As filed with the Securities and Exchange Commission on July 16, 1996
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ICN PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0628076
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
3300 Hyland Avenue
Costa Mesa, California 92626
(714) 545-0100
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Copies To:
David C. Watt
Executive Vice President, General Counsel and Corporate Secretary
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
(714) 545-0100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Approximate date of commencement of proposed sale to the public:
From time to time 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,
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. [ ]
<TABLE>
Calculation of Registration Fee
<CAPTION>
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Title of Each
Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered (1) Registered (1) Share (2) Price (2) Registration Fee (2)
- ------------------ ------------------ ------------------ ------------------ ---------------------
<S> <C> <C> <C> <C>
Common Stock, 233,274 $23.06 $5,379,298.44 $1,854.93
$.01 par value
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<FN>
(1) Also includes associated Preferred Stock Purchase Rights.
(2) The offering price per share is estimated pursuant to Rule
457(c) solely for the purpose of calculating the
registration fee and is based upon the average of the high
and low price of shares of Common Stock as reported on the
New York Stock Exchange on July 9, 1996 (which date is
within five business days prior to the date of the filing
of this Registration Statement).
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
REDHERRING
Information contained herein is subject to completion or
amendment. A Registration Statement relating to these securities
has been filed with the Securities and Exchange Commission.
These Securities may not be sold nor may offers to buy be
accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
Subject to Completion, Dated July 16 ,1996
PROSPECTUS
ICN PHARMACEUTICALS, INC.
233,274 SHARES OF COMMON STOCK
This Prospectus relates to 233,274 shares (the "Shares") of
Common Stock, $ .01 par value, including associated Preferred
Stock Purchase Rights (the "Common Stock), of ICN Pharmaceuticals,
Inc., a Delaware corporation (the "Company" or "ICN"), that may
from time to time be sold by the Stockholders identified herein
(the "Selling Stockholders"). The Company will not receive any
of the proceeds from the sale of the Shares. However, under
certain circumstances, the Selling Stockholders will be required
to pay to the Company the amount, if any, by which the proceeds
from the sale of their Shares exceeds certain agreed upon price
thresholds. Conversely, under certain circumstances, the Company
will be required to pay each Selling Stockholder the amount, if
any, by which the proceeds from the sale of such Selling
Stockholders Shares is less than certain agreed upon price
thresholds. The Company has agreed to bear all expenses (other
than selling commissions and fees and expenses of counsel and
other advisors to the Selling Stockholders) in connection with the
registration and sale of the Shares being offered by the Selling
Stockholders. See "Selling Stockholders" and "Plan of
Distribution."
The Shares may be sold from time to time by the Selling
Stockholders or, in certain cases, by transferees or assignees.
Such sales may be made in the over - the - counter market, on the
New York Stock Exchange or other exchanges (if the Common Stock is
listed for trading thereon), or otherwise at prices and at terms
then prevailing, at prices related to the then current market
price or at negotiated prices. The Shares may be sold by any one
or more of the following methods: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker
or dealer as principal and resale by such broker or dealer for its
account; (c) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and (d) privately negotiated
transactions. In addition, any Shares that qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this Prospectus.
The Shares covered by this Prospectus were originally issued
in private placements made by the Company under Rule 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), in
connection with the acquisitions by the Company of (i) 40% of the
outstanding common stock of SeaLite Sciences, Inc. ("SeaLite"),
the owner of patented diagnostic technology which can be used to
produce extremely sensitive test kits, in December 1995 and (ii)
all the outstanding common stock of Gly-Derm, Inc. ("Gly-Derm"), a
Michigan based skin care company, in February 1996. The
acquisition of Gly-Derm, together with the consummated and
proposed acquisitions discussed under "Recent Developments," do
not, individually or in the aggregate, constitute the acquisition
of significant businesses as defined by Regulation S-X promulgated
by the Securities and Exchange Commission (the "Commission").
The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act and any commissions
received by such broker-dealers, agents or underwriters and any
profit on the resale of the Shares purchased by them may be deemed
to be underwriting commissions or discounts under the Securities
Act.
The Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "ICN." On July 15, 1996, the closing
sale price per share, as reported by the NYSE, was $23.25.
AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is July __, 1996.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy
statements and other information with the Commission. Such
reports, proxy statements and other information filed by the
Company may be inspected and copies obtained (at prescribed
rates) at the public reference facilities maintained by the
Commission in Washington, D.C. at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the Commission's
Regional Offices in New York, at 7 World Trade Center 13th Floor,
New York, New York 10048 and in Chicago, at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can be obtained (at prescribed rates), by
writing to the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549. Such material can
also be inspected at the NYSE, 20 Broad Street, New York, New
York 10005, on which the Common Stock is listed.
This Prospectus is part of a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") filed by the Company with the
Commission under the Securities Act with respect to the Shares.
This Prospectus does not contain all the information set forth or
incorporated by reference in the Registration Statement and the
exhibits and schedules relating thereto, certain portions of
which have been omitted as permitted by the Commission's rules
and regulations. For further information with respect to the
Company and the Shares offered hereby, reference is made to the
Registration Statement and the exhibits thereto which are on file
at the offices of the Commission and may be obtained upon payment
of the fee prescribed by the Commission as described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following reports and documents filed by the Company
with the Commission pursuant to the Exchange Act are incorporated
into this Prospectus by reference as of their respective dates:
1. Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 as amended by Form 10-K/A-
1, dated April 29, 1996.
2. Quarterly Report on Form 10-Q for the three months
ended March 31, 1996.
3. The description of the Common Stock and associated
Preferred Stock Purchase Rights contained in the
Registration Statement on Form 8-A, dated November
10, 1994.
All reports and other documents filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the
termination of the offering of the Shares pursuant to this
Prospectus (this "Offering") shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the
date of filing of such reports and documents. Any statement
contained herein or in a report or document incorporated or
deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently
filed report or document that is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
The making of a modifying or superseding statement shall not
be deemed an admission for any purpose that the modified or
superseded statement, when made, constituted a misrepresentation,
an
untrue statement of a material fact or an omission to state
a material fact that is required to be stated or that is
necessary to make a statement not misleading in light of the
circumstances in which it was made.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, ON THE REQUEST OF
SUCH PERSON, A COPY OF ANY OR ALL OF THE REPORTS AND DOCUMENTS
INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS THERETO,
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH REPORTS OR DOCUMENTS). WRITTEN REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO DAVID C. WATT, EXECUTIVE VICE
PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY, ICN
PHARMACEUTICALS, INC., 3300 HYLAND AVENUE, COSTA MESA, CALIFORNIA
92626. TELEPHONE INQUIRIES MAY BE DIRECTED TO DAVID C. WATT AT
(714) 545-0100.
THE COMPANY
On November 1, 1994, the stockholders of ICN
Pharmaceuticals, Inc. ("Old ICN"), SPI Pharmaceuticals, Inc.
("SPI"), Viratek, Inc. ("Viratek"), and ICN Biomedicals, Inc.
("Biomedicals") (collectively, the "Predecessor Companies")
approved the combination of the Predecessor Companies ("the
Merger"). On November 10, 1994, SPI, Old ICN and Viratek merged
into ICN Merger Corp., and Biomedicals merged into ICN Subsidiary
Corp., a wholly-owned subsidiary of ICN Merger Corp. In
conjunction with the Merger, ICN Merger Corp. was renamed ICN
Pharmaceuticals, Inc. For accounting purposes, SPI is the
acquiring company and as a result, the Company reports the
historical financial data of SPI in its financial results.
Subsequent to the Merger, the results of the Company include the
combined operations of all Predecessor Companies.
ICN is a multinational research-based pharmaceutical company
that develops, manufactures, distributes and sells
pharmaceutical, nutrition, research and diagnostic products. The
Company pursues a strategy of international expansion which
includes (i) research and development of proprietary products
with the potential to be significant contributors to the
Company's global operations; (ii) penetration of major
pharmaceutical markets by means of targeted acquisitions; and
(iii) expansion in these major markets through the development or
acquisition of pharmaceutical products that meet the particular
needs of each market.
The Company distributes and sells a broad range of
prescription and over-the-counter pharmaceutical and nutritional
products in over 60 countries worldwide, primarily in North
America, Latin America, Western Europe and Eastern Europe. These
pharmaceutical products treat viral and bacterial infections,
diseases of the skin, myasthenia gravis, cancer, cardiovascular
disease, diabetes and psychiatric disorders. The Company's
leading product is the broad spectrum antiviral agent ribavirin,
which is marketed in the United States, Canada and most of Europe
under the trade name Virazole(registered trademark).
Virazole(registered trademark) is currently approved for
commercial sale in over 40 countries for one or more of a variety
of viral infections, including respiratory syncytial virus
("RSV"), herpes simplex, influenza, chicken pox, hepatitis and
HIV. In the United States, Virazole(registered trademark) is
approved only for use in hospitalized infants and young children
with severe lower respiratory infections due to RSV.
The Company believes it has substantial opportunities to
realize growth from its internally developed compounds. These
compounds are the result of significant investments in its
research and development activities related to nucleic acids
conducted over three decades. The Company believes that the
approval of Virazole(registered trademark) for the treatment of
chronic hepatitis C would be important to the Company because of
the potential size of the chronic hepatitis C market both in the
United States and abroad. On June 1, 1994, a New Drug
Application ("NDA") was filed with the United States Food and
Drug Administration (the "FDA") for the use of
Virazole(registered trademark) for the treatment of chronic
hepatitis C in the United States. Similar applications for
approval to market Virazole(registered trademark) for chronic
hepatitis C were filed in the European Union, Canada, Sweden,
Norway, Finland, Australia and New Zealand. Following the
submission of the NDA, the FDA raised serious questions regarding
the safety and efficacy of Virazole(registered trademark).
Similar questions were raised by foreign reviewers.
Subsequently, the Company withdrew its NDA for
Virazole(registered trademark) and the applications for
Virazole(registered trademark) submitted in other world markets.
On July 28, 1995, the Company entered into an agreement
(described below) with a subsidiary of Schering-Plough
Corporation (collectively with such subsidiary, "Schering") to
license ribavirin (Virazole(registered trademark)) as a treatment
for chronic hepatitis C in combination with Schering's alpha
interferon (the "Combination Therapy"). The FDA subsequently
approved a protocol for the testing of the Combination Therapy,
and Schering is currently conducting Phase III clinical trials of
the Combination Therapy. To obtain FDA approval of
Virazole(registered trademark) for use in Combination Therapy,
the Company and Schering must demonstrate that Combination
Therapy is safer and more effective in treating chronic hepatitis
C than alpha interferon alone. Schering is also testing the
Combination Therapy pursuant to protocols approved by the
European Union. The Company continues to believe that
Virazole(registered trademark) has potential in the treatment of
hepatitis C in Combination Therapy and is taking all steps
necessary to capitalize on its full potential.
Pursuant to an Exclusive License and Supply Agreement (the
"License Agreement") with Schering, the Company licensed
ribavirin to Schering for use in Combination Therapy. The
License Agreement provided the Company an initial non-refundable
payment by Schering of $23,000,000, and future royalty payments
to the Company for marketing of ribavirin, including certain
minimum royalty rates. Schering will have exclusive marketing
rights for ribavirin for hepatitis C worldwide, except that the
Company will retain the right to co-market the drug in the
countries of the European Union. In addition, Schering will
purchase up to $42,000,000 in Common Stock upon the achievement
of certain regulatory milestones. Under the License Agreement,
Schering will be responsible for all clinical developments
worldwide.
The Company believes it is positioned to expand its presence
in the pharmaceutical markets in Eastern Europe. In 1991, a 75%
interest was acquired in Galenika Pharmaceuticals, a large drug
manufacturer and distributor in Yugoslavia. Galenika
Pharmaceuticals was subsequently renamed ICN Galenika
("Galenika"). This acquisition added new products and
significantly expanded the sales volume of the Company. With the
investment in Galenika Pharmaceuticals, the Company became one of
the first Western pharmaceutical companies to establish a direct
investment in Eastern Europe. Galenika continues to be a
significant part of the Company's operations although its sales
and profitability have, at times, been substantially diminished
owing principally to the imposition of sanctions on Yugoslavia by
the United Nations. However, in December 1995, the United
Nations Security Council adopted a resolution that suspended
economic sanctions imposed on the Federal Republic of Yugoslavia
since May of 1992. The suspension of economic sanctions has
enabled Galenika to resume exporting certain of its product lines
to Russia, other Eastern Europe Markets, Africa, the Middle East
and the Far East. Additionally, during 1995, in pursuing its
Eastern Europe expansion strategy, the Company acquired a 75%
interest in Oktyabr, a pharmaceutical company in the Russian
Republic.
In addition to its pharmaceutical operations, the Company
also develops, manufacturers and sells a broad range of research
chemical products, diagnostic reagents and radiation monitoring
services. The Company markets these products internationally to
major scientific, academic, health care and governmental
institutions through catalog and direct mail marketing programs.
The principal executive offices of the Company are located
at 3300 Hyland Avenue, Costa Mesa, California 92626. The
telephone number at such address is (714) 545-0100.
RISK FACTORS
AN INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK
AND MAY NOT BE APPROPRIATE FOR INVESTORS WHO CANNOT AFFORD TO
LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE PURCHASERS OF THE
SHARES SHOULD BE FULLY AWARE OF THE RISK FACTORS SET FORTH
HEREIN. THIS PROSPECTUS CONTAINS OR INCORPORATES STATEMENTS THAT
CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THOSE
STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS PROSPECTUS AND IN
THE DOCUMENTS INCORPORATED BY REFERENCE AND MAY INCLUDE
STATEMENTS REGARDING, AMONG OTHER MATTERS, THE COMPANY'S GROWTH
OPPORTUNITIES, THE COMPANY'S ACQUISITION STRATEGY, REGULATORY
MATTERS PERTAINING TO GOVERNMENTAL APPROVAL OF THE MARKETING OR
MANUFACTURING OF CERTAIN OF THE COMPANY'S PRODUCTS AND OTHER
FACTORS AFFECTING THE COMPANY'S FINANCIAL CONDITION OR RESULTS OF
OPERATIONS. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH
FORWARD LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO
DIFFER MATERIALLY FROM THE FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED IN SUCH FORWARD LOOKING KNOWN
AND UNKNOWN STATEMENTS. SUCH FACTORS INCLUDE THE VARIOUS RISK
FACTORS DESCRIBED BELOW.
DEPENDENCE ON FOREIGN OPERATIONS
Approximately 75% and 75% of the Company's net sales for
1995 and the three months ended March 31, 1996, respectively,
were generated from operations outside the United States. The
Company operates directly and through distributors in North
America, Latin America (principally Mexico), Western Europe and
Eastern Europe and through distributors elsewhere in the world.
Foreign operations are subject to certain risks inherent in
conducting business abroad, including possible nationalization or
expropriation, price and exchange controls, limitations on
foreign participation in local enterprises, health-care
regulation and other restrictive governmental actions. Changes
in the relative values of currencies take place from time to time
and may materially affect the Company's results of operations.
Their effects on the Company's future operations are not
predictable.
RISK OF OPERATIONS IN YUGOSLAVIA
Galenika represents a material part of the Company's
business. Approximately 46% and 45% of the Company's net sales
for 1995 and the three months ended March 31, 1996, respectively,
were from Galenika. In addition, approximately 49% and 36% of
the Company's operating income for 1995 and the three months
ended March 31, 1996, respectively, were from Galenika. The
current political and economic circumstances in Yugoslavia create
certain business risks particular to that country. Between May
1992 and December 1995, Yugoslavia had been operating under
sanctions imposed by the United Nations which had severely
limited the ability to import raw materials for manufacturing and
had prohibited all exports. While the sanctions were suspended
in December 1995, certain risks such as hyperinflation, currency
devaluations, wage and price controls and potential government
action could continue to have a material adverse effect on the
Company's results of operations.
Galenika is subject to price controls in Yugoslavia. The
size and frequency of government-approved price increases are
influenced by local inflation, devaluations, cost of imported raw
materials and demand for Galenika products. During 1995,
Galenika received fewer price increases than in the past due to
lower relative levels of inflation. As inflation increases, the
size and frequency of price increases are expected to increase.
Price increases obtained by Galenika are based on economic events
preceding such an increase and not on expectations of ongoing
inflation. A lag in approved price increases could reduce the
gross margins that Galenika receives on its products. Although
the Company expects that Galenika will limit sales of products
that have poor margins until an acceptable price increase is
received, the impact of an inability to obtain adequate price
increases in the future could have an adverse impact on the
Company as a result of declining gross profit margins or
declining sales in an effort to maintain existing gross margin
levels.
RISK OF OPERATIONS IN EASTERN EUROPE AND RUSSIA
The Company has an investment in Russia through its 75%
interest in the Russian pharmaceutical company Oktyabr. The
Company has purchased a 40% investment in a U.S. Company which
formed a joint venture with a joint stock company in Kazakhstan
to convert a former Soviet scientific production complex in
Kazakhstan into a pharmaceutical manufacturing and distribution
plant and also acquired a 72.4% interest in Lekstredstva, a
Russian pharmaceutical company. In addition, the Company
recently won a competitive bid to purchase up to a 59% interest
in Alkaloida Chemical Co., a Hungarian state-owned pharmaceutical
company. The Company is also considering several other strategic
acquisitions and investments in Eastern Europe. Although the
Company believes that investment in Russia and Eastern Europe
offers access to growing world markets, the economic and
political conditions in such countries are unstable. See "Recent
Developments."
NO ASSURANCE OF SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION
OF FUTURE PRODUCTS
The Company's future growth will depend, in large part, upon
its ability to develop or obtain and commercialize new products
and new formulations of or indications for current products. The
Company is engaged in an active research and development program
involving compounds owned by the Company or licensed from others
which the Company may, in the future, desire to develop
commercially. There can be no assurance that the Company will be
able to develop or acquire new products, obtain regulatory
approvals to use such products for proposed or new clinical
indications in a timely manner, manufacture its potential
products in commercial volumes or gain market acceptance for such
products. In addition, the Company may require financing over
the next several years to fund costs of development and
acquisitions of new products and, if Virazole(registered
trademark) is approved for treatment of chronic hepatitis C in
Combination Therapy (for which there can be no assurance), to
expand the production and marketing of Virazole(registered
trademark) in the countries of the European Union where the
Company has retained marketing rights under the License
Agreement. It may be desirable that the Company enter into
licensing arrangements with other pharmaceutical companies in
order to market effectively any new products or new indications
for existing products such as the License Agreement with Schering
for the marketing of Virazole(registered trademark) for
Combination Therapy (if approved). There can be no assurance
that the Company will be successful in raising such additional
capital or entering into such marketing arrangements, if
required, or that such capital will be, raised, or such marketing
arrangements will be, on terms favorable to the Company.
