As filed with the Securities and Exchange Commission on August 7, 2000.
Registration No. 333-_____.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
IVAX CORPORATION
----------------------
(Exact name of registrant as specified in its charter)
Florida 16-1003559
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 Biscayne Boulevard
Miami, Florida 33137
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(305) 575-6000
(Address of principal executive offices, including zip code and
telephone number)
Carol Gillespie, Esq.
General Counsel
Ivax Corporation
4400 Biscayne Boulevard
Miami, FL 33137
(305) 575-6000
--------------
(Name, address and telephone number, including
area code, of agent for service)
With a Copy to:
Alison W. Miller, Esq.
Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A.
150 West Flagler Street, Suite 2200
Miami, Florida 33130
(305) 789-3200
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 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. [_]
---------------------------
<PAGE>
<TABLE>
<CAPTION>
Calculation of Registration Fee
===================================================================================================================================
Proposed Proposed
maximum maximum Amount of
Title of each class of securities Amount to be offering price aggregate registration
to be registered registered per security offering price fee
----------------------------------------------- ------------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
5.5% Convertible Senior Subordinated Notes Due $250,000,000 100% $250,000,000 $66,000
2007
----------------------------------------------- ------------------- --------------------- -------------------- ---------------------
Common Stock, par value $.10 per share 6,729,500 shares(1) N/A N/A N/A(2)
(Conversion Shares)
----------------------------------------------- ------------------- --------------------- -------------------- ---------------------
Common Stock Purchase Rights(3) 6,729,500 rights(1) N/A N/A N/A(4)
----------------------------------------------- ------------------- --------------------- -------------------- ---------------------
</TABLE>
(1) Represents the number of shares of common stock and associated common stock
purchase rights issuable upon conversion of the 5.5% Convertible Senior
Subordinated Notes due 2007 registered hereby and, pursuant to Rule 416
under the Securities Act of 1933, such indeterminate number of shares of
common stock and associated common stock purchase rights as may be issuable
from time to time upon the conversion of the notes as a result of the
antidilution provisions thereof.
(2) Pursuant to Rule 457(i) of the Securities Act of 1933, no registration fee
is required with respect to the Common Stock.
(3) The Common Stock Purchase Rights are attached to and trade with and
transfer with the Common Stock. The Common Stock Purchase Rights are only
exercisable upon the occurrence of certain prescribed events, none of which
has occurred.
(4) Pursuant to Rule 457(i) of the Securities Act of 1933, no registration fee
is required with respect to the Common Stock Purchase Rights.
---------------------------
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. These
securities may not be sold by means of this prospectus until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED AUGUST 7, 2000
IVAX CORPORATION
$250,000,000 5.5% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2007
AND
6,729,500 SHARES COMMON STOCK
ISSUABLE UPON CONVERSION OF THE NOTES
------------------------------
This prospectus covers up to:
o $250,000,000 total principal amount of our 5.5% convertible
senior subordinated notes due 2007, and
o 6,729,500 shares of our common stock issuable upon conversion of
the notes together with their related common stock purchase
rights.
which may be offered and sold from time to time by the selling security holders
named in this prospectus. We will receive no part of the proceeds of the sales
of the securities in this offering.
We issued the notes on May 12, 2000 and May 23 2000 in transactions
exempt from the registration requirements of the Securities Act of 1933 pursuant
to Rule 144A.
The notes are convertible into 26.918 shares of our common stock per
$1,000 principal amount, subject to adjustment in some circumstances. We will
pay cash interest of 5.5% per year on the notes on May 15 and November 15 of
each year, commencing on November 15, 2000. The notes will mature on May 15,
2007. The notes are subordinated to all of our existing and future senior
indebtedness and structurally subordinated to all of our subsidiaries'
obligations, including trade payables. As of June 30, 2000, we had approximately
$51.0 million of consolidated indebtedness and other obligations effectively
ranking senior to the notes. If we experience a change in control, we must offer
to repurchase the notes at 100% of their principal amount, together with accrued
and unpaid interest to the date of repurchase. On or after May 29, 2003, we may
at our option redeem the notes at the redemption prices stated in this
prospectus, together with accrued and unpaid interest to the date of redemption.
The notes are not entitled to any mandatory redemption or sinking fund.
The notes trade on the PORTAL Market. Our common stock is listed on the
American Stock Exchange under the trading symbol "IVX."
See "Risk Factors" beginning on page 3 for a discussion of factors that you
should consider before making an investment decision.
------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ______________, 2000.
<PAGE>
TABLE OF CONTENTS
PAGE
ABOUT THIS PROSPECTUS........................................................1
WHERE YOU CAN FIND MORE INFORMATION..........................................1
INCORPORATION BY REFERENCE...................................................1
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS..............................2
THE COMPANY..................................................................2
RISK FACTORS.................................................................3
USE OF PROCEEDS.............................................................11
RATIO OF EARNINGS TO FIXED CHARGES..........................................11
SELLING SECURITY HOLDERS....................................................12
PLAN OF DISTRIBUTION........................................................14
TRANSFER AGENT, REGISTRAR AND TRUSTEE.......................................15
DESCRIPTION OF NOTES........................................................15
DESCRIPTION OF COMMON STOCK.................................................25
DESCRIPTION OF COMMON STOCK PURCHASE RIGHTS.................................25
CERTAIN PROVISIONS OF OUR ARTICLES OF INCORPORATION
AND BYLAWS AND FLORIDA LAW.........................................27
LEGAL MATTERS...............................................................27
EXPERTS ...................................................................27
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ABOUT THIS PROSPECTUS
This prospectus is a part of the registration statement that we filed
with the Securities and Exchange Commission, or SEC. The selling security
holders named in this prospectus may from time to time sell the securities
described in this prospectus. You should read this prospectus together with
additional information described under the next heading "Where You Can Find More
Information."
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or any sale of the securities. In
this prospectus, the "Company," "IVAX," "we," "us" and "our" refer to IVAX
Corporation. Our principal executive offices are located at 4400 Biscayne
Boulevard, Miami, Florida 33137, and our telephone number is (305) 575-6000.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You can inspect, read and copy these reports,
proxy statements and other information at the public reference facilities
maintained by the SEC at:
o Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549;
o Suite 1400, 500 West Madison Street, Chicago, Illinois
60661-2511; and
o Suite 1300, 7 World Trade Center, New York, New York 10048.
You can also obtain copies of these materials from the public reference
facilities of the SEC at prescribed rates. You can obtain information on the
operation of the public reference facilities by calling the SEC at 1-800-
SEC-0330. The SEC also maintains a web site (http://www.sec.gov) that makes
available reports, proxy statements and other information regarding issuers that
file electronically with it. In addition, you can inspect certain reports, proxy
statements and other information we file at the offices of the American Stock
Exchange, Inc., 86 Trinity Place, New York, New York 10006.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus
the information we file with it, which means that we can disclose important
information to you by referring you to those documents. In addition, information
that we file with the SEC after the date of this prospectus will update and
supersede the information contained in this prospectus and incorporated filings.
The information we incorporate by reference is an important part of this
prospectus. We incorporate by reference the following documents filed by us with
the SEC:
o our Annual Report on Form 10-K for the year ended December 31,
1999 filed on March 30, 2000 as amended by our Form 10-K/A filed
on May 1, 2000;
o our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000 filed on May 15, 2000;
o our Current Report on Form 8-K dated February 8, 2000 and filed
on February 11, 2000;
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o the description of our common stock contained in our Registration
Statement on Form 8-B filed on July 28, 1993;
o the description of our common stock purchase rights contained in
our Current Report on Form 8-K dated December 19, 1997 and filed
on December 31, 1997; and
o all other documents we subsequently file pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
after the date of this prospectus and before the termination of
the offering, each which will be deemed to be a part of this
prospectus from the date of filing.
To receive a free copy of any of the documents incorporated by
reference in this prospectus (other than exhibits, unless they are specifically
incorporated by reference in the documents), write to or call:
IVAX Corporation
4400 Biscayne Boulevard
Miami, Florida 33137
Attention: Corporate Secretary
Phone Number: (305) 575-6000
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements," or statements
that are based on current expectations, estimates and projections rather than
historical facts. We make these forward-looking statements in reliance on the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to a number of risks and
uncertainties, many of which are difficult to predict and are beyond our
control. Forward-looking statements are typically identified by the words
"believe," "expect," "anticipate," "intend," "estimate" and similar expressions.
Many of these risks and uncertainties are included under the caption "Risk
Factors."
Our actual results could differ materially from those contemplated by
these forward-looking statements as a result of factors including but not
limited to economic, competitive, governmental and technological factors
affecting our operations, markets, products and prices, and other factors
discussed elsewhere in this prospectus and the documents filed by us with the
SEC.
In light of these risks and uncertainties, the results and events
contemplated by the forward-looking information contained in this prospectus
might not occur. We caution you not to place undue reliance on these
forward-looking statements. We do not undertake any obligation to update or
revise any forward-looking statements.
THE COMPANY
We are a multi-national company engaged in the research, development,
manufacture and marketing of pharmaceutical products. We have subsidiaries
located throughout the world, some of which are among the leading pharmaceutical
companies in their markets. Our current business is well established, generating
net revenues in 1999 of $656 million and net income of approximately $70
million. While we expect continued growth from our current products, we
recognize that our long-term growth will depend on the discovery and development
of new products that will satisfy currently unmet medical needs. Accordingly, we
are focusing on expanding our portfolio of proprietary and brand name
pharmaceutical products through our research and development efforts and through
strategic acquisitions and collaborations. As a result, although our strategy is
to continue to expand our generic
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business, we anticipate an increasing amount of our future revenues to be
generated from the sale of proprietary and branded products.
We market several brand name pharmaceutical products and a wide variety
of generic and over-the-counter pharmaceutical products, primarily in the United
States and the United Kingdom. We also maintain operations in Argentina, China,
the Czech Republic, France, Germany, Hong Kong, Hungary, India, Ireland, Italy,
Kazakhstan, Latvia, Peru, Poland, Russia, the Slovak Republic, Ukraine, Uruguay,
and Venezuela and market our products through distributors or joint ventures in
other foreign markets.
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. Our business, operating results or financial condition
could be materially and adversely affected by these and other risks. You should
also refer to the other information contained or incorporated by reference in
this prospectus, before making an investment decision.
Risks Relating to Our Company
Our research and development expenditures may not result in commercially
successful products.
We spent approximately $54.2 million during 1999 on our research and
development efforts. We have budgeted approximately $80 million in the year 2000
for research and development expenditures and may in the future increase the
amounts we expend for research and development. These amounts represent a
significant increase in the amounts we allocated to research and development in
prior periods and, in the short term, our research and development expenditures
may have an adverse impact on our earnings. Further, we cannot be sure that our
research and development expenditures will, in the long term, result in the
discovery or development of products which prove to be commercially successful.
Our potential acquisitions may reduce our earnings, be difficult for us to
integrate or require us to obtain additional financing.
We search for and evaluate acquisitions which will provide new product
and market opportunities, leverage our existing assets and add critical mass. On
June 20, 2000 we announced that we had acquired Laboratorios Elmor S.A., a
pharmaceutical company based in Venezuela. Additionally, on August 4, 2000 we
announced that we had entered into a definitive agreement to acquire Wakefield
Pharmaceuticals, Inc., a privately held company located in Alpharetta, Georgia,
engaged in the marketing and sale of respiratory products to allergists,
otolaryngologists, pulmonologists, and primary care physicians. Acquisitions
commonly involve risks and may have a material effect on our results of
operations. Any acquisitions we make may fail to accomplish our strategic
objectives, may not be successfully integrated with our operations and may not
perform as expected. In addition, based on current acquisition prices in the
pharmaceutical industry, acquisitions could initially dilute our earnings and
add significant intangible assets and related goodwill amortization charges. Our
acquisition strategy may require us to obtain additional debt or equity
financing, resulting in additional leverage and dilution of ownership,
respectively. We may not be able to finance acquisitions on terms satisfactory
to us.
We depend on the development, manufacture and marketing of new products for our
future success.
Our future success is largely dependent upon our ability to develop,
manufacture and market commercially viable new pharmaceutical products and
generic versions of off-patent pharmaceutical products. Generally, in order to
be marketed commercially:
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o products must be continually developed and tested;
o new products must be proven to be safe and effective in clinical
trials;
o generic products must be proven to be bioequivalent to the name
brand counterpart; and
o all products must receive requisite regulatory approval.
Delays in the development, manufacture and marketing of new products
will impact our results of operations. Each of the steps in the development,
manufacture and marketing of our products, as well as the process taken as a
whole, involves significant periods of time and expense. We cannot be sure that:
o any of our products presently under development, if and when
fully developed and tested, will perform in accordance with our
expectations;
o we will obtain necessary regulatory approvals in a timely manner,
if at all; or
o we can successfully and profitably produce and market any of our
products.
We depend on our patents and proprietary rights and cannot be certain of their
confidentiality and protection.
