<PAGE>
As filed with the Securities and Exchange Commission on May 2, 1996
Registration No. 33-
----
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
CHATTEM, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 62-0156300
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1715 WEST 38TH STREET
CHATTANOOGA, TENNESSEE 37409
(423) 821-4571
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-------------------
ZAN GUERRY, PRESIDENT A. ALEXANDER TAYLOR, II, ESQ.
CHATTEM, INC. MILLER & MARTIN
1715 WEST 38TH STREET 1000 VOLUNTEER BUILDING
CHATTANOOGA, TENNESSEE 37409 CHATTANOOGA, TENNESSEE 37402
(423) 821-4571 (423) 756-6600
(Name, address, zip code and telephone number,
including area code, of agents for service)
<PAGE>
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement
becomes effective.
-----------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans, check the following box. /x/
-----------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================
Proposed Proposed
Title of each Maximum maximum
class of offering aggregate Amount of
securities to Amount to be price per offering registration
be registered registered (1) share (2) price (2) fee
- ------------- -------------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Common Stock,
without par
value 775,792 shares $6.4375 $4,994,161 $1,722
===========================================================================
</TABLE>
(1) All securities subject to this Registration Statement are being
registered on behalf of selling shareholders.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the maximum aggregate offering price and the
registration fee have been calculated based on $6.4375, the average of
the high and low prices of the Common Stock as reported by NASDAQ for
trading on April 30, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8 (a),
MAY DETERMINE.
ii
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 2, 1996
- --------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
- -------------------------------------------------------------------------------
PROSPECTUS
CHATTEM, INC.
775,792 Shares of Common Stock
This Prospectus relates to 775,792 shares of Common Stock, without par
value, of Chattem, Inc. (the "Company"), which may be offered from time to time
by certain shareholders of the Company (the "Selling Shareholders"). See
"Selling Shareholders." The Company will not receive any of the proceeds of such
sales. All expenses (other than commissions and discounts of brokers, dealers or
agents) incurred in connection with this offering, estimated to be $20,000, will
be borne by the Company.
It is anticipated that the Selling Shareholders may sell all or a
portion of the shares offered by this Prospectus from time to time in one or
more transactions on the NASDAQ National Market System at prevailing market
prices or at prices related to prevailing market at the time of such sales, in
block transactions, in negotiated transactions or by a combination of methods of
offering. The Selling Shareholders may also make private sales at negotiated
prices directly or through one or more brokers. The distribution of such shares
may occur over an extended period of time. The Sellling Shareholders and any
broker, dealer or other agent executing sell orders on behalf of the Selling
Shareholders may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), in which event
commissions received by any such agent may be deemed to be underwriting
commissions under the Securities Act.
The Common Stock of the Company is traded on the NASDAQ National
Market System under the symbol "CHTT." On April 30, 1996, the last reported sale
price of the Company's Common Stock on the NASDAQ National Market System was
$6.625 per share.
Investment in the Common Stock offered hereby involves certain risks.
See "Risk Factors."
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------
The date of this Prospectus is May __, 1996
- --------------------------------------------------------------------------------
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files, reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the Commission's regional offices located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission
at Judiciary Plaza, 450 Fifth Street, Washington, D.C. 20549 at prescribed
rates. The Company's common stock is listed on the National Association of
Security Dealers Inc.'s Automated Quotation System National Market System
under the symbol "CHTT."
