Company Name: Gensia, Inc.
Public Availability Date:  June 23, 1995

INQUIRY LETTER

PILLSBURY MADISON & SUTRO
POST OFFICE BOX 7880
SAN FRANCISCO, CALIFORNIA 94120
TELEPHONE(415) 983-1000

June 22, 1995

Securities Act of 1933
Sections 3(a)(10) and 4(1)
Rule 144

Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20459

Re: Gensia, Inc.

(In Re: Gensia Securities Litigation, Civil Action No. 92-1500-J, United States District Court, Southern District of California and Design Electrical Construction, Inc., et al. v. David F. Hale, et al. Civil Action No. 94-1743-J United States District Court, Southern District of California)

Dear Ladies and Gentlemen:

On behalf of our client, Gensia, Inc., a Delaware corporation (the "Company" or "Gensia"), we respectfully request the written advice of the Staff of the Division of Corporation Finance (the "Division") that it will not recommend enforcement action to the Securities and Exchange Commission (the "Commission") based upon the following facts and that the Division concurs with our opinions that (i) the Company may issue shares (the "Settlement Stock") of its common stock, par value $.01 per share ("Common Stock") to members of the plaintiff class ("Settlement Class") and to their counsel ("Class Counsel") in exchange for the settlement of claims of the Settlement Class without registration under the Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption under Section 3(a)(10) thereof; (ii) the Settlement Stock as so issued will not be deemed to be "restricted securities" within the meaning of Rule 144(a)(3) under the Act; and (iii) the Settlement Stock as so issued will be freely transferable except that, if any transferee of the Settlement Stock is deemed to be an "affiliate" of the Company within the meaning of Rule 144(a)(1) under the Act, then any public sale of Settlement Stock by such transferee without registration under the Act will be required to comply with the provisions of Rule 144 except for the holding period requirements under Rule 144(d).

I. BACKGROUND.

A. The Company.

Gensia, Inc. is a Delaware corporation with its principal executive offices located in San Diego, California. The Company is a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with Common Stock of the Company quoted on the Nasdaq National Market. Aramed, Inc., a Delaware corporation ("Aramed"), was formed by Gensia in 1991. Aramed is a reporting company under the Exchange Act, with Common Stock of Aramed quoted on the Nasdaq National Market.

B. The Litigation.

Commencing on or after September 28, 1992, several plaintiffs (the "Gensia I Plaintiffs") filed various alleged class actions in the United States District Court for the Southern District of California (the "Court") against the Company and other defendants. Pursuant to an order of the Court dated November 30, 1992, the various actions were consolidated in a single proceeding captioned In re Gensia Securities Litigation, No. 92-1500-J ("Gensia I").

On or about November 13, 1994, another class action was filed in the Court captioned Design Electrical Construction, Inc. et al. v. David F. Hale et al., No. 94-1743-J ("Gensia II"). The defendants in Gensia I and Gensia II include the Company, Aramed, David F. Hale, Paul K. Laikind, James C. Blair, Carl F. Bobkoski, Daniel D. Burgess, Stephen C. Mendell, David A. Shapiro and Walter Singleton (collectively, the "Defendants"). Gensia I and Gensia II alleged inter alia that the Defendants violated federal securities laws and state laws. The Gensia I Plaintiffs and the Gensia II plaintiffs are together referred to as the "Class Plaintiffs" and both are parties to the proposed settlement described below.

The Defendants have and continue to deny all liability and all allegations of wrongdoing directed at them in Gensia I and Gensia II. However, the Company and the other Defendants desire to settle the lawsuits on the terms described below in order to avoid the substantial expense, inconvenience and distraction of continued litigation, to facilitate the continued operations of Gensia, to finally dispose of the litigation and because a settlement would be in Defendants overall best interest.

C. The Proposed Settlement.

The parties in Gensia I and Gensia II have entered into a Stipulation and Agreement of Compromise and Settlement (the "Settlement Stipulation") dated as of March 27, 1995. A copy of the Settlement Stipulation has been previously provided for the Divisions information. The Settlement Stipulation contains as Exhibits (A) the form of Preliminary Order (the "Preliminary Order"), (B) the form of Notice of Proposed Settlement (the "Notice"), (C) the form of Proof of Claim and Release, (D) the form of Summary Notice of Proposed Settlement to be published in the newspaper (the "Summary Notice") and (E) the form of Final Judgment and Order of Dismissal (the "Final Order").

