Exhibit 3.2
CERTIFICATE OF AMENDMENT TO THE CERTIFICATE
OF INCORPORATION OF PHARMACEUTICAL RESOURCES, INC.
(Pursuant to Section (2) 14A:7-2(2) and 14A:9-2(2) of the
Business Corporation Act of the State of New Jersey)
ARTICLE ONE: The name of the Corporation is Pharmaceutical Resources, Inc.
(the "Corporation").
ARTICLE TWO: The resolutions adopted by the Board of Directors of the
Corporation, pursuant to subsections 14A:6-10(3) and 14A:7-2(3) of the Business
Corporation Act of the State of New Jersey are as follows:
WHEREAS, the Certificate of Incorporation of the Corporation provides
for a class of shares known as Preferred Stock, consisting of 6,000,000
shares; and
WHEREAS, said Certificate of Incorporation authorizes issuance of the
Preferred Stock from time to time in one or more series and authorizes the
Board of Directors to determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock, to fix the number of shares constituting any
such series, and to determine the designation thereof, or any of them; and
WHEREAS, the Corporation has not issued any shares of such Preferred
Stock and the Board of Directors of the Corporation desires, pursuant to
its authority as aforesaid, to determine and fix the rights, preferences,
privileges, and restrictions relating to the initial series of said
Preferred Stock and the number of shares constituting, and the designation
of, said series:
WHEREAS, in connection with the Settlement Agreement, dated as of
March 3, 1992, in connection with the Securities Litigation of Par
Pharmaceutical, Inc. ("Par") and the Par Derivative Litigation, Par entered
into an Indemnity Agreement, among Par, Perry Levine and Jeffrey Levine,
dated as of March 3, 1992, as amended, providing for, among other things,
the issuance by the Corporation to the plaintiffs in such litigation, on
behalf of Messrs. Levine and Levine, of 140,000 shares of its common stock,
par value $.0l per share ("Common Stock"), and up to 13,333 options to
purchase the Corporation's Common Stock in exchange for the assignment of
their claims against certain insurance companies and their cooperation in
pursuing claims against such insurers (the "Indemnity Agreement"), and the
Corporation wishes to ratify and affirm such Indemnity Agreement;
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NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby amends
the Corporation's Certificate of Incorporation to fix and determine the
designation of, the number of shares constituting, and the rights, preferences,
privileges, and restrictions relating to, said initial series of Preferred
Stock, as follows:
1. Designation and Number. 2,000,000 shares of Preferred Stock will be
designated the "Series A Convertible Preferred Stock" (hereinafter referred
to as the "Series A Preferred Stock") with the rights, preferences and
privileges specified herein.
2. Voting Rights. The holders of Series A Preferred Stock shall not
have any voting rights except as otherwise from time to time required by
law.
3. Dividends. (a) The holders of record of shares of Series A
Preferred Stock at the close of business on the first day of January of
each year commencing after the issue date of the Series A Preferred Stock
(each such date being hereinafter referred to as a "Dividend Record Date")
shall be entitled to receive cash dividends at the per annum rate of the
Dividend Rate (as defined below) per share, and no more, payable annually
on the first day of February of each year commencing after the issue date
of the Series A Preferred Stock (each a "Dividend Payment Date"). The
"Dividend Rate" with respect to each Dividend Payment Date shall equal the
amount, if any, of the Corporation's Net Income (as defined below) in
excess of $1,500,000 for its fiscal year preceding the fiscal year which
includes such Dividend Payment Date, divided by the number of shares of
Series A Preferred Stock then issued and outstanding; provided, however,
that the Dividend Rate shall not exceed $.30 per share with respect to any
Dividend Payment Date. Notwithstanding the foregoing, the Dividend Rate for
the first Dividend Payment Date shall be equal to the Dividend Rate, as
determined in the preceding sentence, multiplied by a fraction, the
numerator of which is the number of days elapsed from the entry of the
final order pursuant to the Settlement Agreement, dated as of March 3,
1992, in connection with the Par Pharmaceutical, Inc. Securities Litigation
and the Par Pharmaceutical, Inc. Derivative Litigation (the "Issue Date")
to the last day of the Corporation's fiscal year immediately preceding such
first Dividend Payment Date, inclusive, and the denominator of which shall
be 365. For purposes of this Paragraph 3, "Net Income" shall mean, with
respect to any fiscal year of the Corporation, the amount shown as the net
income of the Corporation on the Consolidated Statement of Operations and
Retained Earnings contained
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in the Corporation's Form 10-K, Annual Report filed with the Securities and
Exchange Commission for such fiscal year (before any amounts identified as
extraordinary items thereon). Dividends upon the Series A Preferred Stock,
if any, shall be preferential and cumulative (whether or not on any
Dividend Payment Date there shall be funds of the Corporation legally
available for the payment of such dividends), so that if at any time all
prior dividends upon the Series A Preferred Stock through the immediately
preceding Dividend Payment Date shall not have been paid or set apart for
payment at the per annum rate specified above, the amount of the arrearage
shall be fully paid, but without interest, before any dividends, other than
dividends payable solely in shares of common stock, par value $.01 per
share (the "Common Stock"), or other capital stock of the Corporation
ranking junior as to dividends to the Series A Preferred Stock (the "Junior
Dividend Stock"), shall be paid or set apart for payment on any shares of
Common Stock or Junior Dividend Stock.
