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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 21, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALPHARMA INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 22-2095212
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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ONE EXECUTIVE DRIVE
FORT LEE, NEW JERSEY 07024
TELEPHONE: (201) 947-7774
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL OFFICES)
JEFFREY E. SMITH
ALPHARMA INC.
ONE EXECUTIVE DRIVE
FORT LEE, NEW JERSEY 07024
TELEPHONE: (201) 947-7774
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
GLEN E. HESS, P.C.
KIRKLAND & ELLIS
CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 446-4800
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
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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 interest
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
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PROPOSED
MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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Warrants to Purchase Class A Common Stock................... (2) (2)
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Class A Common Stock, par value $.20 per share.............. $28,240,883 $8,332
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(1) Estimated solely for the purposes of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
(2) Pursuant to Rule 457(g) under the Securities Act, no separate registration
fee is required for the Warrants.
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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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
ALPHARMA
ALPHARMA INC.
1,149,754 SHARES OF CLASS A COMMON STOCK
WARRANTS TO PURCHASE 1,149,754 SHARES OF CLASS A COMMON STOCK
This Prospectus relates to (i) offers and sales of certain outstanding
warrants to purchase up to 1,149,754 shares of Class A Stock (the "Registered
Warrants") by the holders of the Registered Warrants specified under "Selling
Securityholders" below who may be deemed to be affiliates of the Company (the
"Selling Securityholders"); (ii) reoffers and resales by the Selling
Securityholders of up to 1,149,754 shares of Class A Stock purchased by such
persons upon exercise of their Registered Warrants; and (iii) issuances by the
Company of up to 1,149,754 shares of the Company's Class A Common Stock, par
value $.20 per share (the "Class A Stock"), upon exercise of the Registered
Warrants.
The Registered Warrants were issued by the Company in 1994 together with
other warrants to purchase 2,669,846 shares of Class A Stock as part of the
consideration for the acquisition of the human pharmaceutical, animal health and
bulk antibiotics businesses of A.L. Industrier AS (formerly known as
Apothekernes Laboratorium A.S), a Norwegian corporation ("A.L. Industrier"). As
used in this Prospectus, the term "Warrants" means all warrants issued in such
acquisition, including the Registered Warrants, and the term Warrant means the
right represented by the Warrants to purchase 1.061 shares of Class A Stock.
The exercise price of the Warrants is $20.69 per share of Class A Stock,
subject to certain antidilution adjustments (the "Exercise Price"). The Warrants
by their terms are exercisable at the holder's option until 5:00 p.m., New York
City time, on January 3, 1999 (the "Expiration Date"). See "Description of the
Capital Stock and Warrants" for a summary of the features of the Class A Stock
and Warrants.
The Company will not receive any of the proceeds from the sale of Warrants
or Class A Stock by the Selling Securityholders, but will receive the exercise
price upon the exercise of any Warrants. See "Use of Proceeds."
The Class A Stock and the Warrants are listed on the New York Stock
Exchange under the symbol "ALO." The closing sales prices of the Class A Stock
and the Warrants on the New York Stock Exchange on September 17, 1998 was
$24.5625 per share and $5.125 per Warrant, respectively.
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SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN CONSIDERATIONS RELEVANT TO
AN INVESTMENT IN THE CLASS A STOCK AND THE WARRANTS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS AND ANY SUPPLEMENT HERETO SHALL NOT CONSTITUTE AN OFFER TO SELL,
OR THE SOLICITATION OF ANY OFFER TO BUY, ANY SECURITIES OTHER THAN THE CLASS A
STOCK OR WARRANTS TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO OR
SOLICITATION OF ANY PERSON IN ANY STATE OR JURISDICTION IN WHICH SUCH
SOLICITATION OR OFFER WOULD BE UNLAWFUL. ALL INFORMATION CONTAINED IN THIS
PROSPECTUS IS AS OF THE DATE OF THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF, OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
NO ACTION HAS BEEN OR WILL BE TAKEN BY THE COMPANY THAT WOULD PERMIT A
PUBLIC OFFERING OF THE CLASS A STOCK OR THE WARRANTS OR THE CIRCULATION OR
DISTRIBUTION OF THIS PROSPECTUS OR ANY OFFERING MATERIAL IN RELATION TO THE
COMPANY, THE CLASS A STOCK OR THE WARRANTS IN ANY COUNTRY OR JURISDICTION WHERE
ACTION FOR THAT PURPOSE MAY BE REQUIRED OTHER THAN THE UNITED STATES.
TABLE OF CONTENTS
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PAGE
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Special Note Regarding Forward-Looking Statements........... 2
Incorporation of Certain Documents by Reference............. 3
The Company................................................. 4
Risk Factors................................................ 5
Possible Exchange Offer for Warrants........................ 9
Use of Proceeds............................................. 10
Description of Capital Stock and Warrants................... 10
Selling Securityholders..................................... 12
Plan of Distribution........................................ 13
Legal Matters............................................... 14
Experts..................................................... 14
Available Information....................................... 14
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements under the captions "The Company," "Risk Factors," and
elsewhere in this Prospectus constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, risks
associated with the following: leverage; acquisition strategy; competition;
government regulation; foreign operations, including currency fluctuations;
fluctuations in operating results; dependence on single sources of raw material
supply and manufacture; third party reimbursement pricing pressures; potential
liability for current products; and other factors referenced in this Prospectus
or in the Company's Annual Report on Form 10-K for the year ended December 31,
1997, which is incorporated herein by reference. See "Risk Factors."
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated by reference into this Prospectus: the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997; the Company's Current
Report on Form 8-K dated March 30, 1998; the Company's Quarterly Reports on Form
10-Q for the quarter ended March 31, 1998 and June 30, 1998, respectively; and
the Company's Current Report on Form 8-K dated May 7, 1998, as supplemented by
Form 8-K/A dated July 21, 1998. All documents subsequently filed by the Company
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
Warrants and shares of Class A Stock offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
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THE COMPANY
Alpharma is a multinational pharmaceutical company that develops,
manufactures and markets specialty human pharmaceutical and animal health
products. The Company manufactures and markets approximately 600 pharmaceutical
products for human use and 40 animal health products. The Company conducts
business in more than 50 countries and has approximately 3,000 employees at 38
sites in 21 countries. For the year ended December 31, 1997 and the six months
ended June 30, 1998, the Company generated revenue of approximately $500 million
and $266 million, respectively, and operating income of approximately $47
million and $25 million, respectively.
