As filed with the Securities and Exchange Commission via EDGAR on
November 25, 1998
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PHARMACEUTICAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-3122182
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Ram Ridge Road
Spring Valley, New York 10977
(Address of principal executive offices, including zip code)
1997 DIRECTORS STOCK OPTION PLAN
(Full title of the plan)
KENNETH I. SAWYER, Chairman
Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, NY 10977
(914) 425-7100
(Name, address and telephone number,
including area code, of agent for service)
Copies of all communications to:
STEPHEN A. OLLENDORFF, ESQ.
Hertzog, Calamari & Gleason
100 Park Avenue
New York, New York 10017
(212) 481-9500
================================================================================
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed
Title of maximum maximum
Securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered share(1) price(2) fee
- --------------------------------------------------------------------------------
Common
Stock,
$.01 par
value 500,000
per share shares $3.66 $1,446,598 $439.00
- --------------------------------------------------------------------------------
(1) Based upon the market price of the Common Stock, as reported on The New
York Stock Exchange, Inc. on November 23, 1998, in accordance with Rule 457(c)
under the Securities Act of 1933, as amended.
(2) This amount is the sum of (a) the aggregate option price of the 301,000
shares of Common Stock of the Registration subject to options granted under the
Registrant's 1997 Directors Stock Option Plan and outstanding as of November 23,
1998, and (b) the assumed aggregate option price of the remaining shares of
Common Stock being registered hereunder, based upon the market price of the
Common Stock of the Registrant on November 23, 1998, in accordance with Rules
457(c) and (h) under the Securities Act of 1933, as amended.
In accordance with the provisions of Rule 462 promulgated under the
Securities Act of 1933, as amended, this Registration Statement will become
effective upon filing with the Securities and Exchange Commission.
This Registration Statement, including all exhibits and attachments,
contains 23 pages. The exhibit index may be found on page 8 of the consecutively
numbered pages of the Registration Statement.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
----------------------------------------
The documents listed below are incorporated by reference in this
Registration Statement:
1. The Registrant's Annual Report on Form 10-K, for the fiscal year
ended September 30, 1997.
2. The Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 27, 1997.
3. The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 28, 1998.
4. The Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 27, 1998.
5. The Registrant's Current Report on Form 8-K, filed on March 31,
1998.
6. The Registrant's Current Report on Form 8-K, filed on July 14, 1998.
7. The Registrant's definitive proxy materials filed on Schedule 14A
filed on May 11, 1998.
8. The description of the Common Stock, which is registered under
Section 12 of the Securities Exchange Act of 1934, as amended, contained in the
Registrant's Registration Statement on Form 8-B, including any amendments or
reports filed for the purpose of updating such description.
All documents and reports subsequently filed by the Registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post-effective amendment which indicates
that all securities offered herein have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by reference
in this Registration Statement and to be a part hereof from the date of filing
of such documents.
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ITEM 4. Description of Securities.
--------------------------
Not applicable.
ITEM 5. Interests of Named Experts.
--------------------------
Certain legal matters in connection with the issuance of the shares of
Common Stock offered hereby have been passed upon for the Registrant by Hertzog,
Calamari & Gleason, 100 Park Avenue, New York, New York 10017, special counsel
to the Registrant. Stephen A. Ollendorff, Esq., a consultant to the Registrant,
is of counsel to the firm of Hertzog, Calamari & Gleason and a director of the
Registrant. At November 25, 1998, he held options (vested and unvested) to
purchase 71,000 shares of Common Stock and owned 2,975 outstanding shares of
Common Stock.
ITEM 6. Indemnification of Directors and Officers.
-----------------------------------------
Paragraphs VIII and IX of the Registrant's Certificate of Incorporation
provide for the indemnification of officers and directors and limitations on
liability of officers and directors in the manner and to the fullest extent
permitted by New Jersey law. Under Article VII of the Registrant's By-Laws, the
Registrant shall indemnify each director and officer of the Registrant to the
fullest extent permitted by law.