Our success with our proprietary products depends, in large part, on
our ability to protect our current and future technologies and products and to
defend our intellectual property rights. If we fail to adequately protect our
intellectual property, competitors may manufacture and market products similar
to ours. We have been issued numerous patents covering our technologies, and
have filed, and expect to continue to file, patent applications seeking to
protect newly developed technologies and products in various countries,
including the United States. Patent applications in the United States are
maintained in secrecy until the patent application is published or the patent is
issued, but in any event no longer than 18 months after the patent application
has been filed. Since publication of discoveries in the scientific or patent
literature tends to follow actual discovery by several months, we cannot be
certain that we were the first to file patent applications on our discoveries.
We cannot be sure that patents will be issued for any of our patent applications
or that any existing or future patents that we receive or license will provide
competitive advantages for our products or will not be challenged, invalidated
or circumvented by competitors. In addition, patent rights may not prevent our
competitors from developing, using or commercializing products that are similar
or functionally equivalent to our products.
We also rely on trade secrets, unpatented proprietary know-how and
continuing technological innovation that we seek to protect, in part, by
confidentiality agreements with licensees, suppliers, employees and consultants.
We cannot assure you that these parties will not breach these agreements. We
also cannot be certain that we will have adequate remedies for any breach.
Disputes may arise concerning the ownership of intellectual property or the
applicability of confidentiality agreements. Furthermore, we cannot be sure that
our trade secrets and proprietary technology will not otherwise become known or
be independently developed by our competitors or, if patents are not issued for
products arising from research, that we will be able to maintain the
confidentiality of information relating to our products.
Third parties may claim that we infringe their proprietary rights and may
prevent us from manufacturing and selling certain of our products.
The manufacture, use and sale of new products that are the subject of
conflicting patent rights have been the subject of substantial litigation in the
pharmaceutical industry. These lawsuits relate to the validity and infringement
of patents or proprietary rights of third parties. We may be required to defend
against charges of infringement of patents or proprietary rights of third
parties. This is especially true for the sale of the generic version of products
on which the patent covering the branded product is expiring, an area where
infringement
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<PAGE>
litigation is prevalent. Our defense against charges of infringement of patent
or proprietary rights of third parties could require us to incur substantial
expense and to divert significant effort of our technical and management
personnel, and could result in our loss of rights to develop or make certain
products or require us to pay monetary damages or royalties to license
proprietary rights from third parties.
Although patent and intellectual property disputes in the
pharmaceutical product area have often been settled through licensing or similar
arrangements, costs associated with these arrangements may be substantial and
could include ongoing royalties. Furthermore, we cannot be certain that the
necessary licenses would be available to us on terms we believe to be
acceptable. Accordingly, an adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling a number of our products.
We are also required to certify to regulatory authorities, such as the
United States Food and Drug Administration, or FDA, when seeking approval of
some of our products, that the product does not infringe upon third party
rights. A patent holder may challenge a notice of non-infringement or invalidity
by filing suit for patent infringement within 45 days of receiving the notice.
This challenge, if made, would prevent regulatory approval in the United States
until the suit is resolved or until at least 30 months have elapsed. A challenge
by a patent holder and the associated delay could result in additional expenses
or could eventually prevent us from manufacturing and selling certain of our
products.
Marketing practices such as returns, allowances and charge-backs and marketing
programs adopted by wholesalers may reduce sales revenues in subsequent periods.
Based on industry practice, generic manufacturers, including us, have
liberal return policies and have been willing to give customers post-sale
inventory allowances or credits based on decreases in the market prices of
generic products held in inventory. Like our competitors, we also give credits
for charge-backs to wholesale customers for their sales to hospitals, group
purchasing organizations, pharmacies or other retail customers that have
contracts with us. Although we establish reserves based on our prior experience
and our best estimates of the impact that these policies may have in subsequent
periods, we cannot be sure that our reserves will be adequate or that actual
product returns, inventory allowances and charge-backs will not exceed our
estimates.
The concentration of ownership among our principal shareholders may permit
corporate matters and policies to be influenced.
Our executive officers and directors and two additional shareholders
currently have or share voting control over approximately 21.3% of our issued
and outstanding common stock. Accordingly, these persons may have the ability to
significantly influence the election of the members of our board of directors
and other corporate decisions.
The market price of our stock has been and may continue to be volatile because
of a number of internal and external factors.
The market prices for securities of companies engaged in pharmaceutical
development, including ours, have been volatile. Many factors, including many
over which we have no control, may have a significant impact on the market price
of our common stock, including without limitation:
o the announcement of technological innovations or new commercial
products by us or our competitors;
o changes in governmental regulation;
o regulatory approvals obtained by us or our competitors;
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o developments relating to patents or proprietary rights by us or
our competitors;
o publicity regarding actual or potential medical results for
products under development by us or our competitors; and
o period-to-period fluctuations in financial results.
Our foreign operations are subject to political and economic instability and
foreign currency fluctuations that may adversely affect their ability to
generate revenue.
Our foreign operations are subject to currency exchange fluctuations
and restrictions, political instability in some countries, and uncertainty as to
the enforceability of, and government control over, commercial rights.
We sell products in many countries that are recognized to be
susceptible to significant foreign currency risk. These products are generally
sold for United States dollars, which eliminates our direct currency risk but
increases our credit risk if the local currency devalues significantly and it
becomes more difficult for customers to purchase the United States dollars
required to pay us. Acquisitions we are currently evaluating or pursuing may
increase our foreign currency risk. On May 25, 2000 we announced that we had
purchased an additional 8.5% of our Czech Republic subsidiary, Galena, A.S.,
bringing our ownership of Galena to 94.7%. Additionally, on June 20, 2000 we
announced our acquisition of Laboratorios Elmor S.A., a pharmaceutical company
based in Venezuela. We may acquire additional operations in the future which may
expose us to additional risk.
Future inability to obtain raw materials or products from contract manufacturers
could seriously affect our operations.
We currently source raw materials and other products from single
domestic or foreign suppliers. Although to date we have not experienced
difficulty in obtaining these raw materials and products, we cannot assure you
that supply interruptions will not occur in the future or that we will not have
to obtain substitute materials or products, which would require additional
regulatory approvals. Further, we cannot assure you that our third party
suppliers will continue to do so. In addition, changes in our raw material
suppliers could result in delays in production, higher raw material costs and
loss of sales and customers because raw material sources for pharmaceutical
products must generally be approved by regulatory authorities. Any significant
interruption of supply could have a material adverse effect on our operations.
We have enacted a shareholder rights plan and charter provisions that may have
anti-takeover effects.
We have in place a shareholders rights plan under which we issued
common stock purchase rights. As a result of the plan, each share of our common
stock carries with it one common stock purchase right. Each common stock
purchase right entitles the registered holder to purchase from us one-half (1/2)
of a share of common stock at a price of $15 per one-half (1/2) of a share of
common stock, subject to adjustment. The common stock purchase rights are
intended to cause substantial dilution to a person or group who attempts to
acquire us on terms not approved by our board of directors. The existence of the
common stock purchase rights could have the effect of making it more difficult
for a third party to acquire a majority of our common stock. Other provisions of
our articles of incorporation and bylaws may also have the effect of
discouraging, delaying or preventing a merger, tender offer or proxy contest,
which could have an adverse effect on the market price of our common stock.
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Risks Relating to Our Industry
Our revenues and profits from generic pharmaceuticals will decline as additional
generic equivalents of a product are introduced.
Revenues and gross profit derived from generic pharmaceutical products
tend to follow a pattern based on regulatory and competitive factors unique to
the generic pharmaceutical industry. As patents for brand name products and the
related and regulatorily mandated exclusivity periods expire, the first generic
manufacturer to apply for regulatory approval for a generic equivalent of a
brand name product may be entitled to a six-month period of exclusivity during
which no other generic equivalent can be approved. If we are not the first
generic applicant, our generic product will be kept off the market for an
additional six months after expiration of the brand name drug's patents. Whether
due to the generic exclusivity period or other factors that delay the approval
of other generic competitors, the first generic equivalent on the market is
usually able to initially achieve relatively high revenues and gross profit. As
other generic manufacturers receive regulatory approvals on competing products,
prices and revenues typically decline. The timing of these declines is
unpredictable and can result in a significantly curtailed period of
profitability for a generic product. Accordingly, the level of revenues and
gross profit attributable to generic products developed and manufactured by us
is dependent, in part, on:
o our ability to develop and introduce new generic products;
o the timing of regulatory approval of generic products;
o the number and timing of regulatory approvals of competing
products;
o strategies adopted by brand name companies to maintain market
share; and
o our cost of manufacturing.
Brand name companies are selling their own generics and are finding new ways of
extending their market exclusivity.
In addition to competition from other generic drug manufacturers, we
face competition from brand name companies as they increasingly sell their
products into the generic market directly by establishing, acquiring or forming
licensing or business arrangements with generic pharmaceutical companies. No
regulatory approvals are required for a brand name manufacturer to sell directly
or through a third party to the generic market, nor do brand name manufacturers
face any other significant barriers to entry into the generic market. In
addition, brand name companies are increasingly pursuing strategies to prevent
or delay the introduction of generic competition. These strategies include,
among others:
o seeking to establish regulatory obstacles to the demonstration of
the bioequivalence of generic drugs to their brand name
counterparts;
o instituting legal actions that automatically delay approval of
generic products which involve certifications that the brand name
drug's patents are invalid or would not be infringed by the
generic;
o obtaining approvals of patented drugs for orphan indications for
which a generic is undergoing clinical trials, consequently
obtaining seven years of exclusivity for that indication;
o obtaining extensions of patent exclusivity by conducting trials
of brand name drugs using children; and
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o persuading the FDA to withdraw the approvals of brand name drugs
that are about to go off patent so that the brand name company
can substitute a new patented product.
Additionally, in the United States, companies holding brand name products have
lobbied Congress for amendments to the Hatch-Waxman legislation which could give
them additional advantages over generic competitors.
Legislative proposals, reimbursement policies of third parties, cost containment
measures and health care reform could affect the marketing, pricing and demand
for our products.
Various legislative proposals including proposals relating to
prescription drug benefits are under discussion which could materially impact
the pricing and sale of our products. Further, reimbursement policies of third
parties may affect the marketing of our products. Our ability to market our
products will depend in part on reimbursement levels for the cost of the
products and related treatment established by health care providers, including
government authorities, private health insurers and other organizations, such as
health maintenance organizations, or HMOs, and managed care organizations, or
MCOs. Third party payors are increasingly challenging the pricing of
pharmaceutical products and reviewing their reimbursement practices. In
addition, the following factors could significantly influence the purchase of
pharmaceutical products, which would result in lower prices and a reduced demand
for our product:
o the trend toward managed health care in the United States;
o the growth of organizations such as HMOs and MCOs;
o legislative proposals to reform health care and government
insurance programs; and
o price controls and non-reimbursement of new and highly priced
medicines for which the economic therapeutic rationales are not
established.
These cost containment measures and health care reform could affect our ability
to sell our products.
The reimbursement status of a newly approved pharmaceutical product may
be uncertain. Reimbursement may not be available for some of our products.
Reimbursement for a product, if granted, may not be maintained. Limits placed on
reimbursement could reduce the demand for, or make it harder for people to buy,
our products. The unavailability or inadequacy of third party reimbursement for
our products would reduce or possibly eliminate demand for our products. We are
unable to predict whether governmental authorities will enact additional
legislation or regulation which will affect third party coverage and
reimbursement that reduces demand for our products.
New developments by others could make our products or technologies
non-competitive or obsolete.
The markets in which we compete and intend to compete are undergoing,
and are expected to continue to undergo, rapid and significant technological
change. We expect competition to intensify as technological advances in the
pharmaceutical industry are made. We cannot be sure that developments by others
will not render our products or technologies obsolete or uncompetitive.
Our industry is highly competitive which affects our product selection, pricing,
gross profit and market share.
The pharmaceutical industry is intensely competitive. Most or all of
the products that we commercialize will face competition from different chemical
or other agents intended to treat the same diseases. Our current and future
products will also face competition from traditional forms of drug delivery and
from advanced delivery systems being developed by others. Our competitors vary
depending upon product categories, and within each product category, upon dosage
strengths and drug delivery systems. Many of these competitors may be able to
-8-
<PAGE>
develop products and processes competitive with or superior to our own for many
reasons, including that they may have:
o significantly greater financial resources;
o larger research and development and marketing staffs; or
o larger production facilities or extensive experience in
preclinical testing and human clinical trials.
Our industry is subject to government regulation that increases our costs and
could prevent us from marketing or selling our products.
Governmental authorities in the United States and other countries
subject our operations to extensive regulation, including the regulation of the
testing, approval, manufacture, labeling, marketing and sale of pharmaceutical
products. We devote significant time, effort and expense addressing these
extensive government regulations. Failure to comply with governmental
regulations can result in fines, unanticipated compliance expenditures,
interruptions of production and criminal prosecution. The process of obtaining
regulatory approval is rigorous, time consuming and costly. We cannot be sure
that we will obtain necessary approvals on a timely basis, if at all. Delays in
receiving regulatory approvals would adversely affect our ability to market
products commercially. Product approvals by the FDA and comparable foreign
regulatory authorities may be withdrawn if compliance with regulatory standards
is not maintained or if problems relating to the products are experienced after
initial approval.