(b) Any reference to "distribution" contained in this Paragraph 3
shall not be deemed to include any distributions made in connection with
any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.
4. Liquidation Preference. In the event of a liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, after
payment of the debts and other liabilities of the Corporation, the holders
of Series A Preferred Stock shall be entitled to receive out of the assets
of the Corporation, whether such assets are stated capital or surplus of
any nature, a sum equal to $5.00 per share together with any accrued but
unpaid dividends thereon, but without interest, before any payments shall
be made or any assets distributed to the holders of Common Stock or any
other class or series of the Corporation's capital stock ranking junior as
to liquidation rights to the Series A Preferred Stock (the "Junior
Liquidation Stock"); provided, however, that such rights shall accrue to
the holders of Series A Preferred Stock only in the event that the
Corporation's payments with respect to the liquidation preferences of the
holders of capital stock of the Corporation ranking senior as to
liquidation rights to the Series A Preferred Stock (the "Senior Liquidation
Stock") are fully met. The entire assets of the Corporation available for
distribution after the liquidation preferences of the Senior Liquidation
Stock are fully met shall be distributed ratably among the holders of the
Series A Preferred Stock and any other
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class or series of the Corporation's capital stock which may hereafter be
created having parity as to liquidation rights with the Series A Preferred
Stock, in proportion to the respective preferential amounts to which each
is entitled (but only to the extent of such preferential amounts). Except
as otherwise provided in this Paragraph 4, holders of Series A Preferred
Stock shall not be entitled to any distribution in the event of a
liquidation, dissolution or winding up of the Corporation. For purposes of
this Paragraph 4, neither a consolidation or merger of the Corporation with
one or more other corporations nor a sale or transfer of all or part of the
Corporation's assets for cash, securities or other property will be
considered a liquidation, dissolution or winding up of the Corporation
unless such a transaction is entered into for the purpose of liquidating,
dissolving or winding up the Corporation.
5. Redemption of Series A Preferred Stock. (a) Subject to the
provisions of this Paragraph 5, the Corporation will, if required to
facilitate a merger or consolidation of the Corporation in which the Common
Stock will no longer be publicly traded (other than a merger or
consolidation in which the common stock of the surviving corporation is
owned by the holders of the Common Stock in substantially the same
proportions in which they held such Common Stock before such merger or
consolidation), redeem all, but not less than all, of the Series A
Preferred Stock at the price specified in subparagraph (b) below. The
Corporation shall provide, not less than 60 days prior to such redemption,
notice by first class mail, postage prepaid, to each holder of Series A
Preferred Stock at the address of such holder on the books of the
Corporation, of the Corporation's election to redeem hereunder and shall
publish such notice in the national edition of the Wall Street Journal and
furnish a copy of such notice to Dow Jones & Company for inclusion in its
news ticker. Any such notice by the Corporation shall specify the date
fixed for the redemption, shall notify the holders of the Series A
Preferred Stock of the conversion rights granted to them pursuant to
subparagraph (e) below, and shall inform such holders of the consideration
the holders of the Common Stock are entitled to receive pursuant to the
merger or consolidation. Such notice shall be conclusively presumed to have
been duly given, whether or not the holder of Series A Preferred Stock
actually receives such notice; and failure to give such notice, or any
defect in such notice, to any holder of any shares shall not affect the
validity of any notice with respect to the redemption of any shares owned
by any other holder of Series A Preferred Stock.
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(b) Any redemption of the Series A Preferred Stock in accordance with
subparagraph (a) above shall be for a price equal to $5.00 per share plus
the amount all accrued and unpaid dividends thereon, but without interest,
and no more.
