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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant X
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Filed by a Party other than the Registrant _____
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_____ Preliminary Proxy Statement
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X Definitive Proxy Statement
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_____ Definitive Additional Materials
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_____ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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Roberts Pharmaceutical Corporation
______________________________________________
(Name of Registrant as Specific in its Charter)
______________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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X $125 per Exchange Act Rule 0-11(c)(1)(ii), 14A-6(i)(1) or 14a-6(i)(3).
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_____ $500 per each party to the controversy pursuant to Exchange Act Rule
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14a-6(i)(3).
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_____ Fee computed on table below per Exchange Act Rules 14a(6)(i)(4) and
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1) Title of each class of securities to which transaction applies:
___________________________________________________________________
2) Aggregate number of securities to which transaction applies:
___________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act rule 0-11.
___________________________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________________________
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_____ Check box if any part of the fee is offset as provided by Exchange
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Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid:______________________________________
2) Form, Schedule or Registration Statement No._________________
3) Filing party:________________________________________________
4) Date filed:__________________________________________________
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ROBERTS PHARMACEUTICAL CORPORATION
Meridian Center II
4 Industrial Way West
Eatontown, New Jersey 07724
_________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 6, 1996
_________________________
To the Shareholders of
ROBERTS PHARMACEUTICAL CORPORATION:
Notice is hereby given that a special meeting of the shareholders (the "Special
Meeting") of ROBERTS PHARMACEUTICAL CORPORATION (the "Company") will be held on
Wednesday, November 6, 1996 at the Company's headquarters, Meridian Center II, 4
Industrial Way West, Eatontown, New Jersey 07724 at 10:00 a.m., local time, for
the following purposes:
1. To consider and vote upon a proposal to approve the issuance to the
holders of the Company's 5% Convertible Preferred Stock, $.10 par value
per share (the "5% Preferred Stock"), of the full number of shares of
Common Stock, $.01 par value per share ("Common Stock"), to which such
holders are entitled upon conversion of the 5% Preferred Stock.
2. To consider and vote upon a proposal to approve an amendment to the
Company's Amended and Restated Certificate of Incorporation which would
increase the authorized shares of the Company's Common Stock, from
50,000,000 shares to 100,000,000 shares.
3. To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
Holders of Common Stock of record at the close of business on October 10,
1996, are entitled to notice of and to vote at the Special Meeting.
ANTHONY A RASCIO, ESQ.
Vice President and
Secretary
Eatontown, New Jersey
October 11, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU ARE UNABLE TO DO
SO, PLEASE MARK, SIGN AND DATE THE ACCOMPANYING PROXY AND MAIL IT AT ONCE IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
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ROBERTS PHARMACEUTICAL CORPORATION
_________________________
PROXY STATEMENT
_________________________
GENERAL INFORMATION
This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share ("Common Stock"), of Roberts Pharmaceutical Corporation (the
"Company" or "Roberts") in connection with the solicitation of proxies for use
at a special meeting of shareholders of the Company to be held at the Company's
headquarters, Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey
07724, on November 6, 1996, at 10:00 a.m., local time, and at any adjournment
thereof (the "Special Meeting"), pursuant to the accompanying Notice of Special
Meeting of Shareholders. A form of proxy for use at the meeting is also
enclosed. The Company anticipates mailing this Proxy Statement to its
shareholders on or about October 11, 1996.
The Special Meeting has been called by the Board of Directors of the
Company for the purpose of voting on (i) a proposal to approve the issuance to
the holders of the Company's 5% Convertible Preferred Stock, $.10 par value per
share (the "5% Preferred Stock"), of the full number of shares of Common Stock
to which such holders are entitled upon conversion of the 5% Preferred Stock
("Proposal I"); and (ii) a proposal to approve an amendment to the Company's
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") which would increase the authorized shares of Common Stock from
50,000,000 shares to 100,000,000 shares ("Proposal II" and, collectively with
Proposal I, the "Proposals").
Shareholders may revoke the authority granted by their execution of proxies
at any time before the effective exercise of proxies by filing written notice of
such revocation with the Secretary of the Special Meeting. Presence at the
Special Meeting does not in and of itself revoke the proxy. All shares
represented by executed and unrevoked proxies will be voted in accordance with
the specifications therein. Proxies submitted without specification will be
voted FOR each of the Proposals. Management is not aware at the date hereof of
any matters to be presented at the Special Meeting other than the matters
described hereinabove, but, if any other matter is properly presented, the
persons named in the proxy will vote thereon according to their best judgement.
Proxies for use at the Special Meeting are being solicited by the Board of
Directors of the Company. The cost of preparing, assembling and mailing the
proxy material is to be borne by the Company. Proxies may be solicited by
directors, officers and employees of the Company in person or by mail, telephone
or facsimile transmission, but such persons will not be specially compensated
therefor. Georgeson & Company, Inc., 88 Pine Street, Wall Street Plaza, 30th
Floor, New York, New York 10005 (telephone: (212) 440-9800) has been retained to
assist in soliciting proxies by mail, telephone or personal solicitation for a
fee of $7,500.00 plus expenses.
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VOTING AT THE SPECIAL MEETING
The voting securities entitled to vote at the Special Meeting consist of
shares of Common Stock, with each share of Common Stock entitling its owner to
one vote on an equal basis. The number of outstanding shares of Common Stock on
October 10, 1996 was 19,207,402. Only shareholders of record on the books of
the Company at the close of business on that date will be entitled to vote at
the Special Meeting. For purposes of acting on the Proposals, the holders of a
majority of the outstanding shares of Common Stock, present in person or by
proxy and entitled to vote, will constitute a quorum at the Special Meeting.
Each of the Proposals must be approved by a majority of the votes cast at
the Special Meeting on such Proposal by the holders of Common Stock.
All votes will be tabulated by the inspector of election appointed for the
Special Meeting who will separately tabulate affirmative votes, negative votes,
abstentions and broker non-votes. Under the New Jersey Business Corporation Act
and under the Company's By-laws, any proxy submitted and containing an
abstention or a broker non-vote will not be counted as a vote cast on any matter
to which it relates. Abstentions and broker non-votes will be counted for
purposes of determining whether a quorum is present at the Special Meeting.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of October 10, 1996, with
respect to each person who is known by the Company to be the beneficial owner,
as defined in Rule 13d-3 ("Rule 13d-3") of the Securities Exchange Act of 1934,
as amended, of more than five percent (5%) of the Company's Common Stock.
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<TABLE>
<CAPTION>
Amount and Nature Percent
Name and Address of of
of Beneficial Owner Beneficial Ownership(1) Class
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<S> <C> <C>
Yamanouchi Group Holding Inc.(2).. 5,048,500 26.3%
Robert A. Vukovich, Ph.D.(3)...... 1,939,161(4)(5)(6) 9.9%
</TABLE>
(1) Except as otherwise indicated, all of the shares of the Company's Common
Stock are held beneficially and of record.
(2) The address of the principal office of such shareholder is c/o The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. Yamanouchi Group Holding Inc. ("Yamanouchi Group
Holding") is a wholly owned subsidiary of Yamanouchi Pharmaceutical Co.,
Ltd. ("Yamanouchi").