Consolidation of our customers or wholesaler programs could result in increased
pricing pressures that may adversely affect our operating results.
We make a significant amount of our United States generic
pharmaceutical sales to a relatively small number of drug wholesalers and retail
drug chains, which represent an essential part of the distribution chain of
pharmaceutical products in the United States. Both of these industries have
undergone, and are continuing to undergo, significant consolidation, which has
resulted in our customers gaining more purchasing leverage and consequently
increasing the pricing pressures facing our United States generic pharmaceutical
business. Further consolidation among our customers may result in even greater
pricing pressures and correspondingly reduce the gross margins of this business,
and may also cause such customers to reduce their purchases of our products.
Additionally, many wholesalers have adopted programs under which they offer
customers price discounts if they purchase a bundled supply of one generic
supplier's products, consequently reducing the number of manufacturers selected
to supply products to the wholesaler and increasing the wholesaler's ability to
influence its customers' buying decisions. These programs generally require that
the manufacturer charge lower prices on products sold and permit wholesalers to
maintain lower inventory levels. Wholesalers may continue these types of
programs or adopt other programs in the future that restrict the market for our
products or require us to charge lower prices in order to access the portion of
the market that they control, adversely affecting our results.
Our industry is susceptible to product-related liability claims that could
require us to pay substantial sums.
Like all pharmaceutical companies, we face the risk of loss and
associated adverse publicity from product liability lawsuits. We cannot assure
you that we can avoid product liability claims. We cannot be sure that our
product liability insurance will be adequate to cover claims or that we will be
able to get adequate insurance coverage in the future at acceptable costs. A
successful product liability claim in excess of our coverage could require us to
pay substantial sums.
-9-
<PAGE>
Risks Related to the Notes
Increased leverage may have an impact on our financial condition and results of
operations.
At June 30, 2000, we had approximately $51.0 million of consolidated
indebtedness and other obligations effectively ranking senior to the notes. We
may incur additional indebtedness in the future. Our level of indebtedness will
have several important effects on our future operations, including, without
limitation:
o a portion of our cash flow from operations will be dedicated to
the payment of any interest or amortization required by
outstanding indebtedness;
o outstanding indebtedness and leverage will increase our
vulnerability to adverse changes in general economic and industry
conditions, as well as to competitive pressure; and
o depending on the levels of our outstanding debt, our ability to
obtain additional financing for working capital, capital
expenditures, general corporate and other purposes may be
limited.
Our ability to make payments of principal and interest on our
indebtedness depends upon our future performance, which will be subject to
general economic conditions, industry cycles and financial, business and other
factors affecting our operations, many of which are beyond our control. Our
business might not continue to generate cash flow at or above current levels. If
we are unable to generate sufficient cash flow from operations in the future to
service our debt, we may be required, among other things:
o to seek additional financing in the debt or equity markets;
o to refinance or restructure all or a portion of our indebtedness,
including the notes;
o to sell selected assets; or
o to reduce or delay planned capital expenditures.
These measures might not be sufficient to enable us to service our debt. In
addition, any financing, refinancing or sale of assets might not be available on
economically favorable terms.
The notes are subordinated to our senior indebtedness and effectively
subordinated to all liabilities of our subsidiaries.
The notes are subordinated in right of payment to all of our existing
and future senior indebtedness, and are structurally subordinated to all
liabilities, including trade payables, of our subsidiaries. For purposes of the
notes, senior indebtedness includes all of our indebtedness that is not, by its
terms, equal or junior to the notes in priority of repayment. As of June 30,
2000, we had approximately, $51.0 million of consolidated indebtedness and other
obligations ranking senior to the notes. The indenture governing the notes does
not restrict our or our subsidiaries' incurrence of senior indebtedness or other
debt. By reason of subordination, in the event of the insolvency, bankruptcy,
liquidation, reorganization, dissolution or winding up of our business, our
assets will be available to pay the amounts due on the notes only after all
senior indebtedness has been paid in full, and, therefore, sufficient assets may
not remain to pay amounts due on any of the notes then outstanding.
Our ability to meet our cash obligations in the future will be
dependent upon the ability of our subsidiaries to make cash distributions to us.
Applicable law and contractual provisions, among other things, restrict and will
continue to restrict the ability of our subsidiaries to make these distributions
to us. The indenture governing the notes does not limit the ability of our
subsidiaries to incur these restrictions and limitations in the future.
-10-
<PAGE>
Our right to participate in the assets of our subsidiaries (and thus
the ability of holders of the notes to benefit indirectly from those assets) is
generally subject to the prior claims of the subsidiary's creditors, including
its trade creditors, except to the extent that we are recognized as a creditor
of the subsidiary, in which case our claim would still be subject to any
security interest of the subsidiary's other creditors. The notes, therefore, are
structurally subordinated to creditors, including trade creditors, of our
subsidiaries with respect to the assets of the subsidiaries against which the
creditors have a claim.
We may not have the ability to raise the funds necessary to finance the "change
in control" offer required by the indenture.
If we undergo a "change in control" (as defined in the indenture), each
holder of the notes may require us to repurchase all or a portion of the
holder's notes. We cannot assure you that we will have sufficient funds
available for any required repurchases of these securities if a change in
control occurs. In addition, the terms of our outstanding debt may prohibit or
limit our ability to repurchase the notes. If we fail to repurchase the notes in
that circumstance, we will be in default under the indenture governing the
notes.
Absence of a public market for the notes could cause purchasers of the notes to
be unable to resell them for an extended period of time.
Although the notes trade through the PORTAL Market, there is not an
established public trading market for the notes and we cannot assure you that an
active public trading market for the notes will develop or, if one develops, how
liquid it will be. We have no present intention of causing the notes to be
listed for trading on any national securities exchange or Nasdaq stock market.
If a public trading market for the notes does not develop or is not
maintained, holders of the notes may experience difficulty in reselling, or an
inability to sell, the notes. If a public trading market for the notes develops,
it may be discontinued at any time. If a public trading market develops for the
notes, future trading prices of the notes will depend on many factors,
including, among other things, the price of our common stock into which the
notes are convertible, prevailing interest rates, our operating results and
financial condition and the market for similar securities. Depending on these
and other factors, the notes may trade at a discount from their principal
amount.
USE OF PROCEEDS
We will receive no proceeds from this offering. The selling security
holders will receive the proceeds from this offering.
RATIO OF EARNINGS TO FIXED CHARGES
The table below contains our consolidated ratio of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
Three months ended Year ended December 31,
March 31, 2000 1999 1998 1997 1996 1995
----------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges: 15.15x 15.31x 5.85x (10.53x) (9.65x) 15.46x
</TABLE>
The ratio of earnings to fixed charges was computed by dividing
earnings by fixed charges. For purposes of computing this ratio, "earnings"
consist of net income (loss) before provision for income taxes and minority
-11-
<PAGE>
interests minus fixed charges. "Fixed charges" consist of the sum of interest
expense on indebtedness and interest within rental expense.
SELLING SECURITY HOLDERS
We originally issued the notes on May 12, 2000 and May 23, 2000 in
transactions exempt from the registration requirements of the Securities Act of
1933 pursuant to Rule 144A. The following table sets forth information with
respect to the selling security holders and the principal amounts of notes
beneficially owned by each selling security holder that may be offered under
this prospectus. The information is based on information provided by or on
behalf of the selling security holders. None of the selling security holders nor
any of their affiliates, officers, directors or principal entity holders has
held any position or office or has had any material relationship with us within
the past three years. The term "selling security holder" includes, without
duplication, the holders listed below and their transferees, pledgees, donees or
other successors. Information concerning the selling holders may change from
time to time and any changed information will be set forth in supplements to
this prospectus if and when necessary. The selling security holders may offer
all, some or none of the notes or common stock into which the notes are
convertible pursuant to this prospectus. Because the selling security holders
may offer all or some portion of the notes or the common stock, no estimate can
be given as to the amount of the notes or the common stock that will be held by
the selling security holders upon termination of any sales. In addition, the
selling security holders identified below may have sold, transferred or
otherwise disposed of all or a portion of their notes since the date on which
they provided the information regarding their notes in transactions exempt from
the registration requirements of the Securities Act.
<TABLE>
<CAPTION>
Principal Amount of Amount of Common Stock
Notes Owned and Issuable Upon Conversion of the
Selling Security Holders Offered Hereby (1)(2) Notes and Offered Hereby (1)(2)
------------------------ --------------------- -------------------------------
<S> <C> <C>
1976 Distribution Trust FBO A.R. Lauder Zinterhofer $ 16,000 430
1976 Distribution Trust FBO Jane A Lauder $ 16,000 430
Occidental Petroleum Corporation $ 221,000 5,948
Arpeggio Fund L.P. $ 946,810 25,486
Bancroft Convertible Fund, Inc. $ 500,000 13,459
Boulder II Limited $ 6,300,000 169,583
BP Amoco Corporation Master Trust for Employee Pension Plans $ 5,150,000 138,627
British Virgin Island Social Security Board $ 33,000 888
California Public Employees' Retirement System $ 3,000,000 80,754
Chrysler Corporation Master Retirement Trust $ 3,790,000 102,019
City University of New York $ 81,000 2,180
Continental Assurance Company Separate Account (E) $ 4,300,000 115,747
Cova Bond Debenture Fund $ 750,000 20,188
Delta Air Lines Master Trust $ 1,425,000 38,358
Deutsch Bank Securities $ 2,800,000 75,370
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Deutsch Bank AG $ 237,000 6,379
Elf Aquitaine $ 200,000 5,383
Ellsworth Convertible Growth and Income Fund, Inc. $ 500,000 13,459
Employee Benefit Convertible Securities Fund $ 240,000 6,460
Fuji U.S. Income Open $ 1,500,000 40,377
Fundamental Investors, Inc. $ 15,000,000 403,770
Grady Hospital Foundation $ 124,000 3,337
Gryphon III Convertible $ 2,946,057 79,301
Independence Blue Cross $ 122,000 3,283
Investcorp SAM $ 3,668,993 98,761
Kentfield Trading, Ltd. $ 4,513,000 121,480
Local Initiatives Support Corporation $ 53,000 1,426
Lord Abbett Bond Debenture Fund $ 10,000,000 269,180
Merrill Lynch Insurance Group $ 297,000 7,994
Motion Picture Industry Health Plan- Retiree Member Fund $ 220,000 5,921
Motion Picture Industry Health Plan- Active Member Fund $ 440,000 11,843
Nations Convertible Securities Fund $ 3,760,000 101,211
New Orleans Firefighters Pension/Relief Fund $ 131,000 3,526
OCM Convertible Limited Partnership $ 170,000 4,576
OCM Convertible Trust $ 1,265,000 34,051
Ohio Bureau of Workers Compensation $ 153,000 4,118
Onex Industrial Partners Limited $ 2,650,000 71,332
Oxford, Lord Abbett & Co. $ 1,600,000 43,068
Partner Reinsurance Company Ltd. $ 755,000 20,323
Pebble Capital, Inc. $ 2,250,000 60,565
Rhapsody Fund L.P. $ 1,922,607 51,752
Sage Capital, QIB $ 2,000,000 53,836
Shell Pension Trust $ 174,000 4,683
Silvercreek Limited Partnership $ 5,050,000 135,935
Spear, Leeds & Kellogg $ 1,000,000 26,918
State Employees' Retirement Fund of the State of Delaware $ 1,920,000 51,682
State of Connecticut Combined Investment Funds $ 3,945,000 106,191
State of Maryland Retirement Agency $ 3,018,000 81,238
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
The Grable Foundation $ 122,000 3,283
The Income Fund of America, Inc. $ 15,000,000 403,770
The Northwestern Mutual Life Insurance Company(3) $ 4,000,000 107,672
UBS Warburg LLC $ 22,160,000 596,502
Vanguard Convertible Securities Fund, Inc. $ 4,070,000 109,556
Wilmington Trust Co. $ 41,350,000 1,113,059
Zurich HFR Master Hedge Fund Index Ltd. $ 110,000 2,960
</TABLE>
(1) Amounts indicated may be in excess of the total amount registered due to
sales or transfers exempt from the registration requirements of the
Securities Act since the date upon which selling holders provided to us the
information regarding their notes. In addition, the conversion rate and
therefore, the number of shares of common stock issuable upon conversion of
the notes, is subject to adjustment under certain circumstances.
Accordingly, the aggregate principal amount of notes and the number of
shares of common stock into which the notes are convertible may increase or
decrease.
(2) Assumes that the selling security holders will sell all of the securities
listed. We cannot be sure that the selling security holders will sell all
or any of the securities offered in this offering. The amount of securities
listed in the table represents an estimate of the amount of securities to
be offered by each selling security holder.
(3) Includes $250,000 principal amount of notes and the associated conversion
shares over which investment and voting power is shared with The
Northwestern Mutual Life Insurance Company Group Annuity Separate Account.