The Company has filed with the Commission a Registration Statement on
Form S-3 (herein together with all amendments and exhibits thereto called the
"Registration Statement") under the Securities Act with respect to the
securities covered by this Prospectus. This Prospectus does not contain all of
the information set forth in the Registration Statement as permitted by the
rules and regulations of the Commission. For further information with respect to
the Company and the securities offered hereby, reference is made to the
Registration Statement, including the exhibits and financial schedules filed or
incorporated as a part thereof. Statements contained herein concerning the
provisions of certain documents filed with, or incorporated by reference in, the
Registration Statement as exhibits are not necessarily complete and each such
statement is qualified in its entirety by reference to the applicable document
filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission under the Exchange Act are hereby incorporated by reference in this
Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended
November 30, 1995;
(2) The Company's Quarterly Report on Form 10-Q for the three months
ended February 29, 1996; and
(3) The Company's Current Report on Form 8-K dated April 29, 1996; and
2
<PAGE>
(4) The description of the Company's Common Stock as set forth in the
Company's Amended and Restated Charter filed as an exhibit to the Company's
Annual Report on Form 10-K for the transition period ended November 30, 1992.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Common Stock made
by this Prospectus shall be deemed to be incorporated in this Prospectus by
reference and to be a part of this Prospectus from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
the information this Prospectus incorporates). Requests for such copies should
be directed to Chattem, Inc., 1715 West 38th Street, Chattanooga, Tennessee
37409, Attention: Robert E. Bosworth (Telephone: (423) 821-4571).
THE COMPANY
Chattem, Inc. (the "Company") is a diversified manufacturer and
marketer of consumer products. Through its consumer products division, the
Company manufactures and markets branded over-the-counter ("OTC")
pharmaceuticals, such as GOLD BOND, FLEX-ALL 454, ICY HOT, PAMPRIN, PREMSYN PMS
and NORWICH aspirin, and functional toiletries and cosmetics, including
PHISODERM, CORN SILK, BULLFROG, ULTRASWIM, SUN-IN and MUDD.
The Company's objective is to offer high quality brand name products
in niche market segments in which the Company's products can be among the market
leaders. The Company strives to achieve its objective by identifying brands with
favorable demographic appeal, being flexible in modifying products and
promotions in response to changing consumer demands and developing creative and
cost-effective marketing and advertising programs. The Company manufactures
substantially all of its consumer products.
3
<PAGE>
The Company anticipates that it will continue to expand through a
combination of brand acquisitions and internal growth. Since 1986, the Company
acquired eight brands, the most recent of which was GOLD BOND acquired April 29,
1996. Other brands acquired during this period include FLEX-ALL 454, ICY HOT,
PHISODERM, BENZODENT, NORWICH, BULLFROG and ULTRASWIM. The Company's acquisition
strategy is to identify brands that are embryonic or have unrealized potential,
which can complement existing brands, and which can be among the leaders in
attractive niche market segments. The Company also seeks internal growth with
programs designed to capitalize on the value of existing brands and product line
extensions such as the PHISODERM Antibacterial Handsoap to be introduced in mid-
1996.
RECENT DEVELOPMENTS
On June 11, 1993, the Company paid a special cash dividend ("Special
Dividend") of $20.00 per share to holders of its common stock. In connection
with the payment of the Special Dividend, the Company borrowed approximately
$97.0 million under a $100.0 million senior secured bank agreement. The
financing of the Special Dividend resulted in a substantial increase in the
Company's total indebtedness.
On June 17, 1994, the Company acquired a license to the PHISODERM
trademark in the United States, Canada and Puerto Rico, together with certain
other PHISODERM related assets from Sterling Winthrop Inc. Also on June 17,
1994, the Company sold units consisting of $75.0 million aggregate principal
amount of 12.75% senior subordinated notes due 2004 (the "Notes") with five year
warrants to purchase 417,182 shares of Company common stock at $7.15 per share
and entered into a new credit agreement with a syndicate of banks to borrow up
to $55.0 million. The proceeds of the financings were used to fund the PHISODERM
acquisition and repay all existing indebtedness.
On May 26, 1995, the Company completed the sale of its specialty
chemicals division to privately-held Elcat, Inc. ("Elcat"). The Company received
$25.0 million from the sale of the specialty chemicals division consisting of
$20.0 million in cash and $5.0 million of 13.125% cumulative, convertible
preferred stock of Elcat. The net cash proceeds were used to repay long-term
debt of approximately $12.0 million.
