<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[_] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
Roberts Pharmaceutical Corporation
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a(6)(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date filed:
<PAGE>
LOGO
PROXY STATEMENT
ROBERTS PHARMACEUTICAL CORPORATION
MERIDIAN CENTER II
4 INDUSTRIAL WAY WEST
EATONTOWN, NEW JERSEY 07724
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 22, 1996
----------------
To the Shareholders of
ROBERTS PHARMACEUTICAL CORPORATION:
The Annual Meeting of the Shareholders of ROBERTS PHARMACEUTICAL CORPORATION
(the "Company") will be held on Wednesday, May 22, 1996 at the Company's
headquarters, Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey
07724, at 10:00 a.m., Eastern Daylight Savings Time, for the following
purposes:
1. To elect eight Directors to serve for the following year or until their
successors have been elected and qualify;
2. To consider and act upon a proposal to approve and adopt the Roberts
Pharmaceutical Corporation Employee Stock Purchase Plan;
3. To consider and act upon a proposal to approve and adopt the Roberts
Pharmaceutical Corporation 1996 Equity Incentive Plan;
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of Common Stock of record at the close of business on April 4, 1996,
are entitled to notice of and to vote at the meeting.
ANTHONY A. RASCIO, Esq.
Vice President and
Secretary
Eatontown, New Jersey
April 29, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE YOUR
REPRESENTATION AT THE MEETING, HOWEVER, YOU ARE URGED TO SIGN AND DATE THE
ACCOMPANYING PROXY AND MAIL IT AT ONCE IN THE ENCLOSED ENVELOPE. PROMPT
RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
<PAGE>
ROBERTS PHARMACEUTICAL CORPORATION
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This Proxy Statement is furnished to the holders of Common Stock, $.01 par
value ("Common Stock"), of Roberts Pharmaceutical Corporation (the "Company")
in connection with the solicitation of proxies for use at the annual meeting
of shareholders to be held on May 22, 1996, and at any adjournment thereof
(the "Annual Meeting"), pursuant to the accompanying Notice of Annual Meeting
of Shareholders. A form of proxy for use at the meeting is also enclosed. The
Company anticipates mailing this Proxy Statement to its shareholders on or
about April 29, 1996. The executive offices of the Company are located at
Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey 07724.
Shareholders may revoke the authority granted by their execution of proxies
at any time before the effective exercise of proxies by filing written notice
of such revocation with the Secretary of the Annual Meeting. Presence at the
Annual Meeting does not of itself revoke the proxy. All shares represented by
executed and unrevoked proxies will be voted in accordance with the
instructions therein. Proxies submitted without indication will be voted FOR
the nominees for Director named herein; FOR the proposal to approve and adopt
the Roberts Pharmaceutical Corporation Employee Stock Purchase Plan (the
"Stock Purchase Plan"); and FOR the proposal to approve and adopt the Roberts
Pharmaceutical Corporation 1996 Equity Incentive Plan (the "Equity Incentive
Plan"). Management is not aware, at the date hereof, of any matters to be
presented at the Annual Meeting other than the matters described hereinabove,
but, if any other matter is properly presented, the persons named in the proxy
will vote thereon according to their best judgment.
The cost of preparing, assembling and mailing the proxy material is to be
borne by the Company. Proxies for use at the Annual Meeting are being
solicited by the Board of Directors of the Company (the "Board of Directors").
It is not anticipated that any compensation will be paid for soliciting
proxies and the Company does not intend to employ specially engaged personnel
in the solicitation of proxies. It is contemplated that proxies will be
solicited principally through the mail. Further, Directors, officers and
employees of the Company may also, without additional compensation, solicit
proxies, personally or by mail, telephone, telegraph, facsimile transmission
or special letter.
VOTING SECURITIES
The voting securities entitled to vote at the Annual Meeting consist of
shares of Common Stock of the Company with each share of Common Stock
entitling its owner to one vote on an equal basis. The number of outstanding
shares of Common Stock on April 4, 1996 was 18,551,090. Only shareholders of
record on the books of the Company at the close of business on that date will
be entitled to vote at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting for purposes of
electing Directors and acting upon the proposals to approve and adopt the
Stock Purchase Plan and the Equity Incentive Plan. Abstentions and broker non-
votes will be counted for purposes of determining whether a quorum is present
at the Annual Meeting.
Directors shall be elected by a plurality of the votes cast at the Annual
Meeting by the holders of shares of Common Stock present in person or
represented by proxy and entitled to vote. The proxy card provides space for a
shareholder to withhold votes for any or all nominees for the Board of
Directors. The proposal to approve and adopt the Stock Purchase Plan must be
approved by a majority of the votes cast at the Annual Meeting on such
proposal by the holders of shares of Common Stock present in person or
represented by proxy and entitled to vote. The proposal to approve and adopt
the Equity Incentive Plan must be approved by a majority of the votes cast at
the Annual Meeting on such proposal by the holders of shares of Common Stock
present in person or represented by proxy and entitled to vote.
1
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All votes will be tabulated by the inspector of election appointed for the
Annual Meeting who will separately tabulate affirmative votes, negative votes,
authority withheld for any nominee for Director, abstentions and broker non-
votes. Authority withheld will be counted toward the tabulation of total votes
cast in the election for Directors and will have the same effect as a negative
vote. Under the New Jersey Business Corporation Act and under the Company's
By-Laws, any proxy submitted and containing an abstention or a broker non-vote
will not be counted as a vote cast on any matter to which it relates except
that, solely for purposes of determining whether the Stock Purchase Plan and
the Equity Incentive Plan have been approved by the Company's shareholders in
compliance with the voting standards of Rule 16b-3 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), any proxy containing an
abstention with respect to the proposals to approve and adopt the Stock
Purchase Plan and the Equity Incentive Plan and any share of Common Stock
present at the Annual Meeting that has abstained from voting on such proposals
will be counted toward the tabulation of the votes cast on the proposals to
approve and adopt the Stock Purchase Plan and the Equity Incentive Plan and
will have the same effect as a negative vote.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of April 4, 1996, with respect
to each person who is known by the Company to be the beneficial owner, as
defined in Rule 13d-3 ("Rule 13d-3") of the Exchange Act, of more than five
percent (5%) of the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
- ------------------- ----------------------- -------
<S> <C> <C>
Yamanouchi Group Holding Inc.(2).............. 5,048,500 27.2%
Robert A. Vukovich, Ph.D.(3).................. 1,939,161(4)(5)(6) 10.3%
</TABLE>
- --------
(1) Except as otherwise indicated, all of the shares of the Company's Common
Stock are held beneficially and of record.
(2) The address of the principal office of such shareholder is c/o The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. Yamanouchi Group Holding Inc. ("Yamanouchi
Group Holding") is a wholly owned subsidiary of Yamanouchi Pharmaceutical
Co., Ltd. ("Yamanouchi").
(3) Dr. Vukovich is Chairman of the Board of Directors, President and Chief
Executive Officer of the Company and maintains a business address at the
Company's offices at Meridian Center II, 4 Industrial Way West, Eatontown,
New Jersey 07724.
(4) Includes 250,000 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich pursuant to the Company's stock option
plans.
(5) Includes 4,090 shares of Common Stock held by Dr. Vukovich's wife, with
respect to which Dr. Vukovich disclaims beneficial ownership.
(6) Includes 47,500 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich's wife pursuant to the Company's Incentive
Stock Option Plan ("Incentive Option Plan") with respect to which Dr.
Vukovich disclaims beneficial ownership.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of April 4, 1996, with respect
to the beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of
the Company's Common Stock by each Director or nominee for
Director, each of the Named Officers (as defined in the section captioned
"Executive Compensation") and by all Directors, nominees for Director and
Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL HOLDER OF BENEFICIAL OWNERSHIP(1) CLASS
- ----------------- -------------------------- ----------
<S> <C> <C>
Robert A. Vukovich, Ph.D............ 1,939,161(2)(3)(4) 10.3%
Robert W. Loy....................... 65,000(5) (6)
Anthony A. Rascio, Esq.............. 60,065(7) (6)
Peter M. Rogalin.................... 1,000 (6)
Yale Brozen, Ph.D.(8)............... 30,000(9) (6)
Takao Miyamoto...................... (10)
Akihiko Matsubara................... (10)
W. Robert Fowler, M.D............... 51,000(11) (6)
Digby W. Barrios.................... 18,000(12) (6)
Anthony P. Maris(13)................ 96,834(14) (6)
All Directors, Nominees for Director
and Executive Officers as a Group
(9 persons)........................ 2,164,226(2)(3)(4)(5) 11.4%
(7)(9)(11)(12)
</TABLE>
- --------
(1) Except as otherwise indicated, all of the shares of the Company's Common
Stock are held beneficially and of record.
(2) Includes 250,000 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich pursuant to the Company's Incentive
Option Plan and Restricted Stock Option Plan ("Restricted Option Plan").
(3) Includes 4,090 shares of Common Stock held by Dr. Vukovich's wife, with
respect to which Dr. Vukovich disclaims beneficial ownership.
(4) Includes 47,500 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich's wife pursuant to the Incentive Option
Plan, with respect to which Dr. Vukovich disclaims beneficial ownership.
(5) Includes 64,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Option Plan.
(6) Shares beneficially owned do not exceed 1% of the Company's outstanding
shares of Common Stock.
(7) Includes 8,786 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Option Plan.
(8) Dr. Brozen has declined to stand for re-election to the Board of
Directors.
(9) Includes 30,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Restricted Option Plan.
(10) Yamanouchi Group Holding, a principal shareholder of the Company, is a
wholly owned subsidiary of Yamanouchi. Yamanouchi Group Holding holds
5,048,500 shares of the Company's Common Stock. Each of Mr. Miyamoto and
Mr. Matsubara is a Director and nominee for Director of the Company and
currently serves as an executive of Yamanouchi.
(11) Includes 30,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Restricted Option Plan.
(12) Includes 15,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Restricted Option Plan.
(13) Mr. Maris is a former executive officer and Director of the Company and
was a Named Officer of the Company as of December 31, 1995. Effective
February 2, 1996, Mr. Maris resigned from the Company and its
subsidiaries in all capacities as an officer and Director.
(14) Includes 96,834 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Option Plan.
3
<PAGE>
AGREEMENTS WITH YAMANOUCHI AND CERTAIN OTHER TRANSACTIONS
Yamanouchi, through a subsidiary, owns 5,048,500 shares of the Company's
Common Stock. Of such shares, 4,000,000 were acquired in March 1992 for an
aggregate purchase price of $95,352,000 pursuant to the terms of a stock
purchase agreement (the "Stock Purchase Agreement") entered into by the
Company and Yamanouchi. Under the terms of the Stock Purchase Agreement,
Yamanouchi has certain preemptive rights to acquire securities issued by the
Company for so long as Yamanouchi owns at least 15% of the Company's
outstanding Common Stock on a fully diluted basis, and the Company is
prohibited from taking any action to prevent Yamanouchi from directly or
indirectly acquiring all of the remaining shares of the Company's outstanding
Common Stock, provided that any such acquisition is made in accordance with
the terms of the Stock Purchase Agreement. Yamanouchi is under no obligation
to acquire additional shares of Common Stock. For so long as Yamanouchi owns
10% of the outstanding Common Stock on a fully diluted basis, Yamanouchi has
granted the Company a right of first refusal with respect to any shares of
Common Stock which it proposes to sell, subject to certain specified
exceptions.
The Company has granted Yamanouchi certain demand and piggyback registration
rights with respect to shares of Common Stock owned by it. Under the Stock
Purchase Agreement, the Company is required to discuss with and obtain the
views of Yamanouchi with respect to certain specified transactions, including
equity offerings; incurring a material amount of debt; a material change in
the Company's capital structure; and the granting of any material license to a
third party. If any such proposed transaction involves a financing, the
Company has agreed to review with Yamanouchi its financing needs prior to
engaging in such transaction and to give Yamanouchi a reasonable opportunity
to propose and negotiate a financing alternative for the Company, though
Yamanouchi is under no obligation to do so. Yamanouchi is entitled to
designate two members of the Company's Board of Directors for so long as it
owns at least 18% of the outstanding shares of the Company's Common Stock on a
fully diluted basis (or one Director for so long as it owns at least 10% of
such Common Stock). Mr. Miyamoto and Mr. Matsubara are Yamanouchi's designees.
Pursuant to a shareholder agreement between Yamanouchi and Dr. Vukovich (the
"Shareholder Agreement") entered into at the same time as the Stock Purchase
Agreement, Dr. Vukovich has agreed to vote all shares of Common Stock held by
him in favor of the election of any such designees.
Under the Shareholder Agreement, Dr. Vukovich has granted Yamanouchi certain
rights of first refusal with respect to shares of the Company's outstanding
Common Stock that he proposes to sell. Moreover, Dr. Vukovich has agreed in
the Shareholder Agreement to support as a shareholder and officer of the
Company any fair offer by Yamanouchi to acquire the Company or its outstanding
Common Stock made after December 10, 1994 and before December 31, 1998.
Yamanouchi is under no obligation to acquire the Company or any shares of
Common Stock of the Company.
In 1992 and 1993, the Company's wholly owned subsidiary, VRG International,
Inc. ("VRG"), entered into a series of agreements with a subsidiary of
Yamanouchi, pursuant to which VRG conducted clinical trials on a Yamanouchi
compound known as YM617. In March 1995, these clinical research agreements
were amended in connection with the resolution of a contract interpretation
issue concerning billings for costs incurred by VRG. The agreements, as
amended, provided for the payment to VRG of approximately $30 million and for
all work required by the agreements to be completed by December 31, 1995.
During 1995, the clinical research studies were completed by VRG and the
balance of the payments provided for under the agreements, approximately $1.8
million, has been received by VRG. With the completion of these clinical
trials on YM617, the Company does not anticipate performing any similar
clinical research studies for Yamanouchi or its subsidiaries in the future
since the Company has announced its decision to discontinue and divest the
clinical research operations conducted by VRG and expects the sale of such
operations to be completed by December 31, 1996.
ELECTION OF DIRECTORS
In accordance with the Company's By-Laws which provide that the Board of
Directors shall consist of not less than three nor more than fifteen members,
the Board of Directors has fixed the number of Directors at eight. Each of the
individuals named below, who has been nominated for election as a Director by
the Board of Directors, is currently a member of the Board of Directors of the
Company.
4
<PAGE>
Officers serve at the discretion of the Board of Directors. The Company has
entered into employment agreements with certain officers. See "Employment
Agreements."