PLAN OF DISTRIBUTION
The notes and the common stock covered by this prospectus may be sold
from time to time to purchasers directly by the selling security holders.
Alternatively, the selling security holders may from time to time offer the
securities through underwriters, broker-dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the undersigned and/or the purchasers of securities for whom they may act
as agent. The selling security holders and any underwriters, broker-dealers or
agents that participate in the distribution of the securities may be deemed to
be "underwriters" within the meaning of the Securities Act and any profit on the
sale of securities by them and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker-dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
Because the selling security holders may be deemed to be "underwriters"
within the meaning of the Securities Act, the selling security holders will be
subject to the prospectus delivery requirements of the Securities Act. We have
informed the selling security holders that the anti-manipulative provisions of
Regulation M promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") may apply to their sales in the market.
The notes and the common stock covered by this prospectus may be sold
from time to time in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale or at negotiated prices. Such prices will be determined by the selling
security holders or by agreement between the selling security holders and
underwriters and dealers who may receive fees or commissions in connection
therewith. The sale of the securities may be effected in transactions (which may
involve crosses or block transactions): (a) on any national securities exchange
or quotation service on which the notes or the common stock may be listed or
quoted at the time of sale, (b) in the over-the-counter market; (c) in
transactions other than on such exchanges or in the over-the-counter market; or
(d) through the writing of options. At the time of a particular offering of
securities by a selling security holder, a supplement to this prospectus, if
required, will be distributed setting forth the aggregate amount and type of
securities being offered and the terms of the offering, including the name or
names of any underwriters, broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling security holders and
any discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.
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<PAGE>
To comply with the securities laws of certain jurisdictions, if
applicable, the securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities may not be offered or sold (unless they have been
registered or qualified for sale) in such jurisdictions or an exemption from
registration or qualification is available and is complied with.
Pursuant to the registration rights agreement we entered into with the
initial purchasers of the notes, we will pay all expenses of the registration of
the notes and the common stock including, without limitation, SEC filing fees
and expenses of compliance with state securities or "blue sky" laws and the
reasonable fees and expenses of counsel to the selling security holders. The
selling security holders are responsible for all underwriting discounts and
selling commissions, if any. We and the selling security holders will indemnify
each other against certain liabilities, including certain liabilities under the
Securities Act, or will be entitled to contribution from the other in connection
therewith.
TRANSFER AGENT, REGISTRAR AND TRUSTEE
The transfer agent and trustee for the notes is U.S. Bank Trust
National Association at 180 East Fifth Street, St. Paul, Minnesota 55101. The
transfer agent and registrar for the common stock is ChaseMellon Shareholder
Services, LLC, 85 Challenger Road, Overpeck Centre, Ridgefield Park, New Jersey
07660.
DESCRIPTION OF NOTES
This prospectus describes certain general terms and provisions of the
notes. The notes are issued under an indenture between us and U.S. Bank Trust
National Association, as trustee. The following statements are subject to the
detailed provisions of the indenture and are qualified in their entirety by
reference to the indenture, a copy of which we have filed as an exhibit to the
registration statement of which this prospectus is a part. Particular provisions
of the indenture which are referred to in this prospectus are incorporated by
reference as a part of the statements made, and the statements are qualified in
their entirety by the reference. For purposes of this "Description of Notes"
section, the terms "IVAX," "we," "us," "our," and "company" refer only to IVAX
Corporation and not to any of our subsidiaries.
General
The notes represent our unsecured general obligations, subordinate in
right of payment to certain of our other obligations and are convertible into
common stock. We will pay interest on the notes semi-annually on May 15 and
November 15 of each year at the rate of 5.5% per annum to the persons who are
registered holders of notes at the close of business on the preceding May 1 and
November 1, respectively. We will make the first payment to be made on November
15, 2000. Interest payments on the notes are subject to exceptions in the case
of notes redeemed or repurchased upon a change in control between a record date
and the next succeeding interest payment date. Unless previously redeemed,
repurchased or converted, the notes will mature on May 15, 2007. The notes are
limited to $250,000,000 total principal amount. We may pay principal, premium,
if any, and interest by check and may mail an interest check to a holder's
registered address. Holders must surrender notes to the paying agent to collect
principal payments.
The notes are issued without coupons in denominations of $1,000 and
whole multiples of $1,000. A holder may transfer or exchange notes in accordance
with the indenture. We will not impose any service charge for any registration
of transfer, exchange or conversion of the notes, except for any tax or other
governmental charges that may be imposed on any transfers, registration of
transfers or exchanges. The registrar for the notes need not transfer or
exchange any notes selected for redemption. We may treat the registered holder
of a note as its owner for all purposes.
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<PAGE>
Initially, the trustee will act as registrar, paying agent and
conversion agent. We may appoint an additional, or change any, paying agent,
registrar or conversion agent without notice. We may act as registrar, paying
agent and/or conversion agent.
The indenture does not contain any financial covenants or any
restrictions on the payment of dividends or on the repurchase of our securities.
The indenture does not require us to maintain any sinking fund or other reserves
for repayment of the notes.
Conversion
Holders of notes are entitled, at any time before the close of business
on the date of maturity of the notes, subject to prior redemption or repurchase,
to convert the notes, or portions of the notes (if the portions are $1,000 or
whole multiples of $1,000) into 26.918 shares of common stock per $1,000 of
principal amount of notes. This rate results in a conversion price of
approximately $37.15 per share. Except as described below, the number of shares
into which a note is convertible will not be adjusted for dividends on any
common stock issued on conversion. We will not issue fractional shares of common
stock upon conversion of notes and instead will deliver a check in lieu of the
fractional share based upon the market value of the common stock on the last
trading day prior to the conversion date. In the case of notes called for
redemption, conversion rights will expire at the close of business on the date
five business days prior to the redemption date, and in the event any holder
exercises its repurchase right (as defined below), the holder's conversion right
will terminate upon our receipt of the written notice of exercise of the
repurchase right. In the case of notes called for redemption on a redemption
date between a record date and the opening of business on the next succeeding
interest payment date, no cash interest will be payable on any notes converted
during the period between a record date and the opening of business on the next
succeeding interest payment date.
We are not obligated to pay interest on a note that is converted,
unless the conversion takes place between a record date for the payment of
interest and the next succeeding interest payment date, in which case we will
pay interest on the interest payment date to the registered holder of the note
on the record date. Accordingly, if a note is converted between a record date
and the next succeeding interest payment date, the note must be accompanied by
funds equal to the interest payable to the registered holder on the interest
payment date on the principal amount being converted, unless the note has been
called for redemption on a redemption date between the record date and the
interest payment date or on the interest payment date. A note converted on an
interest payment date need not be accompanied by any payment, and the interest
on the principal amount of that note will be paid on the interest payment date
to the registered holder of that note on the immediately preceding record date.
The number of shares issuable on conversion is subject to adjustment in
accordance with the indenture in a number of events, including:
o the payment of dividends or distributions on the common stock in
shares of capital stock;
o subdivisions or combinations of the common stock into a greater
or smaller number of shares;
o a reclassification of the common stock resulting in an issuance
of any shares of our capital stock;
o the distribution of rights or warrants to all holders of common
stock entitling them for a period of sixty days or less to
purchase common stock at less than the market price at that time;
and
o the distribution to all holders of common stock of assets or debt
securities or any rights or warrants to purchase assets or debt
securities, which assets, debt securities, rights or warrants
have a total fair market value on the date the distribution is
declared that exceeds the "permitted dividend amount" described
below.
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<PAGE>
The "permitted dividend amount" means:
o 10% of our market capitalization (the product of the current
market price of our common stock and the number of shares of our
common stock outstanding as of any particular date) minus
o the total value of all dividends or distributions made to holders
of common stock within the 12 months preceding the distribution
(excluding any distributions or dividends referred to in the
first four bullet points in the preceding paragraph), except that
for any distribution not paid out of our retained earnings, the
permitted dividend amount shall be zero, unless the dividend is
paid out of consolidated net income or in the form of common
stock.
The terms of the notes do not require any adjustment for rights to
purchase common stock pursuant to any plans we have for reinvestment of
dividends or interest, or for a change in the par value of the common stock. To
the extent that notes become convertible into cash, no adjustment will be
required thereafter as to cash. No adjustment in the number of shares issuable
on conversion will be made unless the adjustment would require a change of at
least 1% in the conversion ratio; however, any adjustment that would otherwise
be required to be made shall be carried forward and taken into account in any
subsequent adjustment. We reserve the right to make increases in the conversion
rate in addition to those required in the preceding provisions as we in our
discretion shall determine to be advisable in order that stock-related
distributions hereafter made by us to our stockholders shall not be taxable or
for any other appropriate reason. Except as stated above, the number of shares
issuable on conversion will not be adjusted for the issuance of common stock or
any securities convertible into or exchangeable for common stock, or carrying
the right to purchase common stock or any securities convertible into or
exchangeable for common stock.
If we reclassify the common stock or merge into, or transfer or lease
substantially all of our assets to, another corporation, the holders of the
notes then outstanding will be entitled after the event to convert their notes
into the kind and amount of shares of capital stock, other securities, cash or
other assets which they would have owned immediately after the event had their
notes been converted immediately before the effective date of the event.
Adjustments in the number of shares issuable upon conversion may in
certain circumstances result in constructive distributions that could be taxable
as dividends under the Internal Revenue Code of 1986, as amended, to holders of
notes or to holders of common stock issued upon conversion of the notes.
Redemption
Prior to May 29, 2003, the notes are not redeemable.
Redemption at Our Option
The notes will be redeemable at our option, in whole or in part, for a
period of not less than 30 days nor more than 60 days, at any time on or after
May 29, 2003 after the mailing of a redemption notice to each holder of notes to
be redeemed at the holder's address appearing in the security register. The
redemption price for the notes, expressed as a percentage of the principal
amount to be redeemed, is as follows:
Period Beginning Redemption Price
---------------- ----------------
May 29, 2003.................. 103.143%
May 16, 2004.................. 102.357%
May 16, 2005.................. 101.571%
May 16, 2006.................. 100.786%
We will also pay accrued interest to the redemption date.
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<PAGE>
No "sinking fund" is provided for the notes, and the indenture does not
require us to redeem the notes prior to their stated maturity.
Repurchase at Option of Holders upon Change in Control
Upon any change in control (as defined below) of us, each holder of the
notes shall have the right, at the holder's option, to require us to repurchase
all or a portion of the holder's notes (in a minimum amount of $1,000 or any
integral multiple of $1,000), on the date that is 45 days after the date of the
notice from us (as described in the next paragraph) at a repurchase price equal
to 100% of the principal amount of the holder's notes tendered for repurchase,
plus accrued interest to the repurchase date.
Within 30 days after the occurrence of a change in control, we will be
obligated to mail to all holders of record of the notes a notice of the
occurrence of a change in control and the repurchase right arising as a result
of the change in control. We will deliver a copy of the company notice to the
trustee and will cause a copy of the company notice to be published in The New
York Times and The Wall Street Journal or another newspaper of national
circulation. To exercise the repurchase right, a holder of notes must, on or
before the 30th day after the date of the company notice, deliver an irrevocable
written notice to us (or an agent designated by us for this purpose) and the
trustee of the holder's exercise of its repurchase right together with the notes
for which the repurchase right is being exercised, duly endorsed for transfer.
A "change in control" means:
o the acquisition by any person, entity or "group" within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act,
(excluding, for this purpose, us or our subsidiaries, or any
employee benefit plan of us or our subsidiaries which acquires
beneficial ownership of voting securities of us or any current
affiliate of us whose beneficial ownership does not in the future
exceed 45% of our outstanding common stock) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of shares of common stock sufficient to elect a
majority of directors;
o persons who, as of the date of the indenture, constitute the
board of directors (the "incumbent board") cease for any reason
to constitute at least a majority of the board of directors,
provided that any person becoming a director subsequent to the
date of the indenture whose election, or nomination for election
by our stockholders, was approved by a vote of at least a
majority of the directors then comprising the incumbent board
shall be considered as though the person were a member of the
incumbent board;
o approval by our stockholders of a reorganization, merger or
consolidation, in each case, in which persons who were our
stockholders immediately prior to the reorganization, merger or
consolidation do not, immediately after the reorganization,
merger or consolidation, beneficially own shares sufficient to
elect a majority of directors of the reorganized, merged or
consolidated company; or
o our liquidation or dissolution (other than pursuant to the United
States Bankruptcy Code) or the conveyance, transfer or leasing of
all or substantially all of our assets to any person.
No quantitative or other established meaning has been given to the
phrase "all or substantially all" (which appears in the definition of change in
control) by courts which have interpreted this phrase in various contexts. In
interpreting this phrase, courts make a subjective determination as to the
portion of assets conveyed, considering factors such as the value of assets
conveyed and the proportion of an entity's income derived from the assets
conveyed. To the extent the meaning of the phrase "all or substantially all" is
uncertain, it may be uncertain whether
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a change in control has occurred (and, accordingly, whether the holders of notes
have the right to require us to repurchase their notes).
