<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 1996
REGISTRATION NO. 333-13729
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
ROBERTS PHARMACEUTICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
_______________
NEW JERSEY 22-2429994
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
MERIDIAN CENTER II
4 INDUSTRIAL WAY WEST
EATONTOWN, NEW JERSEY 07724
(908) 389-1182
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT A. VUKOVICH, PH.D.
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ROBERTS PHARMACEUTICAL CORPORATION
MERIDIAN CENTER II
4 INDUSTRIAL WAY WEST
EATONTOWN, NEW JERSEY 07724
(908) 389-1182
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
_______________
COPIES TO:
JOHN A. AIELLO, ESQ.
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
125 HALF MILE ROAD
MIDDLETOWN, NEW JERSEY 07748
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant
to Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class of Proposed maximum Proposed maximum Amount of
securities to be Amount to be offering price per aggregate offering registration fee
registered registered (1)(2) share (3) price (3)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 10,024,540 $17.75 $177,935,585 $61,353(4)
$.01 par value
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Common Stock,
$.01 par value 4,704,770 $14.0625 $66,160,828 $22,815
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the registration for resale of the following: (i) 600,000 shares of
Common Stock (subject to adjustment) issued in a private placement in July 1996,
(ii) all shares of Common Stock issuable upon conversion of 4,200,000 shares of
the Registrant's 5% Convertible Preferred Stock issued in a private placement in
August 1996, (iii) all shares of Common Stock issuable upon conversion of
419,229 shares of the Registrant's 5% Convertible Preferred Stock issuable, in
lieu of cash, as dividends in respect of the shares of 5% Convertible Preferred
Stock issued in the August private placement, (iv) 15,000 shares of Common Stock
(subject to adjustment) issuable upon the exercise of warrants issued in
connection with the July private placement, and (v) all shares of Common Stock
issuable upon conversion of 420,000 shares of the Registrant's 5% Convertible
Preferred Stock issuable upon the exercise of warrants issued in connection with
the August private placement, and all shares of Common Stock issuable upon
conversion of 41,923 shares of the Registrant's 5% Convertible Preferred Stock
issuable, in lieu of cash, as dividends in respect of such shares of 5%
Convertible Preferred Stock issuable upon the exercise of such warrants.
Estimated solely for the purpose of calculating the registration fee in
connection with this Registration Statement. Assumes that all shares of the
Registrant's 5% Convertible Preferred Stock are converted into shares of Common
Stock based on a conversion price of $9.00, which equals 90% of an assumed
market price of $10 per share of Common Stock
(2) In the event of a stock split, stock dividend or similar transaction
involving the Common Stock of the Registrant, in order to prevent dilution, the
number of
<PAGE>
shares of Common Stock registered hereby shall be automatically increased to
cover the additional shares of Common Stock in accordance with Rule 416 under
the Securities Act of 1933.
(3) Estimated in accordance with Rule 457(c) under the Securities Act of 1933,
solely for purposes of calculating the registration fee and based upon an amount
which is equal to the average of the high and low sale prices for a share of the
Registrant's Common Stock as reported on the Nasdaq National Market on (a)
October 3, 1996 with respect to 10,024,540 shares of Common Stock and (b)
November 1, 1996 with respect to 4,704,770 shares of Common Stock.
_______________
(4) Previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
________________________________________________________________
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED NOVEMBER __, 1996
14,729,310 SHARES*
ROBERTS PHARMACEUTICAL CORPORATION
COMMON STOCK
_______________
All of the shares of Roberts Pharmaceutical Corporation Common Stock, $.01
par value per share ("Common Stock"), offered hereby are being offered by
certain shareholders and warrantholders (the "Selling Shareholders") of Roberts
Pharmaceutical Corporation (the "Company"). The Company will not receive any
proceeds from the sale of shares of Common Stock by the Selling Shareholders.
See "Use of Proceeds." All expenses of this offering will be paid for by the
Company except for commissions, fees and discounts of any underwriters, brokers,
dealers or agents retained by the Selling Shareholders. The Company has agreed
to indemnify the Selling Shareholders against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
See "Plan of Distribution." The Common Stock of the Company is traded on the
Nasdaq National Market under the symbol "RPCX." On November 1, 1996, the last
reported sale price of the Company's Common Stock, as reported on the Nasdaq
National Market, was $14-1/16 per share.
* The shares of Common Stock offered hereby for resale are: (i) 600,000 shares
of Common Stock (subject to adjustment) issued in a private placement in July
1996, (ii) all such currently indeterminate number of shares of Common Stock
issuable upon conversion of 4,200,000 shares of the Company's 5% Convertible
Preferred Stock, $.10 par value per share (the "Convertible Preferred Stock"),
issued in a private placement in August 1996, (iii) all such currently
indeterminable number of shares of Common Stock issuable upon conversion of
419,229 shares of Preferred Stock issuable, in lieu of cash, as dividends in
respect of the shares of Convertible
<PAGE>
Preferred Stock issued in the August private placement, (iv) 15,000 shares of
Common Stock (subject to adjustment) issuable upon the exercise of warrants
issued in connection with the July private placement (the "Common Stock
Warrants"), and (v) all such currently indeterminable number of shares of Common
Stock issuable upon conversion of 420,000 shares of Convertible Preferred Stock
issuable upon the exercise of warrants issued in connection with the August
private placement (the "Convertible Preferred Stock Warrants"), and all such
currently indeterminable number of shares of Common Stock issuable upon
conversion of 41,923 shares of Convertible Preferred Stock issuable, in lieu of
cash, as dividends in respect of such shares of Convertible Preferred Stock
issuable upon the exercise of the Convertible Preferred Stock Warrants. The
number of shares of Common Stock issuable in connection with such transactions
and offered for resale hereby is an estimate based upon a "Conversion Price"
(which is equal to 90% of the lowest reported trade price of the Common Stock
during a specified period of trading days) of $9.00, which is subject to
adjustment, and could be materially less or more than such estimated amount
depending upon factors which cannot be predicted by the Company at this time,
including, without limitation, the future market price of the Common Stock. In
addition, the estimated number of shares offered for resale hereby is based on
the assumptions as to dates of conversion of the Convertible Preferred Stock,
dividend payments and dates of exercise of Convertible Preferred Stock Warrants
which are set forth under the caption "Risk Factors--Effects of Conversion of
Convertible Preferred Stock and Additional Issuances of Common Stock." If a
Conversion Price of $9.00 per share of Common Stock (which assumes that a market
price of $10 per share of Common Stock is used to determine the Conversion
Price) were to be used to determine the number of shares of Common Stock
issuable as of August 29, 1998 (the date on which all outstanding shares of
Convertible Preferred Stock automatically convert into Common Stock), the
Company would be obligated to issue a total of approximately 14,114,310 shares
of Common Stock if all 5,081,152 shares of Convertible Preferred Stock
outstanding or issuable upon the exercise of Convertible Preferred Stock
Warrants or as dividends on the Convertible Preferred Stock were converted on
the basis of such Conversion Price. The last sale price of the Common Stock on
November 1, 1996 as reported by the Nasdaq National Market was $14-1/16 per
share. If such price were used to determine the Conversion Price, the Company
would be obligated to issue 10,036,843 shares of Common Stock upon conversion of
the Convertible Preferred Stock (based on the other assumptions described and
referred to above). There can be no assurance that the market prices set forth
above are indicative of future market prices of the Common Stock at such times
when shares of Convertible Preferred Stock are converted into shares of Common
Stock. See "Risk Factors--Effect of Conversion of Convertible Preferred Stock"
and "Description of Securities--Class B Preferred Stock; Description of
Convertible Preferred Stock."
SEE "RISK FACTORS," BEGINNING ON PAGE 5 OF THIS PROSPECTUS, FOR CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON
STOCK.
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
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ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER __, 1996.
No person is authorized in connection with any offering made hereby to
give any information or to make any representation not contained or incorporated
by reference in this Prospectus and any information or representation not
contained or incorporated by reference herein must not be relied upon as having
been authorized by the Company or by any Selling Shareholder. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy by any
person in any jurisdiction in which it is unlawful for such person to make such
an offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall under any circumstance at any time imply that the
information herein is correct as of any date subsequent to the date hereof.
_______________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page
---- ----
<S> <C> <C> <C>
Available Information... 2 Use of Proceeds........... 23
Incorporation of Certain Selling Shareholders...... 24
Documents by Reference.. 4 Plan of Distribution...... 26
Risk Factors............ 5 Description of Securities. 27
The Company............. 16 Legal Matters............. 38
Recent Developments..... 18 Experts................... 39
</TABLE>
___________________
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy and information statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's regional offices located at Seven World Trade Center,
Suite 1300, New York, New York 10048, and at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can
be obtained at prescribed rates from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
In addition, the Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding the Company. The
address of such site is http://www.sec.gov.
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<PAGE>
The Company has filed with the Commission a registration statement
(the "Registration Statement") with respect to the Common Stock offered hereby.
This Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information contained in the Registration Statement and the
exhibits thereto. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement,
including the exhibits thereto. Statements contained herein concerning the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission are not necessarily complete, and in each
instance reference is made to the copy of such document so filed. Each such
statement is qualified in its entirety by such reference.
Certain information included in this Prospectus and other Company
filings (collectively, "SEC Filings") under the Securities Act and the Exchange
Act (as well as information communicated orally or in writing between the dates
of such SEC Filings) contains or may contain forward looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act, including statements concerning the Company's business strategy,
operations, proposed divestitures, economic performance, financial condition and
liquidity and capital resources. Such statements are subject to certain risks,
trends and uncertainties that could cause actual results to differ materially
from expected results. Among these risks, trends and uncertainties are the
effect of governmental regulation on the Company, the availability of working
capital, the cost of personnel and materials, the competitive and constantly
changing healthcare environment in which the Company competes and other risks
described in the Prospectus under the caption "Risk Factors." As a result, the
Company's actual results may differ materially from the results discussed in
such forward looking statements. The forward looking statements are made as of
the date of this Prospectus and the Company assumes no obligation to update the
forward looking statements or to update the reasons actual results could differ
from those projected in such forward looking statements.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are hereby incorporated by reference in this Prospectus: (i) the
Company's Annual Report on Form 10-K for the year ended December 31, 1995; (ii)
the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996 and June 30, 1996; and (iii) the Company's Current Reports on Form 8-K,
dated March 20, 1996 (two separate reports as of such date), March 26, 1996, May
17, 1996, May 31, 1996, June 10, 1996, July 17, 1996, July 18, 1996, July 22,
1996, July 24, 1996, August 14, 1996, September 9, 1996, October 3, 1996,
October 7, 1996 and October 15, 1996. All documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of the offering
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein, or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus. Copies of the documents incorporated
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herein by reference (excluding exhibits unless such exhibits are specifically
incorporated by reference into such documents) may be obtained upon written or
oral request without charge by persons, including beneficial owners, to whom
this Prospectus is delivered. Requests should be made to Roberts Pharmaceutical
Corporation, Attention: Investor Relations Department, Meridian Center II, 4
Industrial Way West, Eatontown, New Jersey 07724, telephone number (908) 389-
1182, telefax number (908) 389-1014.
RISK FACTORS
In addition to the other information provided in this Prospectus, the
following factors should be considered carefully in evaluating the Company and
its business before purchasing shares of Common Stock offered by this
Prospectus.
