<PAGE>
As filed with the Securities and Exchange Commission on July 11, 1997
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
<PAGE>
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 /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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 1,296,385 shares $13.81 $17,903,076.85 $5,425.17
</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 $13.81 the average of the
high and low prices of the Common Stock as reported by The Nasdaq Stock
Market for trading on July 7, 1997.
<PAGE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 11, 1997
- --------------------------------------------------------------------------------
PROSPECTUS
CHATTEM, INC.
1,296,385 Shares of Common Stock
This Prospectus relates to 1,296,385 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 $15,000, 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 the 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 Selling
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 Stock Market
(National Market) under the symbol "CHTT." On July 7, 1997, the last reported
sale price of the Company's Common Stock on The NASDAQ Stock Market was $14.00
per share.
See "Risk Factors" beginning on page 6 of this Prospectus for certain
information that should be considered by prospective purchasers of the Common
Stock offered hereby.
------------------
<PAGE>
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 July __, 1997
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<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 Commission also maintains a site
on the World Wide Web at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Company's Common Stock is listed on The
Nasdaq Stock Market (National Market) under the symbol "CHTT." Information filed
by the Company with Nasdaq may be inspected at the offices of Nasdaq at 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein together with all amendments, supplements 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, 1996;
(2) The Company's Quarterly Report on Form 10-Q for the three months ended
February 28, 1997; and
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(3) The Company's Current Report on Form 8-K dated June 26, 1997; and
(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 making of a modifying or superseding statement shall not be deemed an
admission that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.
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. The Company manufactures and markets branded over-the-counter
("OTC") pharmaceuticals, such as GOLD BOND, FLEX ALL, ICY HOT, PAMPRIN, PREMSYN
PMS and NORWICH aspirin, functional toiletries and cosmetics, including
PHISODERM, CORN SILK, BULLFROG, ULTRASWIM, SUN-IN and MUDD, and dietary
supplements, including GARLIQUE, MELATONEX,
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ECHINEX, PROPALMEX and REJUVEX.
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.
The Company anticipates that it will continue to expand through a
combination of brand acquisitions and internal growth. Since 1986, the Company
has acquired thirteen brands, the most recent of which were GARLIQUE, MELATONEX,
ECHINEX, PROPALMEX and REJUVEX acquired June 26, 1997. Other brands acquired
during this period include GOLD BOND, 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 ICY HOT Arthritis Therapy Gel and GOLD BOND Medicated Foot
Powder introduced in 1997.
The Company's principal executive offices are located at 1715 West 38th
Street, Chattanooga, Tennessee 37409, and its telephone number is (423)
821-4571.
RECENT DEVELOPMENTS
On June 26, 1997, the Company acquired from Sunsource International, Inc.
and Mindbody, Inc. a line of dietary supplements and homeopathic products sold
under the SUNSOURCE, GARLIQUE, MELATONEX, PROPALMEX, ECHINEX and REJUVEX
trademarks (the "Sunsource Products"). For these brands, the Company paid a
total of $28.1 million in cash at closing and 300,000 shares of the Company's
Common Stock and agreed to make contingent payments of up to $15.75 million. The
assets acquired consisted of trademarks and certain inventory and other assets
associated with the brands.
In connection with the acquisition of the Sunsource Products, the Company
entered into an amended and restated $95.0 million credit facility with
NationsBank of Tennessee, N.A., as agent for a syndicate of lenders (the "Credit
Agreement"). The proceeds of the credit facility were used to repay the
Company's existing bank indebtedness and fund a portion of the cash purchase
price paid at closing for the Sunsource Products.
4
<PAGE>
As of May 31, 1997, on a pro forma basis after giving effect to the
acquisition of the Sunsource Products, borrowings under the Credit Agreement,
repayment of the Company's existing bank indebtedness and the equity issuance of
300,000 shares of the Company's Common Stock, total assets would have been
$180,353,000 including inventories of $14,640,000, accounts receivables of
$28,950,000, debt issuance costs of $3,180,000, and patents, trademarks and
other purchased product rights of $102,607,000. The Company's long-term debt
would have been $153,418,000 (including $5,270,000 in current maturities) and
the Company's total shareholders' deficit would have been $817,000.
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 May 31, 1997, on a pro forma basis after giving effect to the
acquisition of the Sunsource Products, borrowings under the Credit Agreement,
repayment of the Company's existing bank indebtedness, and the equity issuance
of 300,000 shares of Common Stock, the Company's long-term debt would have been
$153,418,000 (including $5,270,000 in current maturities) and the Company's
shareholders' deficit would have been $817,000.
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 (the
"Indenture") 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
5
<PAGE>
ratio before incurring additional indebtedness. 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 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, functional toiletry products and dietary supplements
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, toiletry products and
dietary supplements business is the consolidation of retailers and increasingly
more competitive negotiations for access to shelf space.
6
<PAGE>
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" or as dietary
supplements under the Dietary Supplement, Health and Education Act ("DSHEA").
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."
