SECURITIES PURCHASE AGREEMENT
BETWEEN
GENSIA SICOR INC.
AND
HEALTH CARE CAPITAL PARTNERS L.P.
Dated as of May 1, 1997
TABLE OF CONTENTS
Page
1. Issuance and Sale of Notes and Warrants 1
1.1. Issuance, Purchase and Sale of Notes and
Warrants. 1
1.2. Closing. 1
1.3. Conditions to Closing. 2
1.4. Deliveries at Closing. 3
1.5. Definitions. 3
1.6. Transaction Fee. 3
2. Representations and Warranties of the Company 4
2.1. Organization and Qualification. 4
2.2. Due Authorization. 4
2.3. Subsidiaries. 5
2.4. SEC Reports. 5
2.5. Financial Statements. 5
2.6. Actions Pending; Compliance with Laws. 6
2.7. Title to Properties; Insurance. 7
2.8. Governmental Consents, etc. 7
2.9. Holding Company Act and Investment Company
Act. 8
2.10. Taxes. 8
2.11. Conflicting Agreements and Charter
Provisions. 8
2.12. Capitalization. 9
2.13. Disclosure. 10
2.14. Status of Securities. 10
2.15. Registration Under Exchange Act. 10
2.16. ERISA. 10
2.17. Possession of Franchises, Licenses, etc. 11
2.18. Environmental Matters. 11
2.19. Certain Agreements. 12
2.20. Offering of Notes and Warrants. 13
2.21. Use of Proceeds. 14
2.22. Unlawful Use of Proceeds. 14
2.23. Product Warranties and Liabilities. 14
2.24. [Reserved]. 15
2.25. Intellectual Property Rights. 15
2.26. Related Transactions. 15
2.27. No Brokerage or Finder's Fees. 16
3. Representations and Warranties of the Purchaser. 16
3.1. Organization and Qualification. 16
3.2. Due Authorization. 16
3.3. Conflicting Agreements and Other Matters. 17
3.4. Acquisition for Investment. 17
3.5. Brokers or Finders. 17
3.6. Accredited Investor. 17
3.7. HSR Notification. 17
4. Registration, Exchange and Transfer of Notes 18
4.1. Authorized Denominations of Notes. 18
4.2. The Note Register; Persons Deemed Owners. 18
4.3. Issuance of New Notes Upon Exchange or
Transfer. 18
4.4. Lost, Stolen, Damaged and Destroyed Notes. 18
5. Payment of Notes 19
5.1. Home Office Payment. 19
5.2. Limitation on Interest. 19
5.3. No Prepayment. 19
5.4. Interest. 20
6. Covenants of the Company 20
6.1. Financial Covenants. 20
6.2. Limitation on Convertible Securities. 21
6.3. Merger. 21
6.4. Dividends and Distributions. 22
6.5. Compliance with Laws. 22
6.6. Limitation on Agreements. 23
6.7. Preservation of Franchises and Existence. 23
6.8. Insurance. 23
6.9. Payment of Taxes and Other Charges. 24
6.10. [Reserved]. 24
6.11. [Reserved]. 24
6.12. Financial Statements and Other Reports. 24
6.13. Inspection of Property. 26
6.14. Board Membership. 26
6.15. Lost, Stolen, Damaged and Destroyed Stock
Certificates. 27
6.16. [Reserved]. 27
6.17. HSR. 27
6.18. Certain Tax Matters. 28
6.19. Certain Additional Payments Following
Redemption under Certain Circumstances. 29
6.20. Notice of Breach. 30
6.21. Limitation on Transactions with Affiliates. 30
7. Covenants of the Purchaser 31
7.1. Nondisclosure of Confidential Information. 31
8. Events of Default and Remedies 32
8.1. Events of Default. 32
8.2. Acceleration of Maturity. 34
8.3. Other Remedies. 35
8.4. Conduct No Waiver; Collection Expenses. 35
8.5. Annulment of Acceleration. 36
8.6. Remedies Cumulative. 36
8.7. Limitations. 36
9. Redemption 37
9.1. Optional Redemption. 37
9.2. Mandatory Redemption. 37
9.3. Change of Control. 37
9.4. Redemption Procedures. 38
10. Conversion 38
10.1. Holder's Option to Convert into Preferred
Stock. 38
10.2. Holder's Option to Convert into Common
Stock. 38
10.3. Company's Option to Convert. 39
10.4. Exercise of Conversion Privilege. 39
10.5. Fractions of Shares; Interest. 41
10.6. Reservation of Stock. 41
10.7. Adjustment of Conversion Ratio. 41
10.8. Merger or Consolidation. 45
10.9. Notice of Certain Corporate Actions. 46
10.10. Reports as to Adjustments. 46
11. Subordination of Notes 47
11.1. Subordination of Notes to Senior
Indebtedness. 47
11.2. Proofs of Claim of Holders of Senior
Indebtedness; Voting. 50
11.3. Rights of Holders of Senior Indebtedness
Unimpaired. 50
11.4. Effects of Event of Default. 50
11.5. Company's Obligations Unimpaired. 51
11.6. Subrogation. 51
12. Interpretation 52
12.1. Definitions. 52
12.2. Accounting Principles. 63
13. Miscellaneous 63
13.1. Payments. 63
13.2. Severability. 63
13.3. Specific Enforcement. 63
13.4. Entire Agreement. 63
13.5. Counterparts. 64
13.6. Notices and Other Communications. 64
13.7. Amendments. 64
13.8. Cooperation. 65
13.9. Successors and Assigns. 65
13.10. Expenses and Remedies. 65
13.11. Survival of Representations and Warranties. 67
13.12. Transfer of Securities. 67
13.13. Governing Law. 68
13.14. Term. 68
13.15. Publicity. 68
13.16. Signatures. 68
SCHEDULES
---------
Schedule 2.3 Subsidiaries of the Company
Schedule 2.5(a) Financial Statements
Schedule 2.7 Insurance Policies
Schedule 2.12 Options and Warrants Outstanding
Schedule 2.16 ERISA
Schedule 2.19(a) Certain Agreements
Schedule 2.19(b) Related Agreements
Schedule 2.23 Product Warranty and Liability Matters
Schedule 2.25 Intellectual Property Rights Matters
Schedule 2.26 Related Transactions
EXHIBITS
--------
Exhibit A Form of Note
Exhibit B Form of Warrant
Exhibit C Opinion Matters of Pillsbury Madison &
Sutro LLP
Exhibit D Form of Registration Rights Agreement
Exhibit E Certificate of Designation of Preferred
Stock
Exhibit F Form of Amendment to Shareholder's
Agreement
THIS SECURITIES PURCHASE AGREEMENT, dated as of May 1,
1997 (this "Agreement"), between Gensia Sicor Inc., a Delaware
corporation (the "Company"), and Health Care Capital Partners
L.P., a Delaware limited partnership (the "Purchaser").
WHEREAS, the Purchaser wishes to purchase from the
Company, and the Company wishes to sell to the Purchaser, 2.675%
Subordinated Convertible Notes due May 1, 2004 (the "Notes") in
the aggregate principal amount set forth herein and warrants (the
"Warrants") to purchase shares of the Company's Common Stock, par
value $.01 (the "Common Stock"), upon the terms set forth herein;
WHEREAS, the Notes shall be convertible (under the
circumstances described herein) into the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the
"Preferred Stock") and the Common Stock; the Notes and the
Warrants are referred to collectively as the "Purchased
Securities"; the Notes, the Warrants and the Preferred Stock are
referred to collectively as the "Convertible Securities"; and the
Convertible Securities and the Common Stock are referred to
collectively as the "Securities"; and
WHEREAS, the Purchaser and the Company desire to
provide for such purchase and sale and to establish various
rights and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein set forth, the parties
hereto agree as follows:
1. Issuance and Sale of Notes and Warrants
1.1. Issuance, Purchase and Sale of Notes and
Warrants. Upon the terms set forth herein, the Company will sell
to the Purchaser, and the Purchaser will purchase from the
Company, Notes in the aggregate principal amount of $20,000,000
(the "Initial Principal Balance") and Warrants at an aggregate
price of $20,000,000 (the aggregate amount paid for the Notes and
the Warrants referred to collectively as the "Purchase Price").
Each Note shall be in the form of Exhibit A hereto and the
Warrants shall be in the form set forth in Exhibit B hereto. The
initial Conversion Price of the Notes shall be $3.78 per share.
The Warrants shall be initially exercisable at a price equal to
$4.347 per share.
1.2. Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at the
offices of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, New York,
New York, at 9:00 a.m. on May 16, 1997 or on such other date as
shall be mutually agreed by the Company and the Purchaser (the
"Closing Date").
1.3. Conditions to Closing.
(a) The obligations of the Company and the
Purchaser to consummate the transactions contemplated hereby at
the Closing are subject to the satisfaction of the following
conditions: no temporary restraining order, preliminary or
permanent injunction or other order or decree which prevents the
consummation of the transactions contemplated hereby shall have
been issued and remain in effect, and no statutes, rule or
regulation shall have been enacted by any governmental authority
(of the United States or otherwise) which prevents the
consummation of the transactions contemplated hereby; provided,
however, that the parties shall use their reasonable best efforts
to cause any such decree, ruling, injunction or other order to be
vacated or lifted.
(b) The obligations of the Purchaser to
consummate the transactions contemplated hereby at the Closing is
subject to the satisfaction or waiver of the following
conditions:
(i) the representations and warranties of
the Company set forth in Section 2 of this Agreement shall
be true and correct in all material respects as of the date
when made and (unless made as of a specified date) as of the
Closing Date; and the Company shall have performed in all
material respects its covenants set forth in this Agreement
to be performed prior to the Closing Date and shall not have
taken any action which (if any shares of Preferred Stock or
the Notes were outstanding) would violate any provision of
the Certificate of Designation or this Agreement, as the
case may be (and at the Closing the Company shall deliver to
the Purchaser an officer's certificate certifying as to the
Company's compliance with the conditions set forth in this
clause (i));
(ii) Pillsbury Madison & Sutro LLP, counsel
to the Company, shall have delivered to the Purchaser an
opinion dated the Closing Date with respect to the matters
set forth in Exhibit C hereto;
(iii) at the Closing, the Company shall have
executed a registration rights agreement in the form of
Exhibit D hereto (the "Registration Rights Agreement");
(iv) the Company and the Purchaser shall
have entered into a warrant agreement in the form of Exhibit
B hereto (the "Warrant Agreement");
(v) prior to the Closing, the Restated
Certificate of Incorporation of the Company, as amended,
shall have been amended and supplemented by the Certificate
of Designation substantially in the form of Exhibit E hereto
setting forth the rights and preferences of the Preferred
Stock (the "Certificate of Designation"), and the
Certificate of Designation shall have been filed with the
Secretary of State of the State of Delaware in accordance
with the General Corporation Law ("GCL") of the State of
Delaware (the Certificate of Incorporation, as amended,
including such Certificate of Designation, the "Certificate
of Incorporation");
(vi) at or prior to the Closing, the Company
and Rakepoll Finance, N.V. ("Rakepoll Finance") shall have
entered into an amendment to the Shareholder's Agreement,
dated November 12, 1996, as amended December 21, 1996 and
February 28, 1997, between the Company and Rakepoll Finance
(the "Shareholder's Agreement") in the form attached as
Exhibit G (the "Rakepoll Finance Consent");
(vii) the Common Stock to be issued upon
conversion of the Notes or Preferred Stock, as the case may
be, or upon exercise of the Warrant shall have been approved
for quotation on the Nasdaq Stock Market, subject to
official notice of issuance; and
(viii) the Purchaser shall have received
funding from its limited partners pursuant to its capital
call sufficient to fund the transactions contemplated
hereby.
1.4. Deliveries at Closing. At the Closing, the
Company shall deliver to the Purchaser, against payment in full
of the Purchase Price, (a) Notes in such denominations as the
Purchaser has requested, dated the Closing Date hereof and
registered in the names requested by the Purchaser, in an
aggregate principal amount corresponding to the Initial Principal
Balance and (b) the Warrants.
The Closing of the purchase and sale of the Purchased
Securities shall be deemed to have taken place in the State of
New York.
1.5. Definitions. Certain capitalized terms used in
this Agreement are defined in Section 12 hereof.
1.6. Transaction Fee. The Company shall pay the
general partner of the Purchaser on the date hereof a transaction
fee of $500,000 by wire transfer to an account specified by the
Purchaser.
2. Representations and Warranties of the Company
The Company represents and warrants as of the date
hereof as follows:
2.1. Organization and Qualification. Each of the
Company and its Subsidiaries is a corporation duly organized and
existing in good standing under the laws of the jurisdiction in
which it is incorporated and has the power to own its respective
property and to carry on its respective business as now being
conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation to do business and in good
standing in every jurisdiction in which the nature of the
respective business conducted or property owned by it makes such
qualification necessary and where the failure so to qualify would
have a material adverse effect on the properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole
(a "Material Adverse Effect").
2.2. Due Authorization. The execution and delivery of
this Agreement, the Registration Rights Agreement and the Warrant
Agreement and the issuance and sale of the Purchased Securities
by the Company and compliance by the Company with all the
provisions of this Agreement, the Registration Rights Agreement,
the Warrant Agreement, the Certificate of Designation and the
Convertible Securities (i) are within the corporate power and
authority of the Company; (ii) except for the Rakepoll Finance
Consent, do not or will not require the approval or consent of
the stockholders of the Company; and (iii) have been authorized
by all requisite corporate proceedings on the part of the
Company. This Agreement, the Registration Rights Agreement and
the Warrant Agreement have been duly executed and delivered by
the Company and constitute valid and binding agreements of the
Company, enforceable in accordance with their respective terms,
except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights, and (ii)
the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor
may be brought. The Company has furnished to the Purchaser true
and correct copies of the Company's Certificate of Incorporation
and By-laws as in effect on the date of this Agreement. Prior to
the Closing, the Certificate of Designation will have been filed
with the Secretary of State of the State of Delaware in
accordance with the GCL.
2.3. Subsidiaries. The Subsidiaries of the Company,
together with their jurisdiction of incorporation, are as set
forth on Schedule 2.3 hereto.
2.4. SEC Reports. The Company has filed all
registration statements, proxy statements, reports and other
documents required to be filed by it under the Securities Act and
the Exchange Act since January 1, 1994; and the Company has
furnished the Purchaser copies of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1996 (the "1996 Form 10-
K") and all proxy statement filings (including the definitive
proxy statement, dated January 15, 1997 (the "Proxy Statement"),
filed by the Company in connection with the stock exchange
between the Company and Rakepoll Finance), registration
statements and reports under the Securities Act and the Exchange
Act filed by the Company after such date, each as filed with the
Commission (collectively, the "SEC Reports"). Each SEC Report
was in substantial compliance with the requirements of its
respective report form and did not on the date of filing contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading and as of the date hereof
there is no fact not disclosed in the SEC Reports which is
peculiar to the Company and which materially adversely affects
the properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole.
2.5. Financial Statements. (a) Attached hereto as
Schedule 2.5(a) are true and correct copies of: (i) the audited
consolidated balance sheet and statements of operations,
stockholders' equity and cash flows of the Company for the year
ended December 31, 1996 (including the related notes thereto),
together with the unqualified report of Ernst & Young LLP ("E&Y")
and (ii) the audited consolidated balance sheet and statements of
operations, stockholder's equity and cash flow of Rakepoll
Holding B.V. ("Rakepoll") and its subsidiaries for the year ended
December 31, 1996 (including the related notes thereto), together
with the unqualified report of KPMG Peat Marwick LLP thereon
(such financial statements of Rakepoll and those referred to in
clause (i), the "1996 Financial Statements").
(b) The 1996 Financial Statements and the
financial statements included in the SEC Reports (including any
related schedules and/or notes) have been prepared in accordance
with generally accepted accounting principles consistently
followed (except as indicated in the notes thereto) throughout
the periods involved and fairly present the consolidated
financial condition, results of operations and changes in
stockholders' equity of the Company and its Subsidiaries or
Rakepoll and its Subsidiaries, as the case may be, as of the
dates thereof and for the periods ended on such dates (in each
case subject, as to interim statements, to changes resulting from
year-end adjustments, none of which will be material in amount or
effect), and the Company has no material liabilities or
obligations, contingent or otherwise, not reserved against or
otherwise disclosed in the1996 Financial Statements, other than
any such liabilities which are not material and were incurred in
the ordinary course of business since December 31, 1996. The pro
forma financial statements of the Company and its Subsidiaries
giving effect to the acquisition of Rakepoll and its Subsidiaries
and the related notes thereto included in the Proxy Statement
present fairly the information shown therein, have been prepared
in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments
used therein, including the valuation adjustments, are
appropriate to give effect to the transactions and circumstances
referred to therein. Since December 31, 1996, the Company and
its Subsidiaries have operated their respective businesses only
in the ordinary course and there has been no material adverse
change in the properties, business, results of operation,
prospects or condition (financial or otherwise) of the Company
and the Subsidiaries taken as a whole, other than changes
disclosed or referred to in the SEC Reports or the 1996 Financial
Statements, and provided that an adverse decision by the Food and
Drug Administration in respect of the Company's New Drug
Application for the GenESA System shall not be deemed to be a
material adverse change for purposes of this Agreement.
2.6. Actions Pending; Compliance with Laws. There is
no action, suit, investigation or proceeding pending or, to the
knowledge of the Company, threatened by any public official or
governmental authority, against the Company or any of its
Subsidiaries or any of their respective properties or assets by
or before any court, arbitrator or governmental body, department,
commission, board, bureau, agency or instrumentality
(collectively, "Litigation"), which questions the validity or
enforceability of, or seeks to enjoin or invalidate this
Agreement, the Registration Rights Agreement, the Warrant
Agreement, the Certificate of Designation or the Convertible
Securities or any action taken or to be taken pursuant hereto or
thereto, or, except as set forth in the SEC Reports or the 1996
Financial Statements, which is reasonably likely to result in any
Material Adverse Effect, and neither the Company nor any of its
Subsidiaries is in default in any material respect with respect
to any judgment, order, writ, injunction, decree or award. To the
knowledge of the Company, the Company and each Subsidiary is in
material compliance with, and at all times since December 31,
1992 has been in material compliance with, all applicable
federal, state, local and foreign laws, statutes, orders, rules,
regulations, policies or guidelines promulgated, or judgments,
decisions or orders entered by any governmental authority
(collectively, "Applicable Laws") relating to the Company or any
Subsidiary or their respective business or properties, including,
without limitation, social security laws, workers' protection
laws, laws regarding the provision of insurance, third party
administration and primary health care services, good
manufacturing practices of the Food and Drug Administration (the
"FDA"), the Prescription Drug Marketing Act, the Federal
Controlled Substances Act of 1970, the Food, Drug and Cosmetic
Act, any federal or state Pharmacy Practice Acts, Controlled
Substance Acts, Dangerous Drugs Acts and Food, Drug and Cosmetic
Acts, the Occupational Safety and Health Act and the regulations
promulgated thereunder ("OSHA"), the Foreign Corrupt Practices
Act (the "FCPA") and all rules of professional conduct applicable
to the Company or any Subsidiary by which any of its properties
are bound or subject, except where the failure to be in
compliance therewith could not reasonably be expected to have a
Material Adverse Effect.
2.7. Title to Properties; Insurance. The Company and
its Subsidiaries have good and valid title to, or, in the case of
property leased by any of them as lessee, a valid and subsisting
leasehold interest in, their respective properties and assets,
free of all liens and encumbrances other than those referred to
in the 1996 Financial Statements, except in each case for such
defects in title and such other liens and encumbrances which are
disclosed in the SEC Reports or the 1996 Financial Statements or
which do not in the aggregate materially detract from the value
to the Company of the properties and assets of the Company and
its Subsidiaries taken as a whole. The Company and its
Subsidiaries maintain insurance in such amounts, including self-
insurance, retainage and deductible arrangements, and of such a
character as is reasonable for companies engaged in the same or
similar business, including directors' and officers' liability
and product liability insurance. Schedule 2.7 sets forth a
complete and correct list of all such policies, including the
amount of all policy limits and deductibles.
2.8. Governmental Consents, etc. The Company is not
required to obtain any consent, approval or authorization of, or
to make any declaration or filing with, any governmental
authority as a condition to or in connection with the valid
execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Warrant Agreement and the
valid offer, issue, sale or delivery of the Securities, or the
performance by the Company of its obligations in respect thereof,
except for the filing with the Secretary of State of the State of
Delaware of the Certificate of Designation which will have been
made prior to the Closing Date, any filings required to effect
any registration pursuant to the Registration Rights Agreement,
and any filings required pursuant to state and federal securities
laws which will be timely made after the Closing hereunder.
2.9. Holding Company Act and Investment Company Act.
Neither the Company nor any Subsidiary is: (i) a "public utility
company" or a "holding company," or an "affiliate" or a
"subsidiary company" of a "holding company," or an "affiliate" of
such a "subsidiary company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility," as defined in the Federal Power Act, as
amended, or (iii) an "investment company" or an "affiliated
person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act
of 1940, as amended.
2.10. Taxes. The representations set forth in
Sections 2.6 and 3.7 of the Stock Exchange Agreement, including
items disclosed in the applicable sections of the Gensia
Disclosure Schedules and the Rakepoll Disclosure Schedule
thereto, are true.
2.11. Conflicting Agreements and Charter Provisions.
None of (i) the execution and delivery of this Agreement, the
Registration Rights Agreement and the Warrant Agreement and the
issuance of the Securities, (ii) the fulfillment of and
compliance with the terms and provisions hereof and thereof and
of the Securities, (iii) the payment of dividends, if any, on
shares of Preferred Stock and the redemption of the Notes and
Preferred Stock as contemplated by the Governing Instruments out
of funds legally available therefor, and (iv) the conversion or
exercise, as the case may be, of the Convertible Securities as
contemplated by the Governing Instruments will conflict with or
result in a breach of the terms, conditions or provisions of, or
give rise to a right of termination under, or constitute a
default under, or result in any violation of, the Certificate of
Incorporation or By-laws of the Company or any mortgage,
agreement, instrument, order, judgment, decree, statute, law,
rule or regulations to which the Company or any of its
Subsidiaries or any of their respective property is subject.
Neither the Company nor any of its Subsidiaries is in default
under any outstanding indenture or other debt instrument or with
respect to the payment of principal of or interest on any
outstanding obligation for borrowed money, is in default under
any of their respective contracts or agreements, or under any
instrument by which the Company or any of its Subsidiaries is
bound, in each case which default materially and adversely
affects the properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole.
2.12. Capitalization. As of April 15, 1997, the
authorized capital stock of the Company consists solely of (a)
125,000,000 shares of the Common Stock of which (i) 74,338,932
shares are issued and outstanding and (ii) 11,656,248 shares were
reserved for issuance upon the exercise of options or warrants
granted or issuable by the Company or pursuant to the Company's
Employee Stock Purchase Plan or pursuant to conversion of
outstanding convertible securities of the Company; and (b)
5,000,000 shares of preferred stock, $.01 per share, of which (i)
1,840,000 shares have been designated as $3.75 Convertible
Exchangeable Preferred Stock of which 1,600,000 shares were
issued and outstanding or reserved for issuance, and (ii) 125,000
shares have been designated as Series I Participating Preferred
Stock, none of which were issued or outstanding, all of which
were reserved for issuance under the Gensia Preferred Stock
Purchase Rights. All of the outstanding shares of Common Stock
have been validly issued and are fully paid and nonassessable.
No class of capital stock of the Company is entitled to
preemptive or similar rights. Except for the securities referred
to in the first sentence of this Section 2.12 and the options and
warrants listed on Schedule 2.12 hereto, there are no outstanding
subscriptions, options, warrants, puts, calls, scrip, rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, shares of
any class of capital stock of the Company, or contracts,
commitments, understandings, or arrangements by which the Company
is or may become bound to issue additional shares of its capital
stock or options, warrants or rights to purchase or acquire any
shares of its capital stock. Since April 15, 1997, the Company
has not, and between the date hereof and the Closing Date the
Company will not, issue any additional shares of capital stock,
other than pursuant to the exercise of outstanding stock options
or warrants or pursuant to the Company's Employee Stock Purchase
Plan or pursuant to the conversion of the Company's outstanding
convertible securities or as contemplated by Schedule 2.12.
Except as disclosed in the SEC Reports or the 1996 Financial
Statements, all dividends on all series of preferred stock have
been paid in full. Except as set forth in Schedule 2.12, the
Company has not agreed to register any securities under the
Securities Act or under any state securities law or granted
registration rights to any person or entity. Except for the
Shareholder's Agreement, there are no voting trusts, stockholders
agreements, proxies or other similar agreements or understandings
in effect to which the Company is a party or of which it has
knowledge with respect to the voting or transfer of any of the
shares of Common Stock other than a letter agreement with the
State of Wisconsin Investment Board obligating the Company to
obtain stockholder approval for any proposed repricing of stock
options. To the extent that any rights, options or warrants to
acquire any securities of the Company are outstanding, none of
(i) the issuance and sale of the Purchased Securities pursuant to
this Agreement, (ii) the conversion of the Notes into Preferred
Stock or (iii) the issuance of the Common Stock upon conversion
of the Notes or the Preferred Stock or upon exercise of the
Warrants will result in an adjustment of the exercise price or
number of shares issuable upon the exercise in respect of any
such rights, options or warrants.
2.13. Disclosure. Neither this Agreement nor any
certificate, instrument or written statement furnished or made to
the Purchaser by or on behalf of the Company in connection with
this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements contained herein and therein misleading. There is no
fact which the Company has not disclosed to the Purchaser or its
counsel in writing and of which the Company is aware which
materially and adversely affects or which could reasonably be
expected to have a Material Adverse Effect or materially and
adversely affect the ability of the Company to perform its
obligations under this Agreement.
2.14. Status of Securities. The Securities have been
duly authorized by all necessary corporate action on the part of
the Company (no consent or approval of stockholders being
required by law, the Certificate of Incorporation or the By-laws
of the Company or otherwise), and the Preferred Stock or Common
Stock, as the case may be, issuable upon conversion of the Notes
and the Preferred Stock and the exercise of the Warrants, as the
case may be, will be validly issued and outstanding, fully paid
and nonassessable, and the issuance of such Preferred Stock or
Common Stock is not and will not be subject to preemptive rights
of any other stockholder of the Company. Such shares of
Preferred Stock and such shares of Common Stock have been validly
reserved for issuance.
2.15. Registration Under Exchange Act. The Company
has not registered the Notes, the Warrants or the Preferred Stock
as a class pursuant to Section 12 of the Exchange Act. Neither
the Notes, the Warrants nor the Preferred Stock will be
registered as such class and such registration is not required
except as otherwise required by the provisions of the
Registration Rights Agreement.
2.16. ERISA. Except as set forth in Schedule 2.16,
the representations and warranties contained in Section 2.14(a)-
(j) (substituting, however, "Gensia Plans" for "Employee Plans"
in Section 2.14(j) each time it appears therein) and Section
3.14(a)-(g) of the Stock Exchange Agreement, which incorporate
the respective applicable sections of the Gensia Disclosure
Schedule and the Rakepoll Disclosure Schedule, are true and
correct in all material respects as if made as of the date hereof
and will be true and correct as of the Closing Date. Rakepoll
and its Subsidiaries have complied in all material respects with
all laws applicable to their Employee Benefit Plans and their
employees. Except as set forth in Schedule 2.16, Schedule
2.14(h) of the Gensia Disclosure Schedule and Schedule 3.14(h) of
the Rakepoll Disclosure Schedule set forth all material
compensatory arrangements between the Company, Rakepoll or any
Subsidiary of the Company or Rakepoll and any of its or their
employees, officers or directors.
2.17. Possession of Franchises, Licenses, etc. The
Company and its Subsidiaries possess all franchises,
certificates, licenses, permits and other authorizations from
governmental or political subdivisions or regulatory authorities
and all patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome
restrictions, that are necessary in any material respect to the
Company and its Subsidiaries taken as a whole for the ownership,
maintenance and operation of their respective properties and
assets, and neither the Company nor any of its Subsidiaries is in
violation of any thereof in any material respect.
2.18. Environmental Matters. Except as listed in
Section 2.22 to the Gensia Disclosure Schedule or Section 3.22 to
the Rakepoll Disclosure Schedule:
(a) There are, with respect to the Company and
each Subsidiary, or any predecessor of the foregoing, no past or
present material violations of Environmental Law, nor any
actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any
liability pursuant to any Environmental Law and neither the
Company nor any of its Subsidiaries has received any notice with
respect to any of the foregoing, nor is any Litigation pending or
threatened in connection with any of the foregoing.
(b) No Hazardous Materials are present on or
about any real property currently owned, leased or used by the
Company or any of its Subsidiaries and no Hazardous Materials
were present on or about any real property previously owned,
leased or used by the Company or any its Subsidiaries during the
period the property was owned, leased or used by the Company or
any of its Subsidiaries, except in the normal course of the
Company's or any such Subsidiary's business.
(c) No Hazardous Materials have been released on
or about, or where they may pose a threat of migration to, any
real property currently owned, leased or used by the Company or
any of its Subsidiaries and no Hazardous Materials were released
on or about any real property previously owned, leased or used by
the Company or any of its Subsidiaries during the period the
property was owned, leased or used by the Company or any of its
Subsidiaries, except as may be required in the normal course of
business and in material compliance with applicable Environmental
Law.
(d) No asbestos-containing materials or PCBs are
present on or about any property currently owned, leased or used
by the Company or any of its Subsidiaries.
(e) There are not now, nor have there ever been,
any underground storage tanks or similar facilities of any kind
on or under any real property currently or previously owned,
leased or used by the Company or any of its Subsidiaries.
2.19. Certain Agreements. (a) Except as set forth in
Schedule 2.15 to the Gensia Disclosure Schedule, Schedule 3.15 to
the Rakepoll Disclosure Schedule or Schedule 2.19(a) hereto,
neither the Company nor any Subsidiary is a party to any written
or oral contract, agreement, guarantee, lease or executory
commitment (each a "Contract") falling within any of the
following categories: (a) Contracts valued at over $250,000
obligating any party to pay or receive money, goods or services,
(b) joint venture, partnership and similar agreements, (c)
Contracts which are service contracts or equipment leases
involving payments by the Company or any Subsidiary of more than
$100,000 per year, (d) Contracts containing covenants purporting
to limit the freedom of the Company or any Subsidiary to compete
in any line of business in any geographic area or to hire any
individual or group of individuals, (e) Contracts which contain
minimum purchase conditions or requirements or other terms that
restrict or limit the purchasing relationships of the Company or
any Subsidiary, (f) Contracts relating to any outstanding
commitment for capital expenditures in excess of $250,000, (g)
Contracts relating to the lease or sublease of or sale or
purchase of real or personal property involving any annual
expense or price in excess of $100,000 and not cancelable by the
Company or any Subsidiary (without premium or penalty) within one
month, (h) Contracts with any labor organization, (i) indentures,
mortgages, promissory notes, loan agreements, guarantees of
amounts in excess of $100,000, letters of credit or other
agreements or instruments of the Company or any Subsidiary or
commitments for the borrowing or the lending of amounts in excess
of $100,000 or by the Company or any Subsidiary or providing for
the creation of any charge, security interest, encumbrance or
lien upon any of the assets of the Company or any Subsidiary, (j)
Contracts involving annual revenues or expenditures to the
business of the Company or any Subsidiary, in excess of 5.0% of
the Company's annual revenues and (k) Contracts with or for the
benefit of any officer, director or Affiliate of the Company or
any Subsidiary or Associate thereof. All such contracts are
valid and binding obligations of the Company and each Subsidiary,
as the case may be, and, to the knowledge of the Company and each
Subsidiary, are the valid and binding obligation of each other
party thereto except such Contracts which if not so valid and
binding would not, individually or in the aggregate, have a
Material Adverse Effect. Neither the Company or any Subsidiary
nor, to the knowledge of the Company or any Subsidiary, any other
party thereto is in violation of or in default in respect of, nor
has there occurred an event or condition which with the passage
of time or giving of notice (or both) would constitute a default
under, any such Contract except such violations or defaults under
such Contracts which, individually or in the aggregate, would not
have a Material Adverse Effect.