(c) On or after the date fixed for redemption as stated in any notice
delivered by the Corporation in accordance with subparagraph (a), each
holder of the shares called for redemption shall surrender the certificates
evidencing such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of the relevant
redemption price in accordance with the terms of this Paragraph 5. If, on
the date fixed for redemption under any provision of this Paragraph 5,
funds necessary for the redemption shall be available therefor, then such
shares shall no longer be deemed outstanding, the holders thereof shall
cease to be stockholders with respect thereto, and all rights whatsoever
with respect to such shares (except the right of the holders to receive the
relevant redemption price without interest upon surrender of their
certificates thereof) shall terminate. Shares of Series A Preferred Stock
redeemed by the Corporation will be restored to the status of authorized
but unissued shares of Preferred Stock, without designation as to class,
and thereafter may be issued, but not as shares of Series A Preferred
Stock.
(d) The shares of Series A Preferred Stock shall not be subject to the
operation of a purchase, retirement or sinking fund.
(e) Notwithstanding any other provision of this Paragraph 5 to the
contrary, each holder of record of any shares of Series A Preferred Stock
shall be entitled to convert all or a portion of such shares into Common
Stock, in accordance with and subject to the provisions of Paragraph 6
hereof, at any time prior to the date fixed for redemption specified in
accordance with subparagraph (a) hereof.
(f) Nothing contained herein to the contrary shall preclude the
Corporation from acquiring shares of Series A Preferred Stock in
open-market transactions in compliance with any applicable federal or state
securities laws.
6. Conversion. (a) Each share of Series A Preferred Stock may, at the
option of the holder of record thereof, at any time, be converted into
shares of Common Stock at the conversion rate in effect at the time
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of such conversion. Each share of Series A Preferred Stock shall initially
be convertible into one share of Common Stock, subject to adjustment as
provided in subparagraph (f) hereof. The Corporation shall not be required
to issue fractional shares of Common Stock upon any conversion, but shall
pay in lieu thereof, as soon as practicable after the date the Series A
Preferred Stock is surrendered for conversion pursuant to subparagraph (d)
hereof, an amount in cash equal to the same fraction of the market value of
a full share of Common Stock. For such purpose, the market value of a share
of Common Stock shall be the last recorded sale price of such a share on
the primary exchange on which the Common Stock is traded if such shares are
listed on one or more securities exchanges, or if the shares of Common
Stock are not listed on one or more securities exchanges, the last recorded
sale price of a share of Common Stock if such shares are quoted on the
National Market System of the National Association of Securities Dealers'
Automated Quotation System ("NASDAQ"), or if the shares of Common Stock are
not so listed or quoted, the closing bid price as reported by NASDAQ (other
than the National Market System), on the day immediately preceding the date
upon which such shares are surrendered for conversion. All shares of Common
Stock which may be issued upon the conversion of the Series A Preferred
Stock will, upon issuance, be fully paid and nonassessable.
(b) Subsequent to the third anniversary of the Issue Date, the
Corporation may, at its option, which option may be exercised on any date
on which the market value of a share of Common Stock (as determined
pursuant to subparagraph (a)) shall have been at least $10.00 on each day
during the twenty-day period ending on the date such option is exercised,
require all of the shares of Series A Preferred Stock to be converted into
Common Stock. The Corporation shall exercise the conversion option granted
pursuant to this subparagraph (b) by publishing a notice to such effect in
the national edition of the Wall Street Journal and furnishing a copy of
such notice to Dow Jones & Company for inclusion in its news ticker. On the
date of such publication (the "Effective Date"), each outstanding share of
Series A Preferred Stock shall automatically, without any action on the
part of the holders thereof, be converted into a number of shares of Common
Stock equal to the product of (i) 110% and (ii) the conversion rate (as
determined pursuant to subparagraph (f)) in effect on the Effective Date.
The Corporation shall not be required to issue any fractional shares of
Common Stock upon any conversion pursuant to this subparagraph (b), but
shall pay in lieu thereof, as soon as practicable after the Effective Date,
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an amount in cash equal to the same fraction of the market value of a full
share of Common Stock (as determined pursuant to subparagraph (a)) on the
Effective Date. The Corporation shall, as soon as practicable after the
Effective Date, issue each holder of shares of Series A Preferred Stock, a
certificate representing the shares of Common Stock issuable to such holder
upon the conversion of such holder's Series A Preferred Stock.
(c) As promptly as practicable after any conversion of shares of
Series A Preferred Stock pursuant to subparagraph (a) or (b), the
Corporation shall pay, with respect to each share of Series A Preferred
Stock which has been so converted, to the holder thereof, the amount, if
any, of all accrued and unpaid dividends with respect to such share
(including any dividends declared after the Effective Date or, if
applicable, the Conversion Date, as defined in subparagraph (e) below,
having a record date prior to such Effective Date or Conversion Date). Such
amount shall be payable, at the option of the Corporation, either in cash
or in shares of Common Stock valued at the market value thereof (as
determined pursuant to subparagraph (a)) on the date such payment is made.