RISKS OF NEW PRODUCT DEVELOPMENT; GOVERNMENT REGULATION
The investigation, manufacture and sale of pharmaceutical products is
subject to regulation, principally by the U.S. Food and Drug Administration
("FDA") and foreign equivalents. The process of obtaining FDA approval is
costly and time-consuming, and there can be no assurance that any product that
the Company is developing or may develop will be approved by the FDA. Products
developed by the Company can be marketed commercially for specified therapeutic
indications only when and where they have been approved by the applicable
regulatory authorities. Of the pharmaceutical products under development by the
Company, only PROAMATINE/TM/ has been approved by the FDA. Although the Company
believes that its other products under development are promising, there can be
no assurance that these products will prove to be efficacious or that toxic side
effects will not occur. Furthermore, any of these products which are developed
will be subject to requisite regulatory approval prior to their commercial sale,
which approval may take several years and might not ever be obtained.
Generally, only a small percentage of products under development are approved
for sale. In addition, the Company is required, under FDA regulations, to
conduct further studies to confirm the clinical benefits and safety of
PROAMATINE. If these studies do not provide verification of the clinical
benefits and safety of the drug, the Company will be required to file an
accelerated approval withdrawal of such drug in accordance with FDA regulations
and to cease selling such drug. No assurance can be given that the Company will
succeed in the development and marketing of any of its products under
development.
United States Federal and state governments continue to seek means to
reduce costs of Medicare and Medicaid programs, including placement of
restrictions on reimbursement for, or access to, certain drug products. Major
changes were made in the Medicaid program under the Omnibus Budget
Reconciliation Act of 1990. As a result, the Company entered into a Medicaid
Rebate Agreement ("Rebate Agreement") with the United States Government, under
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Section 4401 of such Act. Pursuant to the Rebate Agreement, in order for
federal reimbursement to be available for prescription drugs under state
Medicaid plans, the Company must pay certain statutorily prescribed rebates on
Medicaid purchases. Effective July 1, 1991, the law also denies federal
Medicaid reimbursement for drug products of the original holder of the New Drug
Application for such drug if a less expensive generic version of such drug is
available from another manufacturer, unless the prescriber indicates on the
prescription that the branded product is medically necessary.
In most other markets, governments exert controls over pharmaceutical
prices either directly or by controlling admission to, or levels for,
reimbursement by government health programs. The nature of such controls and
their effect on the pharmaceutical industry vary greatly from country to
country. Such controls generally have an adverse effect on revenue levels of
pharmaceutical companies such as the Company.
PATENTS, PROPRIETARY RIGHTS AND LICENSES
The Company owns, or is a licensee under, or has filed applications
for, United States and foreign patents covering certain of its marketed products
and for certain of its late-stage products under development. There can be no
assurance that such patents are enforceable, will be approved, or will provide
the Company with meaningful protection from competition or that the Company will
possess the financial resources necessary to enforce any patent rights licensed
to the Company. Others may be engaged in research which may lead to patents
similar to those owned by the Company or under which the Company is a licensee.
Accordingly, infringement claims may be asserted against the Company or its
licensors which, if upheld, may require the Company to cease developing or
marketing a product or to acquire licenses from others. There can be no
assurance that such licenses, if required, will be available or can be obtained
on terms satisfactory to the Company. In addition, the proprietary nature of
PROAMATINE, and three (3) of the Company's late-stage products under development
are dependent, in whole or in part, upon certain U.S. regulations. PROAMATINE,
for idiopathic orthostatic hypotension, has been designated by the FDA as an
"orphan drug" under the Orphan Drug Act of 1983 (the "Orphan Drug Act"). This
entitles the Company to a seven year period of market exclusivity in the United
States from the date of FDA approval of the drug, when and if obtained.
PROAMATINE was approved by the FDA on September 6, 1996. Each of SOMAGARD (R),
for central precocious puberty, and AGRELIN(R), for thrombocythemia, has been
designated by the FDA as being eligible for orphan drug status. In addition, the
Company believes that its late-stage product DIRAME(R) contains a new active
ingredient which may entitle the product, under the Drug Price Competition and
Patent Term Restoration Act of 1984 (commonly referred to as the "Waxman-Hatch
Act"), to five years of market exclusivity from the date of FDA approval of the
drug, if obtained. No assurance can be
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given that (i) SOMAGARD and AGRELIN will be designated as orphan drugs in the
event that FDA approval of such drugs are obtained, (ii) DIRAME will be entitled
to market exclusivity under the Waxman-Hatch Act or (iii) that other parties
will not challenge the Company's rights to exclusivity under the Orphan Drug Act
or the Waxman-Hatch Act.
DEPENDENCE UPON THIRD PARTIES FOR MANUFACTURING AND RAW MATERIALS
Currently, the Company does not manufacture its products. The
products sold by the Company are manufactured for the Company by contractors
which, in the case of certain products which generate substantial revenues for
the Company, are large pharmaceutical manufacturers. In most instances where
the Company has acquired the rights to approved products from other
pharmaceutical companies, the seller or licensor has agreed to manufacture the
Company's requirements of the products generally for periods of 2 to 5 years.
Although the Company reached an agreement in principle in 1996 to acquire a
fully-equipped manufacturing facility in Canada (which, if acquired, will be
utilized to manufacture the Company's products), no assurance can be given that
such acquisition will be consummated. In addition, there can be no assurance
that the Company will be able to renew its existing arrangements for the
manufacture of its products or enter into similar arrangements in connection
with the acquisition of additional pharmaceutical products. Further, there can
be no assurance that manufacturers engaged by the Company will meet the
Company's requirements for quality, quantity, or timeliness, or that the Company
would be able to find or obtain FDA approval of substitute manufacturers, if
necessary.
The principal raw materials used in the Company's business are active
drug ingredients and inactive pharmaceutical chemicals. These types of raw
materials are generally available from a limited number of foreign and U.S.
sources. In certain instances, the Company is required to purchase active drug
ingredients from the licensor of the product. Because the FDA approval process
requires manufacturers to specify their proposed raw material suppliers in their
drug approval applications, the approval process could be delayed in the event
raw materials from a specific supplier were to become unavailable. Development
and approval of its drugs are, therefore, dependent upon the ability of the
Company and its contractors to procure active ingredients and raw materials from
FDA-approved sources. Arrangements with foreign raw materials suppliers are
subject to the usual risks of doing business abroad, including the availability
of FDA, customs and other governmental clearances, the imposition of import
duties, political and social instability, possible currency fluctuations and
restrictions on the transfer of funds.
PRODUCT LIABILITY
The Company may, in the ordinary course of business, be subject to
substantial claims by, and liability to, persons alleging injury as a result of
taking drugs under development or being sold by the Company. With respect to
marketed pharmaceutical products, such liability may result from claims made
directly by consumers or by pharmaceutical companies or others selling such
products. The Company attempts to reduce its risk with respect to
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marketed pharmaceutical products and products under development by obtaining
indemnity undertakings with respect to such claims from licensors, licensees and
distributors of its products and by carrying product liability insurance of $5
million per occurrence and in the aggregate. In connection with the Company's
Contract Clinical Research operations (which it plans to divest as described
herein under the caption "Recent Developments--Divestiture of Non-Core
Businesses"), the Company attempts to reduce its risk with respect to drugs
tested by the Company by obtaining indemnity undertakings from the
pharmaceutical companies that have engaged the Company to conduct clinical
research on their products under development. In addition, the Company carries
medical malpractice insurance of $1 million per occurrence and $3 million in the
aggregate for its clinical staff. The Company recognizes that it cannot be
fully protected from potential liability in these areas by insurance obtainable
at reasonable cost. There can be no assurance that the Company's existing
medical malpractice and product liability insurance can be renewed or renewed at
rates comparable to those now being paid by the Company. If the Company is held
liable for a claim against the Company for which it is not indemnified or for
damages exceeding the limits of its insurance coverage, there could be a
material adverse effect on the Company.
DEPENDENCE UPON KEY PERSONNEL
The Company is currently dependent upon the ability and experience of
its executive officers, including, without limitation, Dr. Robert A. Vukovich,
the Company's Chairman of the Board, President and Chief Executive Officer and
beneficial owner, as of November 1, 1996, of 1,939,161 shares (10.1%) of the
Company's Common Stock, and other key officers and employees. There can be no
assurance that the Company will be able to retain all of such officers and
employees. If for any reason such key personnel do not remain active in the
Company's management, the Company's operations could be adversely affected. The
Company maintains a $2,000,000 key man life insurance policy on the life of Dr.
Vukovich. Because of the nature of its business, the Company will be dependent
upon its ability to attract and retain additional qualified scientific and
marketing and sales personnel. There is significant competition for such
qualified personnel, and there is no assurance that the Company will be
successful in recruiting and retaining such personnel.
COMPETITION
Many companies, including large pharmaceutical, chemical and
biotechnology firms with financial and marketing resources and research and
development staffs and facilities substantially greater than those of the
Company, are engaged in researching, developing, marketing and selling products
intended to treat the same conditions and diseases as the products currently
sold and under development by the Company. Further, other products now in
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use or under development by others may perform by other means or more
effectively the same functions as the Company's products. The pharmaceutical
industry is characterized by rapid technological advances, and competitors may
develop products more rapidly than the Company. In addition, competitors may be
able to complete the regulatory approval process sooner, and therefore market
their products earlier, than the Company can market certain of its products.
CLASS ACTION LAWSUIT
A shareholders' class action lawsuit was filed on April 10, 1995
against the Company and certain of its officers and a former officer on behalf
of all persons who purchased shares of Common Stock between November 7, 1994 and
March 22, 1995 (which period was subsequently extended to May 31, 1995). The
plaintiffs contend that the Company violated federal securities laws, including
Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated
thereunder, with respect to press releases, filings with the Commission and
certain public statements allegedly made about the Company's business. The
plaintiffs seek to recover damages in an unspecified amount. Although management
believes that the Company has complied with all of its obligations under the
federal securities laws and is vigorously defending against the allegations
contained in the lawsuit, the Company is not able to predict the outcome of this
proceeding at this time, and management is not able to determine the amount of
the potential liability, if any. No assurance can be given that this action will
not have a material adverse effect on the Company.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has historically been
highly volatile. Future announcements concerning the Company or its
competitors, including the results of business operations, the results of
testing, technological innovations or new commercial products, government
regulations, developments concerning proprietary rights, litigation or public
concern as to safety of the Company's products, may have a significant impact on
the market price of the Company's Common Stock.
POSSIBLE ISSUANCE OF PREFERRED STOCK WITHOUT SHAREHOLDER APPROVAL
Shares of the Company's Class B Preferred Stock, $.10 par value per
share (the "Class B Preferred Stock"), may be issued by the Board of Directors
of the Company (the "Board"), without shareholder approval except as required
pursuant to any applicable agreement with or the rules of any exchange or market
on which the Company's securities are traded, in one or more series with such
designations, rights and preferences as may be determined from time-to-time by
the Company's Board of Directors. The Convertible Preferred Stock is a series
of the Class B Preferred Stock. The rights of the holders of Common Stock will
be subject to, and may
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be adversely affected by, the rights of the holders of the Convertible Preferred
Stock and any other shares of Class B Preferred Stock that may be issued in the
future. Further, in the event of issuance, the Class B Preferred Stock could be
used, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company. The Company has no current
intention to issue any additional shares of Convertible Preferred Stock, except
upon exercise of the Convertible Preferred Stock Warrants and as dividends in
respect of the Convertible Preferred Stock, or any other shares of Class B
Preferred Stock; however, there can be no assurance that the Company will not do
so in the future. See "Description of Securities--Class B Preferred Stock."