Section 14A:3-5(2) of the New Jersey Business Corporation Act generally
provides that a corporation has the power to indemnify a current or former
officer or director, employee or agent (each a "corporate agent") of the
corporation against expenses and liabilities in connection with any proceeding
involving the corporate agent by reason of his being or having been a corporate
agent, other than a proceeding by or in the right of the corporation, if such
corporate agent acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation, and with respect to
any criminal proceeding, such corporate agent had no reasonable cause to believe
his conduct was unlawful.
Section 14A:3-5(3) provides that a corporation has the power to
indemnify a current or former corporate agent against his expenses in connection
with any proceeding by or in the right of the corporation to procure a judgment
in its favor which involves the corporate agent by reason of his being or having
been a corporate agent, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation.
However, in such proceeding no indemnification shall be provided in respect of
any claim, issue or matter as to which such officer or director shall have been
adjudged to be liable to the corporation, unless and only to the extent that the
New Jersey Supreme Court or the court in which such proceeding was brought shall
determine upon application that despite the adjudication of liability, but in
view of all circumstances of the case, such officer or director is fairly and
reasonably entitled to indemnify for such expenses as such court shall deem
proper.
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<PAGE>
Section 14A:3-5(5) provides that any indemnification under Section
14A:3-5(2), unless pursuant to a court determination under Section 14A:3-5(3),
may be made by a corporation only as authorized in a specific case upon a
determination that indemnification is proper in the circumstances because the
corporate agent met the applicable standards of conduct as described above.
Unless, otherwise provided in the certificate of incorporation or by-laws, such
determination shall be made by the corporation's board of directors or a
committee thereof, by independent legal counsel or by the shareholders of the
corporation if the certificate of incorporation or by-laws or a resolution of
the board of directors or of the shareholders so directs.
Section 14A:2-7 of the New Jersey Business Corporation Act permits a
corporation to provide in its certificate of incorporation that a director or
officer shall not be personally liable, or shall be liable only to the extent
provided in the corporation's certificate of incorporation, to the corporation
or its shareholders, except that such provision shall not relieve a director or
officer from liability for any breach of duty based upon an act or omission (a)
in breach of such person's duty of loyalty to the corporation or its
shareholders, (b) not in good faith or involving a knowing violation of law or
(c) resulting in receipt by such person of an improper personal benefit. As used
in Section 14A:2-7, an act or omission in breach of a person's duty of loyalty
means an act or omission which that person knows or believes to be contrary to
the best interests of the corporation or its shareholders in connection with a
matter in which he has a material conflict of interest.
The Registrant's By-Laws also provide that the indemnification rights
provided thereby shall not be deemed to be exclusive of any other rights to
which the Registrant's directors and officers may be entitled under the
Registrant's Certificate of Incorporation, an agreement, note of shareholders,
or otherwise. The Registrant maintains a directors' and officers' liability
insurance policy which, subject to the limitations and exclusions stated
therein, covers the officers and directors of the Registrant for certain actions
or inactions that they may take or omit to take in their capacities as officers
and directors of the Registrant.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to officers and directors under any of
the foregoing provisions, the Registrant has been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is therefore
unenforceable.
ITEM 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
II-4
<PAGE>
ITEM 8. Exhibits.
--------
Exhibit No. Description
4.1 1997 Directors Stock Option Plan
5.1 Opinion of Hertzog, Calamari & Gleason, special
counsel to the Registrant, with respect to the
legality of the securities being registered hereunder
23.1 Consent of Arthur Andersen LLP, independent certified public
accountants for the Registrant
23.2 Consent of Hertzog, Calamari & Gleason, special
counsel to the Registrant (included in the opinion
filed as Exhibit 5.1 hereto)
ITEM 9. Undertakings.
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934, as amended, that are incorporated by
reference in the Registration Statement.
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<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934, as amended), that is incorporated
by reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the town of Spring Valley, State of New Jersey, on this 25th day
of November, 1998.
PHARMACEUTICAL RESOURCES, INC.