On April 24, 1996, the Company completed the sale of the trademarks
BLIS-TO-SOL -Registered Trademark- and SOLSTICE -Registered Trademark-,
including existing inventory of the two brands, to The Woolfoam Corporation.
The purchase price for the trademarks was $1.2 million, consisting of $1.0
million in cash and $0.2 million in an unsecured note with the existing
inventory to be purchased at cost.
4
<PAGE>
On April 29, 1996, the Company acquired from Martin Himmel Inc. a
medicated skin care product line sold under the GOLD BOND-Registered Trademark-
trademark. For this brand, the Company paid a total of $39.0 million in cash and
$1.0 million of the Company's common stock comprised of 155,792 shares of common
stock at $6.4188 per share. The assets acquired consist of the GOLD BOND
trademark purchased for $38.0 million and certain inventory associated with the
brand purchased for $2.0 million.
In connection with the acquisition of GOLD BOND, the Company entered
into new $61.5 million credit facilities with NationsBank, N.A., as agent for a
syndicate of lenders (the "Credit Agreement"). The proceeds of the credit
facilities were used to repay the Company's existing bank indebtedness and fund
a portion of the purchase price for GOLD BOND. The purchase price for GOLD BOND
was also funded by the private issuance of $5.5 million of the Company's common
stock to certain affiliates and other investors. The price per share of $5.00
for the sale of such common stock was in excess of the average closing price for
the 30 business days preceding the date of approval of the equity issuance. The
Company received an opinion from an independent investment banking firm that the
terms of sale of the common stock were fair to the Company's shareholders from a
financial point of view. The net cash proceeds of the sale of BLIS-TO-SOL and
SOLSTICE were also used to fund a portion of the purchase price for GOLD BOND.
As of February 29, 1996, on a pro forma basis after giving effect to
the acquisition of GOLD BOND, the divestiture of BLIS-TO-SOL and SOLSTICE,
borrowings under the Credit Agreement, repayment of the Company's existing bank
indebtedness, and the equity issuance of $6.5 million, the Company's total
assets would have been $120,401,000, including inventories of $12,204,000, debt
issuance costs of $4,069,000, and patents, trademarks and other purchased
product rights of $68,620,000. The Company's long-term debt would have been
$114,886,000 (including $2,006,000 in current maturities) and the Company's
total shareholders' deficit would have been $11,098,000.
RISK FACTORS
The following factors should be carefully considered along with the
other information contained in this Prospectus before purchasing the shares
offered hereby:
LEVERAGE
As of February 29, 1996, on a pro forma basis after giving effect to
the acquisition of GOLD BOND, the divestiture of BLIS-TO-SOL and SOLSTICE,
borrowings under the Credit Agreement, repayment of the Company's existing bank
indebtedness, and the equity issuance of $6.5 million, the Company's long-term
5
<PAGE>
debt would have been $114,886,000 (including $2,006,000 in current maturities)
and the Company's shareholders' deficit would have been $11,098,000.
The degree to which the Company is leveraged could have important
consequences, including, but not limited to, the following: (i) the Company's
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes or other purposes
may be limited or become impaired; (ii) a portion of the Company's borrowings
are and will continue to be at variable rates of interest, which could result in
higher interest expenses in the event of increases in interest rates; and (iii)
such indebtedness contains and will contain financial and restrictive covenants,
the failure to comply with which may result in an event of default which, if not
cured or waived, could have a material adverse effect on the Company.
RESTRICTIVE COVENANTS
The Credit Agreement and the Indenture with respect to the Notes
contain various operating covenants including, among others, restrictions on
the ability of the Company to incur additional investments, and to sell or
otherwise dispose of assets and merge or consolidate with another entity. The
Credit Agreement also requires the Company to meet certain financial ratios
and tests, including a minimum net worth test and a maximum leverage ratio,
and the Indenture requires the Company to meet a certain minimum fixed charge
coverage ratio before incurring senior bank indebtedness in excess of $50.0
million. Any failure of the Company to comply with the covenants contained in
the Credit Agreement or the Indenture could result in an event of default
under either the Credit Agreement or the Indenture which could permit
acceleration of the obligations thereunder and acceleration of debt under
other instruments that may contain cross-acceleration or cross-default
provisions.