EFFECTS OF CONVERSION OF CONVERTIBLE PREFERRED STOCK AND ADDITIONAL ISSUANCES OF
COMMON STOCK
In August 1996, the Company sold 4,200,000 shares of Convertible
Preferred Stock to accredited investors in a private placement. See "Recent
Developments--Private Placements." The exact number of shares of Common Stock
issuable upon conversion of the Convertible Preferred Stock depends on the
Conversion Price in effect at the time of conversion. As more particularly
described under the section of this Prospectus captioned "Description of
Securities--Class B Preferred Stock; Description of Convertible Preferred
Stock," 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 number of shares of Common Stock issuable upon conversion of
the Convertible Preferred Stock will vary inversely with the market price of the
Common Stock. Holders of Common Stock will be diluted by issuances of Common
Stock upon conversion of the Convertible Preferred Stock and may be
substantially diluted depending on the market price of the Common Stock.
On November 1, 1996, the closing sales price of the Common Stock on
the Nasdaq National Market was $14-1/16 per share, which represented at such
date the lowest reported closing price of the Common Stock on the Nasdaq
National Market since January 1, 1994. Assuming (i) such market price were to be
used to calculate the Conversion Price used to determine the number of shares of
Common Stock issuable upon the conversion of the shares of Convertible Preferred
Stock outstanding, as well as upon the conversion of the shares of Convertible
Preferred Stock issuable upon the exercise of the Convertible Preferred Stock
Warrants and issuable, in lieu of cash, as dividends in respect of the
Convertible Preferred Stock payable on the dates set forth in clause (iii)
below, (ii) all shares of Convertible Preferred Stock issued or issuable as
described in clause (i) above were to be held until automatically converted into
shares of Common Stock on August 29, 1998, (iii) all dividends payable on the
Convertible Preferred Stock on each of the quarterly dividend payment dates
subsequent to November 27, 1996 were to be paid in shares of Convertible
Preferred Stock valued at $25 per share, (iv) each of the Convertible Preferred
Stock Warrants was exercised as of the date issued, and (v) the
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"Liquidation Preference" (as such term is defined under the section of this
Prospectus captioned "Description of Securities--Description of Convertible
Preferred Stock--Liquidation Preference") used to determine the number of shares
of Common Stock issuable upon conversion of the shares of Convertible Preferred
Stock was $25 per share, the Company would issue a total of approximately
10,036,843 shares of Common Stock. If the market price of the Common Stock used
to determine the Conversion Price were lower or higher than $14-1/16 per share
or if some or all of the shares of Convertible Preferred Stock were converted
into shares of Common Stock before August 29, 1998, or if some or all of the
Convertible Preferred Stock Warrants were not exercised by the holder thereof,
or if part or all of the dividends due in respect of the Convertible Preferred
Stock were paid in cash, or if the amount of the Liquidation Preference was to
include accrued but unpaid dividends and thus be greater than $25 per share, the
Company would issue more or less shares of Common Stock than reflected in the
estimate included herein, and such difference could be material.
In addition, with respect to the private placement of 600,000 shares
of Common Stock completed in July 1996, if the Company were to sell any shares
of Common Stock for an effective issue price lower than $16.65 per share (the
original issue price of such shares of Common Stock in the private placement)
prior to January 23, 1997, then, subject to certain exceptions, the purchase
price per share of the Common Stock issued in such private placement would be
adjusted downward to equal such lower issue price (along with a similar
adjustment to the exercise price of the Common Stock Warrants). Any such
adjustment in the issue price and exercise price would be effected, subject to
certain exceptions, by issuing additional shares of Common Stock to the holders
who purchased such shares in the private placement and by lowering the per share
purchase price and increasing the number of shares of Common Stock which may be
acquired upon exercise of the Common Stock Warrants, and the issuance of such
additional shares of Common Stock would further dilute the interests of the
holders of Common Stock. See "Recent Developments--Private Placements."
CERTAIN ANTI-TAKEOVER PROVISIONS
Article Five of the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") provides that certain
business combinations 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 combination, voting together
without regard to class. Article Five may inhibit and discourage attempts to
acquire control of the Company without negotiation with management. In
addition, Article Five creates a veto power in the minority over certain
business combinations and may make it more difficult to effect a business
combination, even if the business
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combination is advantageous and favored by the Board of Directors or a majority
of the shareholders of the Company. Further, Article Five could result in the
denial or reduction to shareholders of potential premiums over market usually
afforded by tender offers.
The Company's Certificate of Incorporation authorizes 10,000,000
shares of Class B Preferred Stock, of which 5,500,000 shares have been
designated as "5% Convertible Preferred Stock," and authorizes the Board 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 that time. As a result, the Board may issue such stock with such
rights as would discourage possible acquirors of the Company from making a
tender offer or other attempt to gain control of the Company. The provision of
the Company's Certificate of Incorporation described above could limit the price
that certain investors might be willing to pay in the future for shares of the
Company's Common Stock and could make it more difficult for shareholders to
effect certain corporate actions. See "Description of Securities--Provisions of
the Certificate of Incorporation Affecting Acquisition of the Company."
NO COMMON STOCK DIVIDENDS
The Company has not paid any cash dividends on its Common Stock and
does not intend to pay cash dividends on its Common Stock for the foreseeable
future. In addition, holders of the Convertible Preferred Stock are entitled to
receive dividends at the rate of $1.25 per annum per share, payable on a
quarterly basis, in preference and priority to any payment of any dividend on
the Common Stock; provided, that, subject to certain conditions, the Convertible
Preferred Stock dividends may be paid with shares of Convertible Preferred Stock
on or after November 28, 1996. See "Description of Securities--Class B
Preferred Stock; Description of Convertible Preferred Stock--Dividends."
OPERATING LOSSES IN RECENT FISCAL QUARTERS
The Company has incurred operating losses and losses from continuing
operations in each of the first and second quarters of 1996. For the three
month period ended March 31, 1996, the Company reported an operating loss of
approximately $5.7 million and a net loss from continuing operations of
approximately $4.2 million. For the three and six month periods ended June 30,
1996, the Company reported operating losses of approximately $2.5 million and $8
million, respectively, and net losses from continuing operations of
approximately $1.8 million and $6 million, respectively. The Company believes
that the operating loss in the first quarter can be attributed primarily to (i)
an increase in cost of sales as a result of the continued distribution of
NOROXIN and the higher costs related to the sale thereof as well as a decrease
in sales of some of the Company's higher margin products and (ii) an increase in
marketing
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and administrative expenses resulting primarily from promotional activities for
new products and the expansion of the Company's sales forces in the United
States, United Kingdom and Canada. The Company believes that the second quarter
operating loss can be attributed primarily to the same factors set forth above
as well as increased levels of chargebacks and product returns, and increased
Medicaid costs of purchased products. There can be no assurance that the Company
will return to profitability in the foreseeable future. In addition, the Company
has recorded deferred tax assets of approximately $11.9 million. Realization is
dependent upon generating sufficient taxable income to utilize such items.
Although realization is not assured, management believes it is more likely than
not that all of the deferred tax assets will be realized. The amount of the
deferred tax assets considered realizable, however, could be reduced at any time
(including in connection with the finalization of the Company's year end
financial statements) if estimates of future taxable income are reduced.
FUTURE SALES OF COMMON STOCK
Future sales of a substantial number of shares of the Company's Common
Stock in the public market, or the perception that such sales could occur, could
adversely affect prevailing market prices. As of November 1, 1996, the Company
had approximately 19,207,402 shares of Common Stock outstanding. Of these
shares, approximately 12,467,402 shares are tradeable without restriction
(except as to shares held by affiliates of the Company) or registration under
the Securities Act, and approximately 6,740,000 shares are "restricted
securities" as such term is defined in the Securities Act, and may not be sold
in the absence of registration under the Securities Act or an exemption
therefrom including the exemption contained in Rule 144. All of the restricted
securities outstanding as of November 1, 1996 are eligible for sale in the
public market in reliance upon Rule 144, and may be sold under Rule 144(k)
without regard to volume limits.
The Company has registered 14,729,310 shares of Common Stock being
offered by the Selling Shareholders for public sale by means of the Registration
Statement, which is a shelf registration statement, filed under the Securities
Act, of which this Prospectus forms a part, pursuant to the terms of certain
agreements and warrants issued in connection with the private placements
completed by the Company in July and August 1996. Under the terms of such
agreements and warrants, the Company could be required, with certain exceptions,
to keep such Registration Statement effective until October 31, 1999. See
"Recent Developments--Private Placements." The Company has granted Yamanouchi
Pharmaceutical Co., Ltd. ("Yamanouchi"), which, through its wholly owned
subsidiary, Yamanouchi Group Holding Inc. ("Yamanouchi Group Holding"), holds
5,048,500 (26.3%) of the outstanding shares of the Company's Common Stock,
certain rights which enable Yamanouchi to require the Company to register the
offer and sale of shares of Common Stock held by Yamanouchi. Yamanouchi has
waived these
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rights with respect to the offering contemplated by this Prospectus. The
Company is unable to predict the effect that sales of such registered shares of
Common Stock, or that sales made pursuant to such registration rights, under
Rule 144, or otherwise, may have on the then prevailing market price of the
Common Stock.
A total of 2,195,219 shares of Common Stock are subject to outstanding
options under the Company's stock option and incentive plans and an additional
1,428,500 shares of Common Stock are reserved for issuance under such plans and
the Employee Stock Purchase Plan. All of these shares of Common Stock have been
registered under the Securities Act.
AGREEMENTS WITH SIGNIFICANT SHAREHOLDER
As of November 1, 1996, Yamanouchi, through its wholly owned
subsidiary, Yamanouchi Group Holding, owned 5,048,500 shares of Common Stock,
representing approximately 26.3% of the Company's outstanding shares of Common
Stock. Of the shares of Common Stock owned by Yamanouchi, 4,000,000 were
acquired in March 1992 pursuant to a stock purchase agreement (the "Stock
Purchase Agreement"). Under the terms of the Stock Purchase Agreement, for so
long as Yamanouchi owns at least 15% of the Company's outstanding Common Stock
on a fully diluted basis, Yamanouchi has certain preemptive rights to acquire
securities issued by the Company 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 Common Stock; provided, that any such
acquisition is made pursuant to the terms of the Stock Purchase Agreement.
Yamanouchi declined to exercise its preemptive rights in connection with the
sale of securities by the Company pursuant to the "Private Placements" (as such
term is defined in the section captioned "Recent Developments--Private
Placements"). The Stock Purchase Agreement also provides that Yamanouchi is
entitled to designate two (2) 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). Moreover, Dr. Vukovich, who was the beneficial owner
of 1,939,161 shares (10.1%) of the Company's Common Stock as of November 1,
1996, has entered into a shareholder agreement (the "Shareholder Agreement")
with Yamanouchi pursuant to which he has (i) agreed to vote all shares of Common
Stock owned by him in favor of the election of Yamanouchi's designees as
directors of the Company, (ii) agreed to support, in his capacity as shareholder
and officer of the Company, any offer made by Yamanouchi to acquire the Company
or the outstanding Common Stock of the Company not owned by Yamanouchi occurring
before December 31, 1998, provided such offer is fair to the Company's
shareholders, and (iii) granted to Yamanouchi for so long as he directly and
indirectly owns at least 10% of the outstanding shares of Common Stock, on a
fully diluted basis, the right of first refusal to purchase any Common Stock
which he may,
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from time to time, propose to sell, subject to certain exceptions set forth in
the Shareholder Agreement. Yamanouchi has no obligation to acquire the Company
or any shares of the Common Stock of the Company. These arrangements, together
with Yamanouchi's current ownership interest in the Company, could affect the
control of the Company. As of November 1, 1996, Yamanouchi and Dr. Vukovich were
collectively the beneficial owners of 6,987,661 shares (36.4%) 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
Convertible Preferred Stock or upon excercise of any outstanding options or
warrants.