(Registrant)
By:Kenneth I. Sawyer
--------------------------------------
Kenneth I. Sawyer, President, Chairman
and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Kenneth I. Sawyer President, Chairman and November 25, 1998
- --------------------------- Chief Executive Officer
Kenneth I. Sawyer
Dennis J. O'Connor
- --------------------------- Chief Financial Officer November 25, 1998
Dennis J. O'Connor and Secretary (Principal
Financial and Accounting
Officer)
Mark Auerbach
- --------------------------- Director November 25, 1998
Mark Auerbach
Stephen A. Ollendorff
- --------------------------- Director November 25, 1998
Stephen A. Ollendorff
Anthony S. Tabatznik
- --------------------------- Director November 25, 1998
Anthony S. Tabatznik
J. Neil Tabatznik
- --------------------------- Director November 25, 1998
J. Neil Tabatznik
Bernhard Scheuble
- --------------------------- Director November 25, 1998
Bernhard Scheuble
Klaus H. Jander
- --------------------------- Director November 25, 1998
Klaus H. Jander
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<PAGE>
Exhibit Index
-------------
Exhibit No. Description Page
- ----------- ----------- ----
4.1 1997 Directors Stock Option Plan 9
5.1 Opinion of Hertzog, Calamari & Gleason, 17
special counsel to the Registrant, with
respect to the legality of the securities
being registered hereunder
23.1 Consent of Arthur Andersen LLP, 23
independent certified public
accountants for the Registrant
23.2 Consent of Hertzog, Calamari & Gleason, 17
special counsel to the Registrant (included
in the opinion filed as Exhibit 5.1 hereto)
II-8
EXHIBIT 4.1
PHARMACEUTICAL RESOURCES, INC.
1997 DIRECTORS STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean Pharmaceutical Resources, Inc.
(c) "Date of Grant" shall mean, with respect to any Eligible Director: (a)
the Effective Date with respect to those Options granted on the Effective Date,
(b) the date such Eligible Director is initially elected to the Board of
Directors if such Eligible Director was first elected after the Effective Date,
and (c) for each respective fiscal year of the Company thereafter, the date on
which the shareholders of the Company shall elect directors at an annual meeting
of shareholders or any adjournment thereof.
(d) "Effective Date" shall mean October 28, 1997, the date of adoption by
the Board.
(e) "Eligible Director" shall mean any Director of the Company who is not
an employee of the Company or its subsidiaries.
(f) "Fair Market Value" on any day shall mean (a) if the principal market
for the Stock is The New York Stock Exchange, any other national securities
exchange or The NASDAQ Stock Market, the closing sales price regular way of the
Stock on such day as reported by such exchange or market, or on a consolidated
tape reflecting transactions on such exchange or market, or (b) if the principal
market for the Stock is not a national securities exchange and if there are no
closing prices reported on The NASDAQ Stock Market, the mean between the closing
bid and the closing asked prices for the Stock on such day as quoted on such
market, or (c) if there are no such prices quoted on The NASDAQ Stock Market,
the price furnished by any New York Stock Exchange member selected by the
Company from time to time for such purpose; provided that if clauses (a), (b)
and (c) of this paragraph are all inapplicable, or if no trades have been made
or no quotes are available for such day, the Fair Market Value of the Stock
shall be determined by the Board by any method which it deems, in good faith, to
be appropriate. The determination of the Board shall be conclusive as to the
Fair Market Value of the Stock.
9
<PAGE>
(g) "Option" shall mean an Eligible Director's stock option to purchase
Stock granted pursuant to the provisions of Article V hereof.
(h) "Optionee" shall mean an Eligible Director to whom an Option has been
granted hereunder.
(i) "Option Price" shall mean the price at which an Optionee may purchase a
share of Stock under a Stock Option Agreement.
(j) "Qualified Domestic Relations Order" shall have the meaning assigned to
such term under the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
(k) "1997 Plan" shall mean the Pharmaceutical Resources, Inc. 1997
Directors Stock Option Plan, the terms of which are set forth herein, as amended
from time to time.
