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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
JONES PHARMA INCORPORATED
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.04 PER SHARE
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(Title of Class of Securities)
480236 10 8
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(CUSIP Number)
CHARLES E. H. LUEDDE, ESQ.
10 SOUTH BROADWAY, SUITE 2000, ST. LOUIS, MISSOURI 63102 (314) 241-9090
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
AUGUST 25 , 1998
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), (f) or (g), check the following
box [ ].
NOTE. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP No. 480236 10 8 13D Page 2 of 4 Pages
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1 Names of Reporting Persons/I.R.S. Identification Nos. of Above Persons
(entities only)
DENNIS M. JONES; JUDITH A. JONES
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2 Check the Appropriate Box if a Member of a Group
(See Instructions) (a) |X|
(b) | |
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3 SEC Use Only
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4 Source of Funds (See Instructions)
OO
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5 Check if disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
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6 Citizenship or Place of Organization
UNITED STATES
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Number of 7 Sole Voting Power
Shares 4,457,292
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Beneficially 8 Shared Voting Power
Owned by -0-
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Each 9 Sole Dispositive Power
Reporting 4,457,292
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10 Shared Dispositive Power
Person With
-0-
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,457,292
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12 Check if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
(See Instructions)
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Percent of Class Represented by Amount in Row (11)
15.3%
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14 Type of Reporting Person (See Instructions)
IN
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CUSIP No. 480236 10 8 13D Page 3 of 4 Pages
ITEM 1. Security and Issuer.
Common Stock, par value $.04 per share
Jones Pharma Incorporated
1945 Craig Road
St. Louis, Missouri 63146
ITEM 2. Identity and Background.
(a) Dennis M. Jones and Judith A. Jones, husband and wife
(b) Jones Pharma Incorporated
1945 Craig Road
St. Louis, Missouri 63146
(c) Dennis M. Jones is the Chairman of the Board, Chief Executive Officer
and President of Jones Pharma Incorporated. Mr. Jones founded Jones
Pharma Incorporated in 1981.
Judith A. Jones is Executive Vice President of Corporate Affairs,
Secretary and Treasurer of Jones Pharma Incorporated and has served
continuously as a Director of Jones Pharma Incorporated since 1981.
(d) Not applicable.
(e) Not applicable.
(f) Each of Dennis M. Jones and Judith A. Jones is a citizen of the United
States of America.
ITEM 3. Source and Amount of Funds and Other Consideration.
The holdings reflected in this statement represent the aggregation of
the separate individual holdings of Dennis M. Jones and Judith A. Jones, direct
and indirect, of the common stock of Jones Pharma Incorporated. As a result of
the agreement referenced in Item 6 below, each of Dennis M. Jones and Judith A.
Jones may be deemed to have acquired beneficial ownership (for purposes of Rule
13d-3) of the shares separately held by the other.
ITEM 4. Purpose of the Transaction.
As referenced in Item 6 below, the transaction relates to the potential
disposition of shares of the common stock of Jones Pharma Incorporated upon the
latter to occur of the deaths of Dennis M. Jones or Judith A. Jones.
ITEM 5. Interest in Securities of the Issuer.
(a,b) As of February 26, 1999, Dennis M. Jones (and/or his revocable trust) is
deemed to own beneficially an aggregate of 3,356,365 shares of the common stock
of Jones Pharma Incorporated, excluding shares held by Judith A. Jones,
representing 11.5% of the class of common stock of Jones Pharma Incorporated.
Such holdings include 326,000 shares currently under option to Mr. Jones from
Jones Pharma Incorporated. Such holdings also include 200,000 shares owned by
Mr. Jones which are subject to purchase by third parties at $32.50 per share
under option rights expiring on June 18, 1999. Mr. Jones has sole voting and
dispositive power with respect to such shares.
As of February 26, 1999, Judith A. Jones (and/or her revocable trust)
is deemed to own beneficially an aggregate of 1,101,937 shares of the common
stock of Jones Pharma Incorporated, excluding shares held by Dennis M. Jones,
representing 3.8% of the class of common stock of Jones Pharma Incorporated.