The occurrence of a change in control might, under the terms of
indebtedness incurred by us from time to time, permit the lenders to require
prepayment of some or all amounts outstanding under our debt agreements. In the
event of a change in control, any repurchase of the notes could, absent waiver
or payment in full of any amounts outstanding under our indebtedness or credit
facilities, be prevented. Our failure to repurchase the notes when required
would result in an event of default of the notes whether or not the repurchase
is permitted by our lenders. The right to require us to repurchase notes could
delay or deter a change in control of us, whether or not the change in control
were supported by the board of directors.
If a change in control occurs, we cannot be sure that we will have
sufficient funds or financing to repay any senior indebtedness then required to
be repaid or to repurchase any or all notes then required to be repurchased
under the indenture. If an offer is made to repurchase notes as a result of a
change in control, we intend to comply with all tender offer rules, including
but not limited to Section 13(e) and 14(e) under the Exchange Act and Rules
13e-1 and 14e-1 promulgated under the Exchange Act, to the extent applicable to
the offer to repurchase notes as a result of a change in control.
Subordination of Notes
Upon any distribution to our creditors in a liquidation or dissolution
of us or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to us or our property, the payment of all amounts due on the
notes (other than cash payments due upon conversion in lieu of fractional
shares) will be subordinated, to the extent provided in the indenture, in right
of payment to the prior payment in full of all senior indebtedness.
We will not pay, directly or indirectly, any amount due on the notes
(including any repurchase price pursuant to the exercise of the repurchase
right), or acquire any of the notes, in the following circumstances:
o if any default in payment of principal, premium, if any, or
interest on senior indebtedness (as defined below) exists, unless
and until the default has been cured or waived or has ceased to
exist;
o if any default, other than a default in payment of principal,
premium, if any, or interest, has occurred with senior
indebtedness, and that default permits the holders of the senior
indebtedness to accelerate its maturity, until the expiration of
the "payment blockage period" described below unless and until
the default has been cured or waived or has ceased to exist; or
o if the maturity of senior indebtedness has been accelerated,
until the senior indebtedness has been paid or the acceleration
has been cured or waived.
A "payment blockage period" is a period of 183 days that begins on the
date that we receive a written notice from any holder of senior indebtedness or
a holder's representative, or from a trustee under an indenture under which
senior indebtedness has been issued, that an event of default of and as defined
under any senior indebtedness (other than default in payment of the principal
of, or premium, if any, or interest on any senior indebtedness), which event of
default permits the holders of the senior indebtedness to accelerate its
maturity, has occurred and is continuing. However, if the maturity of the senior
indebtedness is accelerated, no payment may be made on the notes until the
senior indebtedness that has matured has been paid or the acceleration has been
cured or waived.
Senior indebtedness is defined in the indenture as all indebtedness (as
defined below) of us outstanding at any time except indebtedness that by its
terms is subordinate in right of payment to the notes or indebtedness that is
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not otherwise senior in right of payment to the notes. Senior indebtedness does
not include our indebtedness to any of our subsidiaries.
Indebtedness is defined with respect to any person as the principal of,
and premium, if any, and interest on:
o all indebtedness of the person for borrowed money (including all
indebtedness evidenced by notes, bonds, debentures or other
securities sold by the person for money);
o all obligations incurred by the person in the acquisition
(whether by way of purchase, merger, consolidation or otherwise
and whether by the person or another person) of any business,
real property or other assets (except inventory and related items
acquired in the ordinary course of the conduct of the acquiror's
usual business);
o guarantees by the person of indebtedness described in the first
two bullet points of this paragraph of another person;
o all renewals, extensions, refundings, deferrals, restructurings,
amendments and modifications of the indebtedness, obligation or
guarantee;
o all reimbursement obligations of the person for letters of
credit, bankers' acceptances or similar facilities issued for the
account of the person;
o all capital lease obligations of the person; and
o all net obligations of the person under interest rate swap or
similar agreements of the person.
No restrictions exist in the indenture upon the creation of additional senior
indebtedness by us, or on the creation of any indebtedness by us or any of our
subsidiaries. As of June 30, 2000 we had approximately $51.0 million of
consolidated indebtedness and other obligations effectively ranking senior to
the notes.
By reason of the subordination provisions described above, in the event
of insolvency, funds which would otherwise be payable to note holders will be
paid to the holders of senior indebtedness to the extent necessary to pay senior
indebtedness in full. As a result of these payments, our general creditors may
recover proportionately less than holders of senior indebtedness and the general
creditors may recover proportionately more than holders of notes or our other
subordinated indebtedness.
Prohibition on Layering
The indenture provides that we will not incur, create, issue, guarantee
or otherwise become liable for any indebtedness that is both:
o subordinate or junior in right of payment to any senior
indebtedness; and
o senior in any respect in right of payment to the notes.
Merger or Consolidation
The indenture does not permit us to consolidate with, or merge into, or
transfer or lease all or substantially all of our assets to, another person
unless the other person is a corporation, limited liability company or other
entity organized under the laws of the United States, any state of the United
States or the District of Columbia and the
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person assumes by supplemental indenture all of our obligations under the notes
and the indenture, and immediately after giving effect to the transaction, no
default shall exist.
Defaults and Remedies
An event of default includes the occurrence of any of the following:
o default for 30 days in payment of interest or liquidated damages
on the notes;
o default in payment of principal at maturity, upon redemption or
exercise of a repurchase right or otherwise;
o our failure for 60 days after notice to us to comply with any of
our other agreements in the indenture or the notes; and
o certain events of bankruptcy or insolvency.
If an event of default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the notes may declare all the
notes to be due and payable immediately, except for defaults due to certain
events of bankruptcy or insolvency in which case if an event of default occurs
and is continuing, the total principal amount on the date of notice of
acceleration shall automatically become immediately due and payable. The trustee
may require indemnity satisfactory to it before it enforces the indenture or the
notes. Subject to certain limitations, holders of a majority in principal amount
of the notes may direct the trustee in its exercise of any trust power. The
trustee may withhold from note holders notice of any default (except a default
in payment of amounts due) if it determines that withholding notice is in their
interests. We are required to file with the trustee annually an officers'
statement as to the absence of defaults in fulfilling any of our obligations
under the indenture.
Modifications of the Indenture
We and the trustee may amend the indenture without notice to any note
holder but with the written consent of the holders of a majority in principal
amount of the outstanding notes. However, without the consent of each note
holder affected, an amendment may not:
o reduce the amount of notes whose holders must consent to an
amendment;
o reduce the rate or change the time for payment of interest on any
note;
o reduce the principal of or change the fixed maturity of any note
(including, without limitation, the optional redemption
provisions or the repurchase right);
o make any note payable in money other than that stated in the
note;
o change the provisions of the indenture regarding the right of a
majority of the note holders to waive defaults under the
indenture or impair the right of a majority of the note holders
to waive defaults under the indenture or impair the right of any
note holder to institute suit for the enforcement of any payment
of principal and interest on the notes on and after their
respective due dates; or
o make any change that adversely affects the rights to convert any
note.
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Additionally, with the consent of the trustee but without the consent of the
holders of notes, we may amend or supplement the indenture to cure any
ambiguity, omission, defect or inconsistency, to reflect any merger,
consolidation or other transaction in which a supplemental indenture would be
required, to provide for certificated as well as uncertificated notes or to make
any change that does not adversely effect the rights of any holder.
Satisfaction and Discharge of Indenture
The indenture will be discharged and canceled upon the satisfaction of
certain conditions, including the payment of all the notes or the deposit with
the trustee of funds sufficient for the payment or redemption within not more
than six months prior to the maturity of the notes or within one year of
redemption of all of the notes.
Reports to Holder of Notes
We will regularly furnish to each holder of notes copies of the annual
report of stockholders, containing audited financial statements, and any other
financial reports which we furnish to our stockholders.
Trustee and Transfer Agent
The trustee and transfer agent for the notes is U.S. Bank Trust
National Association.
Listing
The notes are listed on the PORTAL Market. The common stock is listed
on the American Stock Exchange under the symbol "IVX."
Book Entry Delivery and Form
Upon the initial sale of notes offered hereby, each selling security
holder will be required to deliver a notice of the sale to the trustee and to
us. The notice will, among other things, identify the sale as a transfer
pursuant to the registration statement of which this prospectus forms a part,
certify that the prospectus delivery requirements, if any, of the Securities Act
have been satisfied, and certify that the selling security holder and the
aggregate principal amount of notes owned by such holder are identified in the
prospectus in accordance with the applicable rules and regulations under the
Securities Act.
Upon the initial transfer pursuant to the registration statement of
which this prospectus forms a part, the notes will be issued by on or more
global notes in fully registered form, without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Each global note will be
deposited with, on or on behalf of the Depository Trust Company and registered
in the name Cede & Co., as DTC's nominee. Except as set forth below, record
ownership of the global note may be transferred, in whole or in part, only to
another nominee of DTC or to a successor of DTC or its nominee.
Ownership of beneficial interests in the global note will be limited to
persons that have accounts with DTC ("participants") or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in the global note will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
depository for the global note. Ownership of beneficial interests in the global
note by persons that hold through participants will be shown on, and the
transfer of that ownership interest through the participant will be effected
only through, records maintained by the participant. These requirements and
procedures may impair the ability to transfer beneficial interests in the global
note.
Payment of all amounts due on notes represented by the global note will
be made to DTC or its nominee, as the case may be, as the sole holder of the
notes represented thereby for all purposes under the indenture. None of
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us, the trustee, any agent of ours or the trustee or the initial purchasers will
have any responsibility or liability for any aspect of DTC's records relating to
or payments made on account of beneficial ownership interests in the global note
or for maintaining, supervising or reviewing any of DTC's records relating to
the beneficial ownership interests.
We have been advised by DTC that, upon receipt of any payment on the
global note, DTC will immediately credit, on its book-entry registration and
transfer system, the accounts of participants with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global note as shown on the records of DTC. Payments by participants to
owners of beneficial interests in the global note held through the participants
will be governed by standing instructions and customary practices as is now the
case with securities held for customer accounts registered in "street name," and
will be the sole responsibility of the participants.
The global note may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC
or any nominee to a successor of DTC or a nominee of the successor. If DTC is at
any time unwilling or unable to continue as depository and a successor
depository is not appointed by us or DTC within 90 days, we will issue notes in
definitive form in exchange for the global note. In either instance, an owner of
a beneficial interest in the global note will be entitled to have notes equal in
principal amount to the beneficial interest registered in its name and will be
entitled to physical delivery of the notes in definitive form. Notes so issued
in definitive form will be issued in denominations of $1,000 and integral
multiples of $1,000 and will be issued in registered form only, without coupons.
Amounts due on the notes will be payable, and the notes may be presented for
registration of transfer or exchange, at the offices of the trustee.
So long as DTC for a global security, or its nominee, is the registered
owner of the global note, DTC or the nominee, as the case may be, will be
considered the sole holder of the notes represented by the global note for the
purposes of receiving payment on the notes, receiving notices and for all other
purposes under the indenture and the notes. Beneficial interests in notes will
be evidenced only by, and transfers of beneficial interests in the notes will be
effected only through, records maintained by DTC and its participants. Cede &
Co. has been appointed as the nominee of the depository. Except as provided
above, owners of beneficial interests in the global note will not be entitled to
and will not be considered the holders of beneficial interests in the global
note for any purposes under the indenture. Accordingly, any person owning a
beneficial interest in the global note must rely on the procedures of DTC, and,
if any person is not a participant, on the procedures of the participant through
which the person owns its interest, to exercise any rights of a holder under the
indenture. The indenture provides that DTC may grant proxies and otherwise
authorize participants to give or to take any request, demand, authorization,
direction, notice, consent, waiver or other action which a holder is entitled to
give or take under the indenture. We understand that under existing industry
practices, in the event that we request any action of holders or that an owner
of a beneficial interest in the global note desires to give or take any action
which a holder is entitled to give or take under the indenture, DTC would
authorize the participants holding the relevant beneficial interest to give or
take the action and the participants would authorize beneficial owners owning
through the participants to give or take the action or would otherwise act upon
the instructions of beneficial owners owning through them.
DTC has advised us that it is a limited-purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered under the Exchange Act. DTC was created
to hold the securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants in the securities
through electronic book-entry changes in accounts of the participants,
consequently eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers
(including the initial purchasers), banks, trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies, that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
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Beneficial interests in the global note may be exchanged for beneficial
interests in any other global security only in connection with a transfer of
such interest. These transfers are subject to compliance with customary
certification requirements which are described in the indenture.
Any beneficial interest in the global note that is exchanged for an
interest in any other global security will cease to be an interest in the global
note and will become an interest in the other global security. Accordingly, the
interest will after the exchange be subject to all transfer restrictions and
other procedures applicable to beneficial interests in the other global security
for as long as it remains such an interest. Any exchange of a beneficial
interest in the global note for a beneficial interest in any other global
security will be effected by the depository by means of an instruction
originated by the trustee through DTC's Deposit/Withdraw at Custodian system.