(3) Dr. Vukovich is Chairman of the Board of Directors, President and Chief
Executive Officer of the Company and maintains a business address at the
Company's offices at Meridian Center II, 4 Industrial Way West, Eatontown,
New Jersey 07724.
(4) Includes 250,000 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich pursuant to the Company's stock option
plans. (5)Includes 6,590 shares of Common Stock held by Dr. Vukovich's wife,
with respect to which Dr. Vukovich disclaims beneficial ownership.
(6) Includes 45,000 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich's wife pursuant to the Company's Incentive
Stock Option Plan ("Incentive Option Plan") with respect to which Dr.
Vukovich disclaims beneficial ownership.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of October 10, 1996, with
respect to the beneficial ownership (as defined in Rule 13d-3) of the Company's
Common Stock by each Director of the Company, each of the Company's five most
highly compensated Executive Officers in 1995 (each a "Named Officer") and by
all Directors and Executive Officers of the Company as a group.
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<TABLE>
<CAPTION>
Name of Amount and Nature Percent of
Beneficial Holder of Beneficial Ownership(1) Class
- -------------------------------------- ------------------------------- -----------
<S> <C> <C>
Robert A. Vukovich, Ph.D.............. 1,939,161(2)(3)(4) 9.9%
Robert W. Loy......................... 72,000(5) (6)
Anthony A. Rascio, Esq................ 60,465(7) (6)
Peter M. Rogalin...................... 1,000 (6)
John T. Spitznagel.................... 500 (6)
Takao Miyamoto........................ (8)
Akihiko Matsubara..................... (8)
Digby W. Barrios...................... 18,000(9) (6)
Anthony P. Maris(10).................. 81,000(11) (6)
Zola P. Horovitz...................... --- ---
All Directors and Executive Officers
as a Group (8 persons)................ 2,091,126(2)(3)(4)(5)(7)(9) 10.7%
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</TABLE>
(1) Except as otherwise indicated, all of the shares of the Company's Common
Stock are held beneficially and of record.
(2) Includes 250,000 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich pursuant to the Company's Incentive
Option Plan and Restricted Stock Option Plan ("Restricted Option Plan").
(3) Includes 6,590 shares of Common Stock held by Dr. Vukovich's wife, with
respect to which Dr. Vukovich disclaims beneficial ownership.
(4) Includes 45,000 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich's wife pursuant to the Incentive Option
Plan, with respect to which Dr. Vukovich disclaims beneficial ownership.
(5) Includes 71,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Option Plan.
(6) Shares beneficially owned do not exceed 1% of the Company's outstanding
shares of Common Stock.
(7) Includes 6,200 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Option Plan.
(8) Yamanouchi Group Holding, a principal shareholder of the Company, is a
wholly owned subsidiary of Yamanouchi. Yamanouchi Group Holding holds
5,048,500 shares of the Company's Common Stock. Each of Mr. Miyamoto and
Mr. Matsubara is a Director of the Company and currently serves as an
executive of Yamanouchi. Each of them disclaims beneficial ownership of
the shares owned by Yamanouchi Group Holding.
(9) Includes 15,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Restricted Option Plan.
(10) Mr. Maris is a former executive officer and Director of the Company and
was a Named Officer of the Company as of December 31, 1995. Effective
February 2, 1996, Mr. Maris resigned from the Company and its
subsidiaries in all capacities as an officer and Director.
(11) Includes 81,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Option Plan.
AGREEMENTS WITH YAMANOUCHI
Yamanouchi, through its wholly owned subsidiary, Yamanouchi Group
Holding, Inc., owns 5,048,500 shares of the Company's Common Stock, representing
approximately 26.3% of the Company's outstanding Common Stock as of October 10,
1996. Of the shares of Common Stock owned by Yamanouchi, 4,000,000 shares were
acquired in March 1992 for an aggregate purchase price of $95,352,000 pursuant
to the terms of a stock purchase agreement (the "Stock
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Purchase Agreement") entered into by the Company and Yamanouchi. Under the
terms of the Stock Purchase Agreement, Yamanouchi has certain preemptive rights
to acquire securities issued by the Company (which rights were not exercised in
connection with the private placement transactions described herein under the
caption "Description of Private Placement Transactions") for so long as
Yamanouchi owns at least 15% of the Company's outstanding Common Stock on a
fully diluted basis, and the Company is prohibited from taking any action to
prevent Yamanouchi from directly or indirectly acquiring all of the remaining
shares of the Company's outstanding Common Stock, provided that any such
acquisition is made in accordance with the terms of the Stock Purchase
Agreement. Yamanouchi is under no obligation to acquire additional shares of
Common Stock. For so long as Yamanouchi owns 10% of the outstanding Common
Stock on a fully diluted basis, Yamanouchi has granted the Company a right of
first refusal with respect to any shares of Common Stock which it proposes to
sell, subject to certain specified exceptions.
The Company has granted Yamanouchi certain demand and piggyback
registration rights with respect to shares of Common Stock owned by it. Under
the Stock Purchase Agreement, the Company is required to discuss with and obtain
the views of Yamanouchi with respect to certain specified transactions,
including equity offerings; incurring a material amount of debt; a material
change in the Company's capital structure and the granting of any material
license to a third party. If any such proposed transaction involves a
financing, the Company has agreed to review with Yamanouchi its financing needs
prior to engaging in such transaction and to give Yamanouchi a reasonable
opportunity to propose and negotiate a financing alternative for the Company,
though Yamanouchi is under no obligation to do so. Yamanouchi is entitled to
designate two members of the Company's Board of Directors for so long as it owns
at least 18% of the outstanding shares of the Company's Common Stock on a fully
diluted basis (or one Director for so long as it owns at least 10% of such
Common Stock). Takao Miyamoto and Akihiko Matsubara are Yamanouchi's designees.
Pursuant to a shareholder agreement (the "Shareholder Agreement") between
Yamanouchi and Dr. Robert A. Vukovich, Chairman and President of the Company,
entered into at the same time as the Stock Purchase Agreement, Dr. Vukovich has
agreed to vote all shares of Common Stock held by him in favor of the election
of any such designees. As of October 10, 1996, Dr. Vukovich was the beneficial
owner of 1,939,161 shares of Common Stock, representing approximately 9.9% of
the Company's outstanding Common Stock
Under the Shareholder Agreement, Dr. Vukovich has granted Yamanouchi
certain rights of first refusal with respect to shares of the Company's
outstanding Common Stock that he proposes to sell. Moreover, Dr. Vukovich has
agreed in the Shareholder Agreement to support as a shareholder and officer of
the Company any fair offer by Yamanouchi to acquire the Company or all of its
outstanding Common Stock made before December 31, 1998. Yamanouchi is under no
obligation to acquire the Company or any shares of Common Stock of the Company.
As of October 10, 1996, Yamanouchi and Dr. Vukovich were collectively the
beneficial owners of 6,987,661 shares (36.2%) of the Company's outstanding
Common Stock. The ownership percentages set forth above do not give effect to
potential issuances of Common Stock upon conversion of any shares of 5%
Preferred Stock or upon exercise of any outstanding options or warrants.