Such holdings include 81,000 shares currently under option to Mrs. Jones from
Jones Pharma Incorporated. Mrs. Jones has sole voting and dispositive power
with respect to such shares.
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CUSIP No. 480236 10 8 13D Page 4 of 4 Pages
(c) Neither Mr. nor Mrs. Jones has had any transactions in the common stock of
Jones Pharma Incorporated within the 60 days preceding the filing of this
Schedule 13D except for disposition by gifts of an aggregate of 5,110 shares by
Mr. Jones on February 26, 1999.
Neither Mr. nor Mrs. Jones had any transactions in the common stock of
Jones Pharma Incorporated within the 60 days preceding the August 25, 1998 date
of the agreement referenced in Item 6 below which gives rise to the filing of
this statement except for dispositions by gifts of an aggregate of 2,145 shares
by Mr. Jones on August 26, 1998.
(d)(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
During August 1998 Jones Pharma Incorporated purchased "key employee" insurance
policies on the joint lives of Mr. and Mrs. Jones in policies having an
aggregate death benefit of $40,000,000. The policies represent a combination of
term and whole life insurance intended to provide for level premium expense
aggregating approximately $865,000 per year. Contemporaneously with the purchase
of these policies, on August 25, 1998, Jones Pharma Incorporated entered into an
agreement with Mr. and Mrs. Jones (individually and as the trustees of their
respective revocable trusts holding shares of the Company's common stock).
Pursuant to such agreement, at the time of the death of the second to die of Mr.
or Mrs. Jones their estates or the successor trustees of their trusts or any
beneficiary of such trust receiving a distribution of shares of Jones Pharma
Incorporated common stock is given the option to require Jones Pharma
Incorporated to repurchase some or all of such shares of common stock.
The purchase price applicable to any such repurchase will equal the average
closing price for such stock for the ten days preceding the date of death giving
rise to the option. The option may only be exercised by notice given not earlier
than seven nor later than eight months after the date of death giving rise to
the option and any resulting repurchase shall be made within thirty days of such
notice of exercise. The agreement limits the obligation of Jones Pharma
Incorporated to effect such repurchases to the amount of the insurance proceeds
received by it pursuant to the policies, but provides that Jones Pharma
Incorporated may not borrow against any cash values in the policies or cancel
the insurance without the consent of Mr. and Mrs. Jones. Mr. and Mrs. Jones have
agreed with Jones Pharma Incorporated that in the event of any termination of
the policies under circumstances in which Jones Pharma Incorporated does not
recover in full its premium costs, they will reimburse such unrecovered costs.
ITEM 7. Material to be Filed as Exhibits.
Exhibit 1: Stock Redemption Agreement dated as of August 25, 1998, by and
among Jones Pharma Incorporated and Dennis M. Jones (individually
and as trustee of the Dennis M. Jones Amended and Restated
Revocable Trust dated March 16, 1993) and Judith A. Jones
(individually and as trustee of the Judith A. Jones Amended and
Restated Revocable Trust dated June 8, 1993).
Exhibit 2: Rule 13d-1(k) Joint Filing Agreement.
After reasonable inquiry, and to the best of the undersigned
knowledge and belief, the undersigned certify that the information set forth in
this statement is true, complete and correct.
/s/ Dennis M. Jones /s/ Judith A. Jones
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Dennis M. Jones Judith A. Jones
(individually and as Trustee of (individually and as Trustee of the
the Dennis M. Jones Amended and Judith A. Jones Amended and
Restated Revocable Trust dated Restated Revocable Trust dated
March 16, 1993) June 8, 1993)
April 20, 1999
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Exhibit 1 to Schedule 13D
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT ("Agreement") is made and entered into
as of the 25th day of August, 1998, by and among JONES PHARMA INCORPORATED, a
Delaware corporation (the "Company"); DENNIS M. JONES ("DMJ"), individually and
as trustee of the Dennis M. Jones Amended and Restated Revocable Trust dated
March 16, 1993; and JUDITH A. JONES ("JAJ"), individually and as trustee of the
Judith A. Jones Amended and Restated Revocable Trust dated June 8, 1993. DMJ and
JAJ are hereinafter collectively sometimes referred to as the "Insureds" or
individually as an "Insured." DMJ and JAJ, together with their respective
revocable trusts, are sometimes referred to as the "Shareholder" or collectively
as the "Shareholders."