LIMITED PATENT PROTECTION
The Company may be dependent on the protection afforded by
its patents relating to Virazole(registered trademark) and no
assurance can be given as to the breadth or degree of protection
which these patents will afford the Company. The Company has
patent rights in the United States expiring in 1999 relating to
the use of Virazole(registered trademark) to treat specified
human viral diseases. If future development of
Virazole(registered trademark) in Combination Therapy is
successful and approval is granted in the United States, an
additional award of exclusivity will be granted of up to three
years from date of approval (Waxman-Hatch Act); however, there
can be no assurance that such development will be successful or
that such approval will be obtained. While the Company has
patents in certain foreign countries covering use of
Virazole(registered trademark) in the treatment of certain
diseases, which coverage and expiration varies and which patents
expire at various times through 2006, the Company has no, or
limited, patent rights with respect to Virazole(registered
trademark) and/or its use in certain foreign countries where
Virazole(registered trademark) is currently, or in the future may
be, approved for commercial sale, including France, Germany and
Great Britain. However, the Company and Schering intend to file
applications for approval of Combination Therapy through a
centralized procedure in the European Union (which includes
France, Germany and Great Britain). If such approval is granted,
the Company and Shering would be afforded either six or ten years
(depending upon the particular country) of protection for the
Combination Therapy against competition . There can be no
assurance that the loss of the Company's patent rights with
respect to Virazole(registered trademark) upon expiration of the
Company's patent rights in the United States, Europe and
elsewhere will not result in competition from other drug
manufacturers or will not otherwise have a significant adverse
effect upon the business and operations of the Company.
As a general policy, the Company expects to seek patents,
where available, on inventions concerning novel drugs,
techniques, processes or other products which it may develop or
acquire in the future. However, there can be no assurance that
any patents applied for will be granted, or that, if granted,
they will have commercial value or as to the breadth or the
degree of protection which these patents, if issued, will afford
the Company. The Company intends to rely substantially on its
unpatented proprietary know-how, but there can be no assurance
that others will not develop substantially equivalent proprietary
information or otherwise obtain access to the Company's know-how.
Patents for pharmaceutical compounds are not available in certain
countries in which the Company markets its products.
Marketing approvals in certain foreign countries provide an
additional level of protection for products approved for sale in
such countries.
UNCERTAIN IMPACT OF ACQUISITION PLANS
The Company intends aggressively to continue its strategy of
targeted expansion through the acquisition of compatible
businesses and product lines and the formation of strategic
alliances, joint ventures and other business combinations.
Should the Company complete any material acquisition, the
Company's success or failure in integrating the operations of the
acquired company may have a material impact on the future growth
or success of the Company. See "Recent Developments."
POTENTIAL LITIGATION EXPOSURE
ICN is a defendant in various lawsuits including certain
consolidated class action lawsuits alleging, among other things,
violations of federal securities laws. The plaintiffs in these
lawsuits allege that ICN made, or aided and abetted other
defendants in making, misrepresentations of material facts and
omitted to state material facts concerning the business,
financial condition and future prospects of the Company,
primarily concerning developments regarding Virazole(registered
trademark), including statements made in the 1980's concerning
the efficacy and safety of the drug and the market for the drug
in the treatment of AIDS and AIDS related diseases, and
statements made in 1994 and 1995 concerning the Company's NDA for
the use of Virazole(registered trademark) for the treatment of
chronic hepatitis C (the "Hepatitis C NDA").
The Commission is conducting a private investigation (the
"Commission Investigation") with respect to certain matters
pertaining to the status and disposition of the Hepatitis C NDA,
including whether, during the period June 1994 through February
1995, the Company, persons or entities associated with it and
others (including Mr. Milan Panic, Chairman, President and Chief
Executive Officer of the Company), in the offer and sale or in
connection with the purchase and sale of Common Stock, engaged in
possible violations of federal securities laws, by having
possibly: (i) made false or misleading statements or omitted
material facts with respect to the status and disposition of the
Hepatitis C NDA; (ii) purchased or sold Common Stock while in
possession of material, non-public information concerning the
status and disposition of the Hepatitis C NDA; or (iii) conveyed
material, non-public information concerning the status and
disposition of the Hepatitis C NDA, to other persons who may have
purchased or sold Common Stock. The Company is cooperating with
the Commission in its investigation.
The Company has received a Subpoena (the "Subpoena") from a
Grand Jury in the United States District Court, Central District
of California requesting the production of documents covering a
broad range of matters over various time periods. The Company
and Milan Panic are subjects of the investigation. The Company
is cooperating with the production of documents pursuant to the
Subpoena.
DEPENDENCE ON KEY PERSONNEL
The Company believes that its continued success will depend
to a significant extent upon the efforts and abilities of its
management, including Milan Panic, its Chairman, President and
Chief Executive Officer. The loss of their services could have a
material adverse effect on the Company. The Company cannot
predict what effect, if any, the Commission's Investigation and
the Subpoena may have on Mr. Panic's ability to continue to
devote services on a full time basis to the Company. See " -
Potential Litigation Exposure," above.
POTENTIAL PRODUCT LIABILITY EXPOSURE AND LACK OF INSURANCE
The Company could be exposed to possible claims for personal
injury resulting from allegedly defective products. Even if a
drug were approved for commercial use by an appropriate
governmental agency, there can be no assurance that users will
not claim that effects other than those intended may result from
the Company's products. The Company generally self-insures
against potential product liability exposure with respect to its
marketed products, including Virazole(registered trademark).
While to date no material adverse claim for personal injury
resulting from allegedly defective products, including
Virazole(registered trademark), has been successfully maintained
against the Company or any of its predecessors, a substantial
claim, if successful, could have a material adverse effect on the
Company.
GOVERNMENT REGULATION
FDA approval must be obtained in the United States and
approval must be obtained from comparable agencies in other
countries prior to marketing or manufacturing new pharmaceutical
products for use by humans in such respective jurisdictions.
Obtaining FDA approval for new products and manufacturing
processes can take a number of years and involves the expenditure
of substantial resources. Numerous requirements must be
satisfied, including preliminary testing programs on animals and
subsequent clinical testing programs on humans, to establish
product safety and efficacy. No assurance can be given that
authorization of the commercial sale of any new drugs or
compounds by the Company for any application will be secured in
the United States or any other country, or that, if such
authorization is secured, those drugs or compounds will be
commercially successful.
The FDA in the United States and other regulatory agencies
in other countries also periodically inspect manufacturing
facilities. Failure to comply with applicable regulatory
requirements can result in, among other things, sanctions, fines,
delays or suspensions of approvals, seizures or recalls of
products, operating restrictions and criminal prosecutions.
Furthermore, changes in existing regulations or adoption of new
regulations could prevent or delay the Company from obtaining
future regulatory approvals.
The Company is subject to price control restrictions on its
pharmaceutical products in the majority of countries in which it
operates. To date, the Company has been affected by pricing
adjustments in Spain and by the lag in allowed price increases in
Yugoslavia and Mexico, which have created lower sales in U.S.
dollars and reductions in gross profit. Future sales and gross
profit could be materially affected if the Company is unable to
obtain price increases commensurate with the levels of inflation.
COMPETITION
The Company operates in a highly competitive environment.
The Company's competitors, many of whom have substantially
greater capital resources and marketing capabilities and larger
research and development staffs and facilities than the Company,
are actively engaged in marketing products similar to those of
the Company and in developing new products similar to those
proposed to be developed and sold by the Company. Others may
succeed in developing products that are more effective than those
marketed or proposed for development by the Company. Progress by
other researchers in areas similar to those being explored by the
Company may result in further competitive challenges. In early
1996, MedImmune, Inc. began marketing in the United States
RespiGam, a prophylactic drug for the treatment of RSV. The
Company is aware of several other ongoing research and
development programs which are attempting to develop new
prophylactic and therapeutic products for treatment of RSV.
Although the Company will follow publicly disclosed developments
in this field, on the basis of currently available data, it is
unable to evaluate whether RespiGam or the other technology being
developed in these programs poses a threat to the Company's
current market position in the treatment of RSV or its revenue
streams. The Company may also face increased competition from
manufacturers of generic pharmaceutical products when certain of
the patents covering certain of its currently marketed products
expire.
RECENT DEVELOPMENTS
In June 1996, the Company acquired a 72.4% interest in
Lekstredstva, a Russian pharmaceutical company, for approximately
$5.7 million in cash. The Company has plans to increase its
interest in Lekstredstva to 95% by making purchases from existing
stockholders for an additional approximate $600,000.
In June 1996, the Company entered into an agreement to
acquire the Dosimetry Service division of Siemens Medical
Systems, Inc. ("Siemens") for approximately $22.7 million subject
to certain post-closing adjustments. Dosimetry is a leading
provider of worldwide commercial services used to measure
occupational exposure to radiation. At the election of the
Company, the purchase price may be paid in cash or shares of
Common Stock (the "Dosimetry Shares"). The number of Dosimetry
Shares to be issued at the closing of the acquisition (the
"Dosimetry Closing") would be determined based upon market prices
of the Common Stock for a specified period prior thereto (the
"Issue Price"). The Company presently intends to pay the
purchase price in Common Stock. In that event, Siemens would
have the right, exercisable on or before September 16, 1996, to
require the Company to repurchase on September 27, 1996, all of
the Dosimetry Shares then owned by it for the Issue Price of such
Shares in cash (subject to adjustment under certain
circumstances). In addition, the Company has agreed to file a
registration statement covering the Dosimetry Shares within five
days of the Dosimetry Closing. Additional registration rights
with respect to the Dosimetry Shares would be granted to Siemens
during the two year period following the Dosimetry Closing
(subject to extension under certain circumstances). The Company
anticipates that the Dosimetry Closing will occur in July 1996,
subject to the satisfaction (or waiver) of certain customary
closing conditions.
In June 1996, the Company won a competitive bid to purchase
up to a 59% interest in Alkaloida Chemical Co., a Hungarian state-
owned pharmaceutical company, for approximately $21.9 million in
cash. The Company anticipates that this transaction will close
in September 1996, subject to the negotiation of a definitive
agreement.
In May 1996, the Company purchased a 40% investment in KAMED
Financial, Inc. ("KF"), a Delaware company, for an anticipated
investment of $3,000,000. KF formed a joint venture with
Biomedpreparat ("BP"), a Kazak joint stock company which is owned
by the State Property Committee and by the employees of BP, to
convert BP from a Soviet scientific production complex located in
Kazakhstan into a pharmaceutical manufacturing and distribution
plant. KF has a 51% interest in the joint venture.
Neither the acquisition of Gly-Derm (which was consummated
in 1996), nor the completed or proposed acquisitions discussed
above, individually or in the aggregate, constitute the
acquisition of significant businesses as defined by Regulation S-
X promulgated by the Commission.
As previously discussed, in January 1995, an action was
commenced by a former employee against the Company and the
Company's Chairman. The complaint asserted causes of action for
sex discrimination and harassment and for violations of the
California Department of Fair Employment and Housing statute and
a provision of the California Government Code. On June 30, 1996,
the Company settled the case without admitting any wrongdoing.
Terms of the settlement are sealed under court order.
USE OF PROCEEDS
Since this Prospectus relates to the offering of Shares by
the Selling Stockholders, the Company will not receive any of the
proceeds from the sale of the Shares offered hereby. However,
under certain circumstances, the Selling Stockholders will be
required to pay to the Company the amount, if any, by which the
proceeds from the sale of their Shares exceeds certain agreed
upon price thresholds. Conversely, under certain circumstances
the Company will be required to pay each Selling Stockholder the
amount, if any, by which the proceeds from the sale of such
Selling Stockholder's Shares is less than certain agreed upon
price thresholds. See "Selling Stockholder -- Price Protection"
SELLING STOCKHOLDERS
An aggregate of 233,274 Shares are being offered for the
account of the Selling Stockholders identified in the table
below. The following table provides certain information, as of
the date of this Prospectus, with respect to the Shares owned by
the Selling Stockholders (which information has been furnished to
the Company by the Selling Stockholders). Because the Selling
Stockholders may sell all or part of the Shares which they hold
pursuant to this Prospectus and because this Offering is not
being underwritten on a firm commitment basis, no estimate can be
given as to the amount of Shares that will be held by the Selling
Stockholder upon termination of this Offering. See "Plan of
Distribution."
As of June 30, 1996, the Company had outstanding
approximately 31,835,000 shares of Common Stock. The Shares
represent in the aggregate less than 1% of the outstanding shares
of Common Stock.
SELLING STOCKHOLDER INFORMATION
NAME Number of
Shares of
Common Stock
Marvin E. Klein, Trustee
Marvin E. Klein Revocable Trust 29,683
7/74
Dr. Maurice Belkin, Trustee
Maurice Belkin Revocable Trust 42,830
Irving F. Keene and Diane F.
Keene, Trustees of the Diane F. 24,735
Keene Insurance Trust
dated December 29, 1989
Helene Davidson and Diane F.
Keene, Trustees of the Diane F. 4,946
Keene Grantor Trust
Sidney H. Weber 3,385
Steven J. Cohen 1,236
Sylvia Glover 1,236
Patricia Ann Wendel 13,208
Phyllis F. Fine 2,139
Jennifer L. Markusic 1,236
Noel H. Upfall 12,394
Jeffrey M. Weber 1,938
Robert T. Goldman 961
Daisy P. Ramos 961
Daniel B. Seff 961
Judith C. Redmond Trustee 387
Richard S. Schwartz 387
Marvin D. Siegel 387
SeaLite Sciences, Inc. 89,264
_____________
Total 233,274
=============
All of the Selling Stockholders (other than SeaLite) (the
"Gly-Derm Selling Stockholders") acquired their Shares as partial
consideration for the Company's acquisition of Gly-Derm. SeaLite
acquired its Shares as consideration for the Company's
acquisition of its equity interest in SeaLite. The registration
effected hereby is being effected pursuant to certain
registration rights granted by the Company at the time of the
issuance of the Shares. In the case of the Shares held by the
Gly-Derm Selling Stockholders, the registration rights extend to
transferees and assigns. If applicable, this Offering would
include sales of Shares by such transferees and assigns.
PRICE PROTECTION
Gly Derm
- --------
Pursuant to the Common Stock Undertaking Agreement (the
"Undertaking Agreement") between Gly-Derm, the Gly-Derm Selling
Stockholders and the Company, if, during the Guaranty Period (as
defined below), Shares are sold by any Gly-Derm Selling
Stockholder pursuant to the Registration Statement at a price
(after deducting customary sales commissions) greater than
approximately $20.83, subject to adjustment under certain
circumstances (the "Gly-Derm Guaranty Price"), such Gly-Derm
Selling Stockholder has agreed to pay to the Company such excess.
Conversely, if, during the Guaranty Period, Shares are sold by
any Gly-Derm Selling Stockholder pursuant to the Registration
Statement at a price (after deducting customary sales
commissions) less than the Guaranty Price, the Company has agreed
to pay such deficit to such Gly-Derm Selling Stockholder. The
obligations of the Company pursuant to these provisions are
required to be paid in Common Stock (valued based upon market
prices of the Common Stock for a specified period prior to such
sale) and the obligations of the Gly-Derm Selling Stockholder
pursuant to the provisions are required to be paid, at the
election of the applicable Gly-Derm Selling Stockholder, in cash,
Common Stock (valued at the prices received by the Gly-Derm
Selling Stockholder upon disposition) or a combination thereof.
Similar provisions apply to sales by the Gly-Derm Selling
Stockholders of Shares pursuant to Rule 144 or as otherwise
approved in advance by the Company (the Company being obligated
under certain circumstances to repurchase Shares based upon then
market price if it does not approve certain requested
dispositions of Shares by Gly-Derm Selling Stockholders).
The Guaranty Period is defined in the Undertaking Agreement
as the period ending the earlier of (i) 120 days after the
effective date of the Registration Statement (provided that the
Registration Statement remains effective for 120 days), or (ii)
May 28, 1998.
In the event that a Gly-Derm Selling Stockholder is
permitted to sell Shares pursuant to the Registration Statement,
or Rule 144 is available, at the time the Guaranty Period expires
and the then market price of the Common Stock (as defined) is
greater than the Guaranty Price, the Gly-Derm Selling Stockholder
is required to pay the Company the excess in cash, Common Stock
(valued based upon market prices of the Common Stock for a
specified period prior to such sale) or a combination thereof.
If Rule 144 is not available, or the Registration Statement is
not effective, within 30 days after the expiration of the
Guaranty Period, each Gly-Derm Selling Stockholder has a right to
require the Company to repurchase all of his or her Shares at the
Guaranty Price.
The Shares owned by the Gly-Derm Selling Stockholders are
presently held by First Trust of California National Association,
as escrow agent. Of these Shares held in escrow, 1/6 are being
held in escrow in the event the Company has indemnification
claims against the Gly-Derm Selling Stockholders under the
agreement pursuant to which the Company acquired Gly-Derm (the
"Gly-Derm Acquisition Agreement"). The remaining Shares are
being held in escrow in the event the Gly-Derm Selling
Stockholders are required to make payments to the Company
pursuant to the Undertaking Agreement as described above.
The Shares do not include any shares of Common Stock which
the Gly-Derm Selling Stockholders may be entitled to receive
pursuant an earn-out provision contained in the Gly-Derm
Acquisition Agreement. The maximum earn-out payable by the
Company is $2.6 million, of which the first $1 million is payable
in cash and the balance is payable 50% in cash and 50% in shares
of Common Stock (based upon the market price of the Common Stock
at the time of payment).
SeaLite
- -------
Under the terms of the agreement pursuant to which the
Company issued Shares to SeaLite (the "SeaLite Agreement"), if
the aggregate proceeds (net of broker or dealer fees, discounts
and expenses, and all transfer and other taxes) from sales of
Shares by SeaLite to unaffiliated persons during the Protected
Period (as defined below) is greater than approximately $20.72
times the number of Shares sold, SeaLite is required to pay to
the Company an amount in cash equal to such excess. Conversely,
if the aggregate proceeds (net of broker or dealer fees,
discounts and expenses, and all transfer and other taxes) from
sale of Shares to unaffiliated persons during the Protected
Period is less than approximately $20.72 times the number of
Shares sold, the Company is required to pay to SeaLite an amount
in cash equal to such deficit.
Protected Period means the period from the consummation of
the SeaLite Agreement until ninety (90) days after the earlier of
(i) the effective date of the Registration Statement or (ii) the
date on which the Shares issued to SeaLite are eligible to be
sold under Rule 144.
The descriptions set forth above of the Undertaking
Agreement and SeaLite Agreement are summaries and as such are
subject to and qualified in their entirety by reference to the
text of the Undertaking Agreement and the SeaLite Agreement,
respectively, copies of which are attached as exhibits to the
Registration Statement.
PLAN OF DISTRIBUTION
The Selling Stockholders are offering the Shares for their
own account, and not for the account of the Company. The Company
will not receive any proceeds from the sale of the Shares by the
Selling Stockholders. However, under certain circumstances, the
Selling Stockholders will be required to pay to the Company the
amount, if any, by which the proceeds from the sale of their
Shares exceed certain agreed upon price thresholds. Conversely,
under certain circumstances the Company will be required to pay
each Selling Stockholder the amount, if any, by which the
proceeds from the sale of such Selling Stockholder's Shares is
less than certain agreed upon price thresholds. See "Selling
Stockholder -- Price Protection."