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See "Description of Private Placement Transactions" for a description
of certain other agreements between the Company and its shareholders.
PROPOSAL I
PROPOSAL TO APPROVE ISSUANCE OF FULL NUMBER OF SHARES
OF COMMON STOCK UPON CONVERSION OF 5% PREFERRED STOCK
GENERAL
In July and August 1996, the Company received aggregate net proceeds
of approximately $108 million (after cash fees to the placement agent and
estimated transaction expenses ) from the issuance of shares of Common Stock and
5% Preferred Stock in certain private placements. Such transactions are
referred to herein as the "Private Placements" and the related securities
issuances (including (i) shares of Common Stock issuable upon the conversion of
shares of 5% Convertible Preferred Stock and the exercise of warrants issued in
connection with the Private Placement of the Common Stock, and (ii) shares of 5%
Preferred Stock payable as dividends on the 5% Preferred Stock and issuable upon
exercise of warrants issued in connection with the Private Placement of 5%
Preferred Stock) are referred to as the "Private Placement Issuances." All of
the securities sold in the Private Placements were sold in private placements
solely to accredited investors.
Approval of the proposal to approve the issuance of the full number of
shares of Common Stock upon conversion of the 5% Preferred Stock is being sought
to satisfy the shareholder approval requirements of the National Association of
Securities Dealers, Inc. (the "NASD") in the event that such conversions, after
taking into account the other Private Placement Issuances, require that more
than 3,717,529 shares of Common Stock (approximately 19.9% of the shares of
Common Stock outstanding before the Private Placements) be issued in connection
therewith. The Company is obliged to seek approval of Proposal I under the
terms of its agreements with investors (the "Preferred Stock Investors") who
purchased shares of 5% Preferred Stock. See "Description of Private Placement
Transactions -Preferred Stock Placement."
NASD REQUIREMENT AS TO SHAREHOLDER APPROVAL.
The rules of the NASD provide that shareholder approval must be
obtained in connection with a transaction other than a public offering involving
the sale or issuance of common stock (or securities convertible into or
exercisable for common stock) equal to 20% or more of the voting power
outstanding before the issuance for less than the greater of the book or market
value of the stock (the "NASD Rule").
As more particularly described below under the caption "Description of
Private Placement Transactions - Preferred Stock Placement," the 5% Preferred
Stock is convertible into Common Stock in accordance with the terms of the
Certificate of Amendment to the Company's Certificate of Incorporation filed
with the Office of the Secretary of State, State of New Jersey on August 29,
1996 (the "Certificate of Amendment") which established the 5% Preferred Stock
and the rights, designations and preferences thereof. The number of shares of
Common Stock into which each share of 5% Preferred Stock is convertible depends,
in part, upon the "Conversion Price" in effect at the time of the conversion.
Under the terms of the Certificate of Amendment, the "Conversion Price" is equal
to 90% of the lowest reported trade price of the Common Stock during a specified
period of trading days and, accordingly, the
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number of shares of Common Stock issuable upon conversion of the 5% Preferred
Stock will vary inversely with the market price of the Common Stock. As a
result, it is not possible to determine at this time the number of shares of
Common Stock issuable upon conversion of the 5% Preferred Stock.
The Certificate of Amendment contains provisions which would prohibit
the issuance of Common Stock upon conversion of the 5% Preferred Stock in excess
of the limit imposed by the NASD Rule and require the Company to redeem shares
of 5% Preferred Stock if such limit would otherwise be exceeded upon conversion;
however, under the terms of the Preferred Stock Agreement, the Company has
agreed to use its best efforts to hold a shareholders meeting to obtain any
shareholder approval required to allow the full issuance of Common Stock upon
conversion of the 5% Preferred Stock. The Special Meeting has been called to
fulfill this obligation.
DESCRIPTION OF PRIVATE PLACEMENT TRANSACTIONS
COMMON STOCK PLACEMENT. Pursuant to the terms of the several Stock
Purchase Agreements, each dated as of July 17, 1996 (collectively, the "Common
Stock Agreement"), the Company issued and sold in a private placement to certain
investment funds 600,000 shares of restricted Common Stock at an issue price of
$16.65 per share (the "Common Stock Purchase Price") resulting in aggregate
gross proceeds to the Company of $9,990,000 (the "Common Stock Placement"). The
last reported sales price of the Common Stock on the Nasdaq National Market on
July 17, 1996 was $16.75 per share.
Subject to certain exceptions, if, during the six-month period
following the closing of the Common Stock Placement, the Company sells any
shares of Common Stock (or any securities pursuant to which the Company may be
obligated to issue Common Stock) for an issue price lower than the Common Stock
Purchase Price, the purchase price per share of such Common Stock shall be
adjusted downward to equal such lower issue price. Any such adjustment would be
effected by issuing additional shares of Common Stock to the holders who
purchased in the Common Stock Placement unless the total number of shares of
Common Stock held by an investor who purchased shares in the Common Stock
Placement would exceed 4.99% of the outstanding stock of the Company, in which
case the adjustment would be paid in cash. If there is any capital adjustment
affecting the Common Stock of the Company, including, without limitation, a
stock split or reverse stock split, stock dividend, reclassification of the
Common Stock, recapitalization, merger or consolidation, the Common Stock
Purchase Price shall be adjusted as if such capital adjustment had occurred
immediately prior to July 23, 1996 (the closing date of the Common Stock
Placement). No adjustment will be required in the event of sales of shares of
Common Stock by the Company (i) upon the conversion or exercise of any
convertible securities, options or warrants outstanding on the date of the
Common Stock Agreement, (ii) pursuant to the provisions of shareholder approved
employee benefit or incentive plans (previously adopted or adopted in the
future), (iii) to an entity which is a strategic investor in the Company or an
investor which is in a related industry, as opposed to a financial investor,
(iv) to the owners of another entity acquired by the Company or (v) upon the
conversion of the 5% Preferred Stock or the issuance of 5% Preferred Stock upon
the exercise of warrants issued in connection with the Private Placement of the
5% Preferred Stock. As of the date of this Proxy Statement, no adjustment has
been made in the Common Stock Purchase Price and no event has occurred which
would require such adjustment. Whether or not any adjustment will be necessary
in the future will depend upon factors which cannot be predicted by the Company
at this time including, among others, the future market price of the Common
Stock.
Pursuant to the terms of the Common Stock Agreement, the Company
agreed to register for resale under the Securities Act (i) the shares of Common
Stock issued in connection with the Common Stock Placement (including any shares
issued upon any future adjustment of the Common Stock Purchase
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Price), (ii) the shares of Common Stock issuable upon exercise of certain
warrants issued in connection with the Common Stock Placement and (iii) any
shares of Common Stock or other securities of the Company or any successor
corporation issued as, or issuable upon the conversion or exercise of any
warrant, right or other security issued as, a dividend or other distribution
with respect to, or in exchange for or in replacement of, the shares of Common
Stock issued in the Common Stock Placement.