Advertising claims with respect to the dietary supplement business are
subject to regulation under the DSHEA.
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 monographs could result in the
Company having to revise product labeling and formulations.
The Company responded to certain questions with respect to efficacy received
from the FDA in connection with clinical studies for pyrilamine maleate, one of
the active ingredients used in certain of the PAMPRIN and PR MSYN PMS. While the
Company addressed all of the FDA questions in detail, the final monograph for
menstrual drug products will determine if the FDA considers pyrilamine maleate
safe and effective for menstrual relief products.
The Company has been actively monitoring the process and does not believe
that PAMPRIN PREMSYN PMS and 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. The application of these product
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packaging regulations has required the Company to convert certain of its
PAMPRIN products sold in foil pouches to bottles with child resistant caps.
This conversion was completed in 1995 and involved plant modification and the
installation of additional packaging equipment. To comply with new packaging
requirements for products containing lidocaine, the Company has until January
1998 to develop child resistant packaging for its GOLD BOND cream products
that are sold in tubes or change the product formulation.
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 and
clean air rules. A site in the vicinity of the Company's manufacturing facility
has been designated as a National Priorities List Superfund site. The Company
could be named as a potentially responsible party due to the Company's
historical discharge of wastewater into the creek that flows through the site.
The Company's manufacturing site utilizes chemicals and other potentially
hazardous materials and generates both hazardous and non-hazardous waste, the
transportation, treatment and storage and disposal of which are regulated by
various governmental agencies.
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 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 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 has 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
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particular those of Zan Guerry, Chairman of the Board, President 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.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including all documents incorporated herein by reference,
contains forward-looking statements relating to future events or the future
financial performance of the Company. Such forward-looking statements are within
the meaning of that term in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange act of 1934, as amended,
Such statements may include, but not be limited to, projections of revenues,
income or loss, capital expenditures, acquisitions, plans for growth and future
operations, financing needs or plans or plans relating to acquisitions by the
Company, as well as assumptions relating to the foregoing. Forward-looking
statements are inherently subject to risks and uncertainties, some of which
cannot be predicted or quantified. Future events and actual results could differ
materially from those set forth in, contemplated by, or underlying the forward-
looking statements.
USE OF PROCEEDS
This Prospectus relates to common stock being offered and sold for the
accounts of the Selling Shareholders. 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
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Selling Shareholders as of June 30, 1997:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED SHARES BENEFICIALLY
NAME OF BENEFICIAL PRIOR TO OFFERING BEING OWNED
OWNER NUMBER OFFERED AFTER OFFERING(1)
- ------------------------------------------------------ ------------------------ ------------ -----------------
<S> <C> <C> <C>
Mindbody, Inc. 279,000(2) 279,000(2) 0
Barry R. Shapiro 10,500(2) 10,500(2) 0
Norman Leben 10,500(2) 10,500(2) 0
State Street Bank Cust for GE
pension Trust Global Inv. 472,000 472,000 0
Mellon Bank NA TTEE for NYNEX
Master Pen Tr Dtd 1/1/84 100,000 100,000 0
Boston Safe Deposit & Trust Co.
for Thermo Electron Corp.
Pension Plan 25,000 25,000 0
Whiffletree Partners 100,000 100,000 0
Richardson Electronics 9,000 9,000 0
Twenty Percent Plus 18,000 18,000 0
Andrew Turner 13,000 13,000 0
Peter Sherman, Steven Cocotos,
Charles L. Lamn, TTEES,
Cocotos, Sherman, Koch, Burigo,
Ross & Bone PA 401K Pen Plan 9,000 9,000 0
Beja International S.A. 18,000 18,000 0
Ronald Bird 9,000 9,000 0
Robert Zinn 9,000 9,000 0
Peter Brown 9,000 9,000 0
J. Zagorski & J. Schenckman
TTEE Miami Orth & Sports
Medicine Inc. Prof Shr Plan Dtd
9/1/8 9,000 9,000 0
Marvin Schwartz 440,400(3) 100,000(3) 340,400(4)
Creditanstalt Corporate Finance,
Inc. (5) 96,385 96,385 0
</TABLE>
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(1) Assumes, except as otherwise noted, 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) Represents a portion of the 300,000 shares of Common Stock issued by the
Company in connection with the acquisition of the Sunsource Products.
(3) Includes shares held by family members and trusts for the benefit of
family members.
(4) Represents approximately 3.8 percent of the Company's outstanding Common
Stock as of June 30, 1997.
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(5) An affiliate of a lender to the Company under the Credit Agreement with
NationsBank of Tennessee, as agent for the lenders named therein.
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 Selling Shareholders
could reduce the market price of the Common Stock.