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THE COMPANY
The Company is an international pharmaceutical company which commenced
operations in 1983 to take advantage of the large and growing opportunity to
license, acquire, develop and commercialize post-discovery drugs in selected
therapeutic categories. The Company has organized its drug development,
acquisition and marketing activities to focus on late-stage development drugs in
Phase II or Phase III clinical trials and currently marketed prescription
pharmaceutical products which (i) do not meet the strategic objectives or profit
thresholds of larger pharmaceutical companies or (ii) are made available by
government agencies and research institutions. The Company's executive offices
are located at Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey
07724, and its telephone number is (908) 389-1182.
The Company has a broad product portfolio and currently markets
approved pharmaceutical products in the United States, Canada, the United
Kingdom, Ireland, the Benelux countries and several other European countries.
In September 1996, the FDA approved the Company's New Drug Application ("NDA")
for PROAMATINE and cleared PROAMATINE for marketing in the United States.
PROAMATINE, which has been developed by the Company to fill the therapeutic void
in the United States in the treatment of orthostatic hypotension, is the first
of the Company's pipeline drugs to receive FDA approval. The Company had
previously received approval to sell PROAMATINE for the treatment of orthostatic
hypotension in Ireland (under the name MIDON(R)) and in Canada (under the name
AMATINE(R)). PROAMATINE is also in Phase II trials for stress urinary
incontinence. No assurance can be given that sales of PROAMATINE will be
significant to the Company. See "Risk Factors--Risks of New Product
Development; Government Regulation" and "Recent Developments-NDAs."
The Company has another NDA pending with the FDA for AGRELIN, a drug
used to treat thrombocythemia, a condition of excessive platelet production.
The NDA for AGRELIN was officially accepted for filing by the FDA, effective
January 29, 1996. The application remains under review by the FDA, and the
Company continues to provide the FDA with additional information when requested.
No assurance can be given that this NDA will be approved. See "Risk Factors--
Risks of New Product Development; Government Regulation" and "Recent
Developments--NDAs."
The Company has five additional late-stage development drugs,
including MAXIVENT(R), in Phase III trials for asthma; SOMAGARD(R), in Phase III
trials for central precocious puberty and prostate cancer, and in a Phase II
stage of development for endometriosis; DIRAME, in Phase III trials for pain
management; RADINYL, in Phase III trials as a radiosensitizer; and STANATE/TM/,
in Phase II/III trials for neonatal jaundice. Of these late-stage development
products, the Company has obtained approval to sell SOMAGARD for the treatment
of central precocious puberty in the United Kingdom
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and for the treatment of prostate cancer in Ireland. To date, none of the
pharmaceutical products under development, except for PROAMATINE, has been
approved for sale in the United States and no assurance can be given that any
such approval will be obtained. The Company expects to file NDAs for each of
MAXIVENT and SOMAGARD with the FDA in 1997.
The Company has created a marketing infrastructure and sales force now
numbering in excess of 150 persons, which is capable of marketing its products
to broad-based and specialized physicians, managed health care organizations and
large retail and mass merchandise operations. The Company also uses contract
sales representatives to assist in its sales efforts. The Company engages
contractors, primarily large pharmaceutical companies, to manufacture its
products.
The Company seeks to develop its products for commercialization in the
United States and other countries with attractive sales potential for such
products. The Company has entered new markets by establishing foreign sales and
marketing operations as well as by entering into license, distribution and co-
marketing agreements with partners who have established capabilities in target
markets. In order to develop and market its products in such foreign markets,
the Company has established operations in the United Kingdom through its wholly-
owned subsidiary, Monmouth Pharmaceuticals, Ltd., and in Canada through its
wholly-owned subsidiary, Roberts Pharmaceutical Canada, Inc.
The Company has marketed and sold certain over-the-counter
nonprescription pharmaceuticals and engaged in certain other diversified,
nonpharmaceutical business activities, such as providing home and outpatient
medical care and selling medical products to industrial companies ("Homecare")
and conducting clinical research for other pharmaceutical companies with respect
to the safety and efficacy of their products ("Contract Clinical Research").
While the sale of nonprescription pharmaceuticals and the activities of the
Homecare and Contract Clinical Research operations have provided the Company
with diversification, the Company has determined that a continuation of this
diversity of operations is inconsistent with its principal business objective of
licensing, acquiring, developing, marketing and selling prescription
pharmaceutical products.
In August 1995, the Company announced its decision to divest and seek
purchasers for certain nonprescription pharmaceuticals, certain nonperforming
prescription pharmaceuticals and its Homecare operations. In connection
therewith, the Company sold its NUCOFED(R) and QUIBRON(R) lines of
pharmaceutical products in October 1996. See "Recent Developments--Divestiture
of Non-Core Businesses." In March 1996, the Company announced its decision to
discontinue and divest its Contract Clinical Research operations conducted by
the
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Company's wholly owned subsidiary, VRG International, Inc. ("VRG"). See "Recent
Developments--Divestiture of Non-Core Businesses."
RECENT DEVELOPMENTS
PRIVATE PLACEMENTS
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 Convertible Preferred Stock in certain private placements (the "Private
Placements"). The Company has used and/or intends to use the proceeds from the
Private Placements 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.
The placement agent for the Private Placements 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 Common Stock Warrants to acquire an aggregate of 15,000 shares
of Common Stock for a purchase price of $16.65 per share which warrants expire
in July 1999 and Convertible Preferred Stock Warrants to acquire 420,000 shares
of Convertible Preferred Stock for a purchase price of $25 per share which
warrants expire in August 1998.
A description of each of the Private Placement transactions is set
forth below.
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 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 (which occurred on July 23,
1996), 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 the
Common Stock issued in connection with the Common Stock Placement shall be
adjusted downward to equal such lower issue price. Any such adjustment would be
effected by
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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 total 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 any 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 Convertible Preferred
Stock or the issuance of Convertible Preferred Stock upon the exercise of the
Convertible Preferred Stock Warrants or as dividends on the Convertible
Preferred Stock. As of the date of this Prospectus, 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 Price), (ii) the
shares of Common Stock issuable upon exercise of the Common Stock Warrants 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. An estimate of the number of all
such shares have been registered pursuant to the Registration Statement of which
this Prospectus forms a part.
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 per share an
aggregate of 4,200,000
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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 no shares of preferred stock
outstanding. The last reported sales price of the Common Stock on the Nasdaq
National Market on August 29, 1996 was $18.50 per share.
As required by the rules of the National Association of Securities
Dealers, Inc. (the "NASD") and pursuant to the terms of the Preferred Stock
Agreement, the Company sought shareholder approval of the issuance of the full
number of shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock at a meeting of its shareholders held on November 6, 1996. At
such meeting, the Company's shareholders approved (i) the issuance of the full
number of shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock and (ii) an amendment to the Company's Certificate of
Incorporation which increased the number of authorized shares of Common Stock
from 50,000,000 shares to 100,000,000 shares.
As more particularly described in this Prospectus under the caption
"Description of Securities--Class B Preferred Stock; Description of Convertible
Preferred Stock," the Convertible Preferred Stock has a liquidation preference
of $25 per share (plus accrued and unpaid dividends thereon), is generally non-
voting and is entitled to receive dividends quarterly at the rate of $1.25 per
share per annum, which dividends may be paid in cash or, after November 27, 1996
at the option of the Company and subject to certain conditions, in shares of
Convertible Preferred Stock. The Convertible 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 Convertible Preferred Stock and the rights,
designations and preferences thereof. The number of shares of Common Stock into
which each share of Convertible 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 trade price of the Common Stock as reported by the Nasdaq National
Market during a specified period of trading days and, accordingly, the number of
shares of Common Stock issuable upon conversion of the Convertible 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 Convertible Preferred Stock. See
"Risk Factors--Effects of Conversion of Convertible Preferred Stock and
Additional Issuances of Common Stock" and "Description of Securities--Class B
Preferred Stock; Description of Convertible Preferred Stock."
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The Preferred Stock Agreement requires the Company to register the
shares of Common Stock issuable upon conversion of the Convertible Preferred
Stock (including shares of Common Stock issuable upon the conversion of shares
of Convertible Preferred Stock that are issuable upon the exercise of the
Convertible Preferred Stock Warrants and issuable as dividends, in lieu of cash,
on the Convertible Preferred Stock) for resale under the Securities Act. An
estimate of the number of all such shares have been registered pursuant to this
Registration Statement. Any suspension of the effectiveness of the Registration
Statement during 1996 or 1997 will require that the Company pay to each
purchaser of the Convertible Preferred Stock, 3% of the total purchase price of
the Convertible Preferred Stock (or Common Stock issuable upon conversion of the
Convertible Preferred Stock, which purchase price will be based on the purchase
price of the shares of Convertible Preferred Stock which were converted into
such shares of Common Stock) then held by such purchasers, (i) in cash, or (ii)
at the Company's option, in additional shares of Convertible Preferred Stock
(valued at $25 per share plus any accrued but unpaid dividends), for each 30 day
period that the effectiveness of the Registration Statement is suspended
(prorated for any shorter period); provided, however, that no such penalty will
be imposed in 1997 (a) for the initial 30 days of such suspension, and unless
(b) the aggregate period of suspensions in such year exceeds 30 days.
Each purchaser of the Convertible Preferred Stock has agreed that
following the conversion of the Convertible Preferred Stock into Common Stock,
such purchaser 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;
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," as such term is defined in the
section of this Prospectus captioned "Description of Securities--Class B
Preferred Stock; Description of Convertible Preferred Stock."
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NDAs
In September 1996, the FDA approved the Company's NDA for PROAMATINE
and cleared PROAMATINE for marketing in the United States for the treatment of
symptomatic orthostatic hypotension. The Company is preparing for the
commencement of marketing and sales activities with respect to PROAMATINE which
it expects to commence by the end of 1996. The FDA approved PROAMATINE pursuant
to its accelerated approval process for new drugs for serious or life
threatening illnesses. The Company developed PROAMATINE to fill the U.S.
therapeutic void in the treatment of orthostatic hypotension. No other studies
are required prior to commercialization of PROAMATINE, although the Company is
required to conduct post-approval and post-launch (Phase IV) studies of
PROAMATINE with regard to certain specific symptoms of orthostatic hypotension.
The Company received notice from the FDA that the Company's NDA for
AGRELIN was officially accepted for filing, effective January 29, 1996. The
application remains under FDA review and the Company is continuing to provide
additional information as requested by the FDA. The Company has filed several
process patents with the U.S. Patent and Trademark office for improved methods
for the chemical synthesis of anagrelide, the active ingredient in AGRELIN. The
patent applications were also submitted in certain international markets,
including Europe, Canada and Japan. There can be no assurance that such patents
will be approved.
DIVESTITURE OF NON-CORE BUSINESSES
In recent years, in addition to acquiring and developing late-stage
drugs, the Company has (i) acquired, marketed and sold certain nonprescription
pharmaceuticals; (ii) through its Homecare subsidiaries, provided home and
outpatient medical care, distributed prescription injectable and biotechnology
pharmaceutical products for physician office use, and marketed and sold medical
products to industrial companies; and (iii) through VRG, conducted Contract
Clinical Research activities for pharmaceutical companies with respect to the
safety and efficacy of their products. While sales of nonprescription
pharmaceutical products and the operations of the nonpharmaceutical businesses
provided the Company with diversification in its business operations, the
Company has determined that a continuation of this diversity of operations is
inconsistent with its principal objective of licensing, acquiring, developing,
marketing and selling prescription pharmaceutical products and moving the
Company's late-stage development drugs through the Company's research and
development pipeline.