(1) The Settlement Stipulation. The Settlement Stipulation provides inter alia that the Company and insurers for the individual Defendants, in full settlement of any and all claims, individual and representative, that are, could have been, or might in the future be asserted against the Defendants in connection with Gensia I and Gensia II, shall pay a total of $17 million (the "Settlement Proceeds"), which shall be allocated to settle Gensia I and Gensia II (the "Settlement Fund"). The Settlement Proceeds shall be paid as follows:

(a) The Defendants will deliver or will cause to be delivered after preliminary approval of the Settlement Stipulation by the Court, $13 million in cash, to the law firm of Kaplan, Kilsheimer & Fox as escrow agent (the "Escrow Agent") on behalf of the individual Defendants. The Escrow Agent shall invest the cash received and all interest earned thereon shall be for the benefit of the Settlement Fund;

(b) The Company will pay or cause to be paid an additional $4 million in the form of Settlement Stock (or cash in substitute of all or a portion at the Companys discretion), all of which will be allocated to the Settlement Fund with valuation of such Settlement Stock to be determined as follows:

(i) The value per share of any Settlement Stock to be distributed to Class Counsel in payment of their fees and costs is to based on the weighted average daily closing price of the Common Stock on the Nasdaq National Market for the 20 trading days preceding the Effective Date (i.e., the later of (i) thirty days after the entry of a final judgment by the Court without any appeal or (ii) three days after any appeals have been finally determined by the highest court before which appellate review has been sought and the judgment is not subject to further appeal).

(ii) The value per share of the remaining Settlement Stock is to be based on the weighted average daily closing price of the Common Stock on the Nasdaq National Market for the 20 trading days following the Notification Date (i.e., the date or dates on which the claims administrator that will be receiving and processing Proofs of Claim (the "Claims Administrator") makes the required notification that claims processing has been completed and that all or a portion of the Settlement Stock shall be distributed in accordance with the Courts order).

(iii) If the Common Stock ceases to be traded on the Nasdaq National Market, then the valuation will be based on the weighted average daily closing price of the Common Stock on such other market as the Common Stock is traded. Any fractional amount of shares of the Settlement Stock will be rounded to the nearest share and adjusted to reflect stock splits, stock dividends and comparable adjustments between the date of valuation and distribution.

(c) Payments from the Settlement Fund will be made as follows:

(i) To the extent the Court authorizes the distribution of a portion of the Settlement Stock as payment of any portion of the attorneys fees to the counsel for Class Plaintiffs, the Company shall direct its transfer agent to issue and distribute the amount of Settlement Stock determined on or prior to the later of the fifth business day after the Effective Date or July 19, 1995.

(ii) The remaining portion of the Settlement Fund, including cash and any Settlement Stock, will be distributed in the portions and amounts in accordance with the provisions of the Settlement Stipulation and Plan of Allocation (as further described below) in the form of cash or Settlement Stock to members of the Settlement Class. Cash proceeds will be distributed by the Escrow Agent and Settlement Stock, if any, will be issued by the Company to its transfer agent for immediate distribution directly to qualified members of the Settlement Class and counsel for the Class Plaintiffs.

The Settlement Stipulation also provides for the following:

1. The parties stipulation to the entry of the agreed upon Order certifying a class in connection with Gensia I and Gensia II consisting of all persons (except those who validly and timely request exclusion from the Class) who (a) purchased (i) the common stock of Gensia from February 27, 1992 through September 21, 1992; or (ii) Aramed Units from February 27, 1992 through September 21, 1992; or (b) purchased (i) the common stock of Gensia from September 22, 1992 through October 16, 1994; (ii) the units of Aramed (each unit consisting of one share of callable Aramed common stock and one warrant to purchase one share of Gensia common stock) from September 22, 1992 through September 30, 1993; (iii) the common stock of Aramed from October 1, 1993 through October 16, 1994; or (iv) the warrants of Gensia from October 1, 1993 through October 16, 1994, except the Defendants, members of their immediate families, any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest or which is related to or affiliated with any of the defendants, and the legal representatives, heirs, successors-in-interest or assigns of any excluded party.