RECITALS:
A. The Shareholders own a substantial number of shares of the common
stock of the Company (the "Shares") which said Shares constitute a major portion
of the Insureds' respective estates.
B. Each Shareholder has for many years served, and currently serves, as
a senior executive officer and as a director of the Company.
C. The Company believes it to be in the best interest of the Company to
have "key person" insurance proceeds available on the death of the Insureds in
order to minimize the negative impact on the Company in the event of the deaths
of the Insureds, and with the consent of the Insureds the Company has purchased
the life insurance policies identified on Exhibit A attached hereto (the
"Policies")
D. As an inducement to the Insureds to consent to and cooperate with
the Company in the purchase of the Policies, the Insureds have requested the
Company to agree to utilize some or all of the proceeds from such Policies to
redeem all or part of the Shares as hereinafter set forth in this Agreement with
a view to providing liquidity to their estates and certain trusts and
beneficiaries.
E. In recognition that the Shareholders currently own in excess of
fifteen percent of the Company's outstanding common stock; in the interest of
preserving an orderly market for such common stock; and in recognition that such
use of the proceeds should benefit the Company's shareholders by increasing the
per share book value of the shares of such common stock not redeemed, the
Company is willing to agree to such request and believes that the arrangement is
in the best interests of its shareholders generally.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and agreements contained herein, the parties agree as follows:
1. The Company shall maintain and keep the Policies in full force and
effect during the lives of the Insureds unless otherwise agreed in writing by
the Insureds, or the survivor of them. The Company shall pay all premiums
required and shall perform such other acts and deeds as may be necessary in
order to keep and maintain the Policies in full force and effect.
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2. The Company shall not sell, assign, pledge, borrow against,
surrender or otherwise terminate the Policies, without the written consent of
the Insureds, or the survivor of them. The Company shall not alter or amend
elections with respect to the application of dividends or policy earnings in any
manner without the written consent of the Insureds, or the survivor of them.
3. On the death of the second to die of the Insureds, the Company shall
promptly perform such acts and deeds and sign such documents and instruments as
may be reasonably required to collect the insurance proceeds (the "Proceeds")
payable to the Company with respect to the Policies as the result of the death
of the Insureds. The Company agrees to place such Proceeds in one or more
segregated accounts to assure that such funds are available for the purposes of
this Agreement and acknowledges that such Proceeds shall be deemed subject to an
equitable lien in connection therewith. Upon its own initiative or upon the
written request of a Shareholder, the Company agrees to execute and file a
contingent collateral assignment of the Proceeds in favor of the Eligible
Holders (as hereinafter defined).
4. As promptly as practicable upon the death of an Insured, the
executor or personal representative of such Insured and the successor trustee of
such Insured's revocable trust, shall give written notice to the Company
identifying any trust or other beneficiary entitled to receive distribution of
any Shares as a result of such death. As promptly as practicable upon the death
of the second to die of the Insureds, the executor or personal representative of
such Insured and the successor trustee of such Insured's revocable trust shall
give written notice to the Company identifying any trust or other beneficiary
entitled to receive distribution of Shares as a result of such death. In
addition, if the revocable trust of the first Insured to die remains in
existence as of the date of death of the second to die of the Insureds, then the
successor trustee of such first Insured's revocable trust shall then give
written notice to the Company identifying any beneficiary entitled to receive
distribution of Shares as a result of the death of the second to die of the
Insureds. The term "Eligible Holder," as hereinafter used, shall mean (i) the
respective estates of the Insureds, (ii) the respective revocable trusts of the
Insureds (including any trusts created thereby upon the death of an Insured for
the benefit of the spouse or descendants of such Insured), and (iii) any
beneficiary of any of such estates or trusts identified to the Company as a
result of the notices delivered pursuant to this Section 4, but only if such
beneficiary is a descendant of one of the Insureds or a trust for the benefit of
one or more such descendants. (The failure of the Company to receive notices as
provided in this Section 4 shall not affect the rights of the Insureds'
respective estates and trusts as Eligible Holders, but no other beneficiary
shall be deemed an Eligible Holder unless notice of such beneficiary's status
has been given to the Company as herein provided.)