(b) Except for Non-Disclosable Contracts,
Schedule 2.19 (b) lists all Contracts to which the Company or any
Subsidiary is a party with or for the benefit of any officer,
director or Affiliate of the Company or any Subsidiary or
Associate thereof, and the Company has provided to the Purchaser
true and correct copies of each such Contract as currently in
effect.
2.20. Offering of Notes and Warrants. Neither the
Company nor any Person acting on its behalf has offered the Notes
or the Warrants or any similar securities of the Company for sale
to, solicited any offers to buy the Notes or the Warrants or any
similar securities of the Company from or otherwise approached or
negotiated with respect to the Company with any Person other than
the Purchaser and other "Accredited Investors" (as defined in
Rule 501(a) under the Securities Act). Neither the Company nor
any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of
the Company under circumstances which would require the
integration of such offering with the offering of the Notes and
Warrants under the Securities Act and the rules and regulations
of the Commission thereunder) which could reasonably be expected
to subject the offering, issuance or sale of the Notes and
Warrants to the registration requirements of Section 5 of the
Securities Act.
2.21. Use of Proceeds. The proceeds of the sale of
the Purchased Securities will be used by the Company for general
corporate purposes.
2.22. Unlawful Use of Proceeds. (a) The Company does
not own, directly or indirectly, any "margin security", as
defined in Regulation G issued by the Board of Governors of the
Federal Reserve System (12 CFR Part 207); and the Company will
not use any proceeds from the sale of the Purchased Securities to
purchase or carry any "Security", as defined in Section 3(a)(10)
of the Exchange Act, or for any other purpose which would result
in any transaction contemplated by this Agreement constituting a
"purpose credit" within the meaning of said Regulation G, or
which would involve a violation of Section 7 of the Exchange Act
or Regulation T, U or X of said Board of Governors (12 CFR Parts
220, 221 and 224, respectively).
(b) The Company does not intend to apply and will
not apply any part of the proceeds of the sale of the Purchased
Securities in any manner which is unlawful or which would involve
a violation of Executive Orders 12775 and 12779 (56 Fed. Reg.
50645 and 55976) Prohibiting Certain Transactions with respect to
Haiti or any of the following regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended):
the Foreign Assets Control Regulations, the Transactions Control
Regulations, the Cuban Assets Control Regulations, the Foreign
Funds Control Regulations, the Iranian Assets Control
Regulations, the Iraqi Transactions Regulations, the Nicaraguan
Trade Control Regulations, the South African Transactions
Regulations and the Libyan Sanctions Regulations.
2.23. Product Warranties and Liabilities. Except as
set forth in the SEC Reports or as otherwise set forth in
Schedule 2.23 or in Section 2.21 to the Gensia Disclosure
Schedule or Section 3.21 to the Rakepoll Disclosure Schedule, the
Company and each Subsidiary have no forms of warranties or
guarantees of its products and services that are in effect or
proposed to be used by it. Schedule 2.23 sets forth a
description, which is true and correct in all material respects,
of each pending or, to the knowledge of the Company, threatened
material action under any warranty or guaranty of the Company or
any Subsidiary which is not accurately described in all material
respects in the SEC Reports. Except for amounts covered by
specific reserves in the 1996 Financial Statements, the Company
and each Subsidiary have not incurred, nor does the Company or
any Subsidiary know or have any reason to believe there is any
basis for alleging, any material liability, damage, loss, cost or
expense as a result of any material defect or other deficiency
(whether of design, materials, workmanship, labeling instructions
or otherwise) ("Product Liability") with respect to any product
sold or services rendered by or on behalf of the Company or any
Subsidiary (including any lessee thereof), whether such Product
Liability is incurred by reason of any express or implied
warranty (including, without limitation, any warranty of
merchantability or fitness), any doctrine of common law (tort,
contract or other), any statutory provision or otherwise and
irrespective of whether such Product Liability is covered by
insurance.
2.24. [Reserved].
2.25. Intellectual Property Rights. To the Company's
knowledge, except as described in the SEC Reports or as set forth
in Schedule 2.25 or in the Gensia Disclosure Schedule or the
Rakepoll Disclosure Schedule:
(a) The Company or a Subsidiary owns or has a
license to use all patents and patent applications, trademark
registrations and applications and copyright registrations and
applications, and all other material intangible property and
technology ("Intellectual Property") which are used by the
Company or any Subsidiary free and clear of all mortgages,
liens, loans and encumbrances, except such encumbrances and liens
which arise in the ordinary course of business and do not
materially impair such ownership or use of such Intellectual
Property or materially detract from the value thereof. With
respect to such Intellectual Property licensed by the Company or
any Subsidiary, such licenses are in full force and effect, the
Company or such Subsidiary is in compliance with the terms and
provisions thereof, and no event has occurred which, with notice
or lapse of time or both, would constitute a breach or violation
thereof which could have a Material Adverse Effect, and the
Company or such Subsidiary holds a valid license to use such
Intellectual Property, free of any liens, claims or encumbrances
except those liens, claims or encumbrances which do not and will
not, individually or in the aggregate, have a Material Adverse
Effect.
(b) The Company and the Subsidiaries have the
right and authority to use such Intellectual Property in
connection with the conduct of the business of the Company and
the Subsidiaries in the manner and to the extent such business is
presently conducted, and neither the Company nor any Subsidiary
has been notified of any claim that such use conflicts with,
infringes upon or violates any rights of any other person or
entity, except to the extent that such conflict, infringement or
violation does not and will not, individually or in the
aggregate, have a Material Adverse Effect.
2.26. Related Transactions. Except as disclosed in
the SEC Reports or on Schedule 2.26, no current stockholder,
director, officer or employee of the Company, or any "Affiliate"
or "associate" (as such term is defined in Rule 12b-2 under the
Exchange Act) of any of the foregoing persons or the Company or
any Subsidiary is presently, or during the past three years has
been, directly or indirectly, a party to any agreement,
transaction or series of similar transactions with the Company or
any Subsidiary which are or will be required to be disclosed
under the provisions of the 1934 Act, other than in connection
with any such person's duties as a director, officer or employee
of the Company.
2.27. No Brokerage or Finder's Fees. Except for the
Company's potential obligations to CS First Boston Corporation
under an engagement letter dated May 1, 1995, neither the
Company, any Subsidiary of the Company, nor any stockholder,
director, officer or employee of the Company or any Subsidiary
has incurred or will incur any brokerage, finder's or similar fee
in connection with the transactions contemplated by this
Agreement.
3. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants as to it itself as of the date
hereof as follows:
3.1. Organization and Qualification. The Purchaser is
a limited partnership duly organized and existing in good
standing under the laws of the jurisdiction of its formation and
has the power to own its respective property and to carry on its
respective business as now being conducted. The Purchaser is
duly qualified to do business and in good standing in every
jurisdiction in which the nature of the respective business
conducted or property owned by it makes such qualification
necessary, except where the failure to so qualify would not
prevent consummation of the transactions contemplated hereby or
have a material adverse effect on the Purchaser's ability to
perform its obligations hereunder.
3.2. Due Authorization. The Purchaser has all right,
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary action on
behalf of the Purchaser. This Agreement has been duly executed
and delivered by the Purchaser and constitutes a valid and
binding agreement of the Purchaser enforceable in accordance with
its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
3.3. Conflicting Agreements and Other Matters.
Neither the execution and delivery of this Agreement nor the
performance by the Purchaser of its obligations hereunder will
conflict with, result in a breach of the terms, conditions or
provisions of, constitute a default under, or require any
consent, approval or other action by or any notice to or filing
with any court or administrative or governmental body pursuant
to, the organizational documents or agreements of the Purchaser
or any mortgage, agreement, instrument, order, judgment, decree,
statute, law, rule or regulation to which the Purchaser or any of
its respective properties are subject, except for filings after
the Closing under Section 13(d) of the Exchange Act.
3.4. Acquisition for Investment. The Purchaser is
acquiring the Purchased Securities being purchased by it for its
own account for the purpose of investment and not with a view to
or for sale in connection with any distribution thereof, and the
Purchaser has no present intention or plan to effect any
distribution thereof. The Purchaser acknowledges that the
Securities, including the Securities issuable upon conversion or
exercise, as the case may be, of the Convertible Securities, have
not been registered under the Securities Act of 1933, as amended,
and may be sold or disposed of in the absence of such
registration only pursuant to an exemption from such registration
and in accordance with this Agreement. At the date hereof the
Purchaser does not beneficially own, directly or, to the
knowledge of the Purchaser, indirectly (or have any option or
right to acquire), any securities of the Company other than the
Securities being purchased by it hereunder.
3.5. Brokers or Finders. No agent, broker, investment
banker or other firm or Person, including any of the foregoing
that is an Affiliate of the Purchaser, is or will be entitled to
any broker's fee or any other commission or similar fee from the
Purchaser in connection with any of the transactions contemplated
by this Agreement that the Company will be responsible for
pursuant to Section 13.10.
3.6. Accredited Investor. The Purchaser is an
"accredited investor" within the meaning of Rule 501 promulgated
under the Securities Act.
3.7. HSR Notification. The Purchaser will cause to be
filed its notification ("HSR Notification") of the transaction
contemplated by this Agreement pursuant to the HSR Act at the
same time as the Company files its HSR Notification pursuant to
Section 6.17.
4. Registration, Exchange and Transfer of Notes
4.1. Authorized Denominations of Notes. The Notes are
issuable only as fully registered Notes in denominations of at
least $100,000.
4.2. The Note Register; Persons Deemed Owners. The
Company shall maintain, at its office designated for notices in
accordance with Section 13.6, a register for the Notes (the "Note
Register"), in which the Company shall record the name and
address of the person in whose name each Note has been issued and
the name and address of each transferee and prior owner of each
Note. The Company may deem and treat the person in whose name a
Note is so registered as the holder and owner thereof for all
purposes and shall not be affected by any notice to the contrary,
until due presentment of such Note for registration of transfer
as provided in this Article 4.
4.3. Issuance of New Notes Upon Exchange or Transfer.
Upon surrender for exchange or registration of transfer of any
Note at the office of the Company designated for notices in
accordance with Section 13.6, the Company shall execute and
deliver, at its expense, one or more new Notes of any authorized
denominations requested by the holder of the surrendered Note,
each dated the date to which interest, if any, has been paid on
the Note so surrendered (or, if no interest has been paid, the
date of such surrendered Note), but in the same aggregate unpaid
principal amount as such surrendered Note, and registered in the
name of such person or persons as shall be designated in writing
by such holder. Every Note surrendered for registration of
transfer shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note
or by his attorney duly authorized in writing. The Company may
also condition the issuance of any new Note or Notes in
connection with a transfer by any person on the payment of a sum
sufficient to cover any stamp tax or other governmental charge
imposed in respect of such transfer.
4.4. Lost, Stolen, Damaged and Destroyed Notes. Upon
receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of
the Purchaser or any Affiliate of the Purchaser or the general
partner of the Purchaser, notice from the Purchaser or such
Affiliate of such ownership and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that if the
holder of such Note is, or is a nominee for, the Purchaser, an
Affiliate of the Purchaser or the general partner of the
Purchaser or another holder of a Note with a minimum net worth of
at least $5,000,000, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof, the Company at its own expense shall
execute and deliver, in lieu thereof, a new Note, dated and
bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
5. Payment of Notes
5.1. Home Office Payment. The Company will pay to the
Purchaser or any transferee thereof all sums becoming due on the
Notes (including all sums which become due on the Notes at the
maturity thereof) at the address specified in Section 13.6 or at
the address specified by such transferee, by wire transfer of
immediately available funds, or at such other address or by such
other method as the Purchaser or transferee shall have designated
by notice to the Company, without presentment for notation of
payment and without surrender. Before selling or otherwise
transferring any Note, the Purchaser or transferee will make a
notation thereon of the aggregate amount of all payments of
principal, if any, therefore made, and of the date to which
interest has been paid.
5.2. Limitation on Interest. No provision of this
Agreement or of any Note shall require the payment or permit the
collection of interest, if payable, in excess of the maximum rate
which is permitted by law. If any such excess interest is
provided for herein or in any Note, or shall be adjudicated to be
so provided for, then the Company shall not be obligated to pay
such interest in excess of the maximum rate permitted by law, and
the right to demand payment of any such excess interest is hereby
waived, any other provisions in this Agreement or in any Note to
the contrary notwithstanding.
5.3. No Prepayment. Except for redemptions in
accordance with Section 9.4 or upon conversion pursuant to
Section 10, neither the Company nor any Subsidiary will prepay or
otherwise acquire any Note unless it offers to prepay or acquire
Notes pro rata from each holder thereof.
5.4. Interest. Interest, if payable, on the principal
amount of the Notes shall be due and payable as provided in the
Notes.
6. Covenants of the Company
A. The Company covenants that so long as the Purchaser
(and/or its Affiliates and Affiliates of the general partner of
the Purchaser) collectively hold not less than $10,000,000 in
aggregate Liquidation Value or Stated Value of Notes or Preferred
Stock:
6.1. Financial Covenants. (a) The Company will not
permit its Consolidated Tangible Net Worth to be less than the
following amounts on the last day of any fiscal quarter: (i) on
or before December 31, 1997, $60 million; (ii) from January 1,
1998 to and including December 31, 1998, $70 million and (iii)
from January 1, 1999 and thereafter, $75 million (it being
understood that, for the purposes of this paragraph (a), the
Notes and any other Subordinated Indebtedness of the Company
shall be treated as equity).
(b) The Company will not incur, create, assume or
permit to exist any Indebtedness, or permit any Subsidiary to
incur, create, assume or permit to exist any Indebtedness, if
such Indebtedness (excluding the Notes) would result in a ratio
of Consolidated Total Indebtedness (excluding the Notes) to
Consolidated Tangible Net Worth (which for this purpose shall
include the principal amount of any Notes then outstanding) of
more than 1.0 to 1.0.
(c) The Company will not exchange its $3.75
Convertible Exchangeable Preferred Stock for its 7 1/2% Convertible
Subordinated Debentures due 2003.
(d) This Section 6.1 shall terminate and cease to
be of further force and effect from and after a Change of Control
described in clause (c)(iv) of the definition of Change of
Control, provided that (i) no Default or Event of Default shall
have occurred and be continuing, (ii) the Person with or into
which the Company is merged or consolidated is directly or
through wholly owned subsidiaries an operating business or is
part of a consolidated group (not including the Company) that
operates a business, (iii) no Indebtedness is incurred by the
Company (or any of its Subsidiaries) in anticipation of such
merger or consolidation and (iv) the Company shall have paid in
cash the Change of Control Price, plus in each case accrued and
unpaid interest or dividends, as the case may be, to the date of
payment, to each holder of Notes or Preferred Stock who elects to
have the Company redeem such holder's Notes or Preferred Stock as
a result of such Change of Control.
6.2. Limitation on Convertible Securities. (a) For
so long as $10,000,000 in aggregate principal amount of Notes are
outstanding, (i) the Company will not issue any convertible debt
securities ranking senior to the Notes and (ii) the Company will
not issue any other convertible debt securities or any
convertible equity securities ranking senior to the Preferred
Stock with respect to dividends or as to distribution of assets
upon liquidation, dissolution or winding up unless either (A)
such convertible debt or equity securities provide by their terms
that they shall automatically convert into equity securities of
the Company ranking on a parity with or junior to the Preferred
Stock with respect to dividends or as to distribution of assets
upon liquidation, dissolution or winding up upon conversion of
the Notes pursuant to Section 10.3 or (B) the Company irrevocably
waives its right to convert the Notes into Preferred Stock under
Section 10.3.
(b) For so long as any Preferred Stock is
outstanding, the Company will not issue (i) any convertible debt
securities or (ii) any convertible equity securities ranking
senior to the Preferred Stock with respect to dividends or as to
distribution of assets upon liquidation, dissolution or winding
up; provided, however, that this paragraph (b) shall not restrict
the issuance of convertible debt securities if, on the issue
date, (a) no Default or Event of Default shall have occurred and
be continuing and (b) the Current Market Price of the Common
Stock has exceeded the Conversion Price multiple by 200% for the
preceding 60 consecutive Trading Days.
(c) For purposes of this Section 6.2, the
issuance of units comprising debt (including financial leases) or
preferred stock and warrants (other than Excepted Warrant Issues)
shall be deemed to be an issuance of convertible securities.
6.3. Merger. The Company will not merge with or into
or consolidate with any other Person or sell or convey all or
substantially all of its assets or property to any other Person
unless the Company is the continuing or surviving entity or the
Person (if other than the Company) formed by such merger or
consolidation or into which the Company is merged or to which the
assets of the Company are sold or conveyed (the "Surviving
Entity") shall expressly assume the then outstanding principal
amount of the Notes or Stated Value of the Preferred Stock.
6.4. Dividends and Distributions. The Company will
not, and will not permit any Subsidiary to, declare or pay any
dividend on, or make any other distribution in respect of, or
redeem, purchase or otherwise acquire any shares of Common Stock
or any other shares of capital stock of the Company ranking
junior to or on a parity with the Preferred Stock; provided,
however, that nothing in this Section 6.4 shall prevent the
Company from (i) redeeming, at a redemption price of $.01 per
Right, the Rights issued pursuant to the Rights Agreement, (ii)
declaring or paying accrued and accumulated dividends on the
Company's outstanding $3.75 Convertible Exchangeable Preferred
Stock, (iii) declaring or paying a dividend in the stock of
Metabasis Therapeutics, Inc. ("Metabasis") or Gensia Automedics,
Inc. ("Automedics") in accordance with the proposals disclosed by
the Company to the Purchaser or (iv) declaring or paying a
dividend in the stock of any other Subsidiary, provided that (a)
no Default or Event of Default shall have occurred and be
continuing or result from the payment of such dividend and (b) if
such dividend will constitute a Change of Control, the Company
shall have paid in cash the Change of Control Price, plus in each
case accrued and unpaid interest or dividends, as the case may
be, to the date of payment, to each holder of Notes or Preferred
Stock who elects to have the Company redeem such holder's Notes
or Preferred Stock as a result of such dividend. This Section
6.4 in no way limits intercompany dividends between the Company
and any Subsidiary or between Subsidiaries with respect to
dividends or as to distributions of assets upon liquidation,
dissolution or winding up.
6.5. Compliance with Laws. The Company will, and will
cause each Subsidiary to, comply with all Applicable Laws with
respect to the conduct of its business and the ownership of its
properties, including without limitation, social security laws,
workers' protection laws, environmental laws, human health and
equal employment opportunity laws, laws regarding the provision
of insurance, third party administration and primary health care
services, good manufacturing practices of the FDA, the
Prescription Drug Marketing Act, the Federal Controlled
Substances Act of 1970, the Food, Drug and Cosmetic Act, any
federal or state Pharmacy Practice Acts, Controlled Substance
Acts, Dangerous Drugs Acts and Food, Drug and Cosmetic Acts,
OSHA, the FCPA and all rules of professional conduct applicable
to the Company or any Subsidiary by which any of its properties
are bound or subject, provided that the Company shall not be
deemed to be in violation of this Section 6.5 as a result of any
failure to comply with any provisions of such statutes, rules,
regulations, and orders, the noncompliance with which would not
result in fines, penalties, injunctive relief or other civil
liabilities which, in the aggregate, would materially and
adversely affect the properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company
and the Subsidiaries taken as a whole.
6.6. Limitation on Agreements. The Company will not,
and will not permit any Subsidiary to, enter into any agreement,
or any amendment, modification, extension or supplement to any
existing agreement, which contractually prohibits the Company
from paying interest, if any, payable on the Notes or dividends
on the Preferred Stock or redeeming the Notes or the Preferred
Stock.
6.7. Preservation of Franchises and Existence. Except
as otherwise permitted by the Agreement, the Company will (i)
maintain its corporate existence, rights and franchises in full
force and effect, and (ii) cause the Subsidiaries to maintain
their respective corporate existences, rights and franchises in
full force and effect, provided that nothing in this Section 6.7
shall prevent the Company or any Subsidiary from discontinuing
its operations in any particular state or at any particular
location or locations within the state, or prevent the corporate
existence, rights and franchises of any Subsidiary from being
terminated if, in the opinion of the Board of Directors of the
Company, the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries taken
as a whole or implementing the Company's plans with respect to
Metabasis or Automedics.
6.8. Insurance. (a) The Company will, and will cause
each of the Subsidiaries to maintain, with insurers believed by
the Company to be responsible, such insurance, in such amounts
and of such types as are customarily carried under similar
circumstances by companies engaged in the same or a similar
business or having similar properties similarly situated.
(b) The Company shall (i) provide, maintain and
perform in the same manner as prior to the date hereof the
Company's existing indemnification provisions with respect to
present and future directors and officers of the Company for all
losses, claims, damages, expenses or liabilities arising out of
actions or omissions or alleged actions or omissions occurring
after the Closing Date to the extent permitted or required under
applicable law and the Company's Restated Certificate of
Incorporation and By-Laws in effect at the date hereof (to the
extent consistent with applicable law); and (ii) maintain
directors and officers liability coverage, with limits, terms and
conditions no less advantageous than in effect on the date
hereof. Such coverage will be maintained with the current
insurance carriers or insurance carriers of financial strength
equal to or greater than the financial strength of the current
insurance carriers. Evidence of such coverage will be provided
to the individual officers and directors upon request. Any new
directors or officers of the Company will be added to such
policies.
6.9. Payment of Taxes and Other Charges. The Company
will pay or discharge, and will cause each of the Subsidiaries to
pay or discharge, before the same shall become delinquent, (i)
all taxes, assessments and other governmental charges or levies
imposed upon it or any of its properties or income (including,
without limitation, such as may arise under Section 4062, 4063,
or 4064 of ERISA or any similar provision of law), and (ii) all
claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which, in the case
of either clause (i) or clause (ii), if unpaid, might result in
the creation of a material lien upon any of its properties,
provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or
validity is being contested in good faith pursuant to appropriate
proceedings.
6.10. [Reserved].
6.11. [Reserved].
6.12. Financial Statements and Other Reports.
(i) The Company will, as soon as practicable and
in any event within 45 days after the end of each quarterly
period (other than the last quarterly period) in each fiscal
year, furnish to the Purchaser statements of consolidated
net income and cash flows and a statement of changes in
consolidated stockholders' equity of the Company and its
Subsidiaries for the period from the beginning of the then
current fiscal year to the end of such quarterly period, and
consolidated balance sheets of the Company and its
Subsidiaries as of the end of such quarterly period, setting
forth in each case in comparative form figures for the
corresponding period or date in the preceding fiscal year,
all in reasonable detail and certified by an authorized
financial officer of the Company, subject to changes
resulting from year-end adjustments; provided, however, that
delivery pursuant to clause (iii) below of a copy of the
Quarterly Report on Form 10-Q of the Company for such
quarterly period filed with the Commission shall be deemed
to satisfy the requirements of this clause (i);
(ii) it will, as soon as practicable and in any
event within 90 days after the end of each fiscal year,
furnish to the Purchaser statements of consolidated net
income and cash flows and a statement of changes in
consolidated stockholders' equity of the Company and its
Subsidiaries for such year, and consolidated balance sheets
of the Company and its Subsidiaries as of the end of such
year, setting forth in each case in comparative form the
corresponding figures from the preceding fiscal year, all in
reasonable detail and examined and reported on by
independent public accountants of recognized national
standing selected by the Company; provided, however, that
delivery pursuant to clause (iii) below of a copy of the
Annual Report on Form 10-K of the Company for such fiscal
year filed with the Commission shall be deemed to satisfy
the requirements of this clause (ii);
(iii) it will, promptly upon transmission
thereof, furnish to the Purchaser copies of all such
financial statements, proxy statements, notices and reports
as it shall send to its stockholders and copies of all such
registration statements (without exhibits), other than
registration statements relating to employee benefit or
dividend reinvestment plans, and all such regular and
periodic reports as it shall file with the Commission; and
(iv) it will promptly furnish to the Purchaser
(a) copies of (i) any compliance certificates furnished to
lenders in respect of Indebtedness of the Company and its
Subsidiaries and (ii) any notices of default from lenders in
respect of any such Indebtedness and (b) notice of (i) the
commencement of any Litigation which, if determined
adversely to the Company, would have a Material Adverse
Effect, (ii) the issuance by any governmental authority of
any injunction, order, restraint or other decision which has
resulted in, or which is likely, in the reasonable judgment
of the Company or any such Subsidiary, to have a Material
Adverse Effect or (iii) any development in the business or
affairs of the Company or any of the Subsidiaries which has
resulted in, or which is likely, in the reasonable judgment
of the Company or any such Subsidiary, to result in a
Material Adverse Effect.
Together with each delivery of financial statements
required by clause (ii) above, the Company will deliver to the
Purchaser a certificate of the Chief Financial Officer, Treasurer
or other financial officer of the Company regarding compliance by
the Company with the covenants set forth in Sections 6.1 and 6.4.
6.13. Inspection of Property. The Company will permit
representatives of the Purchaser to visit and inspect, at such
Purchaser's expense, any of the properties of the Company and its
Subsidiaries, to examine the corporate books and make copies or
extracts therefrom and to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the principal
officers of the Company, all at such reasonable times, upon
reasonable notice and as often as the Purchaser may reasonably
request; provided, however, that the foregoing shall be subject
to compliance with reasonable safety, operating and production
requirements and shall not require the Company or any of its
Subsidiaries to permit any inspection which in the reasonable
judgment of the Company would result in the violation of any
statute or regulation with respect to confidentiality or
security. The Purchaser agrees that the information received
pursuant to this Section 6.13 or Section 6.12(iv) is subject to
Section 7.1 hereof.
6.14. Board Membership. On the Closing Date, the
Board of Directors of the Company will take all necessary action
to elect one person reasonably acceptable to the Board of
Directors nominated by the Purchaser to the Board of Directors as
a Class II director. At each subsequent annual meeting for the
election of directors of Class II the Purchaser will be entitled
to propose (and the Company will nominate and recommend) one
person reasonably acceptable to the Board of Directors as a
member of the Company's Board of Directors. In the event of any
vacancy arising by reason of the resignation, death, removal or
inability to serve as the Purchaser's nominee, the Purchaser
shall be entitled to designate a successor to fill such vacancy
until the next annual meeting for the election of Class II
directors. So long as Purchaser and its Affiliates and
Affiliates of the general partner of Purchaser own at least
$10,000,000 in aggregate principal amount of Notes or aggregate
Stated Value of Preferred Stock, such member of the Board of
Directors shall be a member of the Company's executive committee,
if any, or any committee performing substantially similar
functions and shall, if requested by the Purchaser, be considered
for membership on other committees of the Board of Directors.
The Company agrees that if such nominee is not elected, (i) the
Purchaser will be entitled to have observational rights at all
meetings of the Board of Directors and the Purchaser shall have
the same access to information concerning the business and
operations of the Company and its Subsidiaries and at the same
time as directors of the Company, subject to the provisions of
Section 7.1, and shall be entitled to participate in discussions
and consult with the Board of Directors, without voting, and (ii)
the Company will nominate and recommend one person proposed by
the Purchaser at each subsequent annual meeting (without regard
to the Class of directors subject to election at such meeting)
until a nominee proposed by the Purchaser has been elected to the
Board of Directors. If at any time Purchaser and its Affiliates
and Affiliates of the general partner of Purchaser do not own at
least $10,000,000 in aggregate principal amount of Notes or
aggregate Stated Value of Preferred Stock then any director
appointed by Purchaser shall immediately resign from the Board of
Directors.
B. The Company covenants that, so long as the
Purchaser (and/or its Affiliates) owns any of the Securities:
6.15. Lost, Stolen, Damaged and Destroyed Stock
Certificates. Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate for shares of
Preferred Stock (which evidence shall be, in the case of the
Purchaser or any Affiliate of the Purchaser or the general
partner of the Purchaser, notice from the Purchaser or such
Affiliate of such ownership and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it provided that if the
holder of such shares of Preferred Stock is, or is a nominee for,
the Purchaser, an Affiliate of the Purchaser or the general
partner of the Purchaser or another holder of the shares of
Preferred Stock with a minimum net worth of at least $5,000,000,
such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof, the Company at its own expense shall
execute and deliver, in lieu thereof, a new certificate, dated
and paying dividends from the date to which dividends shall have
been paid on such lost, stolen, destroyed or mutilated
certificate or dated the date of such lost, stolen, destroyed or
mutilated certificate if no dividend shall have been paid
thereon.
6.16. [Reserved].
6.17. HSR. If deemed necessary by Purchaser, the
Company shall file its HSR Notification not later than July 31,
1998. Notwithstanding the foregoing, the Company shall not
deliver any notice of redemption pursuant to Article 9 or any
notice of conversion pursuant to Article 10 unless (a) the
Company shall have filed its HSR Notification, (b) the applicable
waiting period shall have expired or been terminated and (c) the
date fixed for redemption in accordance with Section 9.4 or
conversion in accordance with Article 10 shall be a date upon
which the Purchaser shall not be prohibited from owning Voting
Securities under the HSR Act; provided, that if the condition set
forth in clause (c) shall not be satisfied and either the Company
desires to have the ability to issue a notice of conversion or a
notice of redemption or the Purchaser desires to have the ability
to convert some or all of the Notes into Preferred Stock or
Common Stock, each of the Company and the Purchaser, upon notice
from the party desiring to exercise such right to the other
party, shall as promptly as possible file its HSR Notification.
6.18. Certain Tax Matters. (a) In the event (i) of a
Final Determination (as defined below) that the Purchaser is
required to include in income for any taxable year amounts
("OID") determined pursuant to the principles of Sections 1271-75
of the Code and the regulations thereunder, including by
application of Section 305(c) of the Code, or any successor
provisions thereto (collectively, the "OID Rules") with respect
to the Notes, the Warrants or the Preferred Stock (an "OID
Inclusion") or (ii) the OID Rules or any similar or corresponding
state or local law is amended to require an OID Inclusion for any
taxable year, the Company shall pay to such Purchaser with
respect to each such OID Inclusion no later than the Payment Due
Time (as defined below), an additional payment (the "Gross-Up
Payment") such that the net amount of such Gross-Up Payment (plus
the amount of any interest paid with respect to the Notes)
retained by such Purchaser after payment by such Purchaser of any
federal, state and local income tax actually imposed upon such
Gross-Up Payment (plus the amount of any interest paid with
respect to the Notes) shall equal the sum of (A) the amount of
the OID Inclusion for such taxable year (plus the amount of any
interest paid with respect to the Notes) multiplied by the
maximum combined federal, state and local income tax rate for an
individual resident in New York City, after giving due allowance
for the deductibility of state and local income taxes (the
"Applicable Tax Rate"), (B) interest on the amount specified in
subclause (A) at the rates in effect from time to time for
individual taxpayers resident in New York City with respect to
income tax deficiencies for all periods from the date with
respect to which the deficiency arose until the payment of the
amount specified in subclause (A), and (C) penalties, if any,
actually payable by any direct or indirect partner or member of
the Purchaser with respect to the OID Inclusion to the Internal
Revenue Service or any other applicable taxing authority by
reason of such events.
(b) A "Final Determination" with respect to a
federal tax liability shall mean (i) a decision, judgment, decree
or other order by any court of competent jurisdiction, which
decision, judgment, decree or other order has become final, or
(ii) a closing agreement entered into under Section 7121 (or any
successor to such Section) of the Code or any other settlement
agreement entered into a connection with an administrative or
judicial proceeding and consented to by the Purchaser or any
member of its consolidated group. The "Payment Due Time" shall
mean 5:00 p.m. Eastern time, of the day two banking days before
the date on which expires the period allowed by applicable law
for timely payment of the tax liability imposed on the related
OID Inclusion pursuant to an applicable Final Determination.