The Company's human pharmaceutical business is the largest manufacturer and
marketer of generic liquid and topical pharmaceuticals in the U.S. The Company
has a leading position in branded generic pharmaceuticals in the Nordic
countries. It also has an expanding presence internationally, particularly in
Europe, where the Company obtained a substantial generic pharmaceutical market
presence in the U.K. through the May 7, 1998 acquisition of Arthur H. Cox and
Co. Ltd. and related marketing subsidiaries (the "Cox Acquisition"). In
addition, the Company is the world's leading producer of bacitracin, zinc
bacitracin and polymixin, which are important pharmaceutical grade antibiotics.
The human pharmaceutical segment generated approximately $327 million and $183
million of revenue for the year ended December 31, 1997 and the six months ended
June 30, 1998.
The Company's animal health business is a leading provider of animal feed
additives for the poultry and swine industries, as well as vaccines for the
aquaculture industry. The animal health segment generated approximately $173
million and $83 million of revenue for the year ended December 31, 1997 and the
six months ended June 30, 1998.
Alpharma has spent over $30 million annually over the last three years on
research and development for new products, technologies and proprietary
processes. In human pharmaceuticals, these activities have focused on known
chemical entities and proprietary technologies. Its animal health and fine
chemicals divisions utilize the Company's expertise in fermentation, specialized
recovery and purification technologies in the development of new products and
technologies. In the U.S., the Company has 20 animal health product applications
pending, 14 of which are for approval to use an existing Company product in
combination with another existing Company or third-party product.
Internationally, Alpharma has 34 foreign product applications pending,
substantially all of which seek approval to sell an existing Company product in
a new foreign market. In its aquaculture business, the Company has four
additional fish vaccine product applications pending in various countries.
The Company's strategy is to increase revenue and profitability by (i)
building upon its market leadership positions; (ii) leveraging its manufacturing
strengths; (iii) accelerating research and development; (iv) expanding markets
globally; and (v) pursuing complementary acquisitions that can provide new
products and market opportunities as well as leverage existing assets.
The Company was originally organized as A.L. Laboratories, Inc., a wholly
owned subsidiary of A.L. Industrier A.S. ("Industrier"), a Norwegian healthcare
company (previously named Apothekernes Laboratorium A.S.) and subsequently
changed its name to Alpharma Inc. to operate worldwide as one corporate entity.
In 1994, the Company acquired the complementary human pharmaceutical, animal
health and fine chemicals businesses of Industrier. The Company issued the
Warrants, including the Registered Warrants offered hereby, to the shareholders
of Industrier as part of the consideration paid by the Company in such
acquisition.
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RISK FACTORS
In addition to the other information included or incorporated in this
Prospectus, prospective investors should consider carefully the following risk
factors in evaluating the Company and its business before making an investment
in the Warrants or shares of Class A Stock offered hereby.
GOVERNMENT REGULATION
The research, development, manufacturing and marketing of the Company's
products are subject to extensive government regulation by either the FDA or the
U.S. Department of Agriculture ("USDA"), as well as by the Drug Enforcement
Administration ("DEA"), the Federal Trade Commission ("FTC"), the Consumer
Product Safety Commission ("CPSC"), and by comparable authorities in the EU,
Norway, Indonesia and other countries. Although Norway is not a member of the
EU, it is a member of the European Economic Association and, as such, has
accepted all EU regulations with respect to pharmaceuticals. Government
regulation includes detailed inspection of and controls over testing,
manufacturing, safety, efficacy labeling, storage, recordkeeping, approval,
advertising, promotion, sale and distribution of pharmaceutical products.
Noncompliance with applicable requirements can result in civil or criminal
fines, recall or seizure of products, total or partial suspension of production
and/or distribution, debarment of individuals or the Company from obtaining new
generic drug approvals, refusal of the government to approve new products and
criminal prosecution. Such government regulation substantially increases the
cost of producing human pharmaceutical and animal health products.
In the U.S., the FDA has imposed stringent regulatory requirements relating
to the operation of manufacturing plants. The Company's U.S. manufacturing
facilities, as well as two of the Company's European plants that manufacture
products for export to the U.S. and certain of its contract manufacturers, are
affected in that they are required to comply with the U.S. manufacturing
regulations. Failure to demonstrate compliance during periodic inspections could
lead to a cessation or curtailment of plant operations. Similar regulatory
requirements exist in the foreign countries where the Company or its contract
manufacturers have facilities and in certain countries where the Company sells
its products, and non-compliance could lead to adverse events similar to those
described above.
The Company and its subsidiaries have filed applications to market
pharmaceutical and animal health products with regulatory agencies both in the
U.S. and internationally. The timing of receipt of approvals of these
applications, and the timing of such receipt, can significantly affect future
revenues and income. This is particularly important with respect to human
pharmaceuticals where it is the Company's strategy to obtain regulatory approval
to market a generic formulation as soon as third party's patent protection ends
and prior to the price erosion normally caused by the entry of other generic
competitors. There can be no assurance that new product approvals will be
obtained in a timely manner, if ever. Failure to obtain such approvals, or to
obtain such approvals when expected, could have a material adverse effect on the
Company's business, results of operations, and financial condition.
The Company's animal health products, such as feed additives, could be
affected by legislation or regulatory rulings reportedly under consideration in
one or more countries restricting the sale of products containing antibiotics.
Based upon public reports, the Company understands that the governments of
certain European countries have banned the sale of certain of such products. The
Company cannot predict whether such initiatives will ultimately affect its
products. Any such restrictive legislation or regulation in Norway or the U.S.
would have a significant effect on the Company's business.
Regulatory compliance impacts operating expenses directly by requiring the
addition of personnel, programs and capital and indirectly by adding activities
without directly increasing efficiency. The costs both direct and indirect of
regulatory compliance (which have increased in recent years) may continue to
increase in the future.
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RISKS ASSOCIATED WITH LEVERAGE
As of June 30, 1998, the Company had total outstanding long-term
indebtedness of approximately $437 million, or approximately 65% of the
Company's total capitalization. In addition, the Company may incur additional
indebtedness through borrowings (up to $73 million as of June 30, 1998) under
its various credit agreements, subject to the satisfaction of certain financial
tests and maintenance of certain financial ratios. The degree to which the
Company is leveraged could have important consequences to the Company, including
the following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions or other purposes
may be limited or impaired; (ii) the Company's operating flexibility with
respect to certain matters is limited by covenants contained in the credit
agreements, which limit the ability of the Company's operating subsidiaries to
incur additional indebtedness and contingent liabilities, grant liens, pay
dividends, make investments, prepay other indebtedness or engage in certain
asset sales, acquisitions, joint ventures, mergers and consolidations; and (iii)
the Company's degree of leverage may make it more vulnerable to economic
downturns, may limit its ability to pursue other business opportunities and may
reduce its flexibility in responding to changing business and economic
conditions. In addition, the Company believes that it has greater leverage on
its balance sheet than many of its competitors. Under the currently existing
credit agreements, a material portion of the Company's bank indebtedness matures
in 2000 and the Company could require additional equity financing by December
31, 1998 in order to comply with a certain leverage ratio. However, the Company
expects to refinance most of its bank indebtedness by the end of 1998, and is
presently negotiating a new bank credit agreement which would extend the
maturity of its bank indebtedness, increase interest costs and provide greater
flexibility under the various debt covenants. Although the terms of a new bank
agreement have been approved in principal, there can be no assurance that the
new arrangement will be completed as presently contemplated.