STATE LAW LIMITATIONS ON DISTRIBUTIONS
Under the Tennessee Business Corporation Act, it is unlawful to
make a distribution if, after giving effect to the transaction, (i) the
corporation would not be able to pay its debts as they become due in the
usual course of business, or (ii) the corporation's total assets would be
less than the sum of its total liabilities plus the amount that would be
needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
distribution. Distributions include any direct or indirect transfer of money
or other property or incurrence of indebtedness by a corporation to or for
the benefit of its shareholders in respect of any of its shares and may be in
the form of a dividend, a purchase, redemption or other acquisition of
shares, a
6
<PAGE>
distribution of indebtedness or otherwise. The Company presently intends to
retain earnings to finance future growth, service indebtedness and for
general corporate purposes and does not presently intend to pay dividends on
its capital stock. The Indenture and the Credit Agreement also restrict the
payment of distributions.
COMPETITION
The OTC pharmaceutical and functional toiletry products markets in
which the Company competes are highly competitive. The markets are
characterized by the frequent introduction of new products, including the
movement of prescription drugs to the OTC market, often accompanied by major
advertising and promotional programs. The Company competes primarily on the
basis of product quality, price, brand loyalty and consumer acceptance. The
Company's competitors include other OTC pharmaceutical companies and large
consumer products companies, many of which have considerably greater
financial and marketing resources than the Company. The products offered by
these companies are often supported by much larger advertising and
promotional expenditures and are generally backed by larger sales forces. In
addition, the Company's competitors have often been willing to use aggressive
spending on trade promotions as a strategy for building market share at the
expense of their competitors, including the Company. The private label or
generic category has also become increasingly more competitive in certain of
the Company's product markets. Another factor affecting the OTC
pharmaceutical and toiletry products business is the consolidation of
retailers and increasingly more competitive negotiations for access to
shelf space.
GOVERNMENT REGULATION
The Company's products are generally subject to governmental
regulations, primarily those of the Federal Food and Drug Administration (the
"FDA"). Certain of the Company's consumer products are regulated by the FDA
as OTC drugs, with the rest of the products being regulated as "cosmetics."
All such products must comply with FDA regulations governing the safety of
the products themselves and the ingredients used in their manufacture. FDA
regulations for all pharmaceuticals products also include requirements for
product labeling and for adherence to "current good manufacturing practices."
All of the Company's OTC drug products are regulated pursuant to
the FDA's "monograph" system for OTC drugs. The monographs set out the
active ingredients and labeling indications that are permitted for certain
broad categories of OTC drug products, such as topical analgesics.
Compliance with the monograph provisions means that the product is generally
recognized as safe and effective and is not misbranded. Future changes in
the
7
<PAGE>
monographs could result in the Company having to revise product labeling and
formulations.
The Company has supplied data to the FDA in connection with the OTC
review process with respect to pyrilamine maleate, one of the three active
ingredients used in the PAMPRIN and PREMSYN PMS products, to support the
classification of pyrilamine maleate as a generally recognized safe and
effective ingredient for menstrual relief products. Based on study results
and marketing experience, the Company believes that further clinical testing
of pyrilamine maleate may be required. Although the exact requirements of the
final monographs cannot be predicted, it is possible that pyrilamine maleate
will no longer be permitted to be indicated for relief from the "negative
effects cluster," including tension and irritability. The Company has been
actively monitoring the process and does not believe that its OTC drug brands
will be materially adversely affected by the FDA review. The Company believes
that any adverse finding by the FDA would likewise affect the Company's
principal competitor in the menstrual product category.