(c) In the event that the Purchaser is notified
formally or informally of any audit, examination or proceeding by
the Internal Revenue Service or other taxing authority with
respect to the includability in income of OID with respect to the
Notes, Warrants or Preferred Stock, the Purchaser will promptly
notify the Company of such audit, examination or proceeding;
provided, however, that the Purchaser's failure to give such
notice or to keep the Company fully informed concerning a Contest
(as defined below) shall not affect the Company's obligation to
make Gross-Up Payments in accordance with this Section 6.18.
Subject to the requirement that the Purchaser shall proceed in
good faith and shall pursue the issue diligently, the Purchaser
shall have exclusive control and responsibility to conduct any
audit, examination, proceeding or litigation (a "Contest") with
respect to such treatment. The Purchaser shall bear all costs
and expenses in connection with such Contest.
(d) The Company expressly acknowledges that
Affiliates of the Purchaser who acquire Notes, Warrants or
Preferred Stock as permitted by this Agreement shall be entitled
to the benefits of this Section 6.18. No other subsequent holder
shall be entitled to the benefits of this Section 6.18.
6.19. Certain Additional Payments Following Redemption
under Certain Circumstances. In the event that, within six
months after the date of redemption of the Notes pursuant to
Article 9 or redemption of the Preferred Stock pursuant to the
Certificate of Designation, there shall be (i) a reorganization,
merger or consolidation, in each case, with respect to which all
or substantially all of the individuals and entities who were the
respective beneficial owners of the Company immediately prior to
such reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation
resulting from such reorganization, merger or consolidation, (ii)
an acquisition by any Person or "group" (as that term is defined
in Section 13(d) (3) of the Exchange Act) of more than 50% of the
capital stock, assets or property of the Company (determined by
the net book value of such assets or property as of the most
recently prepared balance sheet of the Company), (iii) a plan of
liquidation approved by the Board of Directors, or (iv) a public
announcement of any of the transactions specified in (i) through
(iii) above and such transaction is consummated within six months
after the date of such public announcement, then the Company
shall promptly pay to the record holders of the Notes or the
Preferred Stock on the date of such redemption, an amount in
respect of each share into which the Notes or the Preferred Stock
was convertible as of the date of redemption equal to the excess,
if any, of (x) (in the case of a transaction described in clause
(i) or (iii)) the Fair Market Value of the consideration per
share of Common Stock received or receivable in such transaction
by the Company or the holders of the Company's capital stock or
(y) (in the case of a transaction described in clause (ii)) the
Current Market Price for the five Trading Days immediately
preceding the date of consummation of the transaction over the
redemption price or if higher than (x) or (y), the consideration
per share of Common Stock received by Rakepoll Finance, any
executive officer of the Company or any of their respective
Affiliates or Associates (calculated based upon the number of
shares of Common Stock into which, directly or indirectly, the
Notes or Preferred Stock would have been convertible had they
been so converted on the date of redemption) of the Notes or
shares of Preferred Stock paid to such holders in accordance with
the terms of this Agreement or the Certificate of Designation, as
the case may be.
6.20. Notice of Breach. As promptly as practicable,
and in any event not later than (i) ten Business Days after such
breach in the case of a breach of Section 6.01(a) on the last day
of one of the first three fiscal quarters, (ii) fifteen Business
Days after such breach in the case of a breach of Section 6.01(a)
on the last day of a fiscal year and (iii) ten Business Days
after executive officers of the Company become aware of any other
breach by the Company of any provision of this Agreement,
including, without limitation, any other provision of this
Article 6, the Company shall provide the Purchasers with written
notice specifying the nature of such breach and any actions
proposed to be taken by the Company to cure such breach.
6.21. Limitation on Transactions with Affiliates. The
Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly enter into any transaction or series of
related transactions (including, without limitation , the sale,
purchase, exchange or lease of assets, property or services) with
or for the benefit of any Affiliate of the Company (other than
the Company or a wholly-owned Subsidiary) unless such transaction
or series of related transactions is entered into in good faith
and (a) such transaction or series of related transactions is on
terms that are no less favorable to the Company or such
Subsidiary, as the case may be, than those that would be
available in a comparable transaction in arm's-length dealings
with an unrelated third party and (b) with respect to any
transaction or series of related transactions involving aggregate
value in excess of $100,000, such transaction or series of
related transactions has been approved by a majority of the
Disinterested Directors of the Company, or in the event there is
only one Disinterested Director, by such Disinterested Director;
provided, however, that this provision shall not apply to any
transaction with (i) an officer or director of the Company
entered into in the ordinary course of business (including
compensation and employee benefit arrangements with any officer,
director or employee of the Company, including under any stock
option or stock incentive plans); or (ii) pursuant to the terms
of any agreement or arrangement in existence on the date of this
Agreement listed on Schedule 2.19(b); or (iii) pursuant to any
Non-Disclosable Contract. The Company shall not amend or waive
its rights under, and shall not permit any Subsidiary to amend or
waive its rights under, any of the terms of the agreements
referred to in clause (ii) of the foregoing proviso without the
prior written consent of a majority of the Disinterested
Directors of the Company.
7. Covenants of the Purchaser
7.1. Nondisclosure of Confidential Information. (a)
Without the prior written consent of the Company, any information
relating to the Company provided to the Purchaser in connection
with this Agreement, or to the persons nominated by the Purchaser
to be elected to the Board of Directors, which is either
confidential, proprietary, or otherwise not generally available
to the public (but excluding information the Purchaser has
obtained independently from third-party sources without the
Purchaser's knowledge that the source has violated any fiduciary
or other duty not to disclose such information) (the
"Confidential Information") will be kept confidential by the
Purchaser and its directors, officers, employees, and
representatives (collectively, "Representatives"), using the same
standard of care in safeguarding the Confidential Information as
the Purchaser employs in protecting its own proprietary
information which such Purchaser desires not to disseminate or
publish, and will not be disclosed to any Person, except for
Representatives of the Purchaser who need to know such
Confidential Information. It is understood (i) that such
Representatives shall be informed by the Purchaser of the
confidential nature of the Confidential Information, (ii) that
such Representatives shall be bound by the provisions of this
Section 7.1 as a condition of receiving the Confidential
Information and (iii) that, in any event, the Purchaser shall be
responsible for any breach of this Agreement by any of their
Representatives.
(b) Without the prior consent of the Company,
other than as required by applicable law, the Purchaser will not,
and will direct their Representatives not to, disclose to any
Person either the fact that the Confidential Information has been
made available to the Purchaser or that the Purchaser has
inspected any portion of the Confidential Information.
(c) If the Purchaser or its Representatives are
requested or required (by oral question, interrogatories,
requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any
Confidential Information, such Purchaser will, as soon as
practicable, notify the Company of such request or requirement so
that the Company may seek an appropriate protective order. If,
in the absence of a protective order, such Purchaser or its
Representatives are, in the opinion of such Purchaser's counsel,
compelled to disclose the Confidential Information or else stand
liable for contempt or suffer other censure or significant
penalty, such Purchaser may disclose only such of the
Confidential Information to the party compelling disclosure as is
required by law. The Purchaser shall not be liable for the
disclosure of Confidential Information pursuant to the preceding
sentence. The Purchaser will, at the Company's expense,
cooperate with the Company's reasonable efforts to obtain a
protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information.
8. Events of Default and Remedies
8.1. Events of Default. Each of the following shall
constitute an Event of Default with respect to the Notes under
this Agreement:
(a) Nonpayment of Principal of the Notes. If the
Company fails to pay the principal of or interest on or any other
sum, if any, due on any Note, when and as the same becomes due
and payable, whether at the maturity thereof, on a dated fixed
for a redemption, or otherwise and fails to cure such failure
within five days; or
(b) Cross-Default. If (i) the Company or any
Subsidiary (x) fails to make any payment in respect of any
Indebtedness, having an aggregate principal amount (including
undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit
arrangement) of more than $3,000,000 when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace
or notice period, if any, specified in the relevant document on
the date of such failure; or (y) fails to perform or observe any
other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to
any such Indebtedness, and such failure continues after the
applicable grace or notice period, if any, specified in the
relevant document on the date of such failure if the effect of
such failure, event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries)
to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or collateral in respect thereof to
be demanded; or (ii) there occurs under any Swap Contract an
Early Termination Date (as defined in and provided for in any
such Swap Contract that is in the form of an ISDA Master
Agreement) or equivalent termination event (as provided in any
other Swap Contract) resulting from (1) any event of default
under such Swap Contract as to which the Company or any
Subsidiary is the Defaulting Party (as defined in such Swap
Contract) or (2) any Termination Event (as so defined in such
Swap Contract) as to which the Company or any Subsidiary is an
Affected Party (as so defined in such Swap Contract), and, in
either event, the Swap Termination Value owed by the Company or
such Subsidiary as a result thereof is greater than $3,000,000;
or
(c) Voluntary Bankruptcy and Insolvency
Proceedings. If the Company or any Subsidiary shall file a
petition in bankruptcy or for reorganization or for an
arrangement or any composition, readjustment, liquidation,
dissolution or similar relief pursuant to the Federal Bankruptcy
Code of 1978, as amended, or under any similar present or future
federal law or the law of any other jurisdiction or shall be
adjudicated a bankrupt or become insolvent, or consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) of the Company or such Subsidiary or for all or any
substantial part of its respective property, or the Company or
any Subsidiary shall make an assignment for the benefit of its
creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or shall take any corporate
action, as the case may be, in furtherance of any of the
foregoing; or
(d) Adjudication of Bankruptcy. If a petition or
answer shall be filed proposing the adjudication of the Company
or any Subsidiary as a bankrupt or its reorganization or
arrangement, or any composition, readjustment, liquidation,
dissolution or similar relief with respect to it pursuant to the
Federal Bankruptcy Code of 1978, as amended, or under any similar
present or future federal law or the law of any other
jurisdiction applicable to the Company or such Subsidiary, and
the Company or any Subsidiary shall consent to or acquiesce in
the filing thereof, or such petition or answer shall not be
discharged or denied within 90 days after the filing thereof; or
(e) Receivership or Sequestration. If a decree
or order is rendered by a court having jurisdiction (i) for the
appointment of a receiver or custodian or liquidator or trustee
or sequestrator or assignee (or similar official) in bankruptcy
or insolvency of the Company or any Subsidiary or of all or a
substantial part of its property, or for the winding-up or
liquidation of its affairs, and such decree or order shall have
remained in force undischarged and unstayed for a period of 90
days, or (ii) for the sequestration or attachment of any property
of the Company or any Subsidiary without its return to the
possession of the Company or such Subsidiary or its release from
such sequestration or attachment within 90 days thereafter; or
(f) Covenant Defaults. If the Company shall have
breached in any material respect any of the covenants set forth
herein and such breach shall continue for 90 days following (i)
the date notice is required to be given under Section 6.20(i) or
(ii) with respect to breaches under 6.01(a) and (ii) otherwise
from the date of the breach.
8.2. Acceleration of Maturity. If any Event of
Default shall have occurred and be continuing, the holders of 66
2/3% of the outstanding principal amount of Notes may, by notice
to the Company, declare the entire outstanding principal balance
of the Notes, and all accrued and unpaid interest, if any,
thereon, to be due and payable immediately, and upon any such
declaration the entire outstanding principal balance of the
Notes, and said accrued and unpaid interest, if any, shall become
and be immediately due and payable, without presentment, demand,
protest or other notice whatsoever, all of which are hereby
expressly waived, anything in the Notes or in this Agreement to
the contrary notwithstanding; provided that if an Event of
Default under clause (c), (d), or (e) of Section 8.1 with respect
to the Company shall have occurred, the outstanding principal
amount of all of the Notes, and all accrued and unpaid interest,
if any, thereon, shall immediately become due and payable,
without any declaration and without presentment, demand, protest
or other notice whatsoever, all of which are hereby expressly
waived, anything in the Notes or this Agreement to the contrary
notwithstanding; and provided, further, that if an Event of
Default under clause (a) of Section 8.1 shall have occurred and
be continuing with respect to any Note, the Purchaser or
Affiliate of the Purchaser (but not any transferee thereof other
than an Affiliate of such Purchaser) holding one or more Notes in
an aggregate outstanding principal amount of at least $1,000,000
may, by notice to the Company, declare the entire outstanding
principal of such Notes and all accrued and unpaid interest, if
any, thereon, to be due and payable immediately, and upon any
such declaration the entire outstanding principal of such Notes
and said accrued and unpaid interest, if any, shall become and be
immediately due and payable, without presentment, demand, protest
or other notice whatsoever, all of which are hereby expressly
waived, anything in such Notes or in this Agreement to the
contrary notwithstanding.
8.3. Other Remedies. If any Event of Default shall
have occurred and be continuing, from and including the date of
such Event of Default to but not including the date such Event of
Default is cured or waived, any holder may enforce its rights by
suit in equity, by action at law, or by any other appropriate
proceedings, whether for the specific performance (to the extent
permitted by law) of any covenant or agreement contained in this
Agreement or the Notes or in aid of the exercise of any power
granted in this Agreement or the Notes, and any holder may
enforce the payment of any Note held by such holder and any of
its other legal or equitable rights. From the date that a
Default or Event of Default shall have occurred and during the
continuance of any Default or Event of Default, the Company shall
pay interest on the outstanding principal of, and premium, if
any, on the Notes and (to the extent legally enforceable) on any
overdue installment of interest, if any, at the rate of 11.75%
per annum until such overdue amount is paid or until such Default
or Event of Default is cured or waived.
8.4. Conduct No Waiver; Collection Expenses. No
course of dealing on the part of any holder, nor any delay or
failure on the part of any holder to exercise any of its rights,
shall operate as a waiver of such right or otherwise prejudice
such holder's rights, powers and remedies. If the Company fails
to pay, when due, the principal or the premium, if any, or the
interest, if any, on any Note, the Company will pay to each
holder, to the extent permitted by law, on demand, all costs and
expenses incurred by such holder in the collection of any amount
due in respect of any Note hereunder, including reasonable legal
fees incurred by such holder in enforcing its rights hereunder.
8.5. Annulment of Acceleration. If a declaration is
made in accordance with Section 8.2, then and in every such case,
the holders of at least 66 2/3% of the outstanding principal
amount of the Notes may, by an instrument delivered to the
Company, annul such declaration and the consequences thereof,
provided that at the time such declaration is annulled:
(a) no judgment or decree has been entered for
the payment of any monies due on the Notes or pursuant to this
Agreement;
(b) all arrears of interest on the Notes and all
other sums payable on the Notes and pursuant to this Agreement
(except any principal of or interest or premium on the Notes
which has become due and payable by reason of such declaration)
shall have been duly paid; and
(c) every other Event of Default shall have been
duly waived or otherwise made good or cured;
provided, however, that only the Purchaser or Affiliate of the
Purchaser (but not any transferee thereof other than an Affiliate
of such Purchaser) of the Note or Notes making the declaration
permitted by the last proviso of Section 8.2 may annul such
declaration; and provided, further, that no such annulment shall
extend to or affect any subsequent Event of Default or impair any
right consequent thereon.
8.6. Remedies Cumulative. No right or remedy
conferred upon or reserved to the holders of Notes under this
Agreement is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in
addition to every other right and remedy given hereunder or now
and hereafter existing under applicable law. Every right and
remedy given by this Agreement or by applicable law to the
holders of Notes may be exercised from time to time and as often
as may be deemed expedient by the holders.
8.7. Limitations. Notwithstanding the foregoing
provisions of this Article 8, the exercise of remedies by the
holders of the Notes is subject to the provisions of Article 11
hereof.
9. Redemption
9.1. Optional Redemption. The Company shall have the
right, at its sole option and election made in accordance with
Section 9.4, to redeem the Notes and the Preferred Stock, on or
after 18 months following the Closing Date, in whole but not in
part, if the Current Market Price per share of the Common Stock
shall exceed the Conversion Price multiplied by 350% for at least
90 consecutive Trading Days, subject to the final paragraph of
this Section 9.1, at a redemption price equal to the Liquidation
Value (the "Redemption Price"), plus an amount equal to all
accrued and unpaid interest, if any, to the date of redemption,
in cash.
In the event that at any time a Change of Control
has occurred prior to a redemption pursuant to this Section 9.1,
the Redemption Price of each Note until the expiration of the 90-
day period referred to in Section 9.4(b) shall equal the Change
of Control Price (as defined in Section 9.3 below).
9.2. Mandatory Redemption. On May 1, 2004, the
Company shall redeem all outstanding Notes, by paying therefor
the Liquidation Value, in cash, plus all accrued and unpaid
interest to the date of redemption.
9.3. Change of Control. In the event that there
occurs a Change of Control, any record holder of Notes, in
accordance with the procedures set forth in Section 9.4(b), may
require the Company to redeem any or all of the Notes held by
such holder for, at such holder's option, an amount equal to (i)
the greater of (A) 100% of the Liquidation Value of the Notes and
(B)(I) 135% of the Liquidation Value of the Notes if such Change
of Control occurs on or before the first anniversary of the
Closing Date and (II) 150% of the Liquidation Value of such Notes
if the Change of Control occurs thereafter, less, in the case of
each of clause (B)(I) and (B)(II), the Warrant Value attributable
to the Notes held by such holder or (ii) the form and amount of
consideration that such holder would have received had such
holder converted such Notes into Common Stock and had such holder
received the higher of (A) the same consideration per share of
Common Stock received or receivable on a per share basis by
Rakepoll Finance, any executive officer of the Company or any of
their respective Affiliates or Associates (the "Affiliated
Holders") and (B) the same consideration per share of Common
Stock received or receivable by the non-Affiliated Holders in
connection with such Change of Control (the "Change of Control
Price"), plus, in the case of each of clause (i) and clause (ii)
all accrued and unpaid interest, if any, on the Notes being
redeemed to the date of redemption, in cash. For purposes of
this Section 9.3, the Warrant Value attributable to a Note shall
be equal to the Warrant Value on the date of the Change of
Control multiplied by a fraction the numerator of which shall be
the Liquidation Value of the Note and the denominator of which
shall be $20,000,000.
9.4. Redemption Procedures. (a) Notice of any
redemption of Notes pursuant to Section 9.1 or 9.2 shall be
mailed at least 30 but not more than 60 days prior to the date
fixed for redemption to each holder of Notes to be redeemed, at
such holder's address as it appears in the Note Register. In
order to facilitate the redemption of Notes, the Board of
Directors may fix a record date for the determination of Notes to
be redeemed.
(b) Promptly following a Change of Control (but
in no event more than five Business Days thereafter), the Company
shall mail to each holder of Notes, at such holder's address as
it appears on the transfer books of the Company, notice of such
Change of Control, which notice shall set forth each holder's
right to require the Company to redeem any or all Notes held by
it. The Company shall thereafter during a period of 90 days from
the date of such notice (or the date the Company was required to
give such notice) redeem any Notes, in whole or in part, at the
option of the holder, upon at least five days' written notice to
the Company by such holder specifying (i) the principal amount of
Notes to be redeemed and (ii) the redemption date.
(c) On the date of any redemption being made
pursuant to Section 9.1, 9.2 or 9.3 which is specified in a
notice given pursuant to this Section 9.4, the Company shall wire
transfer to such holder the Redemption Price or Change of Control
Price, as the case may be, for the principal amount of notes so
redeemed, together with an amount equal to all accrued and unpaid
interest, if any, thereon to the date of redemption.
10. Conversion
10.1. Holder's Option to Convert into Preferred Stock.
The Notes shall be converted, in whole but not in part, at the
direction of the holders of not less than 66-2/3% of all
outstanding Notes at any time after the Closing into shares of
Preferred Stock, at a conversion ratio of one share of Preferred
Stock for each $100 of outstanding principal amount of Notes (the
"Preferred Ratio").
10.2. Holder's Option to Convert into Common Stock.
(a) Subject to the provisions for adjustment hereinafter set
forth, any Note or any portion of the outstanding principal
amount of such Note shall be convertible at the option of the
holder at any time after the Closing into shares of Common Stock
at a conversion ratio for each $100 of outstanding principal
amount of Notes equal to the Conversion Ratio.
(b) Following notice of redemption by the Company
pursuant to Section 9.1, subject to the provisions for adjustment
hereinafter set forth, any Note or any portion of the outstanding
principal amount of such Note shall be convertible at the option
of the holder into shares of Common Stock at a conversion ratio
for each $100 of outstanding principal amount of Notes equal to
the Conversion Ratio in effect on the date of such notice of
redemption.
10.3. Company's Option to Convert. Provided that (a)
no Default or Event of Default shall have occurred and be
continuing and (b) (i) the Current Market Price of the Common
Stock has, since the Closing, exceeded the Conversion Price
multiplied by 200% for at least 60 consecutive Trading Days, or
(ii) the Company shall have filed reports with the Commission on
Forms 10-Q or 10-K reporting positive Consolidated Net Income
(after payment of all accrued and accumulated preferred stock
dividends currently due, including any and all preferred stock
dividend arrearages, which amounts shall have been paid prior to
exercise of such option to convert) for two consecutive fiscal
quarters ending on or after March 31, 1997, the Notes shall be
convertible at the option of the Company, in whole but not in
part, at any time into shares of Preferred Stock, at the
Preferred Ratio.
10.4. Exercise of Conversion Privilege. (a) Any
conversion by the holders of Notes into Common Stock shall be in
an aggregate outstanding principal amount equal to at least
$100,000, unless the amount so converted shall be such holder's
entire outstanding principal amount of Notes. Conversion of the
Notes may be effected by any holder thereof upon the surrender to
the Company at the office of the Company designated for notices
in accordance with Section 13.6 or at the office of any agent or
agents of the Company, as may be designated by the Board of
Directors (the "Transfer Agent"), of the Notes to be converted,
accompanied by a written notice stating that such holder elects
to convert all or a specified portion of the outstanding
principal amount of such Notes in accordance with the provisions
of this Article 10 and specifying the name or names in which such
holder wishes the certificate or certificates for shares of
Preferred Stock or Common Stock, as the case may be, to be
issued; provided that, in the case of the conversion of the Notes
into Preferred Stock in accordance with Section 10.3, the Company
shall provide each holder written notice stating that such
holder's Notes have been converted pursuant to Section 10.3, and
each holder shall thereupon promptly surrender to the Transfer
Agent the Notes so converted specifying the name or names in
which such holder wishes the certificates for shares of Preferred
Stock to be issued. In case any holder's notice shall specify a
name or names other than that of such holder, such notice shall
be accompanied by payment of all transfer taxes payable upon the
issuance of shares of Preferred Stock or Common Stock in such
name or names. Other than such taxes, the Company will pay any
and all issue and other taxes (other than taxes based on income)
that may be payable in respect of any issue or delivery of shares
of Preferred Stock or Common Stock on conversion of Notes
pursuant hereto. As promptly as practicable, and in any event
within five Business Days after the surrender of such Notes and
the receipt of such notice relating thereto and, if applicable,
payment of all transfer taxes (or the demonstration to the
satisfaction of the Company that such taxes have been paid), the
Company shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and
nonassessable full shares of Preferred Stock or Common Stock, as
the case may be, to which the holder of the Notes being converted
shall be entitled and (ii) if less than the entire outstanding
principal amount of any Note surrendered is being converted, a
new Note in the principal amount which remains outstanding upon
such partial conversion. Such conversion shall be deemed to have
been made at the close of business on the date of giving such
notice so that the rights of the holder thereof as to the Note or
Notes (or portion thereof) being converted shall cease except for
the right to receive shares of Preferred Stock or Common Stock,
as the case may be, in accordance herewith, and the person
entitled to receive the shares of Preferred Stock or Common Stock
shall be treated for all purposes as having become the record
holder of such shares of Preferred Stock or Common Stock at such
time, so long as such holder's Notes are delivered to the Company
within two Business Days after the date of the giving of notice.
In any other case of conversion at the holder's option, the date
of delivery of the Notes shall be deemed to be the date of
conversion.
(b) In case any Notes are to be redeemed pursuant
to Section 9.1, such right of conversion shall cease and
terminate as to the Notes to be redeemed at the close of business
on the Business Day preceding the date fixed for redemption
unless the Company shall default in the payment of the Redemption
Price or the Change of Control Price, as the case may be.
(c) The Conversion Ratio shall be subject to
adjustment from time to time in certain instances as hereinafter
provided.
10.5. Fractions of Shares; Interest. In connection
with the conversion of any Note into Common Stock, no fractions
of shares shall be issued, but in lieu thereof the Company shall
pay a cash adjustment in respect of such fractional interest in
an amount equal to such fractional interest multiplied by the
Current Market Price per share of Common Stock on the Trading Day
on which such Note is deemed to have been converted. If more
than one Note shall be surrendered for conversion by the same
holder at the same time, the number of full shares of Common
Stock issuable on conversion thereof shall be computed on the
basis of the aggregate outstanding principal amount of Notes so
surrendered. Promptly upon conversion, the Company shall pay to
holders of Notes so converted an amount equal to any accrued and
unpaid interest on the Notes surrendered for conversion to the
date of such conversion, together with cash in lieu of any
fractional share of Common Stock.
10.6. Reservation of Stock. (a) The Company shall at
all times reserve and keep available for issuance upon the
conversion of the Notes and exercise of the Warrants, free from
any preemptive rights, such number of its authorized but unissued
shares of Preferred Stock and Common Stock as will from time to
time be sufficient to permit the conversion of the entire
outstanding principal amount of the Notes into Preferred Stock or
Common Stock and permit the exercise of all of the Warrants, and
shall take all action required to increase the authorized number
of shares of Preferred Stock or Common Stock, if necessary, to
permit the conversion of the entire outstanding principal amount
of the Notes and permit the exercise of all of the Warrants.
(b) If the Company shall issue shares of Common
Stock upon conversion of the Notes as contemplated by this
Article 10, or upon exercise of the Warrants, the Company shall
issue together with each such share of Common Stock one Right (or
other securities in lieu thereof), or any rights issued to
holders of Common Stock in addition thereto or in replacement
therefor, whether or not such rights shall be exercisable at such
time, but only if such rights are issued and outstanding and held
by other holders of Common Stock at such time and have not
expired.
10.7. Adjustment of Conversion Ratio. The Conversion
Ratio will be subject to adjustment from time to time as follows:
(a) In case the Company shall at any time or from
time to time after May 1, 1997 (A) pay a dividend, or make a
distribution, on the outstanding shares of Common Stock in shares
of Common Stock, (B) subdivide the outstanding shares of Common
Stock, (C) combine the outstanding shares of Common Stock into a
smaller number of shares or (D) issue by reclassification of the
shares of Common Stock any shares of capital stock of the
Company, then, and in each such case, the Conversion Ratio in
effect immediately prior to such event or the record date
therefor, whichever is earlier, shall be adjusted so that the
holder of any Note thereafter surrendered for conversion into
Common Stock shall be entitled to receive, for each $100 of
outstanding principal amount of Notes, the number of shares of
Common Stock or other securities of the Company which such holder
would have owned or have been entitled to receive after the
happening of any of the events described above, had such Notes
been surrendered for conversion immediately prior to the
happening of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this clause (a) shall
become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the
record date for the determination of holders of shares of Common
Stock entitled to receive such dividend or distribution, or (y)
in the case of such subdivision, reclassification or combination,
at the close of business on the day upon which such corporate
action becomes effective. No adjustment shall be made pursuant
to this clause (a) in connection with any transaction to which
Section 10.8 applies.
(b) In case the Company shall issue shares of
Common Stock (or rights, warrants or other securities convertible
into or exchangeable for shares of Common Stock) after May 1,
1997 at a price per share (or having a conversion price per
share) less than the Conversion Price as of the date of issuance
of such shares (or, in the case of convertible or exchangeable
securities, less than the Conversion Price as of the date of
issuance of the rights, warrants or other securities in respect
of which shares of Common Stock were issued), then, and in each
such case, the Conversion Ratio and the Conversion Price shall be
adjusted so that the holder of each Note shall be entitled to
receive, for each $100 of outstanding principal amount of Notes,
upon the conversion thereof into Common Stock, the number of
shares of Common Stock determined by multiplying (A) the
Conversion Ratio in effect on the day immediately prior to such
date by (B) a fraction, the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding on such
date and (2) the number of additional shares of Common Stock
issued (or into which the convertible securities may convert),
and the denominator of which shall be the sum of (x) the number
of shares of Common Stock outstanding on such date and (y) the
number of shares of Common Stock purchasable at the then
applicable Conversion Price per share with the aggregate
consideration receivable by the Company for the total number of
shares of Common Stock so issued (or into which the rights,
warrants or other convertible securities may convert). An
adjustment made pursuant to this Section 10.7(b) shall be made on
the next Business Day following the date on which any such
issuance is made and shall be effective retroactively to the
close of business on the date of such issuance. For purposes of
this Section 10.7(b), the aggregate consideration receivable by
the Company in connection with the issuance of shares of Common
Stock or of rights, warrants or other securities convertible into
shares of Common Stock shall be deemed to be equal to the sum of
the aggregate offering price (before deduction of underwriting
discounts or commissions and expenses payable to third parties)
of all such Common Stock, rights, warrants and convertible
securities plus the minimum aggregate amount, if any, payable
upon exercise or conversion of any such rights, warrants and
convertible securities into shares of Common Stock. If Common
Stock is sold as a unit with other securities or rights of value,
the aggregate consideration received for such Common Stock shall
be deemed to be net of the Fair Market Value of such other
securities and rights of value. If Common Stock is issued in
consideration of the release of a claim brought by a shareholder
against the Company, whether before or after the Closing Date, on
the basis of events or circumstances occurring prior to the
Closing Date ("Pre-Closing Shareholder Claims"), the
consideration for such Common Stock shall be deemed to be $0.
The issuance or reissuance of any shares of Common Stock (whether
treasury shares or newly issued shares) pursuant to (i) a
dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock
requiring an adjustment in the conversion ratio pursuant to
Section 10.7(a), (ii) shares issued as Stock Milestone Payments
or Combination Milestone Payments pursuant to Section 5.06 of the
Development and Marketing Agreement dated June 13, 1991 with
Gensia Clinical Partners as in effect on the date hereof or
pursuant to any acquisition of BIOFA A.B. on terms approved by
the full Board of Directors or (iii) any restricted stock or
stock option plan or program of the Company involving the grant
of options or rights at below the applicable Conversion Price
(but the Company will in no event issue options or rights
exercisable at less than 85% of Current Market Price at the date
of grant) so long as the granting of such options or rights has
been approved by the full Board of Directors or a committee of
the Board of Directors on which the director designated by the
Purchaser is a member, or (iv) any option, warrant, right, or
convertible security outstanding as of the date hereof (other
than the Rights or similar securities) shall not be deemed to
constitute an issuance of Common Stock or convertible securities
by the Company to which this Section 10.7(b) applies. Upon the
expiration unexercised of any options, warrants or rights to
convert any convertible securities for which an adjustment has
been made pursuant to this Section 10.7(b), the adjustments shall
forthwith be reversed to effect such rate of conversion as would
have been in effect at the time of such expiration or termination
had such options, warrants or rights or convertible securities,
to the extent outstanding immediately prior to such expiration or
termination, never been issued. Nothing herein shall limit the
right of any holder to an anti-dilution adjustment in the event
that there shall occur a "flip-in" or "flip-over" event under the
Rights Agreement or any similar plan or agreement of the Company.
No adjustment shall be made pursuant to this Section 10.7(b)in
connection with any transaction to which Section 10.8 applies.