PREFERRED STOCK PLACEMENT. Pursuant to the terms of the several
Preferred Stock Investment Agreements, each dated as of August 29, 1996
(collectively, the "Preferred Stock Agreement"), the Company issued and sold in
a private placement to certain accredited investors for $25.00 per share an
aggregate of 4,200,000 restricted shares of a newly-established series of the
Company's Class B Preferred Stock, designated as 5% Convertible Preferred Stock,
resulting in gross aggregate proceeds to the Company of $105 million (the
"Preferred Stock Placement"). Prior to this issuance, the Company had not
issued any shares of preferred stock. The last reported sales price of the
Common Stock on the Nasdaq National Market on August 29, 1996 was $18.50 per
share. See "--Use of Proceeds."
Each share of 5% Preferred Stock is entitled to receive dividends,
payable quarterly, at the rate of 5% per annum in preference to any payment made
on any other shares of capital stock of the Company. Any dividend payable after
November 27, 1996 may be paid, at the option of the Company, either (i) in cash
or (ii) upon proper notice and subject to certain conditions, in additional
shares of 5% Preferred Stock (valued at $25 per share plus accrued but unpaid
dividends thereon), if the Common Stock issuable upon conversion of such shares
has been registered for resale under the Securities Act. Each share of 5%
Preferred Stock is also entitled to a liquidation preference of $25.00 per
share, plus any accrued but unpaid dividends (the "Liquidation Preference"), in
preference to any other class or series of capital stock of the Company. Except
as otherwise provided by applicable law, holders of shares of 5% Preferred Stock
generally have no voting rights.
At any time after the earlier of (i) the date at which a registration
statement registering the shares issuable upon the conversion of the 5%
Preferred Stock under the Securities Act is declared effective and shareholder
approval of Proposal I has been obtained, or (ii) the close of business on the
91st day (November 28, 1996) following the original issuance of the 5% Preferred
Stock, each share of 5% Preferred Stock shall be convertible, at the option of
the holder thereof, into shares of Common Stock. The number of shares of Common
Stock issuable upon conversion of the 5% Preferred Stock will equal the
Liquidation Preference of the shares being converted divided by the then-
effective Conversion Price applicable to the Common Stock. The Conversion
Price, as of any date, shall be 90% of the lowest trade price of the Common
Stock as reported by the Nasdaq National Market during a specified period of
trading days (the "Measurement Period") immediately preceding such date. For
the first 120 days following the original issuance of the 5% Preferred Stock,
the Measurement Period is 5 trading days. The Measurement Period increases by
one trading day for each 30 day period thereafter, up to a maximum of 13 trading
days. The Conversion Price may not be greater than 115% of the average of the
means between the closing bid and ask prices (as reported by the Nasdaq National
Market) for each trading day during the 90 day period following the date of the
original issuance of the 5% Preferred Stock (the "Conversion Cap"). The
Conversion Price is at all times also subject to customary adjustments for
events such as stock splits, stock dividends, consolidations and
reclassifications affecting the Common Stock.
The Company at its option may cause all outstanding shares of the 5%
Preferred Stock to be converted into Common Stock at any time beginning on
August 29, 1997 at a Conversion Price determined in accordance with the
provisions described above; however, the Company may not exercise its right of
conversion unless (i) the closing price of the Common Stock as reported by the
Nasdaq
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National Market (or such other principal market on which the Common Stock is
then traded) for the 20 consecutive trading days prior to the date the notice of
conversion is mailed has not on any day been less than 120% of the Conversion
Cap, and (ii) the shares issuable upon conversion of the 5% Preferred Stock are
registered for resale under the Securities Act under a registration statement
which became effective not later than November 27, 1996, and a current
prospectus is available for delivery on the date of conversion.
On August 29, 1998, all then outstanding shares of 5% Preferred Stock
will be automatically converted into Common Stock at the Conversion Price then
in effect.
Unless shareholder approval of Proposal I is obtained, the Company
will only be permitted to issue up to approximately 3,117,529 shares of Common
Stock upon conversion of the 5% Preferred Stock and the exercise of warrants
issued in connection with the Private Placements.
If further issuances of shares of Common Stock in connection with the
Private Placement Issuances would constitute a breach of the Company's
obligations under any applicable agreements with the NASD or the Nasdaq National
Market, or the rules of such organizations, then for so long as such limitation
shall continue to be applicable and any shares of 5% Preferred Stock are
submitted for conversion, the Company, subject to its obligation to make
"Special Redemptions" as described below, will be obliged to redeem any shares
of 5% Preferred Stock that are submitted for conversion at a price equal to the
greater of 111.11% of the Liquidation Preference of such shares or the current
value of the Common Stock to which holders of such shares would otherwise be
entitled to receive upon conversion. Each redemption of 5% Preferred Stock,
other than a "Special Redemption" as described below, must be made no later than
two business days following the surrender of certificates representing the
shares being converted. Any delay in the payment of the redemption amount will
cause the redemption amount to accrue interest at the rate of one-tenth of one
percent (0.1%) per day until paid.
If shareholder approval of Proposal I is not obtained by November 27,
1996, the Company will be required to redeem (a "Special Redemption") at a
"Special Redemption Price" equal to 111.11% of the Liquidation Preference of the
shares being redeemed, a number of shares of 5% Preferred Stock determined by
dividing $75,000,000 (plus any earnings accumulated thereon from August 29, 1996
until the date of redemption) by the Special Redemption Price. The Special
Redemption of 5% Preferred Stock must be completed on November 28, 1996. Any
delay in the payment of the redemption amount will cause the redemption amount
to accrue interest at the rate of one-tenth of one percent (0.1%) per day until
paid. Pursuant to the terms of the Preferred Stock Agreement, the Company has
deposited $75 million (the "Redemption Funds") in a special redemption account
(the "Redemption Account") with Merrill Lynch Trust Company, as redemption agent
(the "Redemption Agent"), under instructions requiring the Redemption Agent to
use the Redemption Funds to pay the Special Redemption Price if the Company's
shareholders have not approved by November 27, 1996 the issuance to the holders
of the 5% Preferred Stock of the full number of shares of Common Stock to which
such holders are entitled upon conversion. The Company has granted a security
interest in the Redemption Funds to the Preferred Stock Investors to secure its
obligation to pay the Special Redemption Price.
The Company has agreed to register the shares of Common Stock issuable
upon conversion of the 5% Preferred Stock (including shares of Common Stock
issuable upon the conversion of the shares of 5% Preferred Stock that are
issuable upon the exercise of certain warrants issued in connection with
Preferred Stock Placement and issuable as dividends, in lieu of cash, on the 5%
Preferred Stock) for resale under the Securities Act no later than November 27,
1996. Any delay in such registration will require that the Company pay to each
Preferred Stock Investor 3% of the total purchase price of the 5%
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<PAGE>
Preferred Stock (i) in cash or (ii) at the Company's option, in additional
shares of 5% Preferred Stock (valued at $25 per share plus any accrued but
unpaid dividends) for each 30-day period of the delay (pro rated for any shorter
period). In addition, any suspension of the effectiveness of the registration
statement during 1996 or 1997 will require that the Company pay a similar 3%
penalty to the Preferred Stock Investors who continue to hold 5% Preferred Stock
(or shares of Common Stock issued upon conversion of the 5% Preferred Stock) for
each 30 days of suspension (pro rated for any shorter period); provided,
however, that no such penalty will be imposed in 1997 (a) unless the aggregate
period of suspensions in such year exceeds 30 days and (b) for the initial 30
days of such suspension.