(l) "1989 Plan" shall mean the Pharmaceutical Resources, Inc. 1989
Directors' Stock Option Plan.
(m) "Sale" shall mean any single transaction or series of related
transactions, upon the consummation of the following events: (i) a definitive
agreement for the merger or other business combination of the Company with or
into another corporation pursuant to which the shareholders of the Company do
not own, immediately after the transaction, more than 50% of the voting power of
the corporation that survives and is a publicly owned corporation and not a
subsidiary of another corporation, or (b) a definitive agreement for the sale,
exchange, or other disposition of all or substantially all of the assets of the
Company (other than to any wholly-owned subsidiary of the Company); provided,
that a Sale shall not be deemed to have occurred if there shall be an
affirmative vote of a majority of the Board to suspend the provisions of Section
4.3 of the 1997 Plan with respect to any such event.
(n) "Stock" shall mean the common stock, par value $.01 per share, of the
Company or, in the event that the outstanding shares of Stock are hereafter
changed into or exchanged for different stock or securities of the Company or
some other corporation, such other stock or securities.
(o) "Stock Option Agreement" shall mean an agreement between the Company
and the Optionee under which the Optionee may purchase Stock in accordance with
the 1997 Plan.
10
<PAGE>
ARTICLE II
THE 1997 PLAN
2.1 Name. This 1997 Plan shall be known as the "Pharmaceutical Resources,
Inc. 1997 Directors Stock Option Plan."
2.2 Purpose. The purpose of the 1997 Plan is to advance the interests of
the Company and its shareholders by affording Eligible Directors of the Company
an opportunity to acquire, maintain and increase their ownership interests in
the Company, and thereby to encourage their continued service as directors and
to provide them additional incentives to achieve the growth objectives of the
Company.
2.3 Effective Date. The Effective Date of the 1997 Plan is October 28,
1997. Any Options granted under the 1997 Plan shall only become effective if the
shareholders of the Company shall have, on or before October 27, 1998, approved
and adopted the 1997 Plan. If the 1997 Plan shall not be so approved and
adopted, all Options granted hereunder shall be of no effect.
2.4 Termination Date. The 1997 Plan shall terminate and no further Options
shall be granted hereunder upon the tenth anniversary of the Effective Date.
ARTICLE III
PARTICIPANTS
Each Eligible Director shall participate in the 1997 Plan, provided that he
is or was elected as a member of the Board at an annual meeting of shareholders,
or any adjournment thereof, or was elected by Eligible Directors who were
elected as members of the Board at an annual meeting of shareholders to fill a
vacancy on the Board.
ARTICLE IV
SHARES OF STOCK SUBJECT TO 1997 PLAN
4.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 4.2 hereof, the maximum number of shares of Stock which
may be issued and sold hereunder shall not exceed 500,000 shares of Stock.
Shares of Stock subject to an Option may be either authorized and unissued
shares or shares issued and later acquired by the Company; provided, however,
that the shares of Stock with respect to which an Option has been exercised
shall not again be available for the grant of an Option hereunder. If any
outstanding Options granted hereunder shall terminate or expire for any reason
without being wholly exercised prior to the end of the period during which
Options may be granted hereunder, new Options may be granted hereunder covering
such unexercised shares.
11
<PAGE>
4.2 Anti-dilution. In the event that the outstanding shares of Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of merger,
consolidation, reorganization, recapitalization, reclassification, combination
of shares, stock split, reverse stock split or stock dividend:
(a) The rights under outstanding Options granted hereunder, both as to the
number of subject shares and the Option Price, shall be adjusted
appropriately; and
(b) Where dissolution or liquidation of the Company or any merger or
combination in which the Company is not a surviving corporation is
involved, each outstanding Option granted hereunder shall terminate,
but the Optionee shall have the right, immediately prior to such
dissolution, liquidation, merger or combination, to exercise his
Option, in whole or in part, to the extent that it shall not have been
exercised, without regard to the date on which such Option would
otherwise have become exercisable pursuant to Sections 5.4 hereof.
