-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ks0dzVLWxq0rfOXFJ1RZ1YlGUZubWBBtTb9Lib6QmXrd7M9b70H58DyA+LTLFo4X p32x9Zbpwv23ThOxiD8Www== 0000893750-97-000123.txt : 19970311 0000893750-97-000123.hdr.sgml : 19970311 ACCESSION NUMBER: 0000893750-97-000123 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970310 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GENSIA INC CENTRAL INDEX KEY: 0000807873 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 330176647 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-43145 FILM NUMBER: 97553643 BUSINESS ADDRESS: STREET 1: 9360 TOWNE CENTRE DR CITY: SAN DIEGO STATE: CA ZIP: 92121-3030 BUSINESS PHONE: 6195468300 MAIL ADDRESS: STREET 1: 9360 TOWNE CENTRE DR CITY: SAN DIEGO STATE: CA ZIP: 92121 FORMER COMPANY: FORMER CONFORMED NAME: GENSIA PHARMACEUTICAL INC DATE OF NAME CHANGE: 19930701 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RAKEPOLL FINANCE N V CENTRAL INDEX KEY: 0001035294 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: P8 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 14 JB GORSTRAWEG CITY: CURACAO STATE: P8 MAIL ADDRESS: STREET 1: 14 JB GORSTRAWEG CITY: CURACAO STATE: P8 SC 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ___)* GENSIA SICOR INC. - ----------------------------------------------------------------------------- (Name of Issuer) Common Stock, $.01 par value per share - ----------------------------------------------------------------------------- (Title of Class of Securities) 372450 10 6 ---------------------------------------- (CUSIP Number) Carlo Salvi SICOR-Societa Italiana Corticosteroidi S.p.A. Via Terrazzano 77 20017 Rho, Milan Italy 011-39-2-930-3981 - ----------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Alan Klein Simpson Thacher & Bartlett 99 Bishopsgate London EC2M 3YH, England 011-44-171-422-4000 February 28, 1997 - ----------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box /_/. Check the following box if a fee is being paid with the statement /_/. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index begins on Page 14 CUSIP No. 372450 10 6 13D 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON RAKEPOLL FINANCE N.V. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP JOINT FILING (a) /_/ (b) /_/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION NETHERLANDS ANTILLES 7 SOLE VOTING POWER NUMBER OF SHARES 29,500,000 BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH REPORTING NONE PERSON WITH 9 SOLE DISPOSITIVE POWER 29,500,000 10 SHARED DISPOSITIVE POWER NONE 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 29,500,000 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 42.1% 14 TYPE OF REPORTING PERSON CO CUSIP No. 372450 10 6 13D 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON KARBONA INDUSTRIES LTD. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP JOINT FILING (a) /_/ (b) /_/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION BAHAMAS 7 SOLE VOTING POWER NUMBER OF SHARES 29,500,000 BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH REPORTING NONE PERSON WITH 9 SOLE DISPOSITIVE POWER 29,500,000 10 SHARED DISPOSITIVE POWER NONE 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 29,500,000 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 42.1% 14 TYPE OF REPORTING PERSON HC CUSIP No. 372450 10 6 13D 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CARLO SALVI 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP JOINT FILING (a)/_/ (b)/_/ 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) /_/ 6 CITIZENSHIP OR PLACE OF ORGANIZATION SWITZERLAND 7 SOLE VOTING POWER NUMBER OF SHARES 29,990,000 BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH REPORTING NONE PERSON WITH 9 SOLE DISPOSITIVE POWER 29,990,000 10 SHARED DISPOSITIVE POWER NONE 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 29,990,000 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES /_/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 42.8% 14 TYPE OF REPORTING PERSON IN STATEMENT PURSUANT TO RULE 13d-1 OF THE GENERAL RULES AND REGULATIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Item 1. Security and Issuer. This statement on Schedule 13D (this "Schedule 13D") relates to the common stock, $.01 par value per share ("Common Stock") of Gensia Sicor, Inc., a Delaware corporation (the "Company"). The Company's principal executive offices are located at 9360 Towne Center Drive, San Diego, California, 92121, U.S.A. Item 2. Identity and Background. (a) - (c), (f) This Schedule 13D is being filed jointly by Rakepoll Finance N.V., a company organized under the laws of the Netherlands Antilles ("Rakepoll Finance"), Karbona Industries Ltd., a company organized under the laws of the Bahamas ("Karbona"), and Carlo Salvi, a citizen of Switzerland ("Salvi"; together with Rakepoll Finance and Karbona, the "Reporting Persons"). Rakepoll Finance is a holding company which is a majority-owned direct subsidiary of Karbona, a holding company which is wholly-owned by Salvi. The principal business and principal office addresses of Rakepoll Finance and Karbona are as follows: Rakepoll Finance N.V. 14 J.B. Gorsiraweg Curacao, Netherlands Antilles and Karbona Industries Ltd. IBM House 4th Floor East Bay Street Nassau, Bahamas Salvi is a director of both Rakepoll Finance and Karbona. The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted and the citizenship of each executive officer and director of Rakepoll Finance, including Salvi, are set forth on Schedule I hereto and are incorporated herein by reference. Karbona has no officers, executive or otherwise, and Salvi is its sole director. (d) - (e) None of the Reporting Persons has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanours) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. In addition, none of the Reporting Persons has any knowledge that any executive officer or director of Rakepoll Finance or Karbona has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanours) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. All of the shares of Common Stock beneficially owned by the Reporting Persons (other than 490,000 shares beneficially owned by Salvi) were acquired by Rakepoll Finance in a stock exchange with the Company (the "Stock Exchange") consummated on February 28, 1997 (the "Closing Date"). The Stock Exchange was consummated pursuant to the terms of the Stock Exchange Agreement, dated November 12, 1997, as amended on December 16, 1996 (the "Stock Exchange Agreement"), between the Company and Rakepoll Finance. Pursuant to such terms, on the Closing Date, Rakepoll Finance (i) exchanged all of the capital stock of Rakepoll Holding B.V., a company organized under the laws of the Netherlands ("Rakepoll Holding") and (prior to such Stock Exchange) a wholly-owned subsidiary of Rakepoll Finance, in consideration for 29,500,000 shares of Common Stock and $100,000 in cash and (ii) caused certain intercompany debt to be converted into equity and contributed to Rakepoll Holding. In addition, on the Closing Date, pursuant to a Deed of Assignment of Claims and Contract among Rakepoll Finance, Rakepoll Holding and Gensia, and in lieu conversion and contribution as provided for in the Stock Exchange Agreement, Rakepoll Finance assigned to Gensia certain other intercompany debt, consisting of claims of Rakepoll Finance against Rakepoll Holding. Item 4. Purpose of Transaction. In connection with the Stock Exchange Agreement, the Company and Rakepoll Finance entered into a Shareholder's Agreement, dated as of November 12, 1996, as amended December 21, 1996 and February 28, 1997 (the "Share- holder's Agreement"), which sets forth certain terms governing Rakepoll Finance's investment in the Company, including, among other things, (i) Rakepoll Finance's representation on the Company's Board of Directors (the "Board"), (ii) certain changes in Company management, (iii) the establishment and composition of a Company executive operating committee, (iii) special approvals required for certain Board actions and (iv) certain restrictions and rights with respect to Rakepoll Finance's ability to purchase or dispose of Company securities. Rakepoll Finance intends to influence and participate in the management and policies of the Company to the fullest extent permitted by Delaware General Corporation Law and by the Shareholder's Agreement, as described below. Pursuant to the terms of the Shareholder's Agreement, the Company is presently obligated to have ten members on the Board and to use its best efforts to cause the Board to consist of (i) two directors who are executive officers of the Company and not affiliated with Rakepoll Finance ("Management Directors"), (ii) three directors designated by Rakepoll Finance ("Investor Directors") and (iii) five independent directors to be designated jointly by the Management Directors and the Investor Directors ("Independent Directors"); provided, however, that the number of Investor Directors and Independent Directors which Rakepoll Finance is entitled to designate, jointly or otherwise, shall be reduced in proportion to certain reductions in Rakepoll Finance's percentage equity interest in the Company; and provided, further, that Rakepoll Finance's right so to designate any Investor Director or Independent Director shall terminate in the event that Rakepoll Finance's percentage equity interest in the Company is less than 10% of its percentage equity interest in the Company on and as of the Closing Date (its "Initial Interest"). Further, if, under certain circumstances, the holders of certain Company preferred stock become entitled to appoint two directors to the Board (the "Preferred Directors"), then for so long as such holders are entitled to designate the Preferred Directors, the Board shall be increased from ten to 12 directors and Rakepoll Finance shall thereafter be entitled to designate an additional Investor Director and one Management Director shall resign. On February 28, in connection with the consummation of the Stock Exchange and in furtherance of the foregoing, the following individuals were elected to the Board: (i) Carlo Salvi, Chairman of the Board of Rakepoll Finance, (ii) Michael D. Cannon, Executive Vice-President of the Company and an officer and director of SICOR-Societa Italiana Corticosteriodi S.p.A., a indirect wholly-owned subsidiary of the Company, (iii) Patrick D. Walsh, President and Chief Operating Officer of Gensia Laboratories, Ltd., and (iv) Donald E. Panoz, executive Chairman of the Board of Fountainhead Holdings Ltd. and of Fountainhead Development Corp. and non-executive Chairman of the Board of Warner Chilcott plc. The Shareholder's Agreement also requires that all necessary action be taken to cause (i) the designation of an Independent Director to serve as non-executive Chairman of the Board upon the mutual agreement of the Investor Directors and Management Directors, (ii) the appointment of David F. Hale as President and Chief Executive Officer of the Company, and (iii) the appointment of Michael D. Cannon to serve as Executive Vice-President of the Company. On February 28, 1997, in connection with the consummation of the Stock Exchange and in furtherance of the foregoing, the Board elected Donald Panoz to serve as Chairman of the Board. On the same date, the Board also appointed David F. Hale and Michael D. Cannon to the offices of the Company described in the foregoing paragraph. The Shareholder's Agreement further obligates the Company to establish an Executive Operating Committee, which shall be a management committee and not a committee of the Board, consisting of Carlo Salvi (who shall serve as Chairman of such committee), the President and Chief Executive Officer of the Company, the President of Gensia Laboratories, Ltd. and the Executive Vice-President of the Company. In connection with the consummation of the Stock Exchange and in furtherance of the foregoing, the Company has formed an Executive Operating Committee comprised of the following individuals: Carlo Salvi, David F. Hale, Patrick D. Walsh and Michael D. Cannon. The Shareholder's Agreement further provides that, as long as Rakepoll Finance's percentage equity interest in the Company is 50% or greater than its Initial Interest, the approval of the Investor Directors will be required in order for the Company to take certain corporate actions, including (i) the entry of the Company or any of its subsidiaries into any merger or consolidation, or the acquisition by any thereof of any business or assets which would constitute a substantial part of the business or assets of the Company, (ii) the disposition by the Company or any of its subsidiaries of all or substantially all of the business or assets of the Company, (iii) certain actions related to dissolution, liquidation or bankruptcy, (iv) the payment of an extraordinary dividend by the Company, (v) the issuance of any debt or equity securities of the Company in excess of a certain amount and (vi) the issuance of any debt or equity securities or other capital stock of any Company subsidiaries, except certain issuances pursuant to certain benefit or other plans approved by the Board or pursuant to the terms of certain Company securities outstanding on the Closing Date. For a period of twelve months after the Closing Date, under the terms of the Shareholder's Agreement, Rakepoll Finance and its affiliates are prohibited from acquiring or offering to acquire any Company securities, except (i) with the consent of a majority of the Independent Directors, (ii) in the event of any issuance by the Company of any equity securities not contemplated by the funding plan previously agreed to by Rakepoll Finance and the Company or (iii) under certain circumstances, following (a) the commencement by any third party of a bona fide tender or exchange offer to purchase in excess of 20% of the outstanding shares of Common Stock, (b) a bona fide proposal to acquire all or substantially all of the assets of the Company, (c) a bona fide proposal to enter into any other similar business combination with the Company or (d) a definitive agreement, or an agreement contemplating a definitive agreement, for any of the transactions described in clauses (iii)(a)-(c) above. Rakepoll Finance is also prohibited by the Shareholder's Agreement, for a period of twelve months after the Closing Date, from (i) disposing of any shares of Common Stock (and from permitting any affiliate thereof to do so) and (ii) disposing of any shares of the capital stock of any subsidiary thereof that owns shares of Common Stock, except to an affiliate of Rakepoll Finance that agrees in writing to be bound by the terms of the Shareholder's Agreement. The foregoing restrictions do not apply following the commencement by any third party of a bona fide tender or exchange offer to purchase in excess of 20% of the outstanding shares of Common Stock that the Board either recommends acceptance of, expresses no opinion and remains neutral towards, or is unable to take a position with respect to. In addition, the Shareholder's Agreement grants Rakepoll Finance certain anti-dilution privileges pursuant to which Rakepoll Finance, may, upon the authorization by the Board of the issuance of certain equity securities, acquire in the open market such number of shares of Common Stock so that Rakepoll Finance's percentage equity interest in the Company after such issuance is equal to but not greater than its Initial Interest. Finally, the Shareholder's Agreement provides that, at any time on or after the first anniversary of the Closing Date, the holders of Common Stock subject to the Shareholder's Agreement constituting at least 5% of the aggregate Common Stock outstanding immediately upon consummation of the Stock Exchange (the "Initiating Holders") may request that the Company file a registration statement under the Securities Act of 1933, as amended (the "Act"), covering the registration of the Registrable Securities (generally defined in the Shareholder's Agreement to include Common Stock and other securities convertible into such stock, acquired by Rakepoll Finance in accordance with the Stock Exchange and Shareholder's Agreements). The Company is thereupon obligated to use its best efforts to cause the registration under the Act of all Registrable Securities requested by the Initiating Holders and certain other holders of Common Stock which elect to participate in such registration; provided, that the Company shall not be obligated to cause the filing of more than two effective registration statements per year up to a maximum of five effective registration statements. In addition, under the terms of the Stock Exchange Agreement, Rakepoll Finance and the Company have also agreed that they presently intend that certain medical device products and research activities of the Company shall be transferred to other companies. The Company shall contribute to Automedics Development, Inc., a subsidiary of the Company, the assets, licenses, contracts, intellectual property and other associated rights related to certain existing Company medical device products and any medical device products in-licensed by the Company between the date of the Stock Exchange Agreement and the Closing Date. Rakepoll Finance and the Company have also agreed that, subsequent to the Closing Date, they will use their best efforts to present to the Board a plan to effectuate the spin-off of the Company's research activities into an independent company, so long as such spin-off is reasonably feasible. In connection with the consummation of the Stock Exchange, the Company was obligated to make certain amendments to the form of its certificate of incorporation and by-laws on or prior to the Closing Date. Amendments to the Company's certificate of incorporation (the "Certificate of Incorporation") included (i) a name change from "Gensia, Inc." to "Gensia Sicor Inc.", (ii) an increase in the number of authorized shares of Common Stock from 75,000,000 to 125,000,000 and (iii) an increase in the number of authorized shares of the Company's Series I Participating Preferred Stock, $.01 par value per share, from 100,000 to 125,000. The Company's by-laws (the "By-laws") were amended to implement certain provisions of the Shareholder's Agreement, including provisions with respect to board composition and special director approvals as described in this Item 4. A copy of each of the Shareholder's Agreement, Stock Exchange Agreement, Certificate of Incorporation and By-laws is attached as an exhibit to this Schedule 13D and the descriptions of the terms of each of such agreements contained in this Item 4 are qualified in their entirety by reference to such exhibits. Except as discussed in this Schedule 13D, none of the Reporting Persons has any present plans or proposals that relate to or that could result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. Each of the Reporting Persons reserves the right, either individually or in any combination thereof or together with one or more other shareholders of the Company, at any time, to reconsider and change its plans or proposals relating to the foregoing depending upon the circumstances prevailing at such time. Item 5. Interest in Securities of the Issuer. According to the Company, upon the consummation of the Stock Exchange, there were 70,108,045 shares of Common Stock outstanding on the Closing Date. The Common Stock ownership percentages set forth below are based on that number of shares of Common Stock outstanding. (a) Under the definition of "beneficial ownership" set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as at February 28, 1997, by virtue of the consummation of the Stock Exchange, each of the Reporting Persons may be deemed to beneficially own, either directly or indirectly, 29,500,000 shares of Common Stock, representing approximately 42.1% of Common Stock outstanding. Further, certain other companies which are wholly-owned by Salvi have acquired a total of 490,000 additional shares of Common Stock in prior transactions. As a result, under the definition of "beneficial ownership" set forth in Rule 13d- 3 under the Exchange Act, Salvi may be deemed to indirectly beneficially own an additional 490,000 shares of Common Stock. Taking account of such additional shares of Common Stock, Salvi may be deemed to beneficially own a total of 29,990,000 shares of Common Stock, representing approximately 42.8% of Common Stock outstanding. (b) Each of Rakepoll Finance and Karbona may be deemed to have sole voting and dispositive power with respect to 29,500,000 shares of Common Stock. There are no shares of Common Stock with respect to which either Rakepoll Finance or Karbona shares voting or dispositive power. Salvi may be deemed to have sole voting and dispositive power with respect to 29,990,000 shares of Common Stock. There are no shares of Common Stock with respect to which Salvi shares voting or dispositive power. (c) Except as set forth elsewhere herein, none of the Reporting Persons and, to the best knowledge of the Reporting Persons, no other person described in Item 2 of this Schedule 13D has engaged in any transaction during the past 60 days in any Common Stock. (d) None of the Reporting Persons knows of any other person who has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock beneficially owned by the Reporting Persons. (e) Not Applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The information set forth in Item 4 above is incorporated herein by reference. Other than as set forth in this Item 6, none of the Reporting Persons has any knowledge of any contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 of this Schedule 13D and between such persons and any person with respect to any securities of the Company. Item 7. Material to Be Filed as Exhibits. Exhibit 1 Stock Exchange Agreement, dated as of November 12, 1996, as amended December 16, 1996, between Gensia Sicor, Inc. and Rakepoll Finance N.V. Exhibit 2 Shareholder's Agreement, dated as of November 12, 1996, as amended December 21, 1996 and February 28, 1997, between Gensia Sicor, Inc. and Rakepoll Finance N.V. Exhibit 3 Restated Certificate of Incorporation of Gensia Sicor, Inc. Exhibit 4 By-laws of Gensia Sicor, Inc. Exhibit 5 Joint Filing Agreement dated as of March 7, 1997 among Rakepoll Finance N.V., Karbona Industries Ltd. and Carlo Salvi. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. RAKEPOLL FINANCE N.V. By: /s/ Carlo Salvi ---------------------------- Name: Carlo Salvi Title: Chairman of the Board DATED: March 7, 1997 SCHEDULE I DIRECTORS OF RAKEPOLL FINANCE N.V. Set forth below is the name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted and citizenship of each executive officer and director of Rakepoll Finance N.V. Name, Principal Business and Address of Corporation or Name, Citizenship Organization and Position with Present Principal in Which Such Rakepoll Finance Occupation or Employment Employment is Conducted - ------------------ --------------------------- ----------------------- Carlo Salvi (Swiss), Chairman of the Board, SICOR-Societa Italiana President and Director SICOR-Societa Italiana Corticosteriodi S.p.A. Corticosteriodi S.p.A. Via Terrazzano 77 20017 Rho, Milan Italy Jerome A. van Zuylen Managing Director, MeesPierson Trust (Dutch), Managing MeesPierson Trust (Curacao) N.V. Director (Curacao) N.V. 14 J.B. Gorsiraweg Curacao, Netherlands Antilles Reginald D. Schotborgh Senior Account Manager, MeesPierson Trust (Dutch), Managing MeesPierson Trust (Curacao) N.V. Director (Curacao) N.V. 14 J.B. Gorsiraweg Curacao, Netherlands Antilles INDEX OF EXHIBITS Exhibit Number Description - -------------- ----------- 1. Stock Exchange Agreement, dated as of November 12, 1996, as amended December 16, 1996, between Gensia Sicor, Inc. and Rakepoll Finance N.V. 2. Shareholder's Agreement, dated as of November 12, 1996, as amended December 21, 1996 and February 28, 1997, between Gensia Sicor, Inc. and Rakepoll Finance N.V. 3. Restated Certificate of Incorporation of Gensia Sicor, Inc. 4. By-laws of Gensia Sicor, Inc. 5. Joint Filing Agreement dated as of March 7, 1997 among Rakepoll Finance N.V., Karbona Industries Ltd. and Carlo Salvi. EX-99.1 2 EXHIBIT 1 STOCK EXCHANGE AGREEMENT BETWEEN GENSIA, INC. ("GENSIA"), and RAKEPOLL FINANCE N.V. ("RAKEPOLL FINANCE") November 12, 1996 TABLE OF CONTENTS Page ARTICLE 1 EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . 4 1.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . 4 1.2 Exchange of Shares and Additional Consideration . . . . . . 4 1.3 Delivery of Shares and Additional Consideration at Closing 5 1.4 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF GENSIA . . . . . . . . . 5 2.1 Organization and Standing . . . . . . . . . . . . . . . . . 5 2.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 6 2.3 Corporate Power and Authority . . . . . . . . . . . . . . . 6 2.4 Capitalization of Gensia . . . . . . . . . . . . . . . . . 6 2.5 Conflicts, Consents and Approval . . . . . . . . . . . . . 7 2.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.7 Intellectual Property Rights . . . . . . . . . . . . . . . 9 2.8 Title to and Condition of Properties . . . . . . . . . . . 10 2.9 Brokerage and Finder's Fees; Expenses . . . . . . . . . . . 10 2.10 Gensia SEC Documents . . . . . . . . . . . . . . . . . . . 10 2.11 [This Section intentionally left blank.] . . . . . . . . . 11 2.12 Compliance with Law . . . . . . . . . . . . . . . . . . . . 11 2.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 11 2.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 12 2.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.16 Accounts Receivable . . . . . . . . . . . . . . . . . . . . 15 2.17 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 15 2.18 No Material Adverse Change . . . . . . . . . . . . . . . . 15 2.19 Operation of Gensia's Business; Relationships . . . . . . . 15 2.20 Permits; Compliance . . . . . . . . . . . . . . . . . . . . 16 2.21 Product Warranties and Liabilities . . . . . . . . . . . . 16 2.22 Environmental Matters . . . . . . . . . . . . . . . . . . . 17 2.23 Opinion of Financial Advisor . . . . . . . . . . . . . . . 18 2.24 Board Recommendation . . . . . . . . . . . . . . . . . . . 18 2.25 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 18 2.26 Gensia Rights Agreement . . . . . . . . . . . . . . . . . . 19 2.27 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF RAKEPOLL FINANCE . . . . 19 3.1 Organization and Standing . . . . . . . . . . . . . . . . . 19 3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 20 3.3 Corporate Power and Authority . . . . . . . . . . . . . . . 20 3.4 Capitalization of Rakepoll Holding . . . . . . . . . . . . 21 3.5 Conflicts; Consents and Approvals . . . . . . . . . . . . . 21 3.6 Certain Rakepoll Holding Documents . . . . . . . . . . . . 22 3.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.8 Compliance with Law . . . . . . . . . . . . . . . . . . . . 24 3.9 Intellectual Property Rights . . . . . . . . . . . . . . . 24 3.10 Title to and Condition of Properties . . . . . . . . . . . 25 3.11 [This Section intentionally left blank.] . . . . . . . . . 25 3.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 25 3.13 Brokerage and Finder's Fees; Expenses . . . . . . . . . . . 26 3.14 Employee Matters . . . . . . . . . . . . . . . . . . . . . 26 3.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.16 Accounts Receivable . . . . . . . . . . . . . . . . . . . . 28 3.17 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 28 3.18 No Material Adverse Change . . . . . . . . . . . . . . . . 28 3.19 Operation of Rakepoll Holding's Business; Relationships . . 29 3.20 Permits; Compliance . . . . . . . . . . . . . . . . . . . . 29 3.21 Product Warranties and Liabilities . . . . . . . . . . . . 30 3.22 Environmental Matters . . . . . . . . . . . . . . . . . . . 30 3.23 [This section intentionally left blank.] . . . . . . . . . 31 3.24 Board Recommendation . . . . . . . . . . . . . . . . . . . 31 3.25 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . 31 3.26 Ownership of Rakepoll Holding Shares . . . . . . . . . . . 31 3.27 Exchange Entirely for Own Account . . . . . . . . . . . . . 31 3.28 Restricted Securities. . . . . . . . . . . . . . . . . . . 32 3.29 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3.30 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . 32 3.31 Authorization of Rakepoll Holding Subsidiaries . . . . . . 32 ARTICLE 4 COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . 32 4.1 Mutual Covenants . . . . . . . . . . . . . . . . . . . . . 33 4.2 Covenants of Gensia . . . . . . . . . . . . . . . . . . . . 37 4.3 Covenants of Rakepoll Finance . . . . . . . . . . . . . . . 39 ARTICLE 5 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . 41 5.1 Mutual Conditions . . . . . . . . . . . . . . . . . . . . . 41 5.2 Conditions to Obligations of Rakepoll Finance . . . . . . . 41 5.3 Conditions to Obligations of Gensia . . . . . . . . . . . . 42 ARTICLE 6 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . 43 6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 43 6.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 44 6.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 45 6.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 45 ARTICLE 7 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 45 7.1 Survival of Representations and Warranties . . . . . . . . 45 7.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 46 7.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . 46 7.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 47 7.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 47 7.6 Governing Law; Consent to Jurisdiction . . . . . . . . . . 47 7.7 Specific Performance . . . . . . . . . . . . . . . . . . . 47 7.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 48 7.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 48 Exhibit A - Form of Opinion of Counsel to Gensia Exhibit B - Form of Opinions of Counsel to Rakepoll Finance STOCK EXCHANGE AGREEMENT THIS STOCK EXCHANGE AGREEMENT (this "Agreement") is made and entered into as of the 12th day of November, 1996, by and between GENSIA, INC., a Delaware corporation ("Gensia"), and RAKEPOLL FINANCE N.V., a corporation organized under the laws of the Netherlands Antilles ("Rakepoll Finance"). PRELIMINARY STATEMENTS A. Gensia and Rakepoll Holding B.V., a company organized under the laws of the Netherlands ("Rakepoll Holding"), desire to combine their respective businesses. In order to effectuate this combination, all of the outstanding shares of Rakepoll Holding Common Stock (as defined in Section 3.4) outstanding at the Closing Date (as defined in Section 1.1) will be exchanged (the "Stock Exchange") for Gensia Common Shares (as defined in Section 2.4) and additional consideration, as more fully provided herein. B. The respective Boards of Directors of Gensia and Rakepoll Finance have determined the Stock Exchange in the manner contemplated herein to be desirable and in the best interests of their respective stockholders and, by resolutions duly adopted, have approved and adopted this Agreement. The shareholders of Rakepoll Finance (the "Rakepoll Finance Shareholders") have approved this Agreement and the Stock Exchange. C. Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Gensia's and Rakepoll Finance's willingness to enter into this Agreement, Gensia and the Rakepoll Finance Shareholders have entered into the Shareholder's Agreement, dated as of the date hereof (the "Shareholder's Agreement"). AGREEMENT NOW, THEREFORE, in consideration of these premises and the mutual and dependent promises hereinafter set forth, the parties hereto agree as follows: ARTICLE 1 EXCHANGE OF SHARES 1.1 Closing Date. The date on which the Closing is held shall be referred to as the "Closing Date." Subject to the satisfaction of the conditions to closing set forth in Article 5, the closing of the exchange of shares contemplated hereby (the "Closing") shall be held at the offices of Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San Francisco, California, at 10:00 A.M. California time on a date specified by the parties, which date shall be as soon as practicable, but in any event within two business days following the date upon which all conditions set forth in Article 5 hereof have been satisfied or waived, or at such other time and place as the parties mutually may agree. 1.2 Exchange of Shares and Additional Consideration. On the terms and subject to the satisfaction or waiver of the conditions set forth herein, at the Closing, (a) Rakepoll Finance shall sell, transfer, convey and assign all of the outstanding shares of Rakepoll Holding Common Stock to Gensia, (b) and shall receive in exchange for such shares of Rakepoll Holding Common Stock 29,500,000 newly issued shares of Gensia Common Shares and U.S. $100,000 in cash. 1.3 Delivery of Shares and Additional Consideration at Closing. At the Closing, Rakepoll Finance shall deliver to Gensia certificates evidencing the Rakepoll Holding Common Stock which are duly endorsed for transfer thereon or by means of duly executed stock powers attached thereto against delivery by Gensia of that number of shares of Gensia Common Shares provided in Section 1.2 in the name of Rakepoll Finance and U.S.$100,000 by check or wire transfer. 1.4 Tax Treatment. The parties intend that the purchase and sale of the Shares will not qualify as a "plan of reorganization" under Section 368 of the United States Internal Revenue Code of 1986, as amended (the "Code"), within the meaning of the regulations promulgated under Section 368 of the Code. The parties intend that the purchase of the shares of Rakepoll Holding Common Stock by Gensia will qualify as a "purchase" within the meaning of section 338 of the Code and that Gensia will be permitted, if it elects, to make a section 338 election with respect to Rakepoll Holding in accordance with the Code. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF GENSIA In order to induce Rakepoll Finance to enter into this Agreement, Gensia hereby represents and warrants to Rakepoll Finance that the statements contained in this Article 2 are true, correct and complete. 2.1 Organization and Standing. Gensia and each of its subsidiaries listed in Section 2.1 to the disclosure schedule (the "Gensia Subsidiaries" or individually a "Gensia Subsidiary"), delivered by Gensia to Rakepoll Finance and dated the date hereof (the "Gensia Disclosure Schedule") is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation with full corporate power and authority to own, lease, use and operate its properties and to conduct its business as and where now owned, leased, used, operated and conducted. Gensia and each Gensia Subsidiary is duly qualified to do business and in good standing in each jurisdiction listed in Section 2.1 to the Gensia Disclosure Schedule, is not qualified to do business in any other jurisdic- tion and neither the nature of the business conducted by it nor the property it owns, leases or operates requires it to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified, except where the failure to be so qualified or in good standing in such jurisdiction would not have a material adverse effect on the assets, liabilities, results of operations or financial condition (a "material adverse effect") on Gensia and the Gensia Subsidiaries taken as a whole. Gensia and each Gensia Subsidiary is not in default in the performance, observance or fulfillment of any provision of its articles or certificate of incorporation or incorporation deed or bylaws or other charter documents or corporate organizational documents ("Charter Documents"). 2.2 Subsidiaries. Gensia does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise, except as set forth in Section 2.2 to the Gensia Disclosure Schedule. Except as set forth in Section 2.2 to the Gensia Disclosure Schedule, Gensia is not subject to any obligation or requirement to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such entity. Gensia owns directly or indirectly each of the outstanding shares of capital stock (or other ownership interests having by their terms ordinary voting power to elect a majority of directors or others performing similar functions with respect to such Gensia Subsidiary) of each Gensia Subsidiary. Each of the outstanding shares of capital stock of each Gensia Subsidiary is duly authorized, validly issued, fully paid and nonassessable, and, is owned, directly or indirectly, by Gensia free and clear of all liens, pledges, security interests, claims or other encumbrances. The following information for each Gensia Subsidiary is set forth in Section 2.2 to the Gensia Disclosure Schedule, as applicable: (i) its name and jurisdiction of incorporation or organization; (ii) its authorized capital stock or share capital; and (iii) the number of issued and outstanding shares of capital stock or share capital and the record owner(s) thereof. Other than as set forth in Section 2.2 to the Gensia Disclosure Schedule, there are no outstanding subscriptions, options, warrants, puts, calls, agreements, under- standings, claims or other commitments or rights of any type relating to the issuance, sale or transfer of any securities of any Gensia Subsidiary, nor are there outstanding any securities which are convertible into or exchangeable for any shares of capital stock of any Gensia Subsidiary; and no Gensia Subsidiary has any obligation of any kind to issue any additional securities or to pay for securities of any Gensia Subsidiary or any prede- cessor thereof. 2.3 Corporate Power and Authority. Gensia has all requisite corporate power and authority to enter into this Agreement and, subject to authorization of the issuance of Gensia Common Shares issuable in the Stock Exchange and the transactions contemplated hereby by the stockholders of Gensia (the "Gensia Stockholders"), to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Gensia, subject to authorization of the issuance of Gensia Common Shares issuable in the Stock Exchange and the transactions contemplated hereby by Gensia Stock- holders. This Agreement has been duly executed and delivered by Gensia and constitutes the legal, valid and binding obligation of Gensia enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 2.4 Capitalization of Gensia. As of September 30, 1996, Gensia's authorized capital stock consisted solely of (a) 75,000,000 common shares, $.01 par value ("Gensia Common Shares"), of which (i) 36,950,792 shares were issued and outstanding and (ii) 12,503,294 shares were reserved for issuance upon the exercise or conversion of options, warrants or contingent value rights granted or issuable by Gensia or pursuant to Gensia's Employee Stock Purchase Plan, (b) 5,000,000 preferred shares, $.01 par value ("Gensia Preferred Stock"), of which (i) 1,894,000 shares have been designated as $3.75 Convertible Exchangeable Preferred Stock of which 1,600,000 shares were issued and outstanding or reserved for issuance, and (ii) 100,000 shares have been designated as Series I Participating Preferred Stock, none of which were issued or outstanding, all of which were reserved for issuance under the Gensia Preferred Stock Purchase Rights. Each outstanding share of Gensia capital stock is, and all Gensia Common Shares to be issued in connection with the Stock Exchange will be, duly authorized and validly issued, fully paid and nonassessable, and each outstanding share of Gensia capital stock has not been, and all Gensia Common Shares to be issued in connection with the Stock Exchange will not be, issued in violation of any preemptive or similar rights. As of the date hereof, other than as set forth in the first sentence hereof or in Section 2.4 to the Gensia Disclosure Schedule there are no outstanding subscriptions, options, warrants, puts, calls, agreements, understandings, claims or other commitments or rights of any type relating to the issuance, sale or transfer by Gensia of any equity securities of Gensia, nor are there outstanding any securities which are convertible into or exchangeable for any shares of capital stock of Gensia. Except as set forth in Section 2.4 to the Gensia Disclosure Schedule, all dividends on all series of Gensia Preferred Stock have been paid in full. Except as set forth in Section 2.4 to the Gensia Disclosure Schedule, Gensia has not agreed to register any securities under the Securities Act of 1933, as amended (the "Securities Act"), or under any state securities law or granted registration rights to any person or entity. Except for the Shareholder's Agreement or as set forth in Section 2.4 to the Gensia Disclosure Schedule, there are no voting trusts, stockholders agreements, proxies or other similar agreements or understandings in effect with respect to the voting or transfer of any of the shares of Gensia Common Shares. 2.5 Conflicts, Consents and Approval. Other than as set forth in Section 2.5 of the Gensia Disclosure Schedule neither the execution and delivery of this Agreement by Gensia nor the consummation of the transactions contemplated hereby will: (a) violate, conflict with, or result in a breach of any provision of the Charter Documents of Gensia or of any Gensia Subsidiary; (b) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with the giving of notice, the passage of time or otherwise, would constitute a default) under, require any consent under, or entitle any party (with the giving of notice, the passage of time or otherwise) to terminate, accelerate, modify or call a default under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties, shares of Gensia Common Shares or assets of Gensia or any Gensia Subsidiary under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, contract, undertaking, agreement, lease or other instrument or obligation to which Gensia or any Gensia Subsidiary is a party; (c) violate any order, writ, injunction, decree, statute, rule or regulation, applicable to Gensia or any Gensia Subsidiary or any of their respective business, properties or assets; or (d) require any action or consent or approval of, or review by, or registration or filing by Gensia or any Gensia Subsidiary or any of their respective affiliates with any third party or any court, arbitral tribunal, administrative agency or commission or other governmental or regulatory body, agency, instrumentality or authority (a "Governmental Authority"), other than (i) authorization of the issuance of Gensia Common Shares issuable in the Stock Exchange and the transactions contemplated hereby by Gensia Stockholders, (ii) authorization for trading and quotation of the Gensia Common Shares to be issued in the Stock Exchange and the transactions contemplated hereby on the Nasdaq National Market ("Nasdaq"), subject to official notice of issuance, (iii) actions required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regula- tions promulgated thereunder (the "HSR Act"), the voluntary notification to be made pursuant to section 721 of the Defense Production Act of 1950, as amended (the "Exon-Florio Amendment"), and any necessary Mexican approvals, and (iv) registrations or other actions required under applicable securities laws as are contemplated by this Agreement; except in the case of (b), (c) and (d) for any of the foregoing that would not, individually or in the aggregate, have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole or on its ability to consummate the transactions contemplated by this Agreement. 2.6 Taxes. Except for matters that would not have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole (i) all tax returns (including, without limitation, income, profit, franchise, sales and use, excise, severance, occupation, property, gross receipts, payroll and withholding tax returns and information returns), deposits and reports (all such returns, deposits and reports herein referred to collectively as "Tax Returns" or singularly as a "Tax Return") of or relating to any federal, state, local or foreign or other governmental tax (all together with any penalties, additions to tax, fines and interest thereon or related thereto, herein referred to collectively as "Taxes" or singularly as a "Tax") that are required to be filed or deposited for, by, on behalf of or with respect to Gensia and the Gensia Subsidiaries, including, but not limited to, those relating to the income, business, operations or property of Gensia and the Gensia Subsidiaries and those which include or should include Gensia and the Gensia Subsidiaries have been filed or deposited duly and on a timely basis and all Taxes and filing fees shown to be due and payable on such Tax Returns have been paid in full and all installments, assessments and charges of which Gensia or any Gensia Subsidiary is aware or has received notice and which are due and payable by Gensia or any Gensia Subsidiary have been paid in full; (ii) to the knowledge of Gensia or any Gensia Subsidiary, no such Tax Return contains any material misstatement or omits any material statement that should have been included; (iii) all Taxes imposed on Gensia or any Gensia Subsidiary (or for which Gensia or any Gensia Subsidiary is or could be liable, whether to any Governmental Authority or to other persons (as, for example, under tax allocation agreements)), for all periods up to the Closing Date which are due and payable on or before the Closing Date, have been paid or will be paid when due; (iv) none of such Tax Returns are now under audit or examination by any federal, state, local or foreign or other Governmental Authority and there are no agreements, waivers or other arrangements providing for an extension of time with respect to the assessment or collection of any Tax or deficiency of any nature against Gensia or any Gensia Subsidiary or with respect to any such Tax Return or any suits or other judicial or administrative actions, proceedings, investigations or claims now pending or, to the knowledge of Gensia or any Gensia Subsidiary, threatened against Gensia or any Gensia Subsidiary with respect to any Tax, governmental charge or assessment; (v) the latest balance sheet included in the Gensia Documents reflects and includes adequate provisions for the payment in full of any and all Taxes imposed on Gensia or any Gensia Subsidiary and not yet due for any and all periods up to and including the date of such balance sheet; (vi) all Taxes for which Gensia or any Gensia Subsidiary is liable for periods through the Closing Date (whether or not the period ends for tax purposes on the Closing Date) have been or will be, paid when due or adequately reserved against on the books of the Gensia or any Gensia Subsidiary on or prior to the Closing Date; (vii) Gensia and the Gensia Subsidiaries have withheld and remitted all amounts required to be withheld and have paid such amounts due to the appropriate authority on a timely basis and in the form required under the appropriate legislation; (viii) Gensia and the Gensia Subsidiaries have not been and are currently not required to file a Tax Return in any jurisdiction other than the United States, Germany and the United Kingdom; and (ix) Gensia and the Gensia Subsidiaries have not acquired property from or disposed of property for proceeds less than the fair market value thereof to any person who is considered a related party to Gensia or the Gensia Subsidiaries under the transfer pricing rules of the applicable jurisdiction. The Gensia balance sheets at December 31, 1995 and June 30, 1996 contain adequate reserves against any liability for Taxes for which Gensia or any Gensia Subsidiaries could be liable in respect of any audit or examination set forth on the Gensia Disclosure Schedule. There is no Tax lien, whether imposed by any federal, state, county, local or foreign taxing authority, outstanding against the assets, properties or business of Gensia or any Gensia Subsidiary other than liens for current Taxes not yet due for which adequate reserves have been provided for. All material elections and consents with respect to any Tax (or the computation thereof) affecting Gensia and the Gensia Subsidiaries as of the date hereof are obvious from the Tax Returns or are set forth on the Gensia Disclosure Schedule. After the date hereof, no election or consent with respect to any Tax (or the computation thereof) affecting Gensia and the Gensia Subsidiaries will be made without the written consent of Rakepoll Finance. Gensia and the Gensia Subsidiaries have not agreed to make and are not required to make any adjustment under Section 481(a) of the Code, by reason of a change in accounting method or otherwise. Gensia and the Gensia Subsidiaries are not a party to any agreement, contract, arrangement or plan that has resulted, or as a consequence of the transactions contemplated hereby will result, separately or in the aggregate, in the payment of any excess parachute payments within the meaning of Section 280G of the Code. Gensia and the Gensia Subsidiaries have not filed a consent under Section 341(f) concerning collapsible corporations. Gensia is not, and was not at any time during the previous 5 years, a United States real property holding corporation, as defined in Section 897 of the Code. 2.7 Intellectual Property Rights. Except as disclosed in Section 2.7 to the Gensia Disclosure Schedule: (a) To Gensia's knowledge and except as set forth in Section 2.7(a) to the Gensia Disclosure Schedule, Gensia or a Gensia Subsidiary owns or has a license to use all patents and patent applications, trademark registrations and applications and copyright registrations and applications, and all other material intangible property and technology ("Intellectual Property") which are used by Gensia or any Gensia Subsidiary free and clear of all mortgages, liens, loans and encumbrances, except such encumbrances and liens which arise in the ordinary course of business and do not materially impair such ownership or use of such Intellectual Property or materially detract from the value thereof. With respect to such Intellectual Property licensed by Gensia or any Gensia Subsidiary, to Gensia's knowledge such licenses are in full force and effect, Gensia or such Gensia Subsidiary is in compliance with the terms and provisions thereof, and no event has occurred which, with notice or lapse of time or both, would constitute a breach or violation thereof which could have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole, and Gensia or such Gensia Subsidiary holds a valid license to use such Intellectual Property, free of any liens, claims or encumbrances except those liens, claims or encumbrances which do not and will not, individually or in the aggregate, have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. (b) To Gensia's knowledge, Gensia and the Gensia Subsidiaries have the right and authority to use such Intellectual Property in connection with the conduct of the business of Gensia and the Gensia Subsidiaries in the manner and to the extent such business is presently conducted, and neither Gensia nor any Gensia Subsidiary has been notified of any claim that such use conflicts with, infringes upon or violates any rights of any other person or entity, except to the extent that such conflict, infringement or violation does not and will not, individually or in the aggregate, have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. 