2. The costs of providing notice of the proposed settlement to the Settlement Class, locating members of the Settlement Class and administering and distributing the Settlement Proceeds shall be paid out of the Settlement Fund. An award of attorneys fees or reimbursement of expenses and costs to counsel for the Class Plaintiffs must be approved by the Court and will be paid out of the Settlement Fund as described above.

3. The Settlement Proceeds, including cash and the Settlement Stock, net of the payments described above, will be allocated and distributed to each member of the Settlement Class who does not request exclusion and who submits a valid proof of claim and release along with proper documentation.

4. The Company shall request, prior to the hearing to consider the fairness of the settlement, a "No-Action" letter from the Division confirming that the Division will not recommend an enforcement action to the SEC if the Settlement Stock is issued without registration under the Act and all cost associated with the issuance of the "No-Action" letter shall be borne by the Company.

5. The parties stipulation to the entry by the Court of the "Preliminary Order" (a) preliminarily approving the Settlement Stipulation as being fair, just, reasonable and adequate as to the Settlement Class and its members, subject to further consideration at the settlement hearing; (b) scheduling the settlement hearing to determine finally whether the proposed settlement is fair, just, reasonable, and adequate and should be approved by the Court and to approve then, or thereafter, the Plan of Allocation; (c) approving the form and manner of the notice to be provided to members of the Settlement Class; (d) directing that the notice of settlement and of the settlement hearing be mailed to all members of the Settlement Class who can reasonably be identified by individual notice and by summary notice to be published once in the national edition of The Wall Street Journal; and (e) directing that a proof of claim and release form accompany the notice to all members of the Settlement Class setting forth the procedures for the filing of objections to the proposed settlement, and providing that any member of the Settlement Class who has not requested exclusion and has filed timely written objections may appear at the settlement hearing to object to, among other things, any aspect of the settlement, the plan of allocation, or application of Plaintiffs Counsel for fees, costs and expenses. The Preliminary Order was entered on March 30, 1995 and the final hearing in this matter (the "Settlement Hearing") is scheduled for June 26, 1995.

(2) Plan of Allocation. The Preliminary Order of the Court dated March 29, 1995 sets forth the procedures for, among other things, distribution of a notice to Settlement Class members which states the proposed Plan of Allocation and sets forth other procedures for the Settlement Hearing. In the Preliminary Order, the Court approved for distribution to Settlement Class members the Notice, which Notice dated March 30, 1995 has now been distributed to the Settlement Class and publication of a Summary Notice (which was published in the Wall Street Journal). Settlement Counsel was required by the Preliminary Order to make reasonable efforts to identify and send the Notice to all persons who are Settlement Class members, including beneficial owners whose Gensia Common Stock or Aramed Units are held by banks, brokerage firms, or other nominees. We have been advised that the mailing of the Notice was made in the manner required by the Preliminary Order.

The form of Notice approved by the Court and distributed to Settlement Class members describes the terms of the $17 million Settlement Fund (which are as described above) and the proposed Plan of Allocation of the Settlement Fund. The Notice also states that at the Settlement Hearing Class Counsel will request the Court to award attorneys fees not to exceed one-third of the Settlement Fund. In addition, Class Counsel will seek reimbursement of the expenses advanced in connection with the litigation, including expenses incurred for experts. The Division may assume for purposes of this no-action request that attorneys fees will not exceed the amount stated above.

After deducting fees, expenses, settlement and administrative costs and taxes (which are described in the Notice) the net Settlement Fund shall be distributed to Settlement Class members who have submitted valid, timely Proofs of Claim and Releases by August 7, 1995. The Plan of Allocation provides that to the extent there are sufficient funds in the net Settlement Fund, each authorized claimant will receive an amount equal to its Claim, as defined (see footnote below). An allocated share will be paid if the amount in the Settlement Fund is not sufficient to permit payment of the total claim. The Plan of Allocation sets forth the methodology for computing each amount of the Claim, which is a formula based on the time periods in which Gensia Common Stock or Aramed Units were purchased and sold by the claimant (see pages 4-7 of the Notice). ¹

The Preliminary Order set the date of June 26, 1995 for the Settlement Hearing. The Preliminary Order and Notice set forth procedures for objection by Settlement Class members to the Settlement and exclusion from the Settlement Class. Any Settlement Class member who objects to any aspect of the Settlement, the Plan of Allocation, the application of Settlement Class Counsel for attorneys fees, costs and expenses, or special awards to the named class plaintiffs, may appear and be heard at the Settlement Hearing by filing with the Court a written notice of objection on or before May 27, 1995. As of June 15, 1995, no such objections had been received by the Court, with the exception of one objection to the award of attorneys fees.