The Shares may be sold from time to time by the Selling
Stockholders or, in certain cases, by their transferees or
assigns. Such sales may be made in the over-the-counter market,
on the New York Stock Exchange or other exchanges (if the Common
Stock is listed for trading thereon), or otherwise at prices and
at terms then prevailing, at prices related to the then current
market price or at negotiated prices. The Shares may be sold by
any one or more of the following methods: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases
by a broker as principal and resale by such broker or dealer for
its account; (c) ordinary brokerage transactions and transactions
in which the broker solicits purchasers; and (d) privately
negotiated transactions. In addition, any Shares that qualify
for sale pursuant to Rule 144 may be sold under Rule 144 rather
than pursuant to this Prospectus.
The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in
the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act and any commissions
received by such broker-dealer, agent or underwriter and any
profit on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the
Securities Act.
Under the Exchange Act and the regulations thereunder, any
person engaged in a distribution of the Shares offered by this
Prospectus may not simultaneously engage in market making
activities with respect to the Common Stock during any applicable
"cooling off" periods prior to the commencement of such
distribution. In addition, and without limiting the foregoing,
such Selling Stockholder will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder
including, without limitation, Rules 10b-6 and 10b-7, which
provisions may limit the timing of purchases and sales of Common
Stock by such Selling Stockholder.
In the Undertaking Agreement, the Company has agreed to
indemnify the Gly-Derm Selling Stockholders and each person
controlling a Gly-Derm Selling Stockholder against all claims,
losses, damages and liabilities (or actions in respect thereof),
including any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss,
damage, liability or action, arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
contained in the Registration Statement, or based on any omission
(or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, or any violation by the Company of the Securities
Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the
Company in connection with the Registration Statement; provided
that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission
based upon written information furnished to the Company by the
Gly-Derm Stockholders and stated to be specifically for use in
the Registration Statement. The Gly-Derm Selling Stockholders
have each agreed to indemnify the Company, each of its directors
and officers and each person who controls the Company within the
meaning of the Securities Act and the rules and regulations
thereunder, against all claims, losses, damages and liabilities
(or actions in respect thereof), including any legal or any other
expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action,
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in the
Registration Statement or any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged
omission) is made in the Registration Statement in reliance upon
and in conformity with written information furnished to the
Company by the Gly-Derm Selling Stockholders and stated to be
specifically for use in the Registration Statement; provided,
however, that the obligations of the Gly-Derm Selling
Stockholders are limited to an amount equal to the proceeds to
the Gly-Derm Selling Stockholders of Shares sold pursuant to the
Registration Statement or otherwise as contemplated by the
Undertaking Agreement.
There can be no assurance that the Selling Stockholders will
sell any or all of the Shares offered by them hereunder. To the
extent required, the Company will use its best efforts to file,
during any period in which offers or sales are being made, one or
more supplements to this Prospectus to describe any material
information with respect to the plan of distribution not
previously disclosed in this Prospectus or any material change to
such information in this Prospectus.
The registration effected hereby is being effected pursuant
to certain registration rights previously granted by the Company
to the Gly-Derm Selling Stockholders in the Undertaking Agreement
and to SeaLite in the SeaLite Agreement. The Company will bear
the expense of such registration, other than selling commissions
and fees and expenses of counsel and other advisors to the
Selling Stockholders.
LEGAL MATTERS
The legality of the Shares offered hereby will be passed
upon for the Company by David C. Watt, Executive Vice President,
General Counsel and Corporate Secretary of the Company. As of
July 15, 1996, Mr. Watt beneficially owned 100,332 shares of
Common Stock, including 98,337 shares which he has the right
to acquire upon the exercise of currently exercisable stock
options.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets as of December 31, 1995 and
1994, and the consolidated statements of income, retained
earnings and cash flows for each of the three years in the period
ended December 31, 1995, incorporated by reference in this
Prospectus, have been included herein in reliance on the report,
which includes, as it relates to 1994 and 1993, an emphasis of
matter paragraph related to certain transactions between
affiliates, of Coopers & Lybrand L.L.P., independent public
accountants, given on the authority of that firm as experts in
auditing and accounting. With respect to the unaudited interim
financial information for the periods ended March 31, 1996 and
1995, incorporated by reference in this Prospectus, the
independent accountants have reported that they have applied
limited procedures in accordance with professional standards for
a review of such information. However, their separate report
included in the Company's quarterly report on Form 10-Q for the
quarter ended March 31, 1996, and incorporated by reference
herein, states that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be
restricted in light of the limited nature of the review
procedures applied. The accountants are not subject to the
liability provisions of Section 11 of the Securities Act for
their report on the unaudited interim financial information
because that report is not a "report" or a "part" of the
Registration Statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Securities Act.
Any financial statements and schedules hereafter
incorporated by reference in the Registration Statement of which
this Prospectus is a part, that have been audited and are the
subject of a report by independent accountants will be so
incorporated by reference in reliance upon such reports and upon
the authority of such firms as experts in accounting and auditing
to the extent covered by consents filed with the Commission.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
IN CONNECTION WITH THIS OFFERING, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS
PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses of the
Registrant in connection with the distribution of the securities
being registered hereunder. The Selling Stockholders will not
bear any of these expenses.
<TABLE>
<CAPTION>
<S> <C>
SEC Filing Fee................................. $ 1,854.93
Legal Fees and Expenses........................ $ 40,000.00
Accounting Fees and Expenses................... $ 15,000.00
Miscellaneous.................................. $ 2,500.00
Total $ 59,354.93
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact
that he or she is or was a director, officer, employee or agent
of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or enterprise. Depending on the character of the
proceeding, a corporation may indemnify against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person indemnified acted
in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had no cause
to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification
may be made in respect to any claim, issue or matter as to which
such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine that despite the adjudication of liability such
person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent a director
or officer of a corporation has been successful in the defense of
any action, suit or proceeding referred to above or in the
defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection therewith.
However, if the director or officer is not successful in the
defense of any action, suit or proceeding as referred to above or
in the defense of any claim, issue or matter therein, he shall
only be indemnified by the corporation as authorized in the
specific case upon a determination that indemnification is proper
because he or she met the applicable standard set forth above as
determined by a majority of the disinterested Board of Directors
or by the stockholders.
The Registrant's bylaws provide indemnification to its
officers and directors against liability they may incur in their
capacity as such, which indemnification is similar to that
provided by Section 145, unless a determination is reasonably and
promptly made by a majority of the disinterested Board of
Directors that the indemnitee acted in bad faith and in a manner
that the indemnitee did not believe to be in or not opposed to
the best interests of the Registrant, or, with respect to any
criminal proceeding, that the indemnitee believed or had
reasonable cause to believe that his or her conduct was unlawful.
The Registrant carries directors' and officers' liability
insurance, covering losses up to $5,000,000 (subject to a
$500,000 deductible).
The Registrant, as a matter of policy, enters into
indemnification agreements with its directors and officers
indemnifying them against liability they may incur in their
capacity as such. The indemnification agreements require no
specific standard of conduct for indemnification and make no
distinction between civil and criminal proceedings, except in
proceedings where the dishonesty of an indemnitee is alleged.
Such indemnification is not available if an indemnitee is
adjudicated to have acted in a deliberately dishonest manner with
actual dishonest purpose and intent where such acts were material
to the adjudicated proceeding. Additionally, the indemnity
agreements provide indemnification for any claim against an
indemnitee where the claim is based upon the indemnitee obtaining
personal advantage or profit to which he or she was not legally
entitled, the claim is for an accounting of profits made in
connection with a violation of Section 16(b) of the Securities
Exchange Act of 1934, or similar state law provision, or the
claim was brought about or contributed to by the dishonesty of
the indemnitee.
Section 102(b) (7) of the Delaware General Corporation Law,
as amended, permits a corporation to include in its certificate
of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law (relating to unlawful
payment of dividend and unlawful stock purchase and redemption),
or (iv) for any transaction from which the director derived an
improper personal benefit. The Registrant has provided in its
certificate of incorporation, as amended, that its directors
shall be exculpated from liability as provided under Section
102(b) (7).
The foregoing summaries are necessarily subject to the
complete text of the Delaware General Corporation Law, the
Registrant's Certificate of Incorporation and the agreements
referred to above and are qualified in their entirety by
reference thereto.
ITEM 16. EXHIBITS
4.1 Amended and Restated Certificate of Incorporation of
Registrant, previously filed as Exhibit 3.1 to
Registration Statement No. 33-83952 on Form S-1, which is
incorporated herein by reference, as amended by the
Certificate of Merger, dated November 10, 1994, of ICN
Pharmaceuticals, Inc., SPI Pharmaceuticals, Inc., and
Viratek, Inc. with and into ICN Merger Corp.
4.2 Bylaws of the Registrant, previously filed as Exhibit 3.2
to Registration Statement No. 33-83952 on Form S-1,
which is incorporated herein by reference.
4.3 Form of Rights Agreement, dated as of November 2, 1994
between the Registrant and American Stock Transfer &
Trust Company as Trustee, previously filed as Exhibit 4.3
to Registration Statement on Form 8-A, dated November
10, 1994.
4.4. Common Stock Undertaking, dated as of February 28, 1996,
by and among Gly-Derm, Inc., certain stockholders listed
therein and the Registrant.
4.5 Stock Purchase Agreement by and among SeaLite Science,
Inc. and the Registrant.
5. Opinion of David C. Watt, Executive Vice President,
General Counsel and Corporate Secretary of the
Registrant, regarding the legality of the securities
being registered.
15.1 Awareness Letter of Independent Accountant regarding
Unaudited Interim Financial Information.
15.2 Review Report of Independent Accountant for the period
ended March 31, 1996, previously filed as Exhibit 15 to
Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, and incorporated herein by reference.
23.1 Consent of Coopers & Lybrand L.L.P. Independent Public
Accountants.
23.2 Consent of David C. Watt (contained in his opinion filed
as Exhibit 5).
24. Power of Attorney (included elsewhere in the Registration
Statement).
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; provided, however, that paragraphs (i)
and (ii) do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such 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 offering.
(4) 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 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.
(5) 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 that
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 that Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, 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 Costa Mesa and State of
California on July 16, 1996.
ICN PHARMACEUTICALS, INC.
/s/ Milan Panic
By: Milan Panic
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Milan Panic and David C.
Watt his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITY INDICATED.
SIGNATURE TITLE DATE
/s/ Milan Panic
- -------------------------------
Milan Panic Chairman and Chief July 16, 1996
Executive Officer
(Principal Executive
Officer)
/s/ John E. Giordani
- -------------------------------
John E. Giordani Executive Vice July 16, 1996
President, Chief
Financial Officer
(Principal Financial
and Accounting
Officer)
/s/ Norman Baker, Jr.
- -------------------------------
Norman Barker, Jr. Director July 16, 1996
/s/ Senator Birch E. Bayh, Jr.
- -------------------------------
Senator Birch E. Bayh, Jr. Director July 16, 1996
/s/ Alan F. Charles
- -------------------------------
Alan F. Charles Director July 16, 1996
/s/ Roger Guillemin
- -------------------------------
Roger Guillemin, M.D., Ph.D. Director July 16, 1996
/s/ Adam Jerney
- -------------------------------
Adam Jerney Director, Executive July 16, 1996
Vice President, Chief
Operating Officer
/s/ Dale Hanson
- -------------------------------
Dale M. Hanson Director July 16, 1996
/s/ Weldon B. Jolley
- -------------------------------
Weldon B. Jolley, Ph.D. Director July 16, 1996
/s/ Jean-Francois Kurz
- -------------------------------
Jean-Francois Kurz Director July 16, 1996
/s/ Thomas Lenagh
- -------------------------------
Thomas H. Lenagh Director July 16, 1996
/s/ Charles Manatt
- -------------------------------
Charles T. Manatt Director July 16, 1996
/s/ Stephen D. Moses
- -------------------------------
Stephen D. Moses Director July 16, 1996
/s/ Michael Smith
- -------------------------------
Michael Smith, Ph.D. Director July 16, 1996
/s/ Roberts A. Smith
- -------------------------------
Roberts A. Smith, Ph.D. Director July 16, 1996
/s/ Richard W. Starr
- -------------------------------
Richard W. Starr Director July 16, 1996
INDEX TO EXHIBITS
4.1 Amended and Restated Certificate of Incorporation of
Registrant, previously filed as Exhibit 3.1 to
Registration Statement No. 33-83952 on Form S-1, which is
incorporated herein by reference, as amended by the
Certificate of Merger, dated November 10, 1994, of ICN
Pharmaceuticals, Inc., SPI Pharmaceuticals, Inc., and
Viratek, Inc. with and into ICN Merger Corp.
4.2 Bylaws of the Registrant, previously filed as Exhibit 3.2
to Registration Statement No. 33-83952 on Form S-1, which
is incorporated herein by reference.
4.3 Form of Rights Agreement, dated as of November 2, 1994
between the Registrant and American Stock Transfer &
Trust Company as Trustee, previously filed as Exhibit 4.3
to Registration Statement on Form 8-A, dated November 10,
1994.
4.4. Common Stock Undertaking, dated as of February 28, 1996,
by and among Gly-Derm, Inc., certain stockholders listed
therein and the Registrant.
4.5 Stock Purchase Agreement by and among SeaLite Science,
Inc. and the Registrant.
5. Opinion of David C. Watt, Executive Vice President,
General Counsel and Corporate Secretary of the
Registrant, regarding the legality of the securities
being registered.
15.1 Awareness Letter of Independent Accountant regarding
Unaudited Interim Financial Information.
15.2 Review Report of Independent Accountant for the period
ended March 31, 1996, previously filed as Exhibit 15 to
Quarterly Report on Form 10-Q for the quarter ended March
31, 1996, and incorporated herein by reference.
23.1 Consent of Coopers & Lybrand L.L.P. Independent Public
Accountants.
23.2 Consent of David C. Watt (contained in his opinion filed
as Exhibit 5).
24. Power of Attorney (included elsewhere in the Registration
Statement).
Exhibit 4.1
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF MERGER OF "ICN MERGER CORP.", CHANGING
ITS NAME FROM "ICN MERGER CORP." TO "ICN PHARMACEUTICALS, INC.",
FILED IN THIS OFFICE ON THE TENTH DAY OF NOVEMBER, A.D. 1994, AT
2:45 O'CLOCK P.M.
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7301583
DATE: 11-15-94
Exhibit 4.4
COMMON STOCK UNDERTAKING
------------------------
THIS COMMON STOCK UNDERTAKING ("Agreement") dated as of
February 28, 1996, is entered into by and among GLY DERM, INC., a
Michigan corporation (hereinafter referred to as the "Company")
having its corporate offices at 4120 West Maple Road, Bloomfield
Hills, Michigan 48301, Marvin E. Klein, M.D. Grantor Trust dated
July 3, 1974 as restated; Maurice Belkin, Trustee UTA June 14,
1994; Trustees of the Diane F. Keene Insurance Trust dated
December 29, 1989; Diane F. Keene and Helene Davidson, Trustees
of the Diane F. Keene Grantor Trust; Sidney H. Weber and Ann
Weber; Steven Cohen; Sylvia Glover; Patricia Wendel; Phyllis
Fine; Jennifer Lynn Markusic; Noel H. Upfall, D.O.; Jeffrey Weber
and Elizabeth Weber; Robert T. Goldman; Daisy P. Ramos, M.D.;
Daniel B. Seff and Marsha H. Seff, JTWROS; Judith C. Redmond,
Trustee UTA 11-5-87; Richard S. Schwartz, M.D.; and Marvin D.
Siegel, M.D., Trustee (the foregoing individuals, being
hereinafter referred to collectively as the "Shareholders" and
individually as a "Shareholder"), each residing at the respective
address set forth below such Shareholder's signature hereto, and
ICN PHARMACEUTICALS, INC., a corporation organized under the laws
of the State of Delaware, having its corporate offices at 3300
Hyland Avenue, Costa Mesa, California 92626 (hereinafter
referred to as "ICN").
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, ICN, the Company and the Shareholders have
entered into that certain Agreement and Plan of Merger and
Reorganization dated as of February 28, 1996 (the "Merger
Agreement") by and among the Company, ICN, and ICN Acquisition
Corp., a Michigan corporation, pursuant to which all of the
shares of Common Stock and Preferred Stock of Gly Derm held by
the Shareholders are to be converted and exchanged for shares of
Common Stock of ICN; and
WHEREAS, the execution and delivery of this Agreement
with respect to the issuance of Common Stock of ICN, $.01 par
value per share ("Common Stock"), to be delivered by ICN under
the Merger Agreement, is a condition to the consummation of the
transactions contemplated by the Merger Agreement.
NOW THEREFORE, the parties hereto hereby agree as
follows:
1. Delivery of ICN Shares. ICN agrees that in
consideration of the share conversion referred to in Sections
1.2(c)(2) and 1.2(c)(3) of the Merger Agreement, on the Closing
Date, ICN shall deliver to the Shareholders that number of
previously authorized but unissued and unregistered shares of
Common Stock (the "ICN Shares") having a fair market value, as of
the Closing Date, equal to Three Million Dollars ($3,000,000) in
the aggregate (the "ICN Share Value at Closing"). Such fair
market value shall be computed based upon the average daily
closing price of the Common Stock on the New York Stock Exchange
for the ten trading days ending on the fourth trading day
preceding the Closing Date. The term "Guaranteed Share Price"
shall mean the quotient obtained by dividing $3,000,000 by the
number of ICN Shares issued and outstanding on the Closing Date.
"ICN Shares" shall also include any and all shares of ICN Common
Stock issued after the Closing Date to the Shareholders as an
Earn-Out Payment, as such term is defined in the Merger
Agreement.
1.1. Price Protection; Approved Sales; Excess
Value Recapture; Right of Repurchase in Lieu of Registration.