The foregoing adjustments and the manner of application thereof shall be
determined solely by the Board, and any such adjustment may provide for the
elimination of fractional share interests. The adjustments required under this
Article shall apply to any successor or successors of the Company and shall be
made regardless of the number or type of successive events requiring adjustments
hereunder.
4.3 Sale of Company. Each Stock Option Agreement shall provide that, upon a
Sale, the Board may elect either (a) to continue the outstanding Options without
any payment or (b) to cause to be paid to the Optionee upon consummation of the
Sale, a payment equal to the excess, if any, of the sale consideration
receivable by the holders of shares of Common Stock in such a Sale (the "Sale
Consideration") over the purchase price for his Option for each share of Common
Stock the Optionee shall then be entitled to acquire under the 1997 Plan. If the
Board elects to continue the Option, then the Company shall cause effective
provisions to be made so that the Optionee shall have the right, by exercising
the Option prior to the respective Expiration Dates, to purchase the kind and
amount of shares of stock and other securities and property receivable upon such
a Sale by a holder of the number of shares of Common Stock which might have been
purchased upon exercise of the Option immediately prior to the Sale. The value
of the Sale Consideration receivable by the holder of a share of Common Stock,
if it shall be other than cash, shall be determined, in good faith, by the
Board. Upon payment to the Optionee of the Sale Consideration, the Optionee
shall have no further rights in connection with the Option granted, the Option
shall be terminated and surrendered for cancellation and the Option shall be
null and void.
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<PAGE>
ARTICLE V
OPTIONS
5.1 Option Grant, Number of Shares and Agreement.
(a) Exchange of Existing Options. Subject to the provisions
hereof, each Eligible Director on the Effective Date shall be granted
an Option to purchase Ten Thousand (10,000) shares of Stock for each
year of such Eligible Director's tenure as a director of the Company.
Notwithstanding the preceding sentence, the grant of Options to an
Eligible Director pursuant to this Section 5.1(a) shall be expressly
conditioned upon such Eligible Director surrendering for cancellation
all stock options held by such Director which were granted to him under
the 1989 Plan, and the number of Options granted to an Eligible
Director under this Section 5.1(a) shall in no event exceed the number
of such stock options granted under the 1989 Plan surrendered by such
Director.
(b) Annual Grant of Options. Subject to the provisions hereof,
each Eligible Director shall be granted an Option to purchase Five
Thousand (5,000) shares of Stock on (i) the Effective Date and (ii)
each subsequent Date of Grant (the "Annual Grant"). Notwithstanding
anything herein to the contrary, no Eligible Director shall be entitled
to receive more than one Annual Grant in any calendar year.
(c) Additional Grant. Subject to the provisions hereof, on (i)
the Effective Date and (ii) each subsequent Date of Grant, each
Eligible Director shall be granted an Option to purchase up to an
additional Six Thousand (6,000) shares of Stock (the "Additional
Grant") if such Eligible Director owns on the respective Effective Date
or subsequent Date of Grant (as the case may be) an amount of issued
shares of Common Stock of the Company not less than the product of
2,500 shares of Common Stock multiplied by the sum of one and the
number of years in which he was granted previously an Additional Grant.
Notwithstanding the foregoing, for purposes of determining each
Eligible Director's entitlement to an Additional Grant on the Effective
Date, the Eligible Director must own not less than 2,500 shares of
Common Stock of the Company by April 1, 1998. An Eligible Director who
shall not be entitled to receive an Additional Grant on any particular
Date of Grant as a result of the failure to satisfy the conditions set
forth in this Section 5.1(c) shall be eligible to receive an Additional
Grant pursuant to this Section 5.1(c) on any subsequent Date of Grant.
Notwithstanding anything herein to the contrary, no Eligible Director
shall be entitled to receive more than one Additional Grant in any
calendar year.