Accordingly, for any such exchange, appropriate adjustments will be made in the
records of the registrar to reflect a decrease in the principal amount of the
global note and a corresponding increase in the principal amount of the other
global security.
Payments of Principal and Interest
The indenture requires that all payments in respect of the notes held
of record by the Depository Trust Company, or DTC, (including notes evidenced by
the global securities) be made in same day funds. Payments in respect of the
notes held of record by holders other than DTC may, at our option, be made by
check and mailed to the holders of record as shown on the register for the
notes.
Registration Rights; Liquidated Damages
We and the initial purchasers of the notes entered into a Registration
Rights Agreement. Pursuant to the Registration Rights Agreement, we agreed to
file the registration statement of which this prospectus forms a part with the
SEC and to use our best efforts to cause it to be declared effective by the SEC.
Notwithstanding the foregoing, we will be permitted to prohibit offers and sales
of the notes and common stock pursuant to this prospectus under certain
circumstances and subject to certain conditions (any period during which offers
and sales are prohibited being referred to as a "Suspension Period"). We must
only maintain the effectiveness of the registration statement until the earlier
of (x) the date on which such note or underlying share of common stock has been
effectively registered under the Securities Act of 1933 and disposed of, whether
or not in accordance with the shelf registration statement, and (y) the date
which is two years after the later of May 11, 2000 and the last date that we or
any of our affiliates was the owner of such notes (or any predecessor thereto)
or such shorter period of time as permitted by Rule 144(k) under the Securities
Act or any successor provision thereunder.
If the registration statement ceases to be effective (without being
succeeded immediately by an additional registration statement filed and declared
effective) or usable for the offer and sale of transfer restricted securities
for a period of time (including any suspension period) which shall exceed 60
days in the aggregate in any 12-month period, we will pay liquidated damages to
each selling security holder. The amount of liquidated damages payable during
any period during which a registration default shall have occurred and be
continuing is that amount which is equal to one-quarter of one percent (25 basis
points) per annum per $1,000 principal amount and, if applicable, on an
equivalent basis per share of common stock (subject to adjustment in the event
of stock splits, stock recombinations, stock dividends and the like)
constituting transfer restricted securities for each 90-day period until the
registration statement again becomes effective or usable up to a maximum amount
of liquidated damages of three-quarters of one percent (75 basis points) per
annum per $1,000 principal amount of notes and, if applicable, on an equivalent
basis per share of common stock (subject to adjustment as set forth above)
constituting transfer restricted securities. All accrued liquidated damages
shall be paid to record holders entitled thereto by wire transfer of immediately
available funds or by federal funds check by us on each date on which interest
is payable on the notes or, if no notes are outstanding, as provided in the
Registration Rights Agreement. Following the cure of all registration defaults,
liquidated damages will cease to accrue with respect to that registration
default.
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We shall use our best efforts to cause the shelf registration statement
to be effective for a period of two years from the effective date thereof or
such shorter period that will terminate when each of the transfer restricted
securities covered by the shelf registration statement ceases to be a transfer
restricted security.
Governing Law
The indenture and, except as may otherwise be required by mandatory
provisions of law, notes will be governed by and construed in accordance with
the laws of the State of New York, without giving effect to its conflicts of
laws principles.
DESCRIPTION OF COMMON STOCK
We have the authority to issue 350,000,000 shares of common stock, par
value $0.10 per share. The holders of common stock are entitled to one vote per
share on all matters submitted to a vote of the shareholders. The holders of
common stock have equal, ratable rights to dividends from funds legally
available for dividends, when, as and if declared by the board of directors, and
are entitled to share ratably in all of the assets available for distribution to
holders of common stock upon the liquidation, dissolution or winding-up of our
affairs. Holders of common stock do not have preemptive, subscription or
conversion rights. Our articles of incorporation do not include any redemption
or sinking fund provisions. The outstanding shares of common stock are fully
paid and nonassessable. Our articles of incorporation do not provide for
cumulative voting by shareholders. Our common stock is listed on the American
Stock Exchange under the trading symbol "IVX."
DESCRIPTION OF COMMON STOCK PURCHASE RIGHTS
On December 19, 1997, our board of directors declared a dividend of one
common stock purchase right for each outstanding share of common stock. The
dividend was payable as of December 29, 1997 to shareholders of record on that
date. Each common stock purchase right entitles the registered holder to
purchase from us one-half (1/2) of a share of common stock at a price of $15 per
one-half (1/2) of a share (the "Exercise Price"), subject to certain
adjustments. The description and terms of the common stock purchase rights are
described and defined in that certain Rights Agreement (the "Rights Agreement")
between us and the rights agent named in the Rights Agreement. The common stock
purchase rights are not exercisable and are not certificated until the
distribution date. Until that time the common stock purchase rights will
automatically trade with the common stock. The common stock purchase rights will
expire at the close of business on December 18, 2007, unless earlier redeemed by
us. The number of shares of common stock issuable upon exercise of the common
stock purchase rights is subject to certain adjustments from time to time in the
event of a stock dividend on, or a subdivision or combination of, the common
stock. The Exercise Price for the common stock purchase rights is subject to
adjustment in the event of extraordinary distributions of cash or other property
to holders of common stock. Until a common stock purchase right is exercised,
the holder of a common stock purchase right will have no rights as a
shareholder, including, without limitation, the right to vote or to receive
dividends.
Distribution Date
Unless earlier redeemed by our board of directors, the common stock
purchase rights become exercisable upon the close of business on the
distribution date which is the earlier of:
o the tenth day following a public announcement that a person or
group of affiliated or associated persons, with certain
exceptions, has acquired beneficial ownership of 15% or more of
our outstanding voting stock (an "Acquiring Person") and
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o the tenth business day (or a later date as may be determined by
our board of directors) after the date of the commencement or
announcement of a person's or group's intention to commence a
tender or exchange offer, the completion of which would result in
the ownership of 15% or more of our outstanding voting stock.
Effect of Triggering Event
Unless the common stock purchase rights are earlier redeemed, in the
event that, after the time that a person becomes an Acquiring Person, we were to
be acquired in a merger or other business combination (in which any shares of
common stock are changed into or exchanged for other securities or assets) or
more than 50% of our and our subsidiaries' (taken as a whole) assets or earning
power were to be sold or transferred in one or a series of related transactions,
the Rights Agreement provides that proper provision will be made so that each
holder of record of a common stock purchase right will from and after such date
have the right to receive, upon payment of the Exercise Price, that number of
shares of common stock of the acquiring company having a market value at the
time of the transaction equal to two times the Exercise Price. In addition,
unless the common stock purchase rights are earlier redeemed, if a person or
group (with certain exceptions) becomes the beneficial owner of 15% or more of
our voting stock, the Rights Agreement provides that proper provision will be
made so that each holder of record of a common stock purchase right, other than
the Acquiring Person (whose common stock purchase rights will upon the event
become null and void), will after the event have the right to receive, upon
payment of the Exercise Price, that number of shares of common stock having a
market value at the time of the transaction equal to two times the Exercise
Price. The Rights Agreement also grants our board of directors the option, after
any person or group acquires beneficial ownership of 15% or more of the voting
stock but before there has been a 50% acquisition, to exchange one share of
common stock for each then valid common stock purchase right (which would
exclude common stock purchase rights held by the Acquiring Person that have
become void).
Redemption
At any time on or prior to the close of business on the tenth day after
the time that a person has become an Acquiring Person (or a later date as a
majority of our board of directors may determine), we may redeem the common
stock purchase rights in whole, but not in part, at a price of $.01 per common
stock purchase right (the "Redemption Price"). Immediately upon the effective
time of the action of our board of directors authorizing redemption of the
common stock purchase rights, the right to exercise the common stock purchase
rights will terminate and the only right of the holders of the common stock
purchase rights will be to receive the Redemption Price.
Amendment
For as long as the common stock purchase rights are redeemable, we may,
except for the Redemption Price or date of expiration of the common stock
purchase rights, amend the common stock purchase rights in any manner, including
an amendment to extend the time period in which the common stock purchase rights
may be redeemed. At any time when the common stock purchase rights are not
redeemable, we may amend the common stock purchase rights in any manner that
does not materially adversely affect the interests of holders of the common
stock purchase rights as holders of the common stock purchase rights.
Certain Effects of the Rights
The common stock purchase rights have certain anti-takeover effects. If
not redeemed, the common stock purchase rights will cause substantial dilution
to a person or group who attempts to acquire us on terms not approved by our
board of directors. The common stock purchase rights should not interfere with
any merger or other business combination approved by our board of directors
because we may redeem them at $.01 per common stock purchase right at any time
until the close of business on the tenth day (or a later date as described
above) after a person or group has obtained beneficial ownership of 15% or more
of our voting stock.
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CERTAIN PROVISIONS OF OUR ARTICLES OF INCORPORATION
AND BYLAWS AND FLORIDA LAW
We are subject to several anti-takeover provisions under Florida law
that apply to a public corporation organized under Florida law, unless the
corporation has elected to opt out of these provisions in its articles of
incorporation or bylaws. We have not elected to opt out of these provisions.
Accordingly, the common stock is subject to the "affiliated transactions" and
"control-share acquisition" provisions of the Florida Business Corporation Act.
These provisions require, subject to certain exceptions, that an "affiliated
transaction" be approved by the holders of two-thirds of the voting shares other
than those beneficially owned by an "interested shareholder" or by a majority of
disinterested directors and that voting rights be conferred on "control shares"
acquired in specified control share acquisitions generally only to the extent
conferred by resolution approved by the shareholders, excluding holders of
shares defined as "interested shares."
Florida law presently limits the personal liability of a corporate
director for monetary damages, except where the director:
o breaches his or her fiduciary duties and
o the breach constitutes or includes certain unlawful distributions
or certain other reckless, wanton or willful acts or misconduct.
Our bylaws provide an advance notice provision pursuant to which
nominations for election to the board of directors at a meeting of the
shareholders and business to be brought before an annual meeting of the
shareholders by shareholders must be given by written notice to the corporate
secretary, subject to certain exceptions, not less than 60 days and not more
than 90 days prior to the date of the meeting.
Certain United States Federal Income Tax Considerations
The following is a summary of certain material United States federal
income and estate tax considerations relating to the purchase, ownership and
disposition of the Notes and of Common Stock into which Notes may be converted,
but does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations promulgated thereunder ("Treasury Regulations"), judicial authority
and current administrative rulings and practice, all of which are subject to
change, possibly on a retroactive basis. This summary deals only with holders
that purchase Notes at their original issuance at their issue price. This
summary also deals only with holders that will hold Notes and Common Stock into
which Notes may be converted as "capital assets" (within the meaning of Section
1221 of the Code). This summary does not purport to deal with all aspects of
United States federal income or estate taxation that might be relevant to
particular holders in light of their personal investment circumstances or
status, nor does it address tax considerations applicable to investors that may
be subject to special tax rules, such as certain financial institutions,
tax-exempt organizations, S Corporations, insurance companies, broker-dealers,
dealers or traders in securities or currencies, expatriates subject to Code
Section 877 and taxpayers subject to the alternative minimum tax, and also does
not discuss Notes held as part of a hedge, straddle, "synthetic security" or
other integrated investment composed of a Note and one or more other
investments, or situations in which the functional currency of the holder is not
the United States dollar. Moreover, the effect of any applicable state, local or
foreign tax laws is not discussed. The Company has not sought any ruling from
the Internal Revenue Service (the "Service") with respect to the statements made
and the conclusions reached in the following summary, and there can be no
assurance that the Service will agree with such statements and conclusions. THE
FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY. INVESTORS CONSIDERING THE
PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
APPLICATION OF THE UNITED STATES FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR
PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF
ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX
TREATY.
The term "United States Holder" means a holder of a Note that is, for
United States federal income tax purposes, (A) a citizen or resident of the
United States, (B) a corporation created or organized under the laws of the
United States or of any political subdivision thereof, (C) an estate, the income
of which is subject to United States federal income taxation regardless of
source, or (D) a trust, if (x) a court within the United States is able to
exercise primary jurisdiction over its administration and one or more United
States persons have the authority to control all of its substantial decisions,
or (y), in the case of a trust that was treated as a domestic trust under the
law in effect before 1997, a valid election is in place under applicable United
States Treasury Regulations to treat such trust as a domestic trust. The term
"Non-United States Holder" means a holder of a Note that is neither a United
States Holder nor a partnership for United States federal income tax purposes.
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A partnership for United States federal income tax purposes is not
subject to the income tax on income derived from holding the Notes. A partner of
the partnership may be subject to tax on such income pursuant to rules similar
to the rules for United States Holders or Non-United States Holders depending on
whether (i) the partnership is a United States or a non-United States
partnership, (ii) the partner is a United States or a non-United States person,
and (iii) the partnership is or is not engaged in a United States trade or
business to which income or gain from the Notes is effectively connected.