Each Preferred Stock Investor has agreed that following the conversion
of the 5% Preferred Stock into Common Stock, it will not on any trading day
offer or sell publicly on a net basis more than the following number of shares:
the greatest of (i) 20% of the average trading volume for the Common Stock for
the five consecutive trading days immediately preceding such date as reported by
the Nasdaq National Market, (ii) 20,000 shares, and (iii) 10% of the trading
volume for the Common Stock on such date.
The Company has agreed that except in a business combination, or under
existing employee stock incentive or purchase plans, the Company will not effect
any public sale or distribution of Common Stock or any securities exercisable
for or convertible into Common Stock during the 14 days prior to, and during the
90 days immediately following the effective date of the registration statement
filed pursuant to the Preferred Stock Agreement (the "Registration Statement");
provided, however, that the Company may effect such public sale or distribution
during the 90 days immediately following the effective date of the Registration
Statement if such sale or distribution of securities is at a price equal to or
greater than 120% of the Conversion Cap.
If the Company shall at any time or from time to time make or issue,
or fix a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of the
Company or any of its subsidiaries other than additional shares of Common Stock,
then, in each such event, the Certificate of Amendment requires that provisions
be made so that the holders of 5% Preferred Stock shall receive, upon the
conversion thereof, the securities of the Company which they would have received
had they been the owners on the date of such event of the number of shares of
Common Stock issuable to them upon conversion.
In case of any reorganization or any reclassification of the capital
stock of the Company or any consolidation or merger of the Company with or into
any other corporation or corporations or a sale of all or substantially all of
the assets of the Company to any other person, and the holders of 5% Preferred
Stock do not elect to treat such transaction as a liquidation, dissolution or
winding up (as it permitted under the terms of the Certificate of Amendment),
then, as part of such reorganization, consolidation, merger or sale, the
Certificate of Amendment requires that provision be made so that each share of
5% Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property (including cash) to which a holder of the
number of shares of Common Stock deliverable upon conversion of such share of 5%
Preferred Stock would have been entitled upon the record date of (or date of, if
no record date is fixed) such event and, in any case, appropriate adjustment (as
determined by the Board of Directors) shall be made in the application of the
provisions of the Certificate of Amendment with respect to the rights and
interests thereafter of the holders of the 5% Preferred Stock, to the end that
such provisions shall thereafter be applicable, as nearly as equivalent as is
practicable, in relation to any shares of stock or the securities or property
(including cash) thereafter deliverable upon the conversion of the shares of 5%
Preferred Stock.
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<PAGE>
PLACEMENT AGENT COMPENSATION. The placement agent for the Private
Placements described above was Cappello & Laffer Capital Corp. (the "Placement
Agent"). In consideration for placing such securities, the Placement Agent
received aggregate cash compensation of 5% of the gross proceeds received by the
Company and the reimbursement of certain expenses. Further, the Company also
issued to certain designees of the Placement Agent warrants to acquire an
aggregate of 15,000 shares of Common Stock for a purchase price of $16.65 per
share (the "Common Stock Warrants") which expire in July 1999 and warrants to
acquire 420,000 shares of 5% Preferred Stock for a purchase price of $25.00 per
share (the "Preferred Stock Warrants") which expire in August 1998. The number
of Common Stock Warrants and the per share purchase price shall be adjusted,
subject to certain exceptions, if, prior to January 23, 1997, the Company sells
any shares of Common Stock for an issue price lower than the Common Stock
Purchase Price. The Company is obliged to register the shares of Common Stock
issuable upon exercise of the Common Stock Warrants and upon conversion of the
shares of 5% Preferred Stock that are issuable upon exercise of the Preferred
Stock Warrants for resale under the Securities Act. The Placement Agent will
retain its compensation whether or not the shareholder approval sought hereby is
obtained.
CONSEQUENCES IF SHAREHOLDER APPROVAL NOT OBTAINED
If shareholder approval of Proposal I is not obtained, the Company
will be prohibited under the rules of the NASD and the terms of its listing
agreement with the Nasdaq Stock Market from issuing more than an aggregate of
approximately 3,117,529 shares of Common Stock upon conversion of the 5%
Preferred Stock (including any shares of 5% Preferred Stock issued pursuant to
the exercise of the Preferred Stock Warrants) and exercise of the Common Stock
Warrants. If shareholder approval of Proposal I is not obtained by November 27,
1996, the Company will be obliged to redeem shares of 5% Preferred Stock for
cash at the Special Redemption Price on November 28, 1996. The amount of cash
required to fund the Special Redemption will be approximately $75,000,000.
Although the Company has deposited $75,000,000 in the Redemption Account to
provide for this potential obligation, any payment required in connection with
the Special Redemption, and possibly any other required redemption of the 5%
Preferred Stock, would have a material adverse effect on the Company's ability
to execute its business plan. See "--Use of Proceeds."
EFFECTS OF CONVERSION OF 5% PREFERRED STOCK ON HOLDERS OF COMMON STOCK
The issuance of Common Stock upon the conversion of the 5% Preferred
Stock will have no effect on the rights or privileges of existing shareholders
except to the extent that the interest of each shareholder in the economic
results and voting rights of the Company are diluted pro rata based on the
number of shares owned by existing shareholders prior to any issuance. Further,
prior to conversion, the holders of the 5% Preferred Stock will be entitled to
receive dividends and distributions on a liquidation in preference to the claims
of the holders of the Common Stock. See "-- Preferred Stock Placement."
As noted above, the exact number of shares issuable upon conversion of
the 5% Preferred Stock cannot currently be determined but such issuances of
Common Stock will vary inversely with the market price of the Common Stock. The
current holders of Common Stock will be diluted by issuances of Common Stock
upon conversion of the 5% Preferred Stock and may be substantially diluted
depending on the future market price of the Common Stock. During the five
trading day period ended October 9, 1996, the lowest reported sales price of the
Common Stock on the Nasdaq National Market was $17.25 per share. If such market
price were used to determine the number of shares of Common Stock issuable as of
November 28, 1996 (assuming a Liquidation Preference of $25.21 per share), the
Company would issue a total of approximately 7,502,106 shares of Common Stock if
all such shares and all shares of 5%
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<PAGE>
Preferred Stock issuable upon exercise of the Preferred Stock Warrants were
converted at such date. To the extent that the lowest reported sales price of
the Common Stock is higher than $17.25 during any period used for measuring the
Conversion Price of the 5% Preferred Stock, the Company would issue fewer shares
of Common Stock (although the Conversion Cap would impose a minimum on the
number of shares issued upon conversion). Conversely, to the extent that the
lowest reported sales price of the Common Stock is lower than $17.25 during any
such period, the Company would issue more shares of Common Stock. The following
table demonstrates the effect of changes in the market price of the Common Stock
on the number of shares issuable upon conversion of the 5% Preferred Stock
(including shares of 5% Convertible Preferred Stock issuable upon conversion of
the Preferred Stock Warrants) assuming (i) that all shares of 5% Preferred Stock
are converted into Common Stock on November 28, 1996, (ii) a Liquidation
Preference of $25.21 per share and (iii) the Conversion Cap is $21.