In addition, the Preliminary Order and Notice provide that any Settlement Class member may upon request be excluded from the Settlement if such person submits to the Claims Administrator a request for exclusion postmarked on or before June 6, 1995. As of June 15, 1995, 12 persons representing approximately 4,014 shares of Company Common Stock have asked to be excluded from the Settlement Class.

At the time of the Settlement Hearing, the Court will be asked to enter both the Final Order and an order specifically approving the Plan of Allocation, which order shall contain a finding that the Plan of Allocation provides a fair and reasonable basis upon which to allocate the proceeds of the Settlement Fund among the Settlement Class and its members. In addition, as described below, the Court in its Final Order will retain continuing jurisdiction over the implementation of the Plan of Allocation.

The Company understands that after all claims have been received and reviewed by the Claims Administrator, and to the extent possible, all disputes resolved, a final report will be prepared by the Claims Administrator and submitted to the Court for approval, including resolution of any remaining disputes. The report will set forth the amount of each individual Claim which the Claims Administrator recommends be allowed, and therefore provide the allocation of the proceeds of the net Settlement Fund, including Settlement Stock, in accordance with the terms of the Plan of Allocation approved by the Court. The Court has the power to resolve any disputes concerning allocation or to raise any question it has concerning the process. A hearing will be requested before the Court (and the Division may assume for purposes of this no-action letter request that such hearing will be held) to review the report and to resolve any outstanding issues or disputes and the Court will thereafter issue an order resolving any disputes and authorizing the distribution of the proceeds from the net Settlement Fund. The order will affirm the payment of the allowed Claims pursuant to the Plan of Allocation, specifying the distribution of the cash and Settlement Stock, and contain a finding that the amounts allowed to each such member are fair, just, reasonable and adequate.

3. Final Order. The form of Final Order proposed to be entered by the Court after the Settlement Hearing (which has been provided to the Division as described above), sets forth the following pertinent provisions in connection with the final settlement of the Class Actions:

(a) Determination of Fairness by the Court. The form of Final Order specifically states that the Court approves the fairness of the settlement on behalf of the Settlement Class and the Court determines that the Section 3(a)(10) exemption is a consequence of its finding of fairness. For example, Section 4 states that "pursuant to and in accordance with the requirements of Rule 23 of the Federal Rules of Civil Procedure and §3(a)(10)) of the Securities Act of 1933, the Court approves the settlement of the Class Actions set forth in the Stipulation, including the respective contributions, each of the releases and other terms, as fair, just and reasonable and adequate to the Settlement Class".

(b) Retention of Jurisdiction. Section 13 of the form of Final Order provides that the Court reserves exclusive and continuing jurisdiction over the Class Action, the Named Class Plaintiffs, the Settlement Class and the Defendants for the purposes of: (1) supervising the implementation, enforcement, construction, and interpretation of the Stipulation, the Preliminary Order, the proposed Plan of Allocation, and the Final Judgment; (2) hearing and determining and application by Settlement Counsel for an award of attorneys fees, costs, and expenses and for an award to certain Named Class Plaintiffs; and (3) supervising the distribution of the Settlement Fund. The jurisdiction of the Court will continue through the date of final distribution of the Settlement Fund, including any distribution of the Settlement Stock.

II. DISCUSSION.

A. The Section 3(a)(10) Exemption.

Section 3(a)(10) of the Act provides an exemption from registration under the Act for ". . . any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interest, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court. . . ."

The principle that the Section 3(a)(10) exemption is available for securities distributed by an issuer pursuant to the settlement of a class action which has been approved by a court as fair and reasonable in accordance with the Federal Rules of Civil Procedure is well established. See, e.g., Information Resources, Inc. (February 27, 1995); Sulcus Computer Corporation (July 15, 1994); Aura Systems, Inc. (July 8, 1994); Western Digital Corporation (May 5, 1994); Coeur dAlene Mines Corporation (March 4, 1994); Coventry Corporation (December 23, 1993); Intellicall, Inc. (August 10, 1993); Medical Imaging Centers of America, Inc. (March 12, 1993); Newbridge Networks Corporation (July 27, 1992); Windmere Corporation (May 20, 1992); Riverbend International Corporation (March 30, 1990); Pacific Scientific Company (July 31, 1989); Memory Metal, Inc. (December 9, 1988); Cavanagh Communities Corporation (July 22, 1987); Anacomp Inc. (July 24, 1985); and Koracorp Industries, Inc. (July 22, 1976).