It is the intention of the persons named in the accompanying proxy to vote,
unless otherwise instructed, in favor of the election of the eight nominees
named hereinafter as Directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR DIRECTOR.
If any of the nominees should be unavailable for election, the proxies will
be voted for the election of such other person or persons as shall be
determined by the persons named in the proxy in accordance with their
judgment. The Company is not aware of any reason why any of the nominees
should become unavailable for election, or if elected, should be unable to
serve as a Director.
There are no family relationships among the current Directors, Executive
Officers or persons nominated by the Company to become Directors.
NOMINEES
The nominees, their ages and current principal occupations or employment,
are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NOMINEE AGE OR EMPLOYMENT
------- --- --------------------
<S> <C> <C>
Robert A. Vukovich, Ph.D. ...... 52 Chairman of the Board of Directors,
President and Chief Executive Officer of
Roberts Pharmaceutical Corporation
Peter M. Rogalin................ 53 Vice President, Treasurer, Chief Financial
Officer and a Director of Roberts
Pharmaceutical Corporation
Robert W. Loy................... 58 Executive Vice President-Operations and New
Business Development and a Director of
Roberts Pharmaceutical Corporation
Anthony A. Rascio, Esq. ........ 53 Vice President, Secretary, General Counsel
and a Director of Roberts Pharmaceutical
Corporation
Takao Miyamoto.................. 52 Director of the International Division of
Yamanouchi Pharmaceutical Co., Ltd. and a
Director of Roberts Pharmaceutical
Corporation
Akihiko Matsubara............... 41 Manager of the Corporate Planning
Department of Yamanouchi Pharmaceutical
Co., Ltd. and a Director of Roberts
Pharmaceutical Corporation
W. Robert Fowler, M.D. ......... 67 Retired Surgeon and Professor of Medicine
and a Director of Roberts Pharmaceutical
Corporation
Digby W. Barrios................ 58 Self-employed Consultant and a Director of
Roberts Pharmaceutical Corporation
</TABLE>
Each Director will hold office until the next Annual Meeting of Shareholders
or until his successor is elected and qualifies. Dr. Vukovich serves as a
Director of Cypros Pharmaceutical Corporation and Biotransplant, Inc. Mr.
Barrios serves as a Director of Sepracor, Inc. and Cypros Pharmaceutical
Corporation. None of the other nominees holds any directorships in companies
with a class of securities registered pursuant to Section 12 of the Exchange
Act or subject to the requirements of Section 15(d) of the Exchange Act or any
company registered as an investment company under the Investment Company Act
of 1940, as amended.
Robert A. Vukovich, Ph.D., has served as Chairman of the Board and President
of the Company since its inception in 1983. From 1979 to 1983, he served as
Director of the Division of Developmental Therapeutics for
5
<PAGE>
Revlon Health Care Group. From 1970 to 1974, Dr. Vukovich was employed in
various capacities by the Squibb Institute and served as Director of Clinical
Pharmacology for that organization from 1974 to 1979. Prior to 1970, Dr.
Vukovich was a clinical research scientist for The Warner Lambert Research
Institute. Dr. Vukovich is a graduate of Jefferson Medical College,
Philadelphia, Pennsylvania, with training in pharmacology and pathology.
Peter M. Rogalin has served as Vice President, Treasurer and Chief Financial
Officer and a Director of the Company since February 5, 1996. From 1978 to
1992, Mr. Rogalin was employed in various executive capacities by Sterling
Winthrop, Inc. (formerly Sterling Drug, Inc.), including Assistant Treasurer
from 1987 through 1992. From 1993 through July 1994, Mr. Rogalin was a
Principal in RK Associates, a consulting firm with specific expertise in
financial and business operations and systems for small and medium sized
companies. From July 1994 through January 1996, Mr. Rogalin served as Vice
President-Finance and Chief Financial Officer of ImClone Systems, Inc., a
biopharmaceutical company engaged in research and development of therapeutic
products for the treatment of cancer and cancer related disorders. Mr.
Rogalin, a Certified Public Accountant, received his undergraduate degree from
St. Lawrence University and an M.B.A. from the Graduate School of Business,
New York University.
Robert W. Loy assumed the newly created position of Executive Vice
President-Operations and New Business Development in March 1996. Mr. Loy
served as Chief Operating Officer of the Company from August 1992 to March
1996 and as a Vice President of the Company from December 1992 to March 1996.
Mr. Loy also has served as a Director of the Company since October 1993. From
1963 to 1990, he held various positions at Squibb Corporation, including that
of Vice President, Worldwide Operations for the Squibb Derm Division. From
1990 to 1992, Mr. Loy served as Vice President, International Sales and
Marketing, with Hollister, Inc. Mr. Loy received his undergraduate degree from
Old Dominion University.
Anthony A. Rascio, Esq., has served as Vice President and General Counsel
and a Director of the Company since June 1987. In addition, he served as
Assistant Secretary of the Company from June 1987 to June 1992, at which time
he assumed the position of Secretary of the Company. From January 1987 to June
1987, Mr. Rascio was Director, Legal Affairs for the Company. During 1986, Mr.
Rascio was engaged in the private practice of law. From 1984 through 1985, Mr.
Rascio was employed as Director, International Operations by Jeffrey Martin,
Inc., a marketer of cosmetics and proprietary medicines. Mr. Rascio served as
Legal Director, International Pharmaceutical Products Division for Schering-
Plough Corporation from 1980 through 1984 and held various legal positions
with that company from 1971 to 1980. Mr. Rascio received undergraduate and law
degrees from Fordham University.
Takao Miyamoto has served as the Director of the International Division of
Yamanouchi since 1994. From 1991 to 1994, Mr. Miyamoto served as the Director
of Europe and Americas Department, International Division of Yamanouchi. From
1967 to 1991, Mr. Miyamoto held various management positions at Yamanouchi,
including the position of General Manager of the London Office from 1988 to
1991 and the position of Manager, London Office (Marketing) from 1985 to 1988.
Mr. Miyamoto is a graduate of Kyoto University, Japan, School of
Pharmaceutical Science. Mr. Miyamoto was elected to the Board of Directors
pursuant to the provisions of the Stock Purchase Agreement between the Company
and Yamanouchi and has served as a Director of the Company since 1992.
Akihiko Matsubara has served as Manager of the Corporate Planning Department
of Yamanouchi since 1994. From 1988 to 1994, Mr. Matsubara served as a senior
member of the Corporate Planning Department of Yamanouchi. From 1981 to 1988,
Mr. Matsubara held various management positions at Yamanouchi. Mr. Matsubara
is a graduate of Hitotsubashi University of Japan. Mr. Matsubara was elected
to the Board of Directors pursuant to the provisions of the Stock Purchase
Agreement between the Company and Yamanouchi and has served as a Director of
the Company since November 1993.
W. Robert Fowler, M.D. retired from the private practice of general surgery
in 1983. He has served as Chairman of the Surgical Education Department and as
a member of the faculty of the University of Tennessee
6
<PAGE>
Medical School at Chattanooga. He has also served on the Executive Committees
and Boards of Directors of numerous hospitals and organizations, including
Hospital Corporation of America, Reid-Rowell Laboratories and W.E. Hauck, Inc.
Dr. Fowler was a founder, First Chief of Staff and Chairman of the Board of
Parkridge Hospital in Chattanooga, Tennessee. Dr. Fowler received his
undergraduate degree from the University of North Carolina and his medical
degree from Duke University. In 1988 he received a commission to the Tennessee
Army National Guard and was promoted to Major General in 1991 upon serving in
Operations Desert Shield and Desert Storm. Dr. Fowler has served as a Director
of the Company since September 1992.
Digby W. Barrios served as the President and Chief Executive Officer of
Boehringer Ingelheim Corporation from 1988 to 1992 and as an executive of that
company in various positions from 1983 to 1988. Since 1992, Mr. Barrios has
been self-employed as a consultant. Mr. Barrios also serves as a Director or
trustee of several academic institutions and pharmaceutical organizations. He
received his undergraduate degree from Loyola University. Mr. Barrios has
served as a Director of the Company since March 1994.
MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES
During the fiscal year ended December 31, 1995, the Board of Directors held
four (4) regular meetings and one (1) special meeting. During fiscal 1995,
each incumbent member of the Company's Board of Directors attended at least
75% of the meetings of the Board of Directors and each of the committees on
which he served which were held during the period such person served as a
Director and, if applicable, a committee member.
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee.
AUDIT COMMITTEE
The current members of the Audit Committee of the Board of Directors (the
"Audit Committee") are Dr. Brozen and Dr. Fowler. Dr. Brozen has declined to
stand for re-election to the Board of Directors, and the Board of Directors
will appoint another one of its members to the Audit Committee at its meeting
which will directly follow the conclusion of the Annual Meeting. The functions
of the Audit Committee are, among other things, to recommend to the Board of
Directors, the auditors to be engaged as the Company's independent public
accountants; to review the proposed plan and scope for the annual audit and
the results of such audit when completed; to review the services rendered by
the auditors and the fees charged for such services; to determine the effect,
if any, on the independent public accountants' independence in the performance
of any non-audit services; and to review the plan, scope and results of the
Company's internal audit operations. During the fiscal year ended December 31,
1995, the Audit Committee held four (4) meetings.
COMPENSATION COMMITTEE
The current members of the Compensation Committee of the Board of Directors
(the "Compensation Committee") are Dr. Brozen, Dr. Fowler and Mr. Barrios. Dr.
Brozen has declined to stand for re-election to the Board of Directors. The
Compensation Committee determines the compensation of officers and administers
the Management Incentive Compensation Plan, the Restricted Option Plan and the
Incentive Option Plan. With respect to the Restricted Option Plan and
Incentive Option Plan (collectively, the "Option Plans"), the administration
of these Option Plans involves the determination of persons to whom options
are granted and the terms of such grants, including the number of shares
subject to options, and the exercise price thereof, subject to the express
provisions set forth in each of the Option Plans. In addition, the
Compensation Committee administers the Company's Money Purchase Pension Plan
(the "Money Purchase Plan") and the Company's Employees Savings and Protection
Plan (the "401(k) Plan"). If approved and adopted by the Company's
shareholders at the Annual Meeting, the Compensation Committee will also
administer the Stock Purchase Plan and the Equity Incentive Plan. During the
fiscal year ended December 31, 1995, the Compensation Committee held six (6)
meetings.
7
<PAGE>
CORPORATE PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the five years ending December 31, 1995, with
the cumulative total return on two broad market indices over the same period
(assuming an investment of $100 in the Company's Common Stock and in each of
the indices on December 31, 1990, and reinvestment of all dividends in the two
broad market indices).
[PERFORMANCE GRAPH]
AVERAGE ANNUAL
COMPOUND GROWTH RATES
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Roberts Pharmaceuticals $100 $704 $496 $871 $696 $389
NASDAQ Stock Market (US Companies) $100 $161 $187 $214 $210 $297
NASDAQ Pharmaceutical Stocks $100 $266 $221 $197 $148 $272
</TABLE>
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-
term compensation for services in all capacities to the Company and its
subsidiaries for the fiscal years ended December 31, 1995, 1994 and 1993, of
the Company's Chief Executive Officer and the other Executive Officers of the
Company who earned salary and bonuses in fiscal 1995 in excess of $100,000
(collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------- ----------------------
SECURITIES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($)(1) ($)(2) OPTIONS (#) ($)(3)(4)
- ------------------------- ---- --------- --------- ---------------------- ------------
<S> <C> <C> <C> <C> <C>
Robert A. Vukovich,
Ph.D.................... 1995 $ 452,770(5) $ -- -- $ 7,500
President and Chief 1994 469,038 600,000 200,000 7,500
Executive Officer 1993 399,840 300,000 100,000 28,301
Anthony P. Maris (6).... 1995 263,262 -- 81,000(7) 7,500
Vice President, 1994 260,284 70,000 65,000(8) 7,500
Treasurer 1993 242,205 50,000 15,000 28,301
and Chief Financial
Officer
Robert W. Loy(9)........ 1995 182,196 -- 81,000(7) 7,500
Vice President and 1994 177,458 75,000 65,000(8) 7,500
Chief 1993 163,889 40,000 15,000 10,184
Operating Officer
Anthony A. Rascio, Esq.. 1995 131,030 -- 7,000(7) 6,698
Vice President, 1994 131,100 5,000 7,000(8) 6,705
Secretary 1993 126,346 5,000 2,000 19,702
and General Counsel
</TABLE>
- --------
(1) Includes amounts earned but deferred at the election of the Named Officers
under the Company's 401(k) Plan. See "Employees Savings and Protection
Plan."
(2) Represents amounts paid to the Named Officers pursuant to the Company's
Management Incentive Plan. See "Compensation Committee Report on Executive
Compensation."
(3) Includes amounts to be contributed by the Company under the 401(k) Plan.
Amounts to be contributed by the Company to the accounts of the Named
Officers for fiscal 1995 are as follows: Dr. Vukovich--$4,500; Mr. Maris--
$4,500; Mr. Loy--$4,500; and Mr. Rascio--$4,019.
(4) Includes amounts to be contributed by the Company under the Money Purchase
Plan. Amounts to be contributed by the Company to the accounts of the
Named Officers for fiscal 1995 are as follows: Dr. Vukovich--$3,000; Mr.
Maris--$3,000; Mr. Loy--$3,000; and Mr. Rascio--$2,679.
(5) See "Compensation Committee Report on Executive Compensation--Executive
Officer Compensation."
(6) Effective February 2, 1996, Mr. Maris resigned in all capacities as an
officer and a Director of the Company and its subsidiaries. Mr. Rogalin
has been appointed as Vice President, Treasurer and Chief Financial
Officer of the Company.
(7) Represents 81,000, 81,000, and 7,000 shares of Common Stock underlying
options granted during the fiscal years ended December 31, 1992 through
December 31, 1994 to Mr. Maris, Mr. Loy and Mr. Rascio, respectively; such
options were repriced by the Company during the fiscal year ended December
31, 1995. See "Report on Option Repricing."
(8) Includes 15,000, 15,000 and 2,000 shares of Common Stock underlying
options granted during the fiscal year ended December 31, 1993 to Mr.
Maris, Mr. Loy and Mr. Rascio, respectively; such options were repriced by
the Company during the fiscal year ended December 31, 1994. See "Report on
Option Repricing."
(9) Effective March 4, 1996, Mr. Loy assumed the newly created position of
Executive Vice President--Operations and New Business Development.
9
<PAGE>
EMPLOYMENT AND RESIGNATION AGREEMENTS
The Company has entered into employment agreements with each of Dr.