<TABLE>
<CAPTION>
The number of shares issuable
If the lowest trade price of upon conversion of the 5 %
the Common Stock is: Preferred Stock will be:
------------------------- -----------------------------
<S> <C>
$ 5 25,882,266
$10 12,941,133
$15 8,627,422
$20 6,470,566
$25 5,546,200
</TABLE>
The information set forth above is not intended to constitute a prediction as to
the future market price of the Common Stock
BOARD OF DIRECTORS APPROVAL
In 1996, the Board of Directors of the Company determined that
additional capital would be required to carry out the Company's business plan.
As a result, in July and August 1996, the Board unanimously approved the Common
Stock Placement and the Preferred Stock Placement, respectively. Although other
financing options were pursued, the Board believed that effecting the Private
Placements was the best financing alternative then available. See "--Use of
Proceeds."
USE OF PROCEEDS
The Company estimates that the aggregate net proceeds received by it
from the issuance of shares of Common Stock and 5% Preferred Stock in the
Private Placements was approximately $108 million (after cash fees to the
Placement Agent and estimated transaction expenses). Assuming shareholder
approval of Proposal I is obtained, the Company intends to use such funds
primarily for potential acquisitions of new products; continued development of
existing pipeline products; repayment of debt incurred in connection with prior
product acquisitions and capital expenditures. As of the date of this Proxy
Statement, the Company has no agreement regarding any product acquisition and
there can be no assurance that any such opportunity will be identified or
realized. See "--Consequences if Shareholder Approval Not Obtained."
INTERESTS OF CERTAIN PERSONS
Prior to the Private Placement Issuances, none of the investors
therein was a director, executive officer or 5% shareholder of the Company or an
affiliate of any such person or entity.
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<PAGE>
CERTAIN VOTING AND MARKET STANDOFF AGREEMENTS
Five Directors of the Company have agreed to vote all shares of Common
Stock owned by them in favor of the Proposals, including Proposal I, and each of
such Directors has granted a proxy authorizing the Preferred Stock Investors to
vote such Director's shares in the event that the Director is not present at the
Special Meeting or has not previously submitted a written proxy approving the
Proposals. Such Directors collectively owned 1,694,336 shares of Common Stock
as of October 10, 1996, representing 8.8% of the Company's outstanding Common
Stock as of such date.
Yamanouchi, the parent company of Yamanouchi Group Holding, Inc. which
owned 5,048,500 shares of Common Stock as of October 10, 1996 (representing
26.3% of the Company's outstanding Common Stock as of such date), has indicated
in writing to the Company that all of such shares will be voted in favor of
Proposal I.
Dr. Robert A. Vukovich, Chairman, President and the holder of
1,637,571 shares of Common Stock of the Company, has agreed that he will not
sell any Common Stock until the shareholders of the Company approve Proposal I
and a registration covering the resale of the Common Stock issuable upon
conversion of the 5% Preferred Stock has become effective; provided, however,
that Dr. Vukovich may sell up to 300,000 shares of Common Stock to a private
purchaser in a private transaction. If the shareholders of the Company fail to
approve Proposal I, the restrictions on sales by Dr. Vukovich will terminate
when the Company has redeemed $75,000,000 of 5% Preferred Stock.
VOTE REQUIRED
Approval by the Company's shareholders of Proposal I requires the
affirmative vote of a majority of the votes cast at the Special Meeting by the
holders of Common Stock.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR PROPOSAL I.
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<PAGE>
PROPOSAL II
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
GENERAL
Pursuant to the terms of the Preferred Stock Agreement, Directors
representing a majority of the Company's Board of Directors agreed to use their
best efforts to cause a meeting of shareholders to be held as soon as possible
for the purpose of approving an increase in the number of authorized shares of
Common Stock to enable conversion into Common Stock of all of the 5% Preferred
stock. In September 1996, the Board approved an amendment of the Company's
Certificate of Incorporation which would increase the number of shares of Common
Stock which the Company is authorized to issue from 50,000,000 shares to
100,000,000 shares.
PURPOSES AND EFFECTS OF INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK
The proposed amendment of the Certificate of Incorporation would
increase the number of shares of Common Stock which the Company is authorized to
issue from 50,000,000 share to 100,000,000 shares. If Proposal II is approved
by the shareholders of the Company, the additional 50,000,000 shares of Common
Stock authorized would be part of the existing class of Common Stock and, if and
when issued, would have the same rights and privileges as the shares of Common
Stock currently issued and outstanding. The holders of Common Stock may be
granted preemptive rights to subscribe to or purchase any issuance of capital
stock only to the extent that, and on the terms and conditions upon which, the
Company's Board of Directors expressly grants such rights in a written agreement
between any such holder and the Company. Except for an agreement granting
preemptive rights to Yamanouchi under certain circumstances and the right of
investors in the Common Stock Placement to receive an adjustment of the purchase
price of their shares through the issuance of additional shares of Common Stock,
no such agreements are in effect. See "Agreement with Yamanouchi," "Description
of Private Placement Transactions - Common Stock Placement" and "Description of
Common Stock."
The Board believes that the proposed increase in the number of
authorized shares of Common Stock is advisable so that the Company will have
sufficient authorized capital to permit (i) future equity financings, (ii)
potential acquisitions of products and businesses for Common Stock and (iii)
potential issuances of shares of Common Stock upon conversion of the 5%
Preferred Stock and exercise of outstanding warrants and options to purchase
Common Stock. As of October 10, 1996, there were 19,207,402 shares of Common
Stock outstanding and 2,155,219 shares of Common Stock subject to outstanding
options and warrants. In addition, an additional 1,468,500 shares of Common
Stock were reserved for issuance under the Company's stock option and incentive
plans and Employee Stock Purchase Plan. The number of shares of Common Stock
issuable upon conversion of the 5% Preferred Stock varies inversely with the
market price of the Common Stock at the time of conversion and cannot be
determined at this time; however, if the trading price of the Common Stock were
to decline significantly during the period in which the 5% Preferred Stock is
outstanding, the Company will be required to issue a substantial portion of the
shares of Common Stock currently authorized and unissued upon conversion of the
5% Preferred Stock. The issuance of shares of Common Stock upon conversion of
the 5% Preferred Stock will reduce the number of shares available for other
corporate purposes. Although there are currently no arrangements in place with
respect to equity financings, product acquisitions or business acquisitions, the
Board believes that it is in the best interest of the Company to increase the
number of authorized shares of Common Stock to assure the availability of shares
for such purposes.
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<PAGE>
Approval of Proposal II by the shareholders of the Company will
increase the number of shares of Common Stock which the Company may issue
without further shareholder approval. The issuance of additional shares of
Common Stock could have the effect of delaying, deferring or preventing a change
in control of the Company and discouraging tender offers for the Company.
CERTAIN VOTING UNDERTAKINGS
Five Directors of the Company have agreed to vote all shares of Common
Stock owned by them in favor of the Proposals, including Proposal II, and each
of such Directors has granted a proxy authorizing the Preferred Stock Investors
to vote such Director's shares in the event that the Director is not present at
the Special Meeting or has not previously submitted a written proxy approving
the Proposals. As of October 10, 1996, such Directors collectively owned
1,694,336 shares of Common Stock, representing 8.8% of the Company's outstanding
Common Stock on such date.