(c) In case the Company shall at any time or from
time to time after May 1, 1997 declare, order, pay or make a
dividend or other distribution (including, without limitation,
any distribution of stock or other securities or property or
rights or warrants to subscribe for securities of the Company or
any of its Subsidiaries by way of dividend, including any
distribution of shares or assets of Metabasis or Automedics and
any payment or granting of anything of value in consideration of
the release of a Pre-Closing Shareholder Claim, on its Common
Stock, other than dividends or distributions of shares of Common
Stock which are referred to in Section 10.7(a) or issuances of
Common Stock which are referred to in Section 10.7(b), then, and
in each such case, the Conversion Ratio and the Conversion Price
shall be adjusted so that the holder of each Note shall be
entitled to receive, upon the conversion thereof, for each $100
of outstanding principal amount of Notes, the number of shares of
Common Stock determined by multiplying (1) the applicable
Conversion Ratio on the day immediately prior to the record date
fixed for the determination of stockholders entitled to receive
such dividend or distribution by (2) a fraction, the numerator of
which shall be the Current Market Price of the Common Stock for
the period of 20 Trading Days preceding such record date, and the
denominator of which shall be such Current Market Price of the
Common Stock less the Fair Market Value per share of Common Stock
(as determined in good faith by the Board of Directors and
supported by an opinion from an investment banking firm of
recognized national standing acceptable to holders of a majority
of the Notes) of such dividend or distribution. No adjustment
shall be made pursuant to this Section 10.7(c) in connection with
any transaction to which Section 10.8 applies.
(d) For purposes of this Section 10.7, the number
of shares of Common Stock at any time outstanding shall not
include any shares of Common Stock then owned or held by or for
the account of the Company.
(e) The term "dividend," as used in this Section
10.7, shall mean a dividend or other distribution upon stock of
the Company as well as any consideration granted to a shareholder
for the release of a claim against the Company.
(f) Anything in this Section 10.7 to the contrary
notwithstanding, the Company shall not be required to give effect
to any adjustment in the Conversion Ratio unless and until the
net effect of one or more adjustments (each of which shall be
carried forward), determined as above provided, shall have
resulted in a change of the Conversion Ratio by at least one one-
hundredth of one share of Common Stock, and when the cumulative
net effect of more than one adjustment so determined shall be to
change the Conversion Ratio by at least one one-hundredth of one
share of Common Stock, such change in Conversion Ratio shall
thereupon be given effect.
(g) The certificate of any firm of independent
public accountants of recognized national standing selected by
the Board of Directors (which may be the firm of independent
public accountants regularly employed by the Company) shall be
presumptively correct for any computation made under this Section
10.7.
(h) If the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter
and before the distribution to stockholders thereof legally
abandon its plan to pay or deliver such dividend or distribution,
then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted
by this Section 10.7 or in the Conversion Ratio or Conversion
Price then in effect shall be required by reason of the taking of
such record.
(i) In the case of any event which requires an
adjustment to the Conversion Ratio pursuant to this Section 10.7,
the Conversion Price shall also be appropriately adjusted to
reflect such event.
(j) If any event occurs as to which the
provisions of this Section 10.7 are not strictly applicable or if
strictly applicable would not fairly protect the rights of the
holders of the Notes in accordance with the essential intent and
principles of such provisions, the Board of Directors shall make
an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to
protect such rights of the holders of the Notes.
10.8. Merger or Consolidation. In the case of any
consolidation or merger of the Company with or into another
corporation, or in case of any sale or conveyance to another
corporation of all or substantially all of the assets or property
of the Company (each of the foregoing being referred to as a
"Transaction") occurring in each case at any time, each Note then
outstanding shall thereafter be convertible into, in lieu of the
Common Stock issuable upon such conversion prior to consummation
of such Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon
the consummation of such Transaction by a holder of that number
of shares of Common Stock into which the principal balance of
such Note was convertible immediately prior to such Transaction.
In case securities or property other than Common Stock shall be
issuable or deliverable upon conversion as aforesaid, then all
references in this Article 10 shall be deemed to apply, so far as
appropriate and nearly as may be, to such other securities or
property.
10.9. Notice of Certain Corporate Actions. In case at
any time or from time to time the Company shall pay any stock
dividend or make any other non-cash distribution to the holders
of its Common Stock, or shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of
any class or any other right, or there shall be any capital
reorganization or reclassification of the Common Stock or
consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an
entirety, or there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company, then, in
any one or more of said cases the Company shall give at least 20
days' prior written notice (the time of mailing of such notice
shall be deemed to be the time of giving thereof) to the
registered holders of the Notes at the addresses of each as shown
in the Note Register of the date on which (i) a record shall be
taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be,
provided that in the case of any Transaction to which Section
10.7 applies the Company shall give at least 30 days' prior
written notice as aforesaid. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall
participate in said dividend, distribution or subscription rights
or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or
winding up, as the case may be. Failure to give such notice
shall not invalidate any action so taken.
10.10. Reports as to Adjustments. Upon any adjustment
of the Conversion Ratio then in effect and any increase or
decrease in the number of shares of Common Stock issuable upon
the operation of the conversion provisions set forth in this
Article 10, then, and in each such case, the Company shall
promptly deliver to the Transfer Agent of the Notes and Common
Stock, a certificate signed by the President or a Vice President
and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Company setting forth in
reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the
Conversion Ratio then in effect following such adjustment and the
increased or decreased number of shares issuable upon the
conversion granted by this Section 10, and shall set forth in
reasonable detail the method of calculation of each and a brief
statement of the facts requiring such adjustment. Where
appropriate, such notice to holders of the Notes may be given in
advance and included as part of the notice required under the
provisions of Section 10.9.
11. Subordination of Notes
11.1. Subordination of Notes to Senior Indebtedness.
The Indebtedness evidenced by the Notes and all renewals and
extensions thereof, all obligations of the Company under this
Agreement, the Certificate of Designation, and all other
instruments and agreements arising out of or relating to any or
all of the foregoing and all renewals and extensions thereof
(collectively called the "Junior Indebtedness") shall at all
times be wholly subordinate and junior in right of payment to any
and all Senior Indebtedness of the Company (including any claims
by the holders of such Senior Indebtedness for interest accruing
after any assignment for the benefit of creditors by the Company
or the institution by or against the Company of any proceedings
under the Bankruptcy Code or any law for the relief of or
relating to debtors, or any other claim by such holders for any
such interest which would have accrued in the absence of such
assignment or the institution of such proceedings) in the manner
and with the force and effect hereafter set forth:
(a) In the event of any liquidation, dissolution or
winding up of the Company, or of any execution, sale,
receivership, insolvency, bankruptcy, liquidation,
readjustment, reorganization or other similar proceeding
relative to the Company or its property, all sums owing on
all Senior Indebtedness of the Company (including cash
collateral and amounts not yet due and payable) shall first
be paid in full before any payment is made upon the Junior
Indebtedness; and in any such event any payment or
distribution of any kind or character, whether in cash,
property, or securities which shall be made upon or in
respect of the Junior Indebtedness shall be paid over to the
holders of the Senior Indebtedness of the Company, pro rata,
for application in payment thereof unless and until such
Senior Indebtedness shall have been paid or satisfied in
full. In case of any assignment for the benefit of
creditors by the Company or in case any proceedings under
the Bankruptcy Code or any other law for the relief of or
relating to debtors are instituted by or against the
Company, or in case of the appointment of any receiver for
the Company's business or assets, or in case of any
dissolution or winding up of the affairs of the Company, the
Company and any assignee, trustee in bankruptcy, receiver,
debtor in possession or other person or persons in charge
are hereby directed to pay to the holders of the Senior
Indebtedness of the Company the full amount of such holders'
claims against the Company (including interest to the date
of payment) before making any payments to the holders of
Junior Indebtedness, and insofar as may be necessary for
that purpose, the Purchaser hereby assign and transfer to
the holders of Senior Indebtedness of the Company all rights
to any payments, dividends or other distributions.
(b) In the event that all or any part of the Junior
Indebtedness is declared or becomes due and payable because
of the occurrence of any Event of Default or otherwise than
at the option of the Company (other than pursuant to its
terms at its final maturity), under circumstances when the
foregoing clause (a) shall not be applicable, the holders of
the Junior Indebtedness shall be entitled to payments only
after there shall first have been paid in full all Senior
Indebtedness of the Company or payment shall have been
provided therefor in a manner satisfactory to the holders of
such Senior Indebtedness.
(c) Upon the occurrence of an event which is, or with
the lapse of time or notice or both would be, an event which
gives any holder of any Senior Indebtedness of the Company
the right to demand payment, cash collateral, accelerate the
maturity, or terminate any commitment to further extend
credit, no payment shall be made on any Junior Indebtedness
if either:
(i) notice of such default in writing or by
telegram has been given to the Company by any holder of
any Senior Indebtedness of the Company, provided that
judicial proceedings shall be commenced with respect to
such default (x) within 180 days thereafter if such
default consists of the nonpayment of principal,
interest, or any other sum due on such Senior
Indebtedness, or (y) within 180 days after the earlier
of (i) the giving of such notice or (ii) the date on
which such holder is entitled to institute judicial
proceedings, or
(ii) judicial proceedings shall be pending in
respect of such default.
The holder of any portion of Senior Indebtedness of the Company
shall not be entitled to give notice pursuant to this clause (c)
more than once with respect to any default which was specified in
such notice and which has continued without interruption since
the date such notice was given, nor shall such holder be entitled
to give a separate notice with respect to any default not so
specified which (to the knowledge of the holder giving notice)
was existing on the date such notice was given pursuant to this
clause (c) and which has continued without interruption from the
date such notice was given. Upon receipt of any notice from any
holder of any Senior Indebtedness pursuant to this clause (c),
the Company shall forthwith send a copy thereof to each holder of
Junior Indebtedness and each holder of its Senior Indebtedness at
the time outstanding.
(d) All payments, cash, or noncash distributions made
to the holders of Junior Indebtedness which should have been
made to the holders of Senior Indebtedness of the Company
shall be received and held by the former in trust for the
benefit of the latter, and the holders of Junior
Indebtedness shall forthwith remit such payments, cash, or
noncash distributions to the holders of the Senior
Indebtedness of the Company, pro rata, in the form in which
it was received, together with such endorsements or
documents as may be necessary to effectively negotiate or
transfer the same to the holders of the Senior Indebtedness
of the Company.
(e) Each holder of Senior Indebtedness of the Company
is hereby authorized by the Purchaser to:
(i) renew, compromise, extend, accelerate or
otherwise change the time of payment, or any other
terms, of any Senior Indebtedness of the Company held
by such holder;
(ii) increase or decrease the rate of interest
payable thereon or any part thereof;
(iii) exchange, enforce, waive or release any
security therefor;
(iv) apply such security and direct the order or
manner of sale thereof in such manner as such holder
may at its discretion determine; and/or
(v) release the Company or any guarantor of any
Senior Indebtedness of the Company from liability.
If any such action is taken, the Company shall promptly notify
the Purchaser and any holder of Junior Indebtedness.
Notwithstanding anything set forth in this Section 11.1, nothing
set forth herein shall restrict holders of the Notes and
Preferred Stock from exercising their rights of conversion
hereunder.
11.2. Proofs of Claim of Holders of Senior
Indebtedness; Voting. The Purchaser undertakes and agrees for
the benefit of each holder of Senior Indebtedness of the Company
to execute, verify, deliver and file any proofs of claim relating
to the Junior Indebtedness which any holder of such Senior
Indebtedness may at any time require in order to prove and
realize upon any rights or claims pertaining to the Junior
Indebtedness and to effectuate the full benefit of the
subordination contained herein. Upon failure of the Purchaser to
file the required proof or proofs of claim prior to 30 days
before the expiration of the time to file claims in such
proceeding, each holder of Senior Indebtedness of the Company is
hereby irrevocably appointed by the Purchaser to be such
Purchaser's agent to file the appropriate claim or claims and if
such holder of Senior Indebtedness elects at its sole discretion
to file such claim or claims (i) to accept or reject any plan of
reorganization or arrangement on behalf of the Purchaser, and
(ii) to otherwise vote the Purchaser's claim in respect of the
Junior Indebtedness in any manner deemed appropriate for the
benefit and protection of the holders of the Senior Indebtedness
of the Company.
11.3. Rights of Holders of Senior Indebtedness
Unimpaired. No right of any holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time or in
any way be affected or impaired by any failure to act on the part
of the Company or the holders of Senior Indebtedness, or by any
noncompliance by the Company with any of the terms, provisions
and covenants of this Agreement, regardless of any knowledge
thereof that any such holder of Senior Indebtedness may have or
be otherwise charged with.
11.4. Effects of Event of Default. The Company
agrees, for the benefit of the holders of Senior Indebtedness,
that in the event that a Note is declared due and payable before
its maturity because of the occurrence of an Event of Default,
(i) the Company will give prompt notice in writing of such
happening to the holders of Senior Indebtedness and (ii) all
Senior Indebtedness shall forthwith become immediately due and
payable upon demand, regardless of the expressed maturity
thereof.
11.5. Company's Obligations Unimpaired. The
provisions of this Article 11 are solely for the purpose of
defining the relative rights of the holders of Senior
Indebtedness on the one hand, and the Purchaser on the other
hand, and nothing herein shall impair, as between the Company and
the Purchaser, the obligation of the Company which is
unconditional and absolute, to pay the principal, premium, if
any, and interest, if payable, on the Notes in accordance with
this Agreement and the terms of the Notes, nor shall anything
herein prevent the Purchaser from exercising all remedies
otherwise permitted by applicable law or under this Agreement or
the Notes upon the occurrence of an Event of Default, subject to
the rights of the holders of Senior Indebtedness as herein
provided for.
11.6. Subrogation. Subject to the payment in full of
Senior Indebtedness, holders of the Notes shall be subrogated to
the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities made on
the Senior Indebtedness until the Senior Indebtedness shall be
paid in full; and, for the purposes of such subrogation, payments
or distributions to the holders of Senior Indebtedness of any
cash, property or securities to which any holder of Notes would
be entitled except for the provisions of this Agreement shall, as
between the Company and its creditors other than the holders of
Senior Indebtedness and holders of the Notes, be deemed to be a
payment by the Company to or on account of the Notes, it being
understood that the provisions of this Agreement are and are
intended solely for the purpose of defining the relative rights
of the holders of the Notes on the one hand, and the holders of
Senior Indebtedness, on the other hand. The purpose of this
Section 11.6 is to grant to holders of the Notes the same rights
against the Company with respect to the aggregate amount of such
payments or distributions as the holders of Senior Indebtedness
would have against the Company if such aggregate amount were
considered overdue Senior Indebtedness.
12. Interpretation
12.1. Definitions.
"Adjustment Period" shall mean the period of five
consecutive Trading Days preceding the date as of which the Fair
Market Value of a security is to be determined.
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
"Applicable Tax Rate" shall have the meaning set forth
in Section 6.18(a).
"Beneficially Own" or "Beneficial Owners" with respect
to any securities shall mean having "beneficial ownership" of
such securities (as determined pursuant to Rule 13d-3 under the
Exchange Act), including pursuant to any agreement, arrangement
or understanding, whether or not in writing.
"Board of Directors" shall mean the board of directors
of the Company.
"Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
"Capitalized Lease" shall mean, with respect to any
person, any lease or any other agreement for the use of property
which, in accordance with generally accepted accounting
principals, should be capitalized on the lessee's or user's
balance sheet.
"Capitalized Lease Obligation" of any person shall mean
and include, as of any date as of which the amount thereof is to
be determined, the amount of the liability capitalized or
disclosed (or which should be disclosed) in a balance sheet of
such person in respect of a Capitalized Lease of such person.
"Change of Control" shall mean:
(a) A "person" or "Group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act becoming, in the
transaction or series of related transactions, the Beneficial
Owner of Voting Securities entitled to exercise more than 60% of
the total voting power of all outstanding Voting Securities of
the Company (including any Voting Securities that are not then
outstanding of which such person or Group is deemed the
Beneficial Owner);
(b) liquidation of the Company;
(c) a reorganization, merger or consolidation, in
each case, with respect to which (i) all or substantially all the
individuals and entities who were the respective Beneficial
Owners of the voting securities of the Company immediately prior
to such reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation Beneficially Own,
directly or indirectly, more than 50.1% of the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation
resulting from such reorganization, merger or consolidation, or
(ii) the shares of the surviving corporation held by such holders
are not, and immediately upon issuance will not be, listed on a
national securities exchange or quoted on the Nasdaq Stock
Market, or (iii) the shares of the Surviving Corporation held by
such holders are or will be subject to any right of repurchase by
the issuer thereof or any third-party or are otherwise subject to
any encumbrance as a result of such transaction, or (iv)
immediately after the consummation of such reorganization, merger
or consolidation, the surviving corporation would be in violation
of any covenant set forth in Section 6.1 hereof;
(d) the sale or other disposition of assets or
property of the Company in one transaction or series of related
transactions having a book value greater than 50% of the book
value of the Company's total assets immediately preceding such
transaction;
(e) a "Fundamental Change" within the meaning of
paragraph (c) of Section C8 of Article IV of the Company's
Restated Certificate of Incorporation;
(f) the Company shall propose, declare or pay a
dividend or other distribution in stock of any Subsidiary other
than Metabasis or Automedics and the Fair Market Value of such
stock plus the Fair Market Value of all other stock of
Subsidiaries (other than Metabasis or Automedics) distributed
since the date of this Agreement to shareholders of the Company
(such Fair Market Value in the case of prior distributions to be
determined as of their respective dates of distribution) exceeds
10% of the Company's consolidated total assets as of the end of
the most recently ended fiscal quarter; or
(g) the Company merges with or into or
consolidates with any other Person and the Surviving Entity is
organized under the laws of a jurisdiction other than the United
States or any State thereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commission" shall mean the Securities and Exchange
Commission.
"Consolidated" or "consolidated", when used with
reference to any financial term in this Agreement (but not when
used with respect to any tax return or tax liability), shall mean
the aggregate for two or more persons of the amounts signified by
such term for all such persons, with inter-company items
eliminated and, with respect to earnings, after eliminating the
portion of earnings properly attributable to minority interests,
if any, in the capital stock of any such person or attributable
to shares of preferred stock of any such person not owned by any
other such person.
"Consolidated Net Income (Loss)" of any Person shall
mean, for any period, the Consolidated net income (or loss) of
such Person and its Subsidiaries for such period on a
Consolidated basis as determined in accordance with generally
accepted accounting principles, adjusted, to the extent included
in calculating such net income (or loss), by excluding, without
duplication, (i) all extraordinary gains (less all fees and
expenses relating thereto), (ii) the portion of net income (or
loss) of such Person and its Subsidiaries on a Consolidated basis
allocable to minority interests in unconsolidated Persons to the
extent that cash dividends or distributions have not actually
been received by such Person or one of its Consolidated
Subsidiaries, (iii) net income (or loss) of any Person combined
with such Person or any of its Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the date of
combination, (iv) any gain or loss, net of taxes, realized upon
the termination of any employee pension benefit plan, (v) net
gains (or losses) (less all fees and expenses relating thereto)
in respect of dispositions of assets other than in the ordinary
course of business, (vi) the net income of any Subsidiary to the
extent that the declaration of dividends or similar distributions
by that Subsidiary of that income is not at the time permitted,
directly or indirectly, by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Subsidiary or
its stockholders, (vii) any restoration to income of any
contingency reserve, except to the extent provision for such
reserve was made out of income accrued at any time following the
date of this Agreement, or (viii) any gain arising from the
acquisition of any securities, or the extinguishment, under
generally accepted accounting principles, of any Indebtedness of
such Person.
"Consolidated Tangible Net Worth" shall mean the
consolidated stockholders' equity of the Company and its
Subsidiaries, less the amount of assets constituting good will,
determined in accordance with generally accepted accounting
principles consistently applied; provided, however, that in the
event of any distribution or issuance of the capital stock of
Metabasis, the consolidated tangible net worth of Metabasis at
the time of such distribution or issuance shall subsequently be
added to (or subtracted from in the case of a deficit) any
calculation of the Consolidated Tangible Net Worth of the Company
for purposes of Article 6.
"Consolidated Total Indebtedness" shall mean
consolidated Indebtedness of the Company and its Subsidiaries,
determined in accordance with generally accepted accounting
principles consistently applied.
"Contingent Warrant" shall have the meaning given such
term in the Warrant.
"Conversion Price" shall mean $3.78, subject to
adjustment as provided in Article 10.
"Conversion Ratio" shall mean the ratio obtained by
dividing each $100 of outstanding principal amount of Notes by
the Conversion Price, subject to adjustment as provided in
Article 10.
"Current Market Price", when used with reference to
shares of Common Stock or other securities on any date, shall
mean the closing price per share of Common Stock or such other
securities on such date and, when used with reference to shares
of Common Stock or other securities for any period shall mean the
average of the daily closing prices per share of Common Stock or
such other securities for such period. The closing price for
each day shall be the last quoted bid price in the over-the-
counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other
system then in use, or, if on any such date the Common Stock or
such other securities are not quoted by any such organization,
the closing bid price as furnished by a professional market maker
making a market in the Common Stock or such other securities
selected by the Board of Directors of the Company. If the Common
Stock is listed or admitted to trading on a national securities
exchange, the closing price shall be the closing bid price,
regular way, as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Common Stock or such other securities are not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect
to securities listed on the principal national securities
exchange on which the Common Stock or such other securities are
listed or admitted to trading. If the Common Stock or such other
securities are not publicly held or so listed or publicly traded,
"Current Market Price" shall mean the Fair Market Value per share
of Common Stock or of such other securities as determined in good
faith by the Board of Directors of the Company based on an
opinion of an independent investment banking firm acceptable to
holders of a majority of the Notes, which opinion may be based on
such assumptions as such firm shall deem to be necessary and
appropriate.
"Current Warrant Price" shall have the meaning given
such term in the Warrant.
"Default" shall mean any event which, with or without
the passage of time, would be an Event of Default.
"Disinterested Director" shall mean, with respect to
any transaction or series of related transactions, a member of
the Board of Directors who does not have any material direct or
indirect financial interest in or with respect to such
transaction or series of related transactions.
"Employee Benefit Plan" shall mean each plan, program,
policy, payroll practice, contract, agreement or other
arrangement providing for compensation, severance, termination
pay, performance awards, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal
or informal, funded or unfunded, written or oral and whether or
not legally binding, including, without limitation, each
"employee benefit plan," within the meaning of Section 3(3) of
ERISA and each "multiemployer plan" within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA, pursuant to which the
Company, any Subsidiary or any ERISA Affiliate has or may have
any liability, contingent or otherwise.
"Environmental Laws" shall mean, at any date, all
provisions of federal, state, local or foreign law (including
applicable principles of common and civil law), statutes,
ordinances, rules, regulations, published standards and
directives that have the force and effect of Laws, permits,
licenses, judgments, writs, injunctions, decrees and orders
enacted, promulgated or issued by any Public Authority, and all
indemnity agreements and other contractual obligations, as in
effect at such date, relating to (i) the protection of the
environment, including the air, surface and subsurface soils,
surface waters, groundwaters and natural resources, and (ii)
occupational health and safety and exposure of persons to
Hazardous Materials. Environmental Laws shall include the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Sections 9601 et seq., and any other Laws imposing
or creating liability with respect to Hazardous Materials.
"Environmental Liability" shall mean any liabilities,
obligations, costs, losses, payments or damages, including
compensatory and punitive damages, incurred (i) to contain,
remove, clean up, assess, ▇▇▇▇▇ or otherwise remedy any actual or
alleged release or threatened release of Hazardous Materials, any
actual or alleged contamination (by Hazardous Materials) of air,
surface or subsurface soil, groundwater or surface water, or any
personal injury or damage to natural resources or property
resulting from any such release or contamination, pursuant to the
requirements of any Environmental Law or in response to any claim
by any Public Authority or other Third Party under any
Environmental Law; (ii) to modify facilities or processes or take
any other remedial action in response to any claim by any Public
Authority of non-compliance with any Environmental Law; (iii) as
a result of the imposition of any civil or criminal fine or
penalty by any Public Authority for the violation or alleged
violation of any Environmental Law; or (iv) as a result of any
action, suit, proceeding or claim by any Third Party under any
Environmental Law. The term "Environmental Liability" shall
include: (i) reasonable fees of counsel and consultants (but not
any corporate allocation for management time or for the use of
similar in-house services or facilities) and (ii) the costs and
expenses of any investigation undertaken to ascertain the
existence or extent of any potential or actual Environmental
Liability.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean each business or entity
which is a member of a "controlled group of corporations," under
"common control" or an "affiliated service group" with the
Company or its Subsidiaries within the meaning of Sections
414(b), (c) or (m) of the Code, or required to be aggregated with
the Company or its Subsidiaries under Section 414(o) of the Code,
or is under "common control" with the Company or its
Subsidiaries, within the meaning of Section 4001(a)(14) of ERISA.
"Event of Default" shall mean each of the happenings or
circumstances enumerated in Section 8.1.
"Excepted Warrant Issues" shall mean (i) an issue of
units comprising debt or preferred stock and warrants exercisable
for Common Stock of the Company in which, on the issue date, the
product of (a) the number of shares of Common Stock of the
Company issuable upon exercise of the warrants multiplied by (b)
the Current Market Price of the Common Stock of the Company does
not exceed 25% of the cash consideration paid for such units and
(ii) the grant of warrants exercisable for Common Stock of the
Company to the lessor of equipment to the Company under a
financing lease which finances the acquisition of such equipment
by the Company (or which refinances such a lease) and which is
principally secured by a first priority security interest in such
equipment.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time. Reference to a particular
section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such
successor federal statute.
"Fair Market Value" shall mean, as to shares of Common
Stock or any other class of capital stock or securities of the
Company or any other issuer which are publicly traded, the
average of the Current Market Prices of such shares of securities
for each day of the Adjustment Period. The "Fair Market Value"
of any security which is not publicly traded or of any other
property shall mean the fair value thereof as determined by an
independent investment banking or appraisal firm experienced in
the valuation of such securities or property selected in good
faith by the Board of Directors of the Company or a committee
thereof, or, if no such investment banking or appraisal firm is
in the good faith judgment of the Board of Directors or such
committee available to make such determination, as determined in
good faith by the Board of Directors of the Company or such
committee.
"Fee Letter" shall mean the letter dated March 17,
1997, from the Purchaser to the Company.
"Gensia Disclosure Schedule" shall mean the disclosure
schedule dated February 28, 1997 delivered by the Company to
Rakepoll Finance pursuant to the Stock Exchange Agreement.
"Governing Instruments" shall mean, collectively, this
Agreement, the Notes, the Warrant Agreement and the Certificate
of Designation.
"Guarantee" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of any Person
guaranteeing, or in effect guaranteeing, any Indebtedness,
dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through
an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
(iii) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or
obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in
respect thereof. For the purposes of any computations made under
this Agreement, a Guarantee in respect of any Indebtedness for
borrowed money shall be deemed to be Indebtedness equal to the
principal amount of the Indebtedness for borrowed money which has
been guaranteed, and a Guarantee in respect of any other
obligation or liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of such
obligation, liability or dividend.
"Hazardous Material" shall mean any substance regulated
by any Environmental Law or which may now or in the future form
the basis for any Environmental Liability.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations thereunder.
"Indebtedness" shall mean, with respect to any person,
(i) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind, (ii) all obligations
of such person evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of such person under
conditional sale or other title retention agreements relating to
property purchased by such person, (iv) all obligations of such
person issued or assumed as the deferred purchase price of
property or services (other than accounts payable to suppliers
and similar accrued liabilities incurred in the ordinary course
of business and paid in a manner consistent with industry
practice), (v) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such person whether or
not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such person, (vii) all
Guarantees of such person, (viii) all obligations (including but
not limited to reimbursement obligations) relating to the
issuance of letters of credit for the account of such person,
(ix) all obligations arising out of foreign exchange contracts,
and (x) all Swap Contracts.
"Liquidation Value" shall mean the outstanding
principal amount of any Note.
"Multiemployer Plan" shall mean each Employee Benefit
Plan which is a "multiemployer plan" within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA.
"Non-Disclosable Contracts" shall mean Contracts to
which the Company or any Subsidiary is a party with or for the
benefit of any officer, director or Affiliate of the Company or
any Subsidiary or Associate thereof meeting none of the
disclosure requirements nor any of the exhibit filing
requirements for an annual, quarterly or periodic report on Form
10-K, 10-Q or 8-K of the Company covering reporting periods that
include any of the date of this Agreement, the Closing Date, the
date such Contract is entered into or the date or dates of the
Company's performance under such Contract.
"OSHA" shall have the meaning set forth in Section 2.6.
"Outstanding" or "outstanding" shall mean when used
with reference to the Notes at a particular time, all Notes
therefore issued as provided in this Agreement, except (i) Notes
therefore reported as lost, stolen, damaged or destroyed, or
surrendered for transfer, exchange or replacement, in respect to
which replacement Notes have been issued, (ii) Notes therefore
paid in full, and (iii) Notes therefore canceled by the Company
except that, for the purpose of determining whether holders of
the requisite principal amount of Notes have made or concurred in
any waiver, consent, approval, notice or other communication
under this Agreement, Notes registered in the name of, or owned
beneficially by, the Company or any Subsidiary of any thereof,
shall not be deemed to be outstanding.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Pension Plan" shall mean each Employee Benefit Plan
(other than a Multiemployer Plan) which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA and
which is subject to Title IV of ERISA.
"Preferred Ratio" shall have the meaning set forth in
Section 10.1.
"Public Authority" shall mean any supranational,
national, regional, state or local government court, governmental
agency, authority, board, bureau, instrumentality or regulatory
body.
"Rakepoll Disclosure Schedule" shall mean the
disclosure schedule dated February 28, 1997 delivered by Rakepoll
Finance to the Company pursuant to the Stock Exchange Agreement.
"Rights" shall mean the rights to purchase Preferred
Stock issued pursuant to the Rights Agreement.
"Rights Agreement" shall mean the Gensia Stockholders
Rights Agreement, dated March 16, 1992, as amended, between the
Company and ChaseMellon Shareholder Services, L.L., as successor
in interest to First Interstate Bank.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Senior Indebtedness" shall mean and include, as of any
date as of which the amount thereof is to be determined, the
principal of and premium, if any, and interest due on (a) any
Indebtedness, whether outstanding on the date of this Agreement
or thereafter created, incurred or assumed, except for any such
Indebtedness that by the terms of the instrument or instruments
by which such Indebtedness was created or incurred expressly
provides that it (i) is subordinated in right of payment to the
Notes or (ii) ranks pari passu in right of payment with the Notes
and (b) any amendments, renewals, extensions, modifications and
refundings of any such Indebtedness.
"Stated Value" with respect to a share of Preferred
Stock shall mean $100.00 per share.
"Stock Exchange Agreement" shall mean the Stock
Exchange Agreement, dated November 12, 1996, as amended, between
the Company and Rakepoll Finance.
"Subordinated Indebtedness" shall mean all Indebtedness
which is not Senior Indebtedness.
"Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power or the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
"Swap Contract" shall mean any agreement whether or not
in writing, relating to any transaction that is a rate swap,
basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap or option, bond, note or ▇▇▇▇
option, interest rate option, forward foreign exchange
transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other
similar transaction (including any option to enter into any of
the foregoing) or any combination of the foregoing, and, unless
the context otherwise clearly requires, any master agreement
relating to or governing any or all of the foregoing.
"Swap Termination Value" shall mean, in respect of any
one or more Swap Contracts, after taking into account the effect
of any legally enforceable netting agreement relating to such
Swap Contracts, (a) for any date on or after the date such Swap
Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s),
and (b) for any date prior to the date referenced in subclause
(a) the amount(s) determined as the ▇▇▇▇-to-market value(s) for
such Swap Contracts, as determined by the Company based upon one
or more mid-market or other readily available quotations provided
by any recognized dealer in such Swap Contracts.
"Third Party" shall mean a person who or which is
neither the Company or its Subsidiaries nor the Purchaser.
"Trading Day" shall mean a Business Day or, if the
Common Stock is listed or admitted to trading on any national
securities exchange, a day on which such exchange is open for the
transaction of business.
"Voting Securities" shall mean at any time shares of
any class of capital stock of the Company which are then entitled
to vote generally in the election of directors.
"Warrant Value" shall mean at any time an amount (not
less than $0) equal to the product of (i) the number of shares of
Common Stock previously issued upon exercise of the Contingent
Warrants multiplied by (ii) an amount equal to the difference
between (A) the weighted average of the Current Market Prices of
such shares of Common Stock on the respective exercise dates of
such previously exercised Contingent Warrants less (B) the
weighted average of the Current Warrant Prices of such previously
exercised Contingent Warrants on their respective dates of
exercise.