In August 1995, the Company announced its decision to discontinue and
divest the majority of its nonprescription pharmaceuticals, certain
nonperforming prescription pharmaceuticals and the operations of its Homecare
subsidiaries. In March 1996, the Company announced its intention to discontinue
and divest the Company's Contract Clinical Research business operations. The
Company has already sold many of the assets of Homecare's medical products
division and is continuing the process of reviewing divestment opportunities and
is actively soliciting offers for the assets of the remaining Homecare
businesses. The Company expects the divestiture of the Homecare business to be
completed by the end of 1996. The Company sold its NUCOFED and QUIBRON lines of
pharmaceutical products in October 1996; however, no assurance can be given that
the Company will reach a definitive agreement with respect to the sale of the
other discontinued pharmaceutical products.
Proposed Acquisition of Manufacturing Facility
In October 1996, the Company announced that it had agreed in principle
to acquire a fully-equipped pharmaceutical manufacturing facility from Searle
Canada, a unit of Monsanto Canada, Inc. Finalization of the purchase is
expected in mid-1997; however, the acquisition of the facility is subject to the
negotiation and execution of a definitive purchase agreement and no assurance
can be given that the acquisition of the facility will be completed.
The 100,852 square foot facility, which is located in Oakville, Ontario,
is approved to manufacture pharmaceutical products by both the FDA and the
Health Protection Branch of Canada. In addition to providing manufacturing and
packaging capabilities, the facility includes laboratory, warehouse and
administrative space. Under the terms of its agreement in principle with the
Company, Searle Canada has agreed to lease back certain of the space at the
facility and to engage the Company to fulfill certain of its product packaging
requirements.
Appointment of Director
On October 7, 1996, the Company announced that its Board of Directors
had appointed Dr. Zola P. Horovitz, age 62, as a Director of the Company to fill
the vacancy created by the death in August 1996 of W. Robert Fowler. Dr.
Horovitz has over 35 years of experience in the pharmaceutical industry and
served as Vice President of Business Development and Planning for Bristol-Myers
Squibb from 1991 until his retirement in 1994. Prior thereto he held numerous
positions, including Vice President of Licensing for Bristol-Myers Squibb from
1990 to 1991 and Vice President of Research Planning & Scientific Liason for The
Squibb Institute for Medical Research from 1985 to 1989.
-22-
<PAGE>
the Company announced its intention to discontinue and divest the Company's
Contract Clinical Research business operations. The Company has already sold
many of the assets of Homecare's medical products division and is continuing the
process of reviewing divestment opportunities and is actively soliciting offers
for the assets of the remaining Homecare businesses. The Company expects the
divestiture of the Homecare business to be completed by the end of 1996. The
Company sold its NUCOFED and QUIBRON lines of pharmaceutical products in October
1996; however, no assurance can be given that the Company will reach a
definitive agreement with respect to the sale of the other discontinued
pharmaceutical products.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
by the Selling Shareholders. The shares of Common Stock being offered hereby by
the Selling Shareholders have been acquired in connection with, or will be
acquired upon the conversion of the shares of Convertible Preferred Stock and
the exercise of the Common Stock Warrants which have been acquired in connection
with, the Private Placements pursuant to which the Company received net proceeds
of approximately $108 million.
-23-
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock to be offered hereby as of November 1,
1996, and as adjusted to reflect the sale of the Common Stock offered hereby, by
the Selling Shareholders. The information included in this table concerning the
Selling Shareholders who may offer Common Stock hereunder from time to time is
based on information provided to the Company by such shareholders, except for
the assumed conversion ratio of shares of Convertible Preferred Stock into
shares of Common Stock which is based solely on the assumptions discussed or
referenced in footnote (1) to this table. Information concerning such Selling
Shareholders may change from time to time and any changes of which the Company
is advised will be set forth in a Prospectus Supplement to the extent required.
<TABLE>
<CAPTION>
Beneficial Ownership Number of Shares Beneficial Ownership
of Common Stock of Common Stock of Common Stock
Name of Selling Shareholders Prior to Offering (1) Being Offered After Offering (1)
- ---------------------------- --------------------- ---------------- ------------------
Number of Percent Number of Percent of
Shares of Class Shares Class
--------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
DFA Group Trust - 6-7-8 Subtrust(2).. 26,000 (3) 26,000 -0- -0-
DFA Group Trust - Small Cap Value
Subtrust(2)......................... 268,300 1.4% 268,300 -0- -0-
DFA Group Trust - 6-10 Subtrust(2)... 98,300 (3) 98,300 -0- -0-
U.S. Small Cap Value Series(2)....... 203,700 1.1% 203,700 -0- -0-
U.S. 6-10 Small Company Series(2).... 3,700 (3) 3,700 -0- -0-
AG Super Fund International
Partners, L.P....................... 73,864 (3) 73,864 -0- -0-
Raphael, L.P......................... 60,829 (3) 60,829 -0- -0-
SIL Nominees Ltd..................... 282,422 1.4% 282,422 -0- -0-
Loretta Hirsh Shine.................. 6,952 (3) 6,952 -0- -0-
Lisa G. Shine........................ 1,738 (3) 1,738 -0- -0-
Otato Limited Partnership............ 43,450 (3) 43,450 -0- -0-
ProFutures Special Equities
Fund, L.P........................... 60,829 (3) 60,829 -0- -0-
Olympus Securities, Ltd.............. 173,798 (3) 173,798 -0- -0-
John J. Pujol........................ 4,345 (3) 4,345 -0- -0-
Richmont Value Partners, L.P......... 21,725 (3) 21,725 -0- -0-
Ailouros Ltd......................... 17,380 (3) 17,380 -0- -0-
Alfred Partners, L.P................. 43,450 (3) 43,450 -0- -0-
Alfred Partners, LLC................. 52,139 (3) 52,139 -0- -0-
Kayne Anderson Non-Traditional
Investments, L.P.................... 173,798 (3) 173,798 -0- -0-
Foremost Insurance Company........... 86,899 (3) 86,899 -0- -0-
Arbco Associates, L.P................ 173,798 (3) 173,798 -0- -0-
Offense Group Associates, LP......... 173,798 (3) 173,798 -0- -0-
Strome Partners, L.P................. 325,872 1.7% 325,872 -0- -0-
Strome Offshore Limited.............. 325,872 1.7% 325,872 -0- -0-
Strome Susskind Hedgecap Fund, L.P... 488,807 2.5% 488,807 -0- -0-
Strome Hedgecap Limited.............. 162,936 (3) 162,936 -0- -0-
Anvil Investment Partners, L.P....... 86,899 (3) 86,899 -0- -0-
Lawrence K. Fleischman............... 273,467 (4) 1.4% 273,467 -0- -0-
Trust Company of America FBO PAC..... 52,139 (3) 52,139 -0- -0-
Fayerweather Associates.............. 17,380 (3) 17,380 -0- -0-
Doerge-Deere Park, L.P............... 21,725 (3) 21,725 -0- -0-
Deere Park Partners, L.P............. 65,174 (3) 65,174 -0- -0-
Robert A. Davidow and Diana
R. Davidow, JTWROS.................. 43,450 (3) 43,450 -0- -0-
Chap-Cap Partners, L.P............... 43,450 (3) 43,450 -0- -0-
Gerard K. Cappello................... 271,413 (4) 1.4% 271,413 -0- -0-
Linda S. Cappello.................... 424,501 (4) 2.2% 424,501 -0- -0-
Chestnut Pacific Fund................ 26,834 (3) 26,834 -0- -0-
The & Trust.......................... 12,409 (3) 12,409 -0- -0-
Standard Global Equity
Partners L.P........................ 67,373 (3) 67,373 -0- -0-
</TABLE>
-24-
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Number of Shares Beneficial Ownership
of Common Stock of Common Stock of Common Stock
Name of Selling Shareholders Prior to Offering (1) Being Offered After Offering (1)
- ---------------------------- --------------------- ---------------- ------------------
Number of Percent Number of Percent of
Shares of Class Shares Class
--------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
The Common Fund...................... 17,415 (3) 17,415 -0- -0-
Scorpion Offshore Investment Fund.... 198,921 1% 198,921 -0- -0-
Standard Pacific Capital
Offshore Fund, Ltd.................. 19,865 (3) 19,865 -0- -0-
Banque Scandinave en Suisse.......... 434,495 2.2% 434,495 -0- -0-
Metropolis Partners, L.P............. 143,383 (3) 143,383 -0- -0-
Weyburn Overseas Ltd................. 173,798 (3) 173,798 -0- -0-
Goodland International
Investments Ltd..................... 695,193 3.5% 695,193 -0- -0-
Richard Friedman..................... 21,725 (3) 21,725 -0- -0-
Fortune Fund-Seeker.................. 130,349 (3) 130,349 -0- -0-
Lake Management LDC.................. 187,202 (3) 187,202 -0- -0-
Irvin Kessler........................ 26,070 (3) 26,070 -0- -0-
JMG Capital Partners L.P............. 65,174 (3) 65,174 -0- -0-
Efraim Gildor........................ 20,856 (3) 20,856 -0- -0-
KA Trading L.P....................... 26,070 (3) 26,070 -0- -0-
Leonardo, L.P........................ 373,666 1.9% 373,666 -0- -0-
Gam Arbitrage Investments, Inc....... 99,934 (3) 99,934 -0- -0-
NY-DBL Diamond Group................. 17,360 (3) 17,360 -0- -0-
Edmond O'Donnell..................... 8,690 (3) 8,690 -0- -0-
LICAP Partners....................... 43,450 (3) 43,450 -0- -0-
Grove Limited Partnership............ 4,345 (3) 4,345 -0- -0-
Stanley A. Kaplan.................... 4,345 (3) 4,345 -0- -0-
Och-Ziff Capital Management, L.P..... 434,495 2.2% 434,495 -0- -0-
Theodore Meisel...................... 10,862 (3) 10,862 -0- -0-
Barry Meisel......................... 2,172 (3) 2,172 -0- -0-
Gotham Capital III, L.P.............. 115,576 (3) 115,576 -0- -0-
Gotham Capital IV, L.P............... 36,498 (3) 36,498 -0- -0-
Newberg Family Trust
UTD Dated 12/18/90.................. 60,829 (3) 60,829 -0- -0-
Nelson Partners...................... 260,697 1.3% 260,697 -0- -0-
Daniel S. Martin..................... 4,779 (3) 4,779 -0- -0-
Jeffrey Markowitz.................... 13,035 (3) 13,035 -0- -0-
Andrew M. Kaplan..................... 5,214 (3) 5,214 -0- -0-
Lawrence Kaplan...................... 8,690 (3) 8,690 -0- -0-
Charles B. Krusen.................... 17,380 (3) 17,380 -0- -0-
Morgan and Morgan Trust Corp......... 86,899 (3) 86,899 -0- -0-
Silverton International Fund
Limited............................. 434,495 2.2% 434,495 -0- -0-
Overlook Performance Fund............ 380,697 (5) 1.9% 380,697 120,000 (3)
Q Investments, L.P................... 771,046 (6) 3.9% 771,046 380,000 1.3%
Crisostomo B. Garcia Trust........... 43,450 (3) 43,450 -0- -0-
Seafair Investments Ltd.............. 43,450 (3) 43,450 -0- -0-
BT Holdings.......................... 260,697 1.3% 260,697 -0- -0-
Wessel Corporation N.V............... 39,743 (3) 39,743 -0- -0-
Andromeda Corporation N.V............ 59,743 (3) 59,743 -0- -0-
Chesham Associates Limited........... 173,798 (3) 173,798 -0- -0-
Rimata Corporation N.V............... 59,743 (3) 59,743 -0- -0-
Stonehouse Investments N.V........... 59,743 (3) 59,743 -0- -0-
Canadian Imperial Bank of Commerce... 260,697 1.3% 260,697 -0- -0-
A.B. Laffer, V.A. Canto Associates... 13,674 (4) (3) 13,674 -0- -0-
</TABLE>
(1) Except as otherwise indicated, to the knowledge of the Company, all
securities are held beneficially and of record and all persons listed in
this table have sole voting and investment power with respect to their
securities, except to the extent that authority is shared by spouses under
applicable law. Except as indicated in footnotes (2), (4), (5) and (6),
such beneficial ownership represents an estimate of the number of shares of
Common Stock issuable upon the conversion of shares of Convertible
Preferred Stock beneficially owned by such person and an estimate of the
number of shares of Convertible Preferred Stock which may be issued, in
lieu of cash, as dividends in respect of the outstanding shares of
Convertible Preferred Stock, assuming (a) a conversion ratio which is
determined by dividing (i) the Liquidation Preference per share of
Convertible Preferred Stock of $25 by (ii) a Conversion Price of $12.65625
per share, which represents an amount equal to 90% of the last reported
sale price of $14 1/16 per share of Common Stock on November 1, 1996 as
reported by the Nasdaq National Market, (b) all shares of Convertible
Preferred Stock issued or issuable were to be held until automatically
converted into shares of Common Stock on August 29, 1998, (c) all dividends
payable on the Convertible Preferred Stock on each of the quarterly
dividend payment dates subsequent to November 27, 1996 were to be paid in
shares of Convertible Preferred Stock valued at $25 per share, and (d) each
of the Convertible Preferred Stock Warrants was exercised as of the date of
issuance. The actual number of shares of Common Stock offered hereby is
subject to adjustment and
-25-
<PAGE>
could be materially less or more than the estimated number of shares
indicated depending upon factors which cannot be predicted by the Company
at this time, including, among others, the market prices of the Common
Stock prevailing on or about the actual dates of conversion and whether, or
to what extent, dividends are paid in shares of Convertible Preferred
Stock. The aggregate number of shares of Common Stock offered by this
Prospectus assumes a Conversion Price of $9.00 and thus exceeds the
aggregate number of shares of Common Stock offered by the Selling
Shareholders reflected in the table presented above. See "Risk
Factors--Effects of Conversion of Convertible Preferred Stock and
Additional Issuances of Common Stock" and "Description of Securities--Class
B Preferred Stock; Description of Convertible Preferred Stock."