1.2. Price Protection and Approved Sales. For a
period (the "Guaranty Period") ending on the earlier of: (i)
that date 120 days after that date on which a Registration
Statement covering all of the Registrable Securities of the
Shareholders as to which the Shareholders have requested
registration is declared effective by the Commission in
accordance with the provisions of Section 5.5 or 5.6 hereof,
provided that such Registration Statement remains effective
during such 120 day period, or (ii) that date two years and three
months following the Closing Date, ICN hereby guaranties that the
price received (as defined below) upon a sale of ICN Shares then
owned by a Shareholder (including any Additional Shares received
as a price protection issuance pursuant to this Section 2.1) and
sold not later than the expiration of the Guaranty Period in an
Approved Sale (as defined below), a Registered Sale (as defined
below), or a Rule 144 Sale (as defined below) shall equal or
exceed the Guaranteed Share Price, as described below. In the
event that with respect to any ICN Shares sold at any time, or
from time to time, within the Guaranty Period, the Approved Sale
Share Price (defined below) the Registered Sale Share Price
(defined below) or the Rule 144 Sale Share Price (defined below),
as the case may be, is less than the Guaranteed Share Price, ICN
shall pay to the Shareholder, within 30 days after such Approved
Sale, Registered Sale or Rule 144 Sale, as the case may be, the
difference between (A) the Guaranteed Share Price and (B) the
Approved Sale Share Price, the Registered Sale Share Price or the
Rule 144 Sale Share Price, as the case may be, multiplied by the
number of ICN Shares sold by the Shareholder in such sale (in the
aggregate, the "Guaranteed Amount"). An "Approved Sale" shall be
any sale of ICN Shares by a Shareholder, prior to the expiration
of the Guaranty Period, except a sale made pursuant to a
registered public offering as described in Section 5 below (a
"Registered Sale") or a sale made pursuant to Rule 144 or Rule
145 under the Securities Act (a "Rule 144 Sale"); it being
understood that no sale except a Registered Sale or a Rule 144
Sale (provided that any Registered Sale or Rule 144 Sale shall be
made in accordance with applicable securities law as described in
Section 5, below) shall be made without ICN's prior approval. No
later than 10 days prior to any such proposed sale not
constituting a Rule 144 Sale or a Registered Sale during the
Guaranty Period a Shareholder shall submit in a written notice to
ICN for ICN's approval information concerning such proposed sale,
including the proposed sale price, the proposed purchaser, if
known, and other terms of the proposed sale. Not later than five
days after receipt of such written notice, ICN shall approve or
disapprove such sale; provided that (i) ICN shall not withhold
its approval unreasonably, (ii) ICN must exercise such approval
rights in good faith in a commercially reasonable manner; (iii)
in the event ICN disapproves of such sale, ICN shall deliver a
written explanation of its reasons for disapproval; and (iv) if
ICN shall have disapproved the sale, and in the event the
proposed sale price set forth in the written notice to ICN is
equal to or exceeds the average daily closing price of the Common
Stock on the New York Stock Exchange (or any successor market)
for the ten trading days prior to the date of the written notice,
then ICN shall purchase the shares subject to the notice at such
average daily closing price. The "Approved Sale Share Price"
shall mean the price per share approved by ICN in an Approved
Sale. The "Registered Sale Share Price" shall mean the price per
share, net of customary sales commissions, received by a
Shareholder in a Registered Sale. The "Rule 144 Sale Share
Price" shall mean the price per share, net of customary sales
commissions, received by a Shareholder in a Rule 144 Sale. In
the event that the Approved Sale Share Price, the Registered Sale
Share Price or the Rule 144 Sale Share Price, as the case may be,
equals or exceeds the Guaranteed Share Price, ICN shall have no
further obligations with respect to its guaranty and price
protection obligations set forth in this Section 2.1 as to the
shares sold; provided that ICN shall have such rights with
respect to such excess value as provided in Section 2.2, below.
The Guaranteed Amount shall be paid in additional shares of ICN
Common Stock (the "Additional Shares"), provided that any
Additional Shares shall either (i) have been registered by ICN
under the Securities Act prior to delivery to the Shareholders
and shall be freely tradeable by the Shareholders, or (ii) if not
previously registered as provided in clause (i), then a
Shareholder's Rule 144 holding period with respect to
such Additional Shares shall not be greater than two years less
the amount of time elapsed since the Closing Date. Any
Additional Shares shall be valued at the Approved Sale Share
Price, the Registered Sale Share Price or the Rule 144 Sale Share
Price, as the case may be, for purposes of payment of all or any
portion of the Guaranteed Amount, and shall be entitled to the
benefits of the registration provisions set forth in Section 5 of
this Agreement. The guaranty and price protection provisions set
forth in this Section 2.1 shall not be assignable or
transferable, except by will or the laws of descent or
distribution.
1.3. Excess Value Recapture. In the event that
(i) a Shareholder shall sell ICN Shares in an Approved Sale, a
Registered Sale or a Rule 144 Sale, as the case may be, provided
such sale occurs prior to the expiration of the Guaranty Period,
and the Approved Sale Share Price, Registered Sale Share Price or
Rule 144 Sale Share Price, as the case may be, received upon such
sale shall exceed the Guaranteed Share Price, or (ii) either a
Registered Sale or Rule 144 Sale is available to a Shareholder at
the expiration of the Guaranty Period, but the Shareholder shall
have decided not to sell his or her ICN Shares as of such
expiration date, and as of such expiration date the then current
market value per share of ICN Common Stock (based on the average
closing price on the New York Stock Exchange for the ten trading
days prior to such expiration date) shall exceed the Guaranteed
Share Price, the aggregate amount of such excess (the "Excess
Value") shall be payable by such Shareholder to ICN. Payment of
such Excess Value may be made in cash or additional ICN Shares
owned by such Shareholder (valued based on the average daily
closing price of the Common Stock on the New York Stock Exchange
for the ten trading days ending on the date of such payment) or a
combination thereof at the election of such Shareholder.
1.4. Adjustments to Guaranteed Share Price. In
the event that ICN issues additional shares of Common Stock
pursuant to a stock dividend, stock distribution or subdivision,
the Guaranteed Share Price shall, concurrently with the
effectiveness of such stock dividend, stock distribution or
subdivision, be proportionately reduced, and in the event the
outstanding shares of Common Stock of ICN shall be combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, the Guaranteed Share Price
shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
1.5 Right of Repurchase In Lieu of Registration.
ICN shall have the right, within ten (10) business days after its
receipt of a request by the Shareholders during the Guaranty
Period to register (or to include in a registration) Registrable
Securities, pursuant to Sections 5.5(a) or 5.6(a), to notify the
Shareholders of its intent to repurchase the Shares from the
Shareholders. Pursuant to such notice to the Shareholders, ICN
shall agree to repurchase the ICN Shares owned by the
Shareholders for a price per share payable in cash equal to the
Guaranteed Share Price. Such repurchase shall be closed within
30 days after the foregoing notice from ICN to the Shareholders
of its intent to repurchase.
1.6. Unavailability of Rule 144 or Registered Sale
at Expiration of Guaranty Period. In the event that within 30
days after the expiration of the Guaranty Period (or, in the case
of any Additional Shares, within 30 days after the expiration of
the Rule 144 holding period with respect to such shares), neither
a Rule 144 nor a Registered Sale shall have been or shall be
available to a Shareholder with respect to any ICN Shares because
(i) in the case of a Registered Sale, ICN shall have failed for
any reason, after request by such Shareholder, to effect the
registration of Registrable Securities of such Shareholder in
accordance with the provisions of Section 5, below, and (ii) in
the case of a Rule 144 Sale, ICN shall have failed to obtain an
opinion of counsel reasonably satisfactory to such Shareholder
(or a no-action letter from the Commission, as defined below) to
the effect that Rule 144 is available with respect to such
Shareholder's sale, a Shareholder notifies ICN in writing that it
desires that ICN purchase the remaining ICN Shares held by such
Shareholder, ICN shall repurchase all ICN Shares received by such
Shareholder at the Closing under the Merger Agreement (and any
Additional Shares received thereafter), and still owned by such
Shareholder, for a cash purchase price per share equal to the
Guaranteed Share Price.
2. Representations and Warranties of ICN. ICN
represents and warrants to the Company and Shareholders as
follows:
2.1. Authorization of the ICN Shares. On or
before the Closing, as described in the Merger Agreement, the
issuance of the ICN Shares will have been authorized by all
requisite corporate action and the ICN Shares shall have been
authorized for listing on the New York Stock Exchange upon
official notice of issuance. Upon the delivery of the certifi
cates evidencing the ICN Shares in exchange for the Gly Derm
Common Stock and Gly Derm Preferred Stock (as defined in the
Merger Agreement) and in accordance with the terms of this
Agreement and the Merger Agreement, the ICN Shares will be
validly issued, fully paid and nonassessable, and free and clear
of all security interests, liens, encumbrances, options, calls,
pledges, trusts, assessments, covenants, restrictions,
reservations, commitments, voting trusts and stockholders'
agreements, obligations and other burdens. ICN has full and
lawful authority to issue, transfer and deliver the ICN Shares to
the Shareholders hereunder and this Agreement, the Merger
Agreement and each agreement ancillary thereto has been duly and
validly executed and delivered by ICN and is legally binding on
ICN in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and relief of
debtors.
2.2. Offering of the ICN Shares. To the knowledge
of ICN, in connection with the transactions contemplated herein,
and the issuance and sale of the ICN Shares, no person has
offered the ICN Shares or any substantially similar securities
to, or solicited any offers to acquire any thereof from, or
otherwise approached or negotiated in respect thereof with, any
person or persons. Neither ICN nor anyone acting on its behalf
will directly or indirectly sell or offer the ICN Shares or any
substantially similar securities to, or solicit any offer to buy
any thereof from, any person so as to require registration of the
ICN Shares under the Securities Act of 1933, as amended (the
"Act"), or under any state securities law. Based upon each
Shareholder's investment representations made hereunder, and in
the Investor's Questionnaire referred to in Section 4.6 completed
by each Shareholder, the issuance and sale of the ICN Shares in
the manner contemplated by the Merger Agreement will be exempt
from registration under the Act.
2.3 Information Concerning ICN. ICN has
heretofore delivered to each Shareholder true and complete copies
of its Annual Report on Form 10-K for its fiscal year ended
December 31, 1994, its Quarterly Report on Form 10-Q for its
fiscal quarter ended September 30, 1995, its 1994 Annual Report
to Stockholders, and its proxy statement for the annual meeting
of stockholders held on November 10, 1995.
2.4. Absence of Certain Changes. Except as set
forth herein or in Schedule 3.4 hereto, and in ICN's quarterly
report on Form 10-Q for the quarter ended September 30, 1995,
since September 30, 1995 there has not been (a) any acquisition
or disposition by ICN or its subsidiaries of any asset or
property material to ICN and its subsidiaries taken as a whole,
other than in the ordinary course of business; (b) any damage,
destruction or loss, whether or not covered by insurance,
materially and adversely affecting, either in any case or in the
aggregate, the property, business or prospects of ICN and its
subsidiaries taken as a whole; (c) any declaration, setting aside
or payment of any dividend or any other distribution in respect of
securities of ICN; (d) any direct or indirect redemption, purchase
or other acquisition of any securities of ICN, (e) any incurrence,
directly or indirectly, by ICN or any subsidiary, of any
indebtedness material to ICN and its subsidiaries taken as a
whole, other than in the ordinary course of business, (f) any
modification or cancellation of any agreement between ICN and any
entity controlling or under common control with ICN disclosed in
the documents referred to in Section 3.3, or any entry by ICN or
any subsidiary into any material transaction other than in the
ordinary course of business, or (g) any change in the condition
(financial or otherwise), assets, liabilities, sales, income or
business of ICN and its subsidiaries taken as a whole, or in
their relationships with suppliers, customers, lessors or others,
other than changes in the ordinary course of business, which have
not been, either in any case or in the aggregate, materially
adverse.
3. Representations and Warranties of Shareholders.
Each Shareholder represents and warrants to ICN as follows:
3.1. Experience. Such Shareholder is
knowledgeable, sophisticated and experienced in making
investments, and is qualified to make decisions with respect to
investment in the ICN Shares.
3.2. Investment. Such Shareholder is acquiring
the ICN Shares for investment for its own account and not with a
view to, or for resale in connection with, any distribution
thereof. Such Shareholder understands that the ICN Shares have
not been registered under the Act, by reason of a specified
exemption from the registration provisions of the Act which
depends upon, among other things, the bona fide nature of such
Shareholder's investment intent as expressed herein.
3.3. Rule 144. Such Shareholder acknowledges that
the ICN Shares must be held indefinitely unless they are
subsequently registered under the Act or an exemption from such
registration is available. Such Shareholder has been advised or
is aware of the provisions of Rule 144 and Rule 145 promulgated
under the Act, which permits limited resale of shares received in
a merger subject to the satisfaction of certain conditions and
that such Rule may not become available for resale of the ICN
Shares.
3.4. Access to Data. Such Shareholder has had an
opportunity to discuss ICN's business, management and financial
affairs with ICN's management and has had the opportunity to view
ICN's facilities.
3.5. Financial Condition. Such Shareholder's
financial condition is such that it is able to bear all risks of
holding the ICN Shares for an indefinite period of time.
3.6. Investor's Questionnaire. Such Shareholder
shall have delivered to ICN a true and complete Investor's
Questionnaire in the form of Schedule 1 to this Agreement
satisfactory to ICN and its counsel, and Gly Derm and its
counsel, for purposes of establishment of the exemption referred
to in Section 4.2.
4. Restrictions on Transfer, Registration of Shares,
etc.
4.1. Restrictions on Transferability. The ICN
Shares shall not be transferable, except upon the conditions
specified in this Section 5, which conditions are intended to
ensure compliance with the provisions of the Act. The
Shareholders will cause any proposed transferee of ICN Shares
held by the Shareholders to agree to take and hold those
securities subject to the provisions and upon the conditions
specified in this Section 5.
4.2. Certain Definitions. As used in this Section
5 the following terms shall have the following respective
meanings:
"Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the time
administering the Act.
"Restricted Securities" shall mean the securities
of ICN required to bear or bearing the legend set forth in
Section 5.3 hereof.
"Registrable Securities" shall mean the ICN Shares
or other securities issued with respect thereto upon any stock
split, stock dividend, recapitalization or similar event.
The terms "register," "registered" and
"registration" shall refer to a registration effected by
preparing and filing a registration statement in compliance with
the Act and applicable rules and regulations thereunder, and the
declaration or ordering of the effectiveness of such registration
statement.
"Registration Expenses" shall mean all expenses
incurred by ICN in compliance with Sections 5.5 and 5.6 hereof,
including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for ICN,
blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding
the compensation of regular employees of ICN, which shall be paid
in any event by ICN).
"Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of
Registrable Securities and all fees and disbursements of counsel
for the selling Shareholders.
4.3. Restrictive Legend. Each certificate
representing (i) the ICN Shares, or (ii) any other securities
issued in respect of the ICN Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted or unless the securities
evidenced by such certificate shall have been registered under
the Act) be stamped or otherwise imprinted with a legend in the
following form (in addition to any legend required under
applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAW. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
Upon request of a Shareholder, ICN shall remove
the foregoing legend from the certificate or issue to such
Shareholder a new certificate therefor free of any transfer
legend, if, with such request, ICN shall have received either the
opinion referred to in Section 5.4(i) or the "no-action" letter
referred to in Section 5.4(ii) to the effect that any transfer by
such Shareholder of the securities evidenced by such certificate
will not violate the Act and applicable state securities laws.
4.4 Notice of Proposed Transfers. Each
Shareholder by acceptance of the certificates representing
Restricted Securities agrees to comply in all respects with the
provisions of this Section 5.4. Prior to any proposed transfer
of any Restricted Securities (other than under circumstances
described in Sections 5.5 and 5.6 hereof), a Shareholder shall
give written notice to ICN of its intention to effect such
transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and
shall be accompanied (except in transactions in compliance with
Rule 144 or Rule 145) by either (i) a written opinion of legal
counsel who shall be reasonably satisfactory to ICN, addressed to
ICN and reasonably satisfactory in form and substance to ICN's
counsel, to the effect that the proposed transfer of the
Restricted Securities may be effected without registration under
the Act, or (ii) a "no action" letter from the Commission to the
effect that the distribution of such securities without
registration will not result in a recommendation by the staff of
the Commission that action be taken with respect thereto,
whereupon such Shareholder shall be entitled to transfer such
Restricted Securities in accordance with the terms of the notice
delivered by such Shareholder to ICN. Each certificate
evidencing the Restricted Securities transferred as above
provided shall bear the appropriate restrictive legend set forth
in Section 5.3 above, except that such certificate shall not bear
such restrictive legend if the opinion of counsel or "no-action"
letter referred to above is to the further effect that such
legend is not required in order to establish compliance with any
provisions of the Act.
4.5. Requested Registration.
4.5.1. Request for Registration. If at any
time during the two-year period following the Closing Date under
the Merger Agreement, as extended pursuant to Section 5.13, ICN
shall receive from the Shareholders a written request that ICN
effect any registration with respect to all or a part of the
Registrable Securities, ICN will use its best efforts to
effect such registration (including, without limitation, the
execution of any undertaking to file post-effective
amendments, appropriate qualification under applicable blue
sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Act). ICN shall
not be obligated to effect, or to take any action to effect,
any such registration pursuant to this Section 5.5: (i) in
any particular jurisdiction in which ICN would be required to
execute a general consent to service of process in effecting
such registration, qualification or compliance, unless ICN is
already subject to service in such jurisdiction and except as
may be required by the Act or applicable rules or regulations
thereunder; or (ii) after ICN has effected two such
registrations pursuant to this Section 5.5(a) and such
registrations have been declared or ordered effective and
shall have been kept effective for the period referred to in
Section 5.8(a); provided, that ICN shall not be required to
effect more than one such registration in any fiscal year of
ICN; and provided, further, that if any Registrable Securities
included in a request by the Shareholders under this Section
5.5(a) have not been registered after ICN has effected such
two registrations because they were excluded pursuant to the
provisions of Section 5.5(b) below, then the Shareholders
shall have the right to request such additional registration
or registrations, on the same terms and conditions as provided
in this Section 5.5, as shall be necessary to effect the
registration of such excluded Registrable Securities; or (iii)
if the number of ICN Shares, in the aggregate, requested to be
included in such registration by the Shareholders making such
request, is less than the lower of 28,000 shares or the
remaining balance of ICN Shares not previously registered
hereunder. Subject to the foregoing clauses (i), (ii) and
(iii), ICN shall file a registration statement covering the
Registrable Securities so requested to be registered as soon
as practicable after receipt of the request of the
Shareholders.
The registration statement filed pursuant to
the request of the Shareholders may, subject to the provisions
of Section 5.5(b) below, include other securities of ICN,
including its own securities and securities which are held by
persons who, by virtue of agreements with ICN, are entitled to
include their securities in any such registration.
4.5.2. Underwriting. If the Shareholders
intend to distribute the Registrable Securities covered by
their request by means of an underwritten offering, they shall
so advise ICN as a part of their request made pursuant to
Section 5.5. The Shareholders may include in such
underwriting all the Registrable Securities they hold, subject
to the allocation provided hereinbelow.
If holders of securities of ICN who are
entitled, by contract with ICN, to have securities included in
such an underwritten offering (the "Other Shareholders")
request such inclusion, the Shareholders shall offer to
include the securities of such Other Shareholders in the
underwriting and may condition such offer on their acceptance
of the further applicable provisions of this Section 5. ICN
shall (together with the Shareholders and the Other
Shareholders proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or
underwriters selected for such underwriting by the
Shareholders who shall be reasonably acceptable to ICN.
Notwithstanding any other provision of this Section 5.5, if
the representative advises the Shareholders in writing that
marketing factors require a limitation on the number of shares
to be underwritten, the number of shares of Registrable
Securities and other securities that may be included in the
registration and underwriting shall be allocated among the
Shareholders and Other Shareholders in proportion as nearly as
practicable, to the respective amounts of Registrable
Securities and other securities which they had requested to be
included in such registration at the time of filing the
registration statement. No Registrable Securities or any
other securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in
such registration. If the Shareholders or any Other
Shareholder who has requested inclusion in such registration
as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by
written notice to ICN, the underwriter and the Shareholders.
The securities so withdrawn shall also be withdrawn from
registration. If the underwriter has not limited the number
of Registrable Securities or other securities to be
underwritten, ICN may include its securities for its own
account in such registration if the underwriter so agrees and
if the number of Registrable Securities and other securities
which would otherwise have been included in such registration
and underwriting will not thereby be limited.