The Division has articulated the following four requirements that must be met in order for the Section 3(a)(10) exemption to be available to an issuer that issues securities in settlement of pending class action litigation: (i) the Court must hold a hearing on the fairness of the terms and conditions of the issuance of all such securities; (ii) the persons to whom such securities are to be issued must receive notice of the hearing and of the right to be heard; (iii) the Court must be advised prior to the hearing that if the terms and conditions of the settlement are approved, registration of the securities will not be required under the Act by virtue of the courts approval; and (iv) the Court must approve the fairness of the terms and conditions of the settlement. See, e.g., Coeur dAlene Mines Corporation, Intellicall, Inc., Cavanagh Communities Corporations, and Koracorp Industries, Inc., supra.

The circumstances under which the Settlement Stock will be issued by the Company in connection with the proposed settlement will satisfy these requirements. First, pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, the Court will hold the Settlement Hearing to determine whether the terms and conditions of the proposed settlement (including the issuance of the Settlement Stock to the Settlement Class) are fair, just, reasonable and adequate. Second, the Settlement Class will have received notice of the Settlement Hearing and will have the right to appear at the Settlement Hearing. Notice of the Settlement Hearing will be given by mail to all members of the Settlement Class who can be identified through reasonable effort and will also be given by publication in The Wall Street Journal. Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, these notification procedures have been approved by the Court. Third, the Court will have determined in its Final Order that by virtue of its finding of fairness, the Settlement Stock will not be required to be registered under the Act pursuant to the exemption under Section 3(a)(10). In order for the Settlement Stipulation to be binding, the Court must find that the terms and conditions of the proposed settlement are fair, reasonable and adequate and in the best interests of the Settlement Class, which express findings are set forth in the Final Order, as described above. The Court will expressly approve and issue an order concerning the fairness of the Plan of Allocation and the individual allocations of cash and Settlement Stock to the Settlement Class members. The form of final judgment provides that the Court shall reserve continuing jurisdiction, inter alia, over the Settlement Stipulation and Plan of Allocation.

Based upon the foregoing, and assuming that the settlement is approved by the Court in accordance with the procedures described herein, the Company believes the issuance of the Settlement Stock by the Company in connection with the settlement would be exempt from the registration requirements of the Act under Section 3(a)(10).

B. Public Resale of Settlement Stock.

The Division has also taken the position that securities issued without registration pursuant to Section 3(a)(10) are not "restricted securities" under Rule 144 and, accordingly, (i) in the case of securities issued to persons who are not affiliates of the issuer, may be resold without registration under the Act in reliance on the exemption contained in Section 4(1) of the Act and without compliance with Rule 144 under the Act, and (ii) in the case of securities issued to person who are affiliates of the issuer, may be resold in compliance with Rule 144 under the Act, without regard to the holding period requirement of that Rule. See, e.g., Medical Imaging Centers of America, Inc., Newbridge Networks Corporation, Riverbend International Corporation, and Pacific Scientific Company, supra.

The Settlement Stipulation provides that counsel for the Class Plaintiffs may apply to the Court for an award of attorneys fees and expenses. The amount awarded will be paid in cash or Settlement Stock (the latter if the Company elects to contribute Stock to the Settlement Fund). The exact amount of the award of attorneys fees that will be made in this case is not known at this time. The Division has taken the position that, in situations where plaintiffs counsel receives up to one-third of the securities issued in connection with a settlement, such securities are not "restricted securities" for purposes of Rule 144 and may be freely resold without registration, although any person receiving securities in a settlement, including counsel, who is deemed to be an affiliate must make resales in compliance with Rule 144, without regard to the holding period requirement of that Rule. See Western Digital Corporation, Coeur dAlene Mines Corporation, Intellical, Inc., Newbridge Networks Corporation and Riverbend International Corporation, supra. As set forth in the Notice, Class Counsel will not request an award of fees in excess of one-third of the Settlement Fund.