2.8 Title to and Condition of Properties. Gensia and each Gensia Subsidiary owns or holds under valid leases all real property, plants, machinery and equipment necessary for the conduct of the business of Gensia and each Gensia Subsidiary, respectively, as presently conducted, except where the failure to own or hold such property, plants, machinery and equip- ment would not have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. Section 2.8 to the Gensia Disclosure Schedule lists, and Gensia and each Gensia Subsidiary have furnished or made available to Rakepoll Finance, copies of all third party environmental or other reports prepared by or for Gensia or any Gensia Subsidiary with respect to the real property owned, leased or used by Gensia or any Gensia Subsidiary. 2.9 Brokerage and Finder's Fees; Expenses. Except as disclosed on Schedule 2.9 to the Gensia Disclosure Schedule, and except for Gensia's obligations to CS First Boston ("First Boston") (a copy of the written agree- ment, as amended, relating to such obligations having previously been provided to Rakepoll Finance), neither Gensia nor any Gensia Subsidiary, nor any stockholder, director, officer or employee of Gensia or any Gensia Subsidiary thereof, has incurred or will incur on behalf of Gensia or any Gensia Subsidiary, any brokerage, finder's or similar fee in connection with the transactions contemplated by this Agreement. Section 2.9 to the Gensia Disclosure Schedule discloses a bona fide estimate of the aggregate amount of all fees and expenses (including, without limitation, fees and expenses payable to all banks, investment banking firms and other financial institutions and their respective agents and counsel for arranging or providing financial advice with respect to the Stock Exchange and all reasonable fees and expenses of counsel, accountants, experts and consultants to Gensia) expected to be paid by Gensia and each Gensia Subsidiary up to and including the Closing Date to all attorneys, accountants and investment bankers in connection with the Stock Exchange ("Gensia Stock Exchange Fees"). 2.10 Gensia SEC Documents. Gensia has timely filed with the Securities and Exchange Commission ("Commission") all forms, reports, schedules, statements and other documents required to be filed by it since December 31, 1992 under the Securities Exchange Act of 1934, as amended (together with the rules and regulations thereunder, the "Exchange Act") or the Securities Act, including, without limitation, any financial statements or schedules included therein (such documents, as supplemented and amended since the time of filing, collectively, the "Gensia SEC Documents"). The Gensia SEC Documents at the time filed (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of mailing, respectively) (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circum- stances under which they were made, not misleading, and (b) complied as to form in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be. The financial statements of Gensia included in the Gensia SEC Documents (including the notes and schedules relating thereto) at the time filed (and, in the case of registration statements and proxy statements, on the date of effectiveness and the date of mailing, respectively) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, were prepared in accordance with United States generally accepted accounting principles stated in United States Dollars applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the Commission), include all adjustments (consisting of any normal recurring accruals) that are necessary for a fair presentation of the consolidated financial condition of Gensia and the Gensia Subsidiaries and the results of operations of Gensia and the Gensia Subsidiaries, and fairly present (subject in the case of unaudited statements to normal, recurring audit adjustments) the consolidated financial condition of Gensia and its consolidated subsidiaries as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended. 2.11 [This Section intentionally left blank.] 2.12 Compliance with Law. To the knowledge of Gensia, Gensia and each Gensia Subsidiary is in material compliance with, and at all times since December 31, 1992 has been in material compliance with, all applicable laws, statutes, orders, rules, regulations, policies or guidelines promulgated, or judgments, decisions or orders entered by any Governmental Authority (collec- tively, "Applicable Laws") relating to Gensia or any Gensia Subsidiary or their respective business or properties, including, without limitation, laws regarding the provision of insurance, third party administration and primary health care services, the Prescription Drug Marketing Act, the Federal Controlled Substances Act of 1970, the Food, Drug and Cosmetic Act, any federal or state Pharmacy Practice Acts, Controlled Substance Acts, Dangerous Drugs Acts and Food, Drug and Cosmetic Acts, the Occupational Safety and Health Act and the regulations promulgated thereunder ("OSHA") and all rules of professional conduct applicable to Gensia or any Gensia Subsidiary by which any of its properties are bound or subject, except where the failure to be in compliance therewith could not reasonably be expected to have a mate- rial adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. 2.13 Litigation. Except as set forth in Section 2.13 to the Gensia Disclosure Schedule, there is no suit, claim, action, proceeding or investigation (an "Action") pending or, to the knowledge of Gensia, threat- ened against Gensia or any Gensia Subsidiary which, individually or in the aggregate, could reasonably be expected to have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole or a material adverse effect on the ability of Gensia to consummate the transactions contemplated hereby. None of Gensia and the Gensia Subsidiaries is subject to any outstanding order, writ, injunction or decree which, individually or in the aggregate, insofar as can be reasonably foreseen, could have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole or a material adverse effect on the ability of Gensia to consummate the transac- tions contemplated hereby. Except as set forth in Section 2.13 to the Gensia Disclosure Schedule, since December 31, 1992, Gensia and each Gensia Subsidiary have not been subject to any outstanding order, writ, injunction or decree relating to Gensia's or any Gensia Subsidiary's method of doing business or its relationship with past, existing or future users or purchasers of any goods or services of Gensia or any Gensia Subsidiary. 2.14 Employee Benefit Plans. (a) For purposes of this Section 2.14, the following terms have the definitions given below: "Controlled Group Liability" means any and all liabilities under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii) sections 412 and 4971 of the Code, (iv) the continuation coverage requirements of section 601 et seq. of ERISA and section 4980B of the Code, and (v) corresponding or similar provisions of foreign laws or regulations, in each case other than pursuant to the Gensia Plans. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder and corresponding or similar provisions of foreign laws or regulations. "ERISA Affiliate" means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same "controlled group" as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA. "Gensia Plans" means all employee benefit plans, programs, policies, practices, and other arrangements providing benefits to any employee or former employee or beneficiary or dependent thereof, whether or not written, and whether covering one person or more than one person, sponsored or maintained by Gensia and each Gensia Subsidiary or to which Gensia or any Gensia Subsidiary contributes or is obligated to contribute. Without limiting the generality of the foregoing, the term "Gensia Plans" includes all employee welfare benefit plans within the meaning of Section 3(1) of ERISA and all employee pension benefit plans within the meaning of Section 3(2) of ERISA. (b) Section 2.14(b) to the Gensia Disclosure Schedule lists all Gensia Plans. With respect to each Gensia Plan, Gensia and each Gensia Subsidiary have made available to Rakepoll Holding a true, correct and complete copy of: (i) each writing constituting a part of such Gensia Plan, including without limitation all plan documents, benefit schedules, trust agreements, and insurance contracts and other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (iii) the current summary plan description, if any; (iv) the most recent annual financial report, if any; and (v) the most recent determination letter from the IRS, if any. (c) The Internal Revenue Service has issued a favorable determination letter with respect to each Gensia Plan that is intended to be a "qualified plan" within the meaning of Section 401(a) of the Code (a "Qualified Plan") and there are no existing circumstances nor any events that have occurred that could adversely affect the qualified status of any Qualified Plan or the related trust. (d) All contributions required to be made to any Gensia Plan by Applicable Laws or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any Gensia Plan, for any period through the date hereof have been timely made or paid in full and through the Closing Date will be timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof or the Closing Date, as applicable, have been or will be fully reflected in the Gensia SEC Documents filed or to be filed with the Commission. (e) Gensia and all Gensia Subsidiaries have complied, and are now in compliance, in all material respects, with all provisions of ERISA, the Code and all laws and regulations applicable to the Gensia Plans. There is not now, and there are no existing circumstances that could give rise to, any requirement for the posting of security with respect to a Gensia Plan or the imposition of any lien on the assets of Gensia or any Gensia Subsidiary under ERISA or the Code. (f) No Gensia Plan is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code. No Gensia Plan is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor has Gensia or any Gensia Subsidiary or any of their respective ERISA Affiliates, at any time within five years before the date hereof, contributed to or been obligated to contribute to any Multiemployer Plan or Multiple Employer Plan. (g) There does not now exist, and there are no existing circum- stances that could result in, any Controlled Group Liability that would be a liability of Gensia or any Gensia Subsidiary following the Closing. Without limiting the generality of the foregoing, neither Gensia nor any Gensia Subsidiary nor any of their respective ERISA Affiliates has engaged in any transaction described in Section 4069 or Section 4204 of ERISA. (h) Except for health continuation coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA, neither Gensia nor any Gensia Subsidiary has any liability for life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof. (i) Except as set forth in Section 2.14(i) to the Gensia Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will result in, cause the accelerated vesting or delivery of, or increase the amount or value of, any payment or benefit to any employee of Gensia or any Gensia Subsidiary. Without limiting the generality of the foregoing and except as set forth in Section 2.14(i) to the Gensia Disclosure Schedule, no amount paid or payable by Gensia or any Gensia Subsidiary in connection with the transactions contemplated hereby will be an "excess parachute payment" within the meaning of Section 280G of the Code. (j) There are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted against the Employee Plans, any fiduciaries thereof with respect to their duties to the Employee Plans or the assets of any of the trusts under any of the Employee Plans which could reasonably be expected to result in any material liability of Gensia or any Gensia Subsidiary to the Pension Benefit Guaranty Corporation, the Department of Treasury, the Department of Labor or any multiemployer plan. (k) Section 2.14(k) to the Gensia Disclosure Schedule sets forth the names of all directors and officers of Gensia and each Gensia Subsidiary, the total salary, bonus, fringe benefits and perquisites each received in the fiscal year ended December 31, 1995, and any changes to the foregoing which have occurred subsequent to December 31, 1995; Section 2.14(k) to the Gensia Disclosure Schedule also lists and describes the current compensation of any other employee of Gensia or any Gensia Subsidiary whose salary and bonus in 1995 exceeded U.S. $150,000. Except as disclosed in Section 2.14(k) to the Gensia Disclosure Schedule or in the Gensia SEC Documents, there are no other material forms of compensation paid to any such director, officer or employee of Gensia or any Gensia Subsidiary. Except as set forth in Section 2.14(k) to the Gensia Disclosure Schedule, no officer, director, or employee of Gensia or any other affiliate of Gensia, or any immediate family member of any of the foregoing, provides or causes to be provided to Gensia or any Gensia Subsidiary any material assets, services or facilities and Gensia and each Gensia Subsidiary does not provide or cause to be provided to any such officer, director, employee or affiliate, or any immediate family member of any of the foregoing, any material assets, services or facilities. 2.15 Contracts. Section 2.15 to the Gensia Disclosure Schedule lists all written or oral contracts, agreements, guarantees, leases and executory commitments (each a "Contract") to which Gensia or any Gensia Subsidiary is a party and which fall within any of the following categories: (a) Contracts valued at over U.S. $250,000 obligating any party to pay or receive money, goods or services, (b) joint venture, partnership and similar agreements, (c) Contracts which are service contracts or equipment leases involving payments by Gensia or any Gensia Subsidiary of more than U.S. $100,000 per year, (d) Contracts containing covenants purporting to limit the freedom of Gensia or any Gensia Subsidiary to compete in any line of business in any geographic area or to hire any individual or group of individuals, (e) Contracts which after the Closing Date would have the effect of limiting the freedom of Rakepoll Holding or the Rakepoll Holding Subsidiaries (other than Gensia and each Gensia Subsidiary) to compete in any line of business in any geographic area or to hire any individual or group of individuals, (f) Contracts which contain minimum purchase conditions or requirements or other terms that restrict or limit the purchasing relationships of Gensia or any Gensia Subsidiary, (g) Contracts relating to any outstanding commitment for capital expenditures in excess of U.S. $250,000, (h) Contracts relating to the lease or sublease of or sale or purchase of real or personal property involving any annual expense or price in excess of U.S. $100,000 and not cancelable by Gensia or any Gensia Subsidiary (without premium or penalty) within one month, (i) Contracts with any labor organization, (j) indentures, mortgages, promissory notes, loan agreements, guarantees of amounts in excess of U.S. $100,000, letters of credit or other agreements or instruments of Gensia or any Gensia Subsidiary or commitments for the borrowing or the lending of amounts in excess of U.S. $100,000 or by Gensia or any Gensia Subsidiary or providing for the creation of any charge, security interest, encumbrance or lien upon any of the assets of Gensia or any Gensia Subsidiary, (k) Contracts involving annual revenues or expenditures to the business of Gensia or any Gensia Subsidiary in excess of 5.0% of Gensia's annual revenues and (l) Contracts with or for the benefit of any officer, director or affiliate of Gensia or any Gensia Subsidiary or immediate family member thereof. All such Contracts are valid and binding obligations of Gensia or the Gensia Subsidiary, as the case may be, and, to the knowledge of Gensia and each Gensia Subsidiary, are the valid and binding obligation of each other party thereto except such Contracts which if not so valid and binding would not, individually or in the aggregate, have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. Neither Gensia or any Gensia Subsidiary nor, to the knowledge of Gensia or any Gensia Subsidiary, any other party thereto is in violation of or in default in respect of, nor has there occurred an event or condition which with the passage of time or giving of notice (or both) would constitute a default under, any such Contract except such violations or defaults under such Contracts which, individually or in the aggregate, would not have a material adverse effect on Gensia and each Gensia Subsidiary. 2.16 Accounts Receivable. Except as disclosed in Section 2.16 to the Gensia Disclosure Schedule, all accounts and notes receivable (including lease and finance notes receivable) and accrued interest receivable of Gensia and each Gensia Subsidiary have arisen in the ordinary course of business and the accounts receivable reserves reflected on the balance sheet as of September 30, 1996 are as of such date established in accordance with United States generally accepted accounting principles consistently applied and to the best knowledge of Gensia and each Gensia Subsidiary will be collectible in the ordinary course of business in an amount not less than the amounts thereof carried on the balance sheet as of such date included in the Gensia Documents, net of any reserves included thereon, as applicable, except for any uncollectible amount which, individually or in the aggregate, would not have a material adverse effect on Gensia and each Gensia Subsidiary. 2.17 Labor Relations. There is no unfair labor practice complaint against Gensia or any Gensia Subsidiary pending and there is no labor strike, dispute, slowdown or stoppage, or any union organizing campaign, actually pending or, to the knowledge of Gensia or any Gensia Subsidiary, threatened against or involving Gensia or any Gensia Subsidiary. 2.18 No Material Adverse Change. Except as set forth in Section 2.18 to the Gensia Disclosure Schedule, since December 31, 1995, Gensia and each Gensia Subsidiary have conducted their respective business in the ordinary course, consistent with past practice, and there has been no (i) material adverse change in the assets, liabilities, results of operations or financial condition of Gensia and the Gensia Subsidiaries taken as a whole except for (1) operating losses in the ordinary course of business not exceeding $60 million for 1996 and $15 million per quarter thereafter until the Closing Date in the aggregate, (2) any failure to receive regulatory approval of the GenESA System and (3) any failure to receive regulatory approval of pending Abbreviated New Drug Applications of Gensia or any Gensia Subsidiary or (ii) material adverse effect on the ability of Gensia to consummate the transactions contemplated hereby. 2.19 Operation of Gensia's Business; Relationships. (a) Since December 31, 1995, Gensia and each Gensia Subsidiary have not engaged in any transaction which, if entered into and/or consummated after execution of this Agreement, would violate Section 4.1(h) hereof except as described or reflected in the Gensia SEC Documents or as set forth in Section 2.19 to the Gensia Disclosure Schedule. Section 2.19 to the Gensia Disclosure Schedule describes each termination or nonrenewal that has occurred with respect to any Contract with any lessee or licensee of Intel- lectual Property, from December 31, 1995 to the date hereof. (b) Except as set forth in Section 2.19(b) of the Gensia Disclosure Schedule, the relationships of Gensia and each Gensia Subsidiary with its customers and suppliers are satisfactory and the execution of this Agreement, the Stock Exchange and the transactions contemplated hereby will not materially adversely affect the relationships of Gensia or any Gensia Subsidiary with such customers or suppliers. (c) Except as disclosed in Section 2.19(c) of the Gensia Disclosure Schedule, no product produced by Gensia or any Gensia Subsidiary or produced for Gensia or any Gensia Subsidiary by a third party and bearing a Gensia or any Gensia Subsidiary trademark or other Proprietary Right of Gensia or any Gensia Subsidiary, has been recalled voluntarily or involuntarily since December 31, 1992, no such recall is being considered by Gensia, and, to the knowledge of Gensia and each Gensia Subsidiary, no such recall is being considered by or has been requested or ordered by any Govern- mental Authority or consumer group. 2.20 Permits; Compliance. Gensia and each Gensia Subsidiary are in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate their respective properties and to carry on their respective business as it is now being conducted other than those which are immaterial (collectively, the "Gensia Permits"), and there is no Action pending or, to the knowledge of Gensia and each Gensia Subsidiary, threatened regarding suspension or cancellation of any of the Gensia Permits, except for any such Action which, if determined adversely, could not reasonably be expected, individually or in the aggregate, to have a material adverse effect on Gensia. Gensia and each Gensia Subsidiary is not in conflict with, or in default or violation of, any of the Gensia Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. Since December 31, 1992, Gensia and each Gensia Subsidiary have not received any notification with respect to possible conflicts, defaults or violations of Applicable Laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations could not reasonably be expected to have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. 2.21 Product Warranties and Liabilities. Except as set forth in Section 2.21 to the Gensia Disclosure Schedule, Gensia and each Gensia Subsidiary have no forms of warranties or guarantees of its products and services that are in effect or proposed to be used by it. Section 2.21 to the Gensia Disclosure Schedule sets forth a description, which is true and correct in all material respects, of each pending or, to the knowledge of Gensia, threatened material Action under any warranty or guaranty against Gensia and each Gensia Subsidiary. Gensia and each Gensia Subsidiary have not incurred, nor does Gensia or any Gensia Subsidiary know or have any reason to believe there is any basis for alleging, any material liability, damage, loss, cost or expense as a result of any material defect or other deficiency (whether of design, materials, workmanship, labeling instructions or otherwise) ("Product Liability") with respect to any product sold or services rendered by or on behalf of Gensia or any Gensia Subsidiary (including any lessee thereof) prior to the Closing Date, whether such Product Liability is incurred by reason of any express or implied warranty (including, without limitation, any warranty of merchantability or fitness), any doctrine of common law (tort, contract or other), any statutory provision or otherwise and irrespective of whether such Product Liability is covered by insurance. 2.22 Environmental Matters. (a) As used in this Agreement, the term "Mexican Environmental Laws" means all federal, state, local or foreign laws, including common law and Mexican Civil Law, relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or industrial, toxic or hazardous substances or wastes (collectively, "Hazardous Materials") into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. In specific reference to the Mexican component of this Agreement: "Environment" means soil, surface waters, groundwaters, stream sediments, surface or subsurface strata, ambient air and any environmental media. "Environmental Authorizations" means any permit, license, manifest, consent agreement, acknowledgment, report, log or approval related to environmental, health and safety compliance established in the Environmental Laws or required by any federal, state or local Mexican government agency. "Mexican Environmental Laws" means any of the following laws of Mexico: the General Environmental Law for Ecological Equilibrium and Environmental Protection, the Environmental Law for the Federal District, the Environmental Law for the State of Mexico, the Regulations on Air Emissions, Hazardous Waste, Environmental Impact and Noise, the National Water Law and its Regulation, the Regulation for the Land Transportation of Hazardous Material and Waste, the federal and state Civil and Criminal Codes, and all civil, administrative and criminal jurisprudence, decrees, agreements, guidelines, ordinances and Official Mexican Standards (NOMs), at the federal, state or local level, pertaining to the environment, health or safety in effect at any time up to the date of closing or during the period of post- closing occupancy of the properties. "Mexican Hazardous Materials" means any material or waste in any physical form, which is either corrosive, reactive, explosive, toxic, flammable or biologically infectious, in accordance with the General Environmental Law for Ecological Equilibrium and Environmental Protection, its Hazardous Waste Regulation, Official Mexican Standard NOM-052-ECOL-1993 which defines the criteria for hazardous classification and contains a list of hazardous waste regulated under Mexican Law, the Regulation for the Land Transportation of Hazardous Material and Waste, the General Health Law, the Federal Labor Law, the National Water Law or any other material or waste classified by its characteristics or in official lists as hazardous to human health or the environment by Mexican legislation or authorities. Except as listed in Section 2.22 to the Gensia Disclosure Schedule: (b) There are, with respect to Gensia and each Gensia Subsidiary, or any predecessor of the foregoing, no past or present material violations of Environmental Laws, nor actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any liability pursuant to any Environmental Law and none of Gensia or any Gensia Subsidiary has received any notice with respect to any of the foregoing, nor is any Action pending or threatened in connection with any of the foregoing. (c) No Hazardous Materials are present on or about any real property currently owned, leased or used by Gensia or any Gensia Subsidiary and no Hazardous Materials were present on or about any real property previously owned, leased or used by Gensia or any Gensia Subsidiary during the period the property was owned, leased or used by Gensia or any Gensia Subsidiary, except in the normal course of Gensia's or any Gensia Subsidiary's business. (d) No Hazardous Materials have been released on or about, or where they may pose a threat of migration to, any real property currently owned, leased or used by Gensia or any Gensia Subsidiary and no Hazardous Materials were released on or about any real property previously owned, leased or used by Gensia or any Gensia Subsidiary during the period the property was owned, leased or used by Gensia or any Gensia Subsidiary, except as may be required in the normal course of business and in compliance with applicable Environmental Laws in all material respects. (e) No asbestos-containing materials or polychlorinated biphenyls ("PCBs") are present on or about any property currently owned, leased or used by Gensia or any Gensia Subsidiary. (f) There are not now nor have there ever been any underground storage tanks or similar facilities of any kind on or under any real property currently or previously owned, leased or used by Gensia or any Gensia Subsidiary. 2.23 Opinion of Financial Advisor. Gensia has received the written opinion of First Boston, its financial advisor, to the effect that, as of November 12, 1996, the Stock Exchange is fair to Gensia from a financial point of view, Gensia has heretofore provided a copy of such opinion to Rakepoll Finance and such opinion has not been withdrawn, revoked or modified. 2.24 Board Recommendation. The Board of Directors of Gensia, at a meeting duly called and held, has (i) determined that this Agreement and the transactions contemplated hereby, including the Stock Exchange, are fair to and in the best interests of the Gensia Stockholders, and (ii) resolved to recommend that the Gensia Stockholders approve and authorize the issuance of Gensia Common Shares in the Stock Exchange and the transactions contemplated hereby. 2.25 Undisclosed Liabilities. Except (i) as and to the extent disclosed or reserved against on the consolidated balance sheet of Gensia as of June 30, 1996 included in the Gensia SEC Documents, (ii) as incurred after June 30, 1996 in the ordinary course of business consistent with prior prac- tice and not prohibited by this Agreement or (iii) as set forth in Section 2.25 to the Gensia Disclosure Schedule, Gensia and the Gensia Subsidiaries do not have any liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, that, individually or in the aggregate, have or could reasonably be expected to have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. All payments by or for the benefit of Gensia and the Gensia Subsidiaries to agents, consultants and others have been in payment of bona fide fees and commissions and not as bribes or illegal or improper payments. Gensia and the Gensia Subsidiaries have complied with the Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder and, in each case, have not made any payment to or on behalf of any person with respect to which a deduction could be disallowed under Section 162(c) of the Code. Neither the Internal Revenue Service nor any other federal, state, local or foreign government agency or entity has initiated or threatened any investigation of any payment made by Gensia or any Gensia Subsidiary of, or alleged to be of, the type described in this Section 2.25. 2.26 Gensia Rights Agreement. The Stockholder Rights Agreement dated as of March 16, 1992, between Gensia and ChaseMellon Shareholder Services, L.L.C., as successor in interest to First Interstate Bank (the "Rights Agreement"), has been amended, and will remain amended (and no replacement plan will be adopted), so as to provide that none of Rakepoll Finance and its affiliates will become an "Acquiring Person" and that no "Stock Acquisition Date" or "Distribution Date" (as such terms are defined in the Rights Agreement) will occur as a result of the execution of this Agreement or the consummation of the Stock Exchange pursuant to this Agreement. 2.27 Takeover Laws. Prior to the date hereof, the Board of Directors of Gensia has taken all action necessary to approve for purposes of, or to exempt under, or make not subject to any takeover law or law that purports to limit or restrict business combinations or the ability to acquire or vote shares, including without limitation, Section 203 of the Delaware General Corporation Law: (i) the execution of this Agreement, (ii) the Stock Exchange and (iii) the transactions contemplated hereby. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF RAKEPOLL FINANCE In order to induce Gensia to enter into this Agreement, Rakepoll Finance hereby represents and warrants to Gensia that the statements contained in this Article 3 are true, correct and complete. 3.1 Organization and Standing. Rakepoll Finance, Rakepoll Holding and each of the Rakepoll Holding subsidiaries listed in Section 3.1 of the disclosure schedule (the "Rakepoll Holding Subsidiaries" or individually a "Rakepoll Holding Subsidiary") delivered by Rakepoll Finance to Gensia and dated the date hereof (the "Rakepoll Holding Disclosure Schedule") is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation with full corporate power and authority to own, lease, use and operate its properties and to conduct its business as and where now owned, leased, used, operated and conducted. Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary is duly qualified to do business and in good standing in each jurisdiction listed in Section 3.1 to the Rakepoll Holding Disclosure Schedule, is not qualified to do business in any other jurisdiction and neither the nature of the business conducted by it nor the property it owns, leases or operates requires it to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified, except where the failure to be so qualified or in good standing in such jurisdiction would not have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. Rakepoll Holding and each Rakepoll Holding Subsidiary is not in default in the performance, observance or fulfillment of any provision of its Charter Documents. 3.2 Subsidiaries. Rakepoll Holding does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise, except as set forth in Section 3.2 to the Rakepoll Holding Disclosure Schedule. Except as set forth in Section 3.2 to the Rakepoll Holding Disclosure Schedule, Rakepoll Holding is not subject to any obligation or requirement to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such entity. Rakepoll Holding owns directly or indirectly each of the outstanding shares of capital stock (or other ownership interests having by their terms ordinary voting power to elect a majority of directors or others performing similar functions with respect to such Rakepoll Holding Subsidiary) of each Rakepoll Holding Subsidiary. Each of the outstanding shares of capital stock of each Rakepoll Holding Subsidiary is duly authorized, validly issued, fully paid and nonassessable, and, is owned, directly or indirectly, by Rakepoll Holding free and clear of all voting trust arrangements, liens, pledges, security interests, restrictions, claims or other encumbrances. The following information for each Rakepoll Holding Subsidiary is set forth in Section 3.2 to the Rakepoll Holding Disclosure Schedule, as applicable: (i) its name and jurisdiction of incorporation or organization; (ii) its authorized capital stock or share capital; and (iii) the number of issued and outstanding shares of capital stock or share capital and the record owner(s) thereof. Other than as set forth in Section 3.2 to the Rakepoll Holding Disclosure Schedule, there are no outstanding subscriptions, options, warrants, puts, calls, agreements, understandings, claims or other commitments or rights of any type relating to the issuance, sale or transfer of any securities of any Rakepoll Holding Subsidiary, nor are there outstanding any securities which are convertible into or exchangeable for any shares of capital stock of any Rakepoll Holding Subsidiary; and no Rakepoll Holding Subsidiary has any obligation of any kind to issue any additional securities or to pay for securities of any Rakepoll Holding Subsidiary or any predecessor thereof. 3.3 Corporate Power and Authority. Rakepoll Finance has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Rakepoll Finance. This Agreement has been duly executed and delivered by Rakepoll Finance and constitutes the legal, valid and binding obligation of Rakepoll Finance enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 3.4 Capitalization of Rakepoll Holding. As of September 30, 1996, Rakepoll Holding's authorized capital stock consisted solely of 40 shares of common stock, Dfl.1,000 par value per share ("Rakepoll Holding Common Stock"), of which (i) 40 shares were issued and outstanding and (ii) no shares were issued and held in treasury. Each outstanding share of Rakepoll Holding capital stock is duly authorized and validly issued, fully paid and nonassessable, and has not been issued in violation of any preemptive or similar rights. Other than as set forth in the first sentence hereof or in Section 3.4 to the Rakepoll Holding Disclosure Schedule, there are no outstanding subscriptions, options, warrants, puts, calls, agreements, under- standings, claims or other commitments or rights of any type relating to the issuance, sale or transfer of any securities of Rakepoll Holding, nor are there outstanding any securities which are convertible into or exchangeable for any shares of capital stock of Rakepoll Holding; and Rakepoll Holding has no obligation of any kind to issue any additional securities or to pay for securities of Rakepoll Holding or any predecessor. The issuance and sale of all of the shares of capital stock described in this Section 3.4 have been in compliance with all applicable securities laws. Except as set forth in Section 3.4 to the Rakepoll Holding Disclosure Schedule, Rakepoll Holding has not agreed to register any securities under any applicable securities law or granted registration rights to any person or entity. 3.5 Conflicts; Consents and Approvals. Other than as set forth in Section 3.5 of the Rakepoll Holding Disclosure Schedule neither the execution and delivery of this Agreement by Rakepoll Finance, nor the consummation of the transactions contemplated hereby will: (a) violate, conflict with, or result in a breach of any provision of the Charter Documents of Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary; (b) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with the giving of notice, the passage of time or otherwise, would constitute a default) under, require any consent under, or entitle any party (with the giving of notice, the passage of time or otherwise) to terminate, accelerate, modify or call a default under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties, shares of Rakepoll Holding Common Stock or assets of Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding subsidiary under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, contract, under- taking, agreement, lease or other instrument or obligation to which Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary is a party; (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary or any of their respective business, properties or assets; or (d) require any action or consent or approval of, or review by, or registration or filing by Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary or any of their respective affiliates with any third party or any Governmental Authority, other than (i) authorization of the Stock Exchange and the transactions contemplated hereby by Rakepoll Finance Shareholders, which authorization has been obtained, (ii) actions required by the HSR Act, the voluntary notification to be made pursuant to the Exon- Florio Amendment, and any necessary Mexican approvals, (iii) registrations or other actions required under any applicable securities laws as are contem- plated by this Agreement and (iv) consents or approvals of any Governmental Authority set forth in Section 3.5 to the Rakepoll Holding Disclosure Schedule; except in the case of (b), (c) and (d) for any of the foregoing that would not, individually or in the aggregate, have a material adverse effect on Rakepoll Finance or Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole or on its ability to consummate the transactions contemplated by this Agreement. 3.6 Certain Rakepoll Holding Documents. Rakepoll Holding has delivered to Gensia consolidated/combined statements of operations, statements of cash flow and statements of stockholders equity of Rakepoll Holding and the Rakepoll Holding Subsidiaries for the years ended December 31, 1993, 1994 and 1995 (audited) and the six month periods ended June 30, 1995 and 1996 (unaudited) and consolidated balance sheets at December 31, 1994 and 1995 (audited) and at June 30, 1995 and 1996 (unaudited) and the notes thereto, including, without limitation, any financial statements, notes or schedules included therein (collectively, the "Rakepoll Holding Documents"). The Rakepoll Holding Documents comply as to form in all material respects with the applicable requirements of applicable law. The financial statements of Rakepoll Holding included in the Rakepoll Holding Documents (including the notes and schedules relating thereto) comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of applicable governmental authorities with respect thereto, were prepared in accordance with United States generally accepted accounting principles stated in United States Dollars applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), include all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of the consolidated financial condition of Rakepoll Holding and the Rakepoll Holding Subsidiaries and the result of operations of Rakepoll Holding and the Rakepoll Holding Subsidiaries, and fairly present (subject in the case of unaudited statements to normal, recurring audit adjustments) the consolidated financial condition of Rakepoll Holding as at the dates thereof and the consolidated results of its operations and cash flows for the periods then ended. 3.7 Taxes. Except for items that are disclosed in Section 3.7 to the Rakepoll Holding Disclosure Schedule or for matters that would not have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidi- aries taken as a whole (i) all Tax Returns of or relating to any Tax that are required to be filed or deposited for, by, on behalf of or with respect to Rakepoll Holding and the Rakepoll Holding Subsidiaries, including, but not limited to, those relating to the income, business, operations or property of Rakepoll Holding and the Rakepoll Holding Subsidiaries and those which include or should include Rakepoll Holding and the Rakepoll Holding Subsidiaries have been filed or deposited duly and on a timely basis and all Taxes and filing fees shown to be due and payable on such Tax Returns have been paid in full and all installments, assessments and charges of which Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary is aware or has received notice and which are due and payable by Rakepoll Holding or any Rakepoll Holding Subsidiary have been paid in full; (ii) Rakepoll Holding and the Rakepoll Holding Subsidiaries have complied with all fiscal and monetary statutory regulations; (iii) to the knowledge of Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary, no such Tax Return contains any material misstatement or omits any material statement that should have been included; (iv) all Taxes imposed on Rakepoll Holding or any Rakepoll Holding Subsidiary (or for which Rakepoll Holding or any Rakepoll Holding Subsidiary is liable) for all periods up to the Closing Date which are due and payable on or before the Closing Date have been paid or will be paid when due; (v) none of such Tax Returns are now under audit or examination by any federal, state, local or foreign or other Governmental Authority and there are no agreements, waivers or other arrangements providing for an extension of time with respect to the assessment or collection of any Tax or deficiency of any nature against Rakepoll Holding or any Rakepoll Holding Subsidiary or with respect to any such Tax Return or any suits or other judicial or administrative actions, proceedings, investigations or claims now pending or, to the knowledge of Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary, threatened against Rakepoll Holding or any Rakepoll Holding Subsidiary with respect to any Tax, governmental charge or assessment; (vi) the latest balance sheet included in the Rakepoll Holding Documents reflects and includes adequate provisions for the payment in full of any and all Taxes imposed on Rakepoll Holding or any Rakepoll Holding Subsidiary and not yet due for any and all periods up to and including the date of such balance sheet; (vii) all Taxes for which Rakepoll Holding or any Rakepoll Holding Subsidiary is liable for periods through the Closing Date (whether or not the period ends for tax purposes on the Closing Date) have been or will be, paid when due or adequately reserved against on the books of Rakepoll Holding or any Rakepoll Holding Subsidiary on or prior to the Closing Date; (viii) Rakepoll Holding and the Rakepoll Holding Subsidiaries have withheld and remitted all amounts required to be withheld and have paid such amounts due to the appropriate authority on a timely basis and in the form required under the appropriate legislation; (ix) Rakepoll Holding and the Rakepoll Holding Subsidiaries have not been and are currently not required to file a Tax Return in any jurisdiction other than Italy, Mexico and the Netherlands; (x) Rakepoll Holding and the Rakepoll Holding Subsidiaries have not acquired property from or disposed of property for proceeds less than the fair market value thereof to, any person who is considered a related party to Rakepoll Holding and the Rakepoll Holding Subsidiaries under the transfer pricing rules of the applicable jurisdiction; (xi) Rakepoll Holding and each Rakepoll Holding Subsidiary, to the extent it was required to file tax returns in Italy, has filed all appropriate documents and applications and paid all fees for the settlement ("condono") of any "formal" violations of tax regulations for the fiscal periods from 1991 to 1994; and (xii) Rakepoll Holding and each Rakepoll Holding Subsidiary, to the extent it was required to file tax returns in Italy, has filed all appropriate documents and applications and paid all fees for the settlement ("condono") of any violations of income tax regulations for fiscal periods up to 1990, such "condono" having the effect of a settlement with respect to orders of payment issued by the income tax department, as set forth in Section 3.7(xiii) to the Rakepoll Holding Disclosure Schedule. The Rakepoll Holding balance sheets at December 31, 1995 and June 30, 1996 contain adequate reserves against any liability for Taxes for which Rakepoll Holding or any Rakepoll Holding Subsidiaries could be liable in respect of any audit or examination set forth on the Rakepoll Holding Disclosure Schedule. There is no Tax lien, whether imposed by any federal, state, county, local or foreign taxing authority, outstanding against the assets, properties or business of Rakepoll Holding or any Rakepoll Holding Subsidiary other than liens for current Taxes not yet due for which adequate reserves have been provided for. All material elections and consents with respect to any Tax (or the computation thereof) affecting Rakepoll Holding and the Rakepoll Holding Subsidiaries as of the date hereof are obvious from the Tax Returns or are set forth on Section 3.7 to the Rakepoll Holding Disclosure Schedule. After the date hereof, no election or consent with respect to any Tax (or the computation thereof) affecting Rakepoll Holding and the Rakepoll Holding Subsidiaries will be made without the written consent of Gensia. Except as set forth in Section 3.7 to the Rakepoll Holding Disclosure Schedule, Rakepoll Holding and the Rakepoll Holding Subsidiaries are not a party to any Tax sharing or allocation agreement. Neither Rakepoll Holding nor any Rakepoll Holding Subsidiary has engaged in a trade or business in the United States nor had income effectively connected with a trade or business in the United States. Neither Rakepoll Holding nor any Rakepoll Holding Subsidiary has ever filed United States Federal or State Tax returns or been required to do so, and no tax elections have been filed with the Internal Revenue Service. Rakepoll Holding and the Rakepoll Holding Subsidiaries have never been "controlled foreign corporations" as defined in section 957 of the Code. Except as set forth in Section 3.7 to the Rakepoll Holding Disclosure Schedule, Rakepoll Holding and the Rakepoll Holding Subsidiaries have no U.S. persons as shareholders. 