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<PAGE>
VOTE REQUIRED
Approval by the Company's shareholders of Proposal II requires the
affirmative vote of a majority of the votes cast at the Special Meeting by the
holders of Common Stock.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR PROPOSAL II.
PRICE RANGE OF COMMON STOCK
The Common Stock is traded in the over-the-counter market on the
Nasdaq National Market under the symbol RPCX. The following table sets forth,
for the periods indicated, the high and low closing prices for the Common Stock,
as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
High Low
------- -------
<S> <C> <C>
1994
Quarter ended March 31, 1994 $40 $28 1/2
Quarter ended June 30, 1994 33 1/2 20 1/4
Quarter ended September 30, 1994 35 19 3/4
Quarter ended December 31, 1994 33 1/2 24 3/4
1995
Quarter ended March 31, 1995 46 1/2 24 3/4
Quarter ended June 30, 1995 28 15 1/2
Quarter ended September 30, 1995 26 1/2 17
Quarter ended December 31, 1995 23 3/4 15 3/4
1996
Quarter ended March 31, 1996 26 1/4 16 1/2
Quarter ended June 30, 1996 22 1/2 17 3/4
Quarter ended September 30, 1996 20 3/4 15 3/8
</TABLE>
On October 9, 1996, the last reported sale price of the Common
Stock on the Nasdaq National Market was $17.50.
-16-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company is authorized to issue 50,000,000 shares of Common Stock,
par value $.01 per share. Each share of Common Stock entitles the holder
thereof to one vote on all matters submitted to the shareholders. Since the
Common Stock does not have cumulative voting rights, holders of more than 50% of
the outstanding shares can elect all of the Directors and holders of the
remaining shares could not elect any Directors. The shares are not subject to
redemption and, except as described below, there are no preemptive rights. All
shares of Common Stock outstanding are fully paid and non-assessable. Holders of
Common Stock are entitled to receive dividends out of funds legally available
therefore when, as and if declared by the Board of Directors. The Company has
not paid any dividends on its Common Stock and the payment of cash dividends on
the Common Stock is unlikely for the foreseeable future. Upon any liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share pro rata in any distribution to the holders of Common Stock. In the
event of any such liquidation, dissolution or winding up of the Company, holders
of 5% Preferred Stock are entitled to receive an amount equal to the Liquidation
Preference prior and in preference to any distribution to the holders of Common
Stock.
A holder of any shares of capital stock of the Company may be granted
preemptive rights to subscribe to or purchase any issuance of capital stock of
the Company only to the extent that, and on the terms and conditions upon which,
the Company's Board of Directors expressly grants such rights in a written
agreement between such holder and the Company. Except for an agreement granting
preemptive rights to Yamanouchi under certain circumstances and an agreement
entitling investors in the Common Stock Placement to receive an adjustment of
the purchase price of their shares through the issuance of additional shares of
Common Stock, no such agreements are currently in effect. Yamanouchi did not
exercise its preemptive rights in connection with the Private Placement
Transactions. See "Agreements with Yamanouchi" and "Description of Private
Placement Transactions - Common Stock Placement."
As of October 10, 1996, there were 931 record holders of the
Company's Common Stock.
CLASS B PREFERRED STOCK
The Company's Amended and Restated Certificate of Incorporation
authorizes 10,000,000 shares of Class B Preferred Stock, par value $.10 per
share, and authorizes the Board of Directors to issue shares of Class B
Preferred Stock in one or more series with such dividend, liquidation,
conversion, redemption and other rights as the Board establishes at the time.
The Board has designated 5,500,000 shares of Class B Preferred Stock as "5%
Convertible Preferred Stock." As of October 10, 1996, there were 4,200,000
shares of 5% Preferred Stock outstanding. No other shares of Class B Preferred
Stock are outstanding. See "Description of Private Placements" for a
description of the material terms of the 5% Preferred Stock.
PROVISIONS AFFECTING ACQUISITION OF THE COMPANY
Article Five of the Company's Amended and Restated Certificate of
Incorporation provides that certain Business Combinations (as defined below)
involving the Company may be effected only if approved by the affirmative vote
of the holders of at least 66-2/3% of all votes cast by the holders of all of
the then outstanding shares of the Company's capital stock entitled to vote in
respect of such Business
-17-
<PAGE>
Combination, voting together without regard to class. In the absence of such a
provision, the vote required by New Jersey law to effect Business Combinations
is the affirmative vote of a majority of the votes cast by holders of the
outstanding voting stock of the Company.
In general, a "Business Combination" includes any merger or
consolidation of the Company with or into any other corporation, except where
shareholder approval is not required for such merger or consolidation under New
Jersey law; any merger or consolidation of any other corporation with or into
the Company, except where shareholder approval is not required for such merger
or consolidation under New Jersey law; the sale, lease, exchange, transfer or
other disposition of all or substantially all of the assets of the Company; the
acquisition, in exchange for shares, obligations or other securities of the
Company, of some or all of the shares of another corporation, or of some or all
of the assets of another entity if such acquisition requires shareholder
approval under New Jersey law; and the adoption of any plan or proposal for
liquidation or dissolution of the Company.
Article Five may inhibit and discourage attempts to acquire control of
the Company, without negotiation with management, through the acquisition of a
substantial number of shares of the Company followed by a forced merger. Such a
merger may or may not be in the best interest of the Company or its
shareholders.
Article Five creates a veto power in the minority over any Business
Combination. Companies with large numbers of shareholders frequently have
difficulty obtaining more than an ordinary majority vote even for a proposition
which is supported by management. Article Five makes it more difficult to
effect a Business Combination, even if the Business Combination is advantageous
and favored by the Board of Directors or a majority of the shareholders of the
Company, because of the higher voting standard it imposes. If a Business
Combination is opposed by a group controlling a substantial minority of the
Company's voting stock, that group might have effective veto power of the
Business Combination. By blocking a proposed Business Combination, management of
the Company could use Article Five to perpetuate its control of the Company. As
of October 10, 1996, Yamanouchi controlled the vote of approximately 26.3% of
the outstanding shares of Common Stock and Dr. Vukovich controlled approximately
8.5% of the Company's outstanding Common Stock. Accordingly, Article Five may
allow Yamanouchi and/or Dr. Vukovich to prevent a Business Combination not
favored by it and/or him, even though favored by a majority of the shareholders
of the Company and a majority of the Board of Directors.
Article Five will not prevent a tender offer for all or part of the
Company's capital stock but it may have an adverse impact on shareholders who
wish to participate in any such offer. In this connection, Article Five could
result in the denial or reduction to shareholders of potential premiums over
market usually afforded by tender offers. The higher voting standard contained
in Article Five does, however, provide some protection for shareholders who do
not wish to have their investment in the Company liquidated or shifted to an
organization controlled by management not originally of their choosing.
Management of the Company believes that over the long-term the Company's
shareholders will benefit from the provisions of Article Five because Article
Five will induce a prospective acquiror of the Company to negotiate with
management on an arms-length basis rather than under the volatile conditions
surrounding a hostile takeover.