Vukovich, Mr. Loy and Mr. Rascio. The employment agreements with Dr. Vukovich,
Mr. Loy and Mr. Rascio provide for base minimum salaries of $540,000, $186,500
and $135,200, respectively. In addition, the agreements entitle each of such
officers to participate in any incentive compensation plan offered to the
Company's senior level management and to receive all vacation and other
benefits, including insurance, provided to employees of the Company.
Under the terms of the employment agreements, in the event that the
employment of any such officer is terminated by the Company other than for the
officer's willful misconduct, the officer is entitled to receive all base
compensation at the annual rate of his base compensation at the time of
termination for three years after the termination (five years after
termination in the case of Dr. Vukovich) and to additional payments equal to
three times the officer's average annual bonus and incentive compensation for
the period commencing July 1, 1988 and ending upon termination of the
employment agreement and to three times any payment made by the Company during
the fiscal year prior to termination to the 401(k) Plan and/or Money Purchase
Plan on behalf of the officer (five times the average annual bonus and
incentive compensation received during such period by Dr. Vukovich and five
times any payment made by the Company during the fiscal year prior to
termination to the 401(k) Plan and/or Money Purchase Plan on behalf of Dr.
Vukovich) (all such payments made to an officer in connection with the
termination of employment are referred to herein collectively as "Severance
Compensation"). The Severance Compensation shall be paid to the officer in the
same manner and on the same dates as the officer would have received such
compensation had the termination of the employment agreement not occurred.
Under the terms of the employment agreements, in the event that the
employment of any such officer is terminated by the Company in connection with
a "change in control" (as such term is defined in the employment agreements)
of the Company, the officer is entitled to receive the full amount of the
Severance Compensation. However, if, after giving the Company six months
notice, an officer terminates his employment with the Company in connection
with a change in control of the Company, the officer shall be entitled to
receive 75% of the Severance Compensation (100% of the Severance Compensation
in the case of Dr. Vukovich).
The Internal Revenue Code of 1986, as amended (the "Code"), imposes an
excise tax on and limits the Company's deduction of payments to terminated
employees following a change in control if the payments meet certain
requirements and exceed the limit set forth in the Code. Generally, this limit
is equal to three times the employee's average annual compensation for the
five taxable years preceding the year in which the change of control occurs.
The employment agreements provide that the Company shall pay any such excise
taxes assessed against the officers in connection with any Severance
Compensation payments made or benefits conferred under the employment
agreements, including, in connection with a change in control of the Company.
In the event of termination of an officer's employment with the Company for
any reason, the employment agreements provide that such officer shall have the
right to elect, during a period of seven months from the date of termination,
to exercise all options previously granted to the officer under all stock
option plans then adopted and maintained by the Company, whether or not such
options would then be exercisable. In the event of termination for any reason
by an officer, the employment agreements prohibit such officer from engaging
in any activities in direct competition with the Company for a two year
period. In the event of the "disability" (as such term is defined in the
employment agreements) of an officer, the employment agreements provide that
the officer shall be entitled to receive the full Severance Compensation from
the Company. The current terms of each of the employment agreements, which are
automatically renewed for successive one year periods upon their expiration,
expire as follows: Dr. Vukovich--December 1999; Mr. Loy--December 1997; and
Mr. Rascio--December 1997.
Effective February 2, 1996, Mr. Maris resigned in all capacities as an
officer and Director of the Company and its subsidiaries. In recognition of
his service and contributions to the growth of the Company, the Company has
made a lump sum payment to Mr. Maris, in connection with his resignation, in
the amount of $281,283.
10
<PAGE>
Further, all options to purchase the Company's Common Stock, which had been
granted to Mr. Maris, became immediately exercisable, and Mr. Maris shall be
entitled to exercise all or any part of such options for a period which is the
shorter of fourteen (14) months from the date of his resignation (April 1,
1997) or ten (10) years from the date of grant of each such option.
EMPLOYEES SAVINGS AND PROTECTION PLAN
All employees who have completed six months of service with the Company and
have attained age 20-1/2 are eligible to participate in the Company's 401(k)
Plan. The 401(k) Plan is intended to qualify under Section 401 of the Code.
The 401(k) Plan enables electing employees to save up to 20% of their pre-tax
compensation, subject to a dollar limit which is set by law, through
contributions to the 401(k) Plan. The Company may, but is not obligated to,
make matching contributions to the 401(k) Plan up to a limit of 3% of a
participant's compensation. The total of employee and Company contributions
under the 401(k) Plan for fiscal 1995 will be $756,433 of which the Company
will contribute $199,025. See the Summary Compensation Table for amounts to be
contributed by the Company under the 401(k) Plan to the accounts of the Named
Officers.
MONEY PURCHASE PENSION PLAN
In March 1993, the Company adopted the Money Purchase Plan. All full-time
employees who have completed one year of service with the Company and have
attained age 20-1/2 are eligible to participate in the Money Purchase Plan
(the "Eligible Participants"). For the 1995 fiscal year, the Company will
contribute an aggregate amount of $206,486 under the Money Purchase Plan,
which will be distributed to the accounts of the Company's employees who were
Eligible Participants as of December 31, 1995 pursuant to an allocation
percentage equal to 2% of each Eligible Participant's 1995 compensation up to
$150,000. Contributions to the Money Purchase Plan by the Company, including
the aggregate amount, if any, and the percentage of the annual compensation of
Eligible Participants to be contributed to their accounts, are determined by
the Compensation Committee subject to review by the Company's Board of
Directors. An Eligible Participant's rights in the funds in his or her Money
Purchase Plan account will vest 20% per year commencing after three years of
service with the Company. Full vesting occurs after seven years of service
with the Company. See the Summary Compensation Table for amounts to be
contributed by the Company under the Money Purchase Plan to the accounts of
the Named Officers for fiscal 1995.
RESTRICTED STOCK OPTION PLAN
The Restricted Option Plan is administered by the Compensation Committee
which may grant options to purchase Common Stock to selected employees,
consultants and Directors. Options granted under the Restricted Option Plan
are nontransferable. The Compensation Committee has the discretion to
establish the option exercise price, and the option exercise price may be less
than the fair market value of the Common Stock at the time of the grant of the
option. Options granted under the Restricted Option Plan may be exercised by
payment of the exercise price in cash or such other form of consideration as
may be deemed acceptable by the Compensation Committee. Shares issued pursuant
to the exercise of options under the Restricted Option Plan may be subject to
restrictions against disposition and an obligation of resale to the Company at
the original acquisition price. Such restrictions and obligations lapse as
determined by the Compensation Committee or as specified in the Restricted
Option Plan. The Restricted Option Plan provides for the lapse of restrictions
against disposition and the obligations of resale in the event of, among other
things, the shareholder's death, disability or retirement.
INCENTIVE STOCK OPTION PLAN
The Incentive Option Plan is administered by the Compensation Committee.
Under the Incentive Option Plan, the Compensation Committee may designate
employees, who have not reached age 65, to participate in the Incentive Option
Plan and may grant options to purchase shares of the Company's Common Stock to
such employees, including officers, of the Company and those subsidiaries of
the Company designated by the Board of Directors. All options granted under
the Incentive Option Plan are intended to qualify as "incentive stock
11
<PAGE>
options" as that term is defined in Section 422 of the Code. The exercise
price of an option granted under the Incentive Option Plan shall be determined
by the Compensation Committee, but may not be less than the fair market value
(or 110% of fair market value in the case of a 10% shareholder of the Company)
of the Common Stock on the date of grant of the option. Any number of options
may be granted to an employee under the Incentive Option Plan; provided, that
the aggregate fair market value (determined as of the date the option is
granted) of the shares of Common Stock for which options are exercisable for
the first time by an employee during any calendar year may not exceed
$100,000. Options granted under the Incentive Option Plan may have a term of
up to ten years (five years in the case of a 10% shareholder of the Company),
and the Compensation Committee may provide for the exercise of such options in
installments over a period of up to ten years (five years in the case of a 10%
shareholder). Appropriate adjustments will be made with respect to options in
the event of a stock dividend, stock split, share combination,
recapitalization, merger, consolidation, combination or other similar type
transaction, and if the Company will not survive any such transaction, then
employees may receive, at the discretion of the Board of Directors, substitute
options, cash, or some other form of consideration for outstanding options, or
may be given the right to accelerate the vesting and exercise of all such
options. The Incentive Option Plan provides that it shall terminate in August
1997. On April 4, 1996, there were 715,414 shares of Common Stock reserved for
issuance and available for grant pursuant to options under the Incentive
Option Plan.
In connection with the Board of Directors' approval and adoption of the
Equity Incentive Plan, subject to shareholder approval at the Annual Meeting,
the Board of Directors determined that it would be in the best interests of
the Company and its shareholders to cause an early termination of the
Incentive Option Plan if the Equity Incentive Plan is approved by the
shareholders of the Company at the Annual Meeting. Grants of incentive stock
options are permitted under the Equity Incentive Plan, and the employees of
the Company and its subsidiaries who are eligible to participate in the
Incentive Option Plan will be eligible to participate in the Equity Incentive
Plan. Accordingly, if the Equity Incentive Plan is approved by the
shareholders of the Company at the Annual Meeting, the Incentive Option Plan
will terminate as of the date of the Annual Meeting. Those options granted
under the Incentive Option Plan which are outstanding on the date of such
termination of the Incentive Option Plan, will remain outstanding and be
exercisable pursuant to their respective terms.
12
<PAGE>
OPTION GRANTS
The Company has options outstanding under its Restricted Option Plan and
Incentive Option Plan. The following table shows, for the fiscal year ended
December 31, 1995, certain information regarding options granted to each of
the Named Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
POTENTIAL REALIZABLE
% OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM (4)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#)(1) FISCAL YEAR(2) ($/SH) (3) DATE 5% ($) 10% ($)
- ------------------------ -------------- -------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Vukovich,
Ph.D................... -- --% $ -- -- $ -- $ --
Robert W. Loy........... 16,000 1.95% 18.25 9/18/98 46,080 96,640
50,000 6.11% 18.25 7/28/99 192,500 413,500
15,000 1.83% 18.25 10/13/99 60,300 130,350
Anthony A. Rascio, Esq. 5,000 .61% 18.25 7/28/99 19,250 41,350
2,000 .24% 18.25 10/13/99 8,040 17,380
Anthony P. Maris(5)..... 16,000 1.95% 18.25 4/1/97 23,200 47,200
50,000 6.11% 18.25 4/1/97 72,500 147,500
15,000 1.83% 18.25 4/1/97 21,750 44,250
</TABLE>
- --------
(1) Represents shares of Common Stock underlying options granted during the
years ended December 31, 1992 through December 31, 1994; such options were
repriced by the Company on September 14, 1995. The repriced options
retained their original vesting status and expiration dates.
(2) Includes all employee options repriced by the Company during 1995.
(3) Represents the fair market value of the Common Stock on the date these
options were repriced.
(4) The potential realizable value does not represent actual value. The value,
if any, a Named Officer may realize will depend upon the excess of the
fair market value of the Common Stock over the exercise price on the date
the option is exercised so that there is no assurance the value realized
by the Named Officer will be at or near the estimated value. The estimated
values are based upon assumptions of 5% and 10% appreciation,
respectively, in the fair market value of the Company's Common Stock from
the date of the repricing of these options through the expiration dates of
such options.
(5) Effective February 2, 1996, Mr. Maris resigned in all capacities as an
officer and Director of the Company and its subsidiaries. In connection
with his resignation, Mr. Maris may exercise all or any part of such
options through April 1, 1997.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is certain information with respect to options exercised by each
of the Named Officers during the fiscal year ended December 31, 1995 and
certain information regarding options held by each of the Named Officers at
December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS HELD AT FY-END (#) FY-END ($)(2)
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
- ------------------------ --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Vukovich,
Ph.D................... 89,565 $2,208,673 250,000 50,000 $ 0 $ 0
Robert W. Loy........... -- -- 64,000 17,000 0 0
Anthony A. Rascio, Esq.. -- -- 8,786 1,200 32,100 0
Anthony P. Maris(3)..... 8,000 162,000 79,834 17,000 170,216 0
</TABLE>
13
<PAGE>
- --------
(1) The amounts in this column represent the difference between the exercise
price and the average of the reported sales prices of the Company's Common
Stock on the NASDAQ National Market System on the date of exercise of the
stock options by the Named Officer. The amount actually realized by each
such Named Officer upon the sale of such shares of Common Stock may be
greater or less than, or the same as, the amounts shown above.
(2) The value of unexercised in-the-money options represents the difference
between an option's exercise price and the reported last sale price of the
Company's Common Stock on the NASDAQ National Market System on December
29, 1995 ($17.75 per share), which was the last trading day for the NASDAQ
National Market System during fiscal 1995. The actual value, if any, a
Named Officer may realize upon the exercise of an option will depend upon
the excess of the stock price over the exercise price on the date the
option is exercised, so that there is no assurance the value realized by a
Named Officer will be at or near the value which would have been realized
if such options were exercised on December 31, 1995.
(3) Effective February 2, 1996, Mr. Maris resigned in all capacities as an
officer and Director of the Company and its subsidiaries. In connection
with his resignation, all of Mr. Maris' options became immediately
exercisable and may be exercised through April 1, 1997.
REPORT ON OPTION REPRICING
During the fiscal year ended December 31, 1995, the Board of Directors
adopted and implemented a series of cost reduction measures in order to reduce
the Company's overall operating costs, achieve certain cost efficiencies and
improve the Company's overall operating performance. Certain salary reduction
measures, affecting employees at all levels, including the Named Officers,
were implemented in 1995. The Compensation Committee also examined the market
price of the Company's Common Stock over a period of time and determined that
the exercise price of certain stock options issued under the Incentive Option
Plan and the Restricted Option Plan were consistently higher than the average
market price of the Company's Common Stock over the period of time studied.
The Compensation Committee concluded that such stock options were not
providing the desired incentive to those employees of the Company whom the
Compensation Committee believed were making and were expected to continue to
make substantial contributions to the successful growth of the Company's
business.
In order to offset the effect of the salary reduction measures and to make
the incentive feature of certain options more meaningful to the employees whom
the Company believes are important to the future growth and success of the
Company, the Compensation Committee, which administers both of the Option
Plans, approved an adjustment in the exercise price of certain options to the
last reported sale price ($18.25) of the Company's Common Stock on the NASDAQ
National Market System on September 14, 1995. The repriced options retained
their original vesting status and expiration dates. The Compensation Committee
believes that the repricing of such options has had the desired effect and
will, once again, provide employees of the Company with an attractive
opportunity for increased equity ownership and a meaningful incentive to
remain in the employ of the Company for the long term. Certain of the Named
Officers of the Company were among those employees who had stock options
repriced.