(2) Represents beneficial ownership of shares of Common Stock issued in the
Common Stock Placement. The number of shares of Common Stock issued in
connection with the Common Stock Placement is subject to adjustment under
certain circumstances. See "Risk Factors--Effects of Conversion of
Convertible Preferred Stock and Additional Issuances of Common Stock" and
"Recent Developments--Private Placements; Common Stock Placement."
(3) Shares of Common Stock beneficially owned do not exceed 1% of the Company's
outstanding shares of Common Stock.
(4) Represents an estimate of the number of shares of Common Stock issuable
upon (i) the exercise of the Common Stock Warrants, and (ii) the conversion
of the Convertible Preferred Stock that is issuable upon the exercise of
the Convertible Preferred Stock Warrants and as dividends on such
Convertible Preferred Stock in lieu of cash. See footnote (1) above for the
determination of the conversion ratio for the Convertible Preferred Stock
and the other assumptions used in making such estimate. The shares subject
to the Common Stock Warrants issued in connection with the Common Stock
Placement are subject to adjustment under certain circumstances. See "Risk
Factors--Effects of Conversion of Convertible Preferred Stock and
Additional Issues of Common Stock" and "Recent Developments--Private
Placements; Common Stock Placement."
(5) Includes 120,000 shares of Common Stock acquired before the consummation of
the Private Placements.
(6) Includes 380,000 shares of Common Stock acquired before the consummation of
the Private Placements.
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that the sale or
distribution of the Common Stock may be effected directly to purchasers by the
Selling Shareholders as principals or through one or more underwriters, brokers,
dealers or agents from time to time in one or more transactions (which may
involve crosses or block transactions) (i) on any stock exchange, in the Nasdaq
National Market, or in the over-the-counter market, (ii) in transactions
otherwise than on any stock exchange or in the over-the-counter market, or (iii)
through the writing of options (whether such options are listed on an options
exchange or otherwise) on, or settlement of short sales of, the Common Stock.
Any of such transactions may be effected at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case as
determined by the Selling Shareholder or by agreement between the Selling
Shareholder and underwriters, brokers, dealers, or agents, or purchasers. If
the Selling Shareholders effect such transactions by selling Common Stock to or
through underwriters, brokers, dealers or agents, such underwriters, brokers,
dealers or agents may receive compensation in the form of discounts, concessions
or commissions from the Selling Shareholders or commissions from purchasers of
Common Stock for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). The Selling
Shareholders and any brokers, dealers or agents that participate in the
distribution of the Common Stock may be deemed to be underwriters, and any
profit on the sale of Common Stock by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
-26-
<PAGE>
Under the securities laws of certain states, the Common Stock may be sold
in such states only through registered or licensed brokers or dealers.
The Company will not receive any proceeds from the sale of the shares of
Common Stock being offered by the Selling Shareholders. The Company has agreed
to bear all expenses incident to the registration, offering and sale of the
Common Stock to the public by the Selling Shareholders hereunder other than
commissions and discounts of underwriters, brokers, dealers and agents. The
Company has agreed to indemnify the Selling Shareholders and their officers,
directors, employees, agents, partners and controlling persons against certain
liabilities, including liabilities under the Securities Act, arising out of or
incident to registration of the Common Stock. The Company estimates that the
expenses of the offering to be borne by it will be approximately $237,000.
The Company has informed the Selling Shareholders that the anti-
manipulation provisions of Rules 10b-6 and 10b-7 under the Exchange Act may
apply to purchases and sales of the Common Stock by the Selling Shareholders,
and that there are restrictions on market-making activities by persons engaged
in the distribution of the Common Stock. The Company has also advised the
Selling Shareholders that if a particular offer of Common Stock is to be made on
terms constituting a material change from the information set forth above with
respect to the Plan of Distribution, then to the extent required, a Prospectus
Supplement must be distributed setting forth such terms and related information
as required.
DESCRIPTION OF SECURITIES
The Company's Certificate of Incorporation authorizes the issuance of
110,000,000 shares of capital stock, of which 100,000,000 shares are designated
as Common Stock, par value $.01 per share, and 10,000,000 shares are designated
as Class B Preferred Stock, par value $.10 per share, of which 5,500,000 shares
have been designated as shares of 5% Convertible Preferred Stock.
COMMON STOCK
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, it is possible that holders of more than 50% of the
outstanding shares could 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
-27-
<PAGE>
shares of Common Stock currently issued and outstanding, and which shall be
issued and outstanding upon completion of this offering, will be fully paid and
non-assessable. Holders of Common Stock are entitled to receive dividends out
of funds legally available therefor when, and if, declared by the Board of
Directors of the Company. The Company has not paid any cash dividends on its
Common Stock and the payment of cash dividends on the Common Stock is unlikely
for the foreseeable future. See "Risk Factors--No Common Stock Dividends."
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; provided, that, in the event of any liquidation, dissolution or
winding up of the Company, holders of the Convertible Preferred Stock are
entitled to receive an amount equal to the Liquidation Preference prior and in
preference to any distribution to holders of Common Stock. See "Class B
Preferred Stock--Description of Convertible 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 "Risk Factors--Agreements with Significant Shareholder" and
"Recent Development--Private Placements; Common Stock Placement."
As of November 1, 1996, there were 19,207,402 shares of Common Stock
outstanding and 931 record holders of such shares of the Company's Common Stock.
CLASS B PREFERRED STOCK
The Board of Directors of the Company is authorized to issue shares of
Class B Preferred Stock in series and to fix the number of shares in each
series; the designations, powers, preferences and relative, participating,
optional or other special rights of and the qualifications, limitations and
restrictions on the shares in such series. The Board of Directors of the
Company has designated 5,500,000 shares of Class B Preferred Stock as "5%
Convertible Preferred Stock."
-28-
<PAGE>
DESCRIPTION OF CONVERTIBLE PREFERRED STOCK
As of November 1, 1996, there were 4,200,000 shares of Convertible
Preferred Stock outstanding and 80 record holders of such Convertible Preferred
Stock. The description of the Convertible Preferred Stock set forth below does
not purport to be complete and is qualified in its entirety by reference to the
Certificate of Amendment to the Company's Certificate of Incorporation which has
been filed as an exhibit to the Registration Statement of which this Prospectus
forms a part and is available as set forth in this Prospectus under the caption
"Available Information ."
DIVIDENDS. The holders of the Convertible Preferred Stock shall be
entitled to receive out of any assets legally available therefor cumulative
dividends at the rate of $1.25 per share per annum, payable quarterly on March
31, June 30, September 30 and December 31 of each year, when and as declared by
the Board of Directors, in preference and priority to any payment of any
dividend on the Common Stock or any other class or series of stock of the
Company. Such dividends shall accrue on any given share from the day of
original issuance of such share and shall accrue from day to day whether or not
earned or declared. If at any time dividends on the outstanding Convertible
Preferred Stock at the rate set forth above shall not have been paid or declared
and set apart for payment with respect to all preceding periods, the amount of
the deficiency shall be fully paid or declared and set apart for payment, but
without interest, before any distribution, whether by way of dividend or
otherwise, shall be declared or paid upon or set apart for the shares of any
other class or series of stock of the Company.
Any dividend payable on a dividend payment date occurring after November
27, 1996 may be paid, at the option of the Company, either (i) in cash or (ii)
in shares of Convertible Preferred Stock valued at $25 per share if the Common
Stock issuable upon conversion of such shares has been registered for resale
under the Securities Act and the registration statement, including a current
prospectus with respect thereto, remains in effect at the date of delivery of
such shares, and if the Company shall have given written notice of its intention
to pay such dividend in stock to all holders of the Convertible Preferred Stock
at least 10 days before the record date for such dividend. No holder that is a
bank holding company or subsidiary thereof shall be required to accept
Convertible Preferred Stock in lieu of cash in payment of a dividend unless
after giving effect thereto the provisions of the Certificate of Amendment would
permit one share of Convertible Preferred Stock to be converted by such holder.
Any dividend payable on a dividend payment date occurring prior to November 28,
1996 must be paid in cash.
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<PAGE>
LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or
winding up of the Company, either voluntary or involuntary, the holders of the
Convertible Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any assets of the Company to the holders of
any other class or series of shares, the amount of $25 per share plus any
accrued but unpaid dividends (the "Liquidation Preference").
A 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, shall, at the option of the holders of the Convertible Preferred Stock,
be deemed a liquidation, dissolution or winding up entitling the holders of the
Convertible Preferred Stock to receive their Liquidation Preference if the
shares of stock of the Company outstanding immediately prior to such transaction
represent immediately after such transaction less than a majority of the voting
power of the surviving corporation (or of the acquiror of the Company's assets
in the case of a sale of assets). Such option may be exercised by the vote or
written consent of holders of a majority of the Convertible Preferred Stock at
any time within thirty calendar days after written notice (which shall be given
promptly) of the essential terms of such transaction shall have been given to
the holders of the Convertible Preferred Stock in the manner provided by law for
the giving of notice of meetings of shareholders.
FORCED CONVERSION. The Company at its option may cause all outstanding
shares of the Convertible Preferred Stock to be converted into Common Stock at
any time beginning on August 29, 1997, on at least 20 days' notice, at a
conversion price determined as described below under the caption "Determination
of Conversion Price" (the "Conversion Price") as of the date specified in such
notice (the "Conversion Date") and otherwise on the terms set forth in the
Certificate of Amendment; provided, that the Company may not exercise such right
of conversion unless (i) the closing price (last trade price) of the Common
Stock as reported by the Nasdaq National Market for the 20 consecutive trading
days prior to the date the "Conversion Notice" as defined below is mailed has
not on any day been less than 120% of the "Conversion Cap" (as defined below)
(subject to adjustment for stock dividends, stock splits and reverse stock
splits), and (ii) the shares issuable upon conversion of the Convertible
Preferred Stock are registered for resale by an effective registration statement
under the Securities Act which became effective not later than November 27,
1997, and a current prospectus meeting the requirements of Section 10 of the
Securities Act is available for delivery at the Conversion Date (the
"Registration Condition").