12.2. Accounting Principles. The character or amount
of any asset, liability, capital account or reserve and of any
item of income or expense required to be determined pursuant to
this Agreement, and any consolidation or other accounting
computation required to be made pursuant to this Agreement, and
the construction of any definition in this Agreement containing a
financial term, shall be determined or made, as the case may be,
in accordance with United States generally accepted accounting
principles, to the extent applicable, unless such principles are
inconsistent with the express requirements of this Agreement.
13. Miscellaneous
13.1. Payments. The Company agrees that, so long as
the Purchaser shall hold any Convertible Securities, it will make
all cash payments thereon in immediately available funds in such
manner as the Purchaser may reasonably request in writing.
13.2. Severability. If any term, provision, covenant
or restriction of this Agreement or any exhibit hereto is held by
a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement and such exhibits shall remain
in full force and effect and shall in no way be affected,
impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid,
void or unenforceable.
13.3. Specific Enforcement. The Purchaser, on the one
hand, and the Company, on the other, acknowledge and agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state thereof
having jurisdiction, this being in addition to any other remedy
to which they may be entitled at law or equity.
13.4. Entire Agreement. This Agreement (including the
documents set forth in the exhibits hereto) and the Fee Letter
between the parties contains the entire understanding of the
parties with respect to the transactions contemplated hereby.
13.5. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement, and shall become effective when one or
more of the counterparts have been signed by each party and
delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
13.6. Notices and Other Communications. All notices,
consents, requests, instructions, approvals, financial
statements, proxy statements, reports and other communications
provided for herein shall be rapidly given, if in writing and
delivered personally, by telecopy or sent by registered mail,
postage prepaid, if to:
THE COMPANY:
Gensia Sicor Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
With a copy to:
Pillsbury Madison & Sutro LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
THE PURCHASER:
Health Care Capital Partners L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or to such other address as any party may, from time to time,
designate in a written notice given in a like manner.
13.7. Amendments. This Agreement may be amended as to
the Purchaser and its successors and assigns, and the Company may
take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Company shall obtain the
written consent of the Purchaser and/or such successors and
assigns who are the registered holders of not less than 66 2/3%
of the outstanding principal amount of the Notes or Stated Value
of the Preferred Stock then held by the Purchaser and its
successors or assigns. This Agreement may not be waived,
changed, modified, or discharged orally, but only by an agreement
in writing signed by the party or parties against whom
enforcement of any waiver, change, modification or discharge is
sought or by parties with the right to consent to such waiver,
change, modification or discharge on behalf of such party.
13.8. Cooperation. The Purchaser and the Company
agree to take, or cause to be taken, all such further or other
actions as shall reasonably be necessary to make effective and
consummate the transactions contemplated by this Agreement.
13.9. Successors and Assigns. All covenants and
agreements contained herein shall bind and inure to the benefit
of the parties hereto and their respective successors and
assigns, it being understood however that the covenants set forth
in Sections 6.12(iii) and (iv), 6.14 and 13.10 shall not inure to
the benefit of any assignee of the Purchaser other than
Affiliates of the Purchaser. Neither this Agreement nor any
rights hereunder may be transferred prior to the Closing Date
without the consent of the other party, except that the Purchaser
may assign any of its rights and obligations hereunder to any
fund for which ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. LLC is the general
partner.
13.10. Expenses and Remedies.
(a) Subject to paragraph (d), the Company agrees
to pay the Purchaser for all of its out-of-pocket expenses,
including reasonable outside legal, accounting and consulting
fees of the Purchaser, incurred in connection with this Agreement
and the consummation of all transactions contemplated hereby, and
all costs and expenses relating to any future amendment or
supplement to this Agreement or any of the Securities (or any
proposal by the Company for such amendment or supplement) whether
or not consummated or any waiver or consent with respect thereto
(or any proposal for such waiver or consent) whether or not
consummated, and all costs and expenses of the Purchaser relating
to the enforcement of this Agreement, the Registration Rights
Agreement, the Warrant Agreement or any of the Securities. The
Company shall be entitled to credit the underwriting deposit
previously paid by it to the Purchaser pursuant to the Fee Letter
against such expense reimbursement obligation.
(b) The Company further agrees to indemnify and
save harmless the Purchaser and its officers, directors,
partners, employees, trustees and agents, each person who
controls the Purchaser within the meaning of the Securities Act
or the Exchange Act, from and against any and all costs,
expenses, damages or other liabilities resulting from any breach
of this Agreement by the Company (including the breach of any
covenant or representation or warranty made by the Company) or
any legal, administrative or other proceedings arising out of the
transactions contemplated hereby (other than such costs,
expenses, damages or other liabilities resulting, directly or
indirectly, (i) from the breach by such Purchaser of any of its
agreements contained herein or (ii) from the gross negligence or
willful misconduct of such Purchaser or any of its officers,
directors, partners, employees or agents, or any person who
controls such Purchaser within the meaning of the Securities Act
or the Exchange Act; provided, however, that, if and to the
extent that such indemnification is unenforceable for any reason,
the Company shall make the maximum contribution to the payment
and satisfaction of such indemnified liability which shall be
permissible under applicable laws.
(c) The indemnified party under this Section
13.10 will, promptly after the receipt of notice of the
commencement of any action against such indemnified party in
respect of which indemnity may be sought from the Company on
account of an indemnity agreement contained in this Section
13.10, notify the Company in writing of the commencement thereof.
The omission of any indemnified party so to notify the Company of
any such action shall not relieve the Company from any liability
which it may have to such indemnified party except to the extent
the Company shall have been materially prejudiced by the omission
of such indemnified party so to notify the Company, pursuant to
this Section 13.10. In case any such action shall be brought
against any indemnified party and it shall notify the Company of
the commencement thereof, the Company shall be entitled to
participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party, and after notice from the Company to
such indemnified party of its election so to assume the defense
thereof, the Company will not be liable to such indemnified party
under this Section 13.10 for any legal or other expense
subsequently incurred by such indemnified party in connection
with the defense thereof nor for any settlement thereof entered
into without the consent of the Company; provided, however, that
(i) if the Company shall elect not to assume the defense of such
claim or action or (ii) if the indemnified party reasonably
determines (x) that there may be a conflict between the positions
of the Company and of the indemnified party in defending such
claim or action or (y) that there may be legal defenses available
to such indemnified party different from or in addition to those
available to the Company, then separate counsel for the
indemnified party shall be entitled to participate in and conduct
the defense, in the case of (i) and (ii)(x), or such different
defenses, in the case of (ii)(y), and the Company shall be liable
for any reasonable legal or other expenses incurred by the
indemnified party in connection with the defense.
(d) If the Closing shall fail to occur solely as
a result of the failure of the Purchaser to receive funding from
its limited partners pursuant to the Purchaser's capital call
following the satisfaction of all other conditions to Purchaser's
obligations hereunder, (i) the Company shall be entitled to a
refund of (A) the underwriting deposit paid pursuant to the Fee
Letter, and (B) the transaction fee paid pursuant to Section 1.6,
and (ii) Purchaser shall pay the Company for all of its out-of-
pocket expenses, including reasonable outside legal and
accounting fees. Further, the Company shall not be required to
pay the costs, expenses and fees referred to in paragraph (a) of
this Section 13.10.
13.11. Survival of Representations and Warranties.
All representations and warranties contained herein or made in
writing by any party in connection herewith shall survive the
execution and delivery of this Agreement and the issuance and
delivery of the Securities, regardless of any investigation made
by or on behalf of any party.
13.12. Transfer of Securities. The Purchaser
understands and agrees that the Securities have not been
registered under the Securities Act or the securities laws of any
state and that they may be sold or otherwise disposed of only in
one or more transactions registered under the Securities Act and,
where applicable, such laws or transactions as to which an
exemption from the registration requirements of the Securities
Act and, where applicable, such laws are available. The
Purchaser acknowledges that, except as provided in the
Registration Rights Agreement, the Purchaser has no right to
require the Company to register the Securities. The Purchaser
understands and agrees that each Note or certificate representing
the Securities shall bear the following legend:
"[THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE]
[THIS NOTE HAS] NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
13.13. Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the
laws of the State of Delaware.
13.14. Term. Unless an Event of Default shall have
occurred and be continuing, this Agreement shall terminate on May
1, 2004, except that Sections 6.18 and 13.10 shall survive the
termination of this Agreement.
13.15. Publicity. Each of the parties hereto agrees
that it will make no statement regarding the transactions
contemplated hereby unless such statement has been approved by
both of the parties hereto. Notwithstanding the foregoing, each
of the parties hereto may, in documents required to be filed by
it with the Commission or other regulatory bodies, make such
statements with respect to the transactions contemplated hereby
as each may be advised is legally necessary upon advice of its
counsel.
13.16. Signatures. This Agreement shall be effective
upon delivery of original signature pages or facsimile copies
thereof executed by each of the parties hereto.
IN WITNESS WHEREOF, the Company and the Purchaser have
caused this Agreement to be executed and delivered by their
respective officers thereunto duly authorized.
GENSIA SICOR INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
HEALTH CARE CAPITAL PARTNERS L.P.
By:▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& CO. LLC., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Member
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
GENSIA SICOR INC.
2.675% Subordinated Convertible Notes
due May 1, 2004
No. 1 San Diego, CA
------------, 1997
[$20,000,000.00](1)
[FN]
(1) Registered holders and denomination of each Note to be
determined. Aggregate amount of Notes issued to total
$20,000,000.
GENSIA SICOR INC. (the "Company"), a Delaware
corporation, for value received, hereby promises to pay to
[HEALTH CARE CAPITAL PARTNERS, L.P.], or registered assigns, the
principal amount of TWENTY MILLION AND 00/100 DOLLARS
[$20,000,000.00] on May 1, 2004, with interest (computed on the
basis of a 360-day year of twelve 30-day months) on the unpaid
balance of such principal amount at the rate of 2.675% per annum
from the date hereof, payable quarterly, in arrears, on the last
business day of March, June, September and December, until such
unpaid balance shall become due and payable (whether at maturity
or at a date fixed for redemption or by declaration or
otherwise). During the continuance of any Default or Event of
Default, the Company shall pay interest on the outstanding
principal of, and any other amounts (other than interest), if
any, due on the Notes and (to the extent legally enforceable) on
any overdue installment of interest, at the rate of 11.75% per
annum (computed on the same basis as above) until such overdue
amount is paid or until such Default or Event of Default is
cured. All payments on this Note shall be made in lawful money
of the United States of America at the address specified by the
holder hereof for such purpose in the Purchase Agreement, in the
manner set forth in the Purchase Agreement.
This Note is one of the Company's 2.675% Convertible
Subordinated Notes due May 1, 2004 originally issued in the
aggregate principal amount of $20,000,000.00 pursuant to the
Purchase Agreement. The registered holder of this Note is
entitled to the benefits of such Purchase Agreement and may
enforce the agreements of the Company contained therein and
exercise the remedies provided for thereby or otherwise available
in respect thereof.
This Note is convertible, upon the terms and subject to
the conditions specified in the Purchase Agreement.
This Note is expressly subordinated to the extent and
in the manner provided in Section 11 of the Purchase Agreement to
all Senior Indebtedness (as defined therein) of the Company.
This Note is a registered Note and, as provided in the
Purchase Agreement, is transferable only upon surrender of this
Note for registration of transfer, duly endorsed, or accompanied
by a written instrument of transfer duly executed, by the
registered holder hereof or his attorney duly authorized in
writing. The Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
This Note is subject to redemption, in whole or in
part, all as specified in the Purchase Agreement.
In case an Event of Default, as defined in the Purchase
Agreement, shall occur and be continuing, the unpaid balance of
the principal, interest and any other amounts payable on this
Note may be declared and become due and payable in the manner and
with the effect provided in the Purchase Agreement.
THIS NOTE IS MADE AND DELIVERED IN NEW YORK, NEW YORK,
AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
GENSIA SICOR INC.
By
----------------------------
Title:
Exhibit B
WARRANT
To Purchase Shares of Common Stock of
GENSIA SICOR INC.
Warrant No. [ ]
No. of Shares of Common Stock: 2,645,503
TABLE OF CONTENTS
-----------------
Section Page
------- ----
1. DEFINITIONS 1
2. EXERCISE OF WARRANT 6
2.1. Manner of Exercise 6
2.2. Payment of Taxes 7
2.3. Fractional Shares 7
3. TRANSFER, DIVISION AND COMBINATION 7
3.1. Transfer 7
3.2. Division and Combination 8
3.3. Expenses 8
3.4. Maintenance of Books 8
4. ADJUSTMENTS 8
4.1. Stock Dividends, Subdivisions and Combinations 8
4.2. Certain Other Distributions 9
4.3. Issuance of Additional Shares of Common Stock 10
4.4. Issuance of Warrants or Other Rights 10
4.5. Issuance of Convertible Securities 11
4.6. Superseding Adjustment 12
4.7. Other Provisions Applicable to Adjustments under
this Section 13
4.8. Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets 15
4.9. Other Action Affecting Common Stock 16
4.10. Certain Limitations 16
5. NOTICES TO WARRANT HOLDERS 16
5.1. Notice of Adjustments; Change in Warrant Status 16
5.2. Notice of Corporate Action 17
6. RIGHTS OF HOLDERS 18
6.1. No Impairment 18
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
AUTHORITY 19
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS 19
9. RESTRICTIONS ON TRANSFERABILITY 19
9.1. Restrictive Legend 19
9.2. Registration Rights 20
10. LOSS OR MUTILATION 20
11. LIMITATION OF LIABILITY 20
12. MISCELLANEOUS 20
12.1. Nonwaiver and Expenses 20
12.2. Notice Generally 20
12.3. Remedies 21
12.4. Successors and Assigns 21
12.5. Amendment 21
12.6. Severability 22
12.7. Headings 22
12.8. Governing Law 22
SIGNATURES 23
EXHIBITS
Exhibit A A-1
Exhibit B B-1
EXHIBIT B
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH
LAWS.
No. of Shares of Common Stock: 2,645,503 Warrant No. [ ]
WARRANT
To Purchase Shares of Common Stock of
GENSIA SICOR INC.
THIS IS TO CERTIFY THAT HEALTH CARE CAPITAL PARTNERS
L.P. ("HCCP"), or registered assigns, is entitled, at any time
prior to the Expiration Date (as hereinafter defined), to
purchase from Gensia Sicor Inc., a Delaware corporation (the
"Company"), 2,645,503 shares of Common Stock (as hereinafter
defined and subject to adjustment as provided herein), in whole
or in part, at a purchase price of $4.347 per share, all on the
terms and conditions and pursuant to the provisions hereinafter
set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company after the Closing
Date, other than Warrant Stock.
"Adjustment Period" shall mean the period of five
consecutive Trading Days preceding the date as of which the Fair
Market Value of a security is to be determined.
"Board of Directors" shall mean the board of directors
of the Company.
"Business Day" shall mean any day that is not a
Saturday or Sunday or a day on which banks are required or
permitted to be closed in the State of New York.
"Certificate of Designation" shall mean the Certificate
of Designation establishing the Preferred Stock, dated as of the
Closing Date.
"Closing Date" shall have the meaning set forth in the
Purchase Agreement.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency then administering the
Securities Act and other federal securities laws.
"Common Stock" shall mean (except where the context
otherwise indicates) the Common Stock, $.01 par value, of the
Company as constituted on the Closing Date, and any capital stock
into which such Common Stock may thereafter be changed, and shall
also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares
of Common Stock upon any reclassification thereof which is not
preferred as to dividends or assets over any other class of stock
of the Company and which is not subject to redemption and (ii)
shares of common stock of any successor or acquiring corporation
(as defined in Section 4.8) received by or distributed to the
holders of Common Stock of the Company in the circumstances
contemplated by Section 4.8.
"Convertible Securities" shall mean evidences of
indebtedness, shares of stock or other securities which are
convertible into or exchangeable or exercisable, with or without
payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
"Current Market Price" when used with reference to
shares of Common Stock or other securities on any date, shall
mean the closing price per share of Common Stock or such other
securities on such date and, when used with reference to shares
of Common Stock or other securities for any period shall mean the
average of the daily closing prices per share of Common Stock or
such other securities for such period. The closing price for
each day shall be the last quoted bid price in the over-the-
counter market, as reported by the Nasdaq Stock Market or such
other system then in use, or, if on any such date the Common
Stock or such other securities are not quoted by any such
organization, the closing bid price as furnished by a
professional market maker making a market in the Common Stock or
such other securities selected by the Board of Directors of the
Company. If the Common Stock is listed or admitted to trading on
a national securities exchange, the closing price shall be the
closing bid price, regular way, as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock or such other securities are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Common Stock or such
other securities are listed or admitted to trading. If the
Common Stock or such other securities are not publicly held or so
listed or publicly traded, "Current Market Price" shall mean the
Fair Market Value per share of Common Stock or of such other
securities as determined in good faith by the Board of Directors
of the Company based on an opinion of an independent investment
banking firm acceptable to holders of a majority of the Notes,
which opinion may be based on such assumptions as such firm shall
deem to be necessary and appropriate.
"Current Warrant Price" shall mean, in respect of a
share of Common Stock at any date herein specified, the price at
which a share of Common Stock may be purchased pursuant to this
Warrant on such date or $4.347.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time. Reference to a
particular section of the Exchange Act shall include reference to
the comparable section, if any, of such successor federal
statute.
"Expiration Date" shall mean May 1, 2004.
"Fair Market Value" shall mean, as to shares of Common
Stock or any other class of capital stock or securities of the
Company or any other issuer which are publicly traded, the
average of the Current Market Prices of such shares of securities
for each day of the Adjustment Period. The "Fair Market Value"
of any security which is not publicly traded or of any other
property shall mean the fair value thereof as determined by an
independent investment banking or appraisal firm experienced in
the valuation of such securities or property selected in good
faith by the Board of Directors of the Company or a committee
thereof and acceptable to the Majority Holders.
"Fully Diluted Outstanding" shall mean, when used with
reference to Common Stock, at any date as of which the number of
shares thereof is to be determined, (i) all shares of Common
Stock outstanding at such date and (ii) all shares of Common
Stock issuable in respect of this Warrant, and other options or
warrants to purchase, or securities convertible into, shares of
Common Stock outstanding on such date, the exercise or conversion
price of which is less than the Current Market Price on such
date.
"GAAP" shall mean generally accepted accounting
principles in the United States of America as from time to time
in effect.
"Holder" shall mean the Person in whose name this
Warrant is registered on the books of the Company maintained for
such purpose. "Holders" shall mean, collectively, each Holder of
a Warrant, in the event of any division of this Warrant.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of
shares of Warrant Stock then purchasable upon exercise of all
Warrants.
"Notes" shall mean the 2.675% Subordinated Convertible
Notes due 2004, purchased by HCCP pursuant to the Purchase
Agreement and convertible into either Common Stock or Preferred
Stock.
"Other Property" shall have the meaning set forth in
Section 4.8.
"Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares
thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the
Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates
representing fractional interests in shares of Common Stock. For
the purposes of Sections 4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock
Outstanding shall include all shares of Common Stock issuable in
respect of options or warrants to purchase, or securities
convertible into, shares of Common Stock, the exercise or
conversion price of which is less than the Current Market Price
as of any date on which the number of shares of Common Stock
Outstanding is to be determined.
"Permitted Issuances" shall mean the issuance or
reissuance of any shares of Common Stock (whether treasury shares
or newly issued shares) pursuant to (i) a dividend or
distribution on, or subdivision, combination or reclassification
of, the outstanding shares of Common Stock requiring an
adjustment in the conversion ratio pursuant to Section 4.1(a) or
(ii) shares issued as Stock Milestone Payments or Combination
Milestone Payments pursuant to Section 5.06 of the Development
and Marketing Agreement dated June 13, 1991 with Gensia Clinical
Partners as in effect on the date hereof or pursuant to any
acquisition of BIOFA A.B. on terms approved by the full Board of
Directors or (iii) any restricted stock or stock option plan or
program of the Company involving the grant of options or rights
at below the Current Warrant Price (but the Company will in no
event grant options or rights exercisable at less than 85% of
Current Market Price) so long as the granting of such options or
rights has been approved by the full Board of Directors or a
committee of the Board of Directors on which the director
designated by the Purchaser is a member, or (iv) any option,
warrant, right, or convertible security outstanding as of the
date hereof (other than the rights under the Gensia Stockholder
Rights Agreement dated March 16, 1997 or similar securities).
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by
merger or otherwise of such entity.
"Preferred Stock" shall mean the Company's Series A
Preferred Stock, par value $.01, issuable upon conversion of the
Notes.
"Purchase Agreement" shall mean the Securities Purchase
Agreement, dated May 1, 1997, between the Company and HCCP.
"Registration Rights Agreement" shall mean the
registration rights agreement, dated as of the Closing Date,
between the Company and HCCP.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Trading Day" means a Business Day or, if the Common
Stock is listed or admitted to trading on any national securities
exchange, a day on which such exchange is open for the
transaction of business.
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would
constitute a sale thereof within the meaning of the Securities
Act.
"Transfer Notice" shall have the meaning set forth in
Section 9.2.
"Warrants" shall mean this Warrant and all warrants
issued upon transfer, division or combination of, or in
substitution for, any thereof. All Warrants shall at all times be
identical as to terms and conditions and date, except as to the
number of shares of Common Stock for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the
number of shares of Common Stock being purchased upon exercise of
this Warrant pursuant to Section 2.1, multiplied by (ii) the
Current Warrant Price as of the date of such exercise.
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise
thereof.
2. EXERCISE OF WARRANT
-------------------
2.1. MANNER OF EXERCISE. At any time or from time to
time from and after the Closing Date and until 5:00 P.M., New
York time, on the Expiration Date, Holder may exercise this
Warrant, on any Business Day, for all or any part of the number
of shares of Common Stock purchasable hereunder; PROVIDED,
HOWEVER, that this Warrant shall not be exercisable as to 50% of
the Warrant Stock until (a) after the third anniversary of the
Closing Date and (b) then only if on or before the third
anniversary of the Closing Date (i) the Current Market Price
shall not have exceeded the Current Warrant Price by 250% or more
for 90 consecutive Trading Days and (ii) there shall not have
occurred a Change of Control, as defined in the Purchase
Agreement (such contingently exercisable portion of the Warrant,
the "Contingent Warrant"). From and after the third anniversary
of the Closing Date, any portion of the Contingent Warrant which
is then exercisable and has not previously been exercised shall
expire upon the occurrence of a Change of Control.
In order to exercise this Warrant, in whole or in part,
Holder shall deliver to the Company at its principal office at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (i) a
written notice of Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock
to be purchased, (ii) payment of the Warrant Price and (iii) this
Warrant. Such notice shall be substantially in the form appearing
at the end of this Warrant as Exhibit A, duly executed by Holder.
Upon receipt of the items specified in the second preceding
sentence, the Company shall execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or
certificates representing the aggregate number of full shares of
Common Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share, as hereinafter provided. The
stock certificate or certificates so delivered shall be in such
denomination or denominations as Holder shall request in the
notice and shall be registered in the name of Holder or, subject
to Section 9, such other name as shall be designated in the
notice. This Warrant shall be deemed to have been exercised and
such certificate or certificates shall be deemed to have been
issued, and Holder or any other Person so designated shall be
deemed to have become a holder of record of such shares for all
purposes, as of the date the notice, together with the Warrant
Price and this Warrant, are received by the Company as described
above. If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or
certificates representing Warrant Stock, deliver to Holder a new
Warrant evidencing the right of Holder to purchase the
unpurchased shares of Common Stock called for by this Warrant,
which new Warrant shall in all other respects be identical with
this Warrant, or, at the request of Holder, appropriate notation
may be made on this Warrant and the same returned to Holder.
Payment of the Warrant Price shall be made at the
option of Holder (i) by certified or official bank check or (ii)
by the surrender of this Warrant to the Company, with a duly
executed exercise notice marked to reflect "Net Issue Exercise,"
and, in either case, specifying the number of shares of Common
Stock to be purchased, during normal business hours on any
Business Day. Upon a Net Issue Exercise, Holder shall be
entitled to receive shares of Common Stock equal to the value of
this Warrant (or the portion thereof being exercised by Net Issue
Exercise) by surrender of this Warrant to the Company together
with notice of such election, in which event the Company shall
issue to Holder a number of shares of the Company's Common Stock
computed as of the date of surrender of this Warrant to the
Company using the following formula:
X = Y x (A-B)
---------
A
Where X = the number of shares of Common Stock to be issued to
Holder;
Y = the number of shares of Common Stock otherwise
purchasable under this Warrant (at the date of such
calculation);
A = the Current Market Price of one share of the Company's
Common Stock (at the date of such calculation);
B = the Current Warrant Price (as adjusted to the date of
such calculation).
2.2. PAYMENT OF TAXES. All shares of Common Stock
issuable upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and without any preemptive
rights. The Company shall pay all expenses in connection with,
and all taxes and other governmental charges that may be imposed
with respect to, the issue or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be
required to issue a fractional share of Common Stock upon
exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such
exercise, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the
Current Market Price per share of Common Stock on the date of
exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9,
transfer of this Warrant and all rights hereunder, in whole or in
part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company referred to in Section 2.1,
together with a written assignment of this Warrant substantially
in the form of Exhibit B hereto duly executed by Holder and funds
sufficient to pay any transfer taxes payable upon the making of
such transfer. Upon such surrender and, if required, such
payment, the Company shall, subject to Section 9, execute and
deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled. A Warrant, if properly
assigned in compliance with Section 9, may be exercised by a new
Holder for the purchase of shares of Common Stock without having
a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9,
this Warrant may be divided into multiple Warrants or combined
with other Warrants upon presentation hereof at the aforesaid
office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are
to be issued, signed by Holder. Subject to compliance with
Section 3.1 and with Section 9, as to any transfer which may be
involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with
such notice.
3.3. EXPENSES. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new
Warrant or Warrants under this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to
maintain, at its aforesaid office, books for the registration and
the registration of transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this
Warrant is exercisable and/or the price at which such shares may
be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4. The
Company shall give each Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at
the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS.
If at any time the Company shall:
(a) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, Additional Shares of
Common Stock,
(b) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this
Warrant is exercisable immediately after the occurrence of any
such event shall be adjusted to equal the number of shares of
Common Stock which a record holder of the same number of shares
of Common Stock for which this Warrant is exercisable immediately
prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current
Warrant Price per share shall be adjusted to equal (A) the
Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such
adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If the Company shall
at any time or from time to time after May 1, 1997 declare,
order, pay or make a dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of
its stock or any other securities or property of any nature
whatsoever by way of dividend, including any distribution of
shares or assets of Metabasis Therapeutics, Inc. or Gensia
Automedics, Inc., and any payment or granting of anything of
value in consideration of the release of a claim brought by
a shareholder against the Company, whether before or after
the Closing Date, on the basis of events or circumstances
occurring prior to the Closing Date ("Pre-Closing
Shareholder Claims") (other than cash, Convertible
Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of
its stock or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or
Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this
Warrant is exercisable shall be adjusted to equal the product of
the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such adjustment by a fraction
(A) the numerator of which shall be the Current Market Price per
share of Common Stock for the period of 20 Trading Days preceding
such record and (B) the denominator of which shall be such
Current Market Price per share of Common Stock less the Fair
Market Value per share of Common Stock of any such dividend or
distribution and (ii) the Current Warrant Price shall be adjusted
to equal (A) the Current Warrant Price multiplied by the number
of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of
shares for which this Warrant is exercisable immediately after
such adjustment. A reclassification of the Common Stock (other
than a change in par value, or from par value to no par value or
from no par value to par value) into shares of Common Stock and
shares of any other class of stock shall be deemed a distribution
by the Company to the holders of its Common Stock of such shares
of such other class of stock within the meaning of this Section
4.2 and, if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock
as a part of such reclassification, such change shall be deemed a
subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section
4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If
at any time the Company shall (except as hereinafter provided)
issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, in exchange for consideration in an amount
per Additional Share of Common Stock less than the Current
Warrant Price at the time the Additional Shares of Common Stock
are issued, then (i) the Current Warrant Price as to the number
of shares for which this Warrant is exercisable prior to such
adjustment shall be reduced to a price determined by dividing (A)
an amount equal to the sum of (x) the number of shares of Common
Stock Outstanding immediately prior to such issue or sale
multiplied by the then existing Current Warrant Price, plus (y)
the consideration, if any, received by the Company upon such
issue or sale, by (B) the total number of shares of Common Stock
Outstanding immediately after such issue or sale; and (ii) the
number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by
multiplying the Current Warrant Price in effect immediately prior
to such issue or sale by the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such issue
or sale and dividing the product thereof by the Current Warrant
Price resulting from the adjustment made pursuant to clause (i)
above.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any
time the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a distribution
of, or shall in any manner (whether directly or by assumption in
a merger in which the Company is the surviving corporation) issue
or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible
Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such
Warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant
Price in effect immediately prior to the time of such issue or
sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as
provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock issuable pursuant to all such
warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to
have been issued and outstanding and the Company shall have
received all of the consideration payable therefor, if any, as of
the date of the actual issuance of the number of shares for which
this Warrant is exercisable and such warrants or other rights. No
further adjustments of the Current Warrant Price shall be made
upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon
the actual issue of such Common Stock upon such conversion or
exchange of such Convertible Securities. Notwithstanding the
foregoing, no adjustment shall be required under this Section 4.4
solely by reason of the issuance of stock purchase rights under a
stockholder rights plan of the Company, provided that the
adjustments required by this Section 4.4 shall be made if any
"flip-in" or "flip-over" event shall occur under such stockholder
rights plan.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any
time the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a distribution
of, or shall in any manner (whether directly or by assumption in
a merger in which the Company is the surviving corporation) issue
or sell, any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon such
conversion or exchange shall be less than the Current Warrant
Price in effect immediately prior to the time of such issue or
sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as
provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the
conversion or exchange of all such Convertible Securities shall
be deemed to have been issued and outstanding and the Company
shall have received all of the consideration payable therefor, if
any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the number of shares for which this
Warrant is exercisable and the Current Warrant Price shall be
made under this Section 4.5 upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if
any such adjustment shall previously have been made upon the
issuance of such warrants or other rights pursuant to Section
4.4. No further adjustments of the number of shares for which
this Warrant is exercisable and the Current Warrant Price shall
be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and, if any
issue or sale of such Convertible Securities is made upon
exercise of any warrant or other right to subscribe for or to
purchase any such Convertible Securities for which adjustments of
the number of shares for which this Warrant is exercisable and
the Current Warrant Price have been or are to be made pursuant to
other provisions of this Section 4, no further adjustments of the
number of shares for which this Warrant is exercisable and the
Current Warrant Price shall be made by reason of such issue or
sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any
adjustment of the number of shares of Common Stock for which this
Warrant is exercisable and the Current Warrant Price shall have
been made pursuant to Section 4.4 or Section 4.5 as the result of
any issuance of warrants, rights or Convertible Securities,
(a) such warrants or rights, or the right of
conversion or exchange in such other Convertible Securities,
shall expire, and all or a portion of such warrants or
rights, or the right of conversion or exchange with respect
to all or a portion of such other Convertible Securities, as
the case may be, shall not have been exercised, or
(b) the consideration per share for which shares of
Common Stock are issuable pursuant to such warrants or
rights, or the terms of such other Convertible Securities,
shall be increased solely by virtue of provisions therein
contained for an automatic increase in such consideration
per share upon the occurrence of a specified date or event,
then for each outstanding Warrant such previous adjustment shall
be rescinded and annulled and the Additional Shares of Common
Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a recomputation shall be
made of the effect of such rights or options or other Convertible
Securities on the basis of
(c) treating the number of Additional Shares of Common
Stock or other property, if any, theretofore actually issued
or issuable pursuant to the previous exercise of any such
warrants or rights or any such right of conversion or
exchange, as having been issued on the date or dates of any
such exercise and for the consideration actually received
and receivable therefor, and
(d) treating any such warrants or rights or any such
other Convertible Securities which then remain outstanding
as having been granted or issued immediately after the time
of such increase of the consideration per share for which
shares of Common Stock or other property are issuable under
such warrants or rights or other Convertible Securities;
whereupon a new adjustment of the number of shares of Common
Stock for which this Warrant is exercisable and the Current
Warrant Price shall be made, which new adjustment shall
supersede the previous adjustment so rescinded and annulled.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. The following provisions shall be applicable to
the making of adjustments of the number of shares of Common Stock
for which this Warrant is exercisable and the Current Warrant
Price provided for in this Section 4:
(a) COMPUTATION OF CONSIDERATION. To the extent that
any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for
or purchase any Additional Shares of Common Stock or any
Convertible Securities shall be issued for cash
consideration, the consideration received by the Company
therefor shall be the amount of the cash received by the
Company therefor, or, if such Additional Shares of Common
Stock or Convertible Securities are offered by the Company
for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities
are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering
price (in any such case subtracting any amounts paid or
receivable for accrued interest or accrued dividends and
without taking into account any compensation, discounts or
expenses paid or incurred by the Company for and in the
underwriting of, or otherwise in connection with, the
issuance thereof). To the extent that such issuance shall
be for a consideration other than cash, then, except as
herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the Fair Market Value of
such consideration at the time of such issuance. In case
any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for
or purchase such Additional Shares of Common Stock or
Convertible Securities shall be issued in connection with
any merger in which the Company issues any securities, the
amount of consideration therefor shall be deemed to be the
Fair Market Value of such portion of the assets and business
of the nonsurviving corporation as such Board in good faith
shall determine to be attributable to such Additional Shares
of Common Stock, Convertible Securities, warrants or other
rights, as the case may be. The consideration for any
Additional Shares of Common Stock issuable pursuant to any
warrants or other rights to subscribe for or purchase the
same shall be the consideration received by the Company for
issuing such warrants or other rights plus the additional
consideration payable to the Company upon exercise of such
warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the
terms of any Convertible Securities shall be the
consideration received by the Company for issuing warrants
or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or
payable to the Company in respect of the subscription for or
purchase of such Convertible Securities, plus the additional
consideration, if any, payable to the Company upon the
exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time
of any Additional Shares of Common Stock or Convertible
Securities in payment or satisfaction of any dividends upon
any class of stock other than Common Stock, the Company
shall be deemed to have received for such Additional Shares
of Common Stock or Convertible Securities a consideration
equal to the amount of such dividend so paid or satisfied.