COMPENSATION COMMITTEE
Dr. Yale Brozen
Dr. W. Robert Fowler
Digby W. Barrios
14
<PAGE>
Shown below is information with respect to all repricings of options held by
any Executive Officer of the Company during the period commencing on the date
of the Company's initial public offering (January 23, 1990) through December
31, 1995.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT REMAINING
OPTIONS TIME OF TIME OF NEW AT DATE OF
REPRICED REPRICING OR REPRICING EXERCISE REPRICING
NAME AND POSITION DATE OR AMENDED (#) AMENDMENT ($) AMENDMENT ($) PRICE ($) AMENDMENT
- ----------------- ------- -------------- ------------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Loy........... 9/14/95 16,000 $18.25 $19.50 $18.25 3 Yrs
Executive Vice 9/14/95 50,000 18.25 25.00 18.25 3 Yrs 11 Mos
President 9/14/95 15,000 18.25 25.00 18.25 4 Yrs 1 Mo
7/28/94 15,000 25.00 36.50 25.00 5 Yrs 2 Mos
Anthony A. Rascio....... 9/14/95 5,000 18.25 25.00 18.25 3 Yrs 11 Mos
Vice President, 9/14/95 2,000 18.25 25.00 18.25 4 Yrs 1 Mo
Secretary and 7/28/94 2,000 25.00 36.50 25.00 5 Yrs 2 Mos
General Counsel 9/18/90 10,000 3.875 6.00 3.875 5 Yrs 9 Mos
Anthony P. Maris(1)..... 9/14/95 16,000 18.25 19.50 18.25 3 Yrs
Former Employee/ 9/14/95 50,000 18.25 25.00 18.25 3 Yrs 11 Mos
Executive Officer 9/14/95 15,000 18.25 25.00 18.25 4 Yrs 1 Mo
7/28/94 15,000 25.00 36.50 25.00 5 Yrs 2 Mos
9/18/90 10,000 3.875 6.00 3.875 5 Yrs 9 Mos
Frank S. Caruso......... 9/18/90 10,000 3.875 6.00 3.875 5 Yrs 9 Mos
Former Employee/
Executive Officer
</TABLE>
- --------
(1) Notwithstanding the length of the original terms of such options on the
date of the repricing, as a result of his resignation from the Company,
all of Mr. Maris' options will expire on April 1, 1997, if not exercised.
DIRECTORS' COMPENSATION
Each Director who is not an employee of the Company is entitled to receive a
participation fee of $500 for each meeting of the Board of Directors attended
and a fee of $250 for each meeting attended of any committee of the Board of
Directors on which such Director serves. In addition, each Director who is not
an employee of the Company is entitled to receive a $7,500 fee annually for
services as a Director. The Company makes no payment to Directors who are
employees of the Company for their services on the Board of Directors or
committees thereof. The Company paid a total of $51,283 during the fiscal year
ended December 31, 1995 to Directors who are not employees of the Company.
Each of Mr. Miyamoto and Mr. Matsubara chose not to receive any compensation
for serving as a Director of Roberts in 1995. Nonemployee directors are
eligible to participate in the Company's Restricted Option Plan. During the
fiscal year ended December 31, 1995, no options were granted to any
nonemployee director; however, certain nonemployee directors did have
previously granted options repriced in connection with the repricing of
options held by certain employees of the Company. See "Report on Option
Repricing." Neither Mr. Miyamoto, Mr. Matsubara nor any other representative
of Yamanouchi, who has served on the Board of Directors, has received any
options from the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From January 1, 1995 through December 29, 1995, the Compensation Committee
consisted of Dr. Robert A. Vukovich, Dr. Yale Brozen and Dr. W. Robert Fowler.
Dr. Vukovich has been the Chairman, President and Chief Executive Officer of
the Company since its inception in 1983 and also has served and continues to
serve as an executive officer and/or Director of certain of the Company's
subsidiaries. Dr. Vukovich resigned from the
15
<PAGE>
Compensation Committee on December 29, 1995 in order to allow the Compensation
Committee to be comprised solely of outside Directors. See "Compensation
Committee Report on Executive Compensation--Executive Officer Compensation."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL COMPENSATION POLICIES
The base salaries and wages for all the Company's employees are managed
through the Company's wage and salary administration program. Increases in
base salary and wages are managed according to three guidelines: individual
merit, promotions and competitive factors. Guidelines are established each
year and vary in order to reflect the Company's performance and the
competitive environment and to manage appropriately the overall cost of wage
and salary growth.
The Company's compensation program is based on a pay for performance
criterion and consists of three key components: base salary, an annual
incentive bonus program and long term incentives through the granting of
equity based awards, such as stock options. The compensation program is
designed to attract, retain and motivate the best personnel possible for all
levels of the Company. The Company's various programs are designed to treat
all employees in a fair and equitable manner and have the following common
attributes upon which compensation is based:
. level of job responsibility;
. individual performance;
. company performance;
. competitive marketplace factors.
EXECUTIVE OFFICER COMPENSATION
The method of compensation of the Company's Executive Officers is consistent
with the Company's general compensation policies and is related to the
Company's growth and performance. The Compensation Committee is responsible
for administering the compensation program for Executive Officers of the
Company, the Management Incentive Compensation Plan, the Company's Option
Plans, the Money Purchase Plan and the 401(k) Plan. The Compensation Committee
believes that the Company's compensation practices should reward strategic
management of the business in the best long term interests of the
shareholders.
A portion of an Executive Officer's compensation may consist of bonus
payments under the Management Incentive Compensation Plan. Under this plan,
awards are based on the Company's performance and the employee's contribution
to that performance. The aggregate amount allocated to any individual award
under the Management Incentive Compensation Plan is determined by the
Compensation Committee.
The Company's long term incentives are generally in the form of stock option
grants. The objectives of the Company's stock option programs are to advance
the long term interests of the Company and its shareholders. Equity
compensation, in the form of stock options, is an important element of the
performance-based compensation of the Executive Officers. The grant of stock
options continues the Company's practice of providing for management's equity
ownership in order to ensure that their interests remain closely aligned with
those of the Company's shareholders. Equity ownership in the Company provides
a direct relationship between executive compensation and shareholder value.
Stock options provide the Company's key employees an opportunity for increased
equity ownership, and create an incentive to remain with the Company for the
long term.
16
<PAGE>
The compensation of the Company's Chief Executive Officer is determined by
the Compensation Committee based on its assessment of the Company's financial
and non-financial performance against a background of various factors. The
Committee has identified several factors which are critical to the success of
the business, including sales growth, business growth and achievement,
financial strength, progress toward achievement of goals and growth in
shareholder value. The Compensation Committee believes it is important that
these factors are well managed in order to maximize returns to the Company's
shareholders over the long term. Performance is reviewed on an annual basis.
Based on the Compensation Committee's review and evaluation of the various
performance factors outlined above, Dr. Vukovich was awarded an annual salary
of $540,000 for 1995, a 15% increase over the prior year. Dr. Vukovich
voluntarily elected to forego his salary for approximately two months during
1995, and was therefore paid an effective salary of $452,770 in 1995, a
decrease of 3.5% as compared to the salary paid in 1994 and a voluntary
reduction of 16% from the salary authorized for 1995.
Incentive bonus awards to the Chief Executive Officer are determined by the
Compensation Committee based on the Company's performance and the Compensation
Committee's assessment of the individual contribution of the Chief Executive
Officer to that performance. The Compensation Committee did not award any
bonus to Dr. Vukovich for 1995.
In 1993, the Company adopted the Money Purchase Plan which is available to
all full-time employees who have completed one year of service with the
Company and attained age 20 1/2. The Compensation Committee believes this
additional Company benefit will help attract, retain and motivate the best
personnel possible for all levels of the Company, particularly in light of the
fact that comparable benefits are offered by competitors of the Company. See
"Money Purchase Pension Plan."
Section 162(m) of the Code ("Section 162(m)"), which was enacted in 1993
(final regulations adopted December 19, 1995) for taxable years beginning on
or after January 1, 1994, generally disallows a tax deduction to public
companies for compensation over $1 million (per capita) paid to a
corporation's Chief Executive Officer and four other highest paid officers.
Qualifying performance-based compensation is not subject to the deduction
limit if certain requirements are met.
The 162(m) limitation has not yet had any significant effect upon the
Company and its ability to deduct, for tax purposes, the compensation paid to
the Company's Named Officers. Compensation paid, or to be paid, pursuant to
certain of the Company's employee benefit plans will not qualify for the
performance-based compensation exception to Section 162(m) by reason of Dr.
Vukovich's participation as a member of the Compensation Committee. Dr.
Vukovich resigned from the Compensation Committee in 1995 with the intention
that the Company would thus be able to attempt to qualify compensation to be
paid pursuant to future employee benefit plans under the performance-based
exception to Section 162(m).
The Compensation Committee recognizes that certain future events, such as a
change in control of the Company, the termination by the Company of certain
executive personnel or the exercise of certain stock options, depending upon
the difference between the fair market value of the Company's Common Stock and
the exercise price of such an option on the date of exercise, may result in
the disallowance of a portion of the Company's compensation deductions under
Section 162(m) as it relates to the Named Officers of the Company. See
"Employment and Resignation Agreements." Moreover, the Compensation Committee
may from time to time award compensation that may be non-deductible under
Section 162(m) when, in the exercise of the Compensation Committee's business
judgment, such award would be in the best interests of the Company.
COMPENSATION COMMITTEE
Dr. Yale Brozen
Dr. W. Robert Fowler
Digby W. Barrios
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's Executive Officers
and Directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes
in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission
("SEC"). Executive Officers, Directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all its Executive Officers, Directors, and
greater than ten percent beneficial owners complied with all filing
requirements applicable to them with respect to events or transactions during
fiscal 1995 except for the following reports which were filed late: (i) the
Form 4 required to be filed by Dr. Fowler for the month of August 1995, as a
result of the sale of shares of Common Stock by Dr. Fowler in that month, and
(ii) the Form 4 required to be filed by Mr. Rascio for the month of September
1995, as a result of the repricing in that month of options to acquire shares
of Common Stock which had been granted previously to Mr. Rascio. Each of Dr.
Fowler and Mr. Rascio, however, did promptly file a Form 4 upon realizing the
inadvertent omission.
ADOPTION OF THE EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
There will be presented at the Annual Meeting a proposal to approve and
adopt the Stock Purchase Plan. The Board of Directors of the Company approved
and adopted the Stock Purchase Plan, subject to shareholder approval, at a
meeting of the Board of Directors in December 1995. The Board of Directors
believes that the Stock Purchase Plan would advance the best interests of the
Company and its shareholders since the Board of Directors believes the
adoption of the Stock Purchase Plan will improve employee morale and increase
employee interest and involvement in the growth and development of the
Company's business by allowing employees to use salary deductions to invest in
the Company's Common Stock pursuant to a plan which is intended to qualify as
an "employee stock purchase plan" within the meaning of Section 423 of the
Code. The Stock Purchase Plan is neither a pension, profit-sharing, nor stock
bonus plan designed to qualify under Section 401(a) of the Code nor an
employee benefit plan subject to any of the provisions of the Employee
Retirement Income Security Act of 1974.
SUMMARY OF PROVISIONS OF STOCK PURCHASE PLAN
If approved by the shareholders of the Company at the Annual Meeting, the
Stock Purchase Plan shall become effective as of June 1, 1996. The Stock
Purchase Plan, if approved by the Company's shareholders, would be
administered by the Compensation Committee which shall have the authority to
interpret the provisions of the Stock Purchase Plan and to prescribe, amend
and rescind rules and regulations relating to the Stock Purchase Plan. The
Company intends to (i) establish and maintain separate accounts for all
participants under the Stock Purchase Plan, (ii) allocate shares of Common
Stock to participants' accounts on each investment date, and (iii) update
participants' accounts and issue quarterly statements to each participant
which track account activity, including sales, transfers and deliveries of
Common Stock, for the previous quarter. 500,000 shares of the Company's Common
Stock have been reserved for issuance under the Stock Purchase Plan. All
employees of the Company and any present or future subsidiary corporation of
the Company, except for any employee who owns 5% or more of the outstanding
shares of the Company's Common Stock or any employee who works 20 hours or
less per week or 5 months or less per calendar year, shall be eligible to
participate in the Stock Purchase Plan. As of April 4, 1996, there were
approximately 421 employees eligible to participate in the Stock Purchase
Plan.
GENERAL INFORMATION
Each eligible employee who elects to participate in the Stock Purchase Plan
shall be able to designate from 1% to 10% of the employee's compensation,
which shall be automatically deducted from the employee's
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paycheck, to purchase shares of the Company's Common Stock; provided, that no
employee participant may purchase in a particular plan year under this Stock
Purchase Plan, shares of Common Stock with a fair market value more than
$25,000. The amount of the salary deduction may be increased or reduced at any
time during the course of a plan year by an employee participant, and a
participating employee may cease participation in the Stock Purchase Plan at
any time.
The payroll deductions of employee participants shall be used to purchase
shares of the Company's Common Stock on the Friday immediately preceding the
15th day of the month following the end of each quarter during the Company's
fiscal year (the "Investment Date"). On an Investment Date, each participant
will be granted an option to purchase shares of the Company's Common Stock and
such option will be exercised immediately upon grant without any further
action of the participant. The purchase price for each share of Common Stock
to be acquired pursuant to the Stock Purchase Plan shall be equal to 85% of
the fair market value of the Common Stock on an Investment Date. For purposes
of the purchase price under the Stock Purchase Plan, "fair market value" shall
be the arithmetic average of the high and low sale prices on the Investment
Date of a share of Common Stock as reported on the NASDAQ National Market
System. On April 4, 1996, the closing price of the Company's Common Stock
reported on the NASDAQ National Market System was $19.375 and the average of
the high and low sale prices was $19.75.
FEDERAL INCOME TAX CONSEQUENCES
The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code. Generally,
neither the grant nor the exercise of an option under the Stock Purchase Plan
will have immediate tax consequences to the employee participants or the
Company; provided, that like incentive stock options, the employee participant
does not dispose of the shares of Common Stock acquired within two years of
the date of grant of the option or one year after the transfer of such shares
of Common Stock to the employee participant, and at all times during the
period beginning with the date of grant of the option and ending on the day
three months before the exercise of an option, the participant was an employee
of the Company or a subsidiary of the Company. The amounts deducted from an
employee participant's compensation for the purchase of shares of Common Stock
under the Stock Purchase Plan will not be excludable from such employee's
taxable compensation income and will generally be deductible by the Company as
compensation expense.