5. (a) On the death of the second to die of the Insureds (the
"Decedent"), the Eligible Holders of the Shares shall have the right ("Put
Right") to require the Company to purchase such number of Shares as may be
purchased with the Proceeds, at a purchase price and on such terms and
conditions as are hereinafter set forth in Section 6 of this Agreement. In the
event that the Proceeds are not sufficient to purchase all of the Shares that
are tendered to the Company for redemption by such Eligible Holders, then the
Company shall purchase a pro rata portion of the Shares tendered by each
Eligible Holder; provided, however, that priority shall first be given to the
purchase of any Shares (the "Includable Shares") tendered which are included in
the federal estate tax return with respect to the
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second of the Insureds to die. For example, if (i) the Redemption Price (as
hereinafter defined) is $50.00 per share, (ii) the amount of Proceeds is $40
million, and (iii) 500,000 Includable Shares are tendered to the Company for
redemption by one or more Eligible Holders and 400,000 other Shares are tendered
to the Company for redemption by one or more Eligible Holders, then the Company
shall redeem 100% of the Includable Shares tendered, with 300,000 Shares being
purchased, pro rata in relation to the respective numbers of Shares tendered,
from the other Eligible Holders. Similarly, if the facts in clause (iii) of such
example were that 1,000,000 Includable Shares were tendered by one or more
Eligible Holders and an additional 200,000 other Shares were tendered, then the
Company would redeem 80% of the Includable Shares, pro rata in relation to the
respective numbers of Includable Shares tendered, and would purchase none of the
other Shares tendered.
(b) The Eligible Holders may exercise their respective Put Rights by
giving written notice ("Put Notice") thereof to the Company at any time not
earlier than seven (7) months nor later than eight (8) months after the date of
death of the Decedent (the "Put Period"). If the Put Notice is not given by an
Eligible Holder with respect to a certain number of Shares within the Put
Period, said Eligible Holder's Put Rights shall be null and void and the Company
shall not be required to redeem any Shares held by such Eligible Holder. The Put
Notice shall set forth the number of Shares that the Eligible Holder desires to
tender to the Company for redemption.
(c) Upon receipt of the Put Notice(s) as herein set forth, the
Company shall purchase and redeem, and the Eligible Holders of the Shares shall
sell, such number of Shares as are set forth in the respective Put Notices,
subject to reduction (determined in accordance with clause (a) above) based upon
the amount of Proceeds available and the Redemption Price (as hereinafter
defined) of the Shares to be purchased.
6. (a) The per share purchase price for the Shares (the "Redemption
Price") shall be the average closing price per share of the Shares on the last
ten (10) trading days immediately preceding the date of death of the Decedent.
The Redemption Price payable for the Shares shall be paid by the Company to each
respective electing Eligible Holder of Shares by cashiers check or wire transfer
of funds, at closing.
(b) The closing of the purchase and sale of all of the Shares being
redeemed by the Company shall occur on such date and at such time and place as
the Company shall specify in its written notice (the "Company Notice") to each
Eligible Holder who gave a timely Put Notice. The date of closing shall be not
sooner than ten (10) days nor later than twenty (20) days after the end of the
Put Period, the time of closing shall be between 9:00 a.m. and 3:00 p.m., local
time, and the place of closing shall be at the principal office of the Company
or at a bank or lawyer's office within the City or County of St. Louis,
Missouri, as the Company shall determine, or at such other date, place and time
as the Company and the respective Eligible Holders shall agree.