With regard to all of the Company's products, the FDA may revise
applicable regulations or provide new interpretations of existing regulations
which could necessitate product labeling changes, reformulation or other
changes in the Company's products or the conduct of its business. While it is
impossible to predict the impact of future FDA actions, to date the Company
has not been adversely affected as a result of compliance with FDA or state
regulations.
In addition to the FDA regulations discussed above, the Company is
subject to numerous other statutory and regulatory restrictions, including
regulations relating to product packaging. As a result of product packaging
regulations, in 1997 the Company will be required to repackage GOLD BOND
medicated Anti-Itch Cream in child resistant packaging or reformulate the
product.
The Company is continually engaged in assessing compliance of its
operations with applicable federal, state and local health, safety and
environmental laws and regulations, including those pertaining to underground
storage tanks, clean air rules and the likely designation of a site in the
vicinity of the Company's manufacturing facility as a National Priorities List
Superfund site.
PRODUCT LIABILITY AND INSURANCE
An inherent risk of the Company's business is exposure to product
liability claims brought by users of the Company's products or others. The
Company has not had any claims in the past ten years and is not aware of any
claims pending against the Company or its products that if adversely decided
would have a material adverse effect on the Company. While the Company will
continue to
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<PAGE>
attempt to take what it considers to be appropriate precautions, there can be
no assurance that it will avoid significant product liability exposure. The
Company, through HBA Insurance Limited, its captive insurance company
subsidiary, maintains product liability insurance that it believes to be
adequate; however, there can be no assurance that it will be able to retain
its existing coverage or that such coverage will be cost-justified or
sufficient to satisfy future claims, if any.
SEASONALITY
During recent fiscal years, the Company's first quarter net sales
and operating income have trailed the other fiscal quarters, accounting for
less than 20% of annual sales and operating profit. The absence of major
promotional campaigns during this period is a primary factor contributing to
first quarter performance. Seasonality may become more significant due to the
seasonality of GOLD BOND sales.
DEPENDENCE ON SENIOR MANAGEMENT
The Company's future performance will depend to a significant
degree upon the efforts and abilities of certain members of senior
management, in particular those of Zan Guerry, Chairman of the Board and
Chief Executive Officer, and Robert E. Bosworth, Executive Vice President and
Chief Financial Officer. The loss of the services of either Messrs. Guerry or
Bosworth could have an adverse effect on the Company.
VOLATILITY OF STOCK PRICE
The trading price of the Common Stock could be subject to
significant fluctuations in response to variations in the results of the
Company's operations, its leveraged financial position, general trends in the
consumer products industry, the relative illiquidity of the Company's common
stock and stock market conditions generally.
DIVIDEND POLICY
The Company intends to retain its earnings, if any, for use in its
operations and repayment of outstanding indebtedness and has no current
intention of paying dividends to the holders of Common Stock. The Indenture
and the Credit Agreement restrict the payment of dividends.
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<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
shares offered hereby by the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to
the Selling Shareholders as of April 30, 1996:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
PRIOR TO OFFERING SHARES
------------------ BEING BENEFICIALLY OWNED PERCENTAGE OWNED
NAME OF BENEFICIAL OWNER NUMBER OFFERED AFTER OFFERING (1) AFTER OFFERING(1)
- ------------------------ ------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Martin Himmel Inc. 155,792 155,792 0 (2)
Marvin Schwartz 276,900 100,000 176,900 2.1
Ronald C. Hart 20,000 20,000 0 (2)
Chattem, Inc. Pension Plan 100,000 100,000 0 (2)
The Arthur S. DeMoss
Foundation 225,000 200,000 25,000 (2)
Federal Express Sector Plus 563,800 200,000 363,800 4.3
- ----------
(1) Assumes that all shares covered by this Prospectus are sold or otherwise
disposed of and that no other shares are acquired or transferred by the persons
listed in this table.
(2) Less than 1.0%.