A portion of the gain, if any, recognized by an employee participant upon
the disposition of shares of Common Stock acquired under the Stock Purchase
Plan will be treated as compensation income to an employee participant,
taxable at ordinary federal income tax rates. If such disposition of shares of
Common Stock occurs more than two years after the date the option to purchase
shares was granted and more than one year after the date of transfer of such
shares to the employee participant, or in the event of the death of an
employee participant, at any time while owning shares of Common Stock acquired
pursuant to the Stock Purchase Plan, the amount of compensation income will be
limited to the lesser of (i) the excess of the fair market value of the shares
of Common Stock at the time of such disposition over the amount paid for such
shares or (ii) the excess of the fair market value of the shares of Common
Stock at the time the option was granted over the amount paid for such shares.
Income tax withholding would be required. The Company would not be entitled to
a business deduction for the amount of compensation income recognized by the
employee participant. The amount of such ordinary compensation income would be
added to the employee participant's basis of the shares of Common Stock
disposed of and any additional gain recognized by the holder of shares upon
such disposition will be taxed as a long-term capital gain.
If shares of Common Stock acquired pursuant to the Stock Purchase Plan are
disposed of within two years of the date of grant of the option or one year of
the date of transfer of the shares of Common Stock to the employee
participant, then a "disqualifying disposition" within the meaning of Section
421(b) of the Code will have occurred, and the employee participant must
recognize ordinary compensation income for the year in which the disqualifying
disposition occurred equal to the excess of the fair market value of such
shares of Common Stock on the date the option was exercised over the purchase
price paid for such shares of Common Stock.
19
<PAGE>
Income tax withholding would be required. The Company may claim a business
deduction for compensation expense equal to the amount of ordinary
compensation income recognized by the employee participant making the
disqualifying disposition. The amount of ordinary compensation income
recognized by the employee participant will be added to the employee's basis
in the shares of Common Stock disposed, and any remaining gain or loss
recognized by such employee from such disposition will be short-term or long-
term capital gain or loss, depending on the employee's holding period for the
shares of Common Stock. Gain or loss related to the disqualifying disposition
of any shares of Common Stock held for more than one year will be long-term
capital gain or loss.
The Board of Directors believes that the $1 million deduction limit imposed
by Section 162(m) of the Code with respect to compensation paid by the Company
to certain officers should not apply in connection with any disposition by an
employee participant of shares of Common Stock acquired pursuant to the Stock
Purchase Plan and held for the requisite holding periods since the Company is
not entitled to a business deduction for the amount of ordinary compensation
income recognized by the employee participant. The Board of Directors believes
that the $1 million deduction limit imposed by Section 162(m) would apply with
respect to the Company's deduction in connection with a disqualifying
disposition by certain officers of the Company since the compensation income
to be recognized results from the purchase of shares of Common Stock at a
discount from fair market value. However, the Board of Directors believes that
the potential impact of Section 162(m) with respect to the Stock Purchase Plan
is limited, particularly since Dr. Vukovich owns more than 5% of the shares of
the Company's outstanding Common Stock and is not eligible to participate in
the Stock Purchase Plan.
OTHER INFORMATION
Employee participants in the Stock Purchase Plan will have all of the rights
and privileges of a shareholder of the Company with respect to whole shares of
Common Stock purchased under the Stock Purchase Plan, including, without
limitation, the right to vote the shares with respect to any matter requiring
shareholder approval and the right to receive dividends. Any option granted
under the Stock Purchase Plan is not transferable other than by will or the
laws of descent and distribution. In the event of a stock split or share
combination, the number of shares reserved under the Stock Purchase Plan, and
the number of shares of Common Stock acquired pursuant to the Stock Purchase
Plan, shall be increased or decreased proportionately. In the event of any
other change affecting the Company's Common Stock, such adjustments shall be
made as deemed equitable by the Board of Directors. Upon retirement,
termination of employment or death, the amount of an employee participant's
payroll deductions not yet invested shall be refunded to the participant or
the participant's estate. The Stock Purchase Plan shall terminate when all
shares of Common Stock reserved for issuance are issued, or at any other time
at the discretion of the Board of Directors. The Board of Directors may amend
the Stock Purchase Plan in any respect, subject to shareholder approval if
required.
NEW PLAN BENEFITS
At this time, no options have been granted under the Stock Purchase Plan to
any employee of the Company or its subsidiaries, and it is not possible to
determine how many eligible employees will participate in the Stock Purchase
Plan. However, if the Stock Purchase Plan had been in effect during the
Company's entire 1995 fiscal year and each of the Named Officers of the
Company, who would have been eligible to participate during 1995, had
designated the maximum allowable amount of the officer's salary earned during
fiscal 1995 to purchase shares of the Company's Common Stock pursuant to the
terms of the Stock Purchase Plan, then the Named Officers would have acquired
the number of shares of the Company's Common Stock set forth in the following
table.
20
<PAGE>
ESTIMATED NEW PLAN BENEFITS
UNDER THE EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
MAXIMUM NUMBER OF SHARES
NAME AND POSITION EMPLOYEE CONTRIBUTION($)(1) OF COMMON STOCK(#)(2)
- ----------------- --------------------------- ---------------------
<S> <C> <C>
Robert A. Vukovich, Ph.D.... $ --(3) --(3)
President & Chief Executive
Officer
Peter M. Rogalin............ --(4) --(4)
Vice President, Treasurer
and Chief Financial Officer
Robert W. Loy(5)............ 18,650 999
Executive Vice President
Anthony A. Rascio, Esq...... 13,520 725
Vice President, Secretary
and General Counsel
Anthony P. Maris............ --(6) --(6)
Former Employee/Executive
Officer
Current Executive Officer
Group....................... 32,170(7) 1,724(7)
Non-Executive Officer
Director Group.............. --(8) --(8)
Non-Executive Officer
Employee Group.............. --(9) --(9)
</TABLE>
- --------
(1) Maximum employee contribution is based on the deduction of 10% of 1995
compensation and investment of such amount in the Stock Purchase Plan.
(2) Estimated number of shares of Common Stock which would have been acquired
pursuant to the Stock Purchase Plan is based on the investment during 1995
of employee contributions on each Investment Date at the fair market value
of the Common Stock on each such date.
(3) Dr. Vukovich owns more than 5% of the outstanding shares of the Company's
Common Stock and is not eligible to participate in the Stock Purchase
Plan.
(4) Mr. Rogalin was not an employee of the Company at any time during fiscal
1995 and, accordingly, it is not possible to determine his estimated
benefit in fiscal 1995 under the Stock Purchase Plan.
(5) During fiscal 1995, Mr. Loy served as a Vice President and Chief Operating
Officer of the Company. In March 1996, Mr. Loy assumed the newly created
position of Executive Vice President-Operations and New Business
Development.
(6) Effective February 2, 1996, Mr. Maris, a Named Officer of the Company
during fiscal 1995, resigned in all capacities as an officer and Director
of the Company and its subsidiaries and therefore, cannot participate in
the Stock Purchase Plan.
(7) Includes only Mr. Loy and Mr. Rascio.
(8) Only employees of the Company are eligible to participate in the Stock
Purchase Plan.
(9) The benefits to this group depend upon factors which are not within the
control of, or determinable by, the Company.
VOTE REQUIRED
Approval and adoption by the Company's shareholders of the Stock Purchase
Plan requires the affirmative vote of a majority of the votes cast at the
Annual Meeting by the holders of shares of Common Stock present in person or
represented by proxy. Any proxy containing an abstention and any share of
Common Stock present at the meeting that has abstained from voting on the
proposal to approve and adopt the Stock Purchase Plan will be counted as a
negative vote. Broker non-votes will not be counted as a vote cast on this
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND ADOPTION OF
THE STOCK PURCHASE PLAN.
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ADOPTION OF THE 1996 EQUITY INCENTIVE PLAN
INTRODUCTION
There will be presented at the meeting a proposal to approve and adopt the
Equity Incentive Plan. The Board of Directors of the Company has approved the
Equity Incentive Plan in order to advance the best interests of the Company
and its shareholders by enhancing the ability of the Company to attract and
retain employees and other persons who are in a position to make significant
contributions to the growth and success of the Company's business and to
encourage such employees and other persons to take into account the long-term
interests of the Company through ownership of shares of the Company's Common
Stock. If the Equity Incentive Plan is approved by the shareholders at the
Annual Meeting, the Company's Incentive Option Plan will be terminated as of
such date. See "Incentive Stock Option Plan."
SUMMARY OF PROVISIONS OF EQUITY INCENTIVE PLAN
If approved by the shareholders of the Company at the Annual Meeting, the
Equity Incentive Plan shall become immediately effective on such date. The
Equity Incentive Plan will terminate on May 21, 2006, unless earlier
terminated by the Board of Directors. The Equity Incentive Plan will be
administered by the Compensation Committee. The Equity Incentive Plan will
authorize the Compensation Committee to grant (i) "incentive stock options"
within the meaning of Section 422 of the Code, (ii) nonqualified stock
options, (iii) stock appreciation rights, (iv) restricted stock grants, (v)
deferred stock awards, and (vi) other stock based awards to employees of the
Company and its subsidiaries and other persons and entities who, in the
opinion of the Compensation Committee, are in a position to make a significant
contribution to the success of the Company and its subsidiaries. Awards may be
made singly, in combination or in tandem. As of April 4, 1996, there were
approximately 422 employees eligible to participate in the Equity Incentive
Plan. 1,500,000 shares of Common Stock will be reserved for issuance under the
Equity Incentive Plan, and the maximum number of shares of Common Stock which
could be issued to the Company's Chief Executive Officer pursuant to various
awards shall not exceed 35% of the shares of Common Stock reserved for
issuance thereunder, and the maximum number of shares to be issued to any
other employee or participant shall not exceed 20% of the shares of Common
Stock reserved for issuance thereunder. The Compensation Committee would
determine (i) the recipients of awards under the Equity Incentive Plan, (ii)
the times at which awards will be made, (iii) the size and type of awards, and
(iv) the terms, conditions, limitations and restrictions of awards.
AWARDS UNDER THE EQUITY INCENTIVE PLAN
Stock Options. The Compensation Committee can grant either incentive stock
options or nonqualified stock options. Only employees of the Company and its
subsidiaries may be granted incentive stock options. The exercise price of an
incentive stock option shall not be less than the fair market value, or, in
the case of a 10% or greater shareholder of the Company, 110% of the fair
market value of the Company's Common Stock on the date of grant. At the
discretion of the Compensation Committee, the exercise price of a nonqualified
stock option may be less than the fair market value of the Company's Common
Stock on the date of grant. For purposes of the exercise price of an option,
"fair market value" shall mean the arithmetic average of the highest and
lowest sale prices of the Common Stock reported on the NASDAQ National Market
System on a particular date. On April 4, 1996, the closing price of the
Company's Common Stock reported on the NASDAQ National Market System was
$19.375 and the average of the high and low sale prices was $19.75. The term
of an option and the time or times at which such option are exercisable shall
be set by the Compensation Committee; provided, however, that no option shall
be exercisable more than 10 years (5 years for an incentive stock option
granted to a 10% or greater shareholder of the Company) from the date of
grant, and with respect to an incentive stock option, the fair market value on
the date of grant of the shares of Common Stock which are exercisable by a
participant for the first time during any calendar year shall not exceed
$100,000. Payment of the exercise price shall be made in any form permitted by
the Compensation Committee, including cash or shares of the Company's Common
Stock.
Stock Appreciation Rights. The Compensation Committee may grant stock
appreciation rights ("SAR") either alone or in combination with an underlying
stock option. The term of an SAR and the time or times at which an SAR shall
be exercisable shall be set by the Compensation Committee; provided, that an
SAR granted
22
<PAGE>
in tandem with an option will be exercisable only at such times and to the
extent that the related option is exercisable. SARs entitle the grantees to
receive an amount in cash or shares of Common Stock with a value equal to the
excess of the fair market value of a share of Common Stock on the date of
exercise over the fair market value of a share of Common Stock on the date the
SAR was granted, which represents the same economic value that would have been
derived from the exercise of an option. Payment may be made in cash, in shares
of Common Stock or a combination of both at the discretion of the Compensation
Committee. If a SAR granted in combination with an underlying stock option is
exercised, the right under the underlying option to purchase shares of Common
Stock would terminate.
Restricted Stock Grants. The Compensation Committee may grant shares of
Common Stock under a restricted stock grant which would set forth the
applicable restrictions, conditions and forfeiture provisions which shall be
determined by the Compensation Committee and which may include restrictions on
transfer, continuous service with the Company or any of its subsidiaries,
achievement of business objectives, and individual, subsidiary and Company
performance. Shares of Common Stock may be granted pursuant to a restricted
stock grant for no consideration or for any consideration as determined by the
Compensation Committee. A grantee shall be entitled to vote the shares of
Common Stock and receive any dividends thereon prior to the termination of any
applicable restrictions, conditions or forfeiture provisions.
Deferred Stock Awards. The Compensation Committee may grant shares of Common
Stock under a deferred stock award, with the delivery of such shares of Common
Stock to take place at such time or times and on such conditions as the
Compensation Committee may specify. Shares of Common Stock may be granted
pursuant to deferred stock awards for no consideration or for any
consideration as determined by the Compensation Committee.
Other Stock Based Awards. The Compensation Committee may grant shares of
Common Stock to employees of the Company or its subsidiaries as bonus
compensation, or if agreed to by an employee, in lieu of such employee's cash
compensation.
FEDERAL INCOME TAX CONSEQUENCES
Stock Options. The grant of an incentive stock option or a nonqualified
stock option would not result in income for the grantee or in a deduction for
the Company.
The exercise of a nonqualified stock option would result in ordinary income
for the grantee and a business deduction for the Company measured by the
difference between the option's exercise price and the fair market value of
the shares of Common stock received at the time of exercise. If the Company is
required to withhold income taxes in connection with the exercise of a
nonqualified stock option, the Compensation Committee may, in its discretion,
permit such withholding obligation to be satisfied by the delivery of shares
of Common Stock held by the grantee or to be delivered to the grantee upon
exercise of the option.