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<PAGE>
(d) Agreement. Each Option so granted shall be evidenced by a
written Stock Option Agreement, dated as of the Date of Grant and
executed by the Company and the Optionee, stating the Option's
duration, time of exercise, and exercise price. The terms and
conditions of the Option shall be consistent with the 1997 Plan.
5.2 Option Price. The Option Price of the Stock subject to each Option
shall be the Fair Market Value of the Stock on its Date of Grant.
5.3 Option Expiration. Each Option shall expire on the tenth anniversary of
such Option's Date of Grant (the "Expiration Date").
5.4 Option Exercise.
(a) Any Option granted under the 1997 Plan may not be exercised,
in whole or in part, until the first anniversary of the Date of Grant,
subject to any additional conditions imposed by the Board and set forth
in a Stock Option Agreement. If an Eligible Director shall be removed
"for cause" as a member of the Board of Directors on or prior to the
first anniversary of the Date of Grant of any Option, such Option shall
terminate and be forfeited. Subject to the provisions of this Section
5.4(a), an Option shall remain exercisable at all times until the
Expiration Date, regardless of whether the Optionee thereafter continues
to serve as a member of the Board. Notwithstanding the foregoing, an
Additional Grant shall automatically terminate and be forfeited in the
event that the Eligible Director holding such Additional Grant shall
fail to continue to own the number of shares of Common Stock which were
equal to the number of shares which were a condition of such Additional
Grant. Any such termination and forfeiture shall be done on a pro rata
basis to the number of shares sold or disposed of.
(b) An Option may be exercised at any time or from time to time
during the term of the Option as to any or all full shares which have
become exercisable in accordance with this Section, but not as to less
than one hundred shares of Stock unless the remaining shares of Stock
that are so exercisable are less than one hundred shares of Stock. The
Option Price is to be paid in full in cash upon the exercise of the
Option. The holder of an Option shall not have any of the rights of a
shareholder with respect to the shares of Stock subject to the Option
until such shares of Stock have been issued or transferred to him upon
the exercise of his Option.
(c) An Option shall be exercised by written notice of exercise
of the Option, with respect to a specified number of shares of Stock,
delivered to the Company at its principal office, and by cash payment to
the Company at said office of the full amount of the Option Price for
such number of shares. In addition to, and prior to the issuance of a
certificate for shares pursuant to any Option exercise, the Optionee
shall pay to the Company in cash the full amount of any Federal, state
or local income or employment taxes required to be withheld by the
Company as a result of such exercise.
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<PAGE>
(d) At the discretion of the Board, the Stock Option Agreement
may provide that an Option granted under the 1997 Plan may be exercised
with respect to a specified number of shares of Stock by written notice
of exercise to the Company stating that (i) the option price for the
shares and any withholding tax due thereon will be paid to the Company
directly by a broker-dealer designated by the Eligible Director and
irrevocable instructions to such effect have been furnished by the
Eligible Director to such broker-dealer, and (ii) an advice from the
broker-dealer confirming payment to the Company will be promptly
delivered to the Company. The exercise of any such option shall be
irrevocable at the time of notice to the Company; provided, however,
that the Company shall not be required to deliver certificates for
shares of Stock with respect to the exercise of the option until the
Company has confirmed the receipt of good and sufficient funds in
payment of the purchase price thereof.
5.5 Nontransferability of Option. Unless otherwise provided in the relevant
Stock Option Agreement, options may not be transferred by an Optionee otherwise
than by will or the laws of descent and distribution, or by a Qualified Domestic
Relations Order. Unless otherwise provided in the relevant Stock Option
Agreement, during the lifetime of an Optionee, his Option may be exercised only
by him (or by his guardian or legal representative, should one be appointed) or
by his spouse to whom the Option has been transferred pursuant to a Qualified
Domestic Relations Order. In the event of the death of an Optionee, any Option
held by him may be exercised by his legatee(s) or other distributee(s) or by his
personal representative(s).