If Additional Shares of Common Stock are sold as a unit with
other securities or rights of value, the aggregate
consideration received for such Additional Shares of Common
Stock shall be deemed to be net of the Fair Market Value of
such other securities or rights of value. If Additional
Shares of Common Stock or warrants, rights or Convertible
Securities are issued in consideration for the release of
Pre-Closing Shareholder Claims, the consideration for such
Additional Shares of Common Stock or warrants, rights or
Convertible Securities shall be deemed to be $0.
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments
required by this Section 4 shall be made whenever and as
often as any specified event requiring an adjustment shall
occur, except that any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable that
would otherwise be required may be postponed (except in the
case of a subdivision or combination of shares of the Common
Stock, as provided for in Section 4.1) up to, but not beyond
the date of exercise if such adjustment either by itself or
with other adjustments not previously made results in an
increase or decrease of less than 1% of the shares of Common
Stock for which this Warrant is exercisable immediately
prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount
(except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with
other adjustments required by this Section 4 and not
previously made, would result in a minimum adjustment or on
the date of exercise. For the purpose of any adjustment,
any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(c) FRACTIONAL INTERESTS. In computing adjustments
under this Section 4, fractional interests in Common Stock
shall be taken into account to the nearest 1/100th of a
share.
(d) WHEN ADJUSTMENT NOT REQUIRED. If the Company
shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights,
then thereafter no adjustment shall be required by reason of
the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(e) ESCROW OF WARRANT STOCK. If, after any property
becomes distributable pursuant to this Section 4 by reason
of the taking of any record of the holders of Common Stock,
but prior to the occurrence of the event for which such
record is taken, Holder exercises this Warrant, any
Additional Shares of Common Stock issuable upon exercise by
reason of such adjustment shall be deemed the last shares of
Common Stock for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein)
and such shares or other property shall be held in escrow
for Holder by the Company to be issued to Holder when and to
the extent that the event actually takes place, upon payment
of the then Current Warrant Price. Notwithstanding any
other provision to the contrary herein, if the event for
which such record was taken fails to occur or is rescinded,
then such escrowed shares shall be canceled by the Company
and escrowed property returned.
(f) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever
the Board of Directors of the Company shall be required to
make a determination in good faith of the fair value of any
item under this Section 4, such determination may be
challenged in good faith by the Majority Holders, and any
dispute shall be resolved by an investment banking firm of
recognized national standing selected by the Company and
acceptable to the Majority Holders.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER,
CONSOLIDATION OR DISPOSITION OF ASSETS. In case the Company
shall reorganize its capital, reclassify its capital stock,
consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a
change in or distribution with respect to the Common Stock of the
Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another
corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets,
shares of common stock of the successor or acquiring corporation,
or any cash, shares of stock or other securities or property of
any nature whatsoever (including warrants or other subscription
or purchase rights) in addition to or in lieu of common stock of
the successor or acquiring corporation ("Other Property"), are to
be received by or distributed to the holders of Common Stock of
the Company, then Holder shall have the right thereafter to
receive, upon exercise of this Warrant and payment of the Warrant
Price, the number of shares of common stock of the successor or
acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of
such reorganization, reclassification, merger, consolidation or
disposition of assets by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets,
the successor or acquiring corporation (if other than the
Company) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by
resolution of the Board of Directors of the Company) in order to
provide for adjustments of shares of the Common Stock for which
this Warrant is exercisable which shall be as nearly equivalent
as practicable to the adjustments provided for in this Section 4.
For purposes of this Section 4.8, "common stock of the successor
or acquiring corporation" shall include stock of such corporation
of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is
not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights
to subscribe for or purchase any such stock. The foregoing
provisions of this Section 4.8 shall similarly apply to
successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at
any time or from time to time the Company shall take any action
in respect of its Common Stock, other than any action described
in this Section 4, then the number of shares of Common Stock or
other stock for which this Warrant is exercisable and/or the
purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
4.10. CERTAIN LIMITATIONS. Notwithstanding
anything herein to the contrary, the Company agrees not to enter
into any transaction which, by reason of any adjustment
hereunder, would cause the Current Warrant Price to be less than
the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS; CHANGE IN WARRANT STATUS.
(a) Whenever the number of shares of Common Stock for which this
Warrant is exercisable, or whenever the price at which a share of
such Common Stock may be purchased upon exercise of the Warrants,
shall be adjusted pursuant to Section 2.1 or Section 4, the
Company shall forthwith prepare a certificate to be executed by
the chief financial officer of the Company setting forth, in
reasonable detail, the event requiring the adjustment and the
method by which such adjustment was calculated (including a
description of the basis on which the Board of Directors of the
Company determined the Fair Market Value of any evidences of
indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in
Section 4.2 or 4.7(a)), specifying the number of shares of Common
Stock for which this Warrant is exercisable and (if such
adjustment was made pursuant to Section 4.8 or 4.9) describing
the number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any change in
the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly cause a signed
copy of such certificate to be delivered to each Holder in
accordance with Section 13.2. The Company shall keep at its
principal office copies of all such certificates and cause the
same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a
Warrant designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to
receive a dividend (other than a cash dividend payable out
of earnings or earned surplus legally available for the
payment of dividends under the laws of the jurisdiction of
incorporation of the Company) or other distribution, or any
right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the
capital stock of the Company or any consolidation or merger
of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets
or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to
Holder (i) at least 20 days' prior written notice of the date on
which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in
respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at
least 20 days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing
clause also shall specify (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the
amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is
to take place and the time, if any such time is to be fixed, as
of which the holders of Common Stock shall be entitled to
exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of
Holder appearing on the books of the Company and delivered in
accordance with Section 13.2.
6. RIGHTS OF HOLDERS
6.1 NO IMPAIRMENT. The Company shall not by any
action, including, without limitation, amending its Certificate
of Incorporation or comparable governing instruments or through
any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to
protect the rights of Holder against impairment. Without
limiting the generality of the foregoing, the Company will (a)
not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its best
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as
may be necessary to enable the Company to perform its obligations
under this Warrant.
Upon the request of Holder, the Company will at any
time during the period this Warrant is outstanding acknowledge in
writing, in form reasonably satisfactory to Holder, the
continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at
all times reserve and keep available for issue upon the exercise
of Warrants such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full
of all outstanding Warrants. All shares of Common Stock which
shall be so issuable, when issued upon exercise of any Warrant
and payment therefor in accordance with the terms of such
Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an
adjustment reducing the Current Warrant Price below the then par
value, if any, of the shares of Common Stock issuable upon
exercise of the Warrants, the Company shall take any corporate
action which may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of
such Common Stock at such adjusted Current Warrant Price.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by
the Company to the holders of its Common Stock with respect to
which any provision of Section 4 refers to the taking of a record
of such holders, the Company will in each such case take such a
record and will take such record as of the close of business on a
Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its
stock transfer books or Warrant transfer books so as to result in
preventing or delaying the exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be
transferred, hypothecated or assigned before satisfaction of the
conditions specified in this Section 9, which conditions are
intended to ensure compliance with the provisions of the
Securities Act with respect to the Transfer of any Warrant or any
Warrant Stock. Holder, by acceptance of this Warrant, agrees to
be bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. Except as otherwise provided
in this Section 9, each Warrant and each certificate for Warrant
Stock initially issued upon the exercise of a Warrant, and each
certificate for Warrant Stock issued to any subsequent transferee
of any such certificate, shall be stamped or otherwise imprinted
with the legend required by Section 13.12 of the Purchase
Agreement:
9.2. REGISTRATION RIGHTS. The holders of Warrants and
Warrant Stock shall have the registration rights set forth in the
Registration Rights Agreement.
10. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of this Warrant and indemnity
reasonably satisfactory to it, and in case of mutilation upon
surrender and cancellation hereof, the Company will execute and
deliver in lieu hereof a new Warrant of like tenor to such
Holder; PROVIDED, in the case of mutilation, no indemnity shall
be required if this Warrant in identifiable form is surrendered
to the Company for cancellation.
11. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative
action by Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of Holder hereof,
shall give rise to any liability of such Holder for the purchase
price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors
of the Company.
12. MISCELLANEOUS
12.1. NONWAIVER AND EXPENSES. No course of dealing
or any delay or failure to exercise any right hereunder on the
part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder's rights, powers or remedies. If the
Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this
Warrant, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not
limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
12.2. NOTICE GENERALLY. Any notice, demand,
request, consent, approval, declaration, delivery or other
communication hereunder to be made pursuant to the provisions of
this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested,
postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at
its last known address appearing on the books of the Company
maintained for such purpose.
(b) If to the Company at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telecopy Number:
or at such other address as may be substituted by notice given as
herein provided. The giving of any notice required hereunder may
be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder shall be
deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three (3) Business Days
after the same shall have been deposited in the United States
mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other
communication to the person designated above to receive a copy
shall in no way adversely affect the effectiveness of such
notice, demand, request, approval, declaration, delivery or other
communication.
12.3. REMEDIES. Each holder of Warrant and Warrant
Stock, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled
to specific performance of its rights under of this Warrant. The
Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of
the provisions of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at
law would be adequate.
12.4. SUCCESSORS AND ASSIGNS. Subject to the
provisions of Sections 3.1, this Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and assigns of
Holder. The provisions of this Warrant are intended to be for
the benefit of all Holders from time to time of this Warrant and,
with respect to Section 9 hereof, holders of Warrant Stock, and
shall be enforceable by any such Holder or holder of Warrant
Stock.
12.5. AMENDMENT. This Warrant and all other
Warrants may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Majority
Holders, PROVIDED that no such Warrant may be modified or amended
to reduce the number of shares of Common Stock for which such
Warrant is exercisable or to increase the price at which such
shares may be purchased upon exercise of such Warrant (before
giving effect to any adjustment as provided therein) without the
prior written consent of the Holder thereof.
12.6. SEVERABILITY. Wherever possible, each
provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any
provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Warrant.
12.7. HEADINGS. The headings used in this Warrant
are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant.
12.8. GOVERNING LAW. This Warrant shall be
governed by the laws of the State of Delaware, without regard to
the provisions thereof relating to conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Warrant
to be duly executed and its corporate seal to be impressed hereon
and attested by its Secretary or an Assistant Secretary.
Dated: , 1997
--------------------
GENSIA SICOR INC.
By:
------------------------------
Name:
Title:
Attest:
By:
-------------------------
Name:
Title:
EXHIBIT A
EXERCISE FORM
[To be executed only upon exercise of Warrant]
Net Issue Exercise No Yes
----- -----
The undersigned registered owner of this Warrant
irrevocably exercises this Warrant for the purchase of ------
Shares of Common Stock of Gensia Sicor Inc. and herewith makes
payment therefor, all at the price and on the terms and
conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and
any securities or other property issuable upon such exercise) be
issued in the name of and delivered to ---------- whose address
is ------------ and, if such shares of Common Stock shall not
include all of the shares of Common Stock issuable as provided in
this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be
delivered to the undersigned.
------------------------------
(Name of Registered Owner)
------------------------------
(Signature of Registered Owner)
------------------------------
(Street Address)
------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with
the name as written upon the face of the within Warrant
in every particular, without alteration or enlargement
or any change whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of
this Warrant hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under
this Warrant, with respect to the number of shares of Common
Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF COMMON STOCK
and does hereby irrevocably constitute and appoint --------------
attorney-in-fact to register such transfer on the books of Gensia
Sicor Inc. maintained for the purpose, with full power of
substitution in the premises.
Dated: Print Name:
----------------- ----------------------
Signature:
-----------------------
Witness:
-----------------------
NOTICE: The signature on this assignment must correspond with
the name as written upon the face of the within Warrant
in every particular, without alteration or enlargement
or any change whatsoever.
EXHIBIT C
FORM OF OPINION OF PILLSBURY MADISON & SUTRO LLP
------------------------------------------------
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation with full corporate power and authority to
own, lease, use and operate its properties as and where such
properties are now owned, leased, used to conduct its business
and operated and such business is now conducted.
2. Each of Gensia Laboratories, Ltd., Gensia Development
Corp., Automedics, Inc. and Aramed, Inc. (the "U.S.
Subsidiaries") is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation with full corporate power and authority to own,
lease, use and operate its properties as and where such
properties are now owned, leased, used to conduct its business
and operated and such business is now conducted. All of the
outstanding shares of the capital stock of each class of each
U.S. Subsidiary have been validly issued, are fully paid and non-
assessable and are owned beneficially and of record by the
Company or a wholly-owned Subsidiary, free and clear of any
liens, charges or encumbrances.
3. The Company has all requisite corporate power and
authority to execute and deliver the Purchase Agreement, the
Registration Rights Agreement, the Warrant Agreement and the
amendment to the Shareholder's Agreement (the "Shareholder's
Agreement Amendment") and to perform its obligations thereunder.
4. The execution and delivery by the Company of the
Purchase Agreement, the Registration Rights Agreement, the
Warrant Agreement and the Shareholder's Agreement Amendment and
the consummation of the transactions contemplated thereby, have
been duly authorized by all necessary corporate action on the
part of the Company. The Purchase Agreement, the Registration
Rights Agreement, the Warrant Agreement and the Shareholder's
Agreement Amendment have been duly executed and delivered by the
Company, and each of them and the Certificate of Designation
constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity and public policy.
5. The Notes and the Warrants have been duly authorized by
all necessary corporate action of the Company; the Preferred
Stock and Common Stock issuable upon conversion of the Notes and
the Preferred Stock in accordance with the terms of the Purchase
Agreement and the Certificate of Designation, or upon exercise of
the Warrants in accordance with the terms of the Warrant
Agreement, will be validly issued, fully paid and nonassessable;
and no holder of any presently outstanding shares of capital
stock has any preemptive rights with respect to the issuance of
the Preferred Stock or the Common Stock. To our knowledge, with
respect to the rights, options or warrants to acquire any
securities of the Company listed on Schedule 2.12 to the Purchase
Agreement, none of (i) the issuance and sale of the Purchased
Securities pursuant to the Purchase Agreement, (ii) the
conversion of the Notes into Preferred Stock or (iii) the
issuance of the Common Stock upon conversion of the Notes or the
Preferred Stock or upon exercise of the Warrants will result in
an adjustment of the exercise price or number of shares issuable
upon the exercise of any such rights, options or warrants.
6. The execution, delivery and performance of each of the
Purchase Agreement, the Registration Rights Agreement, the
Warrant Agreement, the Certificate of Designation and the
Shareholder's Agreement Amendment do not violate any provision of
any statute, rule or regulation(1) by which the Company, or any
of its properties are bound as of the date hereof or conflict
with, result in a breach of any of the terms of, or constitute a
default under, the Certificate of Incorporation, as amended, or
the By-Laws of the Company or, to our knowledge, of any material
agreement or instrument filed as an exhibit to the Company's 1996
Form 10-K or any material judgment, decree, writ, order or other
restriction to which the Company is a party or by which the
Company is bound.
[FN]
(1) Can limit to California, Delaware and U.S. federal law.
7. The interest rate and the penalty interest rate
provided for in the Notes does not violate any laws of the State
of California relating to interest and usury (this opinion will
be based on the statutory usury exemption set forth in Section
25117 of the California Securities Law).
8. To our knowledge, no suit, action, claim, proceeding,
arbitration, investigation, order, judgment or decree and no
inquiry by any administrative agency or governmental body is
pending or overtly threatened against the Company, any
U.S. Subsidiary or any of their respective properties or assets
(a) with respect to the Purchase Agreement, the Registration
Rights Agreement, the Warrant Agreement, the Certificate of
Designation and the Shareholder's Agreement Amendment or the
issuance of the Notes, the Warrants, Preferred Stock or the
Common Stock or any of the transactions contemplated thereby, or
(b) which is not disclosed in the Company's report on Form 10-K
for the year ended December 31, 1996 or the 1996 Financial
Statements which could reasonably likely have a Material Adverse
Effect.
9. No consent, approval or authorization of or filing with
any governmental authority is required in connection with the
execution and delivery of the Purchase Agreement, the
Registration Rights Agreement, the Warrant Agreement, the
Certificate of Designation and the Shareholder's Agreement
Amendment, or the offer, sale and delivery of the Notes and the
Warrants, or the conversion of the Notes or Preferred Stock,
except for any such consent, approval, authorization or filing
which has heretofore been obtained or effected.(2)
[FN]
(2) Can limit to California, Delaware and U.S. federal law.
10. Based in part upon the representations and warranties
contained in the Purchase Agreement, the issuance and sale of the
Notes and the Warrants to the Purchaser, and the conversion of
the Notes and Preferred Stock are exempt from the registration
requirements of the Securities Act of 1933, as amended. It is
not necessary to qualify an indenture in respect of any of the
Notes under the Trust Indenture Act of 1939, as amended.
11. Neither the Company nor any Subsidiary is required to
be registered as an "investment company" under the Investment
Company Act of 1940, as amended.
12. Assuming the representations and warranties of the
Company in Section 2.22(a) of the Purchase Agreement are true and
correct, the purchase and sale of the Notes and the Warrants, the
application of the proceeds of the sale of the Notes and the
Warrants and the consummation of the transactions contemplated by
the Purchase Agreement do not result in any violation of Section
7 of the Securities Exchange Act of 1934, as amended, or
regulations G, T, U or X of the Board of Governors of the Federal
Reserve System (12 CFR Parts 207, 220, 221 and 224,
respectively).
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT between GENSIA SICOR INC. and
HEALTH CARE CAPITAL PARTNERS L.P.Dated as of [ ], 1997
REGISTRATION RIGHTS AGREEMENT, dated as of __________,
1997, between Gensia Sicor Inc., a Delaware corporation (the
"Company") and Health Care Capital Partners L.P. ("HCCP").
1. Background. Pursuant to a Securities Purchase
Agreement, dated as of May 1, 1997 (the "Purchase Agreement"),
between the Company and HCCP, HCCP has purchased from the Company
$20,000,000 principal amount of the Company's 2.675% Subordinated
Convertible Notes due May 1, 2004 (the "Notes") and warrants (the
"Warrants") to purchase shares of the Company's Common Stock, par
value $.01 per share ("Common Stock"). Subject to the terms and
conditions set forth in the Purchase Agreement and certain
related documents, the Notes are convertible into shares of
Series A Convertible Preferred Stock, par value $.01 per share,
of the Company ("Preferred Stock") and the Notes and the
Preferred Stock are convertible into, and the Warrants are
exercisable for, shares of Common Stock. The shares of Common
Stock are referred to herein as the "Registrable Securities."
The Notes, Preferred Stock and Warranties are referred to herein
as the "Convertible Securities."
2. Registration Under Securities Act, etc.
--------------------------------------
2.1. Registration on Request.
-----------------------
(a) Request. Subject to Section 2.8 hereof, at any
time and from time to time after August 28, 1998, upon the
written request of holders (the "Initiating Holders") of
Registrable Securities representing not less than 25% of the
number of shares of Common Stock issuable upon conversion of the
Notes and exercise of the Warrants (excluding Contingent Warrants
not then exercisable or which have expired) that the Company
effect the registration under the Securities Act of all or part
of such Initiating Holders' Registrable Securities, provided that
in no event shall the Company be obligated to register shares of
Common Stock pursuant to such request having a Current Market
Value on the date of such request less than $5 million, the
Company will promptly, and in any event within ten days, give
written notice of such requested registration to all registered
holders of Registrable Securities, and thereupon the Company will
use its best efforts to effect the registration under the
Securities Act of
(i) the Registrable Securities which the Company
has been so requested to register by such Initiating
Holders, and
(ii) all other Registrable Securities which the
Company has been requested to register by the holders
thereof (such holders together with the Initiating Holders
are hereinafter referred to as the "Selling Holders") by
written request given to the Company within ten days after
the giving of such written notice by the Company, all to the
extent requisite to permit the disposition of the
Registrable Securities so to be registered.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1
in connection with an underwritten offering by one or more
Selling Holders of Registrable Securities, no securities other
than Registrable Securities shall be included among the
securities covered by such registration unless the Selling
Holders of not less than a majority of all Registrable Securities
to be covered by such registration shall have consented in
writing to the inclusion of such other securities.
(c) Registration Statement Form. Registrations under
this Section 2.1 shall be on such appropriate registration form
of the Commission as shall be selected by the Company.
(d) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to
have been effected (i) unless a registration statement with
respect thereto has been declared effective by the Commission,
(ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or
court for any reason other than an act or omission of the Selling
Holders and has not thereafter become effective, or (iii) if the
conditions to closing specified in the underwriting agreement, if
any, entered into in connection with such registration are not
satisfied or waived, other than by reason of a failure on the
part of the Selling Holders.
(e) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable
Securities so to be registered shall be selected by the Company;
provided, however, that such underwriter shall be reasonably
satisfactory to the Selling Holders who hold more than 50% of the
Registrable Securities so to be registered.
(f) Priority in Requested Registration. If the
managing underwriter of any underwritten offering shall advise
the Company in writing (with a copy to each Selling Holder of
Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in
such registration exceeds the number which can be sold in such
offering within a price range reasonably related to the then
current market value of the securities, the Company will include
in such registration, to the extent of the number which the
Company is so advised can be sold in such offering, Registrable
Securities requested to be included in such registration, pro
rata among the Selling Holders requesting such registration on
the basis of the percentage of the Registrable Securities then
held by, or issuable upon exercise or conversion of Convertible
Securities then held by, such Selling Holders. In connection
with any such registration to which this Section 2.1(f) is
applicable, no securities other than Registrable Securities shall
be covered by such registration unless the written consent of
Selling Holders holding at least a majority of the Registrable
Securities included in such registration shall have been
obtained.
(g) Limitations on Registration on Request.
Notwithstanding anything in this Section 2.1 to the contrary, in
no event will the Company be required to effect, in the aggregate
pursuant to this Section 2.1, without regard to the holder of
Registrable Securities making such request, (1) more than three
registrations during the term of this Agreement or (2) more than
two registrations in any twelve month period.
2.2. Incidental Registration.
-----------------------
(a) Right To Include Registrable Securities. If the
Company proposes to register any of its securities under the
Securities Act by registration on Forms ▇-▇, ▇-▇ or S-3 or any
successor or similar form(s) (except registrations on such Forms
or similar form(s) solely for registration of securities in
connection with an employee benefit plan or dividend reinvestment
plan or a merger or consolidation and registrations effected
pursuant to Section 6.1 of the Shareholder's Agreement dated as
of November 12, 1996, as amended, between the Company and
Rakepoll Finance unless the written consent of Holders (as
defined in such Shareholder's Agreement) holding at least a
majority of the Registrable Securities (as defined in such
Shareholder's Agreement) included in such registration shall have
been obtained to the inclusion of the Registrable Securities in
such registration), whether or not for sale for its own account,
it will, subject to Section 2.9 hereof, each such time give
prompt written notice to all registered holders of Registrable
Securities of its intention to do so and of such holders' rights
under this Section 2.2. Upon the written request of any such
holder (a "Requesting Holder") made as promptly as practicable
and in any event within 30 days after the receipt of any such
notice (which request shall specify the Registrable Securities
intended to be disposed of by such Requesting Holder), the
Company will, subject to Section 2.9 hereof, use its best efforts
to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to
register by the Requesting Holders thereof; provided, however,
that if, at any time after giving written notice of its intention
to register any securities and prior to the effective date of the
registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination
to each Requesting Holder of Registrable Securities and (i) in
the case of a determination not to register, shall be relieved of
its obligation to register any Registrable Securities in
connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any
holder or holders of Registrable Securities entitled to do so to
request that such registration be effected as a registration
under Section 2.1 and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected
under this Section 2.2 shall relieve the Company of its
obligation to effect any registration upon request under
Section 2.1. The Company will pay all Registration Expenses in
connection with registration of Registrable Securities requested
pursuant to this Section 2.2.
(b) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall inform
the Company by letter of its belief that the number or type of
Registrable Securities requested to be included in such
registration would materially adversely affect such offering,
then the Company will include in such registration, to the extent
of the number and type which the Company is so advised can be
sold in (or during the time of) such offering, (i) first, all
securities proposed by the Company to be sold for its own account
or which the Company is required to register on behalf of any
third party exercising rights similar to those granted in section
2.1(a), (ii) second, such Registrable Securities and all other
securities of the Company requested to be included in such
registration by third parties exercising rights similar to those
granted in Section 2.2(a) pro rata among such holders on the
basis of the estimated gross proceeds of the securities of such
holders requested to be so included, and (iii) third, any other
securities of the Company requested to be included in such
registration.
2.3. Registration on Form S-3. If at any time after
August 28, 1998, (a) any holder of Registrable Securities
requests in writing that the Company file a registration
statement on Form S-3 or any successor thereto for a public
offering of all or any portion of the Registrable Securities held
by such requesting holder and (b) the Company is a registrant
entitled to use Form S-3 or any successor thereto, then, subject
to Section 2.9 hereof, the Company shall use its best efforts to
register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of
disposition specified in such request, including, without
limitation, pursuant to Rule 415 under the Securities Act, the
Registrable Securities specified in such request. Whenever the
Company is required by this Section 2.3 to use its best efforts
to effect the registration of Registrable Securities, each of the
limitations, procedures and requirements of Section 2.1(b), (e)
and (f) (including but not limited to the requirement that the
Company notify all holders from whom a request has not been
received and provide them with the opportunity to participate in
the offering) shall apply to such registration. Notwithstanding
the foregoing, the Company shall not be obligated to effect any
such registration, qualification or compliance pursuant to this
Section 2.3: (i) if the holders, together with the holders of
any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public
(net of any underwriters' discounts or commissions) of less than
$5,000,000; (ii) if the Company has, within the twelve-month
period preceding the date of such request, already effected two
registrations on Form S-3 on behalf of the holders; or (iii) in
any jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service
of process in effecting such registration qualification or
compliance.
2.4. Registration Procedures. (a) If and whenever the
Company is required to use its best efforts to effect the
registration of any Registrable Securities under the Securities
Act as provided in Section 2.1, 2.2 and 2.3, the Company will as
expeditiously as possible:
(i) prepare and (as soon as practicable, and in
any event within 45 days after (a) receipt by the Company of
a request under Section 2.1 or 2.3 or (b) the end of the
period within which requests for registration may be given
to the Company under Section 2.2) file with the Commission
the requisite registration statement to effect such
registration and thereafter use its best efforts to cause
such registration statement to become effective; provided,
however, that the Company may discontinue any registration
of its securities which are not Registrable Securities (and,
under the circumstances specified in Section 2.2(a), its
securities which are Registrable Securities) at any time
prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities
covered by such registration statement for such period as
shall be required for the disposition of all of such
Registrable Securities, provided, that such period need not
exceed (a) 180 days in the case of registration required by
Section 2.1 or 2.2 or (b) two years in the case of
registration required by Section 2.3;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement and the
managing underwriter, if any, such number of conformed
copies of such registration statement and of each such
amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained
in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and
such other documents, as such seller may reasonably request;
(iv) use its best efforts (x) to register or
qualify all Registrable Securities and other securities
covered by such registration statement under such other
securities or blue sky laws of such States of the United
States of America where an exemption is not available and as
the sellers of Registrable Securities covered by such
registration statement shall reasonably request, (y) to keep
such registration or qualification in effect for so long as
such registration statement remains in effect, and (z) to
take any other action which may be reasonably necessary or
advisable to enable such sellers to consummate the
disposition in such jurisdictions of the securities to be
sold by such sellers; provided, however, that the Company
shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements
of this subdivision (iv) be obligated to be so qualified or
to consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other federal or state
governmental agencies or authorities as may be necessary in
the opinion of counsel to the Company and counsel to the
seller or sellers thereof to consummate the disposition of
such Registrable Securities;
(vi) furnish to each seller of Registrable
Securities a signed counterpart of
(x) an opinion of counsel for the Company,
and
(y) a "comfort" letter signed by the
independent public accountants who have certified the
Company's financial statements included or incorporated
by reference in such registration statement
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein)
and, in the case of the accountant's comfort letter, with
respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of
issuer's counsel and in accountant's comfort letters
delivered to the underwriters in underwritten public
offerings of securities (and dated the dates such opinions
and comfort letters are customarily dated) and, in the case
of the accountant's comfort letter, such other financial
matters, and in the case of the legal opinion, such other
legal matters, as the sellers of more than 50% of the
Registrable Securities covered by such registration
statement, or the underwriters, may reasonably request;
(vii) notify each seller of Registrable
Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, in the
judgment of the Company, the prospectus included in such
registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of
the circumstances under which they were made, and at the
request of any such seller promptly prepare and furnish to
it a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, in
the judgment of the Company, as thereafter delivered to the
purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;
(viii) otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission,
and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the
period of at least twelve months, but not more than eighteen
months, beginning with the first full calendar month after
the effective date of such registration statement, which
earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder;
(ix) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the
Company) for all Registrable Securities covered by such
registration statement from and after a date not later than
the effective date of such registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on any
national securities exchange on which Registrable Securities
of the same class and, if applicable, series, covered by
such registration statement are then listed.
(b) The Company may require each seller of Registrable
Securities as to which any registration is being effected to
furnish the Company such information regarding such seller and
the distribution of such securities as the Company may from time
to time reasonably request in writing.
(c) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities that upon receipt of
any notice from the Company of the happening of any event of the
kind described in subdivision (vii) of this Section 2.4, such
holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (vii) of this Section 2.4 and, if so
directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies,
then in such holder's possession, of the prospectus relating to
such Registrable Securities current at the time of receipt of
such notice; provided, however, that any period during which a
holder must discontinue disposition of Registrable Securities
shall not be included in determining whether such registration
has been effective for the period required by Section 2.4(a)(ii).