In connection with potential acquisitions, the Company may incur additional
indebtedness, in which event the Company's leverage would be increased.
RISKS ASSOCIATED WITH ACQUISITIONS
The Company has intensified its search for acquisitions which will provide
new product and market opportunities, leverage existing assets and add critical
mass. The Company is actively evaluating various acquisition possibilities,
including joint ventures and licensing arrangements. On May 7, 1998, the Company
completed the Cox Acquisition. The Company cannot predict whether any additional
acquisition which meets its criteria will be available on terms acceptable to
the Company, that financing for any such acquisitions will be available on
satisfactory terms, that the Company will be able to accomplish its strategic
objectives as a result of any such acquisition, that any business or assets
acquired by the Company will be integrated successfully into the Company's
operations or that such integration will not involve significant costs. Given
other transactions in the pharmaceutical industry, and the values of potential
acquisition targets, the Cox Acquisition was, and any future acquisitions could,
initially be dilutive to the Company's earnings and may add significant
intangible assets and related goodwill amortization charges. Depending upon the
timing and success of the Company's acquisition strategy and other corporate
developments, the Company may seek additional debt or equity financing,
resulting in additional leverage and dilution of ownership, respectively. There
can be no assurance that the Company's acquisition strategy, or any other
component of its growth strategy, will be successful.
FOREIGN OPERATIONS; RISK OF CURRENCY FLUCTUATION
The Company's foreign operations are subject to various risks which are not
present in domestic operations, including, in certain countries, currency
exchange fluctuations and restrictions, restrictions on imports, government
price controls, restrictions on the level of remittance of dividends, interest,
royalties and other payments, the need for governmental approval of new
operations, the continuation of existing operations and other corporate actions,
political instability, the possibility of expropriation and uncertainty as to
the enforceability of commercial rights, trademarks and other proprietary
rights.
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The Company's Far East operations, particularly Indonesia where the Company
has a manufacturing facility, are being affected by the wide currency
fluctuations and decreased economic activity in many countries in such
geographical areas and by the social and political unrest in Indonesia. While
the Company's present exposure to economic factors in the Far East is not
material, the region is an important area for the Company's anticipated future
growth.
While from time to time the Company may engage in hedging activities, the
Company cannot predict future currency fluctuations or future governmental
regulatory actions or their impact on the Company.
FLUCTUATING OPERATING RESULTS
The Company has experienced in the past, and will experience in the future,
variations in revenues and net income as a result of many factors, including
past and potential acquisitions, the level of selling, general and
administrative expenses, the general condition of the pharmaceutical industry,
and industry announcements and releases of new products. The Company's planned
operating expenditures and certain capital expenditure programs are based on
sales forecasts. If revenues are below expectations in any given period,
operating results could be materially adversely affected. Additionally, the
Company's operating results could be adversely affected by delays in the
introduction of new products.
COMPETITION
All of the Company's businesses operate in highly competitive markets and
many of the Company's competitors are substantially larger and have greater
financial, technical and marketing resources than the Company. As a result, the
Company may be at a disadvantage in its ability to develop new products to meet
competitive demands. In addition, once a product is approved, the Company may
not be able to market its product (or establish a favorable market price) as
effectively as larger competitors.
The U.S. generic pharmaceutical industry has historically been
characterized by intense competition. As patents for brand-name products and
other bases for market exclusivity expire, prices typically decline as generic
competitors enter the marketplace. Normally, there is a further unit price
decline as the number of generic competitors increase causing an intensifying of
competitive pricing. The timing of these price decreases as to any particular
product is unpredictable and can result in a significantly curtailed profitable
generic product life-cycle. In addition brand-name manufacturers frequently take
actions to prevent or discourage the use of generic equivalents through
marketing and regulatory activities and litigation.
Generic pharmaceutical market conditions in the U.S. were further
exacerbated in the second half of 1996 by a fundamental shift in industry
distribution, purchasing and stocking patterns resulting from increased
importance of sales to major wholesalers and a concurrent reduction in sales to
private label generic distributors. The Company believes that this trend
continues to date. Wholesaler programs generally require lower prices on
products sold, lower inventory levels kept at the wholesaler and fewer
manufacturers selected to provide products to the wholesaler's own marketing
programs.
The factors which have adversely affected the U.S. generic pharmaceutical
industry may also affect some or all of the markets in which the International
Pharmaceutical Division operates. In addition, in Europe the Company is
encountering price pressure from parallel imports (i.e., imports of identical
products from lower priced markets under European Union ("EU") laws of free
movement of goods) and general governmental initiatives to reduce drug prices.
Parallel imports could lead to lower volume growth and both parallel imports and
governmental cost containment could create downward pressure on prices in
certain product and geographical market areas including the Nordic countries
where the Company has significant sales.
The Company has been and will continue to be affected by the competitive
and changing nature of this industry. Accordingly, because of competition, the
significance of relatively few major customers (e.g., large wholesalers and
chain stores), a rapidly changing market and uncertainty of timing of new
product approvals, the sales volume, prices and profits of the Company's U.S.
and International Pharmaceutical Divisions and its generic competitors are
subject to unforeseen fluctuation.
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DEPENDENCE ON SINGLE SOURCES OF RAW MATERIAL SUPPLY AND CONTRACT MANUFACTURERS
Raw materials used in certain human pharmaceutical products are currently
sourced from single qualified suppliers, both foreign and domestic, and certain
products sold by the Company are purchased from single contract manufacturers.
Although the Company has not experienced difficulty to date in acquiring active
raw materials, other materials for production development, or products purchased
from contract manufacturers, there can be no assurance that supply interruptions
will not occur in the future or that the Company will not have to obtain
substitute materials or products, which would require additional product
validations and regulatory submissions. Further, there can be no assurance that
contract manufacturers that supply the Company will continue to do so. Any such
interruption of supply could have a material adverse effect on the Company's
ability to manufacture products, to sell products manufactured under contract or
to obtain or maintain regulatory approval of such products.