United States Holders
Payment of Interest
Interest on a Note generally will be includable in the income of a
United States Holder as ordinary income at the time such interest is received or
accrued, in accordance with such United States Holder's method of accounting for
United States federal income tax purposes.
Market Discount and Acquisition Premium
A United States Holder (other than a United States Holder who
purchased the notes upon original issuance) may be considered to have acquired
its notes with "market discount" or "acquisition premium" as such phrases are
defined for United States federal income tax purposes. In this event, you are
advised to consult your tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the notes. The gain on the disposition
of a debt obligation acquired subsequent to its original issuance at a market
discount generally is treated as ordinary income, not capital gain, to the
extent of the "accrued market discount" as that term is defined below. This rule
is not applicable if the market discount at the time of acquisition of the debt
obligation is de minimis (less than 0.25 percent of the stated redemption price
of the note multiplied by the number of complete years remaining to maturity).
In the case of the notes, market discount would generally be the excess of:
o the issue price of the notes over
o the current holder's initial basis in the note.
The accrued market discount would be the amount calculated by
multiplying the market discount by a fraction:
o the numerator of which is the number of days the note has been
held by the holder, and
o the denominator of which is the number of days after the
holder's acquisition of the note up to and including the
maturity date.
If you have acquired note with "acquisition premium," i.e. at a price
in excess of its face amount, this premium is generally amortizable by
offsetting interest income, at your election, over the remaining term of the
trust preferred security.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange or redemption of a Note, a United States Holder
generally will recognize capital gain or loss equal to the difference between
(i) the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption (except to the extent such amount
is attributable to accrued and unpaid interest, which is treated as interest
subject to the rules discussed above under "Payment of Interest") and (ii) such
holder's adjusted tax basis in the Note. A United States Holder's adjusted tax
basis in a Note generally will equal the cost of the Note to such holder. Such
capital gain or loss will be long-term capital gain or loss if the United States
Holder's holding period in the Note is more than one year at the time of sale,
exchange or redemption.
Conversion of the Notes
A United States Holder generally will not recognize any income, gain or
loss upon conversion of a Note into Common Stock, except with respect to cash
received in lieu of a fractional share of Common Stock. Such holder's tax basis
in the Common Stock received on conversion of a Note will be the same as such
holder's adjusted tax basis in the Note at the time of conversion (reduced by
any basis allocable to a fractional share interest), and the holding period for
the Common Stock received on conversion will generally include the holding
period of the Note converted.
Cash received in lieu of a fractional share of Common Stock upon
conversion should be treated as a payment in exchange for the fractional share
of Common Stock. Accordingly, the receipt of cash in lieu of a fractional share
of Common Stock generally should result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the United
States Holder's adjusted tax basis in the fractional share).
Dividends on the Common Stock
The amount of any distribution by the Company in respect of the Common
Stock (including any liquidated damages in respect of Common Stock as described
above under "Description of Notes--Registration Rights") will be equal to the
amount of cash and the fair market value, on the date of distribution, of any
property distributed. Generally, distributions will be treated as a dividend,
subject to tax as ordinary income, to the extent of our current or accumulated
earnings and profits, then as a tax-free return of capital to the extent of the
holder's tax basis in the Common Stock, and thereafter as capital gain from the
sale or exchange of such stock, long-term or short-term depending on whether the
holder's holding period exceeds one year.
In general, a dividend distribution to a corporate United States Holder
will qualify for the 70% dividends received deduction if the holder owns less
than 20% of the voting power and value of our stock (other than any non-voting,
non-convertible, non-participating preferred stock). A corporate United States
Holder that owns 20% or more of the voting power and value of our stock (other
than any non-voting, nonconvertible, non-participating preferred stock)
generally will qualify for an 80% dividends received deduction. The dividends
received deduction is subject, however, to certain holding period, taxable
income and other limitations.
If at any time (i) we make a distribution of cash or property to our
stockholders or purchase Common Stock and such distribution or purchase would be
taxable to such stockholders as a dividend
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for United States federal income tax purposes (e.g., distributions of evidences
of indebtedness or assets of ours, but generally not stock dividends or rights
to subscribe for Common Stock) and, pursuant to the antidilution provisions of
the indenture, the conversion price of the Notes is decreased, or (ii) the
conversion price of the Notes is decreased at our discretion, such decrease in
conversion price may be deemed to be the payment of a taxable dividend to United
States Holders of Notes (pursuant to Section 305 of the Code) to the extent of
our current or accumulated earnings and profits. Such holders of Notes could
therefore have taxable income as a result of an event pursuant to which they
received no cash or property.
Sale of Common Stock
Upon the sale or exchange of Common Stock, a United States Holder
generally will recognize capital gain or loss equal to the difference between
(i) the amount of cash and the fair market value of any property received upon
the sale or exchange and (ii) such holder's adjusted tax basis in the Common
Stock. Such capital gain or loss will be long-term if the United States Holder's
holding period in the Common Stock is more than one year at the time of the sale
or exchange. A United States Holder's basis and holding period in Common Stock
received upon conversion of a Note are determined as discussed above under
"United States Holders--Conversion of the Notes."
Information Reporting and Backup Withholding Tax
In general, certain information is required to be reported by a payor
to the Service with respect to payments of principal, premium, if any, and
interest on a Note (including the payment of liquidated damages under the
Registration Rights Agreement), payments of dividends on Common Stock, payments
of the proceeds of the sale of a Note and payments of the proceeds of the sale
of Common Stock to certain noncorporate United States Holders. The payor will be
required to withhold backup withholding tax at the rate of 31% if (a) the payee
fails to furnish a taxpayer identification number to the payor or establish an
exemption from backup withholding, (b) the Service notifies the payor that the
taxpayer identification number furnished by the payee is incorrect, (c) there
has been a notified payee underreporting with respect to interest or dividends
described in Section 3406(c) of the Code or (d) there has been a failure of the
payee to certify under the penalty of perjury that the payee is not subject to
backup withholding under the Code. Any amounts withheld under the backup
withholding rules from a payment to a United States Holder will be allowed as a
credit against such holder's United States federal income tax liability and may
entitle the holder to a refund, provided that the required information is
furnished to the Service.
Non-United States Holders
Payment of Interest
Generally, interest income of a Non-United States Holder that is not
effectively connected with a United States trade or business is subject to a
withholding tax at a 30% rate (or, if applicable, a lower treaty rate). However,
interest paid on a Note by us or any paying agent to a Non-United States Holder
will qualify for the "portfolio interest exemption" (provided we are not a
"USRPHC" as defined below under "Non-United States Holders--FIRPTA Treatment of
Non-United States Holders") and therefore, subject to the discussion of backup
withholding below, will not be subject to United States federal income tax or
withholding tax, provided that such interest income is not effectively connected
with a United States trade or business of the Non-United States Holder and
provided that the Non-United States Holder (i) does not actually or
constructively own (pursuant to the conversion feature of the Notes or
otherwise) 10% or more of the combined voting power of all classes of our stock
entitled to vote, (ii) is not a controlled foreign corporation related to us
actually or constructively through stock ownership, (iii) is not a bank which
acquired the Notes in consideration for an extension of credit made pursuant to
a loan agreement entered into in the ordinary course of business and (iv) either
(a) provides a Form W-8 (or a suitable substitute or successor form) signed
under penalties of perjury that includes its name and address and certifies as
to
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its Non-United States status in compliance with applicable law and regulations,
or (b) is a securities clearing organization, bank or other financial
institution that holds customers' securities (including the Note) in the
ordinary course of its trade or business and provides a statement to us or our
agent under penalties of perjury in which it certifies that such a Form W-8 (or
a suitable substitute or successor form) has been received by it from the
Non-United States Holder or qualifying intermediary and furnishes us or our
agent with a copy thereof.
Treasury Regulations that become effective January 1, 2001 provide
alternative methods for satisfying the certification requirement described in
clause (iv) above. These Treasury Regulations also will require, in the case of
Notes held by a foreign partnership, that (i) the certification described in
clause (iv) above be provided by the partners rather than by the foreign
partnership (unless the foreign partnership agrees to become a "withholding
foreign partnership") and (ii) the partnership provide certain information,
including a United States taxpayer identification number. A look-through rule
will apply in the case of tiered partnerships.
Except to the extent that an applicable treaty otherwise provides, a
Non-United States Holder generally will be taxed in the same manner as a United
States Holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the Non-United States
Holder. Effectively connected interest received by a corporate Non-United States
Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate).
Even though such effectively connected interest is subject to income tax, and
may be subject to the branch profits tax, it is not subject to withholding tax
if the holder delivers a properly executed Internal Revenue Service Form W-8ECI
(or applicable successor form) to the payor.
Sale, Exchange or Redemption of the Notes
Subject to the discussion below under "FIRPTA Treatment of Non-United
States Holders," a Non-United States Holder of a Note will generally not be
subject to United States federal income tax or withholding tax on any gain
realized on the sale, exchange or redemption of the Note (including the receipt
of cash in lieu of fractional shares upon conversion of a Note into Common Stock
but not including any amount representing interest or accrued market discount)
unless (i) the gain is effectively connected with a United States trade or
business of the Non-United States Holder or (ii) in the case of a Non-United
States Holder who is an individual, such holder is present in the United States
for a period or periods aggregating 183 days or more during the taxable year of
the disposition and certain other requirements are met.
Conversion of the Notes
In general, no United States federal income tax or withholding tax will
be imposed upon the conversion of a Note into Common Stock by a Non-United
States Holder except with respect to the receipt of cash in lieu of fractional
shares by Non-United States Holders upon conversion of a Note where either of
the conditions described above under "Non-United States Holders--Sale, Exchange
or Redemption of the Notes" is satisfied.
Sale or Exchange of Common Stock
Subject to the discussion below under "Non-United States
Holders--FIRPTA Treatment of Non-United States Holders," a Non-United States
Holder generally will not be subject to United States federal income tax or
withholding tax on the sale or exchange of Common Stock unless either of the
conditions described above under "Non-United States Holders--Sale, Exchange or
Redemption of the Notes" is satisfied.
FIRPTA Treatment of Non-United States Holders
Under the Foreign Investment in Real Property Tax Act of 1980, as
amended ("FIRPTA"), foreign persons generally are subject to United States
federal income tax on capital gain realized on
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the disposition of any interest (other than solely as a creditor) in a
corporation that is a United States real property holding corporation (a
"USRPHC"). For this purpose, a foreign person is defined as any holder who is a
foreign corporation (other than certain foreign corporations that elect to be
treated as domestic corporations), a nonresident alien individual, a
non-resident fiduciary of a foreign estate or trust, or a foreign partnership.
Under FIRPTA, a corporation is a USRPHC if the fair market value of the United
States real property interests held by the corporation is 50% or more of the
aggregate fair market value of certain assets of the corporation.
We do not currently believe that we are a USRPHC. If we are not a
USRPHC, a Non-United States Holder will not be subject to United States federal
income tax imposed by FIRPTA on a sale or other disposition of the Notes or
shares of Common Stock. If we are a USRPHC, a Non-United States Holder generally
will not be subject to FIRPTA withholding on proceeds from a sale or other
disposition of Notes or Common Stock by reason of our USRPHC status unless the
holder's interest in the Notes or Common Stock exceeds the relevant threshold
described below.
Assuming the Common Stock is regularly traded, a Non-United States
Holder will not be subject to FIRPTA withholding on a sale or other disposition
of Common Stock unless such holder owns, actually or constructively, Common
Stock with a fair market value in excess of 5% of the fair market value of all
the Common Stock outstanding at any time during the shorter of the five-year
period preceding such disposition or the holder's holding period. In the case of
a sale or other disposition of Notes, the relevant ownership threshold depends
upon whether the Notes are regularly traded. If the Notes are not regularly
traded, a Non-United States Holder will be subject to FIRPTA withholding only if
on the date the holder acquired such Notes they had a fair market value greater
than 5% of the aggregate value of the outstanding Common Stock. If the Notes are
publicly traded, a holder will be subject to FIRPTA withholding only if such
holder owned more than 5% of the total fair market value of all the Notes
outstanding at any time during the shorter of the five-year period preceding
such disposition or the holder's holding period for such Notes.
We believe that the Common Stock will be treated as regularly traded.
Dividends
Distributions by us with respect to the Common Stock that are treated
as dividends paid (or deemed paid), as described above under "United States
Holders--Dividends on the Common Stock" to a Non-United States Holder (excluding
dividends that are effectively connected with the conduct of a trade or business
in the United States by such holder and are taxable as described below) will be
subject to United States federal withholding tax at a 30% rate (or lower rate
provided under any applicable income tax treaty). Except to the extent that an
applicable tax treaty otherwise provides, a Non-United States Holder will be
taxed in the same manner as a United States Holder on dividends paid (or deemed
paid) that are effectively connected with the conduct of a trade or business in
the United States by the Non-United States Holder. If such Non-United States
Holder is a foreign corporation, it may also be subject to a United States
branch profits tax on such effectively connected income at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. Even though
such effectively connected dividends are subject to income tax, and may be
subject to the branch profits tax, they will not be subject to United States
withholding tax if the holder delivers a properly executed Internal Revenue
Service Form W-8ECI (or applicable successor form) to the payor.