4.6. Company Registration.
--------------------
4.6.1. If at any time during the five-year
period following the closing of the Merger Agreement, as
extended pursuant to Section 5.13, ICN shall determine to
register any of its securities either for its own account or
the account of a security holder or holders exercising their
respective demand registration rights, other than a
registration relating solely to a Commission Rule 145
transaction, or a registration on any registration form which
does not permit secondary sales or does not include
substantially as much information as would be required to be
included in a registration statement covering the sale of
Registrable Securities, ICN will: (i) promptly give to the
Shareholders written notice thereof at least 20 days before
the filing of any registration statement (which shall include
a list of the jurisdictions in which ICN intends to attempt to
qualify such securities under the applicable blue sky or other
state securities laws); and (ii) include in such registration
(and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all or
a part of the Shareholders' Registrable Securities as shall be
specified in a written request or requests, made by the
Shareholders within fifteen (15) days after receipt of the
written notice from ICN described in clause (i) above, except
(A) as set forth in Section 5.6(b) below, (B) ICN shall not be
required to include Registrable Securities in any such
registration if in the opinion of ICN's investment bankers
delivered to the Shareholders in writing the inclusion of such
Registrable Securities may impair the offering in which such
Registrable Securities are proposed for inclusion, and (C)
that ICN shall not be required to include Registrable
Securities in more than one such registration which
registration shall have been kept effective for the period
referred to in Section 5.8(a); provided, that if any
Registrable Securities included in a request by the
Shareholders under this Section 5.6(a) have not been
registered after ICN has effected one such registration
because they were excluded pursuant to the provisions of
Section 5.6(b) below, then the Shareholders shall have the
right to request inclusion of such Registrable Securities in
such additional like registrations by ICN, on the same terms
and conditions as provided in this Section 5.6(a), as shall be
necessary to effect the registration of such excluded
Registrable Securities.
4.6.2. Underwriting. If the registration of
which ICN gives notice is for a registered public offering
involving an underwriting, ICN shall so advise the
Shareholders as part of the written notice given pursuant to
Section 5.6(a)(i). In such event the right of the Shareholders to
registration pursuant to Section 5.6 shall be conditioned upon
the Shareholders' participation in such underwriting and the
inclusion of the Shareholders' Registrable Securities in the
underwriting to the extent provided herein. The Shareholders,
together with ICN and the Other Shareholders distributing
their securities through such underwriting, if any, shall
enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by ICN or the Other
Shareholders, as the case may be. Notwithstanding any other
provision of this Section 5.6, if the underwriter determines
that marketing factors require a limitation on the number of
shares to be underwritten, the underwriter may (subject to the
allocation priority set forth below) exclude from such
registration and underwriting some or all of the Registrable
Securities which would otherwise be underwritten pursuant
hereto. ICN shall so advise all holders of securities
requesting registration, and the number of shares or
securities that are entitled to be included in the
registration and underwriting shall be allocated in the
following manner. The securities of ICN held by officers and
directors of ICN shall be excluded from such registration and
underwriting to the extent required by such limitation, and,
if a limitation on the number of shares is still required, the
number of shares that may be included in the registration and
underwriting shall be allocated among the Shareholders and
Other Shareholders in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities and other
securities which they had requested to be included in such
registration at the time of filing the registration statement.
If the Shareholders or any officer, director or Other
Shareholder disapproves of the terms of any such underwriting,
he may elect to withdraw therefrom by written notice to ICN
and the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration.
4.7 Expenses of Registration. All Registration
Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Section 5 shall be
borne by ICN, and all Selling Expenses (except fees and
disbursements of counsel, which shall be borne by the party
engaging such counsel) shall be borne by the holders of the
securities so registered pro rata on the basis of the number of
their shares so registered.
4.8 Registration Procedures. In the case of each
registration effected by ICN pursuant to Section 5, ICN will keep
the Shareholders advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense,
ICN will:
4.8.1. Keep such registration effective for
a period of one hundred twenty (120) days or until the
Shareholders have completed the distribution described in the
registration statement relating thereto, whichever first
occurs and in furtherance thereof, ICN shall prepare and file
with the Commission such amendments and supplements to the
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration
statement effective for such period;
4.8.2. Furnish such number of prospectuses
and other documents incident thereto, as the same shall be
amended or supplemented from time to time, as the Shareholders
from time to time may reasonably request;
4.8.3 Use its best efforts to register or
qualify the Registrable Securities covered by such
registration statement under the securities or blue sky laws
of such jurisdictions as the underwriter for such offering or
any Shareholder may reasonably request; provided that ICN
shall in no event be required to qualify to do business as a
foreign corporation in any jurisdiction where it is not
otherwise required to be qualified, to amend its Restated
Certificate of Incorporation, as amended, or to change the
composition of its assets at the time to conform with the
securities or blue sky laws of such jurisdictions, to take any
action that would subject it to service of process in suits
other than those arising out of the offer and sale of the
Registrable Securities covered by the registration statement;
or to subject itself to taxation in any jurisdiction where it
has not theretofore done so;
4.8.4 Promptly notify the Shareholders of
any stop order or similar proceeding initiated by state or
federal regulatory bodies and use its best efforts to
expeditiously remove such stop order or similar proceeding;
4.8.5 Cause all Registrable Securities to
be listed on each securities exchange on which similar
securities issued by ICN are then listed and, if not so
listed, to be listed on the NASD's automated quotation system
on which similar securities issued by ICN are listed;
4.8.6. Provide a transfer agent and
registrar for all such Registrable Securities not later than
the effective date of such registration statement;
4.8.7. Otherwise use its best efforts to
comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first
day of ICN's first full calendar quarter after the effective
date of the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Act and
Rule 158 under the Act; and
4.8.8. prior to filing any registration
statement, prospectus or amendment with the Commission, ICN
shall provide the Shareholders copies of all information to be
included therein concerning the Shareholders and give the
Shareholders an opportunity to furnish corrections or other
modifications to such information.
4.9. Indemnification.
---------------
4.9.1. ICN will indemnify the Shareholders
and each person controlling a Shareholder, with respect to
which registration, qualification or compliance has been
effected pursuant to this Section 5, and each underwriter, if
any, and each person who controls any underwriter, against all
claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any
related registration statement, notification or the like)
incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or
any violation by ICN of the Act or any rule or regulation
thereunder applicable to ICN and relating to action or
inaction required of ICN in connection with any such
registration, qualification or compliance, and will reimburse
the Shareholders, and each person controlling a Shareholder,
each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any
such claims, loss, damage, liability or action, provided that
ICN will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of
or is based on any untrue statement or omission based upon
written information furnished to ICN by the Shareholders or
any underwriter and stated to be specifically for use therein.
4.9.2. The Shareholders will, if Registrable
Securities held by them are included in the securities as to
which such registration, qualification or compliance is being
effected, indemnify ICN, each of its directors and officers
and each underwriter, if any, of ICN's securities covered by
such a registration statement, each person who controls ICN or
such underwriter within the meaning of the Act and the rules
and regulations thereunder, against all claims, losses,
damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse
ICN and such directors, officers, partners, persons,
underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon
and in conformity with written information furnished to ICN by
the Shareholders and stated to be specifically for use therein;
provided, however, that the obligations of the Shareholders
hereunder shall be limited to an amount equal to the proceeds
to the Shareholders of securities sold as contemplated herein.
4.9.3. Each party entitled to
indemnification under this Section 5.9 (the "Indemnified
Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom provided that counsel for
the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be approved
by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense, and
provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 4.
No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection with
the defense of such claim and litigation resulting therefrom.
4.9.4. If for any reason the foregoing
indemnity is unavailable, or is insufficient to hold harmless
an Indemnified Party under Section 5.9(a) or 5.9(b) above in
respect of any claim, then the Indemnifying Party shall
contribute to the amount paid or payable by the Indemnified
Party as a result of such claim in such proportion as is
appropriate to reflect the relative benefits received by, and
the relative fault of, the Indemnifying Party on the one hand
and the Indemnified Party on the other from such offering of
securities, as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable in
respect of any claim shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such claim.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The provisions of this Section
5.9(d) shall be in addition to any other rights to
indemnification or contribution which any Indemnified Party
may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any
Indemnified Party and shall survive the transfer of the
Registrable Securities by any such party.
4.10. Information by Shareholders. The
Shareholders shall furnish to ICN such information regarding the
Shareholders and the distribution proposed by the Shareholders as
ICN may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or
compliance referred to in this Section 5.
4.11. Rule 144 Reporting. With a view to
making available the benefits of certain rules and regulations of
the Commission which may permit the sale of the Restricted
Securities to the public without registration, ICN agrees to:
4.11.1 Make and keep public information
available as those terms are understood and defined in Rule
144 under the Securities Act;
4.11.2 Use its best efforts to file with the
Commission in a timely manner all reports and other documents
required to be filed by ICN under the Act and the Securities
Exchange Act of 1934 (the "Exchange Act");
4.11.3 So long as the Shareholders own any
Restricted Securities, furnish to the Shareholders forthwith
upon request a written statement by ICN as to its compliance
with the current reporting requirements of Rule 144, and of
the Act and the Exchange Act, a copy of the most recent annual
or quarterly report of ICN and such other reports and
documents so filed as the Shareholders may reasonably request
in availing themselves of any rule or regulation of the
Commission allowing the Shareholders to sell any such
securities without registration.
4.12. Transfer or Assignment of Registration
Rights. The rights to cause ICN to register securities granted
to the Shareholders by ICN under Sections 5.5 and 5.6 may be
transferred or assigned by the Shareholders to a transferee or
assignee of the Shareholders' Restricted Securities; provided
that ICN is given notice at the time of such transfer or
assignment, stating the name and address of such transferee or
assignee and identifying the securities with respect to which
such registration rights are being transferred or assigned: and
provided, further, that the transferee or assignee of such rights
assumes the obligations of the Shareholders under this Section 5.
Such transferee or assignee shall be deemed a Shareholder for
purposes of this Section 5.
4.13. "Market Stand Off" Agreement. The
Shareholders agree, if requested by ICN and an underwriter of
Common Stock (or other securities) of ICN, not to sell or
otherwise transfer or dispose of any Common Stock (or other
securities) of ICN held by the Shareholders during the one
hundred eighty (180) day period following the effective date of a
registration statement of ICN filed under the Act not including
Restricted Securities, provided that (i) all Other Shareholders
and officers and directors of ICN enter into similar agreements,
and (ii) the two-year and five-year periods referred in Sections
5.5(a) and 5.6(a) and the Guaranty Period referred to in Section
2.1 shall be deemed automatically extended for each such one
hundred eighty-day period, in the case of any such agreements
during the last year of such periods. Such agreement shall be in
writing in a form satisfactory to ICN and such underwriter. ICN
may impose stop-transfer instructions with respect to the shares
(or securities) subject to the foregoing restriction until the
end of said one hundred eighty-day (180) day period.
5. Authority of Shareholders' Representatives;
Reliance by ICN. For purposes of making any decision pursuant
to, or carrying out and performing, this Agreement, on the part
of the Shareholders, including, without limitation, pursuant to
Sections 5.5 and 5.6 in respect of a registered public offering
of Registrable Securities, the Shareholders' Representatives (as
defined in Section 8.15 of the Merger Agreement) shall have authority to
make any such decision, and otherwise carry out and perform the
obligations on the part of the Shareholders hereunder; such
decisions and performance shall be binding upon all the
Shareholders; and ICN shall be entitled to rely upon such
authority in performing its obligations hereunder. In
furtherance of the foregoing, the Shareholders hereby confirm
their agreements set forth in Section 8.15 of the Merger
Agreement, which Section is hereby incorporated by reference
herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement, as of the date first above written.
"ICN"
ICN PHARMACEUTICALS, INC.,
a Delaware corporation
By: Bill A. MacDonald
Title: Executive Vice President
"COMPANY"
GLY DERM, INC.,
a Michigan corporation
By: Steve Sensoli
Title: President
"SHAREHOLDERS"
/s/ Marvin E. Klein
Marvin E. Klein, Trustee
Marvin E. Klein, M.D. Grantor Trust
dated July 3, 1974 as restated
Address:
/s/ Maurice Belkin
Maurice Belkin, Trustee
UTA June 14, 1994
Address:
/s/ Diane F. Keene
Trustees of the Diane F. Keene Insurance
Trust dated December 29, 1989
Address:
/s/ Diane F. Keene
/s/ Helene Davidson
Diane F. Keene and Helene Davidson,
Trustees of the Diane F. Keene Grantor
Trust
Address:
/s/ Ann Weber
/s/ Sidney H. Weber
Sidney H. Weber and Ann Weber
Address:
/s/ Steven Cohen
Steven Cohen
Address:
/s/ Sylvia Glover
Sylvia Glover
Address:
/s/ Patricia Wendel
Patricia Wendel
Address:
/s/ Phyllis Fine
Phyllis Fine
Address:
/s/ Jennifer Lynn Markusic
Jennifer Lynn Markusic
Address:
/s/ Noel H. Upfall
Noel H. Upfall, D.O.
Address:
/s/ Elizabeth Weber
/s/ Jeffrey Weber
Jeffrey Weber and Elizabeth Weber
Address:
/s/ Robert T. Goldman
Robert T. Goldman
Address:
/s/ Daisy P. Ramos
Daisy P. Ramos, M.D.
Address:
/s/ Marsha H. Seff
/s/ Daniel B. Seff
Daniel B. Seff and Marsha H. Seff,
JTWROS
Address:
/s/ Judith C. Redmond
Judith C. Redmond Trustee UTA 11-5-87
Address:
/s/ Richard S. Schwartz
Richard S. Schwartz, M.D.
Address:
/s/ Marvin D. Siegel
Marvin D. Siegel, M.D., Trustee
Address:
Exhibit 4.5
STOCK PURCHASE AGREEMENT
BY AND AMONG
SEALITE SCIENCES, INC.
AND
ICN PHARMACEUTICALS, INC.
DATED AS OF NOVEMBER 16, 1995
TABLE OF CONTENTS
PAGE
----
ARTICLE I - SALE AND PURCHASE OF THE SHARES................... 1
1.1 Agreement to Sell and Purchase................... 1
1.2 Purchase Price................................... 1
1.4 Closing; Valuation Date.......................... 2
1.5 Items to Be Delivered at Closing................. 3
1.7 Default by SeaLite at the Closing................ 5
1.8 Further Assurances............................... 6
ARTICLE II - RELATED AGREEMENTS............................... 6
2.1 Conduct Pending Closing.......................... 6
2.2 Confidentiality.................................. 6
2.3 Public Announcements............................. 7
2.4 Conditions to Closing............................ 7
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SEALITE....... 7
3.1 Organization and Standing of SeaLite............. 7
3.2 SeaLite Capacity and Validity.................... 7
3.3 Capital ......................................... 7
3.4 Subsidiaries and Investments..................... 8
3.5 Absence of Conflicting Agreements or Required
Consents....................................... 8
3.6 Valid Issuance of the Purchased Shares........... 8
3.7 Business Plan.................................... 8
3.8 Intellectual Property Rights..................... 9
3.9 Manufacturing and Marketing Rights............... 9
3.10 Financial Statements............................. 9
3.11 Absence of Changes............................... 10
3.12 No Undisclosed Liabilities....................... 11
3.13 Litigation and Claims............................ 11
3.14 No Violation of Law.............................. 11
3.15 Licenses and Authorizations...................... 11
3.16 Lease Agreements................................. 12
3.17 Property......................................... 12
3.18 Indebtedness for Borrowed Money.................. 13
3.19 Employee Contracts, Union Agreements and Benefit
Plans.......................................... 13
3.20 Labor Relations.................................. 13
3.21 Contracts and Commitments........................ 14
3.22 Environmental Protection......................... 14
3.23 Filing Reports................................... 16
3.24 Policies......................................... 16
3.25 Accounts Receivable.............................. 17
3.26 Inventory........................................ 17
3.27 Taxes............................................ 17
3.28 State Takeover Laws.............................. 17
3.29 Powers of Attorneys.............................. 18
3.30 Agreements in Full Force and Effect.............. 18
3.31 Statements True and Correct...................... 18
3.32 Schedules........................................ 18
3.33 Purchase Entirely for Own Account................ 18
3.34 Reliance Upon Investors' Representations......... 18
3.35 Receipt of Information........................... 19
3.36 Investment Experience............................ 19
3.37 Restricted Securities............................ 19
3.38 Legends.......................................... 19
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PURCHASER...... 20
4.1 Organization, Standing and Authority of Purchaser 20
4.2 Absence of Conflicting Agreements or Required
Consents Relating to Purchaser's Obligations... 20
4.3 Valid Issuance of the Purchase Price Shares...... 20
4.4 Litigation and Claims Against Purchaser.......... 20
4.5 Purchase Entirely for Own Account................ 20
4.6 Reliance Upon Investors' Representations......... 21
4.7 Receipt of Information........................... 21
4.8 Investment Experience............................ 21
4.9 Accredited Investor.............................. 21
4.10 Related Securities............................... 21
4.11 Legends.......................................... 21
ARTICLE V - CONDITIONS TO OBLIGATIONS OF PURCHASER............ 22
5.1 Representations and Warranties................... 22
5.2 Performance; Covenants........................... 22
5.3 No Injunction, Etc............................... 22
ARTICLE VI - CONDITIONS TO OBLIGATIONS OF SEALITE............. 22
6.1 Representations and Warranties................... 23
6.2 Performance; Covenants........................... 23
6.3 No Injunction, Etc............................... 23
6.4 Disclosure....................................... 23
ARTICLE VII - TERMINATION; REMEDIES........................... 23
7.1 Method of Termination............................ 23
7.2 Notice of Termination............................ 24
7.3 Effect of Termination............................ 24
7.4 Notification of Certain Events................... 24
ARTICLE VIII - MISCELLANEOUS PROVISIONS....................... 25
8.1 Notices.......................................... 25
8.2 Waiver........................................... 26
8.3 Assignment....................................... 26
8.4 Binding Effect................................... 26
8.5 Headings......................................... 26
8.6 Entire Agreement................................. 26
8.7 Governing Law; Severability...................... 26
8.8 Counterparts..................................... 27
8.9 No Brokers....................................... 27
8.10 Schedules and Exhibits........................... 27
8.11 Expenses......................................... 27
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
- ---------
3.3.1 SeaLite Capital Stock
3.3.2 SeaLite Warrants
3.8 Intellectual Property Rights
3.10 Financial Statements
3.11 Changes since September 30, 1995
3.12 Undisclosed Liabilities
3.15 Licenses
3.16 Lease Agreements
3.17.1 Personal Property
3.17.2 Intellectual Property
3.18 Indebtedness for Borrowed Money
3.19 Employment Contracts
3.21 Contracts and Commitments
3.24 Insurance
EXHIBITS
- --------
Exhibit 1.4(a)(2) Form of Investor Agreement
Exhibit 1.4(a)(3) Form of Voting Trust Agreement
Exhibit 1.4(a)(4) Form of Stock Option Agreement
Exhibit 1.4(a)(5) Form of Indemnification Agreement
Exhibit 1.4(a)(6) Form of Manufacturing Agreement
Exhibit 1.4(a)(7) Form of SeaLite Compliance Certificate
Exhibit 1.4(a)(8) Form of SeaLite Secretary's Certificate
Exhibit 1.4(a)(9) Form of Opinion of Nelson Mullins Riley &
Scarborough, L.L.P.