The Selling Shareholders and any such brokers, dealers or other agents that
participate in such distribution may be deemed to be "underwriters" within the
meaning of the Securities Act, and any discounts, commissions or concessions
received by any such brokers, dealers or other agents might be deemed to be
underwriting discounts and commissions under the Securities Act. Neither the
Company nor the Selling Shareholders can presently estimate the amount of such
compensation. The Company knows of no existing arrangements between any Selling
Shareholder and any other Selling Shareholder, broker, dealer or other agent
relating to the sale or distribution of the shares of Common Stock.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of any of the shares of Common Stock may not
simultaneously engage in market activities with respect to the Common Stock for
the applicable period under Regulation M prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Shareholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation Rules 10b-5
and Regulation M, which provisions may limit the timing of purchases and sales
of any of the Shares by the Selling Shareholders. All of the foregoing may
affect the marketability of the Common Stock.
The Company will pay all expenses incident to the offering and sale of the
Common Stock to the public, other than commissions, discounts or concessions of
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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,
1996, 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 reports.
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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
Recent Developments.............................. 4
Risk Factors..................................... 5
Use of Proceeds.................................. 9
Selling Shareholders............................. 9
Plan of Distribution............................. 11
Legal Opinion.................................... 12
Experts.......................................... 12
-----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
1,296,385 Shares
CHATTEM, INC.
COMMON STOCK
-----------
PROSPECTUS
-----------
July __, 1997
<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............................................ $5,425.17
Accounting fees and expenses.................................... 2,500.00
Legal fees and expenses......................................... 5,000.00
Printing and engraving expenses................................. 1,000.00
Miscellaneous................................................... 1,074.83
---------
Total...................................................... $15,000.00
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, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or
II-1
<PAGE>
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 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
II-2
<PAGE>
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:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT REFERENCES
- ----------- --------------------------------------------------------------------------------------------- ---------------
<C> <S> <C>
4 Restated Charter of Chattem, Inc. (1)
Amended and Restated By-Laws of Chattem, Inc. (2)
5 Opinion of Miller & Martin
24 Consent of Independent Public Accountants
Consent of Miller & Martin (included in opinion filed as Exhibit 5)
</TABLE>
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
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<PAGE>
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 Act, 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, 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 Act;
(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;
II-4
<PAGE>
(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 Act, 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
June 27, 1997.
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
- ------------------------------ --------------------------- -------------------
Chairman of the Board of
/s/ ZAN GUERRY Directors and President
- ------------------------------ (principal executive July 2, 1997
Zan Guerry officer)
Executive Vice President,
/s/ ROBERT E. BOSWORTH Chief Financial Officer
- ------------------------------ and Director (principal June 27, 1997
Robert E. Bosworth financial officer)
/s/ LOUIS H. BARNETT Director
- ------------------------------ June 27, 1997
Louis H. Barnett
/s/ RICHARD E. CHENEY Director
- ------------------------------ June 30, 1997
Richard E. Cheney
/s/ SCOTT L. PROBASCO, JR. Director
- ------------------------------ June 27, 1997
Scott L. Probasco, Jr.
/s/ SAMUEL E. ALLEN Director
- ------------------------------ June 27, 1997
Samuel E. Allen
/s/ A. ALEXANDER TAYLOR II Director
- ------------------------------ July 8, 1997
A. Alexander Taylor II
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ----------- ------------------------------------------------------------------------ -------------------
<C> <S> <C>
5.1 Opinion of Miller & Martin
24.2 Consent of Arthur Andersen LLP
</TABLE>
<PAGE>
[Miller & Martin Letterhead]
July 11, 1997
Chattem, Inc.
1715 West 38th Street
Chattanooga, TN 37409
Re: Registration Statement on Form S-3 - 1,296,385
Shares of Common Stock
Gentlemen:
We have acted as counsel to Chattem, Inc., a Tennessee corporation
(the "Company"), in connection with the preparation and filing by the Company
with the Securities and Exchange Commission of the Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended. The Registration Statement relates to an aggregate of 1,296,385 shares
of the Company's common stock, without par value (the "Shares").
We have examined such corporate records, documents, instruments and
certificates of the Company and have received such representations from the
officers and directors of the Company and have reviewed such questions of law as
we have deemed necessary, relevant or appropriate to enable us to render the
opinion expressed herein. In such examination, we have assumed the genuineness
of all signatures and authenticity of all documents, instruments, records and
certificates submitted to us as originals.
Based upon such examination and review and upon the representations
made to us by the officers and directors of the Company, we are of the opinion
that the Shares have been duly and validly authorized and are validly issued,
fully paid and nonassessable.
The opinions expressed herein are limited to the corporate laws of the
State of Tennessee and we express no opinion as to the effect on the matters
covered by any other jurisdiction.
<PAGE>
July 11, 1997
Page 2
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to the firm under the caption "Legal
Matters" in the prospectus which is part of the Registration Statement.
Very truly yours,
MILLER & MARTIN
/s/ Miller & Martin
---------------------
<PAGE>
Exhibit 24.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the registration statement of our report dated January 17, 1997,
incorporated by reference in Chattem, Inc.'s Form 10-K for the year ended
November 30, 1996, and to all references to our firm included in this
registration statements.
/s/ Arthur Andersen LLP
Chattanooga, Tennessee
July 9, 1997