</TABLE>
PLAN OF DISTRIBUTION
It is anticipated that the Selling Shareholders may sell all or a
portion of the shares offered by this Prospectus from time to time in one or
more transactions on the NASDAQ National Market System at prevailing market
prices or at prices related to prevailing market at the time of such sales,
in block transactions, in negotiated transactions or by a combination of
methods of offering. The Selling Shareholders may also make private sales at
negotiated prices directly or through a broker or brokers. In connection with
any such sales, the Selling Shareholders and any brokers or other agents
participating in such sales may be deemed to be underwriters within the
meaning of the Securities Act. There can be no assurance that any of the
Selling Shareholders will sell any or all of the shares of Common Stock
offered by them. The Selling Shareholders are not restricted as to the prices
at which they may sell their shares or the number of shares that may be sold
at any one time. The price and amount of shares sold by the
10
<PAGE>
Selling Shareholders could reduce the market price of the Common Stock.
The Company has informed the Selling Shareholders that the
anti-manipulative Rules 10b-6 and 10b-7 under the Exchange Act may apply to
their sales in the market and has furnished the Selling Shareholders with a
copy of these Rules and has informed them of the possible need for delivery
of copies of this Prospectus.
The Company will pay all expenses incident to the offering and sale
of the Common Stock to the public, other than commissions and discounts of
underwriters, brokers, dealers or agents.
LEGAL OPINION
The validity of the shares of the Company's Common Stock offered
hereby has been passed upon for the Company by Miller & Martin, Chattanooga,
Tennessee.
EXPERTS
The financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the fiscal year
ended November 30, 1995, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, which is incorporated herein by reference, and has been so
incorporated in reliance upon the authority of said firm as experts in giving
said report.
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<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the offer made hereby. If given or made, such information or
representation must not be relied upon as having been authorized by the Company
or the Selling Shareholders. This Prospectus does not constitute an offer of
any securities other than the Common Stock to which it relates or an offer to
sell or a solicitation of an offer to buy any of the securities offered hereby
in any jurisdiction to any person to whom it would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implication that the information contained herein is
correct as of any time subsequent to the date hereof.
__________________
TABLE OF CONTENTS
Page
----
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain
Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
__________________
<PAGE>
775,792 Shares
CHATTEM, INC.
Common Stock
__________________
PROSPECTUS
__________________
May __, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All amounts are estimates except the SEC registration fee.
SEC registration fee . . . . . . . . . . . . . . . $ 1,722
Accounting fees and expenses . . . . . . . . . . . 2,500
Legal fees and expenses. . . . . . . . . . . . . . 7,500
Printing and engraving expenses. . . . . . . . . . 2,500
Miscellaneous. . . . . . . . . . . . . . . . . . . 5,778
-------
Total. . . . . . . . . . . . . . . . . . . . . $20,000
-------
The Company will bear all expenses shown above.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 14(1) of the Company's Amended and Restated Charter provides
that no director of the Company shall be liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except for liability: (1) for any breach of the director's duty of loyalty to
the corporation or its shareholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, or
(iii) for distributions in violation of Section 48-18-304 of the Tennessee Code
Annotated.
Section 14(2) of the Company's Amended and Restated Charter further
provides that each person who was or is made a party or is threatened to be made
a party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, and whether formal or informal
(a "proceeding"), by reason of the fact that he or she is or was a director,
officer or employee of the corporation or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans (hereinafter "indemnitee") whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Company to the fullest extent authorized by the Tennessee Business
Corporation Act, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Company to provide broader indemnification rights than such law permitted the
Company to provide prior to such amendment), against all expense, liability and
loss (including attorneys' fees,
II-1
<PAGE>
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer, or employee and shall inure to the benefit
of the indemnitee's heirs, executors and administrators; provided, however,
that, except with respect to proceedings to endorse a right to indemnification
under Section 14(3) of the Company's Amended and Restated Charter, the Company
shall indemnify any such indemnitee in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part thereof)
was authorized by the Board of Directors of the Company. This right to
indemnification includes the right to be paid by the Company the expenses
incurred in defending any such proceeding in advance of its final disposition
("advancement expenses"); provided, however, that, if the Tennessee Business
Corporation Act so requires, an advancement of expenses incurred by an
indemnitee in his or her capacity as a director, officer or employee shall be
made only upon (i) delivery of written affirmation of the indemnitee's good
faith belief that any applicable standard of conduct required by the Tennessee
Business Corporation Act has been met, and (ii) delivery of an
undertaking, by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal that such indemnitee is not
entitled to be indemnified for such expenses under this paragraph or
otherwise (an "undertaking").