At least 20 days prior to the Conversion Date, written notice (the
"Conversion Notice") shall be mailed, first class postage prepaid, by the
Company to each holder of record of the Convertible Preferred Stock, at the
address last shown on the records of the
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<PAGE>
Company for such holder, notifying such holder of the conversion which is to be
effected, specifying the Conversion Date and calling upon each such holder to
surrender to the Company, in the manner and at the place designated, a
certificate or certificates representing the number of shares of Convertible
Preferred Stock held by such holder. On or after the Conversion Date, each
holder of Convertible Preferred Stock shall surrender to the Company the
certificate or certificates representing the shares of Convertible Preferred
Stock owned by such holder as of the Conversion Date, in the manner and at the
place designated in the Conversion Notice, and thereupon the shares issuable
upon such conversion shall be delivered as provided in the Certificate of
Amendment.
If at the Conversion Date the Registration Condition shall not be
satisfied, then no shares shall be converted and the Conversion Notice shall be
deemed to be withdrawn. In such event, any certificates for Convertible
Preferred Stock which have been surrendered for conversion shall be returned to
the persons surrendering the same; provided, however, that if a holder shall
have received shares of Common Stock upon conversion of Convertible Preferred
Stock after the Conversion Notice was given but before the Conversion Date, such
holder may elect either to retain such Common Stock or rescind such conversion
by tendering such shares of Common Stock to the Company.
On August 29, 1998, all then outstanding shares of Convertible Preferred
Stock shall be automatically converted into Common Stock at the Conversion Price
and otherwise pursuant to the applicable provisions of the Certificate of
Amendment described below under the caption "Optional Conversion".
OPTIONAL CONVERSION. At any time until August 29, 1998, at the option of a
holder of Convertible Preferred Stock, each share of Convertible Preferred Stock
shall be convertible into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing (x) the Liquidation Preference of the
Convertible Preferred Stock on the date the notice of conversion is given by the
holder (such date is also referred to herein as the "Conversion Date"), by (y)
the Conversion Price in effect on the Conversion Date.
DETERMINATION OF CONVERSION PRICE. Subject to the "Conversion Cap"
described below, the Conversion Price shall be 90% of the lowest reported sale
price of the Common Stock as reported by the Nasdaq National Market during a
specified period of consecutive trading days immediately preceding the
Conversion Date, which periods are set forth in the table below:
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Period during which such Period of consecutive trading
Conversion Date occurs: days preceding such Conversion
Date:
Through the 120th day after Closing 5 days
121st to 150th day after Closing 6 days
151st to 180th day after Closing 7 days
181th to 210th day after Closing 8 days
211th to 240th day after Closing 9 days
241st to 270th day after Closing 10 days
271st to 300th day after Closing 11 days
301st to 330th day after Closing 12 days
331st day after Closing or later 13 days
The Conversion Price shall not be greater than the Conversion Cap.
The Conversion Cap shall be calculated as follows: the mean between the closing
bid price and closing ask price (as reported by the Nasdaq National Market) for
each trading day during the 90-day period ending on November 27, 1996 shall be
averaged; the Conversion Cap shall be equal to 115% of the resulting average.
If during any period of consecutive trading days provided for above,
the Company shall declare or pay any dividend on the Common Stock payable in
Common Stock or in rights to acquire Common Stock, or shall effect a stock split
or reverse stock split, or a combination, consolidation or reclassification of
the Common Stock, then the Conversion Price shall be proportionately decreased
or increased, as appropriate, to give effect to such event. If any such event
occurs after the Conversion Cap has been determined, the Conversion Cap shall be
proportionately decreased or increased, as appropriate, to give effect to such
event.
DISTRIBUTIONS. 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, provision shall be made so
that the holders of Convertible 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.
FRACTIONAL SHARES. No fractional shares shall be issued upon the
conversion of any share or shares of Convertible Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than
one share of Convertible Preferred Stock by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Company shall, in lieu of issuing any fractional share, pay the
holder otherwise entitled to such fraction a sum in cash equal to the fair
market value of such
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fraction on the date of conversion (as determined in good faith by the Board of
Directors of the Company).
REORGANIZATION OR MERGER. 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 Convertible Preferred Stock do not elect to treat
such transaction as a liquidation, dissolution or winding up as described above
under the caption "Liquidation Preference," then, as part of such
reorganization, consolidation, merger or sale, provision shall be made so that
each share of Convertible 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 Convertible 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 Convertible 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 Convertible Preferred Stock.
VOTING RIGHTS. The Company shall not undertake the following actions
without the consent of the holders of a majority of the Convertible Preferred
Stock: (i) modify its Certificate of Incorporation or Bylaws so as to amend or
change any of the rights, preferences or privileges of the Convertible Preferred
Stock, (ii) authorize or issue any other preferred equity security senior to or
on a parity with the Convertible Preferred Stock, as to dividends, liquidation
preferences, conversion rights, redemption rights or other rights, preferences
or privileges, or (iii) purchase or otherwise acquire for value any Common Stock
or other equity security of the Company either junior or senior to or on a
parity with the Convertible Preferred Stock while there exists any arrearage in
the payment of cumulative dividends hereunder. Except as described in the
preceding sentence or as provided by law, the Convertible Preferred Stock shall
have no voting rights.
NO ADVERSE ACTIONS. The Company may not in any manner, whether by
amendment of its Certificate of Incorporation, merger, reorganization,
recapitalization, consolidation, sales of assets, sale of stock, tender offer,
dissolution or otherwise, take any action, or permit any action to be taken,
solely or primarily for the purpose of increasing the value of any class of
stock of the Company if the effect of such action is to reduce the value or
security of the Convertible Preferred Stock.
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LIMITS ON CONVERSION OF CONVERTIBLE PREFERRED STOCK. Notwithstanding
any right of conversion of Convertible Preferred Stock described above, no such
shares of Convertible Preferred Stock originally issued by the Company to a bank
holding company or an affiliate of a bank holding company shall be converted
into shares of Common Stock or any other class or series of voting stock by the
original holder or any direct or indirect transferee thereof if immediately
after such conversion such person and its affiliates (which term includes such
bank holding company, any such transferee and their respective affiliates) would
own more than 4.9% of any class of voting securities of the Company, unless such
shares are being distributed, disposed of or sold in any one of the following
transactions: (a) an initial public offering or other widely-dispersed public
distribution of the shares of the Company; (b) transfers in small amounts
pursuant to Rule 144 under the Securities Act; (c) a transfer to a single
purchaser (or a group acting in concert) which controls or which has negotiated
the purchase of at least a majority of the Company's voting stock held by
persons other than the bank holding company investor; (d) a private sale of such
equity so long as no purchaser acquires more than 2% of the total equity
outstanding upon conversion; or (e) such shares are being sold in any other
manner permitted by the Federal Reserve Board.
The limitations described in the preceding paragraph will not limit or
affect the right of the Company to force a conversion of the Convertible
Preferred Stock or an automatic conversion of the Preferred Stock in accordance
with the provisions of the Certificate of Amendment. The Company has no
obligation to monitor compliance with the limits described in the preceding
paragraph and will have no liability for the failure of any person to comply
with such limits.
WARRANTS
In connection with the Private Placements, certain designees of the
Placement Agent collectively received (i) 15,000 Common Stock Warrants which may
be exercised, at a purchase price of $16.65 per share, to acquire the same
number of shares of Common Stock, and (ii) 420,000 Convertible Preferred Stock
Warrants which may be exercised, at a purchase price of $25 per share, to
acquire the same number of shares of Convertible Preferred Stock.
See "Common Stock" and "Class B Preferred Stock--Description
of Convertible Preferred Stock" above for a description of the rights of a
holder of Common Stock and of Convertible Preferred Stock. The Common Stock
Warrants expire in July 1999 and the Convertible Preferred Stock Warrants 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
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Stock Purchase Price. The Common Stock Warrants and the Convertible Preferred
Stock Warrants contain customary antidilution provisions which provide for
adjustments in the event of stock splits, stock dividends and similar events.
See "Recent Developments--Private Placements--Common Stock Placement."
The Company is obliged to register the offer and sale of shares of
Common Stock issuable upon exercise of the Common Stock Warrants and upon
conversion of the shares of Convertible Preferred Stock that are issuable upon
exercise of the Convertible Preferred Stock Warrants under the Securities Act.
An estimate of the number of all such shares have been registered pursuant to
the Registration Statement of which this Prospectus forms a part.
PROVISIONS OF THE CERTIFICATE OF INCORPORATION AFFECTING ACQUISITION OF THE
COMPANY
Article Five of the Company's 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 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
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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 November 1, 1996, Yamanouchi controlled the vote of
approximately 26.3% of the outstanding shares of Common Stock and Dr. Vukovich
controlled approximately 10.1% of the outstanding shares of 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.
The Company's Certificate of Incorporation authorizes 10,000,000
shares of Class B Preferred Stock 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 November 1, 1996,
4,200,000 shares of Convertible Preferred Stock were outstanding. Except for
the outstanding shares of Convertible
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Preferred Stock, there are currently no shares of Class B Preferred Stock
outstanding.
The Board of Directors, without shareholder approval, unless otherwise
required by any applicable agreement with or the rules of any exchange or market
on which the Company's securities are traded, 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. See "Risk Factors--Possible
Issuance of Preferred Stock without Shareholder Approval." In the event of a
proposed merger, tender offer or other attempt to gain control of the Company
which the Board of Directors does not approve, it might be possible for the
Board of Directors 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 of Directors 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 of Directors 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 Covertible Preferred Stock and the rights thereof, the holders
of the Convertible Preferred Stock may, by majority vote, elect to treat a
merger or consolidation of the Company with or into any other corporation, or a
sale of all or substantially all of the assets of the Company, as a liquidation,
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. See "Description
of Securities--Class B Preferred Stock; Description of Covertible Preferred
Stock--Liquidation Preference."
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If such election is not made, then the holders of Convertible 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 Convertible 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
Convertible Preferred Stock so that the rights, preferences and privileges with
respect to the Convertible Preferred Stock shall continue to apply as nearly as
equivalent as is practicable following any such transaction. See "Description
of Securities--Class B Preferred Stock; Description of Covertible Preferred
Stock--Reorganization or Merger." These rights of the holders of Convertible
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 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.
TRANSFER AGENT AND REGISTRAR
The Company's transfer agent is Continental Stock Transfer and Trust
Company, New York, New York 10007.
LEGAL MATTERS
Giordano, Halleran & Ciesla, a Professional Corporation, Middletown,
New Jersey, will pass upon certain legal matters with respect to the shares
offered hereby for the Company.
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EXPERTS
The consolidated balance sheets of the Company as of December 31, 1995
and 1994 and the consolidated statements of operations of the Company and
changes in shareholders' equity of the Company for each of the years ended
December 31, 1995, 1994 and 1993 and the consolidated statements of cash flows
for the years ended December 31, 1995, 1994 and 1993, have been incorporated by
reference herein and in the Registration Statement in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses in connection
with the issuance and distribution of the securities being registered hereunder.