Under current Treasury Regulations, dividends paid to an address in a
foreign country are presumed to be paid to a resident of that country (unless
the payor has knowledge to the contrary) for purposes of the withholding
discussed above and, under the current interpretation of the Treasury
Regulations, for purposes of determining the applicability of a tax treaty rate.
Under Treasury Regulations that become effective for distributions after
December 31, 2000, however, a Non-United States Holder of Common Stock who
wishes to claim the benefit of an applicable treaty rate would be required to
satisfy applicable certification and other requirements. In addition, under
these Treasury
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Regulations, in the case of Common Stock held by a foreign partnership, the
certification requirement would generally be applied to the partners of the
partnership (unless the partnership agrees to become a "withholding foreign
partnership") and the partnership would be required to provide certain
information, including a United States taxpayer identification number. These
Treasury Regulations also provide look-through rules for tiered partnerships.
Death of a Non-United States Holder
A Note held by an individual who is a Non-United States Holder at the
time of his or her death will not be includable in the decedent's gross estate
for United States estate tax purposes, provided that such holder or beneficial
owner did not at the time of death directly or indirectly, actually or
constructively, own 10% or more of the combined voting power of all classes of
our stock entitled to vote, and provided that, at the time of death, payments
with respect to such Notes would not have been effectively connected with the
conduct by such Non-United States Holder of a trade or business within the
United States.
Common Stock actually or beneficially held (other than through a
foreign corporation) by a Non-United States Holder at the time of his or her
death (or previously transferred subject to certain retained rights or powers)
will be subject to United States federal estate tax unless otherwise provided by
an applicable estate tax treaty.
Information Reporting and Backup Withholding Tax
United States information reporting requirements and backup withholding
tax will not apply to payments on a Note to a Non-United States Holder if the
statement described in "Non-United States Holders--Payment of Interest" is duly
provided by such holder, provided that the payor does not have actual knowledge
that the holder is a United States person.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a Note or any payment of the
proceeds of the sale of Common Stock effected outside the United States by a
foreign office of a "broker" (as defined in applicable Treasury Regulations),
unless such broker is (i) a United States person, (ii) a foreign person that
derives 50% of more of its gross income for certain periods from activities that
are effectively connected with the conduct of a trade or business in the United
States, (iii) a controlled foreign corporation for United States federal income
tax purposes or (iv) (after December 31, 2000) a foreign partnership more than
50% of the capital or profits of which is owned by one or more United States
persons or which engages in a United States trade or business. Payment of the
proceeds of any such sale effected outside the United States by a foreign office
of any broker that is described in (i), (ii), (iii) or (iv) of the preceding
sentence will not be subject to backup withholding tax, but will be subject to
information reporting requirements unless such broker has documentary evidence
in its records that the beneficial owner is a Non-United States Holder and
certain other conditions are met, or the beneficial owner otherwise establishes
an exemption. Payment of the proceeds of any such sale to or through the United
States office of a broker is subject to information reporting and backup
withholding requirements, unless the beneficial owner of the Note provides the
statement described in "Non-United States Holders--Payment of Interest" or
otherwise establishes an exemption.
If paid to an address outside the United States, dividends on Common
Stock held by a Non-United States Holder will generally not be subject to the
information reporting and backup withholding requirements described in this
section, provided that the payor does not have actual knowledge that the holder
is a United States person. However, under the Treasury Regulations effective
with respect to payments made after December 31, 2000, dividend payments will be
subject to information reporting and backup withholding unless applicable
certification requirements are satisfied. For more information, see the
discussion above with respect to rules applicable to foreign partnerships under
the Treasury Regulations that become effective on January 1, 2001.
LEGAL MATTERS
Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., of Miami,
Florida, will issue an opinion about certain legal matters regarding the notes,
common stock, and common stock purchase rights for us.
EXPERTS
Our consolidated balance sheets as of December 31, 1998 and 1999 and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, to the extent and for the periods
indicated in their report with respect thereto and have been included in this
prospectus in reliance upon the authority of the firm as experts in accounting
and auditing in giving such reports.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses of IVAX Corporation
(the "Registrant") in connection with the sale and distribution of the
securities being registered, other than the underwriting discounts and
commissions. All amounts shown are estimated except for the Securities and
Exchange Commission registration fee.
SEC Registration Fee............................................... $ 66,000
AMEX Listing Fee................................................... $ 17,500
Legal Fees and Expenses............................................ $ 20,000
Accounting Fees and Expenses....................................... $ 5,000
Printing Expenses ................................................. $ 5,000
Miscellaneous Expenses............................................. $ 1,500
TOTAL FEES AND EXPENSES................................... $ 115,000
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0831 of the Florida Business Corporation Act (the "Florida
Act") provides that a director is not personally liable for monetary damages to
the corporation or any person for any statement, vote, decision or failure to
act regarding corporate management or policy, by a director, unless: (a) the
director breached or failed to perform his duties as a director; and (b) the
director's breach of, or failure to perform, those duties constitutes: (i) a
violation of criminal law unless the director had reasonable cause to believe
his conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which the director derived an improper
personal benefit, either directly or indirectly; (iii) a circumstance under
which the director is liable for an improper distribution; (iv) in a proceeding
by, or in the right of the corporation to procure a judgment in its favor or by
or in the right of a shareholder, conscious disregard for the best interest of
the corporation, or willful misconduct; or (v) in a proceeding by or in the
right of someone other than the corporation or a shareholder, recklessness or an
act or omission which was committed in bad faith or with malicious purpose or in
a manner exhibiting wanton or willful disregard of human rights, safety or
property.
Section 607.0850 of the Florida Act provides that a corporation shall
have the power to indemnify any person who was or is a party to any proceeding
(other than an action by, or in the right of, the corporation), by reason of the
fact that he is or was a director, officer or employee or agent of the
corporation, against liability incurred in connection with such proceeding if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Section 607.0850 also provides that a corporation shall have the
power to indemnify any person, who was or is a party to any proceeding by, or in
the right of, the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, against expenses and amounts paid in settlement not
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exceeding, in the judgment of the board of directors, the estimated expense of
litigating the proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including any
appeal thereof. Section 607.0850 further provides that such indemnification
shall be authorized if such person acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, except that no indemnification shall be made under this provision
in respect of any claim, issue, or matter as to which such person shall have
been adjudged to be liable unless, and only to the extent that, the court in
which such proceeding was brought, or any other court of competent jurisdiction,
shall determine upon application that, despite the adjudication of liability,
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which court shall deem
proper. Section 607.0850 further provides that to the extent that a director,
officer, employee or agent has been successful on the merits or otherwise in
defense of any of the foregoing proceedings, or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith. Under Section 607.0850, any
indemnification under the foregoing provisions, unless pursuant to a
determination by a court, shall be made by the corporation only as authorized in
the specific case upon a determination that the indemnification of the director,
officer, employee or agent is proper under the circumstances because he has met
the applicable standard of conduct. Notwithstanding the failure of a corporation
to provide such indemnification, and despite any contrary determination by the
corporation in a specific case, a director, officer, employee or agent of the
corporation who is or was a party to a proceeding may apply for indemnification
to the appropriate court and such court may order indemnification if it
determines that such person is entitled to indemnification under the applicable
standard.
Section 607.0850 also provides that a corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of Section 607.0850.
The Registrant's bylaws provide that it shall indemnify its officers
and directors and former officers and directors to the full extent permitted by
law.
The Registrant has entered into indemnification agreements with each of
its officers and directors. The indemnification agreements generally provide
that the Registrant will pay certain amounts incurred by an officer or director
in connection with any civil or criminal action or proceeding and specifically
including actions by or in the name of the Registrant (derivative suits) where
the individual's involvement is by reason of the fact that he was or is an
officer or director. Under the indemnification agreements, an officer or
director will not receive indemnification if such person is found not to have
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Registrant. The agreements provide a number
of procedures and presumptions used to determined the officer's or director's
right to indemnification and include a requirement that in order to receive an
advance of expenses, the officer or director must submit an undertaking to repay
any expenses advanced on his behalf that are later determined he was not
entitled to receive.
The Registrant's directors and officers are covered by insurance
policies indemnifying them against certain liabilities, including liabilities
under the federal securities laws (other than liability under Section 16(b) of
the Exchange Act), which might be incurred by them in such capacities.
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ITEM 16. EXHIBITS
The following exhibits either are filed herewith or incorporated by
reference to documents previously filed or will be filed by amendment, as
indicated below:
Exhibits Description
-------- -----------
4.1 Indenture, dated as of May 12, 2000, between the
Registrant and U.S. Bank Trust, National Association, as
Trustee.
4.2 Form of 5.5% Convertible Senior Subordinated Notes due
2007 in Global Form (included as Exhibit A to Exhibit
4.1 hereto).
4.3 Registration Rights Agreement dated as of May 12, 2000
by and between the Registrant and UBS Warburg L.L.C. and
ING Barings L.L.C.
4.4 Rights Agreement dated December 19, 1997, between the
Registrant and ChaseMellon Shareholder Services, L.L.C.
with respect to the IVAX Corporation Shareholder Rights
Plan (incorporated by reference to exhibit 4.3 to IVAX
Corporation's Annual Report on Form 10-K for the year
ended December 31, 1999 filed on March 30, 2000).
5 Opinion of Stearns Weaver Miller Weissler Alhadeff &
Sitterson, P.A.
12 Statement regarding Computation of Ratio of Earnings to
Fixed Charges.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Stearns Weaver Miller Weissler Alhadeff &
Sitterson, P.A. (included in Exhibit 5).
24 Power of Attorney (included on signature page hereto).
25 Form T-1: Statement of Eligibility of U.S. Bank Trust
National Association to act as trustee under the
Indenture.
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-
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<PAGE>
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 Securities and Exchange
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a 20 % 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 the information required to be included in a
post-effective amendment by paragraphs (a)(1)(i) and (a)(1)(ii) above may be
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or 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 post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 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
Securities Act of 1933 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 their 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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<PAGE>
(e) The undersigned Registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the Trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act (the "Act") in
accordance with the rules and regulations prescribed by the Securities and
Exchange Commission under Section 305(b)(2) of the Act.
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<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 Miami, State of Florida, on the 7th day of August,
2000.
IVAX CORPORATION
By: /s/ Phillip Frost, M.D.
-------------------------------
Phillip Frost, M.D.
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Thomas E. Beier his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, to act for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments, including, without limitation, any
post-effective amendments, to this Registration Statement, and to file each of
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in order to effectuate
the same as fully, to all intents and purposes, as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or any of them, or their or his substitutes or resubstitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by each of the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/Phillip Frost, M.D. Chairman of the Board, Chief August 7, 2000
-------------------------- Executive Officer
Phillip Frost, M.D. (Principal Executive Officer)
and Director
/s/Thomas E. Beier Senior Vice President - Finance August 7, 2000
-------------------------- and Chief Financial Officer
Thomas E. Beier (Principal Financial Officer)
/s/Thomas E. McClary Vice President - Accounting August 7, 2000
-------------------------- (Principal Accounting Officer)
Thomas E. McClary
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<PAGE>
/s/Mark Andrews Director August 7, 2000
--------------------------
Mark Andrews
/s/Ernest Biekert, Ph.D. Director August 7, 2000
--------------------------
Ernest Biekert, Ph.D.
/s/Charles M. Fernandez Director August 7, 2000
--------------------------
Charles M. Fernandez
/s/Jack Fishman, Ph.D. Director August 7, 2000
--------------------------
Jack Fishman, Ph.D.
/s/Neil Flanzraich Director, President and August 7, 2000
-------------------------- Vice Chairman of the Board
Neil Flanzraich
/s/Jane Hsiao, Ph.D. Director, Vice-Chairman of August 7, 2000
-------------------------- the Board, Chief Technical
Jane Hsiao, Ph.D. Officer
Director and Deputy Chief
-------------------------- Executive Officer
Isaac Kaye
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<PAGE>
INDEX TO EXHIBITS
Exhibits Description
-------- -----------
4.1 Indenture dated as of May 12, 2000 between the
Registrant and U.S. Bank Trust, National Association, as
Trustee.
4.2 Form of 5.5% Convertible Senior Subordinated Notes due
2007 in Global Form (included as Exhibit A to Exhibit
4.1 hereto).
4.3 Registration Rights Agreement dated as of May 12, 2000
by and between the Registrant and UBS Warburg L.L.C. and
ING Barings L.L.C.
5 Opinion of Stearns Weaver Miller Weissler Alhadeff &
Sitterson, P.A.
12 Statement regarding Computation of Ratio of Earnings to
Fixed Charges.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Stearns Weaver Miller Weissler Alhadeff &
Sitterson, P.A. (included in Exhibit 5).
24 Power of Attorney (included on signature page hereto).
25 Form T-1: Statement of Eligibility of U.S. Bank Trust
National Association to act as trustee under the
Indenture.
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