(d) In order to exercise the conversion rights set forth in
subparagraph (a), a holder of record of shares of Series A Preferred Stock
shall surrender the certificate or certificates representing such shares,
duly endorsed to the Corporation or in blank, signature guaranteed, at the
office of the Corporation's transfer agent, or at such other office as the
Corporation may designate, and shall give written notice to the Corporation
that such holder elects to convert the Series A Preferred Stock or, subject
to the provisions of subparagraph (g) below, a specified portion thereof
and the name or names in which he wishes the certificate or certificates
for shares of Common Stock to be issued. As promptly as practicable after
receipt of such notice, surrender of the certificate or certificates
representing the Series A Preferred Stock, receipt of properly executed
instruments of transfer satisfactory to the Corporation, if requested by
the Corporation, and payment by the holder of any applicable transfer
taxes, the Corporation shall issue and deliver (i) a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, in the name or names and to the address or addresses specified
in the notice, and (ii) cash in respect of any fractional shares, as set
forth in subparagraph (a), above. In case of the conversion of less than
the entire number of shares of Series A Preferred Stock represented by the
certificate
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or certificates surrendered in accordance with the provisions of
subparagraph (g) below, the Corporation shall cancel the certificate or
certificates upon the surrender thereof and shall execute and deliver a new
certificate for Series A Preferred Stock for the balance of the number of
shares evidenced by such certificate or certificates not so converted. Each
notice of election to convert pursuant hereto shall constitute a contract
between the holder of shares of Series A Preferred Stock and the
Corporation, whereby the holder of such shares shall be deemed to subscribe
for the amount of Common Stock which he shall be entitled to receive upon
such conversion, and to release the Corporation from all liability
thereunder, and whereby the Corporation shall be deemed to agree that the
amount paid to it for such shares, together with the surrender of the
certificate or certificates therefor and the extinguishment of liability
thereon, shall constitute full payment of such subscription for Common
Stock to be issued upon such conversion.
(e) A conversion pursuant to subparagraph (a) shall be deemed to have
been effected at the close of business on the date on which the certificate
or certificates of Series A Preferred Stock shall have been surrendered and
notice shall have been given to the Corporation in accordance with
subparagraph (d) (the "Conversion Date"). The holders of shares of Series A
Preferred Stock whose shares are converted pursuant to subparagraph (a) or
(b) shall cease to be shareholders with respect thereto on the Conversion
Date or the Effective Date (whichever is applicable) and all rights
whatsoever with respect to such shares (except the rights of the holders to
receive shares of Common Stock and cash in respect of fractional shares)
shall terminate, and the person or persons in whose name any certificate or
certificates for Common Stock are issuable upon such conversion shall be
deemed to have become the holder of record of the shares represented
thereby on such date. On the Conversion Date or the Effective Date
(whichever is applicable), all shares of Series A Preferred Stock which
shall have been surrendered for conversion or automatically converted as
herein provided shall no longer be deemed outstanding. Any shares of Series
A Preferred Stock so converted shall be restored to the status of
authorized but unissued shares of Preferred Stock without designation as to
class, and may be issued thereafter, but not as shares of Series A
Preferred Stock.
(f) The conversion rate shall be subject to adjustment from time to
time as follows:
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(i) If the Corporation shall, at any time or from time to time
while shares of Series A Preferred Stock shall be outstanding, (1) pay
a dividend on Common Stock in Common Stock, (2) subdivide its
outstanding shares of Common Stock into a greater number of shares, or
(3) combine its outstanding shares of Common Stock into a smaller
number of shares, then the number of shares of Common Stock into which
shares of Series A Preferred Stock may be converted shall be
proportionately increased or decreased, as the case may be, and the
conversion rate in effect immediately prior to the record date fixed
for the determination of shareholders entitled to such dividend, or
immediately prior to such subdivision or conversion, as the case may
be, shall be correspondingly increased or decreased, as the case may
be, to produce such results (taking into account fractional interests
in shares of the Common Stock to the nearest thousandth of a share,
and for the purposes of the foregoing, considering such fractional
interests as outstanding fractional shares). Similar adjustments shall
be made if any of the events described hereinabove shall thereafter
occur or reoccur. An adjustment made pursuant hereto shall become
effective immediately after the record date, in the case of a dividend
payable in Common Stock and immediately after the effective date, in
the case of a subdivision or combination thereof.