3.8 Compliance with Law. To the knowledge of Rakepoll Finance, each of Rakepoll Holding and each Rakepoll Holding Subsidiary is in material compliance with, and at all times since December 31, 1992 has been in material compliance with, all Applicable Laws relating to Rakepoll Holding and each Rakepoll Holding Subsidiary or its respective business or properties including, without limitation, social security laws, workers' protection laws, laws regarding the provision of insurance, third party administration and primary health care services, the Prescription Drug Marketing Act, the Federal Controlled Substances Act of 1970, the Food, Drug, and Cosmetic Act, any federal or state Pharmacy Practice Acts, Controlled Substance Acts, Dangerous Drugs Acts and Food, Drug and Cosmetic Acts, OSHA and with all consents, licenses, and permits granted by any Governmental Authority and all rules of professional conduct applicable to Rakepoll Holding or any Rakepoll Holding Subsidiary by which any of its properties are bound or subject, except where the failure to be in compliance therewith could not reasonably be expected to have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. 3.9 Intellectual Property Rights. Except as disclosed in Section 3.9 of the Rakepoll Holding Disclosure Schedule: (a) To the knowledge of Rakepoll Finance, and except as disclosed in the Rakepoll Holding Documents, Rakepoll Holding and the Rakepoll Holding Subsidiaries own or have a license to the Intellectual Property which is used by Rakepoll Holding or any Rakepoll Holding Subsidiaries free and clear of all mortgages, liens, loans and encumbrances, except such encumbrances and liens which arise in the ordinary course of business and do not materially impair Rakepoll Holding's or any Rakepoll Holding Subsidiaries' ownership or use of such Intellectual Property or materially detract from the value thereof. With respect to such Intellectual Property licensed by Rakepoll Holding or any Rakepoll Holding Subsidiary, such licenses are in full force and effect, Rakepoll Holding or such Rakepoll Holding Subsidiary is in compliance with the terms and provision thereof, and no event has occurred which, with notice or lapse of time or both, would constitute a breach or violation thereof which could have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole and Rakepoll Holding or such Rakepoll Holding Subsidiary holds a valid license free of any liens, claims or encumbrances except those liens, claims or encumbrances which do not and will not, individually or in the aggregate, have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. (b) To the knowledge of Rakepoll Finance, Rakepoll Holding and the Rakepoll Holding Subsidiaries have the right and authority to use such Intellectual Property in connection with the conduct of the business of Rakepoll Holding and the Rakepoll Holding Subsidiaries in the manner and to the extent such business is presently conducted, and neither Rakepoll Finance nor Rakepoll Holding nor any Rakepoll Holding Subsidiary has been notified of any claim that such use conflicts with, infringes upon or violates any rights of any other person or entity, except to the extent that such conflict, infringement or violation does not and will not, individually or in the aggregate, have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. 3.10 Title to and Condition of Properties. Rakepoll Holding and each Rakepoll Holding Subsidiary owns or holds under valid leases all real property, plants, machinery and equipment necessary for the conduct of the business of Rakepoll Holding and each Rakepoll Holding Subsidiary, respectively, as presently conducted, except where the failure to own or hold such property, plants, machinery and equipment would not have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. Section 3.10 to the Rakepoll Holding Disclosure Schedule lists, and Rakepoll Holding and each Rakepoll Holding Subsidiary have furnished or made available to Gensia, copies of all third party environ- mental or other reports prepared by or for Rakepoll Holding or any Rakepoll Holding Subsidiary with respect to the real property owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary. 3.11 [This Section intentionally left blank.] 3.12 Litigation. Except as set forth in Section 3.12 to the Rakepoll Holding Disclosure Schedule, there is no Action pending or, to the knowledge of Rakepoll Finance, threatened against Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary which, individually or in the aggregate, could reasonably be expected to have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole or a material adverse effect on the ability of Rakepoll Finance or Rakepoll Holding or any Rakepoll Holding Subsidiary to consummate the transactions contemplated hereby. None of Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary is subject to any outstanding order, writ, injunction or decree which, individually or in the aggregate, insofar as can be reasonably foreseen, could have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole or a material adverse effect on the ability of Rakepoll Finance or Rakepoll Holding or any Rakepoll Holding Subsidiary to consummate the transactions contemplated hereby. Except as set forth in Section 3.12 to the Rakepoll Holding Disclosure Schedule, since December 31, 1992, Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary have not been subject to any outstanding order, writ, injunction or decree relating to Rakepoll Holding's or any Rakepoll Holding Subsidiary's method of doing business or its relationship with past, existing or future lessees, users, purchasers or licensees of any Intellectual Property, goods or services of Rakepoll Holding or any Rakepoll Holding Subsidiary. 3.13 Brokerage and Finder's Fees; Expenses. Except for Rakepoll Finance's obligations to Lehman Brothers International ("Lehman") (a copy of the written agreement relating to such obligations having previously been provided to Gensia), neither Rakepoll Finance nor Rakepoll Holding nor any Rakepoll Holding Subsidiary, nor any stockholder, director, officer or employee of Rakepoll Finance or Rakepoll Holding or any Rakepoll Holding Subsidiary thereof, has incurred or will incur on behalf of Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary, any brokerage, finder's or similar fee in connection with the transactions contemplated by this Agreement. Section 3.13 to the Rakepoll Holding Disclosure Schedule discloses a bona fide estimate of the aggregate amount of all out-of-pocket fees and expenses (including, without limitation, fees and expenses payable to all banks, investment banking firms and other financial institutions and their respective agents and counsel for arranging or providing financial advice with respect to the Stock Exchange and all reasonable fees and expenses of counsel, accountants, experts and consultants to Rakepoll Finance) expected to be paid by Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary up to and including the Closing Date to all attorneys, accountants and investment bankers in connection with the Stock Exchange ("Rakepoll Finance Stock Exchange Fees"). 3.14 Employee Matters. (a)(i) The official registers of employees and salaries of Rakepoll Holding and the Rakepoll Holding Subsidiaries set forth the names of all the employees of Rakepoll Holding and the Rakepoll Holding Subsidiaries, including, with respect to each employee, such employee's actual function, position, seniority and compensation; (ii) Section 3.14(a)(ii) of the Rakepoll Holding Disclosure Schedule contains the name of each independent contractor engaged by Rakepoll Holding or the Rakepoll Holding Subsidiaries. (b) At all times since December 31, 1992, all employees of Rakepoll Holding and each Rakepoll Holding Subsidiary have been fully compen- sated in accordance with applicable regulation, and applicable collective agreement or individual contract, as the case may be. (c) The latest balance sheet included in the Rakepoll Holding Documents reflects and includes adequate provision for the payment in full of any and all compensation which has accrued with respect to each employee, but which was not due as of the date of such balance sheet. All such accrued compensation, and all such compensation which will accrue from the date hereof to the Closing Date, has been or will be adequately reserved against on the books of Rakepoll Holding or any Rakepoll Holding Subsidiary, as the case may be, on or prior to the Closing Date. (d) Rakepoll Holding and the Rakepoll Holding Subsidiaries have withheld and remitted all amounts required to be withheld under all applicable regulations, including concerning employees' social insurance, employees' retirement pensions and employees' income taxes. (e) With respect to Rakepoll Holding, and except as set forth in Section 3.14(e) of the Rakepoll Holding Disclosure Schedule, all terms and conditions of employment are those terms and conditions required by statutory regulations and national collective agreements. (f) Other than any benefit required to be provided by applicable law, and except as set forth in Section 3.14(f) of the Rakepoll Holding Disclosure Schedule, no benefit has been granted to any employee of Rakepoll Holding or the Rakepoll Holding Subsidiaries. (g) Except as set forth in Section 3.14(i) to the Rakepoll Holding Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will result in or cause the accelerated vesting or delivery of any payment or benefit to any employee of Rakepoll Holding or any Rakepoll Holding Subsidiary. (h) Section 3.14(h) to the Rakepoll Holding Disclosure Schedule sets forth the names of all directors and officers of Rakepoll Holding and each Rakepoll Holding Subsidiary, the total salary, bonus, fringe benefits and perquisites each received in the fiscal year ended December 31, 1995, and any changes to the foregoing which have occurred subsequent to December 31, 1995; Section 3.14(h) to the Rakepoll Holding Disclosure Schedule also lists and describes the current compensation of any other employee of Rakepoll Holding or any Rakepoll Holding Subsidiary whose salary and bonus in 1995 exceeded U.S.$150,000. Except as disclosed in Section 3.14(h) to the Rakepoll Holding Disclosure Schedule or in the Rakepoll Holding Documents, there are no other material forms of compensation paid to any such director, officer or employee of Rakepoll Holding or any Rakepoll Holding Subsidiary. Except as set forth in Section 3.14(h) to the Rakepoll Holding Disclosure Schedule, no officer, director, or employee of Rakepoll Holding or any other affiliate of Rakepoll Holding, or any immediate family member of any of the foregoing, provides or causes to be provided to Rakepoll Holding or any Rakepoll Holding Subsidiary any material assets, services or facilities and Rakepoll Holding and each Rakepoll Holding Subsidiary does not provide or cause to be provided to any such officer, director, employee or affiliate, or any immediate family member of any of the foregoing, any material assets, services or facilities. 3.15 Contracts. Section 3.15 to the Rakepoll Holding Disclosure Schedule lists all Contracts to which Rakepoll Holding or any Rakepoll Holding Subsidiary is a party and which fall within any of the following categories: (a) Contracts valued at over U.S.$250,000 obligating any party to pay or receive money, goods or services, (b) joint venture, partnership and similar agreements, (c) Contracts which are service contracts or equipment leases involving payments by Rakepoll Holding or any Rakepoll Holding Subsidiary of more than U.S. $100,000 per year, (d) Contracts containing covenants purporting to limit the freedom of Rakepoll Holding or any Rakepoll Holding Subsidiary to compete in any line of business in any geographic area or to hire any individual or group of individuals, (e) Contracts which after the Closing Date would have the effect of limiting the freedom of Gensia or the Gensia Subsidiaries (other than Rakepoll Holding and each Rakepoll Holding Subsidiary) to compete in any line of business in any geographic area or to hire any individual or group of individuals, (f) Contracts which contain minimum purchase conditions or requirements or other terms that restrict or limit the purchasing relationships of Rakepoll Holding or any Rakepoll Holding Subsidiary, (g) Contracts relating to any outstanding commitment for capital expenditures in excess of U.S. $250,000; (h) Contracts relating to the lease or sublease of or sale or purchase of real or personal property involving any annual expense or price in excess of U.S. $100,000 and not cancelable by Rakepoll Holding or any Rakepoll Holding Subsidiary (without premium or penalty) within one month, (i) Contracts with any labor organization, (j) indentures, mortgages, promissory notes, loan agreements, guarantees of amounts in excess of U.S. $100,000, letters of credit or other agreements or instruments of Rakepoll Holding or any Rakepoll Holding Subsidiary or commitments for the borrowing or the lending of amounts in excess of U.S. $100,000 or by Rakepoll Holding or any Rakepoll Holding Subsidiary or providing for the creation of any charge, security interest, encumbrance or lien upon any of the assets of Rakepoll Holding or any Rakepoll Holding Subsidiary, (k) Contracts involving annual revenues or expenditures to the business of Rakepoll Holding or any Rakepoll Holding Subsidiary in excess of 5.0% of Rakepoll Holding's annual revenues and (l) Contracts with or for the benefit of any officer, director or affiliate of Rakepoll Holding or any Rakepoll Holding Subsidiary or immediate family member thereof. All such Contracts are valid and binding obligations of Rakepoll Holding or the Rakepoll Holding Subsidiary, as the case may be, and, to the knowledge of Rakepoll Holding and each Rakepoll Holding Subsidiary, are the valid and binding obligation of each other party thereto except such Contracts which if not so valid and binding would not, individually or in the aggregate, have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. Neither Rakepoll Holding or any Rakepoll Holding Subsidiary nor, to the knowledge of Rakepoll Holding or any Rakepoll Holding Subsidiary, any other party thereto is in violation of or in default in respect of, nor has there occurred an event or condition which with the passage of time or giving of notice (or both) would constitute a default under, any such Contract except such violations or defaults under such Contracts which, individually or in the aggregate, would not have a material adverse effect on Rakepoll Holding and each Rakepoll Holding Subsidiary. 3.16 Accounts Receivable. All accounts and notes receivable (including lease and finance notes receivable) and accrued interest receivable of Rakepoll Holding and each Rakepoll Holding Subsidiary have arisen in the ordinary course of business and the accounts receivable reserves reflected on the balance sheet as of June 30, 1996 included in the Rakepoll Holding Documents are as of such date established in accordance with United States generally accepted accounting principles consistently applied and to the best knowledge of Rakepoll Holding and each Rakepoll Holding Subsidiary will be collectible in the ordinary course of business in an amount not less than the amounts thereof carried on the balance sheet as of such date included in the Rakepoll Holding Documents, net of any reserves included thereon, as applicable, except for any uncollectible amount which, individually or in the aggregate, would not have a material adverse effect on Rakepoll Holding and each Rakepoll Holding Subsidiary. 3.17 Labor Relations. There is no unfair labor practice complaint against Rakepoll Holding or any Rakepoll Holding Subsidiary pending and there is no labor strike, dispute, slowdown or stoppage, or any union organizing campaign, actually pending or, to the knowledge of Rakepoll Holding or any Rakepoll Holding Subsidiary, threatened against or involving Rakepoll Holding or any Rakepoll Holding Subsidiary. Except as disclosed in Section 3.17 to the Rakepoll Holding Disclosure Schedule, there is no Union Agreement in effect with respect to any Rakepoll Holding Subsidiary which operates in Mexico. 3.18 No Material Adverse Change. Except as set forth in Section 3.18 to the Rakepoll Holding Disclosure Schedule, since December 31, 1995, each of Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary has conducted its business in the ordinary course, consistent with past practice, and there has been no (i) material adverse change in the assets, liabilities, results of operations, business or financial condition of Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole or (ii) material adverse effect on the ability of Rakepoll Finance to consummate the transactions contemplated hereby. 3.19 Operation of Rakepoll Holding's Business; Relationships. (a) Since December 31, 1995, each of Rakepoll Holding and each Rakepoll Holding Subsidiary has not engaged in any transaction which, if entered into and/or consummated after execution of this Agreement, would violate Section 4.1(h) hereof except as described or reflected in the Rakepoll Holding Documents or as set forth in Section 3.19 to the Rakepoll Holding Disclosure Schedule. Section 3.19 to the Rakepoll Holding Disclosure Schedule describes each termination or nonrenewal that has occurred with respect to any Contract with any lessee or licensee of Intellectual Property, from December 31, 1995 to the date hereof. (b) Except as set forth in Section 3.19(b) of the Rakepoll Holding Disclosure Schedule, the relationships of Rakepoll Holding and each Rakepoll Holding Subsidiary with its customers and suppliers are satisfactory and the execution of this Agreement, the Stock Exchange and the transactions contemplated hereby will not materially adversely affect the relationships of Rakepoll Holding or any Rakepoll Holding Subsidiary with such customers or suppliers. (c) Except as disclosed in Section 3.19(c) of the Rakepoll Holding Disclosure Schedule no product produced by Rakepoll Holding or any Rakepoll Holding Subsidiary or produced for Rakepoll Holding or any Rakepoll Holding Subsidiary by a third party and bearing a Rakepoll Holding or any Rakepoll Holding Subsidiary trademark or other Proprietary Right of Rakepoll Holding or any Rakepoll Holding Subsidiary, has been recalled voluntarily or involuntarily since December 31, 1992, no such recall is being considered by Rakepoll Holding, and, to the knowledge of Rakepoll Holding and each Rakepoll Holding Subsidiary, no such recall is being considered by or has been requested or ordered by any Governmental Authority or consumer group. 3.20 Permits; Compliance. Each of Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted other than those which are immaterial (collectively, the "Rakepoll Holding Permits"), and there is no Action pending or, to the knowledge of Rakepoll Holding and each Rakepoll Holding Subsidiary, threatened regarding suspension or cancellation of any of the Rakepoll Holding Permits, except for any such Action which, if determined adversely, could not reasonably be expected, individually or in the aggregate, to have a material adverse effect on Rakepoll Holding. Rakepoll Holding and each Rakepoll Holding Subsidiary is not in conflict with, or in default or violation of, any of the Rakepoll Holding Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, could not reasonably be expected to have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. Since December 31, 1992, Rakepoll Holding and each Rakepoll Holding Subsidiary have not received any notification with respect to possible conflicts, defaults or violations of Applicable Laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations could not reasonably be expected to have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. 3.21 Product Warranties and Liabilities. Except as listed in Section 3.21 to the Rakepoll Holding Disclosure Schedule, Rakepoll Holding and each Rakepoll Holding Subsidiary have no forms of warranties or guarantees of its products and services that are in effect or proposed to be used by it. Section 3.21 to the Rakepoll Holding Disclosure Schedule sets forth a description, which is true and correct in all material respects, of each pending or, to the knowledge of Rakepoll Finance, threatened material Action under any warranty or guaranty against Rakepoll Holding and each Rakepoll Holding Subsidiary. Rakepoll Holding and each Rakepoll Holding Subsidiary have not incurred, nor does Rakepoll Finance, Rakepoll Holding or any Rakepoll Holding Subsidiary know or have any reason to believe there is any basis for alleging, any Product Liability with respect to any product sold or services rendered by or on behalf of Rakepoll Holding or any Rakepoll Holding Subsidiary (including any lessee thereof) prior to the Closing Date, whether such Product Liability is incurred by reason of any express or implied warranty (including, without limitation, any warranty of merchant- ability or fitness), any doctrine of common law (tort, contract or other), any statutory provision or otherwise and irrespective of whether such Product Liability is covered by insurance. 3.22 Environmental Matters. Except as listed in Section 3.22 to the Rakepoll Holding Disclosure Schedule: (a) There are, with respect to Rakepoll Holding and each Rakepoll Holding Subsidiary, or any predecessor of the foregoing, no past or present material violations of Environmental Laws or Mexican Environmental Laws, nor actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any liability pursuant to any Environmental Law and none of Rakepoll Holding and each Rakepoll Holding Subsidiary has received any notice with respect to any of the foregoing, nor is any Action pending or threatened in connection with any of the foregoing. (b) No Hazardous Materials or Mexican Hazardous Materials are present on or about any real property currently owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary and no Hazardous Materials or Mexican Hazardous Materials were present on or about any real property previously owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary during the period the property was owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary, except in the normal course of Rakepoll Holding's or any Rakepoll Holding Subsidiary's business. (c) No Hazardous Materials or Mexican Hazardous Materials have been released on or about, or where they may pose a threat of migration to, any real property currently owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary and no Hazardous Materials or Mexican Hazardous Materials were released on or about any real property previously owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary during the period the property was owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary, except as may be required in the normal course of business and in compliance with applicable Environmental Laws in all material respects. (d) No asbestos-containing materials or PCBs are present on or about any property currently owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary. (e) There are not now nor have there ever been any underground storage tanks or similar facilities of any kind on or under any real property currently or previously owned, leased or used by Rakepoll Holding or any Rakepoll Holding Subsidiary. 3.23 [This section intentionally left blank.] 3.24 Board Recommendation. The Board of Directors of Rakepoll Finance, at a meeting duly called and held, has (i) determined that this Agreement and the transactions contemplated hereby, including the Stock Exchange, are fair to and in the best interests of the Rakepoll Finance Shareholders, and (ii) resolved to recommend that the Rakepoll Finance Shareholders approve this Agreement and the transactions contemplated herein, including the Stock Exchange, and (iii) such Rakepoll Finance Shareholders have approved this Agreement, the Stock Exchange and the transactions contemplated hereby. 3.25 Undisclosed Liabilities. Except (i) as and to the extent disclosed or reserved against on the consolidated balance sheet of Rakepoll Holding as of June 30, 1996 included in the Rakepoll Holding Documents, (ii) as incurred after June 30, 1996, in the ordinary course of business consistent with prior practice and not prohibited by this Agreement or (iii) as set forth in Section 3.25 to the Rakepoll Holding Disclosure Schedule, Rakepoll Holding and the Rakepoll Holding Subsidiaries do not have any liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, that, individually or in the aggregate, have or could reasonably be expected to have a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole. All payments by or for the benefit of Rakepoll Holding and the Rakepoll Holding Subsidiaries to agents, consultants and others have been in payment of bona fide fees and commissions and not as bribes or illegal or improper payments. Rakepoll Holding and the Rakepoll Holding Subsidiaries have complied with the Foreign Corrupt Practices Act of 1977 and the rules and regulations thereunder and, in each case, have not made any payment to or on behalf of any person with respect to which a deduction could be disallowed under Section 162(c) of the Code. Neither the Internal Revenue Service nor any other federal, state, local or foreign government agency or entity has initiated or threatened any investigation of any payment made by Rakepoll Holding or any Rakepoll Holding Subsidiary of, or alleged to be of, the type described in this Section 3.25. 3.26 Ownership of Rakepoll Holding Shares. Rakepoll Finance owns all of the issued and outstanding capital stock of Rakepoll Holding and through Rakepoll Holding owns all of the issued and outstanding capital stock of the Rakepoll Holding Subsidiaries. Upon delivery of and in exchange for such shares under this Agreement pursuant to the Stock Exchange, Gensia will acquire good and valid title to all of the issued and outstanding capital stock of Rakepoll Holding, free and clear of all voting trust arrangements, liens, encumbrances, security interests, restrictions and claims whatsoever. 3.27 Exchange Entirely for Own Account. The Rakepoll Holding Common Stock to be received by Rakepoll Finance under this Agreement will be acquired for investment for Rakepoll Finance's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof. Rakepoll Finance has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Rakepoll Finance further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of such Gensia Common Shares and further that it will not transfer, sell or exchange any of the shares of Gensia Common Shares which it receives pursuant to the terms of this Agreement for a period of 12 months following the Closing Date. Rakepoll Finance is not a "U.S. person" as such term is used in Regulation S under the Securities Act. 3.28 Restricted Securities. Rakepoll Finance understands that the Gensia Common Shares to be received hereunder may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering such Gensia Common Shares or an available exemption from registration under the Securities Act, the Gensia Common Shares must be held indefinitely. In particular, Rakepoll Finance is aware that the Gensia Common Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of that Rule are met. 3.29 Legends. It is understood that the certificates evidencing the Gensia Common Shares may bear one or all of the following legends: (a) "These securities have not been registered under the Securities Act of 1933. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel satis- factory to Gensia that such registration is not required or unless sold pursuant to Rule 144 of such Act or another applicable exemption." (b) Any legend required by the laws of the State of California or other jurisdiction or by the Shareholder's Agreement dated as of the date hereof between the parties hereto. 3.30 Takeover Laws. Prior to the date hereof, the Board of Directors of Rakepoll Finance has taken all action necessary to approve for purposes of, or exempt under or make not subject to any takeover law or law that purports to limit or restrict business combinations or the ability to acquire or vote shares: (i) the execution of this Agreement, (ii) the Stock Exchange and (iii) the transactions contemplated hereby. 3.31 Authorization of Rakepoll Holding Subsidiaries. Prior to the date hereof, to the extent required by law, regulation or their respective Charter Documents, each Rakepoll Holding Subsidiary shall have granted Rakepoll Finance the necessary power and authority to make the representations and warranties contained herein applicable to such Rakepoll Holding Subsidiary. ARTICLE 4 COVENANTS OF THE PARTIES The parties hereto agree as follows with respect to the period from and after the execution of this Agreement. 4.1 Mutual Covenants. (a) General. Each of the parties shall use its reasonable efforts to take all action and to do all things necessary, proper or advisable to consummate the Stock Exchange and the transactions contemplated by this Agreement (including, without limitation, using its reasonable efforts to cause the conditions set forth in Article 5 for which they are responsible to be satisfied as soon as reasonably practicable and to prepare, execute and deliver such further instruments and take or cause to be taken such other and further action as any other party hereto shall reasonably request). (b) HSR Act. As soon as practicable, and in any event no later than ten (10) business days after the date hereof, each of the parties hereto will file any Notification and Report Forms and related material required to be filed by it with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act with respect to the Stock Exchange, will use its reasonable efforts to obtain an early termination of the applicable waiting period, and shall promptly make any further filings pursuant thereto that may be necessary, proper or advisable; provided, however, that neither Gensia nor any of the Gensia Subsidiaries shall be required hereunder to divest or hold separate any portion of their business or assets. (c) Automedics. The parties intend that Gensia shall contribute to its Subsidiary, Automedics Development, Inc. ("Automedics"), the assets (tangible and intangible), licenses, contracts, intellectual property and other associated rights related to the Laryngeal Mask Airway products, the Brevibloc product, the distribution rights related to the GenESA System, the Heparin closed loop drug delivery system and any medical device products in- licensed by Gensia between the date hereof and the Closing Date. Gensia shall endeavor to obtain all necessary consents to permit such asset contributions to Automedics. Gensia, after consultation with Rakepoll Finance, shall be permitted to sell or grant equity interests in Automedics to facilitate obtaining the necessary consents to permit such asset contributions and to obtain financing for Automedics. Gensia, after consultation with Rakepoll Finance, shall determine who is to staff and operate Automedics. Any actions taken by Gensia in consultation with Rakepoll Finance pursuant to the provisions of this Section 4.1(c) shall not be breaches of the representations and warranties or the covenants of Gensia contained in this Agreement. (d) Other Governmental Matters. Each of the parties shall use its reasonable efforts to take any additional action that may be necessary, proper or advisable in connection with any other notices to, filings with, and authorizations, consents and approvals of any Governmental Authority that it may be required to give, make or obtain. (e) Tax Treatment. Each of the parties shall use its reasonable efforts so as to ensure that the Stock Exchange does not constitute a tax- free reorganization under the Code and instead is a "purchase" within the meaning of section 338 of the Code so that Gensia will be permitted to cause a section 338 election to be made with respect to Rakepoll Holding. (f) Public Announcements. Unless otherwise required by Applicable Laws or requirements of the National Association of Securities Dealers, as advised by outside counsel (and in that event only if time does not permit), at all times prior to the earlier of the Closing Date or termination of this Agreement pursuant to Section 6.1, Gensia and Rakepoll Finance shall consult with each other before issuing any press release with respect to the Stock Exchange or the transaction contemplated hereby and shall not issue any such press release prior to such consultation. (g) Access. From and after the date of this Agreement until the Closing Date (or the termination of this Agreement), upon the reasonable request of the other party, Gensia and Rakepoll Finance (including Rakepoll Holding and all Rakepoll Holding Subsidiaries and Alco Chemical Ltd. ("ALCO")) shall permit representatives of the other to have appropriate access at all reasonable times to the other's premises, properties, books, records, contracts, tax records, documents, customers and suppliers ("Information"), in the case of ALCO, only to the extent such information is necessary to the consummation of the transactions contemplated by this Agreement. Information obtained by Gensia, Rakepoll Finance, Rakepoll Holding and the Rakepoll Holding Subsidiaries and ALCO pursuant to this Section 4.1(g) shall be subject to the provisions of the confidentiality agreement between them dated March 5, 1996 (the "Confidentiality Agreement"), which agreement remains in full force and effect until the Closing Date; provided, however, that the Confidentiality Agreement shall continue in full force and effect with respect to Information provided by ALCO. (h) Conduct of Operations. During the period from the date of this Agreement to the Closing Date, Gensia and each Gensia Subsidiary on the one hand and Rakepoll Holding and each Rakepoll Holding Subsidiary, on the other hand, shall conduct its operations in the ordinary course consistent with past practice except with the prior written consent of the other party or as expressly contemplated by this Agreement and the transactions contem- plated hereby and shall use its reasonable efforts to maintain and preserve its business organization and its material rights and franchises and to retain the services of its officers and key employees and maintain relationships with customers, suppliers, lessees, licensees and other third parties to the end that their goodwill and ongoing business shall not be impaired in any material respect. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Closing Date, neither party to this Agreement shall, except with the prior written consent of the other party or as otherwise expressly contemplated by this Agreement and the transactions contemplated hereby, by the Shareholder's Agreement or the Business Plan: (i) (A) adjust, split, combine or reclassify its capital stock, (B) make, declare or pay any dividend except for the payment of dividends on outstanding shares of the $3.75 Convertible Exchangeable Preferred Stock of Gensia and except for the spinout of Gensia research assets as contemplated by this Agreement or distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of capital stock or any securities or obligations convertible into or exchangeable for any shares of capital stock, (C) grant any person any right or option to acquire any shares of capital stock except pursuant to Gensia Stock Plans existing on the date of this Agreement consistent with past practice, (D) issue, deliver or sell or agree to issue, deliver or sell any additional shares of capital stock or any securities or obligations convertible into or exchangeable or exercisable for any shares of its capital stock or such securities except pursuant to Preferred Stock, options, warrants or other agreements or instruments outstanding on the date hereof, or (E) enter into any agreement, understanding or arrangement with respect to the sale or voting of capital stock; (ii) sell, transfer, lease, pledge, mortgage, encumber or otherwise dispose of any property or assets of Gensia or any Gensia Subsidiary on the one hand and Rakepoll Holding or any Rakepoll Holding Subsidiary, on the other hand other than sales or leases of inventory or licensing of Intellectual Property of Gensia or a Gensia Subsidiary on the one hand and Rakepoll Holding or any Rakepoll Holding Subsidiary, on the other hand made in the ordinary course of business consistent with past practice; (iii) make or propose any changes in the Charter Documents of Gensia or any Gensia Subsidiary on the one hand or of Rakepoll Holding or any Rakepoll Holding Subsidiary, on the other hand; (iv) merge or consolidate with any other person or acquire a material amount of assets or capital stock of any other person; (v) incur, create, assume or otherwise become liable for indebtedness in excess of U.S. $250,000 for borrowed money or assume, guarantee, endorse or otherwise as an accommodation become responsible or liable for obligations in excess of U.S. $250,000 of any other individual, corporation or other entity; (vi) create any subsidiaries (other than Automedics and to facilitate the spin out of the Gensia research assets); (vii) enter into or modify any employment, severance, termination or similar agreements or arrangements with, or grant or announce any bonuses, salary increases, severance or termination pay to, any officer or director or employee of Gensia or any Gensia Subsidiary on the one hand, or Rakepoll Holding or any Rakepoll Holding Subsidiary on the other hand, other than salary, stock or option grants, bonuses and benefits, increases granted in the ordinary course of business consistent with past practices and established plans made known to the other party prior to the date hereof, or otherwise increase the compensation or benefits provided to any officer or director except as may be required by Applicable Law or a binding written contract in effect on the date of this Agreement or enter into any new consulting agreements with a duration of greater than twelve months or compensation of greater than U.S. $100,000; (viii) change any method or principle of accounting in a manner that is inconsistent with past practice except as may be required to meet the requirements of United States securities laws and United States GAAP; (ix) settle any Actions, whether now pending or hereafter made or brought involving an amount in excess of U.S. $200,000 affecting Gensia or any Gensia Subsidiary, on the one hand, or Rakepoll Holding or any Rakepoll Holding Subsidiary, on the other hand; (x) modify, amend or terminate, or waive, release or assign any material rights or claims with respect to, any Contract set forth in Section 2.15 to the Gensia Disclosure Schedule or Section 3.15 to the Rakepoll Holding Disclosure Schedule, as applicable, or any other material Contract to which Gensia or any Gensia Subsidiary, on the one hand, or Rakepoll Holding or any Rakepoll Holding Subsidiary, on the other hand, is a party if such modification, amendment, termination, waiver, release or assignment would have a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole or on Rakepoll Holding and the Rakepoll Holding Subsidiaries taken as a whole, as applicable; (xi) incur or commit to any capital expenditures, obligations or liabilities in respect thereof which in the aggregate exceed or would exceed U.S. $250,000 unless otherwise disclosed on the Gensia Disclosure Schedule or the Rakepoll Holding Disclosure Schedule, as applicable; (xii) pay (or agree to become obligated to pay) any Gensia Stock Exchange Fees on the one hand, or Rakepoll Finance Stock Exchange Fees on the other hand, in excess of the amount set forth in Section 2.9 to the Gensia Disclosure Schedule or Section 3.13 of the Rakepoll Holding Disclosure Schedule, as applicable, other than any excess amounts which are immaterial in the aggregate incurred in connection with and in furtherance of consummation of the transactions contemplated hereby; (xiii) take any action to exempt or make not subject to any take- over law or law that purports to limit or restrict business combinations or the ability to acquire or vote shares by any person or entity (other than as contemplated herein) or any action taken thereby, which person, entity or action would have otherwise been subject to the restrictive provisions thereof and not exempt therefrom; (xiv) take any action that could reasonably be expected to result in the representations and warranties set forth in Article 2 or Article 3, as applicable, becoming false or inaccurate; (xv) permit or cause any subsidiary or affiliate to do any of the foregoing or agree or commit to do any of the foregoing; or (xvi) agree in writing or otherwise to take any of the foregoing actions. None of the information provided by Gensia and Rakepoll Finance, respectively, for inclusion in the proxy statement and form of proxies to be filed with the Commission by Gensia under the Exchange Act relating to the vote of the Gensia Stockholders with respect to the Stock Exchange (collec- tively and as amended, supplemented or modified, the "Proxy Statement") at the date of mailing the Proxy Statement will contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. (i) Indemnification and Insurance. Gensia and Rakepoll Finance shall cause (i) Gensia to maintain and perform in the same manner as prior to the date hereof Gensia's existing indemnification provisions with respect to present and former directors and officers of Gensia for all losses, claims, damages, expenses or liabilities arising out of actions or omissions or alleged actions or omissions occurring at or prior to the Closing Date to the extent permitted or required under applicable law and Gensia's Restated Certificate of Incorporation and By-Laws in effect at the date hereof (to the extent consistent with applicable law), (ii) Gensia to provide, maintain and perform in the same manner as prior to the date hereof Gensia's existing indemnification provisions with respect to present and future directors and officers of Gensia for all losses, claims, damages, expenses or liabilities arising out of actions or omissions or alleged actions or omissions occurring after the Closing Date to the extent permitted or required under applicable law and Gensia's Restated Certificate of Incorporation and By-Laws in effect at the date hereof (to the extent consistent with applicable law); and (iii) Gensia to maintain, for a period of no less than three (3) years after the Closing Date, Directors and Officers Liability coverage, with limits, terms and conditions no less advantageous than in effect on the date hereof. Said coverage will be maintained with the current insurance carriers or insurance carriers of financial strength equal to or greater than the financial strength of the current insurance carriers. Evidence of such coverage will be provided to the individual officers and directors upon request. Any new directors or officers of Gensia will be added to such policies. 4.2 Covenants of Gensia. (a) Gensia Stockholders Meeting. Gensia shall take all action in accordance with the federal securities laws, the NASD Rules, the Delaware General Corporation Law including, without limitation, Section 203 thereof and the Gensia Certificate and Bylaws, as amended and restated, necessary to obtain the consent and approval of Gensia Stockholders with respect to the authorization of the issuance of Gensia Common Shares in the Stock Exchange and the transactions contemplated hereby. Without limiting the generality of the foregoing, Gensia, acting through its Board of Directors, shall, subject to and in accordance with applicable law and its Certificate of Incorporation and By-Laws, promptly and duly call, give notice of, convene and hold as soon as practicable following the date upon which the Proxy Statement is mailed a meeting of the holders of Gensia Common Shares for the purpose of voting to approve and adopt this Agreement and the transactions contemplated hereby, and, subject to its fiduciary duties under applicable law as determined in good faith by a majority of the Board of Directors of Gensia based on, among other things, the advice of outside legal counsel to Gensia (A) recommend that the Gensia stockholders approve and adopt this Agreement and the transactions contemplated hereby, (B) include in the Proxy Statement such recommendation and the written opinion of CS First Boston that the consideration to be received by the Company in the transaction is fair to the Company from a financial point of view and (C) take all reasonable and lawful action to solicit and obtain such approval. (b) Preparation of Proxy Statement. Gensia shall, as soon as is reasonably practicable, prepare and file the Proxy Statement with the Commission on a confidential basis. Gensia shall use all reasonable efforts to mail at the earliest practicable date to Gensia Stockholders the Proxy Statement, which shall include all information required under Applicable Law to be furnished to Gensia Stockholders in connection with the Stock Exchange and the transactions contemplated thereby. If at any time prior to the Closing Date, any information pertaining to Gensia or any Gensia Subsidiary contained in or omitted from the Proxy Statement makes such statements contained in the Proxy Statement false or misleading, Gensia shall promptly inform Rakepoll Finance and take such action necessary to make such statements contained in the Proxy Statement not false and misleading. Gensia also shall take such other reasonable actions (other than qualifying to do business in any jurisdiction in which it is not so qualified) required to be taken under any applicable state securities laws in connection with the issuance of Gensia Common Shares in the Stock Exchange. (c) Intellectual Property Matters. Gensia and each Gensia Subsidiary shall use reasonable commercial efforts to preserve Gensia's and the Gensia Subsidiaries' ownership rights to their Intellectual Property free and clear of any liens, claims or encumbrances and shall use reasonable commercial efforts to assert, contest and prosecute any infringement of any issued foreign or domestic patent, trademark, service mark, trade name or copyright that forms a part of such Intellectual Property or any misappropriation or disclosure of any trade secret, confidential information or know-how that forms a part of such Intellectual Property consistent with past practices of Gensia and each Gensia Subsidiary. (d) No Solicitation. Gensia agrees that, during the term of this Agreement, it shall not, and shall not authorize or permit any Gensia Subsidiary or affiliate or any of its or their respective directors, officers, employees, agents or representatives, directly or indirectly, to solicit, initiate, encourage, facilitate, or accept or furnish or disclose non-public information in furtherance of, any inquiries or the making of any proposal with respect to any recapitalization, merger, consolidation or other business combination involving Gensia or any Gensia Subsidiary, or acquisition of any capital stock or any material portion of the assets (except for acquisition of assets in the ordinary course of business consistent with past practice) of Gensia or any Gensia Subsidiary, or any combination of the foregoing (a "Competing Transaction"), or negotiate, explore or otherwise engage in discussions with any person (other than Rakepoll Finance, or its directors, officers, employees, agents and representatives) with respect to any Competing Transaction or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the Stock Exchange or any other transactions contemplated by this Agreement; provided that Gensia may furnish information to, and negotiate or otherwise engage in discussions (i) in connection with financings contemplated by this Agreement and associated documents provided, that prior to the furnishing to prospective investors of any such information in respect of such financing, the identities of such prospective investors are made available to Rakepoll Finance and the prior written consent of Rakepoll Finance is obtained, which consent shall not be unreasonably withheld, as to the furnishing of such information to each such prospective investor, and (ii) with any bona fide party who delivers an unsolicited written proposal for a Competing Transaction if and so long as (x) the Board of Directors of Gensia determines in good faith by a majority vote of its disinterested directors that failing to take such action would constitute a breach of the fiduciary duties of the Board and (y) such a proposal is, based upon the advice of First Boston, more favorable to Gensia's Stockholders from a financial point of view than the Stock Exchange. In the case of any proposal meeting the requirements of clauses (d)(ii), (x) and (y), the Board of Directors of Gensia may withdraw its recommendation of this Agreement and the Stock Exchange. Gensia and each Gensia Subsidiary will immediately cease all existing activities, discussions and negotiations with any parties conducted heretofore with respect to any of the foregoing and except for financings contemplated by this Agreement and associated documents. From and after the execution of this Agreement, Gensia and each Gensia Subsidiary and affiliates shall promptly advise Rakepoll Finance in writing of the receipt, directly or indirectly, of any inquiries, discussions, negotiations, or proposals relating to a Competing Transaction (including the specific terms thereof) and promptly furnish to Rakepoll Finance a copy of any such proposal or inquiry in addition to any information provided to or by any third party relating thereto, and shall state in such notice whether Gensia has determined that it is required to take any action with respect thereto in accordance with the proviso contained in this paragraph. The Board shall keep Rakepoll Finance promptly advised of all developments which could reasonably be expected to culminate in the Board of Directors withdrawing, modifying or amending its recommendation of the Stock Exchange and the transactions contemplated by this Agreement. (e) Employee Benefits. Gensia covenants and agrees that (i) it will cause Rakepoll Holding to provide benefits to employees of Rakepoll Holding in accordance with the applicable laws of the jurisdictions in which such employees are employed and (ii) it will provide for the participation of the employees of Rakepoll Holding set forth on Schedule 4.2(e) hereto in the Gensia stock option plan as of the Closing Date on substantially the same terms and conditions as similarly situated employees of Gensia. (f) Notification of Certain Matters. Gensia shall give prompt notice to Rakepoll Finance of (i) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would cause any Gensia representation or warranty contained in this Agreement to be untrue or inaccurate at or prior to the Closing Date and (ii) any material failure of Gensia or any Gensia Subsidiary to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 4.2(f) shall not limit or otherwise affect the remedies available hereunder to Rakepoll Finance. (g) Contribution of Intercompany Debt to Equity. Rakepoll Finance shall cause all intercompany and affiliate debt between and among Rakepoll Finance, Rakepoll Holding, and the Rakepoll Holding Subsidiaries and affiliates thereof to be converted and contributed into equity of Rakepoll Holding prior to the Closing Date. Gensia will use reasonable efforts to maintain the availability of Rule 144 to Rakepoll Finance, provided that failure to maintain such availability because of a failure of Rakepoll Holding or any Rakepoll Holding Subsidiary to deliver appropriate information to Gensia shall not be deemed a breach of this covenant. 