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, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx, 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 Xxxx-Xxxxx-Xxxxxx
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-Xxxxxx 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-
xxxx 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-
Xxxxxx 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 Xxxxxx 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 xxxx, 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 xxxx, 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-Xxxxxx 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 Xxxxxxx Xxxxxxx & Xxxxxxxx, Xxxxxxxxxxx Y Steta, Studio
Legale Nodari, Saletti & Associati and Xxxxx 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.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxx
Telecopy No.: (000) 000-0000
with a copy to
Pillsbury Madison & Sutro LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxx of America
Attention: Xxxxxx X. Xxxxxx, Xx.
Telecopy No.: (000) 000-0000
(b) if to Rakepoll Finance:
Rakepoll Finance N.V.
00XX Xxxxxxxxxx
Xxxxxxx, Xxxxxxxxxxx Antilles
Attention: Xxxxx Xxxxx
Telecopy No.: (41)(00)000-0000
with a copy to:
Xxxxx Xxxxx
Xxx Xxx Xxxxxxxxx, 0
Xx 0000 Xxxxxx
Xxxxxxxxxxx
with a copy to
Xxxxxxx Xxxxxxx & Xxxxxxxx
00 Xxxxxxxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Attention: Xxxx X. Xxxxx
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 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 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/ Xxxxx X. Xxxx
---------------------------------
Chairman of the Board
RAKEPOLL FINANCE N.V.
By /s/ Xxxxx Xxxxx
---------------------------------
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/ Xxxxx X. Xxxx
-----------------------------
Chairman of the Board
RAKEPOLL FINANCE N.V.
By /s/ Xxxxx Xxxxx
-----------------------------
Chairman of the Board