Exhibit 1.4(a)(10) Form of Promissory Note
Exhibit 1.4(a)(11) Form of Pledge Agreement
Exhibit 1.4(b)(2) Form of ICN Compliance Certificate executed
by an executive officer of ICN
Exhibit 1.4(b)(3) Form of ICN Secretary's Certificate executed
by the Secretary, or Assistant Secretary
Exhibit 1.4(b)(4) Form of Opinion Letter of ICN's Counsel
Exhibit 4.5
Appendix A
"Affiliate" of a person shall mean any other person directly, or
indirectly through one or more intermediaries, controlling,
controlled by or under common control with such person.
"Contract" means any written or oral contract, agreement
understanding, lease, instrument, commitment, restriction,
obligation or undertaking of any kind or character or other
document to which SeaLite is a party or that is binding on
SeaLite or its securities, assets or business.
"Knowledge" with respect to SeaLite shall mean the knowledge of
each of H. Lee Herron, Douglas S. Ross, and David F. Smith Ph.D.
after due inquiry of each employed officer of SeaLite.
"Material Agreement" shall mean any Contract (a) affecting or
relating to real property, (b) affecting or relating to personal
property (other than Contracts affecting rights in personal
property which do not involve the payment by SeaLite of more than
$1,000.00 per month or $12,000.00 per year), (c) for the
acquisition of goods, assets or services that relate to the
business of SeaLite (other than purchase orders and other
commitments which do not exceed $2,500.00 each), (d) for the
acquisition of capital assets that relate to the business of
SeaLite (other than purchase orders and other commitments which
do not exceed $5,000.00 each), (e) for the sale of products or
the performance of services by SeaLite which exceed $10,000.00
each, (f) with any employee or Affiliate of SeaLite that is not
immediately terminable at will by SeaLite without any liability,
(g) with any agent, broker, sales representative of or any person
in a similar representative capacity for SeaLite, (h) whereby a
power of attorney is given by SeaLite, whether limited or
general, to any person, and (i) that (1) requires performance by
SeaLite of any obligation for a period of time extending beyond
six months from the Closing Date or which is not terminable by
SeaLite without penalty upon sixty (60) days or less notice, or
(2) payments provided for or actually made thereunder by or to
SeaLite in any calendar year exceed $12,000.00.
"Material Permit" shall mean any license, franchise, notice,
permit, easement, right, certificate, authorization, approval or
filing to which SeaLite is a party or that is or may be binding
upon or inures to the benefit of SeaLite, its assets, business or
financial position, and which is necessary or required to operate
the business of SeaLite in the manner in which it is currently
operated, or the failure of which to obtain or maintain could
result in any fine, penalty, cost or other liability to SeaLite
in excess of the amounts ordinarily required in the absence of
the failure to obtain or maintain such license, franchise,
notice, permit, easement, right, certificate, authorization,
approval or filing.
"Predecessor" shall mean any predecessor of SeaLite.
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of November 16, 1995 (the "Effective Date") by and
between ICN PHARMACEUTICALS, INC., a corporation organized and
existing under the laws of the State of Delaware ("ICN") and
SEALITE SCIENCES, INC., a corporation organized and existing
under the laws of the State of Georgia ("SeaLite").
RECITALS
--------
A. SeaLite currently has outstanding 1,419,687 shares of
its $0.01 par value common stock (the "Common Stock").
B. SeaLite intends to issue and sell to ICN, and ICN
desires to purchase, an additional 1,333,334 shares of Common
Stock (the "Shares") upon the terms and subject to the conditions
set forth herein.
C. Certain terms used in this Agreement are defined in
Appendix A to this Agreement.
NOW, THEREFORE, in consideration of the recitals above,
which are an integral part of this Agreement, and the mutual
representations, warranties and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE SHARES
-------------------------------
1.1 Agreement to Sell and Purchase. For the consideration
hereinafter provided and subject to the terms and conditions of
this Agreement, at the Closing SeaLite shall sell, assign,
transfer, convey and deliver to ICN, free and clear of all liens,
charges, claims or encumbrances, and ICN shall purchase and
acquire from SeaLite, the Shares. The purchase price (the
"Purchase Price") shall be an amount equal to One Million Eight
Hundred Fifty Thousand Dollars ($1,850,000.00).
1.2 Purchase Price.
--------------
(a) ICN shall pay the Purchase Price to SeaLite by
issuing the number of shares of the $.01 par value common stock
of ICN (the "ICN Common Stock") determined by dividing the
Purchase Price by the average quoted closing price per share of
ICN Common Stock (the "Average Share Price") as reported by the
New York Stock Exchange for the five (5)
consecutive trading days ending two (2) days before the Effective
Date, or for the five (5) consecutive trading days ending two (2)
days before the Closing Date, whichever is higher. The number of
shares of ICN Common Stock issued to SeaLite shall be
proportionately adjusted to reflect any stock dividend, stock
split, recapitalization, combination or exchange of shares,
merger, consolidation, reorganization or other change or
transaction of or by ICN as a result of which shares of any class
of stock or other securities shall be issued in respect of ICN
Common Stock, or if any ICN Common Stock shall be changed into
the same or a different number of shares of the same or another
class of stock or other securities occurring after the date
hereof but prior to the Closing Date. No fractional shares shall
be issued in connection with this transaction. SeaLite shall
receive at Closing the largest whole number of shares deliverable
pursuant to this Section 1.2(a) (the "Purchase Price Shares") and
an amount of cash equal to the Average Share Price multiplied by
the fractional shares deliverable pursuant to the computation set
forth in this Section 1.2(a).
(b) The Purchase Price will be adjusted as follows:
(1) Within five (5) days after the end of the
Protected Period, SeaLite shall provide ICN with a certificate
(the "Adjustment Certificate") signed by the Chief Executive
Officer of SeaLite that sets forth (A) all sales of the Purchase
Price Shares during the Protected Period, and (B) the Net Sales
Price of such sales. "Protected Period" means the period that
begins on the Closing Date and ends ninety (90) days after the
earlier to occur of (x) the day that any of the Purchase Price
Shares are eligible to be sold under Rule 144, or (y) the day
that a Registration Statement with respect to the Purchase Price
Shares becomes effective. "Net Sales Price" means the sales
price realized by SeaLite on the sale of the Purchase Price
Shares, net of any broker or dealer fees, discounts and expenses,
and all transfer and other taxes. "Rule 144" means Rule 144 as
promulgated by the Commission under the Securities Act, as such
Rule may be amended from time to time, or any similar successor
rule that may be promulgated by the Commission.
(2) If the Net Sales Price from the sales of
Purchase Price Shares during the Protected Period to persons
unaffiliated with SeaLite is less than the Average Share Price
multiplied by the number of Purchase Price Shares sold (the
"Minimum Amount"), then ICN shall pay SeaLite an amount in cash
equal to such shortfall. Such payment shall be deemed to be an
increase in the Purchase Price.
(3) If the Net Sales Price from the sales of
Purchase Price Shares during the Protected Period to persons
unaffiliated with SeaLite is greater than 1.2 multiplied by the
Minimum Amount, then SeaLite shall pay ICN an amount in cash
equal to such excess. Such payment shall be deemed to be a
decrease in the Purchase Price.
(4) The payments required by Sections 1.2(b)(2)
and (3) shall be due and payable within fifteen (15) days after
the date that ICN receives the Adjustment Certificate.
1.3 Closing. The closing of the sale of the Shares
hereunder (the "Closing") shall take place at the offices of
Alston & Bird on a date and time to be mutually agreed upon by
the parties, but in no event later than December 31, 1995, unless
otherwise extended by mutual agreement of the parties (the
"Closing Date").
1.4 Items to Be Delivered at Closing. At the Closing, the
parties shall exchange the following documents (collectively,
the "Transaction Documents") in connection with the purchase and
sale of the Shares.
(a) SeaLite shall deliver to ICN the following:
(1) certificates representing the Shares
registered in ICN's name;
(2) an Investor Agreement executed by SeaLite and
substantially in the form of Exhibit 1.4(a)(2) (the "Investor
Agreement");
(3) a Voting Trust Agreement executed by SeaLite
and substantially in the form of Exhibit 1.4(a)(3) (the "Voting
Trust Agreement");
(4) a Stock Option Agreement executed by SeaLite,
and each holder of securities issued by SeaLite, and
substantially in the form of Exhibit 1.4(a)(4) (the "Stock Option
Agreement");
(5) an Indemnification Agreement executed by
SeaLite and substantially in the form of Exhibit 1.4(a)(5) (the
"Indemnification Agreement");
(6) a Manufacturing Agreement executed by SeaLite
and substantially in the form of Exhibit 1.4(a)(6) (the
"Manufacturing Agreement");
(7) a compliance certificate executed by the
President of SeaLite and substantially in the form of Exhibit
1.4(a)(7)
(8) a Secretary's certificate executed by the
Secretary of SeaLite and substantially in the form of Exhibit
1.4(a)(8);
(9) an opinion of Nelson Mullins Riley &
Scarborough, L.L.P., executed by a partner of such firm and
substantially in the form of Exhibit 1.4(a)(9);
(10) the Promissory Note executed by SeaLite and
substantially in the form of Exhibit 1.4(a)(10) (the "Note");
(11) the Pledge Agreement executed by SeaLite and
substantially in the form of Exhibit 1.4(a)(11) (the "Pledge
Agreement");
(12) all other documents reasonably requested by
ICN.
(b) ICN shall deliver to SeaLite the following:
(1) counterpart originals of the Investor
Agreement, the Voting Trust Agreement, the Stock Option
Agreement, the Indemnification Agreement, the Manufacturing
Agreement, the Note and the Pledge Agreement executed by an
executive officer of ICN.
(2) a compliance certificate executed by an
executive officer of ICN and substantially in the form of Exhibit
1.4(b)(2).
(3) a Secretary's certificate executed by the
Secretary, or an assistant Secretary, of ICN and substantially in
the form of Exhibit 1.4(b)(3).
(4) an opinion letter of ICN's counsel (which may
be ICN's Associate General Counsel) executed by such counsel and
substantially in the form of Exhibit 1.4(b)(4).
(5) certificates representing the Purchase Price
Shares registered in SeaLite's name.
(6) all other documents reasonably requested by
SeaLite.
1.5 Registration of the Purchase Price Shares.
-----------------------------------------
(a) Within six (6) months after the Closing Date, ICN
shall:
(1) file with the Securities and Exchange
Commission (the "Commission") a registration statement (the
"Registration Statement") on Form S-3 or other applicable or
available forms to register under the Securities Act of 1933, as
amended (the "Securities Act"), all of the Purchase Price Shares
for sale by SeaLite, and thereafter shall use its best efforts to
cause such Registration Statement to become and remain effective
as provided in this Section 1.5; and
(2) furnish to SeaLite such copies of the
prospectus constituting a part of the Registration Statement as
SeaLite may reasonably request in order to facilitate the public
sale of the Purchase Price Shares during the period that begins
on the effective date of the Registration Statement and ends
ninety (90) days thereafter (the "Registration Period").
(3) make available to SeaLite "piggy-back"
registration rights with respect to the Purchase Price Shares
equivalent in scope to the registration rights granted to ICN
with respect to Registrable Securities under Section 1.3 of the
Investor Agreement.
(b) After delivery of the Registration Statement to
the Commission, and as soon as reasonably practicable, ICN shall:
(1) use its best efforts to cause the Purchase
Price Shares to be listed on each securities exchange or other
securities trading market on which ICN Common Stock is then
listed. Further, ICN shall prepare and file with the Commission
such amendments and supplements to the Registration Statement and
the prospectus used in connection therewith as may be necessary
to keep such Registration Statement effective until the earlier
of (1) such time as SeaLite has sold all of the Purchase Price
Shares or (2) ninety (90) days after the effective date of the
Registration Statement; and
(2) use its best efforts to register or qualify
the Purchase Price Shares under such other securities or blue sky
or other applicable laws of such jurisdictions as SeaLite shall
reasonably request in writing prior to the Closing Date to enable
SeaLite to consummate the public sale or other disposition of the
Purchase Price Shares; provided that ICN shall not be required in
connection therewith or as an election thereto to qualify to do
business or to file a general consent to service of process in
any such jurisdiction.
(c) ICN's obligations under Section 1.5 shall
terminate unless SeaLite shall furnish to ICN such information as
ICN may reasonably request from SeaLite for use in preparing the
Registration Statement (and the prospectus included therein) and
performing its other obligations under this Section 1.5.
(d) Subject to the satisfaction by ICN of its
obligations pursuant to Section 1.5(a)(1) hereof, the refusal of
the Commission to declare effective a Registration Statement with
respect to the Purchase Price Shares shall not in any way affect
the validity or enforceability of any other provision of this
Agreement provided that the Commission's refusal to declare
effective a Registration Statement is not related to, or the
result of, any act or omission of ICN.
(e) Except as set forth below, ICN shall pay all
reasonable and customary expenses of a registrant in connection
with the registration of the Purchase Price Shares, including
fees and expenses of counsel to ICN and of its independent public
accountants, filing fees and other expenses charged by the
Commission or by the securities regulatory authority of any state
or other jurisdiction in which Purchase Price Shares are to be
qualified and which are attributable to the registration or
qualification of such shares, and printing expenses.
Notwithstanding the foregoing, SeaLite shall bear its own
expenses in connection with the registration and sale of the
Purchase Price Shares, including without limitation expenses of
its own counsel, broker or dealer fees, discounts and expenses,
and all transfer and other taxes on the sale of Purchase Price
Shares; provided, however, that ICN shall pay the costs of Rule
144 opinions, if any, rendered by ICN's counsel.
1.6 Restrictions on Sale. SeaLite shall not sell any of
the Purchase Price Shares during the Protected Period without the
prior written approval of ICN; provided, however, that ICN shall
allow SeaLite to sell all of the Purchase Price Shares to persons
unaffiliated with SeaLite during the last ninety (90) days of the
Protected Period in sales either that are registered under
Section 1.5 or that comply with Rule 144. SeaLite shall sell any
or all of the Purchase
Price Shares at such time or times during the Protected Period as
ICN shall designate in writing to SeaLite, assuming such sales
are in compliance with the Securities Act.
1.7 Default by SeaLite at the Closing. SeaLite
acknowledges that the Shares are unique and otherwise not
available and agrees that in addition to any other remedies, ICN
may invoke any equitable remedies to enforce delivery of the
Shares including without limitation, any action or suit for
specific performance.
1.8 Further Assurances. Each party, from time to time
after the Closing, at the other party's request, will execute,
acknowledge and deliver to the other party such other instruments
of conveyance and transfer and will execute and deliver such
other documents and certification, all as such other party may
reasonably require in order to carry out, evidence and confirm
the intended purposes of the Transaction Documents.
ARTICLE II
RELATED AGREEMENTS
------------------
2.1 Conduct Pending Closing.
-----------------------
(a) Except as set forth in Section 7.1(c), SeaLite
covenants and agrees that, between the date of this Agreement and
either the Closing Date or the termination of this Agreement
pursuant to Article VII hereof, it shall not solicit, encourage,
initiate or participate in any discussions or negotiations with,
or provide information to, any person or entity other than ICN
regarding the acquisition of (1) any security of SeaLite
(including the Shares), or (2) any material asset of SeaLite.
(b) At all times prior to the Closing, ICN's
employees, attorneys, accountants, agents and other authorized
and designated representatives will be allowed free and full
access to the properties, books and records of SeaLite, including
without limitation, deeds, title documents, leases, customer
lists, insurance policies, minute books, share certificate books,
share registers, accounts, tax returns, financial statements and
all other data that, in the reasonable opinion of ICN, are
required for ICN to make such investigation as it may desire of
the assets, properties and business of SeaLite. ICN shall also
be allowed free and full access to consult with the officers,
employees, accountants, counsel and agents of SeaLite in
connection with such investigation of the assets, properties and
business of SeaLite.
(c) At all times prior to the Closing Date, SeaLite
shall maintain in full force and effect its corporate existence
and all licenses and other rights in or to use patents,
processes, trademarks, trade names or copyrights owned or
possessed by it and deemed by SeaLite to be necessary to conduct
its business and shall use its best efforts (without making any
commitments other than in the ordinary course of business) to (1)
keep available to SeaLite its present key officers and employees
except as otherwise contemplated by this Agreement or any other
agreement referred to herein, (2) preserve the present
relationships of SeaLite with its suppliers
and customers and others having business relationships, and (3)
take all steps reasonably necessary to maintain the intangible
assets and intellectual property of SeaLite.
2.2 Confidentiality. ICN agrees that from the date hereof
it will not, and will use reasonable efforts to ensure that its
representatives, agents or employees will not, without the prior
written consent of SeaLite, use in the conduct of its business
(except as contemplated by the Transaction Documents), or submit
or disclose to or file with any other person, any confidential or
non-public information relating to SeaLite, except for a
disclosure that may be required by any law, regulation, rule,
ordinance or judicial process. Subject to the foregoing, ICN
shall not, in the course of any investigation it shall deem
necessary and desirable in connection with the transactions
contemplated by the Transaction Documents, be prohibited from
discussing the business, assets and properties of SeaLite with
others having bsiness dealings with SeaLite.
2.3 Public Announcements. Except as contemplated herein,
neither ICN nor SeaLite, nor any of its representatives, shall
make any public announcement with respect to the Transaction
Documents or the transactions contemplated thereby without the
prior consent of the other party hereto unless required by law or
judicial process, in which case notification shall be given to
the other party hereto prior to such disclosure.
2.4 Conditions to Closing. ICN and SeaLite agree to use
their reasonable best efforts to satisfy the closing conditions
set forth in Articles V and VI of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SEALITE
-----------------------------------------
As an inducement to ICN to enter into this Agreement and to
purchase the Shares, SeaLite represents and warrants to ICN as
follows:
3.1 Organization and Standing of SeaLite. SeaLite is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Georgia, and has the
power and authority to carry on its business as it has been and
is now being conducted and to own and lease the properties and
assets which it now owns or leases. SeaLite is duly qualified or
licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign
jurisdictions where the character of its assets and properties or
the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the
failure to be so qualified or licensed will not have,
individually or in the aggregate, a material adverse effect on
SeaLite. The stock record books of SeaLite, which have been made
available to ICN for review, contain true, complete and accurate
records of the stock ownership of SeaLite and the transfer of the
shares of their capital stock.
3.2 SeaLite Capacity and Validity. SeaLite has the full
power, authority and capacity necessary to enter into and perform
its obligations under each of the Transaction Documents to which
it is a party (collectively, the "SeaLite Documents"), and to
consummate the transactions contemplated thereby. Each of the
SeaLite Documents has been duly executed
and delivered by SeaLite, and constitutes the legal, valid and
binding obligation of SeaLite, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, or
other laws affecting creditors' rights generally, or as may be
modified by a court of equity.