4.3 Covenants of Rakepoll Finance. (a) Information for the Preparation of Proxy Statement. Rakepoll Finance shall as soon as reasonably practicable furnish Gensia with all information concerning it as may be required for inclusion in the Proxy Statement. Rakepoll Finance shall cooperate with Gensia in the preparation of the Proxy Statement in a timely fashion and shall use all reasonable efforts to assist Gensia in having the Proxy Statement cleared by the Commission as promptly as practicable. If at any time prior to the Closing Date, any information pertaining to Rakepoll Finance or Rakepoll Holding or any Rakepoll Holding Subsidiary contained in or omitted from the Proxy Statement makes such statements contained in the Proxy Statement false or misleading, Rakepoll Finance shall promptly so inform Gensia and provide Gensia with the information necessary to make statements contained therein not false and misleading. Rakepoll Finance shall use all reasonable efforts to cooperate with Gensia in the preparation and filing of the Proxy Statement with the Commission on a confidential basis. (b) Intellectual Property Matters. Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary shall use reasonable commercial efforts to preserve Rakepoll Holding's and the Rakepoll Holding Subsidiaries' ownership rights to their Intellectual Property free and clear of any liens, claims or encumbrances and shall use reasonable commercial efforts to assert, contest and prosecute any infringement of any issued foreign or domestic patent, trademark, service mark, trade name or copyright that forms a part of such Intellectual Property or any misappropriation or disclosure of any trade secret, confidential information or know-how that forms a part of such Intellectual Property consistent with past practices of each of Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary. (c) No Solicitation. Rakepoll Finance agrees that, during the term of this Agreement, it shall not, and shall not authorize or permit Rakepoll Holding or any Rakepoll Holding Subsidiary or affiliate or any of its or their respective directors, officers, employees, agents or representa- tives, directly or indirectly, to solicit, initiate, encourage, facilitate, or accept or furnish or disclose non-public information in furtherance of, any inquiries or the making of any proposal with respect to any recapitali- zation, merger, consolidation or other business combination involving Rakepoll Holding or any Rakepoll Holding Subsidiary, or acquisition of any capital stock or any material portion of the assets (except for acquisition of assets in the ordinary course of business consistent with past practice) of Rakepoll Holding or any Rakepoll Holding Subsidiary, or any combination of the foregoing (a "Competing Transaction"), or negotiate, explore or otherwise engage in discussions with any person (other than Gensia, or its directors, officers, employees, agents and representatives) with respect to any Competing Transaction or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the Stock Exchange or any other transactions contemplated by this Agreement. Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary will immediately cease all existing activities, discussions and negotiations with any parties conducted heretofore with respect to any of the foregoing except for financings contemplated by this Agreement and association documents. From and after the execution of this Agreement, Rakepoll Finance, Rakepoll Holding and each Rakepoll Holding Subsidiary and affiliates shall promptly advise Gensia in writing of the receipt, directly or indirectly, of any inquiries, discussions, negotiations, or proposals relating to a Competing Transaction (including the specific terms thereof) and promptly furnish to Gensia a copy of any such proposal or inquiry in addition to any information provided to or by any third party relating thereto. (d) Notification of Certain Matters. Rakepoll Finance shall give prompt notice to Gensia of (i) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would cause any Rakepoll Finance representation or warranty contained in this Agreement to be untrue or inaccurate at or prior to the Closing Date and (ii) any material failure of Rakepoll Finance or Rakepoll Holding or any Rakepoll Holding Subsidiary to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 4.3(d) shall not limit or otherwise affect the remedies available hereunder to Gensia. ARTICLE 5 CONDITIONS 5.1 Mutual Conditions. The obligations of the parties hereto to consummate the Stock Exchange shall be subject to satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) No temporary restraining order, preliminary or permanent injunction or other order or decree which prevents the consummation of the Stock Exchange shall have been issued and remain in effect, and no statute, rule or regulation shall have been enacted by any Governmental Authority which prevents the consummation of the Stock Exchange; provided, however, that the parties shall use their reasonable best efforts to cause any such decree, ruling, injunction or other order to be vacated or lifted. (b) All waiting periods (and any extensions thereof) applicable to the consummation of the Stock Exchange under the HSR Act and applicable Mexican law shall have expired or been terminated and the consummation of the transactions contemplated hereby shall be permitted thereunder. (c) [This paragraph intentionally left blank.] (d) The issuance of the Gensia Common Shares to be issued in the Stock Exchange and the other transactions contemplated hereby shall have been approved by the Gensia Stockholders in the manner required by any Applicable Law. (e) The Commission shall have approved the Gensia Proxy Statement. On the Closing Date, no stop order or similar restraining order shall have been threatened by the Commission or entered by the Commission or any state securities administrator prohibiting the Stock Exchange. (f) No Action shall be instituted by any Governmental Authority, including under the HSR Act or the Exon-Florio Amendment, which seeks to prevent consummation of the Stock Exchange or seeking material damages in connection with the transactions contemplated hereby which continues to be outstanding; provided, however, that the parties shall use their reasonable best efforts to cause any such decree, ruling, injunction or other order to be vacated or lifted. Should the consent of the competent antitrust authorities not be granted on or before the Closing Date, the parties shall meet in order to review the situation and establish a new Closing Date without any undue delay. (g) The Shareholder's Agreement shall be in full force and effect and the appointment of directors contemplated therein shall have been made in accordance therewith. 5.2 Conditions to Obligations of Rakepoll Finance. The obliga- tions of Rakepoll Finance to consummate the Stock Exchange and the trans- actions contemplated hereby shall be subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions unless waived by Rakepoll Finance: (a) The representations and warranties of Gensia set forth in Article 2 shall be true and correct in all material respects on the date hereof and on and as of the Closing Date as though made on and as of the Closing Date (except for representations and warranties made as of a specified date, which need be true and correct only as of the specified date), except for such inaccuracies which have not had and would not reasonably be expected to have in the reasonably foreseeable future a material adverse effect on Gensia and the Gensia Subsidiaries taken as a whole. (b) Gensia shall have performed in all material respects each obligation and agreement and shall have complied in all material respects with each covenant to be performed and complied with by it hereunder at or prior to the Closing Date. (c) Gensia shall have furnished Rakepoll Finance with a certificate dated the Closing Date signed on behalf of it by the Chairman, President or any Vice President to the effect that the conditions set forth in Sections 5.1(g), 5.2(a), (b), (f) (g) and (h) have been satisfied. (d) Rakepoll Finance shall have received the legal opinion, dated the Closing Date, of Pillsbury Madison & Sutro LLP counsel to Gensia, substantially in the form of Exhibit A hereto. (e) The Gensia Common Shares to be issued in the Stock Exchange and the transactions contemplated hereby shall have been authorized for inclusion on Nasdaq, subject to official notice of issuance. (f) Gensia shall have paid, or caused to be paid, all dividends owing in connection with any Gensia Preferred Stock, commencing with the dividend payment due as of September 1, 1996. (g) Gensia shall have filed, or caused to be filed, all amendments to its Certificate of Incorporation and Bylaws as contemplated by, and necessary to effectuate, this Agreement and the Shareholder's Agreement. (h) Gensia shall have eliminated research expenses (other than ongoing property lease related expenses), which may include, prior to the Closing Date, a spinout of the Gensia research business to Gensia stockholders and a concurrent cash contribution to the spun out entity as contemplated by the funding plan agreed to by the parties hereto. Any actions taken by Gensia pursuant to the provisions of this Section 5.2(h) shall not be breaches of the representations and warranties or the covenants of Gensia contained in this Agreement. 5.3 Conditions to Obligations of Gensia. The obligations of Gensia to consummate the Stock Exchange and the other transactions contemplated hereby shall be subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) The representations and warranties of Rakepoll Finance set forth in Article 3 shall be true and correct in all material respects on the date hereof and on and as of the Closing Date as though made on and as of the Closing Date (except for representations and warranties made as of a specified date, which need be true and correct only as of the specified date), except for such inaccuracies which have not had and would not reasonably be expected to have in the reasonably foreseeable future a material adverse effect on Rakepoll Holding and the Rakepoll Holding Subsidiaries, taken as a whole. (b) Rakepoll Finance shall have performed in all material respects each obligation and agreement and shall have complied in all material respects with each covenant to be performed and complied with by it hereunder at or prior to the Closing Date. (c) Rakepoll Finance shall have furnished Gensia with a certificate dated the Closing Date signed on its behalf by its Chairman, President or any Vice President to the effect that the conditions set forth in Sections 5.1(g), 5.3(a) and (b) have been satisfied. (d) Gensia shall have received the legal opinions, dated the Closing Date, of Simpson Thacher & Bartlett, Santamarina Y Steta, Studio Legale Nodari, Saletti & Associati and Nauta Dutilh, counsel to Rakepoll Finance, and a legal opinion concerning Kew Investments Limited, in substantially the forms attached hereto as Exhibit B. ARTICLE 6 TERMINATION AND AMENDMENT 6.1 Termination. This Agreement may be terminated at any time prior to the Closing Date, whether before or after approval and adoption of this Agreement by Gensia Stockholders: (a) by mutual consent of Gensia and Rakepoll Finance; (b) by either Gensia or Rakepoll Finance if any permanent injunction or other order, decree or ruling of a court of competent jurisdiction or other competent Governmental Authority preventing the consummation of the Stock Exchange shall have become final and nonappealable; (c) by either Gensia or Rakepoll Finance if the Stock Exchange shall not have been consummated before June 30, 1997, unless extended by the Boards of Directors of both Gensia and Rakepoll Finance (provided that the right to terminate this Agreement under this Section 6.1(c) shall not be available to any party whose failure or whose affiliate's failure to perform any material covenant or obligation under this Agreement has been the cause of or resulted in the failure of the Stock Exchange to occur on or before such date); (d) by Gensia or Rakepoll Finance if the authorization of the Gensia Stockholders with respect to the issuance of Gensia Common Shares in the Stock Exchange shall not have been obtained by reason of the failure to obtain the required vote at a meeting held for such purpose and any adjournment thereof; (e) by Rakepoll Finance if prior to the Closing Date (i) any representation or warranty on the part of Gensia or any Gensia Subsidiary contained in this Agreement is incorrect in any material respect and which has a material adverse effect or which materially adversely affects the ability of the parties to consummate the transactions contemplated hereby, (ii) there shall have been a breach of any covenant or agreement on the part of Gensia or any Gensia Subsidiary contained in this Agreement which has material adverse effect or which materially adversely affects the ability of the parties to consummate the transactions contemplated hereby, which breach, in the case of clauses (i) and (ii), shall not have been cured prior to 30 days following notice thereof, (iii) Gensia's Board of Directors shall have withdrawn or modified (including by amendment of or supplement to the Proxy Statement) in a manner adverse to Rakepoll Finance its approval or recommendation of this Agreement or the transactions contemplated hereby or shall have recommended a Third Party Acquisition (as defined below), or shall have resolved to effect any of the foregoing or (iv) any person other than Rakepoll Finance or any of its affiliates shall have become the beneficial owner of more than 15% of the shares of Gensia Common Shares; and (f) by Gensia if prior to the Closing Date (i) any representation or warranty on the part of Rakepoll Finance or any Rakepoll Finance Subsidiary contained in this Agreement is incorrect in any material respect and which has a material adverse effect or which materially adversely affects the ability of the parties to consummate the transactions contemplated hereby or, (ii) there shall have been a breach of any covenant or agreement on the part of Rakepoll Finance or any Rakepoll Finance Subsidiary contained in this Agreement which has a material adverse effect or which materially adversely affects the ability of the parties to consummate the transactions contemplated hereby, which breach, in the case of clauses (i) and (ii), shall not have been cured prior to 30 days following notice thereof. 6.2 Effect of Termination. (a) In the event of the termination of this Agreement pursuant to Section 6.1, this Agreement, except for the provisions of Sections 6.2 and 7.9, shall become void and have no effect, without any liability on the part of any party or its directors, officers or stockholders. Notwithstanding the foregoing, nothing in this Section 6.2 shall relieve any party to this Agreement of liability for a material breach of any provision of this Agree- ment. (b) If (i) Rakepoll Finance terminates this Agreement pursuant to Section 6.1(d) or (ii) Rakepoll Finance terminates this Agreement pursuant to Section 6.1(c) or clause (i), (ii) or (iv) of Section 6.1(e) hereof and, within twenty-four months thereafter, Gensia enters into an agreement with respect to a Third Party Acquisition, or a Third Party Acquisition occurs, then Gensia shall pay to Rakepoll Finance (A) within one business day following any occurrence contemplated in clause (ii) hereof or simultaneously with any termination contemplated by clause (i) hereof, a fee, in cash, of $5 million, provided, however, that Gensia shall in no event be obligated to pay more than one such fee with respect to all such occurrences and such termination, and (B) within one business day after being requested by Rakepoll Finance (accompanied by reasonably detailed documentation to the extent reasonably requested by Gensia) from time to time, all of the Rakepoll Finance Stock Exchange Fees. (c) If (i) Gensia terminates this Agreement pursuant to Section 6.1(d) or (ii) Gensia terminates this Agreement pursuant to Section 6.1(c) or clause (i) or (ii) of Section 6.1(f) hereof and, within twenty-four months thereafter, Rakepoll Finance enters into an agreement with respect to a Third Party Acquisition, or a Third Party Acquisition occurs, then Rakepoll Finance shall pay to Gensia (A) within one business day following any occurrence contemplated in clause (ii) hereof or simultaneously with any termination contemplated by clause (i) hereof, a fee, in cash, of $5 million, provided, however, that Gensia shall in no event be obligated to pay more than one such fee with respect to all such occurrences and such termination, and (B) within one business day after being requested by Gensia (accompanied by reasonably detailed documentation to the extent reasonably requested by Rakepoll Finance) from time to time, all of the Gensia Stock Exchange Fees. For purposes of this Agreement, "Third Party Acquisition" means any of the following events: (i) the acquisition of Gensia by merger, tender offer or otherwise by any person other than Parent, Sub or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of 30% or more of the assets of the Company and its subsidiaries, taken as a whole; (iii) the acquisition by a Third Party of 15% or more of the outstanding shares of Gensia Common Shares, directly or indirectly; (iv) the adoption by the Company of a plan of liquidation or the declaration or payment of an extraordinary dividend; (v) the repurchase by the Company or any of its subsidiaries of 15% or more of the outstanding shares of Company Common Stock or (vi) the acquisition by Gensia of a Third Party resulting in the issuance to such Third Party or its affiliates, directly or indirectly, of 15% or more of the outstanding shares of Gensia Common Shares. 6.3 Amendment. This Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after adoption of this Agreement by Rakepoll Finance Shareholders or authorization of issuance of Gensia Common Shares in the Stock Exchange by Gensia Stockholders, but after such approval or authorization, no amendment shall be made which by law requires further approval or authorization by the Rakepoll Finance Shareholders or Gensia Stockholders, as the case may be, without such further approval or authorization. Notwithstanding the foregoing, this Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 6.4 Extension; Waiver. At any time prior to the Closing Date, Gensia (with respect to Rakepoll Finance) and Rakepoll Finance (with respect to Gensia) by action taken or authorized by their respective Boards of Directors, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of such party, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. ARTICLE 7 MISCELLANEOUS 7.1 Survival of Representations and Warranties. The representations and warranties made herein by the parties hereto shall survive until the second anniversary of the Closing Date, except that the representations and warranties set forth in Sections 2.6 and 3.7, shall survive until the earlier to occur of the expiration of the applicable statute of limitations period or the sixth anniversary of the Closing Date. 7.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or dispatched by a nationally/internationally recognized overnight courier service to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Gensia: Gensia, Inc. 9360 Towne Centre Drive San Diego, CA 92121 Attention: David Hale Telecopy No.: (619) 453-0095 with a copy to Pillsbury Madison & Sutro LLP 235 Montgomery Street San Francisco, California 94104 United States of America Attention: Thomas E. Sparks, Jr. Telecopy No.: (415) 983-1200 (b) if to Rakepoll Finance: Rakepoll Finance N.V. 14JB Gorsiraweg Curacao, Netherlands Antilles Attention: Carlo Salvi Telecopy No.: (41)(91)994-9777 with a copy to: Carlo Salvi Via San Salvatore, 7 Ch 6902 Lugano Switzerland with a copy to Simpson Thacher & Bartlett 99 Bishopsgate London, England EC2M 3YH Attention: Alan M. Klein Telecopy No.: 011-44-171-422-4022 7.3 Interpretation. When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. The headings and the table of contents contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. When a reference is made in this Agreement to Rakepoll Finance, such reference shall be deemed to include any and all subsidiaries of Rakepoll Finance, individually and in the aggregate, including Rakepoll Finance. When a reference is made in this Agreement to Gensia, such reference shall be deemed to include any and all subsidiaries of Gensia, individually and in the aggregate, including Gensia. When a reference is made in this Agreement to Gensia Common Shares or shares thereof, such reference shall be deemed to include the preferred share purchase rights issued pursuant to the Rights Agreement that trade together with the Gensia Common Shares. 7.4 Counterparts. This Agreement may be executed in counterparts, which together shall constitute one and the same Agreement. The parties may execute more than one copy of the Agreement, each of which shall constitute an original. 7.5 Entire Agreement. This Agreement (including the documents and the instruments referred to herein), and the Confidentiality Agreement constitute the entire agreement among the parties and supersede all prior agreements and understandings, agreements or representations by or among the parties, written and oral, with respect to the subject matter hereof and thereof. 7.6 Governing Law; Consent to Jurisdiction. This Agreement shall be governed and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law. The parties hereto unconditionally and irrevocably agree and consent to the exclusive jurisdiction of, and service of process and value in, the United States District Court for the Southern District of New York and the courts of the State of New York located in the City of New York, and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby and further agree not to commence any such action, suit or proceeding except in any such court. Each party irrevocably waives any objections or immunities to jurisdiction to which it may otherwise be entitled or become entitled (including immunity to pre-judgment attachment, post-judgment attachment and execution) in any legal suit, action or proceeding against it arising out of or relating to this Agreement or the transactions contemplated hereby which is instituted in any such court. Rakepoll Finance hereby appoints CT Corporation, located at 1633 Broadway, New York, New York 10019 as its authorized agent (the "Rakepoll Finance Authorized Agent") upon whom process may be served in any such action arising out of or relating to this Agreement or the transactions contemplated hereby which may be instituted in the United States District Court for the Southern District of New York or the courts of the State of New York located in the City of New York by any other party hereto. Such appointment shall be irrevocable. Rakepoll Finance agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Rakepoll Finance Authorized Agent and written notice of such service to Rakepoll Holding shall be deemed, in every respect, effective service of process upon Rakepoll Finance. 7.7 Specific Performance. The transactions contemplated by this Agreement are unique. Accordingly, each of the parties acknowledges and agrees that, in addition to all other remedies to which it may be entitled, each of the parties hereto is entitled to a decree of specific performance, provided such party is not in material default hereunder. 7.8 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. 7.9 Expenses. Subject to the provisions of Section 6.2, Gensia shall pay all costs and expenses owed at closing associated with the transactions contemplated by this Agreement, including, without limitation, the Rakepoll Finance Stock Exchange Fees. IN WITNESS WHEREOF, Gensia and Rakepoll Finance have signed this Agreement as of the date first written above. GENSIA, INC. By /s/ David F. Hale --------------------------------- Chairman of the Board RAKEPOLL FINANCE N.V. By /s/ Carlo Salvi --------------------------------- Chairman of the Board AMENDMENT NO. 1 TO STOCK EXCHANGE AGREEMENT ------------------------------------------- AMENDMENT NO. 1 (the "Amendment"), dated as of December 16, 1996 to the Stock Exchange Agreement dated as of November 12, 1996 (the "Agreement") between GENSIA, INC., a Delaware corporation (the "Company"), and RAKEPOLL FINANCE N.V., a corporation organized under the laws of the Netherlands Antilles ("Rakepoll Finance"). THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Amendment of the Agreement. Pursuant to Section 6.3 of the Agreement, Section 5.2(h) of the Agreement is hereby amended and restated to read in its entirety as follows: "(h) Gensia shall have eliminated its net use of cash for ongoing research activities (other than ongoing property lease related expenses) either (i) as a result of Gensia having obtained cash or contractually committed payments for such research activities from third parties in the form of research collaborations or otherwise, or (ii) by the termination of such research activities; provided, however, that in any event, Gensia shall be permitted to expend such amounts on research as are required for Gensia to fulfill its obligations under its agreement with Pfizer Inc., dated as of May 1, 1996. It is further understood by Gensia and Rakepoll Finance that Gensia will not borrow money in order to eliminate the net use of cash as described in subclause (i) above. In the event that such net use of cash has been eliminated pursuant to subclause (i) above, it is the intent of the parties hereto that, subsequent to the Closing Date, they will use their best efforts to present to the Board of Directors of Gensia a plan to effectuate the spinoff of the research activities of Gensia into an independent company, so long as such spinoff is reasonably feasible. Such spinoff plan shall include as assets of the company to be spunoff the five million dollar ($5,000,000) cash contribution contemplated by the funding plan agreed to by the parties hereto and other cash payments received (and unspent) or to be received under research collaborations between third parties and Gensia. If there has been no such spinoff within six months after the Closing Date, any such research activities not fully paid for by third parties will be terminated, so that no such research activities will produce losses." 2. Full Force and Effect. Except as modified, amended or supplemented above, all rights, terms and conditions of the Agreement shall remain in full force and effect. 3. Definitions; References. All terms used, but not defined in this Amendment shall have the respective meanings set forth in the Agreement. 4. Governing Law. This Amendment shall be governed by and construed under the laws of the State of New York (irrespective of its choice of law principles). 5. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement as of the date first written above. GENSIA, INC. By /s/ David F. Hale ----------------------------- Chairman of the Board RAKEPOLL FINANCE N.V. By /s/ Carlo Salvi ----------------------------- Chairman of the Board EX-99.2 3 Exhibit 2 --------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- SHAREHOLDER'S AGREEMENT Between RAKEPOLL FINANCE N.V. and GENSIA, INC. Dated as of November 12, 1996 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- TABLE OF CONTENTS Page ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . 4 SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . 4 ARTICLE II ANTI-DILUTION RIGHTS . . . . . . . . . . . . 7 SECTION 2.1. Anti-Dilution Rights of Rakepoll . . . . . . . . 7 ARTICLE III PURCHASE OF COMMON STOCK . . . . . . . . . . . 8 SECTION 3.1. Purchase of Common Stock by Rakepoll . . . . . . 8 ARTICLE IV CORPORATE GOVERNANCE . . . . . . . . . . . . 8 SECTION 4.1. Composition of the Board of Directors . . . . . . 8 SECTION 4.2. Solicitation and Voting of Shares . . . . . . . . 10 SECTION 4.3. Management of the Company . . . . . . . . . . . . 11 SECTION 4.4. Approval of Investor Directors Required for Certain Actions . . . . . . . . . 11 SECTION 4.5. Certificate of Incorporation and By-Laws . . . 12 SECTION 4.6. Funding Plan . . . . . . . . . . . . . . . . . 12 SECTION 4.7. Issuance of Equity Securities During Standstill Period . . . . . . . . . . 12 SECTION 4.8. Management of the Subsidiaries . . . . . . . . 12 SECTION 4.9. Failure to Comply with this Article IV . . . . 13 ARTICLE V TRANSFER OF COMMON STOCK . . . . . . . . . . 13 SECTION 5.1. Transfer of Common Stock . . . . . . . . . . . 13 ARTICLE VI REGISTRATION RIGHTS . . . . . . . . . . . . 14 SECTION 6.1. Request for Registration . . . . . . . . . . . 14 SECTION 6.2. Incidental Registration . . . . . . . . . . . . 16 SECTION 6.3. Registration on Form S-3 . . . . . . . . . . . 17 SECTION 6.4. Obligations of the Company . . . . . . . . . . 18 SECTION 6.5. Furnish Information . . . . . . . . . . . . . . 22 SECTION 6.6. Expenses of Registration . . . . . . . . . . . 22 SECTION 6.7. Underwriting Requirements . . . . . . . . . . . 23 SECTION 6.8. Rule 144 and Rule 144A Information . . . . . . 23 SECTION 6.9. Delay of Registration . . . . . . . . . . . . 23 SECTION 6.10. Indemnification . . . . . . . . . . . . . . . . 23 SECTION 6.11. Lock-up in connection with a Registration of Securities . . . . . . . . . . . . 26 SECTION 6.12. Transfer of Registration Rights . . . . . . . . 27 SECTION 6.13. Selection of Counsel . . . . . . . . . . . . . 27 ARTICLE VII REPRESENTATIONS AND WARRANTIES . . . . . . . . . 27 SECTION 7.1. Representations of the Company . . . . . . . . 27 SECTION 7.2. Representations of Rakepoll . . . . . . . . . . 28 ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . 29 SECTION 8.1. Notices . . . . . . . . . . . . . . . . . . . . 29 SECTION 8.2. Amendments; No Waivers . . . . . . . . . . . . 30 SECTION 8.3. Severability . . . . . . . . . . . . . . . . . 30 SECTION 8.4. Entire Agreement; Assignment . . . . . . . . . 31 SECTION 8.5. Parties in Interest . . . . . . . . . . . . . . 31 SECTION 8.6. Specific Performance . . . . . . . . . . . . . 31 SECTION 8.7. Governing Law; Consent to Jurisdiction . . . . 31 SECTION 8.8. Headings . . . . . . . . . . . . . . . . . . . 32 SECTION 8.9. Counterparts . . . . . . . . . . . . . . . . . 32 SECTION 8.10. Effectiveness; Termination . . . . . . . . . . 32 SECTION 8.11. Waiver of Jury Trial . . . . . . . . . . . . . 32 SCHEDULES - --------- Schedule 2.1 - Securities Outstanding on Closing Date Schedule 4.1(b) - Directors to Resign EXHIBITS - -------- Exhibit A - Composition of the Board of Directors Exhibit B - Form of Amended and Restated Certificate of Incorporation Exhibit C - Form of Amended By-Laws Exhibit D - Composition of Boards of Directors and Senior Management of Subsidiaries SHAREHOLDER'S AGREEMENT, dated as of November 12, 1996, between Rakepoll Finance N.V., a corporation organized under the laws of the Netherlands Antilles ("Rakepoll"), and Gensia, Inc., a corporation organized under the laws of the state of Delaware (the "Company"). W I T N E S S E T H WHEREAS, concurrently herewith, Rakepoll and the Company are entering into a Stock Exchange Agreement of even date herewith (the "Stock Exchange Agreement"); and WHEREAS, the Boards of Directors of Rakepoll and the Company have each determined to engage in the transactions contemplated by the Stock Exchange Agreement, pursuant to which the Company will purchase from the stock of Rakepoll Holding B.V. a corporation organized under the laws of the Netherlands in consideration for shares of Common Stock and certain additional consideration (as defined herein); and WHEREAS, Rakepoll and the Company desire to establish in this Agreement certain terms and conditions concerning the corporate governance of the Company after the Closing Date (as defined in the Stock Exchange Agreement) and certain terms and conditions concerning the acquisition and disposition of securities of the Company by Rakepoll and its Affiliates. NOW, THEREFORE, in consideration of the foregoing and the mutual promises and agreements contained herein, Rakepoll and the Company hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. Definitions. As used in this Agreement, the following terms have the following meanings: (a) "Affiliate" has the same meaning as in Rule 12b-2 promulgated under the Exchange Act. (b) "Associate" has the same meaning as in Rule 12b-2 promulgated under the Exchange Act. (c) "Beneficial owner" and to "beneficially own" has the same meaning as in Rule 13d-3 promulgated under the Exchange Act. (d) "Board of Directors" means the Board of Directors of the Company. (e) "Common Stock" means the common stock, par value $.01 per share, of the Company. (f) "Director" means a member of the Board of Directors. (g) "Equity Security" means any (i) Common Stock, (ii) securities of the Company convertible into or exchangeable for Common Stock, and (iii) options, rights, warrants and similar securities issued by the Company to acquire Common Stock. (h) "Exchange Act" means the United States Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, as amended. (i) "Exon-Florio" means Section 5021 of the United States Omnibus Trade and Competitiveness Act of 1988, as amended, and the rules and regulations thereunder. (j) "Fair Market Value" means: (i) in the case of a security, the average of the closing sale prices during the thirty day period immediately preceding the date in question of such security on the Composite Tape of the New York Stock Exchange ("NYSE") or, if such security is not quoted on the Composite Tape, on the NYSE or, if such security is not listed on the NYSE, on the principal United States securities exchange registered under the Exchange Act on which such security is listed or, if such Security is not listed on any such exchange, the average of the closing sale prices or the average of the closing bid and the asking quotations of such security during the thirty day period preceding the date of determination on the Nasdaq National Market or any system then in use or, if no such quotations are available, the fair market value on the date in question of such security as determined by a majority of Independent Directors in good faith; and (ii) in the case of property other than cash or a security, the fair market value of such property on the date in question as determined by a majority of Independent Directors in good faith. (k) "Holder" shall mean any holder of Registrable Securities. (l) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. (m) "Independent Director" means a director of the Company (i) who is not and has never been an officer or employee of the Company, any Affiliate or Associate of the Company or an entity that derived 10% or more of its revenues or earnings in its most recent fiscal year from transactions involving the Company or any Affiliate or Associate of the Company, (ii) who is not and has never been an officer, employee or director of Rakepoll any Affiliate or Associate of Rakepoll or an entity that derived more than 10% of its revenues or earnings in its most recent fiscal year from transactions involving Rakepoll or any Affiliate or Associate of Rakepoll, (iii) who is not and has never been a professional advisor, including without limitation, attorneys, accountants and financial advisors, to any of the Company, Rakepoll or any Affiliate or Associate of either of them, and (iv) who was on the Closing Date deemed to be, or on or after the Closing Date was designated as, an Independent Director in accordance with Section 4.1. (n) "Investor Directors" means Directors who are designated for such position by Rakepoll in accordance with Section 4.1. (o) "Lock-up Period" means the period of time commencing at the Closing Date and terminating on the date which is 12 months after the Closing Date. (p) "Management Directors" means, at the Closing Date, Directors who were deemed to be Management Directors in accordance with Section 4.1(b) and, after the Closing Date, Directors who are designated for such position in accordance with Section 4.1. (q) "Preferred Stock" means the Company's $3.75 Convertible Exchangeable Preferred Stock. (r) "Rakepoll's Initial Interest" means the number of shares of outstanding Common Stock that is controlled directly or indirectly by Rakepoll and the Rakepoll Affiliates immediately upon consummation of the transactions contemplated by the Stock Exchange Agreement. (s) "Rakepoll's Interest" means, at any time, the number of shares of outstanding Common Stock that is controlled directly or indirectly by Rakepoll and the Rakepoll Affiliates. (t) "Rakepoll's Initial Percentage Interest" means the percentage of outstanding Common Stock that is controlled directly or indirectly by Rakepoll and the Rakepoll Affiliates immediately upon consummation of the transactions contemplated by the Stock Exchange Agreement. (u) "Rakepoll's Percentage Interest" means, at any time, the percentage of outstanding Common Stock that is controlled directly or indirectly by Rakepoll and the Rakepoll Affiliates. (v) "Register," "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act and the declaration or ordering of effectiveness of such registration statement or document. (w) "Registrable Securities" shall mean (i) any Equity Security held by Rakepoll that was issued to Rakepoll by the Company pursuant to, or otherwise acquired by Rakepoll in accordance with, the terms of this Agreement or the Stock Exchange Agreement, (ii) any common stock issued as (or issuable upon the conversion or exercise of any warrant, right, option or other convertible security which is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, such Equity Security, and (iii) any common stock issued by way of a stock split of the Equity Security referred to in clauses (i) or (ii) above. For purposes of this Agreement, any Registrable Securities shall cease to be Registrable Securities when (A) a registration statement covering such Registrable Securities has been declared effective and such Registrable Securities have been disposed of pursuant to such effective registration statement, (B) such Registrable Securities shall have been distributed pursuant to Rule 144 (or any similar provision then in effect) under the Securities Act, (C) such Registrable Securities are sold by a person in a transaction in which the rights under the provisions of this Agreement are not assigned, or (D) such Registrable Securities shall cease to be outstanding. (x) "Registration Expenses" shall mean any and all expenses incident to performance of or compliance with this Agreement, including, without limitation, (i) all SEC and securities exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses of complying with securities or blue sky laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, messenger and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange pursuant to Section 6.4(h), (v) the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance, (vi) the reasonable fees and disbursements of one counsel, other than the Company's counsel, selected by the Holders of a majority of the Registrable Securities being registered to represent all Holders of the Registrable Securities being registered in connection with each such registration (it being understood that any Holder may, at its own expense, retain separate counsel to represent it in connection with such registration), and (vii) any fees and disbursements of underwriters customarily paid by the issuers or sellers of securities, and the reasonable fees and expenses of any special experts retained in connection with the requested registration, but excluding underwriting discounts and commissions and transfer taxes, if any. (y) "SEC" means the United States Securities and Exchange Commission. (z) "Securities Act" means the United States Securities Act of 1933, and the rules and regulations promulgated thereunder, as amended. (aa) "Standstill Period" means the period of time commencing at the Closing Date and terminating on the date which is 12 months after the Closing Date. (ab) "Subsidiary" has the same meaning as in Rule 12b-2 promulgated under the Exchange Act. (ac) A "Substantial Part" of the Company means more than 33 1/3% of the Fair Market Value of the total assets of the Company and its Subsidiaries as of the end of its most recent fiscal quarter ending prior to the time the determination is made. ARTICLE II ANTI-DILUTION RIGHTS SECTION 2.1. Anti-Dilution Rights of Rakepoll. Subject to Section 3.1 of this Agreement, if at any time the Board of Directors shall authorize the issuance of Equity Securities (other than the issuance of securities to officers, employees or directors of the Company or its Subsidiaries pursuant to any employee compensation or benefit plan approved by the Board of Directors or pursuant to the terms of securities outstanding on the Closing Date, as set forth on Schedule 2.1 hereto), then Rakepoll shall have the right to acquire, in the open market, as permitted by applicable law, up to that number of shares of Common Stock so that Rakepoll's Percentage Interest after such issuance of Equity Securities is equal to, but not greater than, Rakepoll's Initial Percentage Interest. ARTICLE III PURCHASE OF COMMON STOCK SECTION 3.1. Purchase of Common Stock by Rakepoll. (a) During the Standstill Period, Rakepoll and the Rakepoll Affiliates shall not directly or indirectly purchase or otherwise acquire, or propose or offer to purchase or otherwise acquire, any Common Stock or other securities of the Company, whether by tender offer, market purchase, privately negotiated purchase, business combination or otherwise, except (i) with the consent of a majority of the Independent Directors or (ii) as set forth in subsection (b) below. (b) The prohibitions contained in Section 3.1(a) shall not apply (i) in the event of any issuance by the Company of any Equity Securities not contemplated by the business plan previously agreed to by the parties hereto (the "Business Plan"), or (ii) following (X) the commencement by any third party of (1) a bona fide tender or exchange offer to purchase in excess of 20% of the outstanding shares of Common Stock that the Board of Directors either recommends acceptance of, expresses no opinion and remains neutral toward or is unable to take a position with respect to, (2) a bona fide proposal to acquire all or substantially all of the assets of the Company that the Board of Directors is actively entertaining and the consummation of which would require approval by the Stockholders of the Company pursuant to Delaware law or (3) a bona fide proposal to enter into any other similar business combination transaction with the Company that the Board of Directors is actively entertaining, in the case of each of clauses (1)-(3), which shall not have been approved in advance by the Company or the Board of Directors, or (Y) the Company entering into (or announcing its intention to do so) a definitive agreement, or an agreement contemplating a definitive agreement, for any of the transactions described in clauses (1)-(3) above. ARTICLE IV CORPORATE GOVERNANCE SECTION 4.1. Composition of the Board of Directors. (a) Except as otherwise provided herein, the Board of Directors shall consist of ten Directors (of whom at least two shall be independent directors as required by the rules of the Nasdaq National Market System and who shall be deemed to be Independent Directors hereunder). (b) Effective as of the Closing Date, the Company shall cause those of the current Directors set forth in Schedule 4.1(b) to resign from the Board of Directors. The Company will cause the Board of Directors to take all necessary action so that at the Closing Date, the Board of Directors shall consist of (i) two Directors who are executive officers of the Company (not affiliated with Rakepoll), who shall be Management Directors hereunder; (ii) three Investor Directors designated by Rakepoll and (iii) five Independent Directors designated jointly by the Management Directors and Investor Directors; provided, however, that in the event that on or prior to the Closing Date the holders of the Preferred Stock of the Company (other than Rakepoll and its Affiliates) become entitled to appoint 2 directors (the "Preferred Directors") to the Board of Directors in accordance with the terms of the Preferred Stock, then (x) the Board of Directors shall be increased from 10 to 12 Directors and (y) Rakepoll shall thereafter be entitled to designate an additional Investor Director and one Independent Director shall resign so that up to 4 of the 12 Directors will be Investor Directors. The names of the members of the Board of Directors at the Closing Date shall be as set forth in Part 1 of Exhibit A hereto. After the Closing, the composition of the Board of Directors shall be determined in compliance with Section 4.1(c). Management Directors, Investor Directors and Independent Directors shall be apportioned, to the extent possible, equally among the three classes of Directors. (c) At all times during the term of this Agreement that Rakepoll's Interest is: (i) 