The exercise of an incentive stock option would not result in income for the
grantee or in a business deduction for the Company if the employee does not
dispose of the shares of Common Stock acquired upon exercise within two years
after the date of grant of the option and one year after the transfer of the
shares of Common Stock upon exercise, and if the employee is an employee of
the Company or a subsidiary of the Company from the date of grant until three
months before the date of exercise. If these requirements are met, the basis
of the shares of Common Stock would be the exercise price. Any gain related to
the subsequent disposition of the shares of Common Stock would be taxed to the
employee as a long-term capital gain and the Company would not be entitled to
any deduction. The excess of the fair market value of the Common Stock on the
date of exercise over the exercise price is an item of tax preference,
potentially subject to the alternative minimum tax.
If an employee should dispose of the shares of Common Stock acquired
pursuant to the exercise of an incentive stock option prior to the expiration
of either of the designated holding periods, the employee would recognize
ordinary income and the Company would be entitled to a business deduction in
an amount equal to the lesser of the fair market value of the shares of Common
Stock on the date of exercise minus the option
23
<PAGE>
exercise price or the amount realized on disposition of the shares of Common
Stock minus the option exercise price. Any gain in excess of the ordinary
income recognized by the employee would be taxable as long-term or short-term
capital gain, depending on the holding period. If an option, intended to be an
incentive stock option, does not satisfy all of the requirements of an
incentive stock option pursuant to Section 422 of the Code when granted, the
employee would recognize ordinary income upon exercise of the option and the
Company would be entitled to a business deduction in an amount equal to the
fair market value of the shares of Common Stock on the exercise date minus the
option exercise price. Income tax withholding would be required. In the event
an option intended to be an incentive stock option does not qualify as such
when granted or when exercised, the Board of Directors believes that any
related deduction should not be subject to the annual $1 million per capita
limitation on employee remuneration for the Named Officers of the Company
imposed by Section 162(m) of the Code. The Board of Directors believes that
the income recognized by an employee or other participant upon the exercise of
an option granted under the Equity Incentive Plan should be qualified
performance-based compensation and, therefore, an exception to the limitations
imposed on the Company by Section 162(m) of the Code with respect to the
deductibility of a Named Officer's compensation during a particular calendar
year.
SARS. The grant of an SAR would not result in income for the grantee or in a
business deduction for the Company. Upon the exercise of an SAR, the grantee
would recognize ordinary income and the Company would be entitled to a
business deduction measured by the fair market value of the shares of Common
Stock plus any cash received. Income tax withholding would be required for
employees of the Company and its subsidiaries. The Board of Directors believes
that any income related to the exercise of SARs should be exempt from the $1
million limit of Section 162(m) of the Code pursuant to the performance-based
compensation exception.
Restricted Stock Grants and Deferred Stock Awards. If the shares of Common
Stock issued pursuant to a restricted stock grant or deferred stock award are
subject to restrictions resulting in a "substantial risk of forfeiture"
pursuant to the meaning of such term under Section 83 of the Code, the
restricted stock grant or deferred stock award would not result in income for
the grantee or in a business deduction for the Company for federal income tax
purposes. If there are no such restrictions, conditions, limitations or
forfeiture provisions, the grantee would recognize ordinary income and the
Company would be entitled to a business deduction upon receipt of the shares
of Common Stock. Dividends paid to the grantee while the stock remained
subject to any restrictions would be treated as compensation for federal
income tax purposes. At the time the restrictions lapse, the grantee would
receive ordinary income and the Company would be entitled to a business
deduction, subject to the $1 million deduction limitation under Section
162(m), measured by the fair market value of the shares of Common Stock at the
time of lapse. Income tax withholding would be required for employees of the
Company and its subsidiaries.
Other Stock Based Awards. Any employee of the Company or any of its
subsidiaries who receives shares of Common Stock as bonus compensation or in
lieu of the employee's cash compensation shall recognize ordinary income, and
the Company would be entitled to a business deduction, subject to the $1
million deduction limitation under Section 162(m), measured by the fair market
value of the shares of Common Stock issued to the employee.
OTHER INFORMATION
If there is a stock split, stock dividend or other relevant change affecting
the Company's Common Stock, appropriate adjustments will be made in the number
of shares of Common Stock or in the type of securities to be issued pursuant
to any award granted before such event. In the event of a merger,
consolidation, combination or other similar transaction involving the Company
in which the Company is not the surviving entity, either all outstanding stock
options and SARs shall become exercisable immediately and all restricted stock
grants and deferred stock awards shall immediately become free of all
restrictions and conditions, or the Compensation Committee may arrange to have
the surviving entity grant replacement awards for all outstanding awards. Upon
termination of service prior to age 65 for any reason other than death or
disability, or upon involuntary termination after age 65, stock options and
SARs which are exercisable as of the date of such termination may be exercised
within three months of the date of termination, and any restricted stock
grants and deferred stock awards which are still subject to any restriction
shall be forfeited to the Company. Upon death or disability or
24
<PAGE>
voluntary termination of service after age 65, all stock options and SARs
become immediately exercisable and may be exercised for a period of six months
(three months in the case of voluntary termination after age 65) after the
date of termination, and all restricted stock grants and deferred stock awards
shall become immediately free of all restrictions and conditions. The
Compensation Committee has the discretionary authority to alter or establish
the terms and conditions of an award in connection with termination of
service. The Board of Directors may amend, suspend or terminate the Equity
Incentive Plan; provided, that no such action may be taken without shareholder
approval if required pursuant to Section 16 of the Exchange Act, or Section
162(m) of the Code. The Company adopted SFAS No. 123 "Accounting for Stock-
Based Compensation" in 1996. The Company does not expect that the application
of SFAS No. 123 to the Equity Incentive Plan, if adopted by the shareholders,
will impact the Company's results of operations, financial position or cash
flows. For additional information with respect to SFAS No. 123, see "Note 1--
Recently Issued Accounting Standards" to the Company's consolidated financial
statements included in the annual report to shareholders.
NEW PLAN BENEFITS
At this time, no awards have been granted under the Equity Incentive Plan,
and it is not possible to state the terms or benefits of any individual awards
which may be issued under the Equity Incentive Plan, or which would have been
issued if the Equity Incentive Plan had been in effect during fiscal 1995, or
the name or positions of, or respective amounts of the allotment to, any
persons who may participate.
VOTE REQUIRED
Approval and adoption by the Company's shareholders of the Equity Incentive
Plan requires the affirmative vote of a majority of the votes cast at the
Annual Meeting by the holders of shares of Common Stock present in person or
represented by proxy. Any proxy containing an abstention and any share of
Common Stock present at the meeting that has abstained from voting on the
proposal to approve and adopt the Equity Incentive Plan will be counted as a
negative vote. Broker non-votes will not be counted as a vote cast on this
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND ADOPTION OF
THE EQUITY INCENTIVE PLAN.
ANNUAL REPORT
The annual report to shareholders for the fiscal year ended December 31,
1995 accompanies this Proxy Statement. Coopers & Lybrand L.L.P. has audited
the financial statements for the fiscal year ended December 31, 1995, which
financial statements are contained in the annual report to shareholders. Such
annual report, including the audited financial statements contained therein,
is not incorporated in this Proxy Statement and is not deemed to be a part of
the proxy soliciting material.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Selection of the independent public accountants for the Company is made by
the Board of Directors and is based upon the recommendation of the Company's
Audit Committee. Coopers & Lybrand L.L.P. was the Company's independent public
accountants for the fiscal year ended December 31, 1995. The Board of
Directors has selected Coopers & Lybrand L.L.P. to serve as the Company's
independent public accountants for the current fiscal year.
A representative of Coopers & Lybrand L.L.P. will be present at the meeting
and will have an opportunity to make a statement if the representative desires
to do so. Said representative will also be available to respond to appropriate
questions from shareholders of the Company.
SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the Company's next Annual Meeting
of shareholders must be received by the Company at its principal executive
offices for inclusion in its proxy statement and form of proxy relating to
that meeting no later than December 30, 1996. The Company's By-Laws contain
certain procedures which must be followed in connection with shareholder
proposals.
25
<PAGE>
MANAGEMENT OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS AND FOR THE PROPOSAL TO APPROVE AND ADOPT
THE STOCK PURCHASE PLAN AND FOR THE PROPOSAL TO APPROVE AND ADOPT THE EQUITY
INCENTIVE PLAN.
THE COMPANY SUBMITS TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. COPIES OF THE REPORT WILL BE FURNISHED WITHOUT CHARGE
UPON WRITTEN REQUEST RECEIVED FROM ANY HOLDER OF RECORD OR BENEFICIAL OWNER OF
SHARES OF THE COMMON STOCK OF THE COMPANY. REQUESTS SHOULD BE DIRECTED TO
INVESTOR RELATIONS, ROBERTS PHARMACEUTICAL CORPORATION, MERIDIAN CENTER II, 4
INDUSTRIAL WAY WEST, EATONTOWN, NEW JERSEY 07724.
ALL SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND SEND IN THEIR PROXIES
WITHOUT DELAY TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, 2 BROADWAY, 19TH
FLOOR, NEW YORK, NY 10004. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION
WILL BE APPRECIATED.
ANTHONY A. RASCIO, Esq.
Vice President and Secretary
April 29, 1996
26
<PAGE>
ROBERTS PHARMACEUTICAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS -- MAY 22, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates and appoints Robert A. Vukovich, Ph.D.,
Anthony A. Rascio, Esq. and W. Robert Fowler, M.D. and each of them, the true
and lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, to vote with respect to all of the shares of Common Stock of
ROBERTS PHARMACEUTICAL CORPORATION standing in the name of the undersigned at
the close of business on April 4, 1996, at the annual meeting of shareholders to
be held at the Company's headquarters, Meridian Center II, 4 Industrial Way
West, Eatontown, New Jersey 07724, on May 22, 1996 at 10:00 a.m., and at any and
all adjournment or adjournments thereof, with all powers that the undersigned
would possess if personally present and especially (but without limiting the
general authorization and power hereby given) to vote as indicated on the
reverse side of this Proxy.
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [ ] to vote for all nominees listed below [ ]
Robert A. Vukovich, Ph.D., Robert W. Loy, Anthony A. Rascio, Esq., Peter M. Rogalin, Takao Miyamoto, Akihiko Matsubara,
W. Robert Fowler, M.D. and Digby W. Barrios.
</TABLE>
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
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2. To approve and adopt the Roberts Pharmaceutical Corporation Employee
Stock Purchase Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve and adopt the Roberts Pharmaceutical Corporation 1996 Equity
Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion upon such other matters as may properly come before
the meeting or any adjournment or adjournments thereof.
(Continued, and to be Signed, on Reverse Side)
<PAGE>
The shares represented by this Proxy will be voted in the manner directed,
and if no instructions to the contrary are indicated, will be voted FOR the
election of the nominees indicated on the reverse side of this Proxy and FOR the
proposal to approve and adopt the Roberts Pharmaceutical Corporation Employee
Stock Purchase Plan as indicated on the reverse side of this Proxy and FOR the
proposal to approve and adopt the Roberts Pharmaceutical Corporation 1996 Equity
Incentive Plan as indicated on the reverse side of ths Proxy.
NOTE: Please mark, sign, date and return
promptly in the envelope provided. No
postage is required if mailed in the
United States.
DATE: , 1996
-------------------------
------------------------------------
(Signature)
------------------------------------
(Signature)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS.
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
SET FORTH YOUR FULL TITLE. IF SIGNER IS A
CORPORATION, PLEASE SIGN THE FULL
CORPORATE NAME BY A DULY AUTHORIZED
OFFICER. JOINT OWNERS SHOULD EACH SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
ROBERTS PHARMACEUTICAL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. Definitions
"Account" means an Employee Stock Purchase Plan account maintained by the
Company or a third party administrator selected by the Committee.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board of Directors of
Roberts Pharmaceutical Corporation.
"Common Stock" means Roberts Pharmaceutical Corporation Common Stock, $.01 par
value per share.
"Company" means Roberts Pharmaceutical Corporation.
"Current Eligible Compensation" for any pay period means the gross amount of
Eligible Compensation with respect to which net amounts are actually paid in
such pay period.
"Default Dollar Amount" for any Plan Year means the lesser of (i) the dollar
amount payroll deduction, if any, as in effect for a Participating Employee as
of the end of the previous Plan Year and (ii) the maximum dollar amount payroll
deduction, if any, allowable for such Participating Employee for such Plan Year.
"Eligible Compensation" means base salary, adjusted compensation, incentive
compensation, overtime, bonuses, and/or other regular payments, unless otherwise
determined by the Committee. Eligible Compensation does not include any
payments for reimbursement for expenses, deferred profit-sharing distributions,
deferred compensation, or other non-regular payments unless otherwise determined
by the Committee.
"Eligible Employee" means employees eligible to participate in the Plan pursuant
to the provisions of Section 5.
"Fair Market Value" means the average of the high and low sale prices of a
share of Common Stock as reported on the Automated Quotation System of the
National Association of Securities Dealers, Inc., National Market System on the
date in question or, if the Common Stock shall not have been traded on such
system on such date, the average of the high and low sale prices on such system
on the first day prior thereto on which the Common Stock was so traded or such
other amount as may be determined by the Committee by any fair and reasonable
means.
<PAGE>
"Investment Date" means the Friday immediately preceding the 15th day of the
month following the end of each calendar quarter.
"Participating Employee" means an employee (i) for whom payroll deductions are
currently being made or (ii) for whom payroll deductions are not currently being
made because he or she has reached the limitations set forth in Section 7.
"Plan" means this Roberts Pharmaceutical Corporation Employee Stock Purchase
Plan.
"Plan Year" means a calendar year.
"Regular Paycheck" means bi-weekly base salary paychecks.
"Subsidiary" means any present or future corporation of which the Company owns
or controls, or will own or control, directly or indirectly, more than 50% of
the total combined voting power of all classes of stock or other equity
interests.
2. Purpose of the Plan.
The purpose of the Plan is to secure for the Company and its shareholders the
benefits of the incentive inherent in the ownership of the Company's Common
Stock by present and future employees of the Company and its Subsidiaries. The
Plan is intended to comply with the provisions of Sections 421, 423 and 424 of
the Code, and the Plan shall be administered, interpreted and construed in
accordance with such provisions.
3. Shares Reserved for the Plan.
There shall be reserved for issuance and purchase by Eligible Employees under
the Plan an aggregate of 500,000 shares of Common Stock, subject to adjustment
as provided in Section 13. Shares subject to the Plan may be shares now or
hereafter authorized but unissued, or shares that were once issued and
subsequently reacquired by the Company. If and to the extent that any right to
purchase shares of Common Stock hereunder shall not be exercised by any employee
for any reason or if such right to purchase shall terminate as provided herein,
shares that have not been so purchased hereunder shall again become available
for the purposes of the Plan unless the Plan shall have been terminated;
provided, that such unpurchased shares shall not be deemed to increase the
aggregate number of shares specified above to be reserved for purposes of the
Plan (subject to adjustment as provided in Section 13).
4. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee may request
advice or assistance or employ such other persons as
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<PAGE>
the Committee deems necessary for proper administration of the Plan. Subject to
the express provisions of the Plan, the Committee shall have authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, and to make all other determinations necessary or
advisable in administering the Plan, all of which determinations shall be final
and binding upon all persons.
5. Eligible Employees.
All employees of the Company and each Subsidiary designated by the Committee
shall be eligible to participate in the Plan, provided that each such employee:
(a) does not own, immediately after any right is granted hereunder, stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of capital stock of the Company or of a Subsidiary; and
(b) customarily works for the Company or any Subsidiary more than twenty
(20) hours per week; and
(c) is customarily employed by the Company or any Subsidiary for more than
five (5) months of any calendar year.
For purposes of determining whether an employee owns five percent (5%) or more
of the Common Stock, the rules of section 424(d) of the Code shall apply and
Common Stock that the employee may purchase under outstanding options granted by
the Company shall be treated as Common Stock owned by the employee. Eligible
Employees who have been or will be terminated or retired as of the first day of
a Plan Year cannot participate in such Plan Year. From time to time, the
Committee shall have the authority to limit or expand the entities participating
in the Plan from among a group consisting of the Company, any Subsidiary, or the
Company's parent, if applicable.
6. Election to Participate and Payroll Deductions.
Each Eligible Employee may elect to participate in the Plan at any time during
the Plan Year.
Each Eligible Employee may elect a payroll deduction of from one percent (1%) to
ten percent (10%) of Current Eligible Compensation from each paycheck in
increments of 1% (i.e. 1%, 2%, 3%, but not 3,5%, etc.). Each Eligible Employee
-3-
<PAGE>
may in the alternative elect a payroll deduction of an annual dollar amount of
from 1% to 10% of Eligible Compensation. Such annual dollar amount shall be
divided by the number of Regular Paychecks in the Plan Year from which payroll
deductions are to be made and the result shall be deducted from each Regular
Paycheck. If any such payroll deduction would exceed the amount of any of a
Participating Employee's Regular Paychecks such Participating Employee may make
a direct payment by personal check in the amount of such shortfall. A
Participating Employee may not change the manner of payroll deduction (i.e.,
percentage vs. dollar amount) during a Plan Year. Elections under this Section 6
are subject to the limits set forth in Section 7. All payroll deductions shall
be credited, as promptly as practicable, to an Account in the name of the
Participating Employee and may be used by the Company for any corporate purpose.
Unless an Eligible Employee elects otherwise prior to the beginning of a
Plan Year, an Eligible Employee who is a Participating Employee on the day
before a Plan Year commences will be deemed (i) to have elected to participate
in such Plan Year and (ii) to have authorized the same type of payroll deduction
(i.e. percentage or dollar amount) for such Plan Year as in effect for such
employee on the day before such Plan Year commences. That payroll deduction
will be either the same percentage deduction in effect for such employee on the
day before such Plan Year commences or the Default Dollar Amount, as applicable.
A Participating Employee may at any time cease participation in the Plan by
filing the required form with the Company. The cessation will be effective as
soon as practicable, whereupon no further payroll deductions shall be made, and
payroll deductions not theretofore invested shall be invested as provided in
Section 9, or shall be refunded to the Participating Employee, or his or her
estate, if cessation is in connection with such employee's retirement,
termination of employment or death. Any Participating Employee who ceases to
participate may elect to participate again, if then eligible, which
participation shall become effective with the first pay period which may be
practicable. A Participating Employee may at any time during the Plan Year
increase or decrease his or her payroll deductions by filing the
required form with the Company, which increase or decrease shall become
effective with the first pay period to which it may be practicably applied.
7. Limitation of Number of Shares that an Employee May Purchase.
No right to purchase shares under this Plan shall permit an employee to purchase
stock under all employee stock purchase plans of the Company and its
Subsidiaries (as defined in Section 423 of the Code) at a rate which in the
aggregate exceeds $25,000 of Fair Market Value of such stock (determined at the
time the right is granted, which, in the case of this Plan, is the
-4-
<PAGE>
Investment Date) for each calendar year in which the right is outstanding at any
time.
8. Purchase Price.
The purchase price for each share of Common Stock shall be eighty-five percent
(85%) of the Fair Market Value of such share of Common Stock on the Investment
Date.
9. Method of Purchase and Investment Accounts.
As of each Investment Date, each Participating Employee shall be offered the
right to purchase, and shall be deemed, without any further action, to have
purchased, the number of whole and fractional shares of Common Stock determined
by dividing the amount of his or her payroll deductions not theretofore invested
by the purchase price as determined in Section 8. All such shares shall be
maintained in separate Accounts for the Participating Employees. All dividends
paid with respect to such shares shall be credited to each Participating
Employee's Account, and will be automatically reinvested in whole and fractional
shares of Common Stock, unless the Participating Employee elects not to have
such dividends reinvested.
10. Title of Accounts.
Each Account may be in the name of the Participating Employee or, if he or she
so indicates on the appropriate form, in his or her name jointly with another
person, with right of survivorship. A Participating Employee who is a resident
of a jurisdiction that does not recognize such a joint tenancy may have an
Account in his or her name as tenant in common with another person, without
right of survivorship.
11. Rights as a Shareholder.
At the time funds from a Participating Employee's payroll deductions account are
used to purchase the Common Stock, he or she shall have all of the rights and
privileges of a shareholder of the Company with respect to whole shares
purchased under the Plan whether or not certificates representing full shares
have been issued.
12. Rights Not Transferable.
Rights granted under the Plan are not transferable by a Participating Employee
other than by will or the laws of descent and distribution and are exercisable
during the Participating Employee's lifetime only by the Participating Employee.
-5-
<PAGE>
13. Adjustment in Case of Changes Affecting the Company's Common Stock.
In the event of a subdivision or consolidation of outstanding shares of Common
Stock, or the payment of a stock dividend thereon, the number of shares of
Common Stock reserved under this Plan shall be increased or decreased
proportionately, and such other adjustment shall be made as may be deemed
necessary or equitable by the Board of Directors, subject to shareholder
approval if required. In the event of any other change affecting the Common
Stock, such adjustment shall be made as may be deemed equitable by the Board of
Directors to give proper effect to such event, subject to the limitations of
Section 424 of the Code.
14. Retirement, Termination and Death.
In the event of a Participating Employee's retirement or termination of
employment during a Plan Year, the amount of his or her payroll deductions not
theretofore invested shall be refunded to him or her, and in the event of his or
her death shall be paid to his or her estate, any such refund or payment to be
made as soon as practicable after the next Investment Date.
15. Amendment of the Plan.
The Board of Directors may at any time, or from time to time, amend the Plan in
any respect; provided, however, that the Plan may not be amended in any way that
will cause rights issued under it to fail to meet the requirements for employee
stock purchase plans as defined in Section 423 of the Code, including
shareholder approval if required.
16. Termination of the Plan.
The Plan and all rights of employees hereunder shall terminate:
(a) on the Investment Date that Participating Employees become entitled to
purchase a number of shares of Common Stock greater than the number of
shares of Common Stock reserved for issuance and remaining available
for purchase hereunder; or
(b) at any time, at the discretion of the Board of Directors.
In the event that the Plan terminates under circumstances described in (a)
above, reserved shares of Common Stock remaining as of the termination date
shall be sold to Participating Employees on a pro rata basis.
-6-
<PAGE>
17. Effective Date of the Plan.
The Plan shall be effective as of June 1, 1996.
18. Governmental and Other Regulations.
The Plan, and the grant and exercise of the rights to purchase shares of Common
Stock hereunder, and the Company's obligation to sell and deliver shares upon
the exercise of rights to purchase shares, shall be subject to all applicable
Federal, state and foreign laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required.
19. Indemnification of Committee.
Service on the Committee shall constitute service as a director of the Company
so that members of the Committee shall be entitled to indemnification and
reimbursement pursuant to the Company's By-Laws for expenses and liabilities
actually and reasonably incurred as a result of the defense of a proceeding
involving a member of the Committee in connection with actions taken by the
Committee with respect to the Plan.
-7-
<PAGE>
ROBERTS PHARMACEUTICAL CORPORATION
1996 EQUITY INCENTIVE PLAN
1. PURPOSE.
--------
The purpose of this Roberts Pharmaceutical Corporation 1996 Equity
Incentive Plan (the "Plan") is to advance the interests of Roberts
Pharmaceutical Corporation (the "Company") and its subsidiaries by
enhancing the ability of the Company to (i) attract and retain employees
and other persons or entities who are in a position to make significant
contributions to the success of the Company and its subsidiaries; (ii)
reward such persons for such contributions; and (iii) encourage such
persons or entities to take into account the long-term interest of the
Company through ownership of shares of the Company's common stock, $.01
par value per share (the "Common Stock").
The Plan is intended to accomplish these objectives by enabling the
Company to grant awards ("Awards") in the form of incentive stock options
("ISOs"), nonqualified stock options ("Nonqualified Options") (ISOs and
Nonqualified Options shall be collectively referred to herein as
"Options"), stock appreciation rights ("SARs"), restricted stock
("Restricted Stock"), deferred stock ("Deferred Stock"), or other stock
based awards ("Other Stock Based Awards"), all as more fully described
below.
2. ADMINISTRATION.
---------------
The Plan will be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"). The
Committee may be constituted to permit the Plan to comply with the
"disinterested administration" requirement of Rule 16b-3(c)(2)(i)
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor rules, and to comply with the "outside
director" requirement of Section 162(m)(4)(c)(i) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder, or any successor rules. The Committee will determine the
recipients of Awards, the times at which Awards will be made, the size and
type or types of Awards to be made to each recipient, and will set forth
in each such Award the terms, conditions and limitations applicable to the
Award granted. Awards may be made singly, in combination or in tandem.
The Committee will have full and exclusive power to interpret the Plan, to
adopt rules, regulations and guidelines relating to the
<PAGE>
Plan, to grant waivers of Plan restrictions and to make all of the
determinations necessary for its administration. Such determinations and
actions of the Committee, and all other determinations and actions of the
Committee made or taken under authority granted by any provision of the
Plan, will be conclusive and binding on all parties.
3. EFFECTIVE DATE AND TERM OF PLAN.
--------------------------------
The Plan will become effective on May 22, 1996. Awards under the Plan may
be made prior to that date, subject to the shareholders' approval of the
Plan.
The Plan will terminate on May 21, 2006, subject to earlier termination of
the Plan by the Board pursuant to Section 18 herein. No Award may be
granted under the Plan after the termination date of the Plan, but Awards
previously granted may extend beyond that date pursuant to the terms of
such Awards.
4. SHARES SUBJECT TO THE PLAN.
---------------------------
Subject to adjustment as provided in Section 16 herein, the aggregate
number of shares of Common Stock reserved for issuance pursuant to Awards
granted under the Plan shall be 1,500,000. The maximum number of shares
of Common Stock which may be issued to the Chief Executive Officer ("CEO")
of the Company pursuant to all Awards granted the CEO under the Plan shall
not exceed thirty-five percent (35%) of the number of shares of the
Company's Common Stock reserved for issuance hereunder. The maximum
number of shares of the Company's Common Stock awarded to any other
"Participant" (as defined in Section 5 below) pursuant to all Awards
granted to such Participant under the Plan shall not exceed twenty percent
(20%) of the number of shares of the Company's Common Stock reserved for
issuance hereunder.
The shares of Common Stock delivered under the Plan may be either
authorized but unissued shares of Common Stock or shares of the Company's
Common Stock held by the Company as treasury shares, including shares of
Common Stock acquired by the Company in open market and private
transactions. No fractional shares of Common Stock will be delivered
pursuant to Awards granted under the Plan and the Committee shall
determine the manner in which fractional share value will be treated.
If any Award requiring exercise by a Participant for delivery of shares of
Common Stock is cancelled or terminates without having been exercised in
full, or if any Award payable in shares of Common Stock or cash is
satisfied in cash rather than Common Stock, the number of shares of
-2-
<PAGE>
Common Stock as to which such Award was not exercised or for which cash
was substituted will be available for future Awards of Common Stock;
provided, however, that Common Stock subject to an Option cancelled upon
the exercise of an SAR shall not again be available for Awards under the
Plan unless, and to the extent that, the SAR is settled in cash. Shares
of Restricted Stock and Deferred Stock forfeited to the Company in
accordance with the Plan and the terms of the particular Award shall be
available again for Awards under the Plan unless the Committee determines
otherwise.
5. ELIGIBILITY AND PARTICIPATION.
------------------------------
Those eligible to receive Awards under the Plan (each, a "Participant" and
collectively, the "Participants") will be persons in the employ of the
Company or any of its subsidiaries designated by the Committee
("Employees") and other persons or entities who, in the opinion of the
Committee, are in a position to make a significant contribution to the
success of the Company or its subsidiaries, including, without limitation,
consultants and agents of the Company or any subsidiary; provided, that
such consultants and agents have been actively engaged in the conduct of
the business of the Company or any subsidiary. A "subsidiary" for purposes
of the Plan will be a present or future corporation of which the Company
owns or controls, or will own or control, directly or indirectly, more than
50% of the total combined voting power of all classes of stock or other
equity interests.
6. OPTIONS.
--------
(a) Nature of Options. An Option is an Award entitling the Participant to
------------------
purchase a specified number of shares of Common Stock at a specified
exercise price. Both ISOs, as defined in Section 422 of the Code, and
Nonqualified Options may be granted under the Plan; provided however,
that ISOs may be awarded only to Employees.
(b) Exercise Price. The exercise price of each Option shall be equal to
---------------
the "Fair Market Value" (as defined below) of the Common Stock on the
date the Award is granted to the Participant; provided, however, that
(i) in the Committee's discretion, the exercise price of a
Nonqualified Option may be less than the Fair Market Value of the
Common Stock on the date of grant; (ii) with respect to a Participant
who owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company, the option price of an ISO
granted to such Participant shall not be less than one hundred and ten
percent (110%) of the Fair Market Value of the Common Stock on the date
the Award is granted; and (iii) with respect to any Option repriced
-3-
<PAGE>
by the Committee, the exercise price shall be equal to the Fair Market
Value of the Common Stock on the date such Option is repriced unless
otherwise determined by the Committee. For purposes of this Plan, Fair
Market Value shall mean the arithmetic average of the highest and
lowest sale prices of the Common Stock as reported on the Automated
Quotation System of the National Association of Securities Dealers,
Inc. National Market System ("NASDAQ National Market System"), on a
particular date, or if there is no sale on such date, then the average
of such high and low sale prices on the last previous date on which a
sale of Common Stock is reported on the NASDAQ National Market System.