2.5. Underwritten Offerings.
----------------------
(a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under
Section 2.1 or 2.3, the Company will enter into an underwriting
agreement with such underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to
the Company, each such holder and the underwriters and to contain
such representations and warranties by the Company and such other
terms as are generally prevailing in agreements of that type,
including, without limitation, indemnities to the effect and to
the extent provided in Section 2.8. The holders of the
Registrable Securities proposed to be distributed by such
underwriters will cooperate with the Company in the negotiation
of the underwriting agreement and will give consideration to the
reasonable suggestions of the Company regarding the form thereof.
Any such holder of Registrable Securities shall not be required
to make any representations or warranties to or agreements with
the Company or the underwriters other than representations,
warranties or agreements regarding such holder, such holder's
Registrable Securities, such holder's intended method of
distribution and any other representations required by law.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities
Act as contemplated by Section 2.2 and such securities are to be
distributed by or through one or more underwriters, the Company
will, subject to Section 2.9 hereof, if requested by any
Requesting Holder of Registrable Securities arrange for such
underwriters to include all the Registrable Securities to be
offered and sold by such Requesting Holder among the securities
of the Company to be distributed by such underwriters. Any such
Requesting Holder of Registrable Securities shall not be required
to make any representations or warranties to or agreements with
the Company or the underwriters other than representations,
warranties or agreements regarding such Requesting Holder, such
Requesting Holder's Registrable Securities and such Requesting
Holder's intended method of distribution or any other
representations required by law.
(c) Holdback Agreements. If any registration of
Registrable Securities shall be in connection with an
underwritten public offering, each holder of Registrable
Securities agrees not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Securities Act,
of any Registrable Securities, and not to effect any such public
sale or distribution of any other equity security of the Company
or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (in each case,
other than as part of such underwritten public offering) for such
customary period of time (not exceeding 120 days) as may be
reasonably requested by the underwriter of such offering
beginning on the effective date of such registration statement
(except as part of such registration) provided that each holder
of Registrable Securities has received written notice of such
registration at least 15 days prior to such effective date.
If any registration of Registrable Securities shall be
in connection with an underwritten public offering, the Company
agrees (i) not to effect any public sale or distribution of any
of its equity securities or of any security convertible into or
exchangeable or exercisable for any equity security of the
Company (other than any such sale or distribution of such
securities in connection with any merger or consolidation by the
Company or any subsidiary of the Company of the capital stock or
substantially all the assets of any other person or in connection
with an employee stock option or other benefit plan) during the
15 days prior to, and during the 90-day period beginning on, the
effective date of such registration statement (except as part of
such registration) and (ii) that any agreement entered into after
the date of this Agreement pursuant to which the Company issues
or agrees to issue any privately placed equity securities shall
contain a provision under which holders of such securities agree
not to effect any public sale or distribution of any such
securities during the period referred to in the foregoing clause
(i), including any sale pursuant to Rule 144 under the Securities
Act (except as part of such registration, if permitted).
2.6. Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement,
the Company will give the holders of Registrable Securities
registered under such registration statement, their underwriters,
if any, and their respective counsel and accountants the
opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed
with the Commission, and, to the extent practicable, each
amendment thereof or supplement thereto, and give each of them
such access to its books and records (to the extent customarily
given to underwriters of the Company's securities) and such
opportunities to discuss the business of the Company with its
officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning
of the Securities Act.
2.7. Company Right to Postpone Registration. The
Company shall be entitled to postpone for a reasonable period of
time (but not exceeding 90 days and no more than once in any
twelve month period) the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to
this Agreement if the Company determines, in its reasonable
judgment, that such registration and offering would interfere
with any financing, acquisition, corporate reorganization or
other material transaction involving the Company or any of its
Affiliates or would require premature disclosure thereof and
promptly gives the holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1 or 2.3 written
notice of such delay. If the Company shall so postpone the
filing of a registration statement, such holders of Registrable
Securities requesting registration thereof pursuant to
Section 2.1 or 2.3 shall have the right to withdraw the request
for registration by giving written notice to the Company within
30 days after receipt of the notice of postponement and, in the
event of such withdrawal, such request shall not be counted for
purposes of the requests for registration to which holders of
Registrable Securities are entitled pursuant to Section 2.1 or
2.3 hereof.
2.8. Indemnification.
---------------
(a) Indemnification by the Company. In the event of
any registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and
hold harmless, in the case of any registration statement filed
pursuant to Section 2.1, 2.2 or 2.3, each seller of any
Registrable Securities covered by such registration statement,
its directors, officers, partners, agents and affiliates and each
other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who
controls such seller or any such underwriter within the meaning
of the Securities Act, insofar as losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such
securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not
misleading, and the Company will reimburse such seller and each
such director, officer, partner, agent or affiliate, underwriter
and controlling Person for any legal or any other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding;
provided, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration
statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Company
through an instrument executed by or on behalf of such seller or
underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof; and provided, further, that
the Company shall not be liable to any Person who participates as
an underwriter in the offering or sale of Registrable Securities
or any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such
Person's failure to send or give a copy of the final prospectus,
as the same may be then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person
if such statement or omission was corrected in such final
prospectus so long as such final prospectus, and any amendments
or supplements thereto, have been furnished to such underwriter.
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such seller or any
such director, officer, partner, agent or affiliate or
controlling Person and shall survive the transfer of such
securities by such seller.
(b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration
statement, the Company shall have received an undertaking
satisfactory to it from each holder joining in such registration,
severally and not jointly, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision
(a) of this Section 2.8) the Company, and each director of the
Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller
specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement;
provided, however, that the liability of such indemnifying party
under this Section 2.8(b) shall be limited to the amount of
proceeds received by such indemnifying party in the offering
giving rise to such liability. Such indemnity shall remain in
full force and effect, regardless of any investigation made by or
on behalf of the Company or any such director, officer or
controlling Person and shall survive the transfer of such
securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action
or proceeding involving a claim referred to in the preceding
subdivisions of this Section 2.8, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.8, except to the extent
that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such
indemnified and indemnifying parties is reasonably likely to
exist in respect of such claim, the indemnifying party shall be
entitled to participate in and, to assume the defense thereof,
jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation
unless in such indemnified party's reasonable judgment a conflict
of interest between such indemnified and indemnifying parties
arises in respect of such claim after the assumption of the
defense thereof and the indemnified party notifies the
indemnifying party of such indemnified party's judgment and the
basis therefor. No indemnifying party shall be liable for any
settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably
withheld. No indemnifying party shall, without the consent of
the indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of
such claim or litigation.
(d) Contribution. If the indemnification provided for
in this Section 2.8 shall for any reason be held by a court to be
unavailable to an indemnified party under subparagraph (a) or (b)
hereof in respect of any loss, claim, damage or liability, or any
action in respect thereof, then, in lieu of the amount paid or
payable under subparagraph (a) or (b) hereof, the indemnified
party and the indemnifying party under subparagraph (a) or (b)
hereof shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably
incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of the
Company and the prospective sellers of Registrable Securities
covered by the registration statement which resulted in such
loss, claims, damage or liability, or action in respect thereof,
with respect to the statements or omissions which resulted in
such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations
or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be
appropriate to reflect the relative benefits received by the
Company and such prospective sellers from the offering of the
securities covered by such registration statement. No Person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such
fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this subparagraph (d)
are several in proportion to the relative value of their
respective Registrable Securities covered by such registration
statement and not joint. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding
subdivisions of this Section 2.8 (with appropriate modifications)
shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other
qualification of securities under any federal or state law or
regulation of any governmental authority other than the
Securities Act.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 2.8 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
2.9. Limitations on Registrations of Registrable
Securities. The Company shall not be required to effect any
registration of Registrable Securities pursuant to Section 2.1,
2.2 or 2.3 hereof if it shall deliver to the holder or holders
requesting such registration an opinion of counsel (which opinion
and counsel shall be reasonably satisfactory to such holder or
holders) to the effect that all Registrable Securities held by
such holder may be sold in the public market without registration
under the Securities Act and any applicable state Securities
laws.
2.10 Expenses. The Company will pay the Registration
Expenses in connection with any registration requested pursuant
to Section 2.1, 2.2 or 2.3.
3. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following
respective meanings:
"Commission" means the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules
and regulations of the Commission thereunder, all as the same
shall be in effect at the time. Reference to a particular
section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any
such similar Federal statute.
"Person" means a corporation, an association, a
partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental
agency.
"Registration Expenses" means all expenses incident to
the Company's performance of or compliance with Section 2,
including, without limitation, all registration, filing and NASD
fees, all listing fees, all fees and expenses of complying with
securities or blue sky laws (including, without limitation,
reasonable fees and disbursements of counsel for the underwriters
in connection with blue sky qualifications of the Registrable
Securities), all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent
public accountants, including the expenses of "cold comfort"
letters required by or incident to such performance and
compliance, any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities and the
reasonable fees and expenses of one counsel to the Selling
Holders (selected by Selling Holders representing at least 50% of
the Registrable Securities covered by such registration);
provided, however, that Registration Expenses shall exclude, and
the sellers of the Registrable Securities being registered shall
pay, underwriters' fees and underwriting discounts and
commissions, expenses incurred in connection with promotional
efforts or "roadshows" and transfer taxes in respect of the
Registrable Securities being registered.
"Registrable Securities" has the meaning set forth in
Section 1 hereof. As to any particular Registrable Securities,
once issued such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) they shall have
been sold as permitted by, and in compliance with, Rule 144 (or
successor provision) promulgated under the Securities Act,
(c) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer under
the Securities Act shall have been delivered by the Company and
subsequent public distribution of them shall not require
registration of them under the Securities Act, or (d) they shall
have ceased to be outstanding.
"Securities Act" means the Securities Act of 1933, or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time. References to a particular section of the Securities Act
of 1933 shall include a reference to the comparable section, if
any, of any such similar federal statute.
"Selling Holders" has the meaning set forth in Section
2.1(a)(ii).
4. Rule 144. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities
to sell such securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from
time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the
generality of the foregoing, using its best efforts to file on a
timely basis all reports required to be filed by the Exchange
Act. Upon the request of any holder of Registrable Securities,
the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended
with the consent of the Company and the Company may take any
action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or
omission to act, of the beneficial owner or owners of at least 66-
2/3% of the Registrable Securities. Each beneficial owner of any
Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 5,
whether or not such Registrable Securities shall have been marked
to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its election
in writing delivered to the Company, be treated as the holder of
such Registrable Securities for purposes of any request or other
action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or
percentage of Registrable Securities held by any holder or
holders of Registrable Securities contemplated by this Agreement.
If the beneficial owner of any Registrable Securities so elects,
the Company may require assurances reasonably satisfactory to it
of such owner's beneficial ownership of such Registrable
Securities.
7. Notices. All communications provided for hereunder
shall be sent by courier or other overnight delivery service,
shall be effective upon receipt, and shall be addressed as
follows:
(a) if to HCCP, addressed to it in the manner set
forth in the Purchase Agreement, or at such other address as HCCP
shall have furnished to the Company in writing;
(b) if to any other holder of Registrable Securities,
at the address that such holder shall have furnished to the
Company in writing, or, until any such other holder so furnishes
to the Company an address, then to and at the address of the last
holder of such Registrable Securities who has furnished an
address to the Company; or
(c) if to the Company, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address as
the Company shall have furnished to each holder of Registrable
Securities at the time outstanding.
8. Assignment; Calculation of Percentage Interests in
Registrable Securities.
(a) This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and, with
respect to the Company, its respective successors and assigns
and, with respect to HCCP, any beneficial owner of any
Registrable Securities, subject to the provisions respecting the
minimum numbers of percentages of shares of Registrable
Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. HCCP (and not any other
holder of Registrable Securities or any other Person) shall be
permitted, in connection with a transfer or disposition of
Registrable Securities permitted by the Purchase Agreement, to
impose conditions or constraints on the ability of the
transferee, as a holder of Registrable Securities, to request a
registration pursuant to Section 2.1 or 2.3 and shall provide the
Company with copies of such conditions or constraints and the
identity of such transferees.
(b) For purposes of this Agreement, all references to
a percentage of the Registrable Securities shall be calculated
based upon the number of Registrable Securities outstanding at
the time such calculation is made, assuming the conversion of all
Notes and shares of Preferred Stock into, and the exercise of all
Warrants for, shares of Common Stock.
9. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted
for reference only and shall not limit or otherwise affect the
meaning hereof.
10. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware.
11. No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities
which (a) is inconsistent with the rights granted to the holders
of Registrable Securities in this Agreement or (b) grants
registration rights to any security holder unless at the time
holders of the Registrable Securities have or are granted without
further consideration no less favorable registration rights.
Except as disclosed on Schedule 11 hereto, the Company has not
previously entered into any agreement with respect to any of its
equity securities granting any registration rights to any person.
12. Recapitalizations, etc. In the event that any capital
stock or other securities are issued in respect of, in exchange
for, or in substitution of, any Registrable Securities by reason
of any reorganization, recapitalization, reclassification,
merger, consolidation, spin-off, partial or complete liquidation,
stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Registrable
Securities or any other change in the Company's capital
structure, appropriate adjustments shall be made in this
Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights and obligations of the parties
hereto under this Agreement.
13. Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any
provision hereof is validly asserted as a defense, the prevailing
party to such action or proceeding shall be entitled to recover
reasonable attorneys' fees in addition to any other available
remedy.
14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their respective
officers thereunto duly authorized as of the date first above
written.
GENSIA SICOR INC.
By:-------------------------------
Name:
Title:
HEALTH CARE CAPITAL PARTNERS L.P.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO. LLC,
its General Partner
By:-------------------------------
Name:
Title:
EXHIBIT E
GENSIA SICOR INC.
CERTIFICATE OF DESIGNATION
OF SERIES A CONVERTIBLE
PREFERRED STOCK
Pursuant to Section 151(g) of the General Corporation
Law of the State of Delaware, Gensia Sicor Inc. (the
"Corporation"), a corporation organized and existing under the
General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board
of Directors of the Corporation by paragraph (A) of Article IV of
the Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), and in accordance with the
provisions of Section 151(g) of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation
on [__________], 1997, adopted the following resolution creating
a series of Preferred Stock designated as Series A Convertible
Preferred Stock.
RESOLVED that, pursuant to the authority vested in the
Board of Directors of the Corporation in accordance with the
General Corporation Law of the State of Delaware and the
provisions of the Certificate of Incorporation, a series of the
class of authorized Preferred Stock, par value $.01 per share, of
the Corporation is hereby created and that the designation and
number of shares thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the
shares of such series, and the qualifications, limitations and
restrictions thereof, are as follows:
Section 1. DESIGNATION AND NUMBER. (a) The shares of
such series shall be designated "Series A Convertible Preferred
Stock" (the "Series A Preferred Stock"). The number of shares
initially constituting the Series A Preferred Stock shall be
200,000, which number may be decreased (but not increased) by the
Board of Directors without a vote of stockholders; PROVIDED,
HOWEVER, that such number may not be decreased (i) prior to
conversion or redemption of all of the Corporation's 2.675%
Subordinated Convertible Notes due May 1, 2004 (the "Notes") and
(ii) after conversion or redemption of all of the Notes, below
the number of then outstanding shares of Series A Preferred
Stock.
(b) The Series A Preferred Stock shall, except as
provided in Section 3(b) hereof, with respect to dividend rights
and rights on liquidation, dissolution or winding up, (i) rank
senior to the Common Stock, par value $.01 per share, of the
Corporation (the "Common Stock") and (ii) rank pari passu with or
senior to other series of convertible preferred stock of the
Corporation (other than preferred stock issuable upon exercise of
the Rights as defined in Section 11) designated by the Board of
Directors of the Corporation prior to or on or after the date
hereof.
Section 2. DIVIDENDS AND DISTRIBUTIONS. (a) The
holders of shares of Series A Preferred Stock, in preference to
the holders of shares of Common Stock and of any shares of other
capital stock of the Corporation ranking junior to the Series A
Preferred Stock as to payment of dividends, shall be entitled to
receive, when, as and if declared by the Board of Directors, out
of the assets of the Corporation legally available therefor,
cumulative cash dividends at an annual rate equal to 2.675% from
and after the date of issuance of the Series A Preferred Stock
(the "Issue Date"), as long as the shares of Series A Preferred
Stock remain outstanding. Dividends shall be computed on the
basis of the Stated Value, and shall accrue and be payable
quarterly, in arrears, on March 1, June 1, September 1 and
December 1 in each year or, if not a Business Day, on the next
Business Day (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date following the Issue Date.
(b) Dividends payable pursuant to paragraph (a) of
this Section 2 shall begin to accrue and be cumulative from the
Issue Date, whether or not earned or declared. The amount of
dividends so payable shall be determined on the basis of twelve
30-day months and a 360-day year. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive payment of a dividend
declared thereon, which record date shall be no more than sixty
days prior to the date fixed for the payment thereof.
(c) No dividend or distribution in cash, shares of
stock or other property on the Common Stock shall be declared or
paid or set apart for payment unless, at the same time, the same
dividend or distribution is declared or paid or set apart, as the
case may be, on the Series A Preferred Stock payable on the same
date, at the rate per share of Series A Preferred Stock based
upon the number of shares of Common Stock into which each share
of Series A Preferred Stock is convertible (as adjusted pursuant
to Section 8) on the record date for such dividend or
distribution on the Common Stock.
(d) In the event that (i) any dividend payable on the
Series A Preferred Stock pursuant to Section 2(a) shall not have
been paid in full, (ii) the Corporation shall have breached in
any material respect any of the covenants (provided the
applicable covenant shall then be in effect pursuant to the terms
of the Purchase Agreement (as defined in Section 11)) set forth
in the Purchase Agreement, (iii) the Corporation shall have
failed to redeem shares of Series A Preferred Stock pursuant to
Section 5(a), whether or not by reason of the absence of legally
available funds, or (iv), a Cross-Default or "Fundamental Change"
within the meaning of paragraph (c) of Section C8 of Article IV
of the Certificate of Incorporation shall occur, then, in any
such case, the holders of Series A Preferred Stock shall be
entitled to annual dividends (in addition to any dividend payable
pursuant to Section 2(a)), at a rate of 11.75% per annum from the
applicable Quarterly Dividend Payment Date or date of such
breach, default or failure to redeem, as the case may be, through
the date of payment of such dividend, cure of such breach or
default or redemption, as the case may be.
Section 3. VOTING RIGHTS. In addition to any voting
rights provided by law, the holders of shares of Series A
Preferred Stock shall have the following voting rights:
(a) So long as any of the Series A Preferred Stock is
outstanding, each share of Series A Preferred Stock shall entitle
the holder thereof to vote on all matters submitted to a vote of
the stockholders of the Corporation, voting together as a single
class with the holders of Common Stock. The holders of each
share of Series A Preferred Stock shall be entitled to vote with
respect to each share of Series A Preferred Stock held by each
such holder a number of votes equal to the number of votes which
could be cast in such vote by a holder of the number of shares of
Common Stock into which such share of Series A Preferred Stock is
convertible (as adjusted pursuant to Section 8) on the record
date for such vote.
(b) The affirmative vote of the holders of at least 66
2/3% of the outstanding shares of Series A Preferred Stock (the
"66 2/3% Holders"), voting together as a class, in person or by
proxy, at a special or annual meeting of stockholders called for
the purpose, shall be necessary to (i) authorize, increase the
authorized number of shares of, or issue (including on conversion
or exchange of any convertible or exchangeable securities or by
reclassification) any shares of any class or classes or series
within a class of the Corporation's capital stock ranking prior
to (either as to dividends or upon voluntary or involuntary
liquidation, dissolution or winding up) the Series A Preferred
Stock (other than the shares of participating preferred stock
issuable upon exercise of the Rights (as defined in Section 11));
(ii) increase the authorized number of shares of, or issue
(including on conversion or exchange of any convertible or
exchangeable securities or by reclassification) any shares of,
Series A Preferred Stock; or (iii) authorize, adopt or approve an
amendment to the Certificate of Incorporation or this Certificate
of Designation which would increase or decrease the par value of
the shares of Series A Preferred Stock, or alter or change the
powers, preferences or special rights of the Series A Preferred
Stock so as to affect such shares of Series A Preferred Stock
adversely.
(c) (i) The foregoing rights of holders of shares of
Series A Preferred Stock to take any actions as provided in this
Section 3 may be exercised at any annual meeting of stockholders
or at a special meeting of stockholders held for such purpose as
hereinafter provided or at any adjournment thereof.
So long as such right to vote continues, the Chairman
of the Board of the Corporation may call, and if the holders of
Series A Preferred Stock are to vote separately as a single
class, upon the written request of holders of record of 20% of
the outstanding shares of Series A Preferred Stock, addressed to
the Secretary of the Corporation, at the principal office of the
Corporation, the Chairman of the Board of the Corporation shall
call, a special meeting of the holders of shares of Series A
Preferred Stock entitled to vote as provided herein. The
Corporation shall use its best efforts to hold such meeting
within 60, but in any event not later than 90, days after
delivery of such request to the Secretary, at the place and upon
the notice provided by law and in the By-Laws of the Corporation
for the holding of meetings of stockholders, provided that the
Corporation shall not be required to call such a special meeting
if such request is received fewer than 90 days before the date
fixed for the next ensuing annual meeting of stockholders of the
Corporation, at which meeting such newly created directorships
shall be filled by the holders of the Series A Preferred Stock.
(ii) At each meeting of stockholders at which the
holders of shares of Series A Preferred Stock shall have the
right, voting separately as a single class, to take any action,
the presence in person or by proxy of the holders of record of
one-third of the total number of shares of Series A Preferred
Stock then outstanding and entitled to vote on the matter shall
be necessary and sufficient to constitute a quorum. At any such
meeting or at any adjournment thereof, in the absence of a quorum
of the holders of shares of Series A Preferred Stock, a majority
of the holders of such shares present in person or by proxy shall
have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Series A Preferred Stock from
time to time and place to place without notice other than
announcement at the meeting until a quorum shall be present.
For the taking of any action as provided in
paragraph (b) of this Section 3 by the holders of shares of
Series A Preferred Stock, each such holder shall have one vote
for each share of such stock standing in his name on the transfer
books of the Corporation as of any record date fixed for such
purpose or, if no such date be fixed, at the close of business on
the Business Day (as defined in Section 11) next preceding the
day on which notice is given, or if notice is waived, at the
close of business on the Business Day next preceding the day on
which the meeting is held.
Section 4. CERTAIN RESTRICTIONS. (a) Whenever
(i) any dividend payable on the Series A Preferred Stock shall
not have been paid in full, (ii) the Corporation shall have
breached in any material respect any of the covenants (provided
the applicable covenant shall then be in effect pursuant to the
terms of the Purchase Agreement) set forth in the Purchase
Agreement, (iii) the Corporation shall have failed to satisfy its
obligation to redeem shares of Series A Preferred Stock pursuant
to Sections 5(a) or 5(b), whether or not by reason of the absence
of legally available funds therefor, or (iv), a Cross-Default or
Fundamental Change shall have occurred and any of such events set
forth in clauses (i) through (iv) above shall not have been
remedied, the Corporation shall not declare or pay dividends, or
make any other distributions, on any shares of Parity Stock or
Junior Stock, except (1) dividends or distributions payable in
Junior Stock and (2) dividends or distributions paid ratably on
the Series A Preferred Stock and all Parity Stock on which
dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all shares of the Series A
Preferred Stock and such Parity Stock are then entitled.
(b) Whenever dividends on the Series A Preferred Stock
shall not have been paid in full or any of the events set forth
in clauses (ii) through (iv) of Section 4(a) shall have occurred
and shall not have been remedied, the Corporation shall not:
(A) redeem, purchase or otherwise acquire for consideration any
shares of Parity Stock or Junior Stock; PROVIDED, HOWEVER, that
(1) the Corporation may at any time redeem, purchase or otherwise
acquire shares of Parity Stock in exchange for any shares of
Junior Stock, (2) the Corporation may accept shares of any Parity
Stock or Junior Stock for conversion into shares of Junior Stock,
and (3) the Corporation may at any time redeem, purchase or
otherwise acquire shares of any Parity Stock pursuant to any
mandatory redemption, put, sinking fund or other similar
obligation, pro rata with the Series A Preferred Stock in
proportion to the total amount then required to be applied by it
to redeem, repurchase or otherwise acquire shares of Series A
Preferred Stock and shares of such Parity Stock; or (B) redeem,
purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock; PROVIDED, HOWEVER, that the Corporation
(1) may accept shares of Series A Preferred Stock surrendered for
conversion into shares of capital stock of the Corporation
pursuant to Section 8, (2) may elect to redeem all outstanding
shares of Series A Preferred Stock pursuant to Section 5(a)(i) or
(3) may redeem shares of Series A Preferred Stock pro rata
pursuant to Section 5(a)(i).
(c) Notwithstanding the foregoing, nothing herein
shall prevent the Corporation from redeeming the Rights (as
defined in Section 11) at a price not to exceed $.01 per Right.
(d) The Corporation shall not permit any Subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of capital stock of the Corporation
unless the Corporation could, pursuant to paragraph (b) of this
Section 4, purchase such shares at such time and in such manner.
Section 5. REDEMPTION; CHANGE OF CONTROL. (a) (i) On
May 1, 2004, the Corporation shall redeem, out of funds legally
available therefor, all outstanding shares of Series A Preferred
Stock, by paying therefor the Stated Value per share, plus an
amount equal to all accrued but unpaid dividends to such date, in
cash (the "Redemption Price").
(ii) The Company shall have the right, at its sole
option and election made in accordance with clause (c) below, to
redeem the Series A Preferred Stock, on or after the date
18 months after the Closing Date (as defined in the Purchase
Agreement) in whole but not in part, if the Current Market Price
per share of the Common Stock shall exceed the Conversion Price
multiplied by 350% for at least 90 consecutive Trading Days, at a
redemption price, subject to the final paragraphs of this clause
(ii), equal to the Redemption Price.
In the event that at any time a Change of Control has
occurred prior to a redemption pursuant to this Section 5(a)(ii),
the Redemption Price of each share of Preferred Stock until the
expiration of the 90-day period referred to in clause (d) of this
Section 5 shall equal the Change of Control Price (as defined in
clause (b) below).
(b) In the event that there occurs a Change of
Control, any record holder of Series A Preferred Stock, in
accordance with the procedures set forth in Clause (d) of this
Section 5, may require the Company to redeem any or all of the
Series A Preferred Stock held by such holder for, at such
holder's option, an amount equal to (i) the greater of (A) 100%
of the Stated Value of the Preferred Stock and (B)(I) 135% of the
Stated Value if such Change of Control occurs on or before the
first anniversary of the Closing Date and (II) 150% of the Stated
Value if such Change of Control occurs thereafter, less, in the
case of each of clause (B)(I) and (B)(II), the Warrant Value
attributable to the Series A Preferred Stock held by such holder,
or (ii) the form and amount of consideration that such holder
would have received had such holder converted such Series A
Preferred Stock into Common Stock and had such holder received
the higher of (A) the same consideration per share of Common
Stock received or receivable on a per share basis by Rakepoll
Finance N.V., any executive officer of the Company or any of
their respective Affiliates and Associates (the "Affiliated
Holders") and (B) the same consideration per share of Common
Stock received or receivable by non-Affiliated Holders in
connection with such Change of Control (the "Change of Control
Price"), plus, in the case of each of clause (i) and clause (ii)
all accrued and unpaid dividends on the Series A Preferred Stock
being redeemed to the date of redemption, in cash. For purposes
of this Section 5, the Warrant Value attributable to a share of
Preferred Stock shall be equal to the Warrant Value on the date
of the Change of Control multiplied by a fraction, the numerator
of which shall be the Stated Value of the Preferred Stock and the
denominator of which shall be $20,000,000.
(c) Notice of any redemption of shares of Series A
Preferred Stock pursuant to this Section 5(a) shall be mailed at
least 30 but not more than 60 days prior to the date fixed for
redemption to each holder of shares of Series A Preferred Stock
to be redeemed, at such holder's address as it appears on the
transfer books of the Corporation. In order to facilitate the
redemption of shares of Series A Preferred Stock, the Board of
Directors may fix a record date for the determination of shares
of Series A Preferred Stock to be redeemed.
(d) Promptly following a Change of Control (but in no
event more than five Business Days thereafter), the Company shall
mail to each holder of Series A Preferred Stock, at such holder's
address as it appears on the transfer books of the Company,
notice of such Change of Control, which notice shall set forth
each holder's right to require the Company to redeem any or all
Series A Preferred Stock held by it. The Company shall
thereafter during a period of 90 days from the date of such
notice (or the date the Company was required to give such notice)
redeem any Series A Preferred Stock, in whole or in part, at the
option of the holder, upon at least five days' written notice to
the Company by such holder specifying (i) the Stated Value of
Series A Preferred Stock to be redeemed and (ii) the redemption
date.
(e) On the date of any redemption being made pursuant
to this Section 5 which is specified in a notice given pursuant
to paragraph (c) of this Section 5, the Corporation shall wire
transfer to such holder the Redemption Price or Change of Control
Price, as the case may be, for the shares of Series A Preferred
Stock so redeemed.
Section 6. REACQUIRED SHARES. Any shares of Series A
Preferred Stock converted, redeemed, purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof.
All such shares of Series A Preferred Stock shall upon their
cancellation, and upon the filing of any document required by the
General Corporation Law of the State of Delaware, become
authorized but unissued shares of Preferred Stock, $.01 par
value, of the Corporation and may be reissued as part of another
series of Preferred Stock, $.01 par value, of the Corporation,
subject to the conditions or restrictions on issuance set forth
in Section 3(b) or elsewhere herein.
Section 7. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) If the Corporation shall commence a voluntary case under the
Federal bankruptcy laws or any other applicable Federal or state
bankruptcy, insolvency or similar law, or consent to the entry of
an order for relief in an involuntary case under such law or to
the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the
Corporation, or of any substantial part of its property, or make
an assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become
due, or if a decree or order for relief in respect of the
Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy
laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its
property, or ordering the winding up or liquidation of its
affairs, and any such decree or order shall be unstayed and in
effect for a period of 60 consecutive days and on account of any
such event the Corporation shall liquidate, dissolve or wind up,
or if the Corporation shall otherwise liquidate, dissolve or wind
up, no distribution shall be made (i) to the holders of shares of
Junior Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock, subject to Section 8, shall have
received the Liquidation Preference (as defined in Section 11)
with respect to each share, or (ii) to the holders of shares of
Parity Stock unless the holders of shares of Series A Preferred
Stock, subject to Section 8, shall have received distributions
made ratably to the holders of the Series A Preferred Stock and
the Parity Stock in proportion to the total amounts to which the
holders of all such shares of Series A Preferred Stock and Parity
Stock would be entitled upon such liquidation, dissolution or
winding up.
(b) Neither the consolidation, merger or other
business combination of the Corporation with or into any other
Person or Persons nor the sale of all or substantially all the
assets of the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation for purposes of this
Section 7.
Section 8. CONVERSION. (a) Subject to the provisions
for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall be convertible at the option of the holder
at any time after the Issue Date into shares of Common Stock at
the Conversion Ratio (as defined in Section 11).
(b) Any conversion by the holders of the Series A
Preferred Stock shall be in an aggregate amount with a Stated
Value equal to at least $100,000 or all shares of Series A
Preferred Stock of such holder. Conversion of the Series A
Preferred Stock may be effected by any such holder upon the
surrender to the Corporation at the principal office of the
Corporation in the State of California or at the office of any
agent or agents of the Corporation, as may be designated by the
Board of Directors of the Corporation (the "Transfer Agent"), of
the certificate(s) for such Series A Preferred Stock to be
converted, accompanied by a written notice stating that such
holder elects to convert all or a specified whole number of such
shares in accordance with the provisions of this Section 8 and
specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be
issued. In case any holder's notice shall specify a name or
names other than that of such holder, such notice shall be
accompanied by payment of all transfer taxes payable upon the
issuance of shares of Common Stock in such name or names. Other
than such taxes, the Corporation will pay any and all issue and
other taxes (other than taxes based on income) that may be
payable in respect of any issue or delivery of shares of Common
Stock on conversion of Series A Preferred Stock pursuant hereto.