ARTICLE VI
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof unless, in the opinion of counsel to the Company, there has
been compliance with all applicable legal requirements. An Option granted under
the 1997 Plan will provide that the Company's obligation to deliver shares of
Stock upon the exercise thereof may be conditioned upon the receipt by the
Company of a representation as to the investment intention of the holder thereof
in such form as the Company shall determine to be necessary or advisable solely
to comply with the provisions of the Securities Act of 1933, as amended, or any
other Federal, state or local securities laws. All certificates for shares of
Stock delivered under the 1997 Plan shall be subject to such stop transfer
orders and other restrictions as the Company may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock is then listed, any Federal, state or
local securities laws and applicable corporate law, and the Company may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
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ARTICLE VII
TERMINATION, AMENDMENT AND MODIFICATION OF 1997 PLAN
The Board may at any time terminate the 1997 Plan, and may at any time and
from time to time and, in any respect amend or modify the 1997 Plan. The Board
may amend the terms of any award theretofore granted under the 1997 Plan;
provided, however, that subject to Section 4.1 hereof, no such amendment may be
made by the Board which in any material respect impairs the rights of the
participant without the participant's consent.
ARTICLE VIII
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the 1997 Plan shall neither affect any other stock option,
incentive or other compensation plans in effect for the Company or any of its
subsidiaries, nor shall the adoption of the 1997 Plan preclude the Company from
establishing any other forms of incentive or other compensation plan for
directors of the Company.
ARTICLE IX
MISCELLANEOUS
9.1 1997 Plan Binding on Successors. The 1997 Plan shall be binding upon
the successors and assigns of the Company.
9.2 Singular, Plural; Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender.
9.3 Headings, etc., Not Part of 1997 Plan. Headings of articles and
Sections hereof are inserted for convenience and reference, and do not
constitute a part of the 1997 Plan.
As of May, 1998
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HERTZOG, CALAMARI & GLEASON
100 PARK AVENUE
NEW YORK, NY 10017-5582
(212) 481-9500
TELEFAX: (212) 213-1199 1
November 25, 1998
Pharmaceutical Resources, Inc.
Registration Statement on Form S-8
----------------------------------
Dear Sirs:
We have acted as special counsel for Pharmaceutical Resources, Inc., a New
Jersey corporation (the "Company"), in connection with the Registration
Statement on Form S-8 (the "Registration Statement") filed by the Company on the
date of this letter with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "1933 Act"). This Registration Statement
is being filed with respect to 500,000 shares of the common stock of the Company
(the "Shares"), par value $.01 per share, issuable upon the exercise of options
granted under the Company's 1997 Directors Stock Option Plan (the "Plan").
You have requested us to express certain opinions in connection therewith.
We have examined the Registration Statement, the Company's Certificate of
Incorporation and By-laws, each as amended, and minutes of meetings and written
consents of the Board of Directors and shareholders of the Company authorizing
the transactions contemplated in connection with the Registration Statement. We
have also examined originals or copies, certified or otherwise identified to our
satisfaction, of such other corporate documents and records of the Company and
certificates of public officials and officers of the Company, and have made such
other investigations, as we have deemed necessary or appropriate in connection
with rendering this opinion. As to questions of fact material to this opinion,
we have relied upon certificates of public officials and information supplied to
us by officers of the Company.
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For purposes of this opinion, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to authentic originals of all documents submitted to us as
certified, conformed or photostatic copies.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing under
the laws of the State of New Jersey.
2. All requisite corporate action has been taken to authorize the issuance
of the Shares being registered under the Registration Statement pursuant to the
1933 Act.
3. The Shares have been duly authorized for issuance and, when issued and
sold in accordance with the provisions of the Plans, will be duly and validly
issued, fully paid and non-assessable when the Company shall have received
therefor all of the consideration provided in the Plans (but not less than the
par value thereof).