In order to prevent circumvention of Article Five by further
amendment, alteration or repeal of the Company's Amended and Restated
Certificate of Incorporation, the Amended and Restated Certificate of
Incorporation requires 66-2/3% approval of any amendment, alteration or repeal
of Article Five.
-18-
<PAGE>
The Company's Amended and Restated Certificate of Incorporation
authorizes 10,000,000 shares of Class B Preferred Stock, par value $.10 per
share, and authorizes the Board of Directors to issue shares of Class B
Preferred Stock in one or more series with such dividend, liquidation,
conversion, redemption and other rights as the Board establishes at the time.
The Board of Directors has designated 5,500,000 shares of Class B Preferred
Stock as "5% Convertible Preferred Stock." As of October 10, 1996, 4,200,000
shares of 5% Preferred Stock were outstanding. Except for the outstanding
shares of 5% Preferred Stock, there are currently no shares of Class B Preferred
Stock outstanding.
The Board of Directors, without shareholder approval, can issue Class
B Preferred Stock with voting and conversion rights which could adversely affect
the voting power or other rights of holders of Common Stock. Class B Preferred
Stock could be issued in one or more series with such voting, conversion and
other rights as would discourage possible acquirors of the Company from making a
tender offer or other attempt to gain control of the Company, even if such
transaction were generally favorable to the Company's shareholders. In the
event of a proposed merger, tender offer or other attempt to gain control of the
Company which the Board does not approve, it might be possible for the Board to
authorize the issuance of a series of Class B Preferred Stock with rights and
preferences which could impede the completion of such a transaction. The Board
could authorize holders of the Class B Preferred Stock to vote, either
separately as a class or with the holders of Common Stock, on any merger, sale
or exchange of assets by the Company or other extraordinary corporate
transaction. Class B Preferred Stock could be privately placed with purchasers
who might ally themselves with the Board in opposing a hostile takeover bid.
Accordingly, a possible effect of the authorization of the Class B Preferred
Stock may be to discourage possible acquirors from making a tender offer or
other attempt to gain control of the Company with a view to imposing a merger or
sale of all or any part of the Company's assets, even though a majority of
shareholders may deem such acquisition attempts to be desirable. In connection
with the foregoing, it is also noted that certain companies have recently
distributed preferred stock or warrants to acquire preferred or common stock to
the holders of their common stock in an effort to discourage or defeat certain
hostile tender offers. To the extent that it impedes any such takeover
attempts, the Class B Preferred Stock may serve to perpetuate management.
Pursuant to the terms of the Certificate of Amendment which
established the 5% Preferred Stock and the rights thereof, the holders of the 5%
Preferred Stock may, by majority vote, elect to treat a merger or consolidation
of the Company with or into any other corporation, or a dissolution or winding
up of the Company, and receive their Liquidation Preference if the shares of
stock of the Company outstanding immediately prior to such transaction represent
less than a majority of the voting power of the surviving corporation or the
acquiror of the Company's assets. If such election is not made, then the
holders of 5% Preferred Stock are entitled to have provision made so that such
shares are convertible into the number of shares of stock or other securities or
property, including cash, which a holder of the number of shares of Common stock
deliverable upon conversion of such shares of 5% Preferred Stock on the record
date of such event would have been entitled to receive. The Board of Directors
shall make appropriate adjustments to the rights and interests of the holders of
5% Preferred Stock so that the rights, preferences and privileges with respect
to the 5% Preferred Stock shall continue to apply as nearly as equivalent as is
practicable following any such transaction. These rights of the holders of 5%
Preferred stock may discourage possible acquirors of the Company from
undertaking a Business Combination with respect to the Company.
The Company's by-laws provide that special meetings of its
shareholders, unless otherwise prescribed by statute or by the Company's
Certificate of Incorporation, may be called by the Chairman of the Board or
President of the Company, and shall be called by the President or Secretary of
the Company at the request in writing of majority of the Board of Directors.
The New Jersey Business Corporation
-19-
<PAGE>
Act provides, among other things, that upon the application of the holder or
holders of not less than 10% of all of the shares entitled to vote at a meeting,
the Superior Court of New Jersey, in an action in which the court may proceed in
a summary manner, for good cause shown, may order a special meeting of the
shareholders to be called at such time and place and for the purpose designated
in such order. These provisions could make it more difficult for shareholders
of the Company to take action opposed by the Board of Directors.
SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the Company's next annual
meeting of shareholders must be received by the Company at its principal
executive offices for inclusion in its proxy statement and form of proxy
relating to that meeting no later than December 30, 1996. The Company's By-laws
contain certain procedures which must be followed in connection with shareholder
proposals.
ALL SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND SEND IN THEIR PROXIES
WITHOUT DELAY TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, 2 BROADWAY, 19TH
FLOOR, N.Y., N.Y. 10004. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL
BE APPRECIATED.
ANTHONY A. RASCIO
Vice President and
Secretary
October 11, 1996
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ROBERTS PHARMACEUTICAL CORPORATION
SPECIAL MEETING OF SHAREHOLDERS - NOVEMBER 6, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates and appoints Robert A. Vukovich,
Ph.D., Anthony A. Rascio, Esq. and Peter M. Rogalin and each of them, the true
and lawful attorneys, agents and proxies of the undersigned, with full power and
substitution, to vote with respect to all of the shares of Common Stock of
ROBERTS PHARMACEUTICAL CORPORATION (the "Company") standing in the name of the
undersigned at the close of business on October 10, 1996, at the special meeting
of the shareholders to be held at the Company's headquarters, Meridan Center II,
4 Industrial Way West, Eatontown, New Jersey 07724, on November 6, 1996 at
10:00 a.m., and at any and all adjournment or adjournments thereof, with all
powers that the undersigned would possess if personally present and especially
(but without limiting the general authorization and power hereby given) to vote
as indicated on the reverse side of the Proxy.
1. To approve the issuance to the holders of the Company's 5% Convertible
Preferred Stock of the full number of shares of Common Stock to which such
holders are entitled upon conversion of the 5% Convertible Preferred Stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve an amendment to the Company's Amended and Restated Certificate of
Incorporation which would increase the authorized shares of the Company's Common
Stock from 50,000,000 shares to 100,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion upon such other matters as may properly come before the
meeting or any adjournment or adjournments thereof.
<PAGE>
The shares represented by this Proxy will be voted in the manner
directed, and if no instructions to the contrary are indicated, will be voted
FOR the proposal to approve the issuance of the full number of shares of Common
Stock upon conversion of the 5% Preferred Stock as indicted on the reverse side
of this Proxy and FOR the proposal to approve the amendment to the Company's
Amended and Restated Certificate of Incorporation as indicated on the reverse
side of this Proxy.
NOTE: Please mark, sign, date and return promptly
in the envelope provided. No postage is
required if mailed in the United States.
DATE: ____________________________, 1996
__________________________________
(Signature)
__________________________________
(Signature)
Please sign exactly as your name appears. When
signing as attorney, executor, administrator,
trustee or guardian, please set forth you full
title. If signer is a corporation, please sign the
full corporate name by a duly authorized officer.
Joint owners should each sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