(ii) If, at any time or from time to time while shares of the
Series A Preferred Stock shall be outstanding, the outstanding shares
of Common Stock are changed into, in whole or part, a different kind
or class of stock (or other securities representing, or payable in, or
convertible into, or entitling the holder to purchase or subscribe
for, stock of any class) as a result of a reclassification, the
Corporation shall execute and deliver to the holders of record of
shares of Series A Preferred Stock, agreements providing that such
holders shall have the right immediately thereafter to convert their
shares of Series A Preferred Stock into the kind and number or amount
of shares of stock and other securities and property which are
receivable upon such reclassification by a holder of the number of
shares of Common Stock into which such shares of Series A Preferred
Stock might have been converted immediately prior to such change, and
which new shares of stock, securities and other property shall
thereafter be subject to adjustment, as nearly as practicable, in the
same manner as provided herein.
(iii) Whenever any adjustment is made in the number of shares of
Common Stock into which shares of Series A Preferred Stock may be
converted pursuant to any
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of the foregoing provisions, the Corporation shall, as soon as
reasonably practicable thereafter, prepare a written statement signed
by an officer of the Corporation, setting forth the adjusted rate of
conversion, determined as provided herein, and, in reasonable detail,
the fact requiring such adjustment. The Corporation shall mail such
statement to all holders of record of shares of Series A Preferred
Stock then outstanding at their respective addresses appearing on the
stock records of the Corporation.
(iv) If the Corporation shall at any time merge or consolidate
with or into another corporation, each holder of shares of the Series
A Preferred Stock then outstanding shall, subject to the provisions of
subparagraph 5(a), receive an equivalent preferred stock in the
surviving company with the same or equivalent features, yield, parity,
conversion rights, and protections as those of the Series A Preferred
Stock. Alternatively, each holder of shares of Series A Preferred
Stock may, immediately prior to such merger or consolidation, convert
such shares into Common Stock in accordance with Paragraph 6 hereof.
(g) The conversion of shares of the Series A Preferred Stock into
shares of Common Stock pursuant to subparagraph (a) must be made in minimum
multiples of 100 shares by the holder of record thereof, or, if less than
100 shares shall be owned of record by such holder, for all the outstanding
shares then held by him. The Corporation shall be under no obligation to
convert into Common Stock, any shares of Series A Preferred Stock which are
not surrendered to it in whole multiples of 100 shares, or which do not
constitute all the shares of such stock then held of record by the
surrendering shareholder.
(h) The Corporation shall at all times reserve and keep available out
of authorized Common Stock, solely for the purpose of effecting the
conversion of the Series A Preferred Stock, the full number of shares of
Common Stock issuable upon conversion of all Series A Preferred Stock at
any time outstanding.
7. Pre-emptive Rights. The holders of shares of Series A Preferred
Stock shall have no pre-emptive rights.
8. Mutilated or Missing Certificate. In case a certificate
representing Series A Preferred Stock shall be mutilated, lost, stolen or
destroyed, the Corporation shall issue and deliver in lieu of and
substitution for
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the certificate so mutilated, lost, stolen or destroyed, a new certificate
of like tenor and representing an equivalent number of shares of Series A
Preferred Stock; but only upon receipt of evidence reasonably satisfactory
to the Corporation of such mutilation, loss, theft or destruction of such
certificate and indemnity with surety, if requested, also reasonably
satisfactory to the Corporation. An applicant for a substitute certificate
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Corporation may prescribe.
FURTHER RES0LVED, that the appropriate officers of the Corporation be,
and they hereby are, authorized and directed to file a certificate of
amendment to the Certificate of Incorporation, amending the provisions of
Article IV(b) of said Certificate of Incorporation to reflect the
designation and number of shares of Series A Preferred Stock and the
relative rights, preferences and limitations thereof, as set forth in the
foregoing Resolution.
ARTICLE THREE: The Resolutions set forth in Article Two hereof were
duly adopted by the Board of Directors of the Corporation, by a telephonic
meeting, pursuant to subsections 14A:6-10(3) and 14A:7-2(3) of the Business
Corporation Act of the State of New Jersey on July 29, 1992.
ARTICLE FOUR: Article IV(b) of the Certificate of Incorporation of the
Corporation is hereby amended so that the designation and number of shares of
Series A Preferred Stock and the relative rights, preferences and limitations
thereof be as set forth in the resolutions contained in Article Two hereof.
IN WITNESS WHEREOF, I have executed this Certificate of Amendment to
the Certificate of Incorporation of the Corporation and do affirm the foregoing
as true, under the penalties of perjury, this third day of August, 1992.
/s/ Richard J. Nadler
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Richard J. Nadler
Vice President-Finance and
Administrator
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