Under Section 14(3) of the Company's Amended and Restated Charter, if
a claim is not paid in full by the Company within sixty days after a written
claim has been received by the Company, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
days, the indemnitee may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim. If the indemnitee is
successful in whole or in part in any such suit brought by the Company to
recover an advancement of expenses pursuant to the terms of the
undertaking, the indemnitee shall be entitled to also be paid the expense of
prosecuting or defending such a suit. In (i) any suit brought by the indemnitee
to enforce a right to indemnification hereunder (but not in a suit brought by
the indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) any suit by the corporation to recover an advancement of
expenses pursuant to the terms of the undertaking the corporation shall be
entitled to such expenses upon a final adjudication that, the indemnitee has
not met the applicable standard of conduct set forth in the Tennessee Business
Corporation Act, as amended. Neither the failure of the Company (including
its board of directors, independent legal counsel, or its shareholders) to
have made a determination prior to the commencement of such suit that
indemnification of the indemnitee is proper in the circumstances because the
indemnitee has met the applicable standard of conduct set forth in the
Tennessee Business
II-2
<PAGE>
Corporation Act, nor an actual determination by the corporation (including its
Board of Directors, independent legal counsel or its shareholders) that the
indemnitee has not met such applicable standard of conduct, shall create a
presumption that the indemnitee has failed to meet the applicable standard of
conduct or be a defense to such suit. In any suit brought by the indemnitee
to enforce a right hereunder, or by the Company to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving
that the indemnitee is not entitled to indemnification or advancement expenses
shall be on the Company.
Section 14 (2) further provides that the rights to indemnification and
to the advancement of expenses conferred therein shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
the corporation's Amended and Restated Charter or Amended and Restated By-laws,
agreement, vote of shareholders or disinterested directors or otherwise.
Article II, Section 5 of the Company's By-Laws provides that any
person made or threatened to be made a party to a suit or proceeding by reason
of the fact that he or his intestate was, is, or shall be a director or officer
or Audit Committee member of the Company or at the request of the Company a
director or officer or Audit Committee member of another corporation controlled
by the Company, shall be indemnified by the Company to the maximum extent and
upon the conditions provided by the laws of the State of Tennessee, including
Tennessee Code Annotated, Sections 48-1-407 through 48-1-411.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed as a part of this Registration
Statement:
Exhibit
Number Description of Exhibit References
------- ---------------------- ----------
4 Restated Charter of Chattem, Inc. (1)
Amended and Restated By-Laws of (2)
Chattem, Inc.
5 Opinion of Miller & Martin
24 Consent of Independent Public Accountants
Consent of Miller & Martin
(included in opinion filed as Exhibit 5)
II - 3
<PAGE>
References:
Previously filed as an exhibit to and incorporated by reference
from:
(1) Form 10-K for the year ended November 30, 1992.
(2) Form 10-K for the year ended November 30, 1993.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to directors,
officers and controlling persons of the Company pursuant to provisions described
in Item 15 above, or otherwise, the Company 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 Company of expenses incurred or paid by a director, officer or
controlling person of the Company 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 Company 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.
The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13 (a) or Section 15 (d) of the
Securities Exchange Act of 1934 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.