We are attorneys admitted to practice in the State of New York and do not
purport to be an expert in, or to render any opinion concerning, the laws of any
other jurisdiction other than the United States of America and the State of New
York. As to all matters of New Jersey law involved in the foregoing opinion, we
have relied upon the opinion of Stephen A. Ollendorff, Esq., special New Jersey
counsel for the Company, a copy of which is annexed hereto as Exhibit A. Mr.
Ollendorff is of counsel to this firm, a business consultant to the Company and
a director of the Company. Mr. Ollendorff also owns 2,975 shares of Common Stock
and options (vested and unvested) to purchase 71,000 shares of Common Stock.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement, to the use of
our name as special counsel with respect to the Registration Statement and to
all references made to us therein.
Very truly yours,
Hertzog, Calamari & Gleason
Hertzog, Calamari & Gleason
18
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Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, New York 10977
Attn: Kenneth I. Sawyer
19
<PAGE>
EXHIBIT A
STEPHEN A. OLLENDORFF, ESQ.
14 LESLIE PLACE
TENAFLY, NEW JERSEY 07670
November 25, 1998
Pharmaceutical Resources, Inc.
Registration Statement on Form S-8
----------------------------------
Dear Sirs:
I have acted as special New Jersey counsel for Pharmaceutical Resources,
Inc., a New Jersey corporation (the "Company"), in connection with the
Registration Statement on Form S-8 (the "Registration Statement") filed by the
Company on the date of this letter with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "1933 Act"). This
Registration Statement is being filed with respect to 500,000 shares of the
common stock of the Company (the "Shares"), par value $.01 per share, issuable
pursuant to the Company's 1997 Stock Option Plan (the "Plan").
You have requested me to express certain opinions in connection therewith.
I have examined the Registration Statement, the Company's Certificate of
Incorporation and By-laws, each as amended, and minutes of meetings and written
consents of the Board of Directors and shareholders of the Company authorizing
the transactions contemplated in connection with the Registration Statement. I
have also examined originals or copies, certified or otherwise identified to my
satisfaction, of such other corporate documents and records of the Company and
certificates of public officials and officers of the Company, and have made such
other investigations, as I have deemed necessary or appropriate in connection
with rendering this opinion. As to questions of fact material to this opinion, I
have relied upon certificates of public officials and information supplied to me
by officers of the Company.
For purposes of this opinion, I have assumed the genuineness of all
signatures and the authenticity of all documents submitted to me as originals
and the conformity to authentic originals of all documents submitted to me as
certified, conformed or photostatic copies.
Based upon the foregoing, I am of the opinion that:
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1. The Company is a corporation duly organized and validly existing under
the laws of the State of New Jersey.
2. All requisite corporate action has been taken to authorize the issuance
of the Shares being registered under the Registration Statement pursuant to the
1933 Act.
3. The Shares have been duly authorized for issuance and, when issued and
sold in accordance with the provisions of the Plan, will be duly and validly
issued, fully paid and non-assessable when the Company shall have received
therefor all of the consideration provided in the Plan (but not less than the
par value thereof).
I am an attorney admitted to practice in the State oaf New Jersey and do
not purport to be an expert in, or to render any opinion concerning, the laws of
any other jurisdiction.
This opinion is solely for your benefit in connection with the Registration
Statement. Except as set forth below, this opinion may not be relied upon by you
for any other purpose, or furnished to, quoted to or relied upon by any other
person without my prior written consent.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of my name as a special New Jersey counsel to the Company with respect to the
Registration Statement.
Very truly yours,
Stephen A. Ollendorff
Stephen A. Ollendorff, Esq.
21
<PAGE>
Pharmaceutical Resources, Inc.
One Ram Ridge Road
Spring Valley, New York 10977
Attn: Kenneth I. Sawyer, Esq.
Hertzog, Calamari & Gleason
100 Park Avenue
New York, New York 10017
Attn: Angelo P. Lopresti, Esq.
22
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our report dated
November 25, 1997 included in Pharmaceutical Resource, Inc.'s Form 10-K for the
year ended September 30, 1998 and to all references to our Firm included in this
registration statement.
/s/ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
New York, New York
November 23, 1998
23