As promptly as practicable, and in any event within five Business
Days after the surrender of such certificate or certificates and
the receipt of such notice relating thereto and, if applicable,
payment of all transfer taxes (or the demonstration to the
satisfaction of the Corporation that such taxes have been paid),
the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully
paid and nonassessable full shares of Common Stock, to which the
holder of shares of Series A Preferred Stock being converted
shall be entitled and (ii) if less than the full number of shares
of Series A Preferred Stock evidenced by the surrendered
certificate or certificates is being converted, a new certificate
or certificates, of like tenor, for the number of shares
evidenced by such surrendered certificate or certificates less
the number of shares being converted. Such conversion shall be
deemed to have been made at the close of business on the date of
giving such notice so that the rights of the holder thereof as to
the shares being converted shall cease except for the right to
receive shares of Common Stock, in accordance herewith, and the
person entitled to receive the shares of Common Stock shall be
treated for all purposes as having become the record holder of
such shares of Common Stock at such time, so long as certificates
for such holder's shares of Series A Preferred Stock are
delivered to the Corporation within two Business Days after the
giving of notice. In any other case of conversion at the
holder's option, the date of delivery of the certificates for the
shares of Series A Preferred Stock shall be deemed to be the date
of conversion.
In case any shares of Series A Preferred Stock are to
be redeemed pursuant to Section 5, such right of conversion shall
cease and terminate as to the shares of Series A Preferred Stock
to be redeemed at the close of business on the Business Day
preceding the date fixed for redemption unless the Corporation
shall default in the payment of the Redemption Price or the
Change of Control Price, as the case may be.
(c) The Conversion Ratio shall be subject to
adjustment from time to time in certain instances as hereinafter
provided.
(d) In connection with the conversion of any shares of
Series A Preferred Stock into Common Stock, no fractions of
shares of Common Stock shall be issued, but in lieu thereof the
Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional
interest multiplied by the Current Market Price per share of
Common Stock on the Trading Day on which such shares of Series A
Preferred Stock are deemed to have been converted. If more than
one share of Series A Preferred Stock shall be surrendered for
conversion by the same holder at the same time, the number of
full shares of Common Stock issuable on conversion thereof shall
be computed on the basis of the total number of shares of Series
A Preferred Stock so surrendered. Promptly upon conversion, the
Corporation shall pay to the holder of shares of Series A
Preferred Stock so converted out of funds legally available, an
amount equal to any accrued and unpaid dividends on the shares of
Series A Preferred Stock surrendered for conversion to the date
of such conversion, together with cash in lieu of any fractional
interest of such holder.
(e) (i) The Corporation shall at all times reserve
and keep available for issuance upon the conversion of the Series
A Preferred Stock, free from any preemptive rights such number of
its authorized but unissued shares of Common Stock as will from
time to time be sufficient to permit the conversion of all
outstanding shares of Series A Preferred Stock into Common Stock,
and shall take all action required to increase the authorized
number of shares of Common Stock if necessary to permit the
conversion of all outstanding shares of Series A Preferred Stock.
(ii) Upon conversion of shares of Series A Preferred
Stock as contemplated by this Section 8, the Corporation shall
issue together with each such share of Common Stock one Right (or
other securities in lieu thereof), or any rights issued to
holders of Common Stock of the Corporation in addition thereto or
in replacement therefor, whether or not such rights shall be
exercisable at such time, but only if such rights are issued and
outstanding and held by other holders of Common Stock of the
Corporation at such time and have not expired.
(f) The Conversion Ratio will be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall at any time or from
time to time after the Issue Date (A) pay a dividend, or make a
distribution, on the outstanding shares of Common Stock in shares
of Common Stock, (B) subdivide the outstanding shares of Common
Stock, (C) combine the outstanding shares of Common Stock into a
smaller number of shares or (D) issue by reclassification of the
shares of Common Stock any shares of capital stock of the
Corporation, then, and in each such case, the Conversion Ratio in
effect immediately prior to such event or the record date
therefor, whichever is earlier, shall be adjusted so that the
holder of any shares of Series A Preferred Stock thereafter
surrendered for conversion into Common Stock shall be entitled to
receive the number of shares of Common Stock or other securities
of the Corporation which such holder would have owned or have
been entitled to receive after the happening of any of the events
described above, had such shares of Series A Preferred Stock been
surrendered for conversion immediately prior to the happening of
such event or the record date therefor, whichever is earlier. An
adjustment made pursuant to this clause (i) shall become
effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for
the determination of holders of shares of Common Stock entitled
to receive such dividend or distribution, or (y) in the case of
such subdivision, reclassification or combination, at the close
of business on the day upon which such corporate action becomes
effective. No adjustment shall be made pursuant to this clause
(i) in connection with any transaction to which paragraph (g)
applies.
(ii) In case the Corporation shall issue shares of
Common Stock (or rights, warrants or other securities convertible
into or exchangeable for shares of Common Stock) after the Issue
Date at a price per share (or having a conversion price per
share) less than the Conversion Price as of the date of issuance
of such shares (or, in the case of convertible or exchangeable
securities, less than the Conversion Price as of the date of
issuance of the rights, warrants or other securities in respect
of which shares of Common Stock were issued), then, and in each
such case, the Conversion Ratio and the Conversion Price shall be
adjusted so that the holder of each share of Series A Preferred
Stock shall be entitled to receive, upon the conversion thereof
into Common Stock, the number of shares of Common Stock
determined by multiplying (A) the Conversion Ratio in effect on
the day immediately prior to such date by (B) a fraction, the
numerator of which shall be the sum of (1) the number of shares
of Common Stock outstanding on such date and (2) the number of
additional shares of Common Stock issued (or into which the
convertible securities may convert), and the denominator of which
shall be the sum of (x) the number of shares of Common Stock
outstanding on such date and (y) the number of shares of Common
Stock purchasable at the then applicable Conversion Price per
share with the aggregate consideration receivable by the
Corporation for the total number of shares of Common Stock so
issued (or into which the rights, warrants or other convertible
securities may convert). An adjustment made pursuant to this
clause (ii) shall be made on the next Business Day following the
date on which any such issuance is made and shall be effective
retroactively to the close of business on the date of such
issuance. For purposes of this clause (ii), the aggregate
consideration receivable by the Corporation in connection with
the issuance of shares of Common Stock or of rights, warrants or
other securities convertible into shares of Common Stock shall be
deemed to be equal to the sum of the aggregate offering price
(before deduction of underwriting discounts or commissions and
expenses payable to third parties) of all such Common Stock,
rights, warrants and convertible securities plus the minimum
aggregate amount, if any, payable upon exercise or conversion of
any such rights, warrants and convertible securities into shares
of Common Stock. If Common Stock is sold as a unit with other
securities, the aggregate consideration received for such Common
Stock shall be deemed to be net of the Fair Market Value of such
other securities. If Common Stock is issued in consideration of
the release of a claim brought by a shareholder against the
Corporation, whether before or after the Closing Date (as defined
in the Purchase Agreement), on the basis of events or
circumstances occurring prior to the Closing Date ("Pre-Closing
Shareholder Claims"), the consideration for such Common Stock
shall be deemed to be $0. The issuance or reissuance of any
shares of Common Stock (whether treasury shares or newly issued
shares) pursuant to (A) a dividend or distribution on, or
subdivision, combination or reclassification of, the outstanding
shares of Common Stock requiring an adjustment in the conversion
ratio pursuant to clause (i) of this paragraph (f), (B) shares
issued as Stock Milestone Payments or Combination Milestone
Payments pursuant to Section 5.06 of the Development and
Marketing Agreement, dated June 13, 1991, with Gensia Clinical
Partners as in effect on the date hereof or pursuant to any
acquisition of BIOFA A.B. on terms approved by the full Board of
Directors, (C) any restricted stock or stock option plan or
program of the Corporation involving the grant of options or
rights at below the applicable Conversion Price (but the Company
will in no event issue options or rights exercisable at less than
85% of the Current Market Price at the date of grant) so long as
the granting of such options or rights has been approved by the
full Board of Directors or a committee of the Board of Directors
on which the director designated by the Purchaser is a member or
(D) any option, warrant, right, or convertible security
outstanding as of May 1, 1997 (other than the Rights or similar
securities) shall not be deemed to constitute an issuance of
Common Stock or convertible securities by the Corporation to
which this clause (ii) applies. Upon the expiration unexercised
of any options, warrants or rights to convert any convertible
securities for which an adjustment has been made pursuant to this
clause (ii), the adjustments shall forthwith be reversed to
effect such rate of conversion as would have been in effect at
the time of such expiration or termination had such options,
warrants or rights or convertible securities, to the extent
outstanding immediately prior to such expiration or termination,
never been issued. Nothing herein shall limit the right of any
holder to an anti-dilution adjustment in the event that there
shall occur a "flip-in" or "flip-over" event under the Rights
Agreement or any similar plan or agreement of the Corporation.
No adjustment shall be made pursuant to this clause (ii) in
connection with any transaction to which paragraph (g) applies.
(iii) In case the Corporation shall at any time or
from time to time after the Issue Date declare, order, pay or
make a dividend or other distribution (including, without
limitation, any distribution of stock or other securities or
property or rights or warrants to subscribe for securities of the
Corporation or any of its Subsidiaries by way of dividend,
including any distribution of shares or assets of Metabasis
Therapeutics, Inc. ("Metabasis") or Gensia Automedics, Inc.
("Automedics") and any payment or granting of anything of value
in consideration of the release of Pre-Closing Shareholder
Claims, on its Common Stock, other than dividends or
distributions of shares of Common Stock which are referred to in
clause (i) of this paragraph (f), then, and in each such case,
the Conversion Ratio and the Conversion Price shall be adjusted
so that the holder of each share of Series A Preferred Stock
shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock determined by multiplying
(1) the applicable Conversion Ratio on the day immediately prior
to the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution by (2) a
fraction, the numerator of which shall be the Current Market
Price of the Common Stock for the period of 20 Trading Days
preceding such record date, and the denominator of which shall be
such Current Market Price of the Common Stock less the Fair
Market Value (as defined in Section 11) per share of Common Stock
(as determined in good faith by the Board of Directors and
supported by an opinion from an investment banking firm of
recognized national standing acceptable to holders of a majority
of the Series A Preferred Stock) of such dividend or
distribution. No adjustment shall be made pursuant to this
clause (iii) in connection with any transaction to which
paragraph (g) applies.
(iv) For purposes of this paragraph (f), the number of
shares of Common Stock at any time outstanding shall not include
any shares of Common Stock then owned or held by or for the
account of the Corporation as well as any settlement of
Shareholder Litigation.
(v) The term "dividend," as used in this
paragraph (f), shall mean a dividend or other distribution upon
stock of the Corporation including in consideration of the
release of claims by a shareholder against the Corporation.
(vi) Anything in this paragraph (f) to the contrary
notwithstanding, the Corporation shall not be required to give
effect to any adjustment in the Conversion Ratio (x) if such
adjustment was previously taken into account in determining the
Conversion Ratio on the Issue Date, (y) if, in connection with
any event which would otherwise require an adjustment pursuant to
this paragraph (f), the holders of Series A Preferred Stock have
received the dividend or distribution to which such holders are
entitled under Section 2 hereof or (z) unless and until the net
effect of one or more adjustments (each of which shall be carried
forward), determined as above provided, shall have resulted in a
change of the Conversion Ratio by at least one one-hundredth of
one share of Common Stock, and when the cumulative net effect of
more than one adjustment so determined shall be to change the
Conversion Ratio by at least one one-hundredth of one share of
Common Stock, such change in Conversion Ratio shall thereupon be
given effect.
(vii) The certificate of any firm of independent
public accountants of recognized national standing selected by
the Board of Directors of the Corporation (which may be the firm
of independent public accountants regularly employed by the
Corporation) shall be presumptively correct for any computation
made under this paragraph (f).
(viii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter
and before the distribution to stockholders thereof legally
abandon its plan to pay or deliver such dividend or distribution,
then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted
by this paragraph (f) or in the Conversion Ratio or Conversion
Price then in effect shall be required by reason of the taking of
such record.
(ix) If any event occurs as to which the provisions of
this Section 8(f) are not strictly applicable or if strictly
applicable would not fairly protect the rights of the holders of
the Series A Preferred Stock in accordance with the essential
intent and principles of such provisions, the Board of Directors
shall make an adjustment in the application of such provisions,
in accordance with such essential intent and principles, so as to
protect such rights of the holders of the Series A Preferred
Stock.
(x) In the case of any event which requires an
adjustment to the Conversion Ratio pursuant to this Section 8(f),
the Conversion Price shall also be appropriately adjusted to
reflect such event.
(g) In the case of any consolidation or merger of the
Corporation with or into another corporation, or in case of any
sale or conveyance to another corporation of all or substantially
all of the assets or property of the Corporation (each of the
foregoing being referred to as a "Transaction") occurring in each
case at any time, each share of Series A Preferred Stock then
outstanding shall thereafter be convertible into, in lieu of the
Common Stock issuable upon such conversion prior to consummation
of such Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash) upon
the consummation of such Transaction by a holder of that number
of shares of Common Stock into which one share of Series A
Preferred Stock was convertible immediately prior to such
Transaction. In case securities or property other than Common
Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references in this Section 8 shall be deemed
to apply, so far as appropriate and nearly as may be, to such
other securities or property.
(h) In case at any time or from time to time the
Corporation shall pay any stock dividend or make any other non-
cash distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common
Stock any additional shares of stock of any class or any other
right, or there shall be any capital reorganization or
reclassification of the Common Stock of the Corporation or
consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of
the property of the Corporation as an entirety or substantially
as an entirety, or there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, then,
in any one or more of said cases the Corporation shall give at
least 20 days' prior written notice (the time of mailing of such
notice shall be deemed to be the time of giving thereof) to the
registered holders of the Series A Preferred Stock at the
addresses of each as shown on the books of the Corporation
maintained by the Transfer Agent thereof of the date on which (i)
a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale or conveyance,
dissolution, liquidation or winding up shall take place, as the
case may be, provided that in the case of any Transaction to
which paragraph (g) applies the Corporation shall give at least
30 days' prior written notice as aforesaid. Such notice shall
also specify the date as of which the holders of the Common Stock
of record shall participate in said dividend, distribution or
subscription rights or shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or
conveyance or participate in such dissolution, liquidation or
winding up, as the case may be. Failure to give such notice
shall not invalidate any action so taken.
Section 9. REPORTS AS TO ADJUSTMENTS. Upon any
adjustment of the Conversion Ratio then in effect and any
increase or decrease in the number of shares of Common Stock
issuable upon the operation of the conversion provisions set
forth in Section 8, then, and in each such case, the Corporation
shall promptly deliver to the Transfer Agent of the Series A
Preferred Stock and Common Stock, a certificate signed by the
President or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of
the Corporation setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment
was calculated and specifying the Conversion Ratio then in effect
following such adjustment and the increased or decreased number
of shares issuable upon the conversion granted by Section 8, and
shall set forth in reasonable detail the method of calculation of
each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to holders of the
Series A Preferred Stock may be given in advance and included as
part of the notice required under the provisions of Section 8(h).
Section 10. CERTAIN COVENANTS. Any registered holder
of Series A Preferred Stock may proceed to protect and enforce
its rights and the rights of such holders by any available remedy
by proceeding at law or in equity to protect and enforce any such
rights, whether for the specific enforcement of any provision in
this Certificate of Designation or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
Section 11. DEFINITIONS. For the purpose of this
Certificate of Designation of Series A Convertible Preferred
Stock, the following terms shall have the meanings indicated:
"ADJUSTMENT PERIOD" shall mean the period of five
consecutive trading days preceding the date as of which the
Fair Market Value of a security is to be determined.
"AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
"APPLICABLE TAX RATE" shall have the meaning set forth
in Section 6.18(a) of the Purchase Agreement.
"BENEFICIALLY OWN" or "BENEFICIAL OWNERS" with respect
to any securities shall mean having "beneficial ownership"
of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in
writing.
"BOARD OF DIRECTORS" shall mean the board of directors
of the Corporation.
"BUSINESS DAY" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of New York are authorized or obligated by law or
executive order to close.
"CAPITALIZED LEASE" shall mean, with respect to any
person, any lease or any other agreement for the use of
property which, in accordance with generally accepted
accounting principals, should be capitalized on the lessee's
or user's balance sheet.
"CAPITALIZED LEASE OBLIGATION" of any person shall mean
and include, as of any date as of which the amount thereof
is to be determined, the amount of the liability capitalized
or disclosed (or which should be disclosed) in a balance
sheet of such person in respect of a Capitalized Lease of
such person.
"CHANGE OF CONTROL" shall mean:
(a) A "person" or "Group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act becoming, in
the transaction or series of related transactions, the
Beneficial Owner of Voting Securities entitled to exercise
more than 60% of the total voting power of all outstanding
Voting Securities of the Company (including any Voting
Securities that are not then outstanding of which such
person or Group is deemed the Beneficial Owner); or
(b) liquidation of the Company; or
(c) a reorganization, merger or consolidation, in each
case, with respect to which (i) all or substantially all the
individuals and entities who were the respective Beneficial
Owners of the Voting Securities of the Company immediately
prior to such reorganization, merger or consolidation do
not, following such reorganization, merger or consolidation
Beneficially Own, directly or indirectly, more than 50.1% of
the combined voting power of the then outstanding Voting
Securities entitled to vote generally in the election of
directors of the corporation resulting from such
reorganization, merger or consolidation, or (ii) the shares
of the surviving corporation held by such holders are not,
and immediately upon issuance will not be, listed on a
national securities exchange or quoted on the NASDAQ Stock
Market, or (iii) the shares of the Surviving Corporation
held by such holders are or will be subject to any right of
repurchase by the issuer thereof or any third-party or are
otherwise subject to any encumbrance as a result of such
transaction; or
(d) the sale or other disposition of assets or
property of the Company in one transaction or series of
related transactions having a book value greater than 50% of
the book value of the Company's total assets immediately
preceding such transaction; or
(e) a "Fundamental Change" within the meaning of
paragraph (c) of Section C8 of Article IV of the Company's
Restated Certificate of Incorporation.
"COMMISSION" shall mean the Securities and Exchange
Commission, and any successor agency.
"CONTINGENT WARRANT" shall have the meaning set forth
in the Warrant Agreement, dated as of the Closing Date (as
defined in the Purchase Agreement), between the Corporation
and Health Care Capital Partners, L.P. (the "Warrant").
"CONVERSION PRICE" shall mean the quotient obtained by
dividing the Stated Value by the Conversion Ratio in effect
at the time.
"CONVERSION RATIO" shall mean the Conversion Ratio (as
set forth in the Purchase Agreement) in effect on the Issue
Date for conversion into Common Stock of the Notes, subject
to adjustment as provided in Section 8(f).
"CROSS-DEFAULT" shall mean (i) the Company or any
Subsidiary (x) fails to make any payment in respect of any
Indebtedness, having an aggregate principal amount
(including undrawn committed or available amounts and
including amounts owing to all creditors under any combined
or syndicated credit arrangement) of more than $3,000,000
when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) and such
failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the
date of such failure; or (y) fails to perform or observe any
other condition or covenant, or any other event shall occur
or condition exist, under any agreement or instrument
relating to any such Indebtedness, and such failure
continues after the applicable grace or notice period, if
any, specified in the relevant document on the date of such
failure if the effect of such failure, event or condition is
to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to
its stated maturity, or collateral in respect thereof to be
demanded; or (ii) there occurs under any Swap Contract an
early Termination Date (as defined in and provided for in
any such Swap Contract that is in the form of an ISDA Master
Agreement) or equivalent termination event (as provided in
any other Swap Contract) resulting from (1) any event of
default under such Swap Contract as to which the Company or
any Subsidiary is the Defaulting Party (as defined in such
Swap Contract) or (2) any Termination Event (as so defined
in such Swap Contract) as to which the Company or any
Subsidiary is an Affected Party (as so defined in such Swap
Contract), and, in either event, the Swap Termination Value
owned by the Company or such Subsidiary as a result thereof
is greater than $3,000,000.
"CURRENT MARKET PRICE," when used with reference to
shares of Common Stock or other securities on any date,
shall mean the closing price per share of Common Stock or
such other securities on such date and, when used with
reference to shares of Common Stock or other securities for
any period shall mean the average of the daily closing
prices per share of Common Stock or such other securities
for such period. The closing price for each day shall be
the last quoted bid price in the over-the-counter market, as
reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or such other system then in
use, or, if on any such date the Common Stock or such other
securities are not quoted by any such organization, the
closing bid price as furnished by a professional market
maker making a market in the Common Stock or such other
securities selected by the Board of Directors of the
Corporation. If the Common Stock is listed or admitted to
trading on a national securities exchange, the closing price
shall be the closing bid price, regular way, as reported in
the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Common Stock or such
other securities are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
exchange on which the Common Stock or such other securities
are listed or admitted to trading. If the Common Stock or
such other securities are not publicly held or so listed or
publicly traded, "Current Market Price" shall mean the Fair
Market Value per share of Common Stock or of such other
securities as determined in good faith by the Board of
Directors of the Corporation based on an opinion of an
independent investment banking firm acceptable to holders of
a majority of the Series A Preferred Stock, which opinion
may be based on such assumptions as such firm shall deem to
be necessary and appropriate.
"CURRENT WARRANT PRICE" shall have the meaning set
forth in the Warrant.
"EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended, or any successor Federal statute, and
the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable
section, if any, of any such successor Federal statute.
"FAIR MARKET VALUE" shall mean, as to shares of Common
Stock or any other class of capital stock or securities of
the Corporation or any other issuer which are publicly
traded, the average of the Current Market Prices of such
shares of securities for each day of the Adjustment Period.
The "Fair Market Value" of any security which is not
publicly traded or of any other property shall mean the fair
value thereof as determined by an independent investment
banking or appraisal firm experienced in the valuation of
such securities or property selected in good faith by the
Board of Directors of the Corporation or a committee
thereof, or, if no such investment banking or appraisal firm
is in the good faith judgment of the Board of Directors or
such committee available to make such determination, as
determined in good faith by the Board of Directors of the
Corporation or such committee.
"GUARANTEE" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business
of negotiable instruments for deposit or collection) of any
Person guaranteeing, or in effect guaranteeing, any
Indebtedness, dividend or other obligation of any other
Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or
otherwise, by such Person: (i) to purchase such Indebtedness
or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for
the purchase or payment of such Indebtedness or obligation,
(y) to maintain working capital or other balance sheet
condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or
obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the
purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect
thereof. For the purposes of any computations made under
this Agreement, a Guarantee in respect of any Indebtedness
for borrowed money shall be deemed to be Indebtedness equal
to the principal amount of the Indebtedness for borrowed
money which has been guaranteed, and a Guarantee in respect
of any other obligation or liability or any dividend shall
be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
"INDEBTEDNESS" shall mean, with respect to any person,
(i) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind, (ii) all
obligations of such person evidenced by bonds, debentures,
notes or similar instruments, (iii) all obligations of such
person under conditional sale or other title retention
agreements relating to property purchased by such person,
(iv) all obligations of such person issued or assumed as the
deferred purchase price of property or services (other than
accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and
paid in a manner consistent with industry practice), (v) all
Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien or security interest
on property owned or acquired by such person whether or not
the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such person, (vii) all
Guarantees of such person, (viii) all obligations (including
but not limited to reimbursement obligations) relating to
the issuance of letters of credit for the account of such
person, (ix) all obligations arising out of foreign exchange
contracts, and (x) all Swap Contracts.
"ISSUE DATE" means the date of issuance of the shares
of Series A Preferred Stock upon conversion of the Notes.
"JUNIOR STOCK" shall mean any capital stock of the
Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock.
"LIQUIDATION PREFERENCE" with respect to a share of
Series A Preferred Stock shall mean $100.00 per share, plus
an amount equal to all accrued but unpaid dividends.
"PARITY STOCK" shall mean any capital stock of the
Corporation ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series
A Preferred Stock.
"PERSON" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"PREFERRED STOCK" shall mean the shares of Preferred
Stock, par value $.01 per share, of the Corporation.
"PURCHASE AGREEMENT" shall mean the Securities Purchase
Agreement, dated as of May 1, 1997, between the Corporation
and the Purchaser named therein.
"RIGHTS" shall mean the rights to purchase Preferred
Stock issued pursuant to the Stockholder Rights Agreement
(the "Rights Agreement") dated as of March 16, 1992, between
the Corporation and ChaseMellon Shareholder Services,
L.L.C., as successor in interest to First Interstate Bank.
"STATED VALUE" with respect to the Series A Preferred
Stock shall mean $100.00 per share.
"SUBSIDIARY" of any Person means any corporation or
other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
"SWAP CONTRACT" shall mean any agreement whether or not
in writing, relating to any transaction that is a rate swap,
basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap or option,
bond, note or ▇▇▇▇ option, interest rate option, forward
foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap,
swaption, currency option or any other similar transaction
(including any option to enter into any of the foregoing) or
any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to
or governing any or all of the foregoing.
"SWAP TERMINATION VALUE" shall mean, in respect of any
one or more Swap Contracts, after taking into account the
effect of any legally enforceable netting agreement relating
to such Swap Contracts, (a) for any date on or after the
date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith,
such termination value(s), and (b) for any date prior to the
date referenced in subclause (a) the amount(s) determined as
the ▇▇▇▇-to-market value(s) for such Swap Contracts, as
determined by the Company based upon one or more mid-market
or other readily available quotations provided by any
recognized dealer in such Swap Contracts.
"TRADING DAY" means a Business Day or, if the Common
Stock is listed or admitted to trading on any national
securities exchange, a day on which such exchange is open
for the transaction of business.
"VOTING SECURITIES" shall mean at any time shares of
any class of capital stock of the Company which are then
entitled to vote generally in the election of directors.
"WARRANT VALUE" shall mean at any time an amount (not
less than $0) equal to the product of (i) the number of
shares of Common Stock previously issued upon exercise of
the Contingent Warrants multiplied by (ii) an amount equal
to the difference between (A) the weighted average of the
Current Market Prices of such shares of Common Stock on the
respective exercise dates of such previously exercised
Contingent Warrants LESS (B) the weighted average of the
Current Warrant Prices of such previously exercised
Contingent Warrants on their respective dates of exercise.
IN WITNESS WHEREOF, the officers named below, acting
for and on behalf of Gensia Sicor Inc., have hereunto subscribed
their names on this __ day of _________, 1997.
GENSIA SICOR INC.
By:
-----------------------------
Name:
Title:
Attest:
By:
------------------------
Name:
Title:
EXHIBIT F
AMENDMENT NO. 3 TO SHAREHOLDER'S AGREEMENT
AMENDMENT NO. 3 (the "Amendment"), dated as of
April , 1997, the Shareholder's Agreement, dated as of
November 12, 1996, as amended by Amendment No. 1 dated as of
December 16, 1996, and Amendment No. 2 dated as of February 28,
1997 (the "Agreement"), between Gensia Sicor Inc. (f/k/a Gensia,
Inc.), a corporation organized under the laws of Delaware (the
"Company"), and Rakepoll Finance N.V., a corporation organized
under the laws of the Netherlands Antilles ("Rakepoll Finance").
W I T N E S S E T H:
WHEREAS, the Company and Rakepoll Finance are parties
to the Agreement; and
WHEREAS, in connection with the investment in the
Company by Health Care Capital Partners, L.P. ("HCCP"), pursuant
to the certain Securities Purchase Agreement, dated as of April
, 1997, between HCCP and the Company (the "HCCP Agreement") the
Company and Rakepoll Finance wish to amend the Agreement, among
other things (i) to extend the lock-up period applicable to
Rakepoll Finance to parallel the lock-up period applicable to
HCCP; (ii) to extend the period before which Rakepoll Finance may
exercise its registration rights under the Agreement to parallel
the analogous period applicable to HCCP; (iii) to modify the
registration rights of Rakepoll Finance to correspond to
registration rights afforded by the Company to HCCP in the HCCP
Registration Rights Agreement, dated as of April , 1997, and
(iv) to provide for certain limitations to the incidental
registration rights of Rakepoll Finance, in each case as more
fully set forth herein and subject to the terms and conditions
hereof; and
WHEREAS, Section 8.2(a) of the Agreement provides that
the Agreement may be amended in a writing signed by the Company
and Rakepoll Finance:
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Definitions; References. Capitalized terms used
in this Amendment but not defined herein shall have the meanings
ascribed to them in the Agreement.
2. Amendment of Section 1.1(o). Section 1.1(o) of
the Agreement is hereby amended by deleting such section in its
entirety and substituting in lieu thereof the following:
'"Lock-Up Period" means the period of time
commencing at the Closing Date and
terminating on the date which is 18 months
after the Closing Date.'
3. Amendment of Section 4.7. Section 4.7 of the
Agreement is hereby amended by inserting immediately before the
"." at the end thereof the following:
", or (iii) pursuant to, or upon conversion
or exercise of securities issued pursuant to,
the Securities Purchase Agreement, dated
April , 1997, between Health Care Capital
Partners ("HCCP") and the Company".
4. Amendment of Section 6.1(a). Section 6.1(a) of
the Agreement is hereby amended by deleting from the first
sentence thereof the words "first anniversary of the Closing
Date" appearing in the first and second lines thereof and
substituting in lieu thereof the words "termination of the Lock-
Up Period".
5. Amendment of Section 6.2. Section 6.2 of the
Agreement is hereby amended by deleting in its entirety the first
sentence thereof and substituting in lieu thereof the following:
"Subject to Section 6.7, if at any time after
the termination of the Lock-Up Period the
Company proposes to file a registration
statement under the Securities Act (other
than a registration statement on a Form S-4
or S-8 or any successor or similar forms, or
a registration effected pursuant to Section
2.1 of the Registration Rights Agreement,
dated as of April , 1997, between HCCP and
the Company (the "HCCP Registration Rights
Agreement") unless the Selling Holders (as
defined in the HCCP Registration Rights
Agreement) holding at least a majority of the
Registrable Securities (as defined in the
HCCP Registration Rights Agreement) included
in such registration shall have provided
their written consent to the inclusion of
such Registrable Securities (as defined in
the HCCP Registration Rights Agreement) in
such registration) on any form that would
permit the registration of the Registrable
Securities, whether or not such filing is to
be on its behalf, each such time the Company
shall give to each Holder prompt written
notice of such determination setting forth
the date on which the Company proposes to
file such registration statement, which date
shall be no earlier than twenty-one days from
the date of such notice, and advising each
Holder of its right under this Section 6.2 to
have Registrable Securities included in such
registration."
5. Full Force and Effect. Except as modified,
amended or supplemented above, all rights, terms and conditions
of the Agreement shall remain in full force and effect.
6. Conditions to Effectiveness of this Amendment.
This Amendment shall become effective when (a) HCCP and the
Company shall have executed and delivered all documents necessary
to effect the investment in the Company by HCCP, including,
without limitation, the HCCP Agreement; (b) the Company shall
have received the Purchase Price (as defined in the HCCP
Agreement); (c) the Company shall have issued to HCCP the notes
and Warrants (each as defined in the HCCP Agreement) in
accordance with the terms of the HCCP Agreement, and (d) it shall
have been executed and delivered by each of the Company and
Rakepoll Finance.
7. Governing Law. This Amendment shall be governed
by and construed under the laws of the State of New York
(irrespective of its choice of law principles).
8. Counterparts. This Amendment may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this
Amendment to the Agreement as of the date first written above.
GENSIA SICOR INC.
By:
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
RAKEPOLL FINANCE N.V.
By:
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman of the Board