THIRD PARTY REIMBURSEMENT PRICING PRESSURES
The Company's commercial success in producing, marketing and selling
generic pharmaceutical products will depend, in part, on the availability of
adequate reimbursement from third-party health care payers, such as government
and private health insurers and managed care organizations. Third-party payers
are increasingly challenging the pricing of medical products and services. There
can be no assurance that reimbursement will be available to enable the Company
to maintain its present product price levels. In addition, the market for the
Company's human pharmaceutical products may be limited by actions of third-party
payers. For example, many managed health care organizations are now controlling
the pharmaceutical products for which reimbursement will be provided. The
resulting competition among pharmaceutical companies to place their products on
these approved lists has created a trend of downward pricing pressure in the
industry. There can be no assurance that the Company's products will be included
on the approved lists of managed care organizations or that downward pricing
pressures in the industry generally will not negatively impact the Company's
business, results of operations and financial condition.
POTENTIAL LIABILITY FOR CURRENT PRODUCTS
Continuing studies of the proper utilization, safety, and efficacy of
pharmaceuticals and other health care products are being conducted by the
industry, government agencies and others. Such studies, which increasingly
employ sophisticated methods and techniques, can call into question the
utilization, safety and efficacy of previously marketed products and in some
cases have resulted, and may in the future result, in the discontinuance of
their marketing and, in certain countries, give rise to claims for damages from
persons who believe they have been injured as a result of their use. The
Company's business, results of operations and financial condition could be
materially adversely affected by the assertion of such a product liability
claim.
RELATIONSHIP OF THE COMPANY AND INDUSTRIER; CONTROLLING STOCKHOLDER; CONFLICTS
OF INTEREST
Industrier, as the beneficial owner of 100% of the outstanding shares of
the Company's Class B Common Stock, par value $.20 per share (the "Class B
Stock") is presently entitled to elect two-thirds of the members of the
Company's Board of Directors and to cast in excess of a majority of the votes
generally entitled to be cast on matters presented to the Company's
stockholders. Accordingly, Industrier controls the Company and its policies. At
June 30, 1998 there were 9,500,000 shares of Class B Stock outstanding, which
shares represented approximately 37% of the total Common Stock outstanding.
Industrier's ownership of the Class B Stock has the effect of preventing hostile
takeovers, including transactions in which stockholders might otherwise receive
a premium for their shares over current market prices. Approximately 50% of the
Class B Stock is pledged by Industrier to its lenders. Industrier also
beneficially owns a convertible note of the Company in the principal amount of
$67,850,000, which may convert upon the occurrence of certain events after April
6, 2001 into 2,372,896 shares of Class B Stock.
E.W. Sissener, Chairman and Chief Executive Officer of the Company, is also
Chairman of Industrier and controls Industrier. Gert Munthe, President and Chief
Operating Officer of the Company, is a director of Industrier. Mr. Sissener
controls a majority of Industrier's outstanding shares and thus may be deemed
the
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indirect controlling stockholder of the Company. The Company and Industrier
engage in various transactions from time to time, including the provision of
administrative services and the sale of certain products, and conflicts of
interest are present with respect to the terms of such transactions. The Company
believes that contractual arrangements with Industrier are no less favorable to
the Company than other third party contracts that are negotiated on an arm's
length basis. All contractual arrangements between the Company and Industrier
are subject to approval by, or ratification of, a committee of the Board of
Directors of the Company consisting of one or more directors, who are
unaffiliated with Industrier, as to the fairness of the terms and conditions of
such arrangements to the Company.
EFFECTS OF OUTSTANDING WARRANTS
There are Warrants to purchase 3,819,600 shares of Class A Stock
outstanding at an Exercise Price, subject to adjustment, of $20.69 per share.
The Warrants expire on January 3, 1999. Purchases and sales of the Warrants may
affect the market price of the Class A Stock. The Company believes that certain
persons acquiring or holding Warrants may engage in short sales of shares of
Class A Stock in hedging or arbitrage transactions.
Exercise of the Warrants will cause dilution to the Company's common
stockholders, and the terms on which the Company may obtain financing may be
affected by the existence of the Warrants. The possibility for the exercise of
large amounts of Warrants and subsequent resale of shares of Class A Stock may
affect the market value of the Company's Common Stock and may cause volatility
in the market for such securities, both before and after the expiration date of
the Warrants.
POSSIBLE STOCK PRICE VOLATILITY
The stock market has from time to time experienced significant price and
volume fluctuations that may be unrelated to the operating performance of
particular companies. In addition, the market price of the Class A Stock, like
the stock prices of many publicly traded pharmaceutical companies, has been and
may continue to be highly volatile. The sale by the Company's major shareholders
or members of the Company's management of shares of Common Stock, announcements
of technological innovations or new commercial products by the Company or its
competitors, publicity regarding actual or potential medical results relating to
marketed products, regulatory developments in either the U.S. or foreign
countries, public concern as to the safety of pharmaceutical products, factors
present in foreign operations, the loss of suppliers or contract manufacturers,
third party reimbursement pressures, potential liability for current products
and economic and other external factors, as well as period-to-period
fluctuations in financial results, among other factors, may have a significant
impact on the market price of the Class A Stock. Transactions involving the
Warrants may also increase the volatility of the price of the Class A Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial numbers of shares of Class A Stock in the public
market could adversely affect the market price of the Company's Class A Stock.
In addition to the shares purchasable on exercise of the Warrants, 9,500,000
shares of Class B Stock, all of which are held by Industrier, are exchangeable
into shares of Class A Stock, on a one for one basis, although Industrier has
agreed not to sell any shares of Class B Stock or convert any Class B Stock into
Class A Stock until after October 31, 1999. See "Description of Capital Stock
and Warrants."
POSSIBLE EXCHANGE OFFER FOR WARRANTS
In view of the possible effects of the Warrants and other factors, the
Company announced on August 6, 1998, that its Board of Directors was considering
making an offer to all holders of the Warrants to exchange Warrants for shares
of Class A Stock at an exchange ratio based on the market value of the Class A
Stock at the time of the exchange plus a premium of up to $1.00 per share. If
the Board determined to proceed with such exchange offer, it would occur in late
October and the first half of November. The decision of whether to proceed with
the exchange offer and the specific terms thereof (including the amount of
premium) are subject
9
<PAGE> 11
to Board determination and the Board intends to consider the matter in early
October, 1998. There can be no assurance that the Company will make the exchange
offer under consideration or any other offer to acquire the Warrants.