The undersigned Company hereby undertakes (1) that for purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this registration statement in reliance upon Rule
430 (A) and contained in a form of prospectus filed by the registrant pursuant
to Rule 424 (b) (1) or (4) or 497 (h) under the Act shall be deemed to be part
of this registration statement as of the time it was declared effective; and (2)
that for the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein,
II-4
<PAGE>
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that it (1) shall 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;
(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.
(2) That, for purposes of determining any liability under the
Securities Act of 1933, 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chattanooga, State of Tennessee, on May 1, 1996.
CHATTEM, INC.
By: /s/ Robert E. Bosworth
--------------------------
Robert E. Bosworth
Executive Vice President
II-6
<PAGE>
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Chattem, Inc., hereby
severally constitute and appoint Zan Guerry and Robert E. Bosworth, and each of
them singly, our true and lawful attorneys with full power to them, and each of
them singly, to sign for us and in our names in the capacities indicated below,
the registration statement on Form S-3 filed herewith and any and all
pre-effective and post-effective amendments to said registration statement, and
generally to do all things in our names and on our behalf in our capacities as
officers and directors to enable Chattem, Inc. to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission, hereby ratifying and confirming our signatures as they
may be signed by our said attorneys, or either of them, to said registration
statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- -----
/s/ Zan Guerry Chairman of the April 30, 1996
- ---------------------------- Board of Directors
Zan Guerry and President
(principal
executive officer)
/s/ Robert E. Bosworth Executive Vice April 30, 1996
- ---------------------------- President, Chief
Robert E. Bosworth Financial Officer
and Director
(principal
financial officer)
/s/ Louis H. Barnett Director
- ----------------------------
Louis H. Barnett April 30, 1996
/s/ Richard E. Cheney Director April 30, 1996
- ----------------------------
Richard E. Cheney
Director April __, 1996
- ----------------------------
Scott L. Probasco, Jr.
/s/ Samuel E. Allen Director April 30, 1996
- ----------------------------
Samuel E. Allen
/s/ A. Alexander Taylor, II Director April 30, 1996
- ----------------------------
A. Alexander Taylor, II
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<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
------ ------- -------------
<S> <C> <C>
5.1 Opinion of Miller & Martin . . . . . . . .
24.2 Consent of Arthur Andersen LLP . . . . . .
</TABLE>
<PAGE>
EXHIBIT 5.1
<PAGE>
[MILLER & MARTIN LETTERHEAD]
May 2, 1996
Chattem, Inc.
1715 West 38th Street
Chattanooga, Tennessee 37409
Re: Registration Statement on Form S-3 -
775,792 Shares of Common Stock
------------------------------------
Gentlemen:
We are counsel to Chattem, Inc., a Tennessee corporation (the
"Company"), and have acted as such in the preparation and filing of its
Registration Statement on Form S-3 dated May 2, 1996 with the Securities and
Exchange Commission (the "SEC") pursuant to the requirements of the
Securities Act of 1933, as amended, and the General Rules and Regulations of
the SEC promulgated thereunder for the registration of 775,792 shares (the
"Shares") of common stock of the Company issued in connection with the
acquisition of certain assets by the Company. In connection with the
following opinion, we have examined and have relied upon such documents,
records, certificates, statements and instruments as we have deemed necessary
and appropriate to render the opinion herein set forth.
Based upon the foregoing, it is our opinion that the Shares are
legally and validly issued, fully paid and nonassessable.
The undersigned hereby consents to filing this opinion as Exhibit 5
to the Registration Statement and using its name in the Registration Statement
under the caption of the prospectus entitled "Legal Opinion."
Very truly yours,
/s/ Miller & Martin
-------------------
MILLER & MARTIN
<PAGE>
EXHIBIT 24.2
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated January
25, 1996, incorporated by reference in Chattem, Inc.'s Form 10-K for
the year ended November 30, 1995, and to all references to our firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
May 1, 1996