All of the expenses identified below will be paid by the Company, and except for
the SEC Registration Fee and NASD filing fee, all amounts are estimates.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee................. $ 84,168
NASD Listing Fee..................... 17,500
Accounting Fees and Expenses......... 15,000
Legal Fees and Expenses.............. 75,000
Printing and Engraving Expenses...... 25,000
Blue Sky Fees and Expenses........... 5,000
Fees and Expenses of Transfer Agent
and Registrar........................ 5,000
Miscellaneous........................ 5,000
--------
Total $236,668
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14A:3-5 of the New Jersey Business Corporation Act empowers
corporations to indemnify their directors, officers, employees and agents in
accordance with the provisions therein set forth.
Article VI of the Registrant's By-laws provides for the
indemnification of the directors, officers, employees and agents of the
Registrant ("Corporate Agents"). More specifically, the Registrant is obliged
to indemnify a Corporate Agent against his expenses and liabilities actually and
reasonably incurred in connection with the defense of any proceeding involving
the Corporate Agent by reason of his being or having been such a Corporate
Agent, other than a proceeding by or in the right of the Registrant; provided,
that such Corporate Agent acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Registrant and,
with respect to any criminal proceeding, such Corporate Agent had no reasonable
cause to believe his conduct was unlawful. In addition, the Registrant shall
indemnify a Corporate Agent against his liabilities and expenses, actually or
reasonably incurred by him in connection with the defense, in any proceeding, by
or in the right of the Registrant to procure a judgment in its favor which
involves the Corporate Agent by reason of his being or having been such
Corporate Agent; provided, that the Corporate Agent acted in good faith and in a
manner he reasonably believed to be in or not
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opposed to the best interests of the Registrant or, if the Corporate Agent is
adjudged liable to the Registrant, a court determines that the Corporate Agent
is entitled to such indemnity. To the extent that a Corporate Agent of the
Registrant has been successful on the merits in any proceeding referred to
above, the Registrant must indemnify the Corporate Agent against expenses,
including attorneys' fees.
Unless otherwise ordered by a court, prior to the payment of any
indemnification to a Corporate Agent of the Registrant, the Board of Directors
of the Registrant (by a majority vote of a quorum consisting of directors not
involved in the proceeding), or the shareholders, or independent legal counsel
designated by the Board of Directors in a written opinion, will determine in a
given situation whether indemnification is proper under the Registrant's By-laws
based upon the conduct of the Corporate Agent. Expenses incurred by a Corporate
Agent in connection with a proceeding may be paid by the Registrant in advance
of the final disposition of the proceeding; provided, that such payment is
authorized by the Registrant's Board of Directors and the Corporate Agent
undertakes to repay such amount if it is found that he is not entitled to be
indemnified under the Registrant's By-laws.
No indemnification of a Corporate Agent will be made if a judgment or
other final adjudication adverse to the Corporate Agent establishes that his
acts or omissions (a) were in breach of his duty of loyalty to the Registrant or
its shareholders, (b) were not in good faith or involved a knowing violation of
law, or (c) resulted in receipt by the Corporate Agent of an improper personal
benefit.
With respect to provisions included in the Registrant's Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation")
limiting the liability of officers and directors of the Registrant, Article 7.01
of the Registrant's Certificate of Incorporation provides that to the fullest
extent permitted by the laws of the State of New Jersey, as they exist or may
hereafter be amended, the directors and officers of the Registrant shall not be
personally liable to the Registrant or its shareholders for damages as a result
of a breach of any duty owed to the Registrant or its shareholders, except that
the provisions of this Article 7.01 shall not relieve a director or officer from
liability for any breach of duty based upon an act or omission (a) in breach of
such person's duty of loyalty to the Registrant or its shareholders, (b) not in
good faith or involving a knowing violation of law, or (c) resulting in receipt
by such person of an improper personal benefit. This Article 7.01 shall apply
with respect to acts or omissions occurring prior to or after the date of its
adoption.
The Registrant maintains two liability insurance policies providing
coverage for its directors and officers in an aggregate amount up to $10,000,000
for any single occurrence.
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Reference is made to the Common Stock Agreement and the Preferred
Stock Agreement, the forms of which are filed as Exhibits 4.4 and 4.5 to this
Registration Statement, each of which contains certain provisions for the
indemnification by the Registrant of the Selling Shareholders and their
officers, directors, employees, agents, partners and controlling persons against
certain liabilities, including liabilities under the Securities Act. The Common
Stock Agreement and Preferred Stock Agreement also contain certain provisions
for the indemnification by the Selling Shareholders of the Registrant and the
Registrant's directors, officers, employees, agents, partners and controlling
persons against certain liabilities, including liabilities under the Securities
Act. The Stock Purchase Agreement dated as of January 22, 1992 between the
Registrant and Yamanouchi Pharmaceutical Company, Ltd. ("Yamanouchi") which is
incorporated by reference as an exhibit to this Registration Statement contains
provisions for the indemnification against certain liabilities, including
liabilities under the Securities Act of 1933, of (i) Yamanouchi, its officers,
directors, employees and controlling persons by the Registrant, and (ii) the
Registrant, its officers, directors and controlling persons by Yamanouchi.
ITEM 16. EXHIBITS
--------
# 4.1 Form of Specimen Certificate, Roberts Pharmaceutical
Corporation Common Stock.
4.2 Form of Specimen Certificate, Roberts Pharmaceutical Corporation 5%
Convertible Preferred Stock.
4.3 Certificate of Amendment, dated August 29, 1996, to the Amended and
Restated Certificate of Incorporation of Roberts Pharmaceutical
Corporation.
4.4 Form of Stock Purchase Agreement, dated July 17, 1996, by and between
the Registrant and the Purchaser named therein.
4.5 Form of Preferred Stock Investment Agreement, dated August 29, 1996, by
and between the Registrant and the Purchaser named therein.
4.6 Form of Stock Purchase Warrant used in connection with the Common Stock
Placement.
4.7 Form of Stock Purchase Warrant used in connection with the Preferred
Stock Placement.
@ 4.8 Stock Purchase Agreement, dated as of January 22, 1992, between the
Registrant and Yamanouchi Pharmaceutical Co., Ltd., including
Shareholder Agreement dated as of January 22, 1992 between Dr. Robert A.
Vukovich and Yamanouchi
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<PAGE>
Pharmaceutical Co., Ltd. which comprises Annex A to such agreement.
5. Opinion of Giordano, Halleran & Ciesla, A Professional Corporation,
regarding legality of the Common Stock, including consent of such
Counsel.
23.1 Consent of Giordano, Halleran & Ciesla, A Professional Corporation
(filed with Exhibit 5).
x 23.2 Consent of Coopers & Lybrand L.L.P.
24. Power of Attorney (filed with signature pages).
- -----------
# Incorporated by reference to the identically numbered exhibit to
Amendment No. 1 to Registrant's Registration Statement on Form S-1
(Registration No. 33-31876), pursuant to rule 411(c) promulgated under
the Securities Act of 1933.
@ Incorporated by reference to Exhibit 10.55 to the Registrant's
Registration Statement on Form S-1 (Registration No. 33-45069), pursuant
to Rule 411(c) promulgated under the Securities Act of 1933.
x Filed with Amendment No. 1 to the Registration Statement.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
For purposes of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as
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amended (the "Exchange Act"), (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities being offered
thereby, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The Registrant hereby undertakes to file, during any period in which offers
or sales of Common Stock are being made, a post-effective amendment to this
Registration Statement to include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement.
The Registrant hereby undertakes, if the Registrant is a foreign private
issuer, to file a post-effective amendment to this Registration Statement to
include any financial statements required by Rule 3-19 of Regulations S-X at the
start of any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the
Securities Act need not be furnished, provided that the Registrant includes in
the prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph and other information necessary to ensure
that all other information in the prospectus is at least as current as the date
of those financial statements.
For the purpose of determining any liability under the Securities Act, each
post-effective amendment referred to above shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as any shares of Common Stock being registered which remain unsold
at the termination of the offering contemplated by this Registration Statement,
such unsold shares of Common Stock shall be removed from registration by means
of a post-effective amendment to the Registration Statement.
II-5
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Eatontown, State of New Jersey, on
the 5th day of November, 1996.
ROBERTS PHARMACEUTICAL CORPORATION
(Registrant)
By:/s/ Robert A. Vukovich
----------------------
Robert A. Vukovich, Ph.D.
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Robert A. Vukovich Chairman of the Board, November 5, 1996
- ----------------------- President and Chief
Robert A. Vukovich Executive Officer
(Principal Executive
Officer)
/s/ Peter M. Rogalin Vice President, November 5, 1996
- ----------------------- Treasurer, Chief
Peter M. Rogalin Financial Officer and
Director (Principal
Financial and Accounting
Officer)
II-6
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Anthony A. Rascio Director November 5, 1996
- ------------------------
Anthony A. Rascio
* Director November 5, 1996
- ------------------------
Robert W. Loy
* Director November 5, 1996
- ------------------------
John T. Spitznagel
Director November 5, 1996
- ---------------------
Takao Miyamoto
Director November 5, 1996
- ---------------------
Akihiko Matsubara
Director November 5, 1996
- ---------------------
Digby W. Barrios
Director November 5, 1996
- ---------------------
Zola P. Horovitz
* By: /s/ Robert A. Vukovich
---------------------------
Robert A. Vukovich
as Attorney-in-Fact
II-7
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No.
- -----------
# 4.1 Form of Specimen Certificate, Roberts Pharmaceutical Corporation
Common Stock.
4.2 Form of Specimen Certificate, Roberts Pharmaceutical Corporation
5% Convertible Preferred Stock.
4.3 Certificate of Amendment, dated August 29, 1996, to the Amended
and Restated Certificate of Incorporation of Roberts
Pharmaceutical Corporation.
4.4 Form of Stock Purchase Agreement, dated July 17, 1996, by and
between the Registrant and the Purchaser named therein.
4.5 Form of Preferred Stock Investment Agreement, dated August 29,
1996, by and between the Registrant and the Purchaser named
therein.
4.6 Form of Stock Purchase Warrant used in connection with the
Common Stock Placement.
4.7 Form of Stock Purchase Warrant used in connection with the
Preferred Stock Placement.
@ 4.8 Stock Purchase Agreement, dated as of January 22, 1992, between
the Registrant and Yamanouchi Pharmaceutical Co., Ltd.,
including Shareholder Agreement dated as of January 22, 1992
between Dr. Robert A. Vukovich and Yamanouchi Pharmaceutical
Co., Ltd. which comprises Annex A to such agreement.
5. Opinion of Giordano, Halleran & Ciesla, A Professional
Corporation, regarding legality of the Common Stock, including
consent of such Counsel.
23.1 Consent of Giordano, Halleran & Ciesla, A Professional
Corporation (filed with Exhibit 5).
x 23.2 Consent of Coopers & Lybrand L.L.P.
II-8
<PAGE>
24. Power of Attorney (filed with signature pages).
- -----------
# Incorporated by reference to the identically numbered exhibit to Amendment
No. 1 to Registrant's Registration Statement on Form S-1 (Registration No.
33-31876), pursuant to rule 411(c) promulgated under the Securities Act of
1933.
@ Incorporated by reference to Exhibit 10.55 to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-45069), pursuant to Rule 411(c)
promulgated under the Securities Act of 1933.
x Filed with Amendment No. 1 to the Registration Statement.
II-9
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to
registration statement of Roberts Pharmaceutical Corporation on Form S-3 of our
report dated March 20, 1996, on our audits of the consolidated financial
statements of Roberts Pharmaceutical Corporation and Subsidiaries as of December
31, 1995 and 1994, and for each of the three years in the period ended December
31, 1995, which report is included in the Corporation's 1995 Annual Report on
Form 10-K. We also consent to the reference to our firm under the caption
"Experts."
COOPERS & LYBRAND L.L.P.
Princeton, New Jersey
November 6, 1996