Based upon the foregoing, and assuming that the settlement is approved by the Court in accordance with the procedures described herein, the Company also believes that the Settlement Stock to be issued to the members of the Settlement Class, or to counsel for the Class Plaintiffs, in the settlement will not be "restricted securities" as defined in Rule 144(a)(3) under the Act and that, accordingly, (i) members of the Settlement Class, or counsel for the Class Plaintiffs, who acquire the Settlement Stock and who are not deemed to be affiliates of the Company may freely resell such shares without registration under the Act in reliance on the exemption contained in Section 4(1) of the Act, and that (ii) members of the Settlement Class, or counsel for the Class Plaintiffs, who are deemed to be affiliates of the Company may resell such shares in compliance with Rule 144 under the Act, without regard to the holding period requirement of that Rule.

III. REQUEST FOR ADVICE.

We respectfully request the written advice of the Division that it will not recommend enforcement action to the Commission based upon the facts described above and that it concurs with our opinions that (i) the Company may issue the Settlement Stock in exchange for the claims of the Settlement Class without registration under the Securities Act of 1933, as amended (the "Act") in reliance upon the exemption from registration provided under Section 3(a)(10) thereof; (ii) the Settlement Stock as so issued will not be deemed to be "restricted securities" within the meaning of Rule 144(a)(3) under the Act; and (iii) the Settlement Stock as so issued will be freely transferable by members of the Settlement Class and Class Counsel, except that if any such transferee is deemed to be an "affiliate" of the Company within the meaning of Rule 144(a)(1) under the Act, any public sale of Settlement Stock by such person without registration under the Act will be required to comply with the provisions of Rule 144 except for the rules holding period requirement.

We would appreciate your earliest possible attention to this matter in light of the fact that the Settlement Hearing is scheduled for June 26, 1995. If you have any questions in connection with this matter or if additional information is required, please do not hesitate to call the undersigned, or John L. Donahue at (415) 983-7237 or Arnold Brown at (415) 983-6190.

In accordance with Release No. 33-6269, seven additional copies of this letter are enclosed.

Very truly yours,

Barbara M. Lange

Enc.

cc: Mr. John L. Donahue

Mr. Arnold E. Brown

STAFF REPLY LETTER

RESPONSE OF THE OFFICE OF CHIEF COUNSEL

DIVISION OF CORPORATION FINANCE

Re: Gensia Inc. (the "Company")

Incoming letter dated June 22, 1995

Based on the facts presented in your letter, and contingent upon the approval of the Settlement Agreement, the Plan of Allocation and the individual allocations of cash and the Companys common stock ("Settlement Stock") by the Court following hearings on each of the foregoing, as described in your letter, the Division will not recommend any enforcement action to the Commission if the Company, in reliance upon your opinion as counsel that registration is not required, issues Settlement Stock in connection with the settlement of the class action suit pending against the Company, as described in your letter, without registration under the Securities Act of 1933.

Recipients of Settlement Stock who are not deemed to be affiliates of the Company may resell such stock for their own accounts without regard to Rule 144. Recipients of Settlement Stock who are deemed to be affiliates may resell such stock pursuant to Rule 144. However, because the Settlement Stock will not be restricted securities, the holding period requirement of Rule 144(d) is inapplicable.

Because these positions are based on the representations made to the Division in your letter, it should be noted that any different facts or conditions might require different conclusions. Further, our response regarding registration of the Settlement Stock only expresses the Divisions position on enforcement action and does not purport to express any legal conclusion on the question presented.

Sincerely,

Cecilia D. Blye

Special Counsel

SEC_CODE_REF_0090001192884

(i) Any person that purchased Gensia Common Stock, from February 27, 1992 through September 21, 1992, and who retained it as of the close of trading on September 21, 1992, shall have a per share recognized loss which is the lesser of:

(a) $13.50;

(b) the Purchase Price less $22.00; or

(c) the Purchase Price less the Sales Price of sold on or after September 22, 1992 through October 16, 1994.

(ii) Any person that purchased Gensia Common Stock, from February 27, 1992 through September 21, 1992, and who sold it prior to September 22, 1992 at a loss shall have a recognized loss equal to one-tenth (1/10) of the difference between the Purchase Price and the Sales Price.