(c) At the closing, the Company shall pay the Redemption Price to
each respective Eligible Holder of Shares by cashiers check or wire transfer of
funds, and each such Eligible Holder shall deliver the Shares to the Company
duly endorsed for transfer to the Company together with all other documents as
the Company may reasonably request. Any and all transfer taxes payable with
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respect to the transfer of said Shares to the Company shall be paid by the
respective Eligible Holder(s) of the Shares.
7. In order to induce the Company to enter into this Agreement and
agree to the redemption of Shares as herein set forth, the Shareholders jointly
and severally guarantee that in the event that the Company does not realize from
the Policies an amount equal to the premiums paid by the Company with respect to
the said Policies, the Shareholders will pay to the Company, the excess, if any,
of any and all premiums paid by the Company with respect to the Policies over
and above the amount of proceeds received by the Company with respect to the
said Policies, and without regard to the Put Rights set forth in this Agreement.
8. This Agreement shall be construed and interpreted in accordance with
the laws of the State of Missouri.
9. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and shall not be amended or modified
except by a written instrument signed by all parties hereto.
10. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
successors and assigns, provided, however, that no Shareholder shall voluntarily
or involuntarily transfer or assign its rights or obligations hereunder without
the express written consent of the Company. Notwithstanding the foregoing,
nothing herein shall limit the ability of DMJ or JAJ to revoke or amend their
respective revocable trusts or to require that the Company consent thereto. The
term "Shareholders" as used herein shall include any revocable, irrevocable or
testamentary trust hereafter created by DMJ or JAJ holding any of the Shares as
to which a surviving spouse or descendant of the settlor is a beneficiary. The
term "Shares" as used herein shall include any shares of the common stock of the
Company or its successors hereafter acquired by any Shareholder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
JONES PHARMA INCORPORATED
/s/ Dennis M. Jones /s/Michael T. Bramlett
_______________________________ By________________________________
Dennis M. Jones (individually and as trustee Duly Authorized
of the Dennis M. Jones Amended and Restated
Revocable Trust dated March 16, 1993)
/s/ Judith A. Jones
_______________________________
Judith A. Jones (individually and as trustee
of the Judith A. Jones Amended and Restated
Revocable Trust dated June 8, 1993)
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EXHIBIT A
Insurance Policies
1. Insurer: The Northwestern Mutual Life Insurance Company
Policy No.: 14 765 059
Insureds: Dennis M. Jones and Judith A. Jones
Owner: Jones Pharma Incorporated
Initial Face Amount of Policy: $26,000,000
2. Insurer: Sun Life of Canada
Policy No.: 20044708
Insureds: Dennis M. Jones and Judith A. Jones
Owner: Jones Pharma Incorporated
Initial Face Amount of Policy: $14,000,000
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Exhibit 2 to Schedule 13D
Rule 13d-2(k)(1) Joint Filing Agreement
In accordance with Rule 13d-2(k)(1) under the Securities Exchange Act of
1934, the undersigned agree that for purposes of reports on Schedule 13D or
Schedule 13G relating to the undersigned's holdings of shares of the Common
Stock, par value $1.04 per share, of Jones Pharma Incorporated, such filings
shall be effected by a single joint statement.
In Witness Whereof, this Joint Filing Agreement has been executed this 20th
day of April, 1999, by the undersigned.
/s/ Dennis M. Jones
________________________________________
Dennis M. Jones
Individually as Trustee of the
Dennis M. Jones Amended and
Restated Revocable Trust dated
March 16, 1993.
/s/ Judith A. Jones
________________________________________
Judith A. Jones
Individually and as Trustee of the
Judith A. Jones Amended and
Restated Revocable Trust dated
June 8, 1993.