50% or above of Rakepoll's Initial Interest, Rakepoll shall have the right to designate for nomination and approval three Investor Directors; the Management Directors shall have the right to designate for nomination and approval two Management Directors; and the five Independent Directors shall be designated for nomination and approval jointly by the Management Directors and the Investor Directors; (ii) 25% or above but less than 50% of Rakepoll's Initial Interest, Rakepoll shall have the right to designate for nomination and approval two Investor Directors; and there shall be four Independent Directors who shall be designated for nomination and approval jointly by the Management Directors and the Investor Directors; (iii) 10% or above but less than 25% of Rakepoll's Initial Interest, Rakepoll shall have the right to designate for nomination and approval one Investor Director; and there shall be three Independent Directors who shall be designated for nomination and approval jointly by the Management Director and the Investor Director; and (iv) below 10% of Rakepoll's Initial Interest, Vermouth shall have no right to designate any Investor Directors or Independent Directors, and the Management Directors shall have no right to designate any Management Directors or Independent Directors; in each case as set forth in Part 2 of Exhibit A hereto. Either (A) at any time prior to the Closing or (B) after the Closing, if the Investor Directors have voted for the payment of the dividend owed on the Preferred Stock, in the event that the holders of the Preferred Stock become entitled to appoint the Preferred Directors, for so long as such holders are entitled to appoint the Preferred Directors, the composition of the Board of Directors in the case of each of (i)-(iv) above shall be as set forth in Part 3 of Exhibit A hereto. If at any time the Rakepoll Interest should be reduced with the result that, in accordance with paragraphs (i) through (iv) above, the number of directors which Rakepoll is entitled to designate is reduced, then such entitlement reduction shall extinguish any right Rakepoll may have hereunder to designate a greater number of directors, notwithstanding any increase in the Rakepoll Interest which may occur after such entitlement reduction. Vacancies on the Board of Directors which result from a reduction in Rakepoll's and the Management Directors' entitlement to designate directors in accordance with the foregoing shall be filled by election by the stockholders at large of the Company, in accordance with applicable law, the Company's Certificate of Incorporation and its Bylaws. (d) If at any time the number of Investor Directors or Management Directors on the Board of Directors exceeds the number of such Directors that Rakepoll or the Management Directors, as the case may be, has the right to designate in accordance with this Section 4.1, then Rakepoll or the Management Directors, as appropriate, shall promptly cause to resign, and take all other action reasonably necessary to cause the prompt removal of, such number of Investor Directors or Management Directors, as appropriate, necessary to cause the composition of the Board of Directors to conform to the provisions of Section 4.1(c). In the event that additional Investor Directors or Management Directors are required to be designated so that the composition of the Board of Directors conforms hereto, then the Investor Directors or the Management Directors, as appropriate, shall designate replacement directors in accordance with Section 4.1(c). (e) Subject to Section 4.1(d), Rakepoll and the Management Directors, respectively, shall have the right to designate any replacement for any Investor Director or Management Director, as applicable, designated in accordance with Section 4.1 by Rakepoll or the Management Directors, respectively, at the termination of such director's term or upon death, resignation, retirement, disqualification, removal from office or other cause; provided, however, that if at any time there are no Management Directors remaining on the Board of Directors, then the Independent Directors shall designate a member of the senior management of the Company who is not an affiliate of Rakepoll (other than by virtue of being a senior manager of the Company) as a replacement(s) for such Management Director. (f) No individual who is an officer, director, partner or principal stockholder of any "competitor" of the Company or any of its Subsidiaries (other than Rakepoll, its Affiliates or officers, directors, partners or principal stockholders thereof) shall serve as a Director. For purposes hereof, an entity shall be deemed to be a "competitor" of the Company if such entity (i) is engaged in the production of injectable generic pharmaceuticals or fine chemical finished products, or (ii) actually manufactures any product which is substantially similar in use or purpose to any product manufactured by the Company, in development by the Company, or in the funding plan agreed to by the parties hereto (the ("Funding Plan") for development by the Company or (iii) engaged in the field of oncology or (iv) is engaged in a business such that the reasonable inference is that such entity is engaged in substantially the same business as the Company. SECTION 4.2. Solicitation and Voting of Shares. (a) The Company shall use its best efforts to solicit from the stockholders of the Company eligible to vote for the election of Directors proxies in favor of the nominees designated in accordance with Section 4.1. (b) In any election of Directors or any meeting of the stockholders of the Company called expressly for the removal of Directors, Rakepoll and its Affiliates will vote all of their shares of Common Stock (i) in favor of any Director or nominee as provided in Section 4.1, (ii) in favor of the removal of any Director as provided in Section 4.1(d), and (iii) otherwise against the removal of any director designated under Section 4.1, provided that no director shall be required to breach his fiduciary duties as a result of this clause (iii). In addition Rakepoll shall, and shall use its best efforts to cause its Affiliates to, take such actions as are necessary as stockholders of the Company to give effect to the provisions of this Agreement. Subject to Section 4.8, in all other matters submitted to a vote of the Company stockholders, Rakepoll and its Affiliates may vote any or all of their shares in their sole discretion. SECTION 4.3. Management of the Company. (a) At the Closing Date, (i) An Independent Director shall serve as the non-executive Chairman of the Board of Directors upon the mutual agreement of the Investor Directors and the Management Directors; (ii) David F. Hale shall serve as President and Chief Executive Officer of the Company; and (iii) Michael D. Cannon shall serve as Executive Vice President of the Company. Each of the Chairman of the Board, David F. Hale and Michael D. Cannon shall serve in accordance with the Certificate of Incorporation and By-laws of the Company. (b) All necessary action to give effect to Section 4.3(a), including the resignation of David F. Hale as Chairman of the Board of Directors effective as of the Closing, shall be taken, or caused to be taken, by the Company. (c) At the Closing Date, an Executive Operating Committee, which shall be a management committee and not a committee of the Board of Directors, shall be established, consisting of Carlo Salvi, the President and Chief Executive Officer, the President of Gensia Laboratories, Inc. and the Executive Vice President. Carlo Salvi shall serve as Chairman of the Executive Operating Committee. SECTION 4.4. Approval of Investor Directors Required for Certain Actions. At all such times that Rakepoll's Interest is greater than or equal to 50% of Rakepoll's Initial Interest, the approval of the Investor Directors shall be required for the Board of Directors to approve and authorize any of the following: (a) the entry by the Company or any of its Subsidiaries into any merger or consolidation, or the acquisition by the Company or any of its Subsidiaries of any business or assets that would constitute a Substantial Part of the business or assets of the Company, whether such acquisition be by merger or consolidation or the purchase or sale of stock or assets or otherwise; (b) the sale, lease, pledge, grant of security interest in, license, transfer or other disposal by the Company or any of its Subsidiaries of all or substantially all of the business or assets of the Company; (c) the dissolution of the Company; the adoption of a plan of liquidation of the Company; any action by the Company or any Significant Subsidiary (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) thereof to commence any suit, case, proceeding or other action (A) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors seeking to have an order for relief entered with respect to the Company or any Significant Subsidiary thereof, or seeking to adjudicate the Company or any Significant Subsidiary thereof a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to the Company or any Significant Subsidiary thereof, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for the Company or any Significant Subsidiary thereof, or for all or any Substantial Part of the assets of the Company or any Significant Subsidiary thereof, or making a general assignment for the benefit of the creditors of the Company or any Significant Subsidiary thereof; (d) the payment of any extraordinary dividend by the Company; (e) the issuance of debt securities by the Company such that the principal amount of such debt securities outstanding subsequent to such issuance is equal to or greater than one hundred and ten percent (110%) of the aggregate principal amount of debt securities contemplated to be outstanding at such time under the Business Plan; (f) the issuance of Equity Securities by the Company such that the number of shares of such Equity Securities outstanding subsequent to such issuance is equal to or greater than one hundred and ten percent (110%) of the aggregate number of Equity Securities contemplated to be outstanding at such time under the Business Plan; and (g) the issuance of any debt or equity securities or other capital stock of any of its Subsidiaries, except the issuance of shares of capital stock of the Company or options to purchase such shares pursuant to any employee compensation or benefit plan approved by the Board of Directors or pursuant to the terms of securities outstanding on the Closing Date, as set forth in Schedule 2.1 hereto. If the Company enters into governance arrangements with respect to Automedics Development, Inc. ("Automedics") which are acceptable to the Investor Directors, then Automedics will not constitute a Subsidiary for purposes of this Section 4.4. SECTION 4.5. Certificate of Incorporation and By-Laws. The Company shall take or cause to be taken all lawful action necessary to ensure at all times that the Company's Certificate of Incorporation and By-Laws are not, at any time, inconsistent with the provisions of this Agreement. In furtherance of the foregoing, at the special stockholders meeting called to approve the Stock Exchange Agreement and the transactions set forth therein, the Company agrees to submit to its stockholders, certain amendments to the Company's Certificate of Incorporation and By-Laws substantially in the form of Exhibits B and C hereto. SECTION 4.6. Funding Plan. The Funding Plan sets forth the funding plan for the Company for the 3-year period beginning on the date hereof. The Funding Plan shall be a rolling funding plan and shall be reviewed at least once a year by the Board of Directors so as to ensure a rolling three-year business plan. The Funding Plan may be modified only with the approval of the Board of Directors. SECTION 4.7. Issuance of Equity Securities During Standstill Period. No issuance of Equity Securities shall take place during the Standstill Period except (i) in accordance with the Funding Plan or (ii) with the approval of the Investor Directors pursuant to Section 4.4(d). SECTION 4.8. Management of the Subsidiaries. (a) (i) Rakepoll shall initially have the right to designate a majority of the directors and the senior managers of each of SICOR S.p.A., Sintesis Lerma S.A. de C.V. and Lermery S.A. de C.V. and (ii) the Management Directors shall be entitled to designate the balance of the directors and senior managers of each such company, each of whom shall serve at the pleasure of the Board of Directors of the Company. The Investor Directors shall have the right to nominate for the consideration of the Board of Directors replacements for all the directors and senior managers designated by Rakepoll in accordance with the previous sentence. The composition at the Closing Date of the board of directors and senior management of each such company is set forth in Part 1 of Exhibit D hereto. (b) With respect to Gensia Laboratories, Inc., Rakepoll shall have the right to designate one director. The composition at the Closing Date of the board of directors of Gensia Laboratories, Inc. is set forth in Part 2 of Exhibit D hereto. SECTION 4.9. Failure to Comply with this Article IV. In addition to any other remedy at law or in equity which Rakepoll may have, in the event that any action is taken or omitted to be taken in violation of this Article IV which results in the failure to nominate or solicit proxies for the election of the Investor Directors or the failure to elect Investor Directors, in each case as set forth herein, the taking of any action specified in Section 4.4(a), or Section 4.4(b) without the required approvals specified therein, or the failure to comply with Sections 4.1(d) and 4.1(e) hereof, the provisions of Section 4.2(b) and Articles III and V hereof shall as of the date of such occurrence or omission be of no further force or effect. ARTICLE V TRANSFER OF COMMON STOCK SECTION 5.1. Transfer of Common Stock. (a) During the Lock-Up Period, Rakepoll will not, and will not permit any Rakepoll Affiliate, directly or indirectly, to sell, transfer or otherwise dispose of any shares of Common Stock. (b) During the Lock-Up Period, Rakepoll shall not sell, transfer or otherwise dispose of any of the capital stock of any Subsidiary of Rakepoll that owns shares of Common Stock, except to an Affiliate of Rakepoll; provided that such Affiliate agrees in writing to be bound by the terms and conditions of this Agreement. (c) The prohibitions in Sections 5.1(a) and 5.1(b) shall not apply following the commencement by any third party of a bona fide tender or exchange offer to purchase in excess of 20% of the outstanding shares of Common Stock that the Board of Directors either recommends acceptance of, expresses no opinion and remains neutral towards, or is unable to take a position with respect to. (d) Rakepoll and its Affiliates may not sell, transfer or otherwise convey to any single third party or single group acting in concert all of Rakepoll's Initial Interest without obtaining the approval of at least a majority of the Independent Directors of such sale to such single third party or group, such approval not to be unreasonably withheld and such determination of the Independent Directors to be given to Rakepoll within 10 days of notification to the Board of Directors by Rakepoll of such contemplated sale. (e) Proposed transfers of shares of Common Stock that are not in compliance with this Article V shall be of no force or effect and the Company shall not be required to register on its stock records any such transfer. ARTICLE VI REGISTRATION RIGHTS SECTION 6.1. Request for Registration. (a) At any time and from time to time on and after the first anniversary of the Closing Date, the Holders of Common Stock that are subject to this Agreement (the "Initiating Holders") may request in a written notice that the Company file a registration statement under the Securities Act (or a similar document pursuant to any other statute then in effect corresponding to the Securities Act) covering the registration of Registrable Securities held by such Initiating Holders (constituting in the aggregate at least 5% of the aggregate Common Stock outstanding immediately upon consummation of the transaction contemplated by the Stock Exchange Agreement); such notice shall specify whether the Initiating Holders require the Registrable Securities to be distributed by means of an underwriting. Following receipt of any notice under this Section 6.1, the Company shall (x) within ten days notify all other Holders of such request in writing and (y) thereupon as expeditiously as possible, use its best efforts to cause to be registered under the Securities Act all Registrable Securities that the Initiating Holders and such other Holders have, within ten days after the Company has given such notice, requested be registered in accordance with the manner of disposition specified in such notice by the Initiating Holders; provided, that the Company shall not be obligated to file a registration statement relating to any registration request under this Section 6.1, (i) if two registration statements relating to registration requests under this Section 6.1 have previously been filed and declared effective by the SEC in the calendar year in which such registration request is made or, (ii) if five registration statements relating to registration requests under this Section 6.1 have previously been filed and declared effective by the SEC. (b) If the Initiating Holders intend to have the Registrable Securities distributed by means of an underwritten offering, the Company shall include such information in the written notice referred to in clause (x) of Section 6.1(a) above. In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwritten offering and the inclusion of such Holder's Registrable Securities in the underwritten offering (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided below. All Holders proposing to distribute Registrable Securities through such underwritten offering shall enter (together with the Company, as provided in Subsection 6.4(j)) into an underwriting agreement in customary form with the underwriter or underwriters. No Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Holder, the Registrable Securities of such Holder and such Holder's intended method of distribution and any other representations required by law or reasonably required by the underwriter. If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw all its Registrable Securities by written notice to the Company, the managing underwriter and the Initiating Holders. The securities so withdrawn also shall be withdrawn from registration. (c) A registration requested pursuant to this section 6.1 shall not be deemed to have been effected pursuant this Section 6.1 for purposes of Section 6.6 unless (i) it has been declared effective by the SEC, (ii) it has remained effective for the period set forth in Section 6.4(a), and (iii) the offering of Registrable Securities pursuant to such registration is not subject to any stop order, injunction or other order or requirement of the SEC (other than any such stop order, injunction, or other requirement of the SEC prompted by any act or omission of Holders of Registrable Securities). (d) Selection of Underwriters. If a requested registration pursuant to this Section 6.1 involves an underwritten offering, the Company shall have the right to select the investment banker or bankers and managers to administer the offering; provided, however, that such investment banker or bankers and managers shall be reasonably satisfactory to Holders of a majority of the Registrable Securities which the Company has been requested to register. (e) Subject to the following sentence, if a requested registration pursuant to this Section 6.1 involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of securities requested to be included in such registration (including securities of the Company which are not Registrable Securities) exceeds the number that can be sold in such offering at a price reasonably related to the then current market value of such securities, the Company will include in such registration only the Registrable Securities requested to be included in such registration. In the event that the number of Registrable Securities requested to be included in such registration exceeds the number which, in the opinion of such managing underwriter, may be sold at a price reasonably related to the then current market value of such securities, the number of such Registrable Securities to be included in such registration shall be allocated pro rata among all requesting Holders on the basis of the relative number of shares of Registrable Securities then held by each such Holder (provided that any shares hereby allocated to any such Holder that exceed such Holder's request shall be reallocated among the remaining requesting Holders in like manner). In the event that the number of Registrable Securities requested to be included in such registration is less than the number which, in the opinion of the managing underwriter, may be sold at a price reasonably related to the then current market value of such securities, the Company may include in such registration the securities the Company proposes to sell up to the number of securities that, in the opinion of the managing underwriter, may be sold at a price reasonably related to the then current market value of such securities. The Company will not include in any requested registration pursuant to this Section 6.1 any securities which are not Registrable Securities (other than securities of the Company) without the prior written consent of the Holders of at least a majority of the Registrable Securities included in such registration. (f) If the Board of Directors of the Company, in its good faith judgment, determines that any registration of Registrable Securities should not be made or continued due to a valid need not to disclose confidential information or because it would materially interfere with any material financing, acquisition, corporate reorganization or merger or other transaction involving the Company (collectively, a "Valid Business Reason"), the Company may postpone filing a registration statement relating to a request for registration under this Section 6.1 for a period of up to 90 days from the date of the Delay Notice (as defined herein). If any such registration statement has been filed, the Company may, with respect to a registration effected pursuant to this Section 6.1 or Section 6.3, postpone amending or supplementing such registration statement for a period of up to 90 days from the date of the Delay Notice. If the Company decides to postpone filing a registration statement or an amendment or supplement thereto, then the Company shall give prompt written notice (a "Delay Notice") to any holder of Registrable Securities included or to be included in any such registration statement of its determination to postpone a registration statement. To be valid, a Delay Notice shall include in reasonable detail the nature of the Valid Business Reasons occasioning such postponement. In addition, if prior to the end of the 90-day delay period the Valid Business Reason should cease to exist, then the Company shall give prompt written notice to those parties to whom a Delay Notice was delivered stating that the Valid Business Reason for such postponement no longer exists. Notwithstanding the foregoing, and without regard to whether the Valid Business Reason continues or not, at the end of the 90-day period from the delivery of a Delay Notice, the Company shall cause such registration statement, amendment or supplement, to be filed with the SEC. Notwithstanding the foregoing the Company shall be entitled to serve only one Delay Notice within any 12 month period. SECTION 6.2. Incidental Registration. Subject to Section 6.7, if at any time after the first anniversary of the Closing Date the Company proposes to file a registration statement under the Securities Act (other than a registration statement on a Form S-4 or S-8 or any successor or similar forms) on any form that would permit the registration of the Registrable Securities, whether or not such filing is to be on its behalf, each such time the Company shall give to each Holder prompt written notice of such determination setting forth the date on which the Company proposes to file such registration statement, which date shall be no earlier than twenty- one days from the date of such notice, and advising each Holder of its right under this Section 6.2 to have Registrable Securities included in such registration. Upon the written request of any Holder received by the Company no later than thirty days after the date of the Company's notice (which request shall specify the Registrable Securities intended to be included in such registration by such Holder), the Company shall use its best efforts to cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has so requested to be registered; provided that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the securities to be sold by it, the Company may, at its election, give written notice of such determination to each Holder of Registrable Securities and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of any Holder to request such registration to be effected as a registration under Section 6.1. If a proposed registration pursuant to this Section 6.2 involves an underwritten public offering, any Holders making a request under this Section 6.2 in connection with such registration may elect in writing, prior to the effective date of the registration statement filed in connection with such registration, to withdraw such request and not to have such securities registered in connection with such registration. If, in the written opinion of the managing underwriter (or, in the case of a non-underwritten offering, in the written opinion of the Company), the total amount of such securities to be so registered, including such Registrable Securities, will exceed the maximum amount of the Company's securities that can be marketed at a price reasonably related to the then current market value of such securities, then the Company shall include in such registration (i) first, all the securities the Company proposes to sell for its own account or is required to register on behalf of any third party exercising rights similar to those granted in Section 6.1(a) and without having the adverse effect referred to above, and (ii) second, to the extent that the number of securities which the Company proposes to sell for its own account pursuant to this Section 6.2, or is required to register on behalf of any third party exercising rights similar to those granted in Section 6.1(a), is less than the number of equity securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, all Registrable Securities requested to be included in such registration by the Holders pursuant to this Section 6.2 and all shares of Common Stock requested to be included by third parties exercising the rights similar to those granted in this Section 6.2; provided that if the number of Registrable Securities and other shares of Common Stock requested to be included in such registration by the Holders pursuant to this Section 6.2 and third parties exercising rights similar to those granted in this Section 6.2, together with the number of securities to be included in such registration pursuant to clause (i) of this Section 6.2, exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registerable Securities requested to be included in such registration by the Holders pursuant to this Section 6.2 shall be limited to such extent and shall be allocated pro rata among all such requesting Holders and third parties exercising rights similar to those granted in this Section 6.2 on the basis of the relative number of Registrable Securities each such Holder has requested to be included in such registration and the number of shares of Common Stock requested to be included in such registration by such third parties. SECTION 6.3. Registration on Form S-3. If at any time after the first anniversary of the Closing Date (a) any Holder requests in writing that the Company file a registration statement on Form S-3 or any successor thereto for a public offering of all or any portion of the Registrable Securities held by such requesting Holder and (b) the Company is a registrant entitled to use Form S-3 or any successor thereto, then the Company shall use its best efforts to register under the Securities Act on Form S-3 or any successor thereto, for public sale in accordance with the method of disposition specified in such request, including, without limitation, pursuant to Rule 415 under the Securities Act, the Registrable Securities specified in such request. Whenever the Company is required by this Section 6.3 to use its best efforts to effect the registration of Registrable Securities, each of the limitations, procedures and requirements of Section 6.1(b), (e) and (f) (including but not limited to the requirement that the Company notify all Holders from whom a request has not been received and provide them with the opportunity to participate in the offering) shall apply to such registration. Notwithstanding the foregoing, the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 6.3: (i) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $10,000,000; (ii) if the Company has, within the twelve-month period preceding the date of such request, already effected two registration on Form S-3 on behalf of the Holders; (iii) in any jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration qualification or compliance; SECTION 6.4. Obligations of the Company. Whenever required under Section 6.1 or Section 6.3 to use its best efforts to effect the registration of any Registrable Securities, the Company shall, as expeditiously as possible: (a) prepare and, in any event with 45 days after, (i) the end of the period specified in section 6.2 or, (ii) receipt by the Company of a request under Section 6.1 or 6.3, as the case may be, file with the SEC a registration statement with respect to such Registrable Securities on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby determined as provided in subsection 6.4(b) below; provided, however, that the Company may discontinue any registration of its securities which is being effected pursuant to Section 6.2 at any time prior to the effective date of the registration statement relating thereto; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of 180 days or such lesser period of time as the Company or any Holder may be required under the Securities Act to deliver a prospectus in connection with any sale of Registrable Securities, and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement, and furnish to each Holder of such Registrable Securities and one counsel acting on behalf of the Holders, such number of copies of any such amendments and supplements in conformity with the requirements of the Securities Act prior to their being used or filed with the SEC, which documents will be subject to the review of such counsel; (c) furnish to each Holder and the managing underwriter, if any, such number of copies of the registration statement and the prospectus included therein (including each preliminary prospectus and any amendments or supplements thereto) in conformity with the requirements of the Securities Act and such other documents and information as they may reasonably request and make available for inspection by the parties referred to in Section 6.4(d) below such financial and other information and books and records of the Company, and cause the officers, directors, employees, counsel and independent certified public accountants of the Company to respond to such inquiries, as shall be reasonably necessary, in the judgment of the respective counsel referred to in such Section, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; (d) provide (i) the Holders of the Registrable Securities to be included in such registration statement, (ii) the underwriters (which term, for purposes of this Agreement, shall include a person deemed to be an underwriter within the meaning of Section 2(11) of the Securities Act), if any, thereof, (iii) the sales or placement agent, if any, therefor, (iv) counsel for such underwriters or agent, and (v) not more than one counsel for all the Holders of such Registrable Securities the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the SEC, and each amendment or supplement thereto; (e) use its best efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each Holder shall reasonably request to keep such registration or qualification in effect for so long as such registration statement remains in effect, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business in or to file a general consent to service of process in any jurisdiction wherein it would not, but for the requirements of this paragraph (e), be obligated to do so; and provided further that the Company shall not be required to qualify such Registrable Securities in any jurisdiction in which the securities regulatory authority requires that any Holder submit its Registrable Securities to the terms, provisions and restrictions of any escrow, lockup or similar agreement(s) for consent to sell Registrable Securities in such jurisdiction unless such Holder agrees to do so; (f) promptly notify counsel for each of the selling Holders of Registrable Securities, the sales or placement agent, if any, therefor and the managing underwriter or underwriters, if any, thereof and confirm such advice in writing, (i) when such registration statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such registration statement or any post-effective amendment, when the same has become effective, (ii) of any comments by the SEC or by any Blue Sky or securities commissioner or regulator of any state with respect thereto or any request by the SEC for amendments or supplements to such registration statement or prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such registration statement or the initiation or threatening of any proceedings for that purpose, (iv) if at any time the representations and warranties of the Company contained in any underwriting agreement or other customary agreement cease to be true and correct in all material respects or (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (g) use its best efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement or any post-effective amendment thereto, or the lifting of any suspension of the qualification of any of the registered Common Stock for sale in any jurisdiction at the earliest possible date; (h) promptly notify each Holder for whom such Registrable Securities are covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make, in light of the circumstances under which they were made, the statements therein not misleading, and at the request of any such Holder promptly prepare and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make, in light of the circumstances under which they were made, the statements therein not misleading; (i) furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to Section 6.1 or Section 6.3, if the method of distribution is by means of an underwriting, on the date that the Registrable Securities are delivered to the underwriters for sale pursuant to such registration, or if such Registrable Securities are not being sold through underwriters, on the date that the registration statement with respect to such Registrable Securities becomes effective, (1) a signed opinion, dated such date, of the independent legal counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request, as to such matters as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction; and (2) letters dated such date and the date the offering is priced from the independent certified public accountants of the Company, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the Holders making such request and, if such accountants refuse to deliver such letters to such Holders, then to the Company (i) stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the registration statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and (ii) covering such other financial matters (including information as to the period ending not more than five business days prior to the date of such letters) with respect to the registration in respect of which such letter is being given as such underwriters or the Holders holding a majority of the Registrable Securities included in such registration, as the case may be, may reasonably request and as would be customary in such a transaction; (j) enter into customary agreements (including if the method of distribution is by means of an underwriting, an underwriting agreement in customary form, including, without limitation, customary indemnification provisions consistent with Section 6.11) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities to be so included in the registration statement; (k) use its best efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect registration or the offering or sale in connection therewith or to enable the selling Holder or Holders to offer, or to consummate the disposition of, their Registrable Securities; (l) cooperate with the Holders of the Registrable Securities and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates shall be printed, lithographed or engraved, or produced by any combination of such methods, steel engraved borders, if required, and which shall not bear any restrictive legends; and, in the case of an underwritten offering, enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request at least two business days prior to any sale of the Registrable Securities; (m) otherwise comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable (but not later than eighteen months) after the effective date of the registration statement, an earnings statement covering the period of at least twelve months beginning with the first full month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; (n) use its best efforts to cause all such Registrable Securities to be listed on any securities exchange on which the Common Stock is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, and to provide a transfer agent and registrar for such Registrable Securities covered by such registration statement no later than the effective date of such registration statement; (o) make available for inspection by one counsel on behalf of all the Holders of the Registrable Securities covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by such Holders or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the Company's officers, directors and employees to supply all information reasonably requested by any such counsel, underwriter, attorney, accountant or agent in connection with such registration statement; and (p) use its best efforts to make available the executive officers of the Company to participate with the Holders of Registrable Securities and any underwriters in any "road shows" or other selling efforts that may be reasonably requested by the Holders in connection with the methods of distribution for the Registrable Securities. For purposes of Sections 6.4(a) and 6.4(b), and with respect to (i) registration required pursuant to Section 6.1, (A) the period of distribution of Registrable Securities in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it and (B) the period of distribution of Registrable Securities in any other registration shall be deemed to extend until the earlier of the sale of all Registrable Securities covered thereby and 180 days after the effective date thereof and (ii) registrations required pursuant to Section 6.3, the period of distribution of Registrable Securities in any registration (firm commitment underwritten or otherwise) shall be deemed to extend until the earlier of the sale of all Registrable Securities covered thereby and two years after the effective date thereof. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 6.4(h), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 6.4(h), and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice; provided, however, that any period of time during which a Holder must discontinue disposition of Registrable Securities shall not be included in the determination of a period of distribution for purposes of Sections 6.4(a) and 6.4(b). SECTION 6.5. Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them, and the intended method of disposition of such securities as the Company may from time to time reasonably request in writing and as shall be required in connection with the action to be taken by the Company. SECTION 6.6. Expenses of Registration. All Registration Expenses in connection with (i) each registration or attempted registration pursuant to Section 6.2, (ii) the first five registrations effected pursuant to Section 6.1 or 6.3 and (iii) any attempted registration (or partial registration deemed not to have been effected pursuant to Section 6.1 or 6.3 by operation of Sections 6.1(c) or (e)) occurring prior to the fifth registration effected pursuant to Section 6.1 or 6.3 of this Agreement, excluding underwriters' discounts and commissions, shall be paid by the Company; provided, however, that the Company shall not be required to pay for any Registration Expenses of any registration proceeding begun pursuant to Section 6.1 or 6.3 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one demand registration pursuant to Section 6.1; provided further, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business or prospects of the Company not actually known by the Holders at the time of their request for registration, then the Holders shall not be required to pay any of such expenses and shall retain in full their rights pursuant to Sections 6.1 and 6.3. The foregoing provisions with respect to expenses shall in no way limit the rights of the Holders to request registration pursuant to Sections 6.1 and 6.3 or the number of registrations which may be requested thereunder. SECTION 6.7. Underwriting Requirements. In connection with any underwritten offering, the Company shall not be required under Section 6.2 to include Registrable Securities in such underwritten offering unless the Holders of such Registrable Securities accept the terms of the underwriting of such offering that have been reasonably agreed upon between the Company and the underwriters selected by the Company; provided, that the Company shall not agree to lock-up periods in excess of 120 days in connection with any such offerings. SECTION 6.8. Rule 144 and Rule 144A Information. With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, at all times, the Company agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (ii) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (iii) furnish to each Holder of Registrable Securities forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any Registrable Securities without registration. SECTION 6.9. Delay of Registration. No Holder, other than Rakepoll, shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Article VI. SECTION 6.10. Indemnification. In the event any Registrable Securities are included in a registration statement under this Agreement: (a) The Company shall indemnify and hold harmless each Holder, such Holder's directors and officers, and each person, if any, who controls such Holder or participating person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based on any untrue or alleged untrue statement of a material fact contained in such registration statement, preliminary prospectus, final prospectus or amendments or supplements thereto or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the indemnity agreement contained in this Section 6.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld); provided further that the Company shall not be liable to any Holder, such Holder's directors and officers or controlling person in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such registration statement, preliminary prospectus, final prospectus or amendments or supplements thereto, in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, such Holder's directors and officers or controlling person; provided, further, that as to any preliminary prospectus or any final prospectus this indemnity agreement shall not inure to the benefit of any Holder, such Holder's directors and officers or controlling persons on account of any losses, claims, damages or liability arising from the sale of Common Stock to any person by such Holder if such Holder or its representatives failed to send or give a copy of the final prospectus or a prospectus supplement, as the case may be (excluding documents incorporated by reference therein), as the same may be amended or supplemented, to that person within the time required by the Securities Act, and the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact in such preliminary prospectus or final prospectus was corrected in the final prospectus or such prospectus supplement, as the case may be (excluding documents incorporated by reference therein), unless such failure resulted from non-compliance by the Company with Section 6.4(c). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any such Holder, such Holder's directors and officers, participating person or controlling person, and shall survive the transfer of such securities by such Holder. (b) Each Holder requesting or joining in a registration severally and not jointly shall indemnify and hold harmless the Company, each of its directors and officers and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to the Holders but only with reference to written information relating to such Holder furnished to the Company expressly for use in connection with such registration; provided, however, that the indemnity agreement contained in this Section 6.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided further that the liability of each Holder hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense that is equal to the proportion that the net proceeds from the sale of the shares sold by such Holder under such registration statement bears to the total net proceeds from the sale of all securities sold thereunder, but not in any event to exceed the net proceeds received by such Holder from the sale of Registrable Securities covered by such registration statement. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel mutually satisfactory to the parties. The indemnifying party shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the Holders, in the case of parties indemnified pursuant to the second preceding paragraph, and by the Company, in the case of parties indemnified pursuant to the first preceding paragraph. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than thirty days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. The failure to deliver written notice to the indemnifying party promptly following of the commencement of any such action shall not relieve the indemnifying party of its obligations under this Section 6.10, except to the extent that the failure so to deliver the notice is prejudicial to the indemnifying party's ability to defend such action. (d) If the indemnification provided for in Section 6.10(a) and/or (b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages or liabilities referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.10(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.10, no Holder shall be required to contribute any amount in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities covered by such registration statement. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 6.10 are not exclusive and shall not limit any right or remedies that may otherwise be available to any indemnified party at law or in equity. SECTION 6.11. Lock-up in connection with a Registration of Securities. Each Holder shall, in connection with any registration of the Company's securities, upon the request of the Company or the underwriters managing any underwritten offering of such securities, agree in writing not to effect any sale, disposition or distribution of any Registrable Securities (other than that included in the registration) without the prior written consent of the managing underwriter for such reasonable and customary period of time (not to exceed 120 days) from the effective date of such registration as the Company or the underwriters may specify; provided, however, that all executive officers and directors of the Company (other than executive officers and directors owning an aggregate of less than 1% of the outstanding Common Stock as of the effective date of such registration statement) shall also have agreed not to effect any sale, disposition or distribution of any Registrable Securities under the circumstances and pursuant to the terms set forth in this Section 6.11. In order to enforce the foregoing covenant in this Section 6.11, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other person subject to the foregoing restriction), which stop-transfer instructions shall only be effective until the end of such reasonable and customary period. SECTION 6.12. Transfer of Registration Rights. The registration rights of any Holder under this Agreement with respect to the Registrable Securities may be transferred to any transferee of such Registrable Securities who acquires any Registrable Securities of any Holder; provided that such registration rights may not be transferred to a holder of less than 2.5% of the outstanding Common Stock unless such transferee is a Rakepoll Affiliate (or a partner of a Rakepoll Affiliate); provided, further, that (i) the transferring Holder shall give the Company written notice at or prior to the time of such transfer stating the name and address of the transferee and identifying the securities with respect to which the rights under this Agreement are being transferred, (ii) such transferee shall agree in writing, in form and substance reasonably satisfactory to the Company, to be bound as a Holder by the provisions of this Article VI, and (iii) immediately following such transfer the further disposition of such securities by such transferee is restricted under the Securities Act. SECTION 6.13. Selection of Counsel. In connection with any registration of Registrable Securities pursuant to Sections 6.1, 6.2 and 6.3 hereof, the Holders of a majority of the Registrable Securities covered by any such registration may select one counsel to represent all Holders of Registrable Securities covered by such registration; provided, however, that in the event that the counsel selected as provided above is also acting as counsel to the Company in connection with such registration, the remaining Holders shall be entitled to select one additional counsel to represent all such remaining Holders. ARTICLE VII REPRESENTATIONS AND WARRANTIES SECTION 7.1. Representations of the Company. As of the date hereof and as of the Closing Date the Company represents and warrants as follows: (a) Authority Relative to This Agreement. The Company has all necessary power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby (the "Transactions"). The execution and delivery of this Agreement by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Transactions. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Rakepoll, constitutes legal, valid and binding obligations of the Company. (b) No Conflict. The execution and delivery by the Company of this Agreement do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or By-Laws of the Company or any of its Subsidiaries, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of the Company or any of its Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any property or asset of the Company or any of its Subsidiaries is bound or affected, except for any such breaches, defaults or other occurrences which would not, individually or in the aggregate, have a material adverse effect on the results of operations, financial condition or business of the Company and its Subsidiaries, taken as a whole. (c) Required Filings and Consents. The execution and delivery by the Company of this Agreement do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing by the Company with or notification to, any governmental or regulatory authority, domestic or foreign, except (i) for applicable requirements, if any, of the Securities Act, the Exchange Act, state blue sky and takeover laws, (ii) the HSR Act, (iii) Exon-Florio, and (iv) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay the Company from performing its obligations under this Agreement and would not, individually or in the aggregate, have a material adverse effect on the results of operations, financial condition or business of the Company and its Subsidiaries, taken as a whole. SECTION 7.2. Representations of Rakepoll. As of the date hereof and as of the Closing Date Rakepoll represents and warrants as follows: (a) Authority Relative to This Agreement. Rakepoll has all necessary power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by Rakepoll and the consummation by Rakepoll of the Transactions have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of Rakepoll are necessary to authorize this Agreement or to consummate the Transactions. This Agreement has been duly and validly executed and delivered by Rakepoll and, assuming the due authorization, execution and delivery by the Company constitutes legal, valid and binding obligations of Rakepoll. (b) No Conflict. The execution and delivery by Rakepoll of this Agreement do not, and the performance of this Agreement by Rakepoll will not, (i) conflict with or violate the Certificate of Incorporation or By-Laws of Rakepoll or any of its Subsidiaries, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Rakepoll or any of its Subsidiaries or by which any property or asset of Rakepoll or any of its Subsidiaries is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of Rakepoll or any of its Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Rakepoll or any of its Subsidiaries is a party or by which Rakepoll or any of its Subsidiaries or any property or asset of Rakepoll or any of its Subsidiaries is bound or affected, except for any such breaches, defaults or other occurrences which would not, individually or in the aggregate, have a material adverse effect on the results of operations, financial condition or business of Rakepoll, taken as a whole. (c) Required Filings and Consents. The execution and delivery by Rakepoll of this Agreement do not, and the performance of this Agreement by Rakepoll will not, require any consent, approval, authorization or permit of, or filing by Rakepoll with or notification to, any governmental or regulatory authority, domestic or foreign, except for (i) applicable requirements, if any, of the Securities Act, the Exchange Act, state blue sky and takeover laws, (ii) the HSR Act, (iii) Exon- Florio, and (iv) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay Rakepoll from performing its obligations under this Agreement and would not, individually or in the aggregate, have a material adverse effect on the results of operations, financial condition or business of Rakepoll, taken as a whole. ARTICLE VIII MISCELLANEOUS SECTION 8.1. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by hand delivery, by mail (registered or certified mail, postage prepaid, return receipt requested) or by any courier service, such as Federal Express, providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the following addresses, or to such other address as any party hereto may hereafter notify to the other parties hereto: if to Rakepoll, to: Rakepoll Finance N.V. 14 JB Gorsiraweg Curacao, Netherlands Antilles Attention: Carlo Salvi with a copy to: Carlo Salvi Via San Salvatore, 7 Ch 6902 Lugano Switzerland with a copy to: Simpson Thacher & Bartlett 21st Floor 99 Bishopsgate London, EC2M 3YH Attention: Alan M. Klein if to the Company, to: Gensia, Inc. 9360 Town Centre Drive San Diego, California 92121 Attention: with a copy to: Pillsbury Madison & Sutro LLP 235 Montgomery Street, San Francisco, CA 94104 Attention: Thomas E. Sparks, Jr. If to a Transferee of Registrable Securities: At the address set forth in the notice required to be delivered pursuant to Section 6.11 hereof. SECTION 8.2. Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Rakepoll and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective; provided that following the Closing Date no such amendment or waiver by the Company shall be effective without the approval of a majority of the Independent Directors. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 8.3. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible. SECTION 8.4. Entire Agreement; Assignment. This Agreement and the Stock Exchange Agreement and the agreements contemplated hereby and thereby constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede, except as set forth in the Stock Exchange Agreement, all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that Rakepoll, other than with respect to Article IV hereof, may assign all or any of its rights and obligations hereunder to any of its Affiliates in connection with a transfer of Common Stock; provided that (a) no such assignment shall relieve Rakepoll of its obligations hereunder and (b) Rakepoll may assign its rights to the extent and as provided in Section 6.12. SECTION 8.5. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. SECTION 8.6. Specific Performance. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. SECTION 8.7. Governing Law; Consent to Jurisdiction. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed in the State of New York. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any New York state or federal court thereof. (b) The parties hereto unconditionally and irrevocably agree and consent to the exclusive jurisdiction of, and service of process and value in, the United States District Court for the Southern District of New York and the courts of the State of New York located in the City of New York, and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby and further agree not to commence any such action, suit or proceeding except in any such court. Each party irrevocably waives any objections or immunities to jurisdiction to which it may otherwise be entitled or become entitled (including immunity to pre-judgment attachment, post-judgment attachment and execution) in any legal suit, action or proceeding against it arising out of or relating to this Agreement or the transactions contemplated hereby which is instituted in any such court. Rakepoll hereby appoints CT Corporation System, located at 1633 Broadway, New York, New York 10019, as its authorized agent (the "Rakepoll Authorized Agent") upon whom process may be served in any such action arising out of or relating to this agreement or the transactions contemplated hereby which may be instituted in the United States District Court for the Southern District of New York or the courts of the State of New York located in the City of New York by any other party hereto. Such appointment shall be irrevocable. Rakepoll agrees to take any and all action, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to Olive shall be deemed, in every respect, effective service of process upon Rakepoll. SECTION 8.8. Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 8.9. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 8.10. Effectiveness; Termination. This Agreement shall become effective as of the Closing Date and shall terminate at such time as Rakepoll and its Affiliates no longer own any such shares. Article IV hereof shall terminate and have no further effect at such time as Rakepoll ceases to be entitled to designate any Investor Directors in accordance with Section 4.1. SECTION 8.11. Waiver of Jury Trial. Rakepoll and the Company each hereby irrevocably waive all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of Rakepoll or the Company in the negotiation, administration, performance and enforcement thereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. GENSIA, INC. By: /s/ David F. Hale ----------------------------- Name: David F. Hale Title: Chairman of the Board RAKEPOLL FINANCE N.V. By: /s/ Carlo Salvi ----------------------------- Name: Carlo Salvi Title: Chairman of the Board AMENDMENT NO. 1 TO SHAREHOLDER'S AGREEMENT ------------------------------------------ AMENDMENT NO. 1 (the "Amendment"), dated as of December 20, 1996, to the Shareholder's Agreement, dated as of November 12, 1996 (the "Agreement"), between Gensia, Inc., a corporation organized under the laws of Delaware (the "Company"), and Rakepoll Finance N.V., a corporation organized under the laws of the Netherlands Antilles ("Rakepoll Finance"). W I T N E S S E T H : WHEREAS, the Company and Rakepoll Finance are parties to the Agreement; and WHEREAS, the Company and Rakepoll Finance wish to revise the definition of "competitor" set forth in Section 4.1 of the Agreement; and WHEREAS, Section 8.2(a) of the Agreement provides that the Agreement may be amended in a writing signed by the Company and Rakepoll Finance; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions; References. Capitalized terms used in this Amendment but not defined herein shall have the meanings ascribed to them in the Agreement. 2. Amendment of Section 4.1. Section 4.1 of the Agreement is hereby amended by deleting in its entirety the last paragraph of Section 4.1 and substituting in lieu thereof the following: "For purposes hereof, an entity shall be deemed to be a "competitor" of the Company if such entity (i) is engaged in the production of active ingredients or finished dosage forms either in the oncological field or for parenteral use, not currently produced by the Company or any subsidiary of Rakepoll Holding B.V., or (ii) actually manufactures any product which is substantially similar in use or purpose to any product manufactured by the Company, in development by the Company, or in the funding plan agreed to by the parties hereto (the ("Funding Plan") for development by the Company or (iii) is engaged in a business such that the reasonable inference is that such entity is engaged in substantially the same business as the Company. For purposes of this paragraph, the term "Company" shall refer to the Company as constituted in accordance with the Stock Exchange Agreement and this Agreement." 3. Full Force and Effect. Except as modified, amended or supplemented above, all rights, terms and conditions of the Agreement shall remain in full force and effect. 4. Governing Law. This Amendment shall be governed by and construed under the laws of the State of New York (irrespective of its choice of law principles). 5. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement as of the date first written above. GENSIA, INC. By: /s/ David F. Hale ------------------------- Name: David F. Hale Title: Chairman of the Board RAKEPOLL FINANCE N.V. By: /s/ Carlo Salvi ------------------------- Name: Carlo Salvi Title: Chairman of the Board AMENDMENT NO. 2 TO SHAREHOLDER'S AGREEMENT ------------------------------------------ AMENDMENT NO. 2 (the "Amendment"), dated as of February 28, 1997, to the Shareholder's Agreement, dated as of November 12, 1996, as amended by Amendment No. 1 dated as of December 16, 1996 (the "Agreement"), between Gensia, Inc., a corporation organized under the laws of Delaware (the "Company"), and Rakepoll Finance N.V., a corporation organized under the laws of the Netherlands Antilles ("Rakepoll Finance"). W I T N E S S E T H : WHEREAS, the Company and Rakepoll Finance are parties to the Agreement; and WHEREAS, the Company and Rakepoll Finance wish to amend Exhibits A and D to the Agreement; and WHEREAS, Section 8.2(a) of the Agreement provides that the Agreement may be amended in a writing signed by the Company and Rakepoll Finance; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions; References. Capitalized terms used in this Amendment but not defined herein shall have the meanings ascribed to them in the Agreement. 2. Amendment of Exhibit A. Part 1 of Exhibit A to the Agreement is hereby amended by: (a) deleting from Part 2 thereof (Initial Investor Directors) the name Frank Becker, and (b) by adding to the end of Part 3 thereof (Initial Independent Directors) the name "Donald Panoz". 3. Amendment of Exhibit D. (a) Part 1 of Exhibit D to the Agreement is hereby amended by adding to the end of Part 1.A thereof (Sicor S.p.A., Directors) the following name "Carlo Salvi". (b) Exhibit D is further hereby amended by adding to the end of Part 1 thereof a new Part 4.A which shall read in its entirety as follows: "4. Rakepoll Holding B.V. A. Directors: Carlo Salvi Michael Cannon David Hale" 4. Amendment of Section 4.1. Section 4.1 of the Agreement is hereby amended by deleting in its entirety the second sentence of paragraph (b) thereof and substituting in lieu thereof the following sentence: "Notwithstanding anything to the contrary contained herein, at the Closing Date, the names of the members of the Board of Directors shall be as set forth in Part 1 of Exhibit A hereto; provided, however, that to preserve the provisions of this Agreement, Rakepoll shall continue to have the right to designate for nomination and approval three Investor Directors as provided for in this Section 4.1; provided, further, that the Company shall cause (i) at any time after the Closing Date, upon the request of Carlo Salvi, the Board of Directors to take all action necessary to promptly appoint to the Board of Directors an Investor Director nominated by Rakepoll, and (ii) a current Independent Director (other than Donald Panoz) to resign from the Board of Directors by a date no later than March 10, 1997. 5. Full Force and Effect. Except as modified, amended or supplemented above, all rights, terms and conditions of the Agreement shall remain in full force and effect. 6. Governing Law. This Amendment shall be governed by and construed under the laws of the State of New York (irrespective of its choice of law principles). 7. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement as of the date first written above. GENSIA, INC. By: /s/ David F. Hale ------------------------------------------ Name: David F. Hale Title: Chairman of the Board RAKEPOLL FINANCE N.V. By: /s/ Carlo Salvi ------------------------------------------ Name: Carlo Salvi Title: Chairman of the Board EX-99.3 4 Exhibit 3 --------- RESTATED CERTIFICATE OF INCORPORATION OF GENSIA SICOR INC. Gensia, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: FIRST: The name of the Corporation is Gensia, Inc. and shall hereby be changed to Gensia Sicor Inc. SECOND: The date of filing of its original Certificate of Incorporation with the Secretary of State of Delaware was November 17, 1986. The Corporation was originally incorporated under the name Gensia Pharmaceuticals, Inc. THIRD: Pursuant to the sections 245 and 245 of the General Corporation Law of the State of Delaware, this Restated Certificate of Incorporation restates, integrates and further amends the provisions of the Certificate of Incorporation of this Corporation. FOURTH: This Restated Certificate of Incorporation was duly adopted in accordance with the provisions of the General Corporation Law of the State of Delaware. FIFTH: That the text of the Certificate of Incorporation of Gensia, Inc. shall be hereby restated, integrated and amended to read in full as follows: ARTICLE I The name of this Corporation is Gensia Sicor Inc. ARTICLE II The registered office of the Corporation within the State of Delaware is located at 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company. ARTICLE III The nature of the business and the purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV A. Classes of Stock. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is One Hundred Thirty Million (130,000,000) of which One Hundred Twenty-Five Million (125,000,000) shares of the par value of One Cent ($.01) each shall be Common Stock (the "Common Stock") and Five Million (5,000,000) shares of the par value of One Cent ($.01) each shall be Preferred Stock (the "Preferred Stock"). The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of Preferred Stock and to determine the designation of any such shares. The Board of Directors is also authorized to determine or alter the rights (including but not limited to voting rights), preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock, and within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of such series outstanding) the number of shares of such series subsequent to the issue of shares of that series by filing a certificate pursuant to the applicable laws of the State of Delaware. B. Series I Participating Preferred Stock. 1. Designation and Amount. Of the Five Million (5,000,000) shares of Preferred Stock, One Hundred Twenty-Five Thousand (125,000) shares shall be designated as "Series I Participating Preferred Stock," $0.01 par value per share. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series I Participating Preferred Stock to a number less than that of the shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Corporation. 2. Dividends and Distributions. (a) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series I Participating Preferred Stock with respect to dividends, the holders of shares of Series I Participating Preferred Stock in preference to the holders of shares of Common Stock of the Corporation and any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series I Participating Preferred Stock in an amount per share (rounded to the nearest cent) equal to the greater of (a) $100, or (b) subject to the provision for adjustment hereinafter set forth, 1000 times the aggregate per share amount of all cash dividends, and 1000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series I Participating Preferred Stock. In the event the Corporation shall at any time after the close of business on March 16, 1992 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the out- standing Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, by reclassification or otherwise, then in each such case the amount to which holders of shares of Series I Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (b) The Corporation shall declare a dividend or distribution on the Series I Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $100 per share on the Series I Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series I Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series I Par- ticipating Preferred Stock unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series I Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series I Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by- share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series I Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. 3. Voting Rights. The holders of shares of Series I Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series I Participating Preferred Stock shall entitle the holder thereof to 1000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock into a greater number of shares, or (iii) combine the outstanding Common Stock into a smaller number of shares, by reclassification or otherwise, then in each such case the number of votes per share to which holders of shares of Series I Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock outstanding immediately prior to such event. (B) Except as otherwise provided herein or by law, the holders of shares of Series I Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) (i) If at any time dividends on any Series I Participating Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series I Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series I Participating Preferred Stock) with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two Directors. (ii) During any default period, such voting right of the holders of Series I Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two Directors or, if such right is exercised at an annual meeting, to elect two Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series I Participating Preferred Stock. (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 10 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation, if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Direc- tors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in, or pursuant to, the Certificate of Incorporation or By-Laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the Certificate of Incorporation or By-Laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors, even though less than a quorum. (D) Except as set forth herein, holders of Series I Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series I Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series I Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series I Participating Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liqui- dation, dissolution or winding up) with the Series I Participating Preferred Stock except dividends paid ratably on the Series I Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series I Participating Preferred Stock provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series I Participating Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series I Participating Preferred Stock or any shares of stock ranking on a parity with the Series I Participating Preferred Stock except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Sec- tion 4, purchase or otherwise acquire such shares at such time and in such manner. 5. Reacquired Shares. Any shares of Series I Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series I Participating Preferred Stock unless, prior thereto, the holders of shares of Series I Participating Preferred Stock shall have received per share, the greater of 1000 times $1.00 or 1000 times the payment made per share of Common Stock, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series I Liquidation Preference"). Following the payment of the full amount of the Series I Liquidation Preference, no additional distributions shall be made to the holders of shares of Series I Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series I Liquidation Preference by (ii) 1000 (as appropri- ately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits, stock dividends and recapitalization with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series I Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series I Participating Preferred Stock and Common Stock, respectively, holders of Series I Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (B) In the event there are not sufficient assets available to permit payment in full of the Series I Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series I Participating Preferred Stock then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) com- bine the outstanding Common Stock into a smaller number of shares, by reclassification or otherwise, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series I Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series I Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event. 8. Redemption. The shares of Series I Participating Preferred Stock shall not be redeemable. 9. Ranking. The Series I Participating Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. 10. Amendment. The Certificate of Incorporation and the By-Laws of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series I Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of Series I Participating Preferred Stock voting separately as a class. 11. Fractional Shares. Series I Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive divi- dends, participate in distributions and to have the benefit of all other rights of holders of Series I Participating Preferred Stock. C. $3.75 Convertible Exchangeable Preferred Stock. 1. Designation and Amount. Of the Five Million (5,000,000) shares of Preferred Stock, One Million Eight Hundred Forty Thousand (1,840,000) shares shall be designated as "$3.75 Convertible Exchangeable Preferred Stock," $.01 par value per share. 2. Definitions. For purposes of the $3.75 Convertible Exchangeable Preferred Stock and this Section C, in addition to those terms otherwise defined in this Restated Certificate of Incorporation, the following terms shall have the meanings indicated: "Board of Directors" shall mean the board of directors of the Corporation or any committee authorized by such Board of Directors to perform any of its responsibilities with respect to the $3.75 Convertible Exchangeable Preferred Stock. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the City of New York are authorized or obligated by law or executive order to close. "Closing Price" of a security on any day shall mean on such day the reported last sales price, regular way, for the security or, in case no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, for the security in either case as reported on the New York Stock Exchange, on the principal national securities exchange on which the security is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the Nasdaq National Market or, if the security is not quoted on such National Market system, the average of the closing bid and asked prices for the security on such day in or, if bid and asked prices for the security on each such date shall not have been reported by The Nasdaq Stock Market, the average of the bid and asked prices of the security for such day as furnished by any New York Stock Exchange member firm regularly making a market in the security selected for such purpose by the Board of Directors or, if no such quotations are available, the fair market value of the security furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose. "Corporation Notice" shall have the meaning set forth in paragraph (b) of Section C5 of this Article. "Conversion Price" shall mean the conversion price per share of Common Stock into which the $3.75 Convertible Exchangeable Preferred Stock is convertible, as such Conversion Price may be adjusted pursuant to Section C7 of this Article. The initial Conversion Price will be $27.60 (equivalent to the rate of approximately 1.8116 shares of Common Stock for each share of $3.75 Convertible Exchangeable Preferred Stock). "Current Market Price" per share of Common Stock on any date shall mean the Closing Price of the Common Stock on the first day which is not a Saturday, a Sunday or a day on which banking institutions and trust companies in New York, New York are authorized by law or executive order to close or a legal holiday. "Dividend Payment Date" shall have the meaning set forth in paragraph (a) of Section C3 of this Article. "Dividend Payment Record Date" shall have the meaning set forth in paragraph (a) of Section C3 of this Article. "Debentures" shall mean the Corporation's 7 1/2% Convertible Subordinated Debentures due 2003. "Dividend Periods" shall mean quarterly dividend periods commencing on the first day of March, June, September and December of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period which shall commence on the Issue Date and end on and include May 31, 1993). "Fundamental Change" shall have the meaning set forth in paragraph (c) of Section C8 of this Article. "Issue Date" shall mean the first date on which shares of the $3.75 Convertible Exchangeable Preferred Stock are issued. "Person" shall mean any individual, association, partnership, corporation, a government or a political subdivision thereof, a governmental agency or other entity, and shall include any successor (by merger or otherwise) of such entity. "Trading Date" with respect to Common Stock means (i) if the Common Stock is listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the New York Stock Exchange or such other national securities exchange is open for business or (ii) if the Common Stock is quoted on the Nasdaq National Market, a day on which trades may be made on such National Market system or (iii) otherwise, any Business Day. "Transfer Agent" means ChaseMellon Shareholder Services, L.L.C., as successor in interest to First Interstate Bank of California or such other agent or agents of the Corporation as may be designated by the Board of Directors of the Corporation as the transfer agent for the $3.75 Convertible Exchangeable Preferred Stock. 3. Dividends. (a) Holders of the $3.75 Convertible Exchangeable Preferred Stock are entitled to receive, when, as and if declared by the Board of Directors, out of the funds of the Corporation legally available therefor, an annual cash dividend at the annual rate of $3.75 per share of $3.75 Convertible Exchangeable Preferred Stock, payable in quarterly installments on March 1, June 1, September 1 and December 1 (each a "Dividend Payment Date"), commencing June 1, 1993 (and, in the case of any accrued but unpaid dividends, at such additional times and for such interim periods, if any, as determined by the Board of Directors). If June 1, 1993 or any other Dividend Payment Date shall be on a day other than a Business Day, the Dividend Payment Date shall be on the next succeeding Business Day. Dividends on the $3.75 Convertible Exchangeable Preferred Stock will be cumulative from the Issue Date, whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends and whether or not such dividends are declared, and will be payable to holders of record as they appear on the stock books of the Corporation on such record dates (each such date, a "Dividend Payment Record Date"), which shall be not more than 60 days nor less than 10 days preceding the Dividend Payment Dates thereof, as shall be fixed by the Board of Directors. Dividends on the $3.75 Convertible Exchangeable Preferred Stock shall accrue (whether or not declared) on a daily basis from the Issue Date, and accrued dividends for each Dividend Period shall accumulate to the extent not paid on the Dividend Payment Date first following the Dividend Period for which they accrue. As used herein, the term "accrued" with respect to dividends includes both accrued and accumulated dividends. (b) The amount of dividends payable for such full Dividend Period for the $3.75 Convertible Exchangeable Preferred Stock shall be computed by dividing the annual dividend rate by four (rounded down to the nearest cent). The amount of dividends payable for the initial Dividend Period on the $3.75 Convertible Exchangeable Preferred Stock, or any other period shorter or longer than a full Dividend Period on the $3.75 Convertible Exchangeable Preferred Stock, shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Holders of shares of $3.75 Convertible Exchangeable Preferred Stock called for redemption on a redemption date falling between the close of business on a Dividend Payment Record Date and the opening of business on the corresponding Dividend Payment Date shall, in lieu of receiving such dividend on the Dividend Payment Date fixed therefor, receive such dividend payment together with all other accrued and unpaid dividends on the date fixed for redemption (unless holder converts such shares in accordance with Section C7 of this Article). Holders of shares of $3.75 Convertible Exchangeable Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the $3.75 Convertible Exchangeable Preferred Stock which may be in arrears. (c) So long as any shares of the $3.75 Convertible Exchangeable Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on any class or series of stock of the Corporation ranking, as to the dividends, on a parity with the $3.75 Convertible Exchangeable Preferred Stock, for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the $3.75 Convertible Exchangeable Preferred Stock for all Dividend Periods terminating on or prior to the date of payment, or setting apart for payment, of such dividends on such parity stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, upon the shares of the $3.75 Convertible Exchangeable Preferred Stock and any other class or series of stock ranking on a parity as to dividends with the $3.75 Convertible Exchangeable Preferred Stock, all dividends declared upon shares of the $3.75 Convertible Exchangeable Preferred Stock and all dividends declared upon such other stock shall be declared pro rata so that the amounts of dividends per share declared on the $3.75 Convertible Exchangeable Preferred Stock and such other stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of the $3.75 Convertible Exchangeable Preferred Stock and on such other stock bear to each other. (d) So long as any shares of the $3.75 Convertible Exchangeable Preferred Stock are outstanding, no other stock of the Corporation ranking on a parity with the $3.75 Convertible Exchangeable Preferred Stock as to dividends or upon liquidation, dissolution or winding up shall be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund or otherwise for the purchase or redemption of any shares of any such stock) by the Corporation (except for repurchases from employees and consultants) unless (i) the full cumulative dividends, if any, accrued on all outstanding shares of the $3.75 Convertible Exchangeable Preferred Stock shall have been paid or set apart for payment for all past Dividend Periods and (ii) sufficient funds shall have been set apart for the payment of the dividend for the current Dividend Period with respect to the $3.75 Convertible Exchangeable Preferred Stock. (e) So long as any shares of the $3.75 Convertible Exchangeable Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Common Stock or other stock ranking junior to the $3.75 Convertible Exchangeable Preferred Stock, as to dividends and upon liquidation, dissolution or winding up) shall be declared or paid or set apart for payment and no other distribution shall be declared or made or set apart for payment, in each case upon the Common Stock or any other stock of the Corporation ranking junior to the $3.75 Convertible Exchangeable Preferred Stock as to dividends or upon liquidation, dissolution or winding up, nor shall any Common Stock nor any other such stock of the Corporation ranking junior to the $3.75 Convertible Exchangeable Preferred Stock as to dividends or upon liquidation, dissolution or winding up be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund or otherwise for the purchase or redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for stock of the Corporation ranking junior to the $3.75 Convertible Exchangeable Preferred Stock as to dividends and upon liquidation, dissolution or winding up) unless, in each case (i) the full cumulative dividends, if any, accrued on all outstanding shares of the $3.75 Convertible Exchangeable Preferred Stock and any other stock of the Corporation ranking on a parity with the $3.75 Convertible Exchangeable Preferred Stock as to dividends shall have been paid or set apart for payment for all past Dividend Periods and all past dividend periods with respect to such other stock and (ii) sufficient funds shall have been set apart for the payment of the dividend for the current Dividend Period with respect to the $3.75 Convertible Exchangeable Preferred Stock and for the current dividend period with respect to any other stock of the Corporation ranking on a parity with the $3.75 Convertible Exchangeable Preferred Stock as to dividends. 4. Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Common Stock or any other series or class of stock of the Corporation ranking junior to the $3.75 Convertible Exchangeable Preferred Stock upon liquidation, dissolution or winding up, the holders of the shares of $3.75 Convertible Exchangeable Preferred Stock shall be entitled to receive $50.00 per share plus an amount per share equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. No payment on account of any liquidation, dissolution or winding up of the Corporation shall be made to the holders of any class or series of stock ranking on a parity with the $3.75 Convertible Exchangeable Preferred Stock in respect of the distribution of assets upon dissolution, liquidation or winding up unless there shall likewise be paid at the same time to the holders of the $3.75 Convertible Exchangeable Preferred Stock like proportionate amounts determined ratably in proportion to the full amounts to which the holders of all outstanding shares of $3.75 Convertible Exchangeable Preferred Stock and the holders of all outstanding shares of such parity stock are respectively entitled with respect to such distribution. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of, $3.75 Convertible Exchangeable Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of stock ranking, as to liquidation, dissolution or winding up, on a parity with the $3.75 Convertible Exchangeable Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of $3.75 Convertible Exchangeable Preferred Stock and any such other stock ratably in accordance with the respective amounts which would be payable on such shares of $3.75 Convertible Exchangeable Preferred Stock and any such other stock if all amounts payable thereon were paid in full. For the purposes of this Section C4, (i) a consolidation or merger of the Corporation with one or more corporations or other entities, (ii) a sale, lease, exchange or transfer of all or any part of the Corporation's assets or (iii) a statutory share exchange shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. (b) Subject to the rights of the holders of shares of any series or class or classes of stock ranking on a parity with or prior to the $3.75 Convertible Exchangeable Preferred Stock upon liquidation, dissolution or winding up, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of $3.75 Convertible Exchangeable Preferred Stock, as provided in this Section C4, any other series or class or classes of stock ranking junior to the $3.75 Convertible Exchangeable Preferred Stock upon liquidation, dissolution or winding up shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holder of $3.75 Convertible Exchangeable Preferred Stock shall not be entitled to share therein. (c) Written notice of any liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when and the place or places where the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage prepaid, not less than thirty (30) days prior to any payment date stated therein, to the holders of record of the $3.75 Convertible Exchangeable Preferred Stock at their respective addresses as the same shall appear on the books of the Transfer Agent. 5. Redemption at the Option of the Corporation. (a) $3.75 Convertible Exchangeable Preferred Stock may not be redeemed by the Corporation prior to March 6, 1996, on or after which the Corporation, at its option, may redeem the shares of $3.75 Convertible Exchangeable Preferred Stock, in whole or in part, out of funds legally available therefor, at any time or from time to time, subject to the notice provisions and provisions for partial redemption described below, during the period beginning on March 1, of the years shown below (March 6 in the case of 1996), at the following redemption prices per share plus an amount equal to accrued and unpaid dividends, if any, to (and including) the date fixed for redemption, whether or not earned or declared: Year Price ---- ----- 1996 $52.50 1997 $52.08 1998 $51.67 1999 $51.25 2000 $50.83 2001 $50.42 2002 and thereafter $50.00 Notwithstanding the foregoing, the $3.75 Convertible Exchangeable Preferred Stock may not be redeemed prior to March 6, 1998 unless the Closing Price of the Common Stock equals or exceeds 150% of the then effective Conversion Price per share for any 20 Trading Dates during a period of 30 consecutive Trading Dates ending within 15 days prior to the mailing of a Corporation Notice of redemption. (b) In the event the Corporation shall redeem shares of $3.75 Convertible Exchangeable Preferred Stock, a Corporation Notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed, at such holder's address as the same appears on the stock records of the Corporation. Each such notice shall state: (i) the redemption date; (ii) the number of shares of $3.75 Convertible Exchangeable Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that payment will be made upon presentation and surrender of such $3.75 Convertible Exchangeable Preferred Stock; (vi) the then current conversion price and the date on which the right to convert such shares of 3.75 Convertible Exchangeable Preferred Stock will expire; (vii) that dividends on the shares to be redeemed shall cease to accrue following such redemption date; (viii) that such redemption is at the option of the Corporation; and (ix) that dividends accrued to and including the date fixed for redemption will be paid as specified in said notice. Notice having been mailed as aforesaid, from and after the redemption date, unless the Corporation shall be in default in providing money for the payment of the redemption price (including any accrued and unpaid dividends to (and including) the date fixed for redemption) (x) dividends on the shares of the $3.75 Convertible Exchangeable Preferred Stock so called for redemption shall cease to accrue, (y) said shares shall be deemed no longer outstanding, and (z) all rights of the holders thereof as stockholder of the Corporation (except the right to receive from the Corporation the money payable upon redemption without interest thereon) shall cease. The Corporation's obligation to provide moneys in accordance with the preceding sentence shall be deemed fulfilled if, on or before the redemption date, the Corporation shall deposit with a bank or trust company having an office or agency in the Borough of Manhattan, City of New York, and having a capital and surplus of at least $50,000,000, the principal amount of funds necessary for such redemption, in trust for the account of the holders of the shares to be redeemed (and so as to be and continue to be available therefor), with irrevocable instructions and authority to such bank or trust company that such funds be applied to the redemption of the shares of $3.75 Convertible Exchangeable Preferred Stock so called for redemption. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so deposited and unclaimed at the end of three years from such redemption date shall be released or repaid to the Corporation, after which, subject to any applicable laws relating to escheat or unclaimed property, the holder or holders of such shares of $3.75 Convertible Exchangeable Preferred Stock so called for redemption shall look only to the Corporation for payment of the redemption price. Upon surrender in accordance with said notice of the certificates for any such shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the applicable redemption price aforesaid. If fewer than all the outstanding shares of $3.75 Convertible Exchangeable Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding shares of $3.75 Convertible Exchangeable Preferred Stock not previously called for redemption by lot or pro rata (as near as may be) or by any other equitable method determined by the Corporation in its sole discretion. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. Notwithstanding the foregoing, if the Corporation Notice of redemption has been given pursuant to this Section C5 and any holder of shares of $3.75 Convertible Exchangeable Preferred Stock shall, prior to the close of business on the third Business Day preceding the redemption date, give written notice to the Corporation pursuant to Section C7(b) of this Article hereof of the conversion of any or all of the shares to be redeemed held by such holder (accompanied by a certificate or certificates for such shares, duly endorsed or assigned to the Corporation), then the conversion of such shares to be redeemed shall become effective as provided in Section C7 of this Article. 6. Shares to Be Retired. Any shares of $3.75 Convertible Exchangeable Preferred Stock converted, redeemed or otherwise acquired by the Corporation shall be retired and cancelled and shall upon cancellation be restored to the status of authorized but unissued shares of Preferred Stock, subject to reissuance by the Board of Directors as $3.75 Convertible Exchangeable Preferred Stock or as shares of Preferred Stock of one or more other series. 