(c) Duration of Options. The term of each Option granted to a Participant
--------------------
pursuant to an Award shall be determined by the Committee; provided,
however, that in no case shall an Option be exercisable more than ten
(10) years (five (5) years in the case of an ISO granted to a
ten-percent shareholder as defined in (b) above) from the date of the
Award.
(d) Exercise of Options and Conditions. Except as otherwise provided in
----------------------------------
Sections 16 and 17 herein, and except as otherwise provided below with
respect to ISOs, Options granted pursuant to an Award will become
exercisable at such time or times, and on and subject to such
conditions, as the Committee may specify at the time of the Award.
The Options may be subject to such restrictions, conditions and
forfeiture provisions as the Committee may determine, including, but
not limited to, restrictions on transfer, continuous service with the
Company or any of its subsidiaries, achievement of business
objectives, and individual, division and Company performance. To the
extent exercisable, an Option may be exercised either in whole at any
time or in part from time to time. With respect to an ISO granted to
a Participant, the Fair Market Value of the shares of Common Stock on
the date of grant which are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000.
(e) Payment for and Delivery of Stock. Full payment for shares of Common
---------------------------------
Stock purchased will be made at the time of the exercise of the
Option, in whole or in part. Payment of the purchase price will be
made in cash or in such other form as the Committee may permit,
including, without limitation, delivery of shares of Common Stock.
-4-
<PAGE>
7. STOCK APPRECIATION RIGHTS.
--------------------------
(a) Nature of Stock Appreciation Rights. A SAR is an Award entitling the
------------------------------------
recipient to receive payment, in cash and/or shares of Common Stock,
determined in whole or in part by reference to appreciation in the
value of a share of Common Stock. A SAR entitles the recipient to
receive in cash and/or shares of Common Stock, with respect to each
SAR exercised, the excess of the Fair Market Value of a share of
Common Stock on the date of exercise over the Fair Market Value of a
share of Common Stock on the date the SAR was granted.
(b) Grant of SARs. SARs may be subject to Awards in tandem with, or
--------------
independently of, Options granted under the Plan. A SAR granted in
tandem with an Option which is not an ISO may be granted either at or
after the time the Option is granted. A SAR granted in tandem with an
ISO may be granted only at the time the ISO is granted and may expire
no later than the expiration of the underlying ISO.
(c) Exercise of SARs. A SAR not granted in tandem with an Option will
-----------------
become exercisable at such time or times, and on such conditions, as
the Committee may specify. A SAR granted in tandem with an Option
will be exercisable only at such times, and to the extent, that the
related Option is exercisable. A SAR granted in tandem with an ISO
may be exercised only when the market price of the shares of Common
Stock subject to the ISO exceeds the exercise price of the ISO, and
the SAR may be for no more than one hundred percent (100%) of the
difference between the exercise price of the underlying ISO and the
Fair Market Value of the Common Stock subject to the underlying ISO at
the time the SAR is exercised. At the option of the Committee, upon
exercise, an SAR may be settled in cash, Common Stock or a combination
of both.
8. RESTRICTED STOCK.
-----------------
A Restricted Stock Award entitles the recipient to acquire shares of
Common Stock, subject to certain restrictions or conditions, for no cash
consideration, if permitted by applicable law, or for such other
consideration as may be determined by the Committee. The Award may be
subject to such restrictions, conditions and forfeiture provisions as the
Committee may determine, including, but not limited to, restrictions on
transfer, continuous service with the Company or any of its subsidiaries,
achievement of business objectives, and individual, division and Company
performance. Subject to such restrictions, conditions and forfeiture
provisions as may be established by the Committee, any Participant
receiving an Award of Restricted
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Stock will have all the rights of a shareholder of the Company with
respect to the shares of Restricted Stock, including the right to vote the
shares and the right to receive any dividends thereon.
9. DEFERRED STOCK.
---------------
A Deferred Stock Award entitles the recipient to receive shares of Common
Stock to be delivered in the future. Delivery of the shares of Common
Stock will take place at such time or times, and on such conditions, as
the Committee may specify. At the time any Deferred Stock Award is
granted, the Committee may provide that the Participant will receive an
instrument evidencing the Participant's right to future delivery of
Deferred Stock.
10. OTHER STOCK BASED AWARDS.
-------------------------
The Committee shall have the right to grant Other Stock Based Awards under
the Plan to Employees which may include, without limitation, the grant of
shares of Common Stock as bonus compensation and the issuance of shares of
Common Stock in lieu of an Employee's cash compensation.
11. AWARD AGREEMENTS.
-----------------
The grant of any Award under the Plan may be evidenced by an agreement
which shall describe the specific Award granted and the terms and
conditions of the Award. Any Award shall be subject to the terms and
conditions of any such agreement required by the Committee.
12. TRANSFERS.
----------
No Award (other than an outright Award in the form of Common Stock without
any restrictions) may be assigned, pledged or transferred other than by
will or by the laws of descent and distribution and, during a
Participant's lifetime, will be exercisable only by the Participant or, in
the event of a Participant's incapacity, by the Participant's guardian or
legal representative.
13. RIGHTS OF A SHAREHOLDER.
------------------------
Except as specifically provided by the Plan, the receipt of an Award will
not give a Participant rights as a shareholder of the Company. The
Participant will obtain such rights, subject to any limitations imposed by
the Plan, or the instrument evidencing the Award, upon actual receipt of
shares of Common Stock.
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14. CONDITIONS ON DELIVERY OF STOCK.
--------------------------------
The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove any restrictions or legends from shares
of Common Stock previously delivered under the Plan until, (a) in the
opinion of the Company's counsel, all applicable federal and state laws
and regulations have been complied with, (b) until the shares of Common
Stock to be delivered have been listed or authorized to be listed on the
NASDAQ National Market System, and (c) until all other legal matters in
connection with the issuance and delivery of such shares of Common Stock
have been approved by the Company's counsel. If the sale of shares of
Common Stock has not been registered under the Securities Act of 1933, as
amended (the "Act"), and qualified under the appropriate "blue sky" laws,
the Company may require, as a condition to exercise of the Award, such
representations and agreements as counsel for the Company may consider
appropriate to avoid violation of such Act and laws and may require that
the certificates evidencing such shares of Common Stock bear an
appropriate legend restricting transfer.
If an Award is exercised by a Participant's legal representative, the
Company will be under no obligation to deliver shares of Common Stock
pursuant to such exercise until the Company is satisfied as to the
authority of such representative.
15. TAX WITHHOLDING.
----------------
The Company will have the right to deduct from any cash payment under the
Plan taxes that are required to be withheld and to condition the
obligation to deliver or vest shares of Common Stock under this Plan upon
the Participant's paying the Company such amount as the Company may
request to satisfy any liability for applicable withholding taxes. The
Committee may in its discretion permit Participants to satisfy all or part
of their withholding liability either by delivery of shares of Common
Stock held by the Participant or by withholding shares of Common Stock to
be delivered to a Participant upon the grant or exercise of an Award.
16. ADJUSTMENT OF AWARD.
--------------------
(a) In the event that a dividend shall be declared upon the Common Stock
payable in shares of Common Stock, the number of shares of the Common
Stock then subject to any Award and the number of shares of the Common
Stock which may be issued under the Plan but not yet covered by an
Award shall be adjusted by adding to each share the number of shares
which would be distributable thereon if such shares had been
outstanding on the date
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fixed for determining the shareholders entitled to receive such stock
dividend. In the event that the outstanding shares of the Common Stock
shall be changed into or exchanged for a different number or kind of
shares of Common Stock or other securities of the Company or of
another corporation or for cash, whether through reorganization,
recapitalization, stock split, combination of shares, sale of assets,
merger or consolidation in which the Company is the surviving
corporation, then, there shall be substituted for each share of the
Common Stock then subject to any Award, the number and kind of shares
of stock or other securities or the amount of cash into which each
outstanding share of the Common Stock shall be so changed or for which
each such share shall be exchanged.
(b) In the event of a proposal, which is approved by the Board, of any
merger or consolidation involving the Company where the Company is not
the surviving entity, any sale of substantially all of the Company's
assets or any other transaction or series of related transactions as a
result of which a single person or several persons acting in concert
own a majority of the Company's then outstanding Common Stock (such
merger, consolidation, sale of assets, or other transaction being
hereinafter referred to as a "Transaction"), all outstanding Options
and SARs shall become exercisable immediately before or
contemporaneously with the consummation of such Transaction and each
outstanding share of Restricted Stock and each outstanding Deferred
Stock Award shall immediately become free of all restrictions and
conditions upon consummation of such Transaction. Upon consummation
of the Transaction, all outstanding Options and SARs shall terminate
and cease to be exercisable.
In lieu of the foregoing, if the Company will not be the surviving
corporation or entity, the Committee may arrange to have such
acquiring or surviving corporation or entity, or an "Affiliate" (as
defined below) thereof, grant replacement Awards to Participants
holding outstanding Awards.
The term "Affiliate," with respect to any Person, shall mean any other
Person who is, or would be deemed to be an "affiliate" or an
"associate" of such Person within the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act. The term "Person" shall mean a corporation,
association, partnership, joint venture, trust, organization,
business, individual or government
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<PAGE>
or any governmental agency or political subdivision thereof.
(c) In the event of the dissolution or liquidation of the Company (except a
dissolution or liquidation relating to a sale of assets or other
reorganization of the Company referred to in the preceding sections),
the outstanding Options and SARs shall terminate as of a date fixed by
the Committee; provided, however, that not less than thirty (30) days
written notice of the date so fixed shall be given to each
Participant who shall have the right during such period to exercise
the Participant's Options or SARs as to all or any part of the shares
of Common Stock covered thereby. Further, in the event of the
dissolution or liquidation of the Company, each outstanding share of
Restricted Stock and each outstanding Deferred Stock Award shall
immediately become free of all restrictions and conditions.
17. TERMINATION OF SERVICE.
-----------------------
Upon a Participant's termination of service with the Company or a
subsidiary (if an employee only of a subsidiary), any outstanding Award shall be
subject to the terms and conditions set forth below, unless otherwise determined
by the Committee:
(a) In the event a Participant leaves the employ or service of the Company
or, if the Participant is an employee only of a subsidiary of the
Company, a subsidiary prior to the Participant's 65th birthday,
whether voluntarily or otherwise but other than by reason of the
Participant's death or "disability" (as such term is defined in
Section 22(e)(3) of the Code), each Option and SAR granted to the
Participant shall terminate upon the earlier to occur of (i) the
expiration of the period three (3) months after the date of such
termination and (ii) the date specified in the Option or SAR;
provided, that, prior to the termination of such Option or SAR, the
Participant shall be able to exercise any part of the Option or SAR
which is exercisable as of the date of termination. Further, each
outstanding share of Restricted Stock and each outstanding Deferred
Stock Award which remains subject to any restrictions or conditions of
the Award shall be forfeited to the Company upon such date of
termination.
(b) In the event a Participant's employment with or service to the Company
or its subsidiaries terminates by reason of the Participant's death or
"disability" (as such term is defined in Section 22(e)(3) of the
Code), each Option and SAR granted to the Participant shall become
immediately exercisable in full and shall terminate
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<PAGE>
upon the earlier to occur of (i) the expiration of the period six (6)
months after the date of such termination and (ii) the date specified
in the Option or SAR. Further, each outstanding share of Restricted
Stock and each outstanding Deferred Stock Award shall immediately
become free of all restrictions and conditions upon the date of such
termination.
(c) In the event a Participant voluntarily leaves the employ or service of
the Company or, if the Participant is an employee only of a subsidiary
of the Company, a subsidiary after the Participant's 65th birthday,
each Option and SAR granted to the Participant shall become
immediately exercisable in full and shall terminate upon the earlier
to occur of (i) the expiration of three (3) months after the date of
such termination and (ii) the date specified in the Option or SAR.
Further, each outstanding share of Restricted Stock and each
outstanding Deferred Stock Award shall immediately become free of all
restrictions and conditions upon the date of such termination unless
otherwise provided in the Award. If the Participant involuntarily
leaves the employ or service of the Company or a subsidiary after the
Participant's 65th birthday, each Option and SAR granted to the
Participant shall terminate upon the earlier to occur of (i) the
expiration of three (3) months after the date of such termination and
(ii) the date specified in the Option or SAR; provided, that, prior to
the termination of such Option or SAR, the Participant shall be able
to exercise any part of the Option or SAR which is exercisable as of
the date of termination. Further, each outstanding share of
Restricted Stock and each outstanding Deferred Stock Award which
remains subject to any restrictions or conditions of the Award shall be
forfeited to the Company upon such date of termination.
18. AMENDMENTS AND TERMINATION.
---------------------------
The Committee will have the authority to make such amendments to any terms
and conditions applicable to outstanding Awards as are consistent with
this Plan provided that, except for adjustments under Section 16 hereof,
no such action will modify such Award in a manner adverse to the
Participant without the Participant's consent except as such modification
is provided for or contemplated in the terms of the Award.
The Board may amend, suspend or terminate the Plan, except (i) no such
action may be taken, without shareholder approval, which would effectuate
any change for which shareholder approval is required pursuant to Section
16 of
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the Exchange Act or Section 162(m) of the Code, and (ii) no action may,
without the consent of a Participant, alter or impair any Award previously
granted to the Participant under the Plan.
19. SUCCESSORS AND ASSIGNS.
-----------------------
The provisions of this Plan shall be binding upon all successors and
assigns of any such Participant including, without limitation, the estate
of any such Participant and the executors, administrators, or trustees of
such estate, and any receiver, trustee in bankruptcy or representative of
the creditors of any such Participant.
20. MISCELLANEOUS.
-------------
(a) This Plan shall be governed by and construed in accordance with the
laws of the State of New Jersey.
(b) Any and all funds received by the Company under the Plan may be used
for any corporate purpose.
(c) Nothing contained in the Plan or any Award granted under the Plan
shall confer upon a Participant any right to be continued in the
employment of the Company or any subsidiary, or interfere in any way
with the right of the Company, or its subsidiaries, to terminate the
employment relationship at any time.
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