3.3 Capital Stock. The authorized capital stock of SeaLite
consists of 20,000,000 shares of voting stock, $0.01 par value,
1,419,687 of which are issued and outstanding. Set forth on
Schedule 3.3.1 hereto is a list of all of the record and
beneficial holders of capital stock of SeaLite and the type and
number of shares of capital stock of SeaLite held by each such
shareholder. Except as set forth on Schedule 3.3.1, no shares of
capital stock are held in the treasury of SeaLite. All of the
shares of outstanding capital stock of SeaLite have been duly and
validly issued, are fully paid and nonassessable, and were issued
pursuant to a valid exemption from registration under (a) the
Securities Act of 1933, as amended (the "Securities Act"), and
(b) all applicable state securities laws. Set forth on Schedule
3.3.2 hereto is a list of all persons who, as of the Closing
Date, hold outstanding warrants, options, rights (including
outstanding rights to demand registration by SeaLite under the
Securities Act), calls or other commitments of any nature
relating to the shares of capital stock of SeaLite. Except as
set forth on Schedule 3.3.2, there are no outstanding warrants,
options, rights (including outstanding rights to demand
registration or to sell in connection with a registration by
SeaLite under the Securities Act), calls or other commitments of
any nature relating to the shares of capital stock of SeaLite and
there are no outstanding securities of SeaLite convertible into
or exchangeable for shares of capital stock of SeaLite. SeaLite
is not obligated to issue any shares of its capital stock for any
purpose, and, except as contemplated hereby, no person or entity
has entered into any contract, whether oral or written, or option
or any right or privilege (whether pre-emptive or contractual)
capable of becoming a contract or option for the purchase,
subscription or issuance of any unissued shares, or other
securities of SeaLite.
3.4 Subsidiaries and Investments. SeaLite does not own,
directly or indirectly, any capital stock or other equity,
ownership or proprietary interest in any corporation,
partnership, association, trust, joint venture or other entity.
3.5 Absence of Conflicting Agreements or Required Consents.
Neither the execution, delivery and performance by SeaLite of the
SeaLite Documents, nor the acquisition by ICN of more than fifty
percent (50%) of the issued and outstanding Common Stock, (with
or without the giving of notice, the lapse of time, or both):
(a) requires the consent of or filing with any governmental or
regulatory authority or any other third party; (b) conflicts with
any provision of SeaLite' articles of incorporation or bylaws,
(c) conflicts with, results in a breach of, or constitutes a default
under, any ruling, judgment, order or injunction, or any law,
ordinance or regulation, of any court or governmental instrumentality
to which SeaLite is a party or by which SeaLite or its properties and
assets are bound; (d) conflicts with, constitutes grounds for
termination of, results in a breach of, constitutes a default under,
or accelerates or permits the acceleration of any performance required
by the terms of any Material Agreement or Material Permit to which
SeaLite is a party or by which SeaLite or any of its assets or properties
are bound; or (e) creates any claim, lien, charge, encumbrance or
restriction upon any of the assets or properties of SeaLite.
3.6 Valid Issuance of the Purchased Shares. The Shares,
when issued, sold and delivered in accordance with the terms of
this Agreement for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable, and will
be free of restrictions on transfer. The offer, sale and
issuance of the Shares as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act.
3.7 Business Plan. The Business Plan dated May 24, 1995,
previously delivered to ICN was prepared in good faith by SeaLite
and does not, to the Knowledge of SeaLite, contain any untrue
statement of a material fact nor does it omit to state a material
fact necessary to make the statements herein not misleading,
except that with respect to projections and expressions of
opinion or predictions contained in the Business Plan; SeaLite
represents only that such projections and expressions of opinion
and predictions were made in good faith and that SeaLite believes
there is a reasonable basis therefor.
3.8 Intellectual Property Rights. SeaLite owns or
possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses,
information, and proprietary rights necessary for its business as
now conducted and as proposed to be conducted without any
conflict with, or infringement of the rights of, others.
Schedule 3.8 contains a complete list of patents and pending
patent applications of SeaLite. Except for agreements with its
own employees or consultants, substantially in the form
referenced in Section 3.19 below, and except as disclosed in
Schedule 3.8, there are no outstanding options, licenses, or
agreements of any kind relating to the foregoing, nor is SeaLite
bound by or a party to any options, licenses, or agreements of
any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information,
and proprietary rights and processes of any other person or
entity. SeaLite has not received any communications alleging
that SeaLite has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights, trade secrets, or other
proprietary rights or processes of any other person or entity.
To the Knowledge of SeaLite, none of its employees is obligated
under any contract (including licenses, covenants, or commitments
of any nature) or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that
would interfere with the use of such employee's best efforts to
promote the interests of SeaLite or that would conflict with
SeaLite's business as proposed to be conducted.
3.9 Manufacturing and Marketing Rights. Except as
disclosed in Schedule 3.9, SeaLite has not granted rights to
manufacture, produce, assemble, license, market, or sell its
products to any other person and is not bound by any agreement
that affects SeaLite's exclusive right to develop, manufacture,
assemble, distribute, market, or sell its products.
3.10 Financial Statements. Attached hereto as Schedule 3.10
are SeaLite's audited financial statements for the period of
inception on April 25, 1991, through March 31, 1992; the fiscal
years ended March 31, 1993 and 1994; and the nine month period
ended December 31, 1994; and interim unaudited financial
statements for the nine month period ended September 30,
1995 reflecting the results of operations and financial condition
of SeaLite at such dates which have been prepared in accordance
with generally accepted accounting principals consistently
applied subject, solely in the case of interim financial
statements, to the absence of notes to such statements
(collectively, the "Financial Statements"). The Financial
Statements (a) present fairly the financial position of SeaLite
as of the dates indicated and present fairly the results of
SeaLite operations for the periods then ended; and (b) are in
accordance with the books and records of SeaLite, which are
complete and correct and have been properly maintained.
3.11 Absence of Changes. Except as set forth on Schedule
3.11 and except as permitted or contemplated by this Agreement,
since September 30, 1995 SeaLite has conducted its business only
in the ordinary course and SeaLite has not:
(a) suffered any material adverse change in its
working capital, condition (financial or otherwise), assets,
liabilities, reserves, business or operations;
(b) paid, discharged or satisfied any liability other
than the payment, discharge or satisfaction of liabilities in the
ordinary course of business;
(c) written off as uncollectible any receivable,
except for write-offs in the ordinary course of business;
(d) except in the ordinary course of business and
consistent with past practice, canceled or compromised any debts
or waived or permitted to lapse any claims or rights or sold,
transferred or otherwise disposed of any of its properties or
assets;
(e) except as set forth in SeaLite's 1995 capital
budget which is attached as a part of Schedule 3.11 hereto (the
"Budget"), entered into any commitment or transaction not in the
ordinary course of business or made any capital expenditure or
commitment in excess of $5,000.00;
(f) made any change in any method of accounting or
accounting practice;
(g) except as set forth in the Budget, incurred any
liabilities or obligations (absolute, accrued or contingent) in
excess of $5,000.00 except for trade payables incurred in the
ordinary course of business;
(h) mortgaged, pledged, subjected or agreed to
subject, any of its assets, tangible or intangible, to any lien,
claim or encumbrance, except for liens for current personal and
real property taxes not yet due and payable;
(i) sold or otherwise transferred any equity or other
interest in itself;
(j) increased any salaries, wages or any employee
benefits for any of its employees;
(k) hired, committed to hire or terminated any
employee except in the ordinary course of business;
(l) declared, set aside or made any payments,
dividends or other distributions to any holder of its capital
stock or other equity securities; or
(m) agreed, whether in writing or otherwise, to take
any action described in this Section 3.11.
3.12 No Undisclosed Liabilities.
--------------------------
(a) Except as listed on Schedule 3.12 hereto and
except for liabilities and obligations reflected on the Financial
Statements, SeaLite has no liabilities or obligations, whether
accrued, absolute, contingent or otherwise, which are reasonably
likely to have, individually or in the aggregate, a material
adverse effect on the business, assets or financial position of
SeaLite.
(b) Except for liabilities and obligations reflected
on the Financial Statements, SeaLite has no liabilities or
obligations, whether accrued, absolute, contingent or otherwise,
by reason of or arising out of (1) any violation of any federal,
state or local law, statute, ordinance, rule or regulation
(excluding Environmental Laws, as defined herein), (2) any
product liability or warranty claims, (3) any engineering
liability or warranty claims related to the provision of
engineering consulting or design or other related services, (4)
any claims for violating the rights of others in any trademark,
trade name, service mark, copyright, patent, trade secret, know-
how or other intellectual property or intangible asset, or (5)
any claims for torts committed by SeaLite or its employees or
agents, including but not limited to tortious interference with
contract, tortious interference with business relationships,
misappropriation of trade secret information, libel and slander;
which are reasonably likely to have, individually or in the
aggregate, a material adverse effect on the business, assets or
financial position of SeaLite.
3.13 Litigation and Claims. There are no lawsuits, actions,
arbitrations, administrative or other proceedings, pending, or to
the Knowledge of SeaLite, threatened against or affecting
SeaLite. To the Knowledge of SeaLite, there are no claims or
governmental investigations or inquiries pending or threatened
against or affecting SeaLite. To the Knowledge of SeaLite, there
is no basis for any such action or any state of facts or
occurrence of any event which might give rise to the foregoing.
There are no unsatisfied judgments against SeaLite or any consent
decrees to which SeaLite is subject.
3.14 No Violation of Law. SeaLite has not been nor shall be
as of the Closing Date (by virtue of any action, omission to act,
contract to which it is a party or any occurrence or state of
facts whatsoever) in violation of any applicable local, state or
federal law, ordinance, regulation, order, injunction or decree,
or any other requirement of any governmental body, agency or
authority or court binding on it, or relating to its assets,
properties or business.
3.15 Licenses and Authorizations. SeaLite is the holder of
all governmental and administrative licenses or permits necessary
to operate its business as it is currently being operated and own
its current assets and properties. A correct and complete list
of such licenses and permits is set forth on Schedule 3.15. No
violations, orders or deficiencies exist with respect to any of
the items listed on Schedule 3.15. There is no action pending
or, to the Knowledge of SeaLite, recommended by any state,
federal or other governmental agencies having jurisdiction over
the items listed on Schedule 3.15, either to revoke, withdraw or
suspend any such license or permit.
3.16 Lease Agreements. Schedule 3.16 contains a true and
complete list of all the lease agreements to which SeaLite is a
party and pursuant to which SeaLite leases (whether as lessor or
lessee) any real or personal property related to the operation of
its business and which are Material Agreements (the "Lease
Agreements"). SeaLite has delivered to ICN true and complete
copies of all of the Lease Agreements. The Lease Agreements are
valid and effective in accordance with their terms, and there is
not under any of such agreements (a) any existing or claimed
default by SeaLite or event of default or event which with notice
or lapse of time, or both, would constitute a default by SeaLite,
or (b) to the Knowledge of SeaLite, any existing default by any
other party under such agreements or any event of default or
event which with notice or lapse of time, or both, would
constitute a default by any such party.
3.17 Property.
--------
(a) Schedule 3.17.1 sets forth a complete and accurate
list and description of all the tangible personal property of
SeaLite existing on September 30, 1995, the net book value of
which, as properly reflected in SeaLite' books and records, on an
individual item-by-item basis, exceeds $5,000.00. Each item of
personal property listed on Schedule 3.17.1, or leased by SeaLite
pursuant to a Lease Agreement, is in good operating condition and
in a state of reasonable maintenance and repair, and is adequate
and usable for the continued operation of the business of SeaLite
as the same is presently conducted.
(b) Schedule 3.17.2 contains a complete and correct
list and summary description of all trademarks, trade names,
service marks, service names, brand names, registered copyrights
and patents, registration thereof and applications therefor, and,
to the Knowledge of SeaLite, any other intellectual property
applicable to or used in the business of SeaLite, including but
not limited to unregistered trademarks and trade names.
(c) SeaLite (1) has good, valid and indefeasible title
to all of the personal and mixed, tangible and intangible
property, rights and assets which it purports to own, including
all the personal property and assets reflected in the Financial
Statements (and not shown as leased or encumbered in the notes
thereto); and (2) owns such rights, assets and personal property
free and clear of all title defects or objections, liens,
restrictions, claims, charges, security interests, or other
encumbrances of any nature whatsoever, including any mortgages,
leases, chattel mortgages, conditional sales contracts, collateral security
arrangements and other title or interest retention arrangements.
(d) Neither SeaLite nor any Predecessor has ever owned
any real property.
(e) To the Knowledge of SeaLite, the present zoning,
building and other ordinances and regulations applicable to the
real property leased by SeaLite specifically permit the continued
use, occupancy and enjoyment of such property consistent with
past practices of SeaLite. SeaLite has received no notices of
violations of any applicable zoning or building regulation,
ordinance or other law, regulation, or requirement relating to
such real property.
(f) To the Knowledge of SeaLite, all buildings and
improvements on the real property leased by SeaLite are in good
operating condition and repair, ordinary wear and tear excepted,
free from known defects in construction or design, and all
equipment and systems presently serving the buildings and
improvements, including but not limited to plumbing, heating, air
conditioning, electrical, and sprinkler systems, are in good
working order and repair.
(g) To the Knowledge of SeaLite, no condemnation or
similar actions are currently in effect or pending against any
part of any real property leased by SeaLite and no such action is
threatened against any such real property. To the Knowledge of
SeaLite, there are no encroachments, leases, easements,
covenants, restrictions, reservations or other burdens of any
nature affecting any part of the real property leased by SeaLite
which might impair the use of any building, structure or any
other improvement thereon, nor does any part of any building,
structure or any other improvement on real property leased by
SeaLite encroach on any property.
3.18 Indebtedness for Borrowed Money. Except as identified
in the Financial Statements or on Schedules 3.12 and 3.16,
SeaLite has no direct or indirect indebtedness for borrowed
money, including indebtedness by way of lease-purchase
arrangements or guarantees.
3.19 Employee Contracts, Union Agreements and Benefit Plans.
Except as set forth on Schedule 3.19 hereto, SeaLite is not a
party to any employment contract (except for oral employment
agreements which are terminable at will), consulting or
collective bargaining contracts, deferred compensation, pension
(as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended, and all rules and regulations
from time to time promulgated thereunder ("ERISA")), profit
sharing, bonus, stock option, stock purchase or other
nonqualified benefit or compensation commitments, benefit plans,
arrangements or plans (whether written or oral), including all
welfare plans, as defined in Section 3(l) of ERISA, of or
pertaining to SeaLite and any of their present or former
employees, or any Predecessors. SeaLite has made available to
ICN true and complete copies of all of the items listed on
Schedule 3.19. Each employee and officer of SeaLite has executed
an Employee Confidentiality and Invention Assignment Agreement
substantially in the form which has been delivered to
special counsel to ICN.
3.20 Labor Relations.
---------------
(a) SeaLite is in compliance with all applicable laws
respecting employment and employment practices, terms and
conditions of employment, wages and hours, occupational safety
and health, and is not engaged in any unfair labor practice
within the meaning of Section 8 of the National Labor Relations
Act;
(b) There is no unfair labor practice charge or
complaint or any other matter against or involving SeaLite
pending or, to the Knowledge of SeaLite, threatened before the
National Labor Relations Board or any court of law;
(c) There are no administrative proceedings pending
or, to the Knowledge of SeaLite, threatened alleging
discrimination (including discrimination based upon sex, age,
marital status, race, national origin, the making of workers'
compensation claims, sexual preference, handicap or veteran
status) before the Equal Employment Opportunity Commission or any
federal, state or local agency or court against SeaLite, nor, to
the Knowledge of SeaLite, is there any charge, investigation
(formal or informal) or complaint regarding any discriminatory
matter or event. There have been no governmental audits of the
equal employment opportunity practices of SeaLite and, to the
Knowledge of SeaLite, no basis for any such audit exists; and
(d) SeaLite is in compliance with the Immigration
Reform and Control Act of 1986, as amended, and all applicable
regulations promulgated thereunder.
3.21 Contracts and Commitments. Except as set forth in
Schedules 3.8, 3.16, 3.19 and 3.21:
(a) There are no Material Agreements to which SeaLite
is a party or by which SeaLite' assets or properties are bound;
(b) There are no contracts or agreements of SeaLite:
(1) with any of the directors, officers or
shareholders of SeaLite, or
(2) with any Affiliate of, or any person related
to, any director, officer or shareholder of SeaLite, or with any
company or other organization in which any Affiliate of SeaLite
has a direct or indirect financial interest;
(c) SeaLite is not subject to any contract or
agreement containing covenants limiting the freedom of SeaLite to
compete in any line of business in any geographic area or
requiring SeaLite to share any profits;
(d) SeaLite is not a party to any existing agreement
for the management of SeaLite or a portion of SeaLite' assets,
properties or business and SeaLite is not obligated to become a
party to any such management agreement; and
(e) SeaLite is not a party to or bound by any
presently existing contract, agreement or other arrangement that
has had, or based upon facts existing as of the date of this
Agreement is, to the Knowledge of SeaLite, reasonably likely to
have during the year following the date of this Agreement, a
material adverse effect upon the business, earnings or financial
condition of SeaLite.
SeaLite has made available to ICN true and complete copies of all
of the items listed in Schedule 3.21.
3.22 Environmental Protection.
------------------------
(a) As used herein, "Environmental Laws" shall mean
any statute, law, ordinance, regulation, order or rule of any
federal, state, local or other governmental agency or body or of
any other type of regulatory body relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata), including, without limitation, the
Comprehensive Environmental Recovery Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq.("CERCLA"), Resource
Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.
("RCRA"), and other statutes, laws, ordinances, regulations,
orders or rules relating to emissions, discharges, releases or
threatened releases of any Hazardous Substance, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any
Hazardous Substance.
(b) As used herein, "Environmental Matter" shall mean
any matter or circumstances related in any manner whatsoever to
(1) the emission, discharge, disposal, release, or threatened
release of any solid, liquid or gaseous waste into the
environment, or (2) the treatment, storage or other handling of
any Hazardous Substance, or (3) the placement of structures or
materials into the waters of the United States, or (4) the
presence of any Hazardous Substance, including, but not limited
to, asbestos, in any building, structure, or workplace or on any
of the real property owned or leased by SeaLite.
(c) As used herein, "Hazardous Substance" shall mean
any hazardous or toxic substance or waste as those items are
defined in any applicable statute, law, ordinance, regulation,
order or rule of any federal, state, local or other governmental
agency or body or of any other type of regulatory body relating
to pollution or protection of human health or the environment
(including, without limitation, CERCLA and RCRA), and petroleum,
petroleum products and oil.
(d) There are no claims, actions, suits, proceedings
or, to the Knowledge of SeaLite, investigations related to
Environmental Matters with respect to the ownership, use,
condition or operation of any of the properties and assets held
for use or sale by SeaLite or any of its Predecessors in any
court or before or by any federal, state or other governmental
agency or private arbitration tribunal (hereinafter collectively
referred to as "Environmental Litigation").