7. Conversion. Holders of shares of $3.75 Convertible Exchangeable Preferred Stock shall have the right to convert all or a portion of such shares (including fractions of such shares) into shares of Common Stock, as follows: (a) Subject to and upon compliance with the provisions of this Section C7, a holder of shares of $3.75 Convertible Exchangeable Preferred Stock shall have the right, at his or her option, at any time, to convert any of such shares (or fractions thereof) into the number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the aggregate liquidation preference of the shares to be converted by the Conversion Price and by surrender of such shares, such surrender to be made in the manner provided in paragraph (b) of this Section C7; provided, however, that the right to convert shares called for redemption pursuant to Section C5 of this Article shall terminate at the close of business on the third Business Day preceding the date fixed for such redemption, unless the Corporation shall default in making payment of the amount payable upon such redemption. Subject to the following provisions of this Section C7(a), any shares of $3.75 Convertible Exchangeable Preferred Stock may be converted, at the option of its holder, in part into Common Stock under the procedures set forth above. If a part of a share of $3.75 Convertible Exchangeable Preferred Stock is converted, then the Corporation will convert such share into the appropriate number of shares of Common Stock (subject to paragraph (c) of this Section C7) and issue a fractional shares of $3.75 Convertible Exchangeable Preferred Stock evidencing the remaining interest of such holder. (b) In order to exercise the conversion right, the holder of each share of $3.75 Convertible Exchangeable Preferred Stock (or fraction thereof) to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office or agency of the Transfer Agent in the Borough of Manhattan, City of New York or Los Angeles, California, accompanied by written notice to the Corporation that the holder thereof elects to convert the holder's $3.75 Convertible Exchangeable Preferred Stock or a specified portion thereof. Unless the shares issuance on conversion are to be issued in the same name as the name in which such share of $3.75 Convertible Exchangeable Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or such holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid or are not required to be paid). Holders of shares of $3.75 Convertible Exchangeable Preferred Stock at the close of business on a Dividend Payment Record Date will be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the conversion thereof or the Corporation's default on payment of the dividend due on such Dividend Payment Date. However, shares of $3.75 Convertible Exchangeable Preferred Stock surrendered for conversion during the period from the close of business on any Dividend Payment Record Date to the opening of business on the corresponding Dividend Payment Date (except shares called for redemption on a redemption date during such period) must be accompanied by payment of an amount equal to the dividend payable on such shares on such Dividend Payment Date. A holder of shares of $3.75 Convertible Exchangeable Preferred Stock on a Dividend Payment Record Date who (or whose transferee) converts shares of $3.75 Convertible Exchangeable Preferred Stock on a dividend payment date will receive the dividend payable on such shares of $3.75 Convertible Exchangeable Preferred Stock by the Corporation on such date, and the converting holder need not include payment in the amount of such dividend upon surrender of shares of $3.75 Convertible Exchangeable Preferred Stock for conversion. Except as provided above, no payment or adjustment will be made on account of accrued or unpaid dividends upon conversion of shares of $3.75 Convertible Exchangeable Preferred Stock. As promptly as practicable after the surrender of certificates for shares of $3.75 Convertible Exchangeable Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or on his or her written order, a certificate or certificates for the number of shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions of this Section C7, and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in paragraph (c) of this Section C7. Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of $3.75 Convertible Exchangeable Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate of certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date and such conversion shall be at the Conversion Price in effect at such time as such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation. All shares of Common Stock delivered upon conversion of the $3.75 Convertible Exchangeable Preferred Stock will, upon delivery, be duly authorized, validly issued and fully paid and nonassessable. (c) In connection with the conversion of any shares of $3.75 Convertible Exchangeable Preferred Stock, fractions of such shares may be converted; however, no fractional shares or securities representing fractions of shares of Common Stock shall be issued upon conversion of the $3.75 Convertible Exchangeable Preferred Stock. Instead of any fractional interest in a share of Common Stock which would otherwise be delivered upon the conversion of a shares of $3.75 Convertible Exchangeable Preferred Stock (or fractions thereof), the Corporation shall pay to the holder of such shares an amount in cash (computed to the nearest cent) equal to the Current Market Price of Common Stock on the Trading Date immediately preceding the date of conversion multiplied by the fraction of a share of Common Stock represented by such fractional interest. If more than one share (or fraction thereof) shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of $3.75 Convertible Exchangeable Preferred Stock so surrendered. (d) The Conversion Price shall be adjusted from time to time as follows: (i) Stock Dividends and Stock Splits. If at any time after the Issue Date, (A) the Corporation shall fix a record date for the issuance of any dividend payable in shares of Common Stock or (B) the number of shares of Common Stock shall have been increased by a subdivision or split-up of shares of Common Stock, then, on the record date fixed for the determination of holders of Common Stock entitled to receive such dividend or immediately after the effective date of such subdivision or split-up, as the case may be, the number of shares to be delivered upon surrender of any share of $3.75 Convertible Exchangeable Preferred Stock for conversion will be appropriately increased so that each holder of $3.75 Convertible Exchangeable Preferred Stock thereafter will be entitled to receive the number of shares of Common Stock that such holder would have owned immediately following such action had such share been surrendered for conversion immediately prior thereto, and the Conversion Price will be appropriately adjusted. The time of occurrence of an event giving rise to an adjustment made pursuant to this paragraph (d)(i) shall, in the case of subdivision or split-up, be the effective date thereof and shall, in the case of a stock dividend, be the record date thereof. (ii) Combination of Stock. If the number of shares of Common Stock outstanding at any time after the Issue Date shall have been decreased by a combination of the outstanding shares of Common Stock, then, immediately after the effective date of such combination, the number of shares to be delivered upon surrender of any shares of $3.75 Convertible Exchangeable Preferred Stock for conversion will be appropriately decreased so that each holder thereafter will be entitled to receive the number of shares of Common Stock that such holder would have owned immediately following such action had such shares been surrendered for conversion immediately prior thereto, and the Conversion Price will be appropriately adjusted. (iii) Reorganization. If any capital reorganization of the Corporation, or any reclassification of the Common Stock, or any consolidation of the Corporation with or merger of the Corporation with or into any other corporation or any sale, lease or other transfer of all or substantially all of the assets of the Corporation to any other person (including any individual, partnership, joint venture, corporation, trust or group thereof) shall be effected in such a way that the Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), then, upon surrender of the $3.75 Convertible Exchangeable Preferred Stock for conversion in accordance with the term of this Section C7, each holder shall have the right to receive the kind and holder shall have the right to receive the kind and amount of stock and other securities and property receivable (including cash or any combination thereof) upon such reorganization, reclassification, consolidation, merger or sale, lease or other transfer by a holder of the number of shares of Common Stock that such holder of the $3.75 Convertible Exchangeable Preferred Stock would have been entitled to receive upon surrender of the $3.75 Convertible Exchangeable Preferred Stock for conversion pursuant to this Section C7 had the $3.75 Convertible Exchangeable Preferred Stock been surrendered for conversion immediately prior to such merger or sale, lease or other transfer. (iv) Special Dividends. If (other than in a dissolution or liquidation) securities of the Corporation (other than shares of Common Stock or rights, options or warrants referred to in subparagraph (v) hereof) or evidence of its indebtedness or assets (other than cash dividends payable (a) out of retained earnings or (b) out of any earnings or surplus not in excess of 10% of the average Closing Price of the Common Stock for the thirty (30) trading days prior to the fifth trading day before the date of declaration multiplied by the number of shares of Common Stock outstanding during such period), are issued by way of a dividend on outstanding shares of Common Stock, then the number of shares to be delivered upon surrender of the $3.75 Convertible Exchangeable Preferred Stock shall be appropriately increased so that immediately after the date fixed by the Corporation as the record date in respect of such issuance, each holder will be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares such holder would have been entitled to receive immediately before the record date for the determination of the stockholders entitled to receive such dividend by a fraction, the denominator of which shall be the Closing Price of the Common Stock on such record date less the then fair market value as determined by the Board of Directors, whose determination if made in good faith shall be conclusive, of the portion of the securities or evidence of indebtedness or assets distributed applicable to one share of Common Stock and the numerator of which shall be such Closing Price; and the Conversion Price shall be appropriately adjusted. Such adjustment shall become effective immediately prior to the opening of business on the day following such record date. (v) Rights Offering. If the Corporation at any time after the Issue Date shall issue or sell or fix a record date for the issuance of rights, options or warrants to all holders of Common Stock entitling the holders thereof to subscribe for or purchase or otherwise acquire Common Stock (of securities convertible or exchangeable for Common Stock), in any such case, at a price per share (or having a conversion price or exchange value per share) that, together with the value (if for consideration other than cash, as determined in good faith by the Board of Directors) of any consideration paid for any such rights, options or warrants is less than the Closing Price of the Common Stock on the date of such issuance or sale or on such record date then, immediately after such record date, the number of shares to be delivered upon surrender of the $3.75 Convertible Exchangeable Preferred Stock for conversion shall be appropriately increased so that each holder thereafter will be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares such holder would have been entitled to receive immediately before the date of such issuance or sale on such record date by a fraction, the numerator of which will be the number of shares of Common Stock outstanding on such date plus the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are initially convertible) and the denominator of which will be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock that the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such Closing Price, and the Conversion Price shall be appropriately adjusted. Notwithstanding the foregoing, rights issued by the Corporation to all holders of its Common Stock entitling the holders thereof to subscribe for or purchase securities of the Corporation, which rights (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable, and (iii) are also issued in respect of future issuances of Common Stock pursuant to the Corporation's Rights Agreement, dated as of March 16, 1992, between the Corporation and First Interstate Bank, Ltd. (the "Rights Plan") or any future or successor plan substantially similar to the Rights Plan, in each case in clauses (i) through (iii) until the occurrence of a specified event or events, shall for purposes of this paragraph (d) of this Section C7 not be deemed issued until the occurrence of the earliest such specified event. (vi) No Adjustments to Exercise Price. No adjustment in the Conversion Price in accordance with the provisions of paragraphs (i), (ii), (iii), (iv) or (v) above need be made if such adjustment would amount to a change in such Conversion Price of less than $.05; provided, however, that the amount by which any adjustment is not made by reason of the provisions of this section shall be carried forward and taken into account at the time of any subsequent adjustment in the Conversion Price; and provided further, that adjustment shall be required and made in accordance with the provisions of this Section C7 not later than such time as may be required in order to preserve the tax free nature of a distribution to the holder of any share of Common Stock. Anything in this Section C7 to the contrary notwithstanding, the Corporation shall be entitled to the extent permitted by law to make such reductions in the Conversion Price, in addition to those required by this Section C7, as it in its sole discretion shall determine to be advisable in order to avoid or diminish any income tax to any holder of Common Stock resulting from any dividend or distribution of capital stock or rights or warrants to purchase capital stock or from any event treated as such for income tax purposes of for any other reasons. (vii) Readjustments, etc. If an adjustment is made under paragraphs (i), (ii), (iii), (iv) or (v) above, and the event to which the adjustment relates does not occur, then any adjustment in the Conversion Price or shares of Common Stock to be delivered upon surrender of the $3.75 Convertible Exchangeable Preferred Stock for conversion that were made in accordance with such paragraphs shall be adjusted back to the Conversion Price and the number of shares of Common Stock to be delivered upon surrender of the $3.75 Convertible Exchangeable Preferred Stock for conversion that were in effect immediately prior to the record date for such event. (e) Whenever the Conversion Price is adjusted as herein provided, the Corporation shall promptly file in the custody of its Secretary or an Assistant Secretary at its principal office and with the Transfer Agent an officers' certificate setting forth the adjusted number of shares of Common Stock to be delivered upon surrender of the $3.75 Convertible Exchangeable Preferred Stock for conversion and the Conversion Price after such adjustment, the method of calculating thereof and setting forth a brief statement of the facts requiring such adjustment and upon which such adjustments are based. Promptly after each such adjustment, the Corporation shall cause a copy of such certificate to be mailed to the holder of each share of $3.75 Convertible Exchangeable Preferred Stock at his or her last address as shown on the stock books of the Corporation. Each such officers' certificate shall be made available at all reasonable times for inspection by each holder of $3.75 Convertible Exchangeable Preferred Stock. (f) In any case in which paragraph (d) of this Section C7 provides that an adjustment shall become effective immediately after a record date for an event and the date fixed for conversion pursuant to Section C7 occurs after such record date but before the occurrence of such event, the Corporation may defer until the actual occurrence of such event (A) issuing to the holder of any share of $3.75 Convertible Exchangeable Preferred Stock surrendered for conversion the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount in cash in lieu of any fraction pursuant to paragraph (c) of this Section C7. (g) The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, sufficient shares of Common Stock to provide for conversion of the $3.75 Convertible Exchangeable Preferred Stock from time to time as such; $3.75 Convertible Exchangeable Preferred Stock is presented for conversion. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value, if any, of the shares of Common Stock issuable upon conversion of the $3.75 Convertible Exchangeable Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue shares of Common Stock at such adjusted Conversion Price which shares shall be fully-paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof. Prior to the delivery of any securities which the Corporation shall be obligated to deliver upon conversion of the $3.75 Convertible Exchangeable Preferred Stock, the Corporation will endeavor in good faith and as expeditiously as possible to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. (h) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of the shares of $3.75 Convertible Exchangeable Preferred Stock (or any other securities issued on account of the $3.75 Convertible Exchangeable Preferred Stock pursuant hereto) or shares pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of $3.75 Convertible Exchangeable Preferred Stock (or any other securities issued on account of the $3.75 Convertible Exchangeable Preferred Stock pursuant hereto) or shares of Common Stock in a name other than the name in which the shares of $3.75 Convertible Exchangeable Preferred Stock with respect to which such shares of Common Stock are issued were registered and the Corporation shall not be required to make any issue or delivery unless and until the person requesting such issue or delivery has paid to the Corporation the amount of any such tax or has established, to the reasonable satisfaction of the Corporation, that such tax has been paid or is not required to be paid. (i) If: (i) the Corporation shall authorize the issuance to all holders of the Common Stock of rights or warrants to subscribe for or purchase shares of Common Stock or any other subscription rights or warrants; or (ii) the Corporation shall authorize the distribution to all holders of the Common Stock of evidences of its indebtedness or assets (other than cash dividends payable out of retained earnings, distributions excluded from the operation of subparagraph (d)(iv) of this Section C7, stock dividends or securities issued pursuant to any stockholder rights plan or any similar plan of the Corporation); or (iii) there shall be any capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock, an increase in the authorized capital stock of the Corporation not involving the issuance of any shares thereof, or a change in par value of the Common Stock), or any other consolidation or merger to which the Corporation is a party (other than a consolidation or merger with a subsidiary in which the Corporation is the continuing corporation and that does not result in any reclassification or change in the Common Stock outstanding) or a sale, lease or transfer of all or substantially all of the assets of the Corporation; or (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Corporation; or (v) there shall be any other event that would result in an adjustment pursuant to paragraph (d) of this Section C7 of the Conversion Price or the number of shares of Common Stock that may be purchased upon the conversion of the $3.75 Convertible Exchangeable Preferred Stock; then the Corporation will cause to be filed with the Transfer Agent and to be mailed to each holder of $3.75 Convertible Exchangeable Preferred Stock by first class mail addressed to such holder at the address appearing in the stock records of the Corporation, at least twenty (20) days (or ten (10) days in any case specified in clauses (i) or (ii) above) before the applicable record or effective date hereinafter specified, a notice stating (A) the date as of which the holders of Common Stock of record entitled to receive any such rights, warrants or distributions are to be determined or (B) the date on which any such consolidation, merger, sale, lease, transfer, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record will be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such reorganization, reclassification, consolidation, merger, sale, lease, transfer, dissolution, liquidation or winding-up. Such notice shall also state whether such transaction will result in any adjustment in the Conversion Price and, if so, shall state what the adjusted Conversion Price will be and when it will become effective. The failure to give such notice or any defect therein shall not affect the legality or validity of any distribution right, warrant, consolidation, merger, sale, lease, transfer, dissolution, liquidation or winding-up or the vote upon any such action. 8. Redemption at Option of Holder Upon a Fundamental Change. (a) If a Fundamental Change (as defined in paragraph (c) of this Section C8) occurs, each holder of $3.75 Convertible Exchangeable Preferred Stock shall have the right, at the holder's option, to require the Corporation to repurchase all of such holder's $3.75 Convertible Exchangeable Preferred Stock, or any portion thereof that has an aggregate liquidation value that is a multiple of $50.00, on the date (the "Repurchase Date") selected by the Corporation that is not less than 10 nor more than 20 days after the Final Surrender Date (as defined in paragraph (b) of this Section C8), a price per share equal to $50.00, plus accrued and unpaid dividends to the Repurchase Date. The Corporation may, at its option, pay all or any portion of the repurchase price upon a Fundamental Change in shares of common stock of the Corporation or any successor corporation. For purposes of calculating the number of shares of Common Stock issuable upon such redemption, the value of any Closing Prices of such common stock for the five Trading Dates ending on the third Trading Date immediately preceding the Repurchase Date. Payment may not be made in shares of common stock unless such shares (i) have been, or will be registered on or prior to the Final Surrender Date (as defined in paragraph (b) of this Section C8 under the Securities Act of 1933, as amended, or are freely tradable pursuant to an exemption thereunder and (ii) are listed on a United States national securities exchange or quoted on the Nasdaq National Market at the time of payment. (b) Within 30 days after the occurrence of a Fundamental Change, the Corporation must mail to all holders of record of the $3.75 Convertible Exchangeable Preferred Stock a Corporation Notice containing the information set out in paragraph (b) of Section C5, of this Article, except that, for purposes of this Section C8 only, instead of stating that such redemption is at the option of the Corporation, the Corporation Notice shall describe the occurrence of such Fundamental Change and of the repurchase right arising as a result thereof. The Corporation must cause a copy of such notice to be published in a newspaper of general circulation in the borough of Manhattan, the City of New York. At least two Business Days prior to the Repurchase Date, the Corporation must publish a similar notice stating whether and to what extent the repurchase price will be paid in cash or shares of Common Stock. To exercise the repurchase right, a holder of $3.75 Convertible Exchangeable Preferred Stock must surrender, on or before the date which is, subject to any contrary requirements of applicable law, 60 days after the date of mailing of the Corporation Notice (the "Final Surrender Date"), the certificates representing the $3.75 Convertible Exchangeable Preferred Stock with respect to which the right is being exercised, duly endorsed for transfer to the Corporation, together with a written notice of election. (c) The term "Fundamental Change" shall mean any of the following: (i) a "person" or "Group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) becoming, in one transaction or a series of related transactions, the "beneficial owner" (as defined in Rule 13d-2 under the Exchange Act) of Voting Shares (as defined in this paragraph (c)) of the Corporation entitled to exercise more than 60% of the total voting power of all outstanding Voting Shares of the Corporation (including any Voting Shares that are not then outstanding of which such person or Group is deemed the beneficial owner); or (ii) any consolidation of the Corporation with, or merger of the Corporation into, any other person, any merger of another person into the corporation, or any sale, lease or transfer of all or substantially all of the assets of the Corporation to another person (other than a merger, (a) which results in the holders of Common Stock of the Corporation immediately prior to giving effect to such transaction owning shares of capital stock of the surviving corporation in such transaction representing in excess of 40% of the total voting power of all shares of capital stock of such surviving corporation entitled to vote generally in the election of directors and (b) in which the shares of the surviving corporation held by such holders are, or immediately upon issuance will be, listed on a national securities exchange or quoted on the Nasdaq National Market and are not subject to any right of repurchase by the issuer thereof or any third party and are not otherwise subject to any encumbrance as a result of such transaction, provided, that the surviving corporation amends its charter or certificate of incorporation to include the $3.75 Convertible Exchangeable Preferred Stock and its terms as set forth herein); provided, however, that a Fundamental Change shall not occur if either (i) for any five Trading Dates during the 10 Trading Dates immediately preceding either the public announcement by the Corporation of such transaction or the consummation of such transaction, the Closing Price of the Common Stock is at least equal to 105% of the Conversion Price in effect on such trading days or (ii) at least 90% of the consideration (excluding cash payments for fractional shares) in such transaction or transactions to the holders of Common Stock consists of shares of common stock that are, or immediately upon issuance will be, listed on a national securities exchange or quoted on the Nasdaq National Market, and as a result of such transaction or transactions, the $3.75 Convertible Exchangeable Preferred Stock becomes convertible into such common stock. (d) An election by a holder of $3.75 Convertible Exchangeable Preferred Stock to have the Corporation redeem shares of $3.75 Convertible Exchangeable Preferred Stock pursuant to subsection C8(a) shall become irrevocable at the close of business on the relevant redemption date. (e) The Corporation agrees that it will not complete any Fundamental Change described in subsection C8(c) unless proper provision has been made to satisfy its obligations under this Section C8. For purposes of this Section C8, "Voting Shares" is defined to mean all outstanding shares of any class or classes (however designated) of capital stock entitled to vote generally in the election of members of the Board of Directors. 9. Ranking. Any class or classes of stock of the Corporation shall be deemed to rank: (i) prior to the $3.75 Convertible Exchangeable Preferred Stock, as to dividends or as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of $3.75 Convertible Exchangeable Preferred Stock. (ii) on a parity with the $3.75 Convertible Exchangeable Preferred Stock, as to dividends or as to distribution as assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the $3.75 Convertible Exchangeable Preferred Stock, if the holders of such class of stock and the $3.75 Convertible Exchangeable Preferred Stock shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation prices, without preference or priority of one over the other; and (iii) junior to the $3.75 Convertible Exchangeable Preferred Stock, as to dividends or as to the distribution of assets upon liquidation, dissolution or winding up, if such stock shall be Common Stock or if the holder of $3.75 Convertible Exchangeable Preferred Stock shall be entitled to receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of shares of such stock. 10. Voting. (a) Except as herein provided or as otherwise from time to time required by law, holders of $3.75 Convertible Exchangeable Preferred Stock shall have no voting rights. Whenever, at any times or times, dividends payable on the shares of $3.75 Convertible Exchangeable Preferred Stock at the time outstanding shall be cumulatively in arrears for such number of Dividend Periods (whether or not consecutive) which shall in the aggregate contain not less than 540 days, the holders of $3.75 Convertible Exchangeable Preferred Stock shall have the exclusive right, voting separately as a class with holders of shares of any one or more other series of Preferred Stock ranking on a parity with the $3.75 Convertible Exchangeable Preferred Stock as to dividends or on the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable (the $3.75 Convertible Exchangeable Preferred Stock and any such other Preferred Stock, collectively for purposes of this Section C10, the "Defaulted Preferred Stock"), to elect two directors of the Corporation at the Corporation's next annual meeting of stockholders and at each subsequent annual meeting of stockholders; provided, however, that if such voting rights shall become vested more than 90 days or less than 20 days before the date prescribed for the annual meeting of stockholders, thereupon the holders of the shares of Defaulted Preferred Stock shall be entitled to exercise their voting rights at a special meeting of the holders of shares of Defaulted Preferred Stock as set forth in paragraphs (b) and (c) of this Section C10. At elections for such directors, each holder of $3.75 Convertible Exchangeable Preferred Stock shall be entitled to one vote for each share held (the holders of shares of any other series of Defaulted Preferred Stock ranking on such a parity being entitled to such number of votes, if any, for each share of stock held as may be granted to them). Upon the vesting of such right of the holders of Defaulted Preferred Stock, the maximum authorized number of members of the Board of Directors shall automatically be increased by two and the two vacancies so created shall be filled by vote of the holders of outstanding Defaulted Preferred Stock as hereinafter set forth. The right of holders of Defaulted Preferred Stock, voting separately as a class, to elect members of the Board of Directors as aforesaid shall continue until such time as all dividends accumulated on Defaulted Preferred Stock shall have been paid or declared and funds set aside for payment in full, at which time such right shall terminate, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned. (b) Whenever such voting right shall have vested, such right may be exercised initially either at a special meeting of the holders of shares of Defaulted Preferred Stock called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such meeting or by the written consent of such holders pursuant to Section 228 of the General Corporation Law of the State of Delaware. (c) At any time when such voting right shall have vested in the holders of shares of Defaulted Preferred Stock entitled to vote thereon, and if such right shall not already have been initially exercised, an officer of the Corporation shall, upon the written request of 10% of the holders of record of shares of such Defaulted Preferred Stock than outstanding, addressed to the Secretary of the Corporation, call a special meeting of holders of shares of such Defaulted Preferred Stock. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding annual meetings of stockholders of the Corporation or, if none, at a place designated by the Treasurer of the Corporation. If such meeting shall not be called by the proper officers of the Corporation within 30 days after the personal service of such written request upon the Treasurer of the Corporation, or within 30 days after mailing the same within the United States, by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of 10% of the shares of Defaulted Preferred Stock then outstanding may designate in writing any person to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders and shall be held at the same place as is elsewhere provided in this paragraph. Any holder of shares of Defaulted Preferred Stock than outstanding that would be entitled to vote at such meeting shall have access to the stock books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this paragraph. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called or held during a period within 45 days immediately preceding the date fixed for the next annual meeting of stockholders. (d) The directors elected pursuant to this Section shall serve until the next annual meeting or until their respective successors shall be elected and shall qualify; any director elected by the holders of Defaulted Preferred Stock may be removed by, and shall not be removed otherwise than by, the vote of the holders of a majority of the outstanding shares of the Defaulted Preferred Stock who were entitled to participate in such election of directors, voting as a separate class, at a meeting called for such purpose or by written consent as permitted by law, this Restated Certificate of Incorporation and the By-laws of the Corporation. If the office of any director elected by the holders of Defaulted Preferred Stock, voting as a class, becomes vacant by reason of death, resignation, retirement, disqualification or removal from office or otherwise, the remaining director elected by the holders of Defaulted Preferred Stock, voting as a class, may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred. Upon any termination of the right of the holders of Defaulted Preferred Stock to vote for directors as herein provided, the term of office of all directors then in office elected by the holders of Defaulted Preferred Stock, voting as a class, shall terminate immediately. Whenever the terms of office of the directors elected by the holders of Defaulted Preferred Stock, voting as a class, shall so terminate and the special voting powers vested in the holders of Defaulted Preferred Stock shall have expired, the number of directors shall be such number as may be provided for in the By-laws irrespective of any increase made pursuant to the provisions of this Section C10. (e) So long as any shares of the $3.75 Convertible Exchangeable Preferred Stock remain outstanding, the consent of the holders of at least a majority of the shares of $3.75 Convertible Exchangeable Preferred Stock outstanding at the time given in person or by proxy either in writing (as permitted by law, this Restated Certificate of Incorporation and the By-laws of the Corporation) or at any special or annual meeting, shall be necessary to permit, effect or validate any one or more of the following: (i) the authorization, creation or issuance, or any increase in the authorized or issued amount, of any class or series of stock ranking prior to the $3.75 Convertible Exchangeable Preferred Stock as to dividends or the distribution of assets upon liquidation, dissolution or winding up; (ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of this Restated Certificate of Incorporation of the Corporation which would adversely affect any right, preference, privilege or voting power of the $3.75 Convertible Exchangeable Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized Preferred Stock or the creation and issuance of other series of Preferred Stock, or any increase in the amount of authorized shares of such series or of any other series of Preferred Stock, in each case ranking on a parity with or junior to the $3.75 Convertible Exchangeable Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to adversely affect such rights, preferences or voting powers; or (iii) the authorization of any reclassification of the $3.75 Convertible Exchangeable Preferred Stock. 11. Exchange. (a) The $3.75 Convertible Exchangeable Preferred Stock shall be exchangeable in whole, but not in part, at the option of the Corporation on any dividend payment date beginning March 1, 1994, for the Debentures. Holders of outstanding shares of $3.75 Convertible Exchangeable Preferred Stock will be entitled to receive $50.00 principal amount of Debentures in exchange for each share of $3.75 Convertible Exchangeable Preferred Stock held by them at the time of exchange; provided that the Debentures will be issuable in denominations of $1,000 and integral multiples thereof. If the exchange results in an amount of Debentures that is not an integral multiple of $1,000, the amount in excess of the closest integral multiple of $1,000 will be paid in cash by the Corporation. (b) The Corporation will mail to each record holder of the $3.75 Convertible Exchangeable Preferred Stock written notice of its intention to exchange the $3.75 Convertible Exchangeable Preferred Stock for the Debentures no less than 30 nor more than 60 days prior to the date of the exchange (the "Exchange Date"). The notice shall specify the effective date of the exchange and the place where certificates for shares of $3.75 Convertible Exchangeable Preferred Stock are to be surrendered for Debentures and shall state that dividends on $3.75 Convertible Exchangeable Preferred Stock will cease to accrue on the Exchange Date. Prior to giving notice of intention to exchange, the Corporation shall have executed and delivered to a bank or trust company selected by the Corporation to act as Trustee with respect to the Debentures, which Trustee shall meet the eligibility requirements of Section 310(a) of the Trust Indenture Act of 1939 as then in effect, and which Trustee shall have executed and delivered to the Corporation, an Indenture substantially in the form attached to the Placement Agreement dated February 19, 1993, between the Corporation and Alex. Brown & Sons Incorporated, Montgomery Securities and PaineWebber Incorporated with such changes as may be required by law, stock exchange rule, Nasdaq National Market rule or customary usage (including, without limitation, such changes as are requested by the Trustee with respect to its rights and obligations thereunder, provided that any such changes do not adversely affect the rights of holders of the Debentures thereunder). (c) If the Corporation has caused the Debentures to be authenticated on or prior to the Exchange Date and has complied with the other provisions of this Section C11, then, notwithstanding that any certificate for shares of $3.75 Convertible Exchangeable Preferred Stock have not been surrendered for exchange, on the Exchange Date dividends shall cease to accrue on the $3.75 Convertible Exchangeable Preferred Stock and at the close of business on the Exchange Date the holders of the $3.75 Convertible Exchangeable Preferred Stock shall cease to be stockholders with respect to the $3.75 Convertible Exchangeable Preferred Stock and shall have no interest in or other claims against the Corporation by virtue thereof and shall have no voting or other rights with respect to the $3.75 Convertible Exchangeable Preferred Stock, except the right to receive the Debentures issuable upon such exchange and the right to accumulated and unpaid dividends, without interest thereon, upon surrender (and endorsement, if required by the Corporation) of their certificates, and the shares evidenced thereby shall no longer be deemed outstanding for any purpose. The Corporation will cause the Debentures to be authenticated on or before the Exchange Date. (d) Notwithstanding the foregoing, if notice or exchange has been given pursuant to this Section C11 and any holder of shares of $3.75 Convertible Exchangeable Preferred Stock shall, prior to the close of business on the Exchange Date, give written notice to the Corporation pursu- ant to Section C7 of this Article of the conversion of any or all of the shares held by the holder (accompanied by a certificate or certificates for such shares, duly endorsed or assigned to the Corporation), then the exchange shall not become effective as to the shares to be converted and the conversion shall become effective as provided in such Section C7. (e) The Debentures will be delivered to the persons entitled thereto upon surrender to the Corporation or its agent appointed for that purpose of the certificates for the shares of $3.75 Convertible Exchangeable Preferred Stock being exchanged therefor. (f) Notwithstanding the other provisions of this Section C11, if on the Exchange Date the Corporation has not paid full cumulative dividends on the $3.75 Convertible Exchangeable Preferred Stock (or set aside a sum therefor) the Corporation may not exchange the $3.75 Convertible Exchangeable Preferred Stock for the Debentures and any notice previously given pursuant to this Section C11 shall be of no effect. (g) Prior to the Exchange Date, the Corporation will comply with any applicable securities and blue sky laws with respect to the exchange of the $3.75 Convertible Exchangeable Preferred Stock for the Debentures. 12. Record Holders. The Corporation and the Transfer Agent may deem and treat the record holder of any shares of $3.75 Convertible Exchangeable Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary. 13. Notice. Except as may otherwise be provided for herein, all notices referred to herein shall be in writing, and all notices hereunder shall be deemed to have been given upon receipt, in the case of a notice of conversion given to the Corporation as contemplated in Section C7(b) of this Article, or, in all other cases, upon the earlier of receipt of such notice or three Business Days after the mailing of such notice if sent by registered mail (unless first-class mail shall be specifically permitted for such notice under the terms of this Section C of this Article) with postage prepaid, addressed: if to the Corporation, to its offices at 9360 Towne Centre Drive, San Diego, California 92121 (Attention: Investor Relations Department) or to an agent of the Corporation designated as permitted by this Certificate, or, if to any holder of the $3.75 Convertible Exchangeable Preferred Stock, to such holder at the address of such holder of the $3.75 Convertible Exchangeable Preferred Stock as listed in the stock record books of the Corporation (which may include the records of any transfer agent for the $3.75 Convertible Exchangeable Preferred Stock); or to such other address as the Corporation or holder, as the case may be, shall have designated by notice similarly given. D. Common Stock. 1. Relative Rights of Preferred Stock and Common Stock. All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations or restrictions of the Common Stock are expressly made subject and subordinate to those that may be fixed with respect to any shares of the Preferred Stock. 2. Voting Rights. Except as otherwise required by law or this Restated Certificate of Incorporation, each holder of Common Stock shall have one vote in respect of each share of stock held by such holder of record on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation. 3. Dividends. Subject to the preferential rights of the Preferred Stock, the holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property or in shares of capital stock. 4. Dissolution, Liquidation or Winding Up. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock, holders of Common Stock shall be entitled, unless otherwise provided by law or this Restated Certificate of Incorporation, to receive all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. ARTICLE V No action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Special meetings of the stockholders of the Corporation may be called only by the Chairman of the Board or the President of the Corporation or by a resolution adopted by the affirmative vote of a majority of the Board of Directors. ARTICLE VI Except as otherwise provided for in Article IV, the Board of Directors shall be divided into three classes, designated Class I, Class II and Class III, as nearly equal in number as possible, and the term of office of Directors of one class shall expire at each annual meeting of stockholders, and in all cases as to each Director until his successor shall be elected and shall qualify or until his earlier resignation, removal from office, death or incapacity. Except as otherwise provided for in Article IV, additional directorships resulting from an increase in number of Directors shall be apportioned among the classes as equally as possible. The initial term of office of Directors of Class I shall expire at the annual meeting of stockholders in 1993; that of Class II shall expire at the annual meeting in 1994; and that of Class III shall expire at the annual meeting in 1995; and in all cases as to each Director until his successor shall be elected and shall qualify or until his earlier resignation, removal from office, death or incapacity. At each annual meeting of stockholders the number of Directors equal to the number of Directors of the class whose term expires at the time of such meeting (or, if less, the number of Directors properly nominated and qualified for election) shall be elected to hold office until the third succeeding annual meeting of stockholders after their election. A Director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares then entitled to vote at an election of Directors, unless otherwise specified by law or this Restated Certificate of Incorporation. ARTICLE VII Election of directors need not be by written ballot unless the By- laws so provide. ARTICLE VIII Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receivers appointed for the Corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority, in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation. ARTICLE IX A. No Personal Liability. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director's duty of loyalty to the Corporation and its stockholders; (2) for acts or omissions not in good faith or which involve intentional misconduct or knowing violations of law; (3) under section 174 of the Delaware General Corporation law; or (4) for any transaction from which the director derived an improper personal benefit. B. Indemnification. Each person who is or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, offi- cer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law per- mitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall incur to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in the second paragraph hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this section shall be a contract right and shall include the right to be paid by the Corporation any expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corpora- tion of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this section or otherwise. The Corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. If a claim under the first paragraph of this section is not paid in full by the Corporation within thirty (30) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determina- tion by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Restated Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. ARTICLE X The Board of Directors is expressly empowered to adopt, amend or repeal By-Laws of the Corporation, provided, however, that any adoption, amendment or repeal of By-Laws of the Corporation by the Board of Directors shall require the approval of at least sixty-six and two-thirds percent (66 2/3%) of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board). The stockholders shall also have power to adopt, amend or repeal By- Laws of the Corporation, provided, however, that in addition to any vote of the holders of any class or series of stock of this Corporation required by law or by this Restated Certificate of Incorporation the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the then outstanding shares of the stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for such adoption, amendment or repeal by the stockholders of any provisions of the By-Laws of the Corporation. ARTICLE XI Notwithstanding any other provision of this Restated Certificate of Incorporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the then out- standing shares of the stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall be required to amend in any respect or repeal this Article XI, or Articles V, VI, IX and X. IN WITNESS WHEREOF, said Gensia, Inc. has caused its corporate seal to be hereunto affixed and this certificate to be signed by its President and Chief Executive Officer, David F. Hale, and its Secretary, Wesley N. Fach, this 26th day of February, 1997. By /s/ David F. Hale -------------------------------- David F. Hale, President and Chief Executive Officer Attest: By /s/ Wesley N. Fach ------------------------ Wesley N. Fach Secretary EX-99.4 5 Exhibit 4 --------- GENSIA SICOR INC. BY-LAWS As Amended through February 28, 1997 Amended as of February 28, 1997 BY-LAWS OF GENSIA SICOR INC. ARTICLE 1 Definitions 1.1 "Affiliate" and "Associate" each have the same meaning as in Rule 12b-2 promulgated under the Exchange Act. 1.2 "Closing Date" has the meaning set forth in the Stock Exchange Agreement. 1.3 "Common Stock" means the common stock, par value $.01 per share, of the Corporation. 