USE OF PROCEEDS
If the Warrants are exercised, the Company will receive the Exercise Price
multiplied by the number of shares of Class A Stock being purchased upon
exercise of such Warrants. If all of the Registered Warrants are exercised, the
Company will receive proceeds of approximately $23.78 million. If all of the
Warrants (including the Registered Warrants) are exercised, the Company will
receive proceeds of approximately $79.03 million. Such proceeds would be used
for general corporate purposes, including funding of working capital and
repayment of debt. Funds not required immediately for such purposes may be
invested temporarily in short-term marketable securities. The Company will not
receive any of the proceeds upon the sale of the Warrants or shares of Class A
Stock by the Selling Securityholders. The Company is considering making an offer
to exchange Warrants for shares of Class A Stock as described under "Possible
Exchange Offer for Warrants", which would eliminate any cash proceeds to the
Company.
DESCRIPTION OF CAPITAL STOCK AND WARRANTS
The Company's authorized capital stock currently consists of: (i)
40,000,000 shares of Class A Stock, of which 15,914,454 shares were issued and
outstanding as of June 30, 1998, (ii) 15,000,000 shares of Class B Stock, of
which 9,500,000 shares were issued and outstanding as of June 30, 1998, and
(iii) 500,000 shares of Preferred Stock, par value $1.00 per share, of which
none were issued and outstanding as of June 30, 1998. The following description
of the capital stock of the Company and certain provisions of the Company's
Amended and Restated Certificate of Incorporation and By-laws is a summary of
all material terms of the Company's capital stock and is qualified in its
entirety by the provisions of the Amended and Restated Certificate of
Incorporation and By-laws, copies of which have been filed with the Commission.
As of June 30, 1998, the Class A Stock was held of record by 1,199 stockholders.
COMMON STOCK
The Class A Stock and the Class B Stock are identical in all respects,
including with respect to the right to receive dividends, except as follows: (i)
the holders of the Class A Stock are currently entitled as a class to elect
33 1/3% of the Board of Directors (rounded to the nearest whole number, but not
less than two members of the Company's Board of Directors), and the holders of
the Class B Stock are entitled as a class to elect the remaining directors; (ii)
on all other matters submitted to a vote of stockholders, the holders of the
Class A Stock are entitled to one vote per share of Class A Stock held, and the
holders of the Class B Stock are entitled to four votes per share of Class B
Stock held; (iii) the holders of the Class B Stock have the right at any time
and from time to time to convert each share of Class B Stock into one share of
Class A Stock; and (iv) shares of Class A Stock may be declared and paid as
dividends on shares of both Class A Stock and Class B Stock, shares of Class B
Stock may be declared and paid as dividends on shares of Class A Stock and
shares of Class B Stock may be declared and paid as dividends on shares of Class
B Stock and in any such case the same number of shares must be declared and paid
as dividends in respect of each outstanding share of Class A Stock and each
outstanding share of Class B Stock. The special voting rights of the holders of
the Class A Stock as reflected in clause (i) above terminate if the number of
outstanding shares of Class A Stock is less than 10% of the aggregate number of
outstanding shares of Class A Stock and Class B Stock, and the special voting
rights of the holders of the Class B Stock as reflected in clauses (i) and (ii)
above terminate if the number of outstanding shares of Class B Stock is less
than 12 1/2% of such aggregate number, in each case as determined on the record
for the stockholder vote.
The Company may not subdivide or combine either class of Common Stock
without at the same time combining or subdividing shares of the other class of
Common Stock in the same proportion. Upon liquidation of the Company, holders of
the Class A Stock and the Class B Stock are entitled to share ratably in any
assets available for distribution to stockholders after payment of all
obligations of the Company, and payments due in
10
<PAGE> 12
respect of any other senior securities of the Company, including any shares of
Preferred Stock. Holders of Common Stock do not have cumulative voting rights or
preemptive, subscription or, except as set forth above with respect to the Class
B Stock, conversion rights.
PREFERRED STOCK
The Preferred Stock may be issued in one or more series, with such
designations, relative rights, powers, priorities, preferences and limitations
thereof as the Board of Directors, without any stockholder action, may
determine, provided that the right of the holders of Class A Stock, voting as a
class, to elect no less than 25% of the Board of Directors may not be limited by
the grant of voting rights to any series of Preferred Stock.
WARRANTS
General. There are 3,600,000 outstanding Warrants, representing rights to
purchase 3,819,600 shares of Class A Stock. The Warrants have been issued in
registered form pursuant to the terms of a warrant agreement (the "Warrant
Agreement") dated October 3, 1994 between the Company and The First National
Bank of Boston, as the warrant agent (the "Warrant Agent"), a copy of which is
filed as an exhibit hereto and incorporated herein by reference. The statements
herein relating to the Warrants and the Warrant Agreement are summaries and are
subject to the detailed provisions of the Warrant Agreement, to which reference
is hereby made for a complete statement of those provisions. Whenever particular
provisions of the Warrant Agreement or terms defined therein are referred to
herein, those provisions or definitions are incorporated by reference as part of
the statements made, and the statements are qualified in their entirety by that
reference.
Exercise of Warrants. Each Warrant currently entitles the registered
holder thereof to purchase 1.061 shares of Class A Stock at the Exercise Price
of $20.69 per share, subject to certain antidilution adjustments. The Exercise
Price is payable in cash only. The Warrants are exercisable, at the holder's
option, as a whole or from time to time in part at any time until 5:00 p.m., New
York City time, on January 3, 1999 in accordance with the terms of the Warrants
and the Warrant Agreement. The Company may at its option extend the Expiration
Date of the Warrants for such period as it may determine. However, with respect
to any Warrants in which the Selling Securityholders or other affiliates of the
Company have an interest, any such change in the terms of the Warrants is
subject to certain restrictions on transactions with interested parties pursuant
to the General Corporation Law of the State of Delaware. Notice of such change
in the Expiration Date will be given to the Warrant Agent and the holders of the
Warrants. The Company will not be required to issue any fractional shares of
Class A Stock or, under certain circumstances, any fractional Warrants. Holders
of Warrants will receive cash in lieu of any such fractional shares or Warrants.
Certain Adjustments. No adjustment in the Exercise Price or the number of
shares of Class A Stock purchasable upon exercise of the Warrants will be made
for any cash dividends or distributions payable out of consolidated earnings or
earned surplus. The Exercise Price and the number of shares of Class A Stock
purchasable upon exercise of each Warrant are subject to adjustment upon (1) the
payment of a dividend by the Company on its shares of Class A Stock in shares of
Class A Stock or Class B Stock, (2) any subdivision, combination, or
reclassification of the Class A Stock, (3) any distribution by the Company
generally to the holders of the Class A Stock of certain rights, options, or
warrants to subscribe for or purchase shares of Class A Stock at a price per
share lower than the then current market price per share, or (4) any
distribution by the Company generally to the holders of the Class A Stock of
evidences of indebtedness or assets (excluding certain cash dividends or
distributions), or other rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase Class
A Stock. No adjustment in the Exercise Price or the number of shares of Class A
Stock purchasable upon exercise of the Warrants will be required until
cumulative adjustments would require a change of at least 1% in the number of
shares of Class A Stock purchasable upon exercise of the Warrants. In lieu of
adjusting the number of shares of Class A Stock issuable upon exercise of each
Warrant, the Company may elect to adjust the number of outstanding Warrants.