There are no existing violations by SeaLite of federal, state,
local or other governmental laws, regulations, ordinances or
orders related to Environmental Matters with respect to the
ownership, use, condition or operation of any real property
leased by SeaLite or any other assets of SeaLite or any asset or
property formerly held for use or sale by SeaLite or any of its
Predecessors. SeaLite has not used, and, to the Knowledge of
SeaLite, no third party has used, any real property leased by
SeaLite or any other asset or property of SeaLite or any of its
Predecessors or any part thereof, for the handling, treatment,
storage, or disposal of any Hazardous Substances. No written or
oral notice, or other communication from any court or
governmental agency, official or instrumentality, of any alleged
violation of any ordinance, law, decree, order, code, or
governmental rule or regulation related to Environmental Matters
has been filed or communicated to management of SeaLite with
respect to the use, ownership, condition, operation, or disposal
of any of the properties and assets of SeaLite or any property or
asset formerly held for use or sale by SeaLite or any of its
Predecessors. To the Knowledge of SeaLite, no basis exists for
the allegation of any such violations with respect to the real
property leased by SeaLite, or any other assets of SeaLite or any
property or asset formerly held for use or sale by SeaLite or any
of its Predecessors.
(e) To the Knowledge of SeaLite no release, discharge,
spillage or disposal of any Hazardous Substances has occurred or
is occurring at any real property owned or leased by SeaLite or
at any other assets or premises of SeaLite or any of its
Predecessors or any part thereof, while or before such assets or
premises were owned, leased, operated, or managed, directly or
indirectly, by SeaLite or any of its Predecessors.
(f) To the Knowledge of SeaLite no soil or water in,
under or adjacent to any real property leased by SeaLite or any
other assets or premises of SeaLite or property formerly held for
use or sale by SeaLite or any of its Predecessors, has been
contaminated by any Hazardous Substance while or before such
property, assets or premises were leased, operated or managed,
directly or indirectly, by SeaLite or any of its Predecessors.
(g) All waste containing any Hazardous Substances
generated, used, handled, stored, treated or disposed of
(directly or indirectly) by SeaLite or, to the Knowledge of
SeaLite, by any of its Predecessors has been released or disposed
of in compliance with all applicable reporting requirements under
applicable Environmental Laws.
(h) To the Knowledge of SeaLite, there are no
underground tanks or other underground storage facilities, or the
lines and facilities associated therewith, presently or
previously located at any real property leased by SeaLite, or any
other premises owned, leased, operated, or managed by SeaLite or
any of its Predecessors or any such tanks, lines or facilities
located at any premises while such premises were owned, leased,
operated, or managed by SeaLite or any of its Predecessors.
(i) SeaLite or its Predecessors have removed from all
of the real property leased by SeaLite and other premises of
SeaLite and their Predecessors all hazardous waste.
(j) SeaLite has complied with all applicable reporting
requirements under applicable Environmental Laws concerning the
disposal or release of Hazardous Substances. SeaLite and each of
its Predecessors have made no such reports concerning any assets,
properties, premises, operations or activities of SeaLite or any
of its Predecessors.
(k) To the Knowledge of SeaLite none of the real
property leased by SeaLite or other premises operated or managed
by SeaLite contains any asbestos-containing materials.
3.23 Filing Reports. All returns, reports, plans and
filings of any kind or nature necessary to be filed by SeaLite
with any governmental authority have been properly completed and
timely filed in compliance with all applicable requirements where
failure to so file would have a material adverse effect on
SeaLite.
3.24 Insurance Policies. Schedule 3.24 sets forth a
complete and accurate list and description of all insurance
policies in force naming SeaLite, or any employee thereof, as an
insured or beneficiary or as a loss payee and for which SeaLite
has paid or is obligated to pay all or part of the premiums
including, without limitation, all liability, errors and
omissions, fire, health and life insurance policies. SeaLite has
not received notice of any pending or threatened termination or
premium increase (retroactive or otherwise) with respect thereto,
and SeaLite is in compliance with all conditions contained
therein. Except for claims by employees of SeaLite against group
health or medical policies or as set forth on Schedule 3.24,
there are no pending claims against such insurance by SeaLite as
to which insurers are defending under reservation of rights or
have denied liability, and except as set forth on Schedule 3.24,
there exists no claim by SeaLite under such insurance that has
not been properly filed by such SeaLite. There are no
outstanding or unfulfilled requirements or recommendations of any
insurance company insuring SeaLite and/or its assets or
properties regarding any repairs to or work to be performed at
any of the properties and premises of SeaLite. SeaLite has
complied with any such requirements and recommendations as to
which SeaLite has received notice.
3.25 Accounts Receivable. All accounts receivable of
SeaLite arose in the ordinary course of business and (except as
reflected in the Financial Statements) have not been previously
written off as bad debts and, to the Knowledge of SeaLite, are
collectible in the ordinary course of business subject to
SeaLite' reserves for doubtful and uncollectible accounts which
are currently at levels consistent with SeaLite' past practices
and business in the ordinary course.
3.26 Inventory. All items of inventory on SeaLite's
September 30, 1995 balance sheet contained in the Financial
Statements consisted, and all such items on hand on the date of
this Agreement consist, and all such items on hand at the Closing
Date will consist, of items of a quality and a quantity usable
and salable in the ordinary course of SeaLite's business and
conform to generally accepted standards in the industry of which
SeaLite is a part. The value of the inventories reflected on
SeaLite's September 30, 1995 balance sheet contained in the
Financial Statements are net of adequate reserves for damaged,
excess, and unusable items. Purchase commitments of SeaLite for
inventory are not in excess of normal requirements, and
none of such purchase commitments are at prices in excess of
prevailing market prices at the time of such commitment.
3.27 Taxes. Except as reflected in the Financial Statements
(a) there does not exist and will not after the Closing exist any
liability for taxes which may be asserted by any taxing authority
against, and no lien or other encumbrance for taxes will attach
to, SeaLite or any of its assets or properties, (b) there are no
requests for tax filing and/or payment extensions with any taxing
authority filed by or granted to SeaLite, and (c) there are no
audit examinations or refund actions, claims, investigations or
litigation with respect to any tax obligation of SeaLite. All
federal, state, local and other tax returns and tax reports
required to be filed with respect to SeaLite have been filed with
the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, all of
which are true, correct and complete, and all amounts shown as
owing thereon have been paid.
3.28 State Takeover Laws. SeaLite has taken all necessary
action to exempt the transactions contemplated by the Transaction
Documents from any applicable state takeover statute.
3.29 Powers of Attorneys. SeaLite has not given or granted
any power of attorney, whether limited or general, to any entity
or individual person or otherwise that is continuing in effect.
3.30 Agreements in Full Force and Effect. Except as
expressly set forth in the Schedules to this Agreement, all
contracts, agreements, plans, leases, policies and licenses
referred to, or required to be referred to, in any Schedule
delivered hereunder are valid and binding, and are in full force
and effect and are enforceable in accordance with their terms,
except to the extent that the validity or enforceability thereof
may be limited by bankruptcy, insolvency, reorganization and
other similar laws affecting creditors' rights generally. No
event has occurred which (whether with or without notice, lapse
of time or the happening or occurrence of any other event) would
constitute a default under such agreement by SeaLite or, to the
Knowledge of SeaLite, any other party thereto. To the Knowledge
of SeaLite, there is no pending or threatened bankruptcy,
insolvency or similar proceeding with respect to any party to
such agreements.
3.31 Statements True and Correct. No representation or
warranty made herein, nor any statement, certificate or
instrument to be furnished to ICN pursuant to this Agreement or
any other document, agreement or instrument referred to herein or
therein (including, without limitation, information provided by
SeaLite to ICN for inclusion in any disclosure document provided
by ICN to signatories to the Stock Option Agreement), contains or
will contain any untrue statement of material fact or omits or
will omit to state a material fact necessary to make the
statements contained herein and therein not misleading.
3.32 Schedules. Matters disclosed on each Schedule shall be
deemed disclosed only for purposes of the matters to be disclosed
on such Schedule and shall not be deemed to be disclosed for any
other purpose unless expressly provided herein or therein.
3.33 Purchase Entirely for Own Account. The Purchase Price
Shares will be acquired for investment for SeaLite's own account,
not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the Securities
Act, and that SeaLite has no present intention of selling,
granting any participation in, or otherwise distributing the same
otherwise than pursuant to an effective registration statement
under the Securities Act as contemplated by Section 1.5 hereof or
in a transaction exempt from the registration requirements under
the Securities Act and applicable state securities laws. Except as set
forth in Section 1.5, SeaLite does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third
person, with respect to any of the Purchase Price Shares.
3.34 Reliance Upon SeaLite's Representations. SeaLite
understands that the issuance of the Purchase Price Shares will
not be registered under the Securities Act or any state
securities laws on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from
registration under the Securities Act and such state laws, and
that ICN's reliance on such exemption is predicated in part on
SeaLite's representations set forth herein.
3.35 Receipt of Information. SeaLite has received all the
information it considers necessary or appropriate for deciding
whether to purchase the Purchase Price Shares. SeaLite has had
an opportunity to ask questions and receive answers from ICN
regarding the terms and conditions of the offering of the
Purchase Price Shares and the business, properties, prospects,
and financial condition of ICN and to obtain additional
information (to the extent ICN possessed such information or
could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to
SeaLite or to which SeaLite had access. The foregoing, however,
does not limit or modify the representations and warranties of
ICN in Article IV of this Agreement or the right of SeaLite to
rely thereon.
3.36 Investment Experience. SeaLite alone or with its
representative acknowledges that it is able to fend for itself,
can bear the economic risk of the investment in the Purchase
Price Shares, and has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits
and risks of the investment in the Purchase Price Shares.
3.37 Restricted Securities. SeaLite understands that the
Purchase Price Shares may not be sold, transferred, or otherwise
disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective
registration statement covering the Purchase Price Shares or an
available exemption from registration under the Securities Act,
the Purchase Price Shares must be held indefinitely. The
Purchase Price Shares may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions
of that Rule are met.
3.38 Legends. To the extent applicable, each certificate
evidencing any of the Purchase Price Shares shall be endorsed
with the legend set forth below:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION
WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
"The shares represented hereby are subject to certain
restrictions on transfer contained in a certain Stock
Purchase Agreement dated November 16, 1995 between the
Company and SeaLite Sciences, Inc., a copy of which is
available at the Company's headquarters."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ICN
-------------------------------------
As an inducement to SeaLite, to enter into the Transaction
Documents and consummate the transactions contemplated therein,
ICN hereby represents and warrants to SeaLite, as follows:
4.1 Organization, Standing and Authority of ICN. ICN is a
corporation duly organized and validly existing under the laws of
the State of Delaware. ICN has the full power and authority to
execute, deliver and perform all of the Transaction Documents to
which it is a party (collectively, the "ICN Documents"), and to
consummate the transactions contemplated thereby. Each of the
ICN Documents has been duly executed and delivered by ICN, and
constitutes the legal, valid and binding obligation of ICN,
enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, or other laws affecting
creditors' rights generally or as may be qualified by a court of
equity.
4.2 Absence of Conflicting Agreements or Required Consents
Relating to ICN's Obligations. The execution, delivery and
performance by ICN of the ICN Documents (with or without the
giving of notice, the lapse of time, or both): (a) will not
conflict with any provision of ICN's certificate of incorporation
or bylaws; (b) will not conflict with, result in a breach of, or
constitute a default under any ruling, judgment, order or
injunction, or any law, ordinance or regulation, of any court or
governmental instrumentality to which ICN is subject or by which
ICN or its assets and properties are bound; and (c) will not
conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of any
agreement, instrument, license or permit, material to this
transaction, to which ICN is a party or by which ICN, its assets
and properties are bound.
4.3 Valid Issuance of the Purchase Price Shares. The
Purchase Price Shares, when issued, sold and delivered in
accordance with the terms of this Agreement in exchange for the
Shares will be duly and validly issued, fully paid and
nonassessable. The offer, sale and issuance of the Purchase
Price Shares as contemplated by this Agreement are exempt from
the registration requirements of the Securities Act.
4.4 Litigation and Claims Against ICN. There are no
lawsuits, actions, arbitrations, administrative or other
proceedings, or to the knowledge of ICN, claims or governmental
investigations or inquiries pending, or to the knowledge of ICN,
threatened against ICN affecting the performance by ICN of the
ICN Documents and there is no basis for any such action or any
state of facts or occurrence of any event which might give rise
to the foregoing.
4.5 Purchase Entirely for Own Account. The Shares will be
acquired for investment for ICN's own account, not as a nominee
or agent, and not with a view to the resale or distribution of
any part thereof, and ICN has no present intention of selling,
granting any participation in, or otherwise distributing the
same. ICN does not have any contract, undertaking, agreement or
arrangement with any person to sell or transfer the Shares or
grant participations to such person or to any third person, with
respect to any of the Shares.
4.6 Reliance Upon ICN's Representations. ICN understands
that issuance of the Shares will not be registered under the
Securities Act or any state securities laws on the ground that
the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the
Securities Act and such laws, and that SeaLite's reliance on such
exemption is predicated on ICN's representations set forth
herein.
4.7 Receipt of Information. ICN has received all the
information it considers necessary or appropriate for deciding
whether to purchase the Shares. ICN has had an opportunity to
ask questions and receive answers from SeaLite regarding the
terms and conditions of the offering of the Shares and the
business, properties, prospects, and financial condition of
SeaLite and to obtain additional information (to the extent
SeaLite possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy
of any information furnished to ICN or to which ICN had access.
The foregoing, however, does not limit or modify the
representations and warranties of SeaLite in Section 3 of this
Agreement or the right of ICN to rely thereon.
4.8 Investment Experience. ICN is experienced in evaluating
and investing in securities of companies in the development stage
and acknowledges that it is able to fend for itself, can bear the
economic risk of such investment, and has such knowledge and experience
in financial and business matters that it is capable of evaluating the
merits and risks of the investment in the Shares. ICN has not been
organized for the purchase of acquiring the Shares.
4.9 Accredited Investor. ICN is an Accredited Investor as
defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
4.10 Restricted Securities. ICN understands that the Shares
may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom,
and that in the absence of an effective registration statement
covering the Shares or an available exemption from registration
under the Securities Act, the Shares must be held indefinitely.
The Shares may not be sold pursuant to Rule 144 promulgated under
the Securities Act unless all of the conditions of that Rule are
met. Among the conditions for use of Rule 144 may be the
availability of current information to the public about SeaLite.
Such information is not now available and SeaLite has no present
plans to make such information available.
4.11 Legends. To the extent applicable, each certificate
evidencing any of the Shares shall be endorsed with the legend
set forth below:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION
WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED. IN ADDITION,
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES ACT OF
1973, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT
TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT."
ARTICLE V
CONDITIONS TO OBLIGATIONS OF ICN
--------------------------------
The obligations of ICN to close the transactions
contemplated by this Agreement are subject to the satisfaction,
at or prior to Closing, of each of the following conditions:
5.1 Representations and Warranties. The representations
and warranties of SeaLite set forth in the SeaLite Documents
shall be true and correct as of the Closing Date, with the same
force and effect as if such representations and warranties had
been made on and as of the Closing Date.
5.2 Covenants. All of the terms, covenants and conditions
of the SeaLite Documents to be complied with or performed by
SeaLite at or prior to Closing shall have been complied with and
performed in all material respects.
5.3 No Injunction, Etc. No action, proceeding,
investigation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency, or
legislative body to enjoin, restrain, prohibit or obtain
substantial damages in respect of, or which is related to or
arises out of, the Transaction Documents, or the consummation of
the transactions contemplated thereby, or which is related to or
arises out of the business or operations of SeaLite, if such
action, proceeding, investigation or legislation, in the
reasonable judgment of ICN or its counsel, would make it
inadvisable to consummate such transactions.
5.4 Amendment of UGARF License. An amendment to the
License Agreement dated July 18, 1991, by and between SeaLite and
the University of Georgia Research Foundation, Inc. ("UGARF")
shall be executed and delivered that eliminates the obligation of
SeaLite to redeem any securities owned by UGARF.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SEALITE
------------------------------------
The obligations of SeaLite to close the transactions
contemplated by this Agreement are subject to the satisfaction,
at or prior to Closing, of each of the following conditions:
6.1 Representations and Warranties. The representations
and warranties of ICN set forth in the ICN Documents shall be
true and correct as of the Closing Date with the same force and
effect as if such representations and warranties had been made at
and as of the Closing Date.
6.2 Covenants. All of the terms, covenants and conditions
of the ICN Documents to be complied with or performed by ICN at
or prior to the Closing shall have been complied with and
performed in all material respects.
6.3 No Injunction, Etc. No action, proceeding,
investigation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency, or
legislative body to enjoin, restrain, prohibit or obtain
substantial damages in respect of, or which is related to or
arises out of, the Transaction Documents, or the consummation of
the transactions contemplated thereby, or which is related to or
arises out of the business or operations of ICN, if such action,
proceeding, investigation or legislation, in the reasonable
judgment of SeaLite or its counsel, would make it inadvisable to
consummate such transactions.
6.4 Disclosure. ICN shall have delivered to SeaLite a
disclosure document which includes the information required to be
provided to SeaLite pursuant to Regulation D to the Securities
Act and which is acceptable to SeaLite acting reasonably.
ARTICLE VII
TERMINATION; REMEDIES
---------------------
7.1 Method of Termination. This Agreement and the
transactions contemplated by it may be terminated at any time
prior to the Closing:
(a) by the mutual consent of the parties hereto;
(b) by SeaLite, after December 31, 1995 if any of the
conditions set forth in Article VI hereof, to which its
obligations are subject, have not been fulfilled or waived,
unless such fulfillment has been frustrated or made impossible by
any act or failure to act of SeaLite;
(c) by SeaLite, if such termination is required in
order for SeaLite's Board of Directors to satisfy its fiduciary
duties to SeaLite or its shareholders, which duties include, but
are not limited to, pursuing alternative buyers for SeaLite if,
in the reasonable business judgment of such Board of Directors,
an alternative buyer would be in the best interests of SeaLite
and its shareholders; provided however, in the event of any
termination pursuant to this Section 7.1(c), SeaLite shall pay to
ICN all expenses reasonably incurred by ICN in connection with
the transactions contemplated by this Agreement.
(d) by ICN, if SeaLite directly or indirectly, through
any representative or otherwise, solicits or entertains offers
from, negotiates with or in any manner encourages, discusses,
accepts or considers any proposal of any other person relating to
the acquisition of SeaLite, in whole or in part (other than the
sale of inventory in the ordinary course);
(e) by ICN after December 31, 1995, if any of the
conditions set forth in Article V hereof, to which the
obligations of ICN are subject, have not been fulfilled or
waived, unless such fulfillment has been frustrated or made
impossible by any act or failure to act of ICN;
(f) by ICN in the event any of the conditions set
forth in Article VI cannot be satisfied or fulfilled by December
31, 1995;
(g) by ICN upon written notice to SeaLite pursuant to
Section 7.4(b) or (c); or
(h) by ICN if a condemnation, destruction, loss or
damage due to fire or other casualty occurs between the date of
this Agreement and the Closing Date such that the business of
SeaLite is materially interrupted or curtailed or the assets or
properties of SeaLite are materially affected.
7.2 Notice of Termination. Notice of any termination of
this Agreement, as provided for in this Article VII, shall be
given by the party or parties so terminating to the other party
or parties hereto in accordance with