1.4 "Competitor" has the meaning set forth in the Shareholder's Agreement. 1.5 "Equity Security" means (i) any Common Stock, (ii) securities of the Corporation convertible into or exchangeable for Common Stock, and (iii) options, rights, warrants and similar securities issued by the Corporation to acquire Common Stock. 1.6 "Exchange Act" means the United States Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, as amended. 1.7 "Fair Market Value" has the same meaning as set forth in the Shareholder's Agreement. 1.8 "Independent Director" means a director of the Corporation (i) who is not and has never been an officer or employee of the Corporation, any Affiliate or Associate of the Corporation or an entity that derived 10% or more of its revenues or earnings in its most recent fiscal year from transactions involving the Corporation or any Affiliate or Associate of the Corporation, (ii) who is not and has never been an officer, employee or director of Rakepoll, any Affiliate or Associate of Rakepoll or an entity that derived more than 10% of its revenues or earnings in its most recent fiscal year from transactions involving Rakepoll or any Affiliate or Associate of Rakepoll, (iii) who is not and has never been a professional advisor, including without limitation, attorneys, accountants and financial advisors, to any of the Corporation, Rakepoll or any Affiliate or Associate of either of them, and (iv) who was on the Closing Date deemed to be, or on or after the Closing Date was designated as, an Independent Director in accordance with Section 4.1 of the Shareholder's Agreement. 1.9 "Investor Directors" means Directors who are designated for such position by Rakepoll in accordance with Section 4.1 of the Shareholder's Agreement. 1.10 "Management Directors" means, at the Closing Date, Directors who were deemed to be Management Directors in accordance with Section 4.1(b) of the Shareholder's Agreement and, after the Closing Date, Directors who are designated for such position in accordance with Section 4.1 of the Shareholder's Agreement. 1.11 "Preferred Directors" has the meaning set forth in Section 4.1 of these By-laws. 1.12 "Preferred Stock" means the Corporation's $3.75 Convertible Exchangeable Preferred Stock. 1.13 "Rakepoll" means Rakepoll Finance N.V., a corporation organized under the laws of the Netherlands Antilles. 1.14 "Rakepoll Initial Interest" means the number of shares of outstanding Common Stock that is controlled directly or indirectly by Rakepoll and Rakepoll's Affiliates upon consummation of the transactions contemplated by the Stock Exchange Agreement. 1.15 "Rakepoll Interest" means, at any time, the number of shares of outstanding Common Stock that is controlled directly or indirectly by Rakepoll and Rakepoll's Affiliates. 1.16 "Shareholder's Agreement" means the Shareholder's Agreement between Rakepoll and the Corporation dated as of November 12, 1996. 1.17 "Stock Exchange Agreement" means the Stock Exchange Agreement between Rakepoll and the Corporation dated as of November 12, 1996. 1.18 "Subsidiary" has the same meaning as in Rule 12b-2 promulgated under the Exchange Act. 1.19 "Substantial Part" of the Corporation means more than 33 1/3% of the Fair Market Value of the total assets of the Corporation and its Subsidiaries as of the end of the most recent fiscal quarter ending prior to the time the determination is made. ARTICLE 2 Offices Section 2.1. Registered Office. The registered office of the Corporation within the State of Delaware is located at 1209 Orange Street in the City of Wilmington, County of New Castle, in the State of Delaware and Corporation Trust Company is the registered agent. Section 2.2 Other Offices. The Corporation may also have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the Corporation may require. ARTICLE 3 Meetings of Stockholders Section 3.1 Annual Meetings. Annual meetings of stockholders shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of meeting. At the annual meeting the stockholders shall elect by a plurality vote the number of Directors equal to the number of Directors of the class whose term expires at such meetings (or, if fewer, the number of Directors properly nominated and qualified for election) to hold office until the third succeeding annual meeting of stockholders after their election. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, otherwise properly brought before the meeting by or at the direction of the Board of Directors, or otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than fifty (50) days nor more than seventy-five (75) days prior to the meeting; provided, however, that in the event that less than sixty-five (65) days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the Corporation which are beneficially owned by the stockholder, (iv) any material interest of the stockholder in such business. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 3.1 by any stockholder of any business properly brought before the annual meeting in accordance with said procedure. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 3.2 Special Meetings. Special meetings of the stockholders for any proper purpose or purposes may be called only by the Chairman of the Board, or by the President of the Corporation or by a resolution adopted by the affirmative vote of a majority of the Board of Directors. Section 3.3 Notice of Meeting. Notice, signed by the Chairman of the Board, the President, any Vice President, the Secretary or an Assistant Secretary, of every annual or special meeting of stockholders stating the purpose or purposes for which the meeting is called, and the date and time when, and the place where it is to be held, shall be prepared in writing and personally delivered or mailed, postage prepaid by first class mail, to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the meeting, except as otherwise provided by statute. If mailed, such notice shall be directed to a stockholder at his address as it shall appear on the stock record book of the Corporation, unless the stockholder shall have filed with the Secretary a written request that notices intended for him or her be mailed to some other address, in which case it shall be mailed to the address designated in such request. Notice shall be deemed given when personally delivered or five days after deposited to the United States mail, as the case may be; provided, however, that such notice may also be given by telegram, cablegram, facsimile or other means of electronically transmitted written copy and in such case shall be deemed given when ordered or, if delayed delivery is ordered, as of such delayed delivery time, or when transmitted, as the case may be. Section 3.4 List of Stockholders. A complete list of the stockholders entitled to vote at each meeting of stockholders, arranged in alphabetical order and showing the address of each such stockholder and the number of shares registered in the name of each such stockholder, shall be open to the examination of any stockholder, for any purpose germane to such meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of such meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting and during the whole time thereof, and may be inspected by any stockholder who is present. Section 3.5 Quorum. The presence at any meeting, in person or by proxy, of the holders of record of a majority of the shares then issued and outstanding and entitled to vote shall be necessary and sufficient to constitute a quorum for the transaction of business, except where otherwise provided by statute. Section 3.6 Adjournments. In the absence of a quorum, stockholders representing a majority of the shares then issued and outstanding and entitled to vote, present in person or by proxy, or, if no stockholder entitled to vote is present in person or by proxy, any officer entitled to preside at or act as secretary of such meeting, may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 3.7 Voting. When a quorum is present at any meeting, the holders of a majority of the shares of the Corporation, present in person or by proxy, shall decide any question brought before the meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation a different vote is required in which case such express provision shall govern and control the decision of such question. Section 3.8 Proxies. Any stockholders entitled to vote may vote by proxy, provided that the instrument authorizing such proxy to act shall have been executed in writing (which shall include telegraphing, cabling or other means of electronically transmitted written copy) by the stockholder himself or herself or by his or her duly authorized attorney-in-fact. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Section 3.9 Judges of Election. The Board of Directors may appoint judges of election to serve at any election of Directors and at balloting on any other matter that may properly come before a meeting of stockholders. If no such appointment shall be made, or if any of the judges so appointed shall fail to attend, or refuse or be unable to serve, then such appointment may be made by the presiding officer of the meeting at the meeting. Section 3.10 Written Consent. No action required or permitted to be taken at any annual or special meeting of the stockholders of the Corporation may be taken without a meeting, and the power of the stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Section 3.11 Waiver of Notice. Notice of any meeting need not be given to any stockholder who shall attend such meeting in person or shall waive notice thereof, before or after such meeting, in writing or by telegram, facsimile, cablegram or other means of electronically transmitted written copy. ARTICLE 4 Board of Directors Section 4.1 Number and Qualification. (a) The number of directors which shall constitute the whole Board of Directors shall be ten (10) (of whom at least two shall be independent directors as required by the rules of the Nasdaq National Market and who shall be deemed to be Independent Directors). Thereafter, the number of directors which shall constitute the whole Board of Directors shall be fixed from time to time by resolution of the Board of Directors or stockholders at the annual meeting or any special meeting called for that purpose. Notwithstanding the foregoing, in the event that the holders of the Preferred Stock (other than Rakepoll and its Affiliates) become entitled to appoint two (2) directors (the "Preferred Directors") to the Board of Directors in accordance with the terms of the Preferred Stock, then, until such right to appoint the Preferred Directors terminates, the Board of Directors shall be increased from ten (10) to twelve (12) Directors as soon as possible after such event and the composition of the Board of Directors shall be adjusted in accordance with Section 4.5(b) hereto. (b) No individual who is an officer, director, partner or principal stockholder of any "competitor" of the Corporation or of any of its Subsidiaries (other than Rakepoll and its Affiliates) shall serve as a Director. Section 4.2 Election and Term of Office. Directors shall be elected at the annual meeting of the stockholders except as provided in Section 4.4 of this Article. Each Director (whether elected at an annual meeting or to fill a vacancy or otherwise) shall continue in office until a successor shall have been elected and qualified or until his or her death, resignation or removal in the manner hereinafter provided, whichever shall first occur. Section 4.3 Nominations. Subject to the rights of holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation, nominations for election to the Board of Directors of the Corporation at a meeting of stockholders may be made on behalf of the Board by the Nominating Committee appointed by the Board, or by any stockholder of the Corporation entitled to vote for the election of Directors at such meeting. Such nominations, other than those made by the Nominating Committee on behalf of the Board, shall be made by notice in writing delivered or mailed by first class United States mail, postage prepaid, to the Secretary or Assistant Secretary of the Corporation, and received by him not less than one hundred twenty (120) days prior to any meeting of stockholders called for the election of directors; provided, however, that if less than one hundred (100) days' notice of the meeting is given to stockholders, such nomination shall have been mailed or delivered to the Secretary or the Assistant Secretary of the Corporation not later than the close of business on the seventh (7th) day following the day on which the notice of meeting was mailed. Such notice shall set forth as to each proposed nominee who is not an incumbent director (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice; (ii) the principal occupation or employment of each such nominee; (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee and by the nominating stockholder; and (iv) any other information concerning the nominee that must be disclosed of nominees in proxy solicitations regulated by Regulation 14A of the Securities Exchange Act of 1934. The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare the meeting and the defective nomination shall be disregarded. Section 4.4 Vacancies and Additional Directorships. If any vacancy shall occur among the Directors by reason of death, resignation or removal, or as the result of an increase in the number of Directorships, the Directors then in office shall continue to act and may fill any such vacancy by a vote of the majority of Directors then in office, though less than a quorum; provided, however, that (a) subject to Section 4.5, Rakepoll shall have the right to designate any replacement for any Investor Director designated thereby in accordance with Section 4.1 of the Shareholder's Agreement at the termination of such Director's term or upon death, resignation, retirement, disqualification, removal from office or other cause and (b) the Management Directors shall have the right to designate any replacement for any Management Director designated in accordance with Section 4.1 of the Shareholder's Agreement at the termination of such Director's term or upon death, resignation, retirement, disqualification, removal from office or other cause, except that, if at any time there are no Management Directors remaining on the Board of Directors, then the Independent Directors shall designate a member of the senior management of the Corporation who is not an affiliate of Rakepoll (other than by virtue of being a senior manager of the Corporation) as a replacement for such Management Director. Each Director so chosen shall hold office until the next annual election at which the term of the class to which he or she has been elected expires and until his or her successor shall be duly elected and shall qualify, or until his or her earlier death, resignation or removal. Section 4.5 Reduction of Certain Rakepoll Rights. (a) Notwithstanding anything to the contrary contained in these By-laws: (i) for long as Rakepoll's Interest is equal to or greater than 50% of Rakepoll's Initial Interest, then (A) Rakepoll shall be entitled to designate three (3) Investor Directors for nomination and approval, (B) the Management Directors shall be entitled to designate two (2) Management Directors for nomination and approval and (C) the Management Directors and Investor Directors shall be entitled to jointly designate five (5) Independent Directors for nomination and approval. (ii) from and after the date that Rakepoll's Interest is equal to or greater than 25% but less than 50% of Rakepoll's Initial Interest, then (A) at the request of a majority of the Independent Directors, one Investor Director shall immediately resign from the Board of Directors and the rights of Rakepoll and the Investor Directors under Section 4.4 hereof with respect to the replacement of such Investor Director shall terminate, (B) Rakepoll shall thereafter be entitled to designate two (2) Investor Directors for nomination and approval and (C) the Management Directors and remaining Investor Directors shall thereafter be entitled to jointly designate four (4) Independent Directors for nomination and approval. (iii) from and after the date that Rakepoll's Interest is equal to or greater than 10% but less than 25% of Rakepoll's Initial Interest, then (A) at the request of a majority of the Independent Directors, such number of Investor Directors shall immediately resign from the Board of Directors such that only one (1) Investor Director remains and the rights of Rakepoll and the Investor Directors under Section 4.4 hereof with respect to the replacement of such Investor Directors shall terminate, (B) Rakepoll shall thereafter be entitled to designate one (1) Investor Director for nomination and approval and (C) the Management Directors and remaining Investor Director shall thereafter be entitled to jointly designate three (3) Independent Directors for nomination and approval. (iv) from and after the date that Rakepoll's Interest is less than 10% of Rakepoll's Initial Interest, then (A) at the request of a majority of the Independent Directors, all Investor Directors shall immediately resign from the Board of Directors and the rights of Rakepoll under Section 4.4 hereof with respect to the replacement of such Investor Directors shall terminate, (B) Rakepoll shall neither be entitled to designate any Investor Directors nor jointly, with the Management Directors, designate any Independent Directors for nomination and approval and (C) the Management Directors shall neither be entitled to designate any Management Directors nor jointly, with Rakepoll, designate any Independent Directors for nomination and approval. (b) In the event that the holders of the Preferred Stock become entitled to appoint the Preferred Directors, for so long as such holders are entitled to appoint the Preferred Directors, (i) the number of Investor Directors which Rakepoll shall be entitled to designate pursuant to Sections 4.5(a)(i)(A), 4.5(a)(ii)(B) and 4.5(a)(iii)(B) above shall be increased to four (4), three (3) and two (2), respectively, and (ii) the number of Independent Directors which the Investor Directors and Management Directors shall be entitled to jointly designate pursuant to Sections 4.5(a)(i)(C), 4.5(a)(ii)(C) and 4.5(a)(iii)(C) above shall be decreased to four (4), three (3) and two (2), respectively. Section 4.6 Powers. The business of the Corporation shall be managed by its Board of Directors, which may exercise all powers of the Corporation and do all lawful acts and things as are not by law or by the Certificate of Incorporation or these By-Laws reserved to the stockholders. Section 4.7 Resignation of Directors. Any Director may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the President, any Vice President or the Secretary. Any such resignation shall take effect at the time specified therein or, if no time be specified, upon receipt thereof by the Board of Directors or one of the above named officers; and, unless specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4.8 Compensation of Directors. Directors shall receive such reasonable compensation for their services as such, whether in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine. Nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE 5 Meeting of the Board of Directors Section 5.1 Place. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5.2 Regular Meetings. The Board of Directors by resolution may provide for the holding of regular meetings and may fix the times and places at which such meetings shall be held. Notice of regular meetings shall not be required to be given, provided that whenever the time or place of regular meetings shall be fixed or changed, notice of such action shall be mailed promptly to each Director who shall not have been present at the meeting at which such action was taken, addressed to him or her at his or her residence or usual place of business, unless he or she shall have filed with the Secretary a written request that notices intended for him or her be mailed to some other address, in which case it shall be mailed to the address designated in such request. Section 5.3 Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President or a Vice President, and shall be called by the President or Secretary at the written request of any one Director. Except as otherwise required by statute, notice of each special meeting shall be given to each Director, if by mail, when addressed to him or her at his or her residence or usual place of business, unless he or she shall have filed with the Secretary a written request that notices intended for him or her be mailed to some other address, in which case it shall be mailed to the address designated in such request, on at least two (2) days' notice prior to the time of the meeting, or shall be sent to him or her at such place by telegram, facsimile or cablegram, or other electronic means, or delivered to him or her personally, not later than four (4) hours before the time the meeting is to be held. Such notice shall state the time and place of such meeting, but need not state the purposes thereof, unless otherwise required by statute, the Certificate of Incorporation of the Corporation or these By-laws. Section 5.4 Quorum. At any meeting of the Board of Directors a majority of the whole Board of Directors shall constitute a quorum for the transaction of business, and the act of the majority of those present at any meeting at which a quorum is present shall be sufficient for the act of the Board of Directors, except as may be otherwise specifically provided by law, the Certificate of Incorporation and these By-laws. Section 5.5 Investor Director Approval. Notwithstanding anything to the contrary contained in these By-laws, at all such times that Rakepoll's Interest is greater than or equal to 50% of Rakepoll's Initial Interest, the Board of Directors shall not take, approve or otherwise ratify at a meeting or in writing any of the following actions except with the consent of the Investor Directors: (a) the entry by the Corporation or any of its Subsidiaries into any merger or consolidation, or the acquisition by the Corporation or any of its Subsidiaries of any business or assets that would constitute a Substantial Part of the business or assets of the Corporation, whether such acquisition be by merger or consolidation or the purchase or sale of stock or assets or otherwise; (b) the sale, lease, pledge, grant of security interest in, license, transfer or other disposal by the Corporation or any of its Subsidiaries of all or substantially all of the business or assets of the Corporation; (c) the dissolution of the Corporation; the adoption of a plan of liquidation of the Corporation; any action by the Corporation or any Significant Subsidiary (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) thereof to commence any suit, case, proceeding or other action (i) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors seeking to have an order for relief entered with respect to the Corporation or any Significant Subsidiary thereof, or seeking to adjudicate the Corporation or any Significant Subsidiary thereof a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to the Corporation or any Significant Subsidiary thereof, or (ii) seeking appointment of a receiver, trustee, custodian or other similar official for the Corporation or any Significant Subsidiary thereof, or for all or any Substantial Part of the assets of the Corporation or any Significant Subsidiary thereof, or making a general assignment for the benefit of the creditors of the Corporation or any Significant Subsidiary thereof; (d) the payment of any extraordinary dividend by the Corporation; (e) the issuance of (i) debt securities by the Corporation such that the principal amount of such debt securities outstanding subsequent to such issuance is equal to or greater than one hundred and ten percent (110%) of the aggregate principal amount of debt securities contemplated to be outstanding at such time under the Funding Plan, (ii) Equity Securities by the Corporation such that the number of shares of such Equity Securities outstanding subsequent to such issuance is equal to or greater than one hundred and ten percent (110%) of the aggregate number of Equity Securities contemplated to be outstanding at such time under the Funding Plan, or (iii) any debt or equity securities or other capital stock of any of its Subsidiaries, except the issuance of shares of capital stock of the Corporation or options to purchase such shares pursuant to any employee compensation or benefit plan approved by the Board of Directors or pursuant to the terms of securities outstanding on the Closing Date, as set forth in Schedule 2.1 to the Shareholder's Agreement; and (f) any material amendment, modification or restatement of this Section. Section 5.6 Adjourned Meetings. If a quorum shall not be present at a meeting of the Board of Directors, the Directors present thereat may adjourn the meeting from time to time, until a quorum shall be present. Four (4) hours' notice of any such adjournment shall be given personally to each Director who was not present at the meeting at which such adjournment was taken and, unless announced at the meeting, to the other Directors; provided, that two (2) days' notice shall be given if notice is given by mail. Section 5.7 Written Consent. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, including, without limitation, Section 5.5 hereof, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all the members of the Board consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board of Directors. Section 5.8 Communications Equipment. Any one or more members of the Board of Directors may participate in any meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting. Section 5.9 Waiver of Notice. Notice of any meeting need not be given to any Director who shall attend such meeting in person or shall waive notice thereof, before or after such meeting, in writing or by telegram, facsimile or cablegram or other means of electronically transmitted written copy. ARTICLE 6 Committees of the Board Section 6.1 Designation, Power, Alternate Members and Term of Office. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one (1) or more committees. Each such committee shall consist of one (1) or more of the Directors of the Corporation. Any such committee, to the extent provided in such resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. The Board of Directors may designate one (1) or more Directors as alternate members of any committee who, in the order specified by the Board of Directors, may replace any absent or disqualified member at any meeting of the committee. The term of office of the members of each committee shall be as fixed from time to time by the Board, subject to the term of office of the Directors and these By-Laws; provided, however, that any committee member who ceases to be a member of the Board of Directors shall ipso facto cease to be a committee member. Each committee shall appoint a secretary, who may be the Secretary or an Assistant Secretary of the Corporation. Section 6.2 Meetings, Notices and Records. Each committee may provide for the holding of regular meetings, with or without notice, and a majority of the members of any such committee may fix the time, place and procedure for any such meeting. Special meetings of each committee shall be held upon call by or at the direction of its chairman or, if there be no chairman, by or at the direction of any one (1) of its members, at the time and place specified in the respective notices or waivers of notice thereof. Notice of each special meeting of a committee shall be mailed to each member of such committee, addressed to him or her at his or her residence or usual place of business, unless he or she shall have filed with the Secretary a written request that notices intended for him or her be mailed to some other address, in which case it shall be mailed to the address designated in such request, at least two (2) days before the day on which the meeting is to be held, or shall be sent by telegram, facsimile or cablegram, or other means of electronically transmitted written copy, addressed to him or her at such place, or telephoned or delivered to him or her personally, not later than four (4) hours before the time the meeting is to be held. Notice of any meeting of a committee need not be given to any member thereof who shall attend the meeting in person or who shall waive notice thereof by telegram, facsimile, cablegram or other means of electronically transmitted written copy. Notice of any adjourned meeting need not be given. Each committee shall keep a record of its proceedings. Each committee may meet and transact any and all business delegated to that committee by the Board of Directors by means of a conference telephone or similar communications equipment, provided that all persons participating in the meeting are able to hear and communicate with each other. Participation in a meeting by means of conference telephone or similar communication shall constitute presence in person at such meeting. Section 6.3 Quorum and Manner of Acting. At each meeting of any committee the presence of a majority of its members then in office shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the members present at any meeting at which a quorum is present shall be the act of such committee; in the absence of a quorum, a majority of the members present at the time and place of any meeting may adjourn the meeting from time to time until a quorum shall be present. Subject to the foregoing and other provisions of these By-Laws and except as otherwise determined by the Board of Directors, each committee may make rules for the conduct of its business. Any determination made in writing and signed by all the members of such committee shall be as effective as if made by such committee at a meeting. Section 6.4 Resignations. Any member of a committee may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the President, any Vice President or the Secretary of the Corporation. Unless otherwise specified in such notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer. Section 6.5 Removal. Any member of any committee may be removed at any time by the affirmative vote of a majority of the whole Board of Directors with or without cause. Section 6.6 Vacancies. If any vacancy shall occur in any committee by reason of death, resignation, disqualification, removal or otherwise, the remaining members of such committee, though less than a quorum, shall continue to act until such vacancy is filled by the Board of Directors. Section 6.7 Compensation. Committee members shall receive such reasonable compensation for their services as such, whether in the form of salary or a fixed fee for attendance at meetings, with reasonable expenses, if any, as the Board of Directors may from time to time determine. Nothing herein contained shall be construed to preclude any committee member from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE 7 Officers SECTION 7.1 Officers. The officers of the Corporation shall be a President, a Treasurer and a Secretary, and may also include a Chairman of the Board, one or more Vice-Chairmen, one or more Vice Presidents, Assistant Secretaries or Assistant Treasurers, each of whom shall be elected by the Directors, and shall hold office until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. None of the officers of the Corporation except the Chairman or any Vice-Chairman of the Board need be Directors. Any number of offices may be held by the same person. SECTION 7.2 Duties. All officers, as between themselves and the Corporation, shall have such authority and perform such duties in the management of the Corporation as may be provided in these By-Laws, or, to the extent not so provided, as may be provided by resolution of the Board of Directors or, as to all other officers except the Chairman of the Board, by the President. SECTION 7.3 Resignations. Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the President, a Vice President or the Secretary. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer. SECTION 7.4 Removal. Any officer may be removed at any time, either with or without cause, by the vote of a majority of all the Directors then in office. SECTION 7.5 Vacancies. A vacancy in any office by reason of death, resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed by these By-Laws for regular election or appointment to such office. SECTION 7.6 Chairman of the Board. The Chairman of the Board of Directors, if there be one, shall perform such duties as from time to time may be assigned to him by the Board of Directors. SECTION 7.7 President. The President shall be the chief executive officer of the Corporation. Subject to the direction of the Board of Directors, he or she shall supervise and direct the daily management of the business, affairs and property of the Corporation. In the absence or disability of the Chairman of the Board, or if there be none, the President shall preside at all meetings of the stockholders. The Chairman of the Board, if any, and the President shall each be charged with seeing that all orders and resolutions of the Board of Directors are carried into effect. The President may sign, with any other officer thereunder duly authorized, certificates of stock of the Corporation the issuance of which shall have been duly authorized (the signature to which may be facsimile signature) and may sign and execute in the name of the Corporation, deeds, mortgages, bonds, contracts, agreements, and other instruments. From time to time he shall report to the Board of Directors all matters within his knowledge which the interests of the Corporation may require to be brought to its attention. The President shall also perform such other duties as are assigned by these By- Laws or as from time to time may be assigned to him by the Board of Directors. SECTION 7.8 Vice President. In the absence or disability of the President, the Vice President, or if there be more than one, the Vice Presidents in the order of priority determined by the Board of Directors, shall perform all the duties of the President and, when so acting, shall have all the powers of and be subject to all restrictions upon the President. Any Vice President may also sign, with any other officer thereunto duly authorized, certificates of stock of the Corporation the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature), and may sign and execute in the name of the Corporation deeds, mortgages, bond and other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent. Each Vice President shall perform such other duties as are assigned by these By-Laws or as from time to time may be assigned by the Board of Directors, the Chairman of the Board or the President. SECTION 7.9 Secretary. The Secretary shall: (i) record all the proceedings of the meetings of the stockholders, the Board of Directors, and all committees of the Board of Directors in a book or books to be kept for that purpose; (ii) cause all notices to be duly given in accordance with the provisions of these By-Laws as required by statute; (iii) whenever any committee shall be appointed in pursuance of a resolution of the Board of Directors, furnish the chairman of such committee with a copy of such resolution; (iv) be custodian of the records and of the seal of the Corporation, and cause such seal to be affixed to all certificates representing capital stock of the Corporation prior to the issuance thereof and to all instruments the execution of which on behalf of the Corporation under its seal shall have been duly authorized; (v) see that the lists, books, reports, statements, certificates and other documents and records required by statute are properly kept and filed; (vi) have charge of the stock record and stock transfer books of the Corporation, and exhibit such stock books at all reasonable times to such persons as are entitled by statute to have access thereto; (vii) sign (unless the Treasurer or an Assistant Secretary or an Assistant Treasurer shall sign) certificates representing capital stock of the Corporation the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature); and (viii) in general, perform all duties incident to the office of Secretary and such other duties as are given to him or her by these By- Laws or as from time to time may be assigned to him or her by the Board of Directors, the Chairman of the Board or the President. SECTION 7.10 Assistant Secretaries. At the request of the Secretary or in his or her absence or disability, the Assistant Secretary designated by him or her (or in the absence of such designation, the Assistant Secretary designated by the Board of Directors or the President) shall perform all the duties of the Secretary, and, when so acting, shall have all the powers of and be subject to all restrictions upon the Secretary. The Assistant Secretaries shall perform such other duties as from time to time may be assigned to them by the Board of Directors, the Chairman of the Board, the President or the Secretary. SECTION 7.11 Treasurer. The Treasurer shall: (i) have charge of and supervision over and be responsible for the funds, securities, receipts and disbursements of the Corporation; (ii) cause the securities and other valuable effects of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as shall be selected in accordance with Section 9.2 of these By-Laws or to be otherwise dealt with in such manner as the Board of Directors may direct; (iii) cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation, and cause to be taken and preserved proper vouchers for all monies disbursed; (iv) render to the Board of Directors or the President, whenever required, a statement of the financial condition of the Corporation and of all his or her transactions as Treasurer; (v) cause to be kept at the Corporation's principal office correct books of account of all its business and transactions and such duplicate books of account as he or she shall determine and upon application cause such books or duplicates thereof to be exhibited to any Director; (vi) be empowered, from time to time, to require from the officers or agents of the Corporation reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Corporation; (vii) sign (unless the Secretary or an Assistant Secretary or Assistant Treasurer shall sign) certificates representing stock of the Corporation the issuance of which shall have been duly authorized (the signature to which may be a facsimile signature); and (viii) in general, perform all duties incident to the office of Treasurer and such other duties as are given to him or her by these By-Laws or as from time to time may be assigned to him or her by the Board of Directors, the Chairman of the Board or the President. SECTION 7.12 Assistant Treasurers. At the request of the Treasurer or in his or her absence or disability, the Assistant Treasurer designated by him or her (or in the absence of such designation, the Assistant Treasurer designated by the Board of Directors or the President) shall perform all the duties of the Treasurer, and, when so acting, shall have all the powers of and be subject to all restrictions upon the Treasurer. The Assistant Treasurers shall perform such other duties as from time to time may be assigned by the Board of Directors, the Chairman of the Board, the President or the Treasurer. SECTION 7.13 Salaries. The salaries of the officers of the Corporation shall be fixed from time to time by the Board of Directors. No officer shall be prevented from receiving such salary by reason of the fact that he or she is also a Director of the Corporation. ARTICLE 8 Certificates of Stock SECTION 8.1 Stock Certificates. Every holder of capital stock of the Corporation shall be entitled to have a certificate or certificates in such form as shall be approved by the Board of Directors, certifying the number of shares of capital stock of the Corporation owned by him or her. The certificates representing shares of capital stock shall be signed in the name of the Corporation by the Chairman of the Board or the President or any Vice President, and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer (which signatures may be facsimiles) and sealed with the seal of the Corporation (which seal may be a facsimile). In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer, transfer agent or registrar before such certificates are issued, they may nevertheless be issued by the Corporation with the same effect as if such officer, transfer agent, or registrar were still such at the date of their issue. SECTION 8.2 Books of Account and Record of Stockholders. The books and records of the Corporation may be kept at such places, within or without the State of Delaware, as the Board of Directors may from time to time determine. The stock record books and the blank stock certificate books shall be kept by the Secretary or by any other officer or by the transfer agent or registrar, if any, designated by the Board of Directors. There shall be entered on the stock books of the Corporation the number of each certificate issued, the number of shares represented thereby, the name of the person to whom such certificate was issued and the date of issuance thereof. SECTION 8.3 Transfers of Shares. Transfers of shares of capital stock of the Corporation shall be made on the stock records of the Corporation only upon authorization by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or with the transfer agent, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon, if any. Except as otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person in whose name any share or shares stand on the record of stockholders as the owner of such share or shares for all purposes, including, without limitation, the rights to receive dividends or other distributions, and to vote as such owner, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in any such share or shares on the part of any other person whether or not the Corporation shall have express or other notice thereof. SECTION 8.4 Regulations. The Board of Directors may make such additional rules and regulations, not inconsistent with these By-Laws, as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer agents or one or more registrars and may further provide that no stock certificate shall be valid until countersigned by one of such transfer agents and registered by one of such registrars. Nothing herein shall be construed to prohibit the Corporation from acting as its own transfer agent or registrar. SECTION 8.5 Lost, Stolen or Destroyed Certificates. The holder of any certificate representing any share or shares of the capital stock of the Corporation shall immediately notify the Corporation of any loss, theft, or destruction of such certificate. The Board of Directors may direct that a new certificate or certificates be issued in the place of any certificate or certificates theretofore issued by it which the owner thereof shall allege to have been lost, stolen or destroyed upon the furnishing to the Corporation of an affidavit to that effect by the person claiming that the certificate has been lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion, require such owner or his or her legal representatives to give to the Corporation and its transfer agent(s) and registrar(s) a bond in such sum, limited or unlimited, and in such form and with such surety or sureties as the Board of Directors in its absolute discretion shall determine, sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate, or the issuance of a new certificate. SECTION 8.6 Stockholder's Right of Inspection. Any stockholder of record of the Corporation, in person or by attorney or other agent, shall upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation's stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorized the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal place of business. ARTICLE 9 Deposit of Corporate Funds SECTION 9.1 Borrowing. No loans or advances shall be obtained or contracted for, by or on behalf of the Corporation and no negotiable paper shall be issued in its name, unless and except as authorized by the Board of Directors. Such authorization may be general or confined to specific instances. SECTION 9.2 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositaries as the Board of Directors may select, or as may be selected by any officer or officers or agent or agents authorized to do so by the Board of Directors. SECTION 9.3 Check, Drafts, etc. All checks, drafts or other orders for the payment of money, and all negotiable and non-negotiable notes or other negotiable or non-negotiable evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers or agent or agents of the Corporation, and in such manner, as from time to time shall be determined by the Board of Directors. ARTICLE 10 Record Dates SECTION 10.1 In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. Only those stockholders of record on the date so fixed shall be entitled to any of the foregoing rights, notwithstanding the transfer of any such stock on the books of the Corporation after any such record date fixed by the Board of Directors. ARTICLE 11 Dividends SECTION 11.1 Dividends. Subject to any agreement to which the Corporation is a party or by which it is bound, the Board of Directors may declare to be payable, in cash, in other property or in stock of the Corporation of any class or series, such dividends in respect of outstanding stock of the Corporation of any class or series as the Board of Directors may at any time deem to be advisable. Before declaring any such dividend, the Board of Directors may cause to be set aside any funds or other property or assets of the Corporation legally available for the payment of dividends. ARTICLE 12 Fiscal Year SECTION 12.1 Fiscal Year. The fiscal year of the Corporation shall be determined by resolution of the Board of Directors. ARTICLE 13 Corporate Seal SECTION 13.1 The Corporate Seal shall be circular in form and shall bear the name of the Corporation and the words and figures denoting its organization under the laws of the State of Delaware and year thereof and otherwise shall be in such form as shall be approved from time to time by the Board of Directors. ARTICLE 14 Amendments SECTION 14.1 The Board of Directors is expressly empowered to adopt, amend or repeal By-Laws of the Corporation, provided, however, that any adoption, amendment or repeal of By-Laws of the Corporation by the Board of Directors shall require the approval of at least sixty-six and two-thirds percent (66 2/3%) of the total number of authorized Directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board). The stockholders shall also have the power to adopt, amend or repeal By-Laws of the Corporation, provided, however, that in addition to any vote of the holders of any class or series of stock of this Corporation required by law or by the Restated Certificate of Incorporation of the Corporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the then outstanding shares of the stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall be required for such adoption, amendment or repeal by the stockholders of any provisions of the By-Laws of the Corporation. Notwithstanding the foregoing, so long as Rakepoll is entitled to designate an Investor Director to serve as a member of the Board of Directors, Sections 4.1, 4.4, 4.5, 5.5, 5.7, Article 6 and this Article 14 shall not be materially altered, amended or repealed by (i) the Board of Directors without the consent of the Investor Directors or (ii) the stockholders unless such alteration, amendment or repeal shall have been approved by Rakepoll. EX-99.5 6 Exhibit 5 --------- JOINT FILING AGREEMENT Each of the undersigned hereby agrees and consents that the statement on Schedule 13D filed herewith (the "Schedule 13D") by Rakepoll Finance N.V. ("Rakepoll Finance") is filed on behalf of each of them pursuant to the authorization of each of them to Rakepoll Finance to make such filing and that such Schedule 13D is filed jointly on behalf of each of them, pursuant to the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. Each of these persons is not responsible for the completeness or accuracy of the information concerning the other persons making this filing unless such person knows or has reason to believe that such information is inaccurate. This agreement may be signed in counterparts. RAKEPOLL FINANCE N.V. By:/s/ Carlo Salvi ------------------------------ Name: Carlo Salvi Title: Chairman of the Board KARBONA INDUSTRIES LTD. By:/s/ Carlo Salvi ------------------------------ Name: Carlo Salvi Title: Director CARLO SALVI /s/ Carlo Salvi ------------------------------- Dated: March 7, 1997 -----END PRIVACY-ENHANCED MESSAGE-----