Notwithstanding the foregoing, in case of a consolidation, merger, sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, the holder of each outstanding Warrant shall
11
<PAGE> 13
continue to have the right to exercise the Warrant for the kind and amount of
shares and other securities and property receivable by a holder of the number of
shares of Class A Stock for which such Warrants were exercisable immediately
prior thereto.
Transferability. Any Warrant may be transferred, split up, combined or
exchanged for another Warrant or Warrants entitling the registered holder
thereof to purchase a like number of shares of Class A Stock as the Warrant
certificate or certificates surrendered. Certificates may be exchanged for other
certificates in different denominations representing Warrants to purchase the
same aggregate number of shares at any time.
No Rights as Holder of Class A Stock. No holder of Warrants shall be
entitled to vote or consent or receive dividends or be deemed for any other
purpose the holder of Class A Stock or of any other securities of the Company
that may at any time be issuable upon the exercise of the Warrants until the
Warrants are properly exercised as provided in the Warrant Agreement.
Certain Registration Rights. The Warrants were issued by the Company in
1994 pursuant to exemptions from the registration requirements of the Securities
Act in reliance on Regulation S promulgated under, and Section 4(2) of, the
Securities Act. Pursuant to the Warrant Agreement the Company is obligated to
file the Registration Statement of which this Prospectus is a part of with
respect to the Registered Warrants and the Class A Stock purchasable on exercise
thereof. The Company also filed pursuant to the Warrant Agreement a registration
statement which became effective in 1995 ("1995 Registration Statement") with
respect to all Warrants other than the Registered Warrants and the Class A Stock
purchasable on exercise thereof. The 1995 Registration Statement and the
registration statement of which this Prospectus is a part are herein referred to
as the "Registration Statements." The Company is obligated to use its best
efforts to keep the Registration Statements continuously effective until the
tenth business day following the Expiration Date until the earlier of (x) such
time as may be necessary to permit sale of shares of Class A Stock acquired on
exercise of any Warrants by an affiliate of the Company or (y) the second
anniversary of the Expiration Date.
SELLING SECURITYHOLDERS
The following table sets forth: (i) the name of each Selling
Securityholder; (ii) the number and percentage of Warrants beneficially owned by
each Selling Securityholder as of August 28, 1998; (iii) the number of
Registered Warrants which may be offered for the account of each Selling
Securityholder under the Prospectus; and (iv) the number and percentage of
shares of Class A Stock which may be purchased pursuant to the Registered
Warrants and which may be offered under this Prospectus.
<TABLE>
<CAPTION>
NUMBER AND PERCENT NUMBER OF
OF SHARES PURCHASABLE SHARES PURCHASABLE
UPON EXERCISE UPON EXERCISE OF PERCENT OF
NAME OF SELLING OF WARRANTS REGISTERED PERCENT OF CLASS A STOCK COMMON
SECURITYHOLDER BENEFICIALLY OWNED WARRANTS WARRANTS OFFERED HEREBY STOCK(2)
- --------------- ---------------------- ------------------ ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
E.W. Sissener........... 722,720.00(1) 18.9% 489,470.46 12.8% 489,470.46 1.7%
AS Swekk................ 660,284.10 17.3% 660,284.10 17.3% 660,284.10 2.3%
------------ ------------ ----- ------------
Total offered hereby.... 1,383,004.10 1,149,754.56 30.1% 1,149,754.56
</TABLE>
- ---------------
(1) Includes 233,250 Warrants which are owned by a family trust and by Mr. E.W.
Sissener's wife and which (together with the shares of Class A Stock
purchasable upon exercise thereof) were registered under the 1995
Registration Statement. Does not include Warrants owned by AS Swekk, a
family Norwegian corporation of which Mr. Sissener is Chairman of the Board
and controlling shareholder since AS Swekk is separately listed as a Selling
Securityholder. In addition to the Warrants and shares of Class A Stock
purchasable upon exercise thereof which are beneficially owned by Mr.
Sissener, he is Chairman of the Board and controlling shareholder of
Industrier which beneficially owns 9,500,000 shares of the Company's Class B
Stock and a convertible subordinated note of the Company in the principal
amount of $67,850,000, which note may convert upon the occurrence of certain
events after April 6, 2001 into 2,372,896 shares of Class B Stock, subject
to antidilution adjustment. See "Risk Factors -- Relationship of the Company
and Industrier; Controlling Shareholder; Conflict of Interest."
12
<PAGE> 14
(2) At June 30, 1998, the Company had 15,914,454 outstanding shares of Class A
Stock and 9,500,000 shares of Class B Stock. The percentage in the table is
based on the aggregate number of shares of Class A Stock and Class B Stock
outstanding at June 30, 1998, assuming exercise of all outstanding Warrants.
PLAN OF DISTRIBUTION
DISTRIBUTION OF CLASS A STOCK BY THE COMPANY
Upon the exercise of each Registered Warrant from time to time, the Company
shall deliver the shares of Class A Stock to the Warrant Agent for delivery to
the holder who is exercising such Warrant. The Registered Warrants are
exercisable at the option of the holder thereof on or after the date hereof
prior to the Expiration Date.
DISTRIBUTION OF WARRANTS AND WARRANTS SHARES BY SELLING SECURITYHOLDERS
The Company has been advised that the Selling Securityholders may sell
their Registered Warrants and/or the shares of Class A Stock purchasable on
exercise of such Warrants from time to time in one or more of the following:
(a) privately negotiated transactions between the Selling
Securityholders and a purchaser;
(b) offerings through underwriters, dealers or agents who may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers of such
securities for whom they act as agents;
(c) transactions or distributions (including block trades) on the New
York Stock Exchange or other United States or foreign stock exchanges where
unlisted trading privileges are available;
(d) transactions or distributions in the over-the-counter market;
(e) sales through broker-dealers (whether or not on exchanges) acting
as agents for the Selling Securityholder or to broker-dealers who may
purchase the securities as principals and thereafter sell such securities;
or
(f) where applicable, a combination of any of the foregoing.
In addition, any Registered Warrants or shares of Class A Stock covered by
this Prospectus which qualify for sale pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act may be sold under Rule 144 or Rule 144A
rather than pursuant to this Prospectus.
Pursuant to the Warrant Agreement, if the Selling Stockholders and/or other
original holders of not less than 25% of the outstanding Warrants so request,
the Company has agreed to enter into an underwriting agreement with such holders
and an investment banking firm containing customary representations, warranties
and provisions relating to indemnification and contribution. In addition, the
Company has agreed to use its reasonable efforts to cooperate with such
investment banking firm to facilitate any such offering. Any underwriter will be
identified, and any underwriting compensation paid by the Selling Securityholder
to underwriters or agents in connection with the offering of the Warrants or
shares of Class A Stock purchasable on exercise of such warrants and any
discounts, concessions or commissions allowed by underwriters to participating
dealers will be described, to the extent required, in a prospectus supplement.
In addition, upon notification to the Company by a Selling Securityholder that
any material arrangement has been entered into with a broker or dealer for the
sale of shares through a block trade, special offering or secondary distribution
or a purchase by a broker or dealer, a supplement to this Prospectus identifying
the participating brokers or dealers and describing any compensation to be paid
by the Selling Securityholder to such person will be filed with the Commission,
if required, pursuant to Rule 424 under the Securities Act. Underwriters,
dealers and agents participating in the distribution of the Warrants or shares
of Class A Stock purchasable on exercise of such warrants may be deemed to be
underwriters, and any discounts and commissions received by them and
13
<PAGE> 15
any profit realized by them on resale of the Warrants or shares of Class A Stock
purchasable on exercise of such warrants may be deemed to be underwriting
discounts and commissions under the Securities Act.
See "Description of Capital Stock and Warrants -- Warrants -- Certain
Registration Rights" for information about the Company's obligation to use its
best efforts to keep the Registration Statement effective.
Pursuant to the Warrant Agreement, the Company has agreed to indemnify the
holders of Warrants and shares of Class A Stock purchasable on exercise of such
warrants and each person who controls such holder, and each holder of Warrants
or shares of Class A Stock purchasable on exercise of such warrants will
indemnify the Company and each person who controls the Company, against certain
liabilities, including liabilities under the Securities Act, relating to the
Registration Statements.
Pursuant to the Warrant Agreement, the Company is obligated to pay all
out-of-pocket expenses (other than underwriting discounts and commissions)
incurred in connection with the Registration Statements, including, without
limitation, all Commission and blue sky registration and filing fees, printing
expenses, transfer agents' and registrars' fees, fees and disbursements of the
Company's and the Warrantholders' counsel (provided however that the
Warrantholders are only entitled to one counsel as a group selected by the
holders of a majority of the shares of Class A Stock covered thereby) and
accountants and fees and disbursements of experts used by the Company in
connection with such registration. The Selling Securityholders are solely
responsible from paying any underwriting or brokerage discounts or commissions
with respect to the sale of their Warrants and shares of Class A Stock offered
hereby.
The Company announced on August 6, 1998, that its Board of Directors was
considering making an offer to all holders of the Warrants to exchange Warrants
for shares of Class A Stock at an exchange ratio based on the market value of
the Class A Stock at the time of the exchange plus a premium of up to $1.00. If
the Board determined to proceed with such exchange offer, it would occur in late
October and the first half of November. The decision of whether to proceed with
exchange offer and the specific terms thereof (including the amount of premium)
is subject to Board determination and the Board intends to consider the matter
in early October, 1998. There can be no assurance that the Company will make the
exchange offer under consideration or any other offer to acquire the Warrants.
LEGAL MATTERS
The validity of the issuance of the Registered Warrants and shares of Class
A Stock purchasable on exercise thereof will be passed upon for the Company by
Kirkland & Ellis. Mr. Glen E. Hess has been a director of the Company since
1983. Mr. Hess's professional corporation is a partner of Kirkland & Ellis, a
law firm which since 1978 has performed significant legal services for the
Company.
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996 and the
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1997, incorporated by
reference in this Prospectus have been incorporated herein in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement," which term
shall include any amendments thereto) on Form S-3 under the Securities Act of
1933 (the "Securities Act"), with respect to the Registered Warrants and the
shares of Class A Common Stock offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits and
schedules thereto, certain parts of which are omitted in accordance with the
rules and regulations of the Commission, and to which reference is hereby
14
<PAGE> 16
made. Statements made in this Prospectus as to the contents of any document
referred to are not necessarily complete. With respect to each such document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. The
Registration Statement may be inspected and copied at the public reference
facilities maintained by the Commission referred to below.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with 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., Washington, D.C. 20549, and at the following regional
offices of the Commission: Seven World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can be obtained by mail from the
Public Reference Section of the Commission, at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Class A Common
Stock and the Warrants are listed on the NYSE, and copies of reports, proxy
statements and other information concerning the Company can be inspected at the
offices of the NYSE located at 20 Broad Street, New York, New York 10005. The
Commission maintains a World Wide Web site on the Internet at http://www.sec.gov
that contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission.
15
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses of the Registrant in connection
with the registration of the securities being registered, other than
underwriting discounts and commissions. All such amounts are estimates, other
than the fees payable to the Commission and the NYSE.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 8,332
Legal fees and expenses..................................... 35,000
Accounting fees and expenses................................ 10,000
Miscellaneous............................................... 6,668
-------
Total............................................. $50,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
permits a Delaware corporation to limit the personal liability of its directors
in accordance with the provisions set forth therein. The Restated Certificate of
Incorporation of the Registrant provides that the personal liability of its
directors shall be limited to the fullest extent permitted by applicable law.
Section 145 of the General Corporation Law of the State of Delaware
contains provisions permitting corporations organized thereunder to indemnify
directors, officers, employees or agents against expenses, judgments and fines
reasonably incurred and against certain other liabilities in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person was or is a director, officer, employee or agent of the corporation. The
Restated Certificate of Incorporation of the Registrant provide for
indemnification of its directors and officers to the fullest extent permitted by
applicable law.
ITEM 16. EXHIBITS.
The following exhibits are filed pursuant to Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Warrant Agreement (the "Warrant Agreement") dated October 3,
1994 between the Company and the First National Bank of
Boston, as Warrant Agent (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
4.2 Form of Warrant Certificate (included as Exhibit A to the
Warrant Agreement).
5.1 Opinion of Kirkland & Ellis regarding legality of securities
being registered.
23.1 Consent of PricewaterhouseCoopers LLP
23.1 Consent of Kirkland & Ellis -- included in Exhibit 5.1.
24.1 Powers of Attorney included in Part II of Registration
Statement.
</TABLE>
II-1
<PAGE> 18
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof, which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate. the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (I)(i) and (I)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective 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 the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors. officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE> 19
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED HEREUNTO DULY
AUTHORIZED, IN THE CITY OF FORT LEE, NEW JERSEY, AS OF SEPTEMBER 21, 1998.
ALPHARMA INC.
By: /s/ JEFFREY E. SMITH
------------------------------------
Jeffrey E. Smith
Vice President, Finance and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jeffrey E. Smith and Robert F. Wrobel and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement (and any registration
statement filed pursuant to Rule 462(b) under the Securities Act), and to file
the same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND AS OF THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ EINAR W. SISSENER Chairman and Chief Executive September 21, 1998
- --------------------------------------------- Officer and Director
Einar W. Sissener
/s/ GERT W. MUNTHE President and Chief Operating September 21, 1998
- --------------------------------------------- Officer and Director
Gert W. Munthe
/s/ JEFFREY E. SMITH Vice President, Finance and Chief September 21, 1998
- --------------------------------------------- Financial Officer
Jeffrey E. Smith
/s/ I. ROY COHEN Director September 21, 1998
- ---------------------------------------------
I. Roy Cohen
/s/ THOMAS GIBIAN Director September 21, 1998
- ---------------------------------------------
Thomas Gibian
/s/ GLEN E. HESS Director September 21, 1998
- ---------------------------------------------
Glen E. Hess
</TABLE>
II-3
<PAGE> 20
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ERIK G. TANDBERG Director September 21, 1998
- ---------------------------------------------
Erik G. Tandberg
/s/ PETER G. TOMBROS Director September 21, 1998
- ---------------------------------------------
Peter G. Tombros
/s/ ERIK HORNNAESS Director September 21, 1998
- ---------------------------------------------
Erik Hornnaess
/s/ OYVIN A. BROYMER Director September 21, 1998
- ---------------------------------------------
Oyvin A. Broymer
</TABLE>
II-4
<PAGE> 1
To Call Writer Direct:
212 446-4800
September __, 1998
Alpharma Inc.
One Executive Drive
Fort Lee, New Jersey 07024
Re: Alpharma Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as special counsel to Alpharma Inc., a Delaware
corporation (the "Company"), in connection with its registration statement on
Form S-3 (the "Registration Statement"), filed with the Securities and Exchange
Commission (the "Commission"), relating to resales of warrants (the "Registered
Warrants") to purchase up to 1,149,754 shares of Class A Common Stock, par value
$.20 per share, of the Company (the "Class A Stock") amount of the Company's
5 3/4% Convertible Subordinated Notes due 2005 (the "Notes") and the 1,149,754
shares of Class A Stock (the "Registered Shares") purchasable upon exercise of
the Registered Warrants in accordance with their terms. This opinion letter is
furnished to you at your request to enable you to fulfill the requirements of
Item 601(b)(5) of Regulation S-K in connection with the Registration Statement.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. An executed copy of the Warrant Agreement dated
October 3, 1994 between the Company and the First
National Bank of Boston, as Warrant Agent.
3. The form of Warrant Certificate.
4. The Amended and Restated Certificate of Incorporation
of the Company.
5. The Amended and Restated Bylaws of the Company.
6. Resolutions of the Board of Directors of the Company.
<PAGE> 2
Alpharma Inc.
September __, 1998
Page 2
For purposes of this opinion letter, we have assumed the authenticity
of all documents submitted to us as originals, the conformity to the originals
of all documents submitted to us as copies and the authenticity of the originals
of all documents submitted to us as copies. We have also assumed the legal
capacity of all natural persons, the genuineness of the signatures of persons
signing all documents in connection with which this opinion is rendered, the
authority of such persons signing on behalf of the parties thereto other than
the Company and the due authorization, execution and delivery of all documents
by the parties thereto other than the Company. As to any facts material to the
opinions expressed herein, we have relied upon the statements and
representations of officers and other representations of the Company and others.
Our advice on every legal issue addressed in this letter is based
exclusively on the internal laws of the State of New York, the General
Corporation Law of the State of Delaware and the federal law of the United
States of America, and represents our opinion as to how that issue would be
resolved were it to be considered by the highest court in the jurisdiction which
enacted such law. The manner in which any particular issue would be treated in
any actual court case would depend in part on facts and circumstances particular
to the case, and this opinion letter is not intended to guarantee the outcome of
any legal dispute which may arise in the future.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, we hereby advise you
that in our opinion:
1. The Registered Warrants constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms.
2. The Registered Shares when issued in accordance with the terms
of the Warrants, will be validly issued, fully paid and
non-assessable.
Our opinion in paragraph 1 of this opinion letter is subject to: (i)
the effect of bankruptcy, insolvency, fraudulent conveyance and other similar
laws and judicially developed doctrines in this area such as substantive
consolidation and equitable subordination; (ii) the effect of general principles
of equity; and (iii) other commonly recognized statutory and judicial
constraints on enforceability including statutes of limitations. "General
principles of equity" include but are not limited to: principles which limit the
availability of specific performance and injunctive relief; principles which
limit the availability of a remedy under certain circumstances where another
remedy has been elected; principles requiring reasonableness, good faith and
fair dealing
<PAGE> 3
Alpharma Inc.
September __, 1998
Page 3
in the performance and enforcement of an agreement by the party seeking
enforcement; principles which may permit a party to cure a material failure to
perform its obligations; and principles affording equitable defenses such as
waiver, laches and estoppel.
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the securities
of "Blue Sky" laws of the various states to the Registered Warrants and the
Registered Shares.
This opinion letter is limited to the specific issues addressed herein,
and no opinion may be inferred or implied beyond that expressly stated herein.
We assume no obligation to revise or supplement this opinion should the present
laws of the State of New York, the General Corporation Law of the State of
Delaware or the federal law of the United States be changed by legislative
action, judicial decision or otherwise.
We hereby consent to the filing of this opinion letter with the
Commission as Exhibit 5.1 to the Registration Statement. We also consent to the
reference to our firm under the heading "Legal Matters" in the Registration
Statement. In giving this consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or the rules and regulations of the Commission.
Very truly yours,
/s/ Kirkland & Ellis
Kirkland & Ellis
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Alpharma, Inc. on Form S-3 of our report dated February 25, 1998,
on our audits of the consolidated financial statements of Alpharma, Inc. as of
December 31, 1997 and 1996, and for the years ended December 31, 1997, 1996,
and 1995, which report is included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997. We also consent to the reference to our
firm under the caption "Experts."
PRICEWATERHOUSECOOPERS LLP
Parsippany, NJ
September 21, 1998