(iii) Any person that purchased Gensia Common Stock, from September 22, 1992 through October 16, 1994, and who did not sell it prior to October 17, 1994 shall have a per share recognized loss which is the lesser of:

(a) $5.375; or

(b) the Purchase Price less $5.00.

(iv) Any person that purchased Gensia Common Stock, from September 22, 1992 through October 16, 1994, and who sold it prior to October 17, 1994 at a loss shall have a recognized loss equal to one-tenth (1/10) of the difference between the Purchase Price and the Sales Price.

(v) Any person that purchased Aramed Units, from February 27, 1992 through September 21, 1992, and who retained the units as of the close of trading on September 21, 1992, shall have a per unit recognized loss which is the lesser of

(a) $16.00;

(b) the Purchase Price less $23.50; or

(c) if sold on or after September 22, 1992 through October 16, 1994, the Purchase Price less:

(1) the Sales Price of the Aramed Unit if sold prior to October 1, 1993;

(2) the Sales Price of the Aramed Callable Stock and the Gensia Warrant, if both were sold;

(3) the Sales Price of the Aramed Callable stock plus $.625, if only the stock were sold; or

(4) the Sales Price of the Gensia Warrant plus $11.00, if only the warrant were sold.

(vi) Any person that purchased Aramed Units, from February 27, 1992 through September 21, 1992 and who sold prior to September 22, 1992 at a loss shall have a recognized loss equal to one-tenth (1/10) of the difference between the Purchase Price and the Sales Price.

(vii) Any person that purchased Aramed Units, from September 22, 1992 through September 30, 1993, and who did not sell shares of Aramed Callable Common Stock and Gensia Warrants prior to October 17, 1994, shall have a per unit recognized loss which is the lesser of:

(1) $7.50; or

(2) the Unit Purchase Price minus $11.625 per share.

(viii) Any person that purchased Aramed Units, from September 22, 1992 through September 30, 1993, and who sold them prior to October 1, 1993 at a loss shall have a recognized loss equal to one-tenth (1/10) of the difference between the Purchase Price and the Sales Price.

(ix) Any person that purchased Aramed Units, from September 22, 1992 through September 30, 1993, and who did not sell Aramed Callable Common Stock prior to October 17, 1994, and who sold Gensia Warrants, from October 1, 1993 through October 16, 1994, shall have a per share recognized loss which is the lesser of:

(1) $5.50; or

(2) the per Unit Purchase Price less the sum of the per Warrant Sales Price plus $11.00.

(x) Any person that purchased Aramed Units, from September 22, 1992 through September 30, 1993, who did not sell Gensia Warrants prior to October 17, 1994 and who sold Aramed Callable Common Stock, from October 1, 1993 through October 16, 1994, shall have a per warrant recognized loss which is the lesser of:

(1) $2.00; or

(2) the per Unit Purchase Price of the Units, less the sum of the per share Sales Price of the Aramed Callable Common Stock plus $.625.

(xi) Any person that purchased Aramed Callable Common Stock from October 1, 1993 through October 16, 1994, and who did not sell it prior to October 17, 1994 shall have a per share recognized loss which is the lesser of:

(1) $5.50; or

(2) the per share Purchase Price less $11.00 per share.

(xii) Any person that purchased Aramed Callable Common Stock from October 1, 1993 through October 16, 1994, and who sold it prior to October 17, 1994 at a loss shall have a recognized loss equal to one-tenth (1/10) of the difference between the Purchase Price and the Sales Price.

(xiii) Any person that purchased Gensia Warrants from October 1, 1993 through October 16, 1994, and who did not sell them prior to October 17, 1994 shall have a per warrant recognized loss which is the lesser of:

(1) $2.00; or

(2) the per warrant Purchase Price less $0.625 per warrant.

(xiv) Any person that purchased Gensia Warrants from October 1, 1993 through October 16, 1994, and who sold them prior to October 17, 1994 at a loss shall have a recognized loss equal to one-tenth (1/10) of the difference between the Purchase Price and the Sales Price.

(xv) For Settlement Class members who made multiple purchases or multiple sales during the Settlement Class Period, the earliest subsequent sale shall be matched with the earliest purchase and chronologically thereafter for purposes of the Claim calculations.

(xvi) All profits shall be subtracted from all losses to determine the net Claim of each Settlement Class member.

(xvii) The Court has reserved jurisdiction to allow, disallow or adjust the Claim of any Settlement Class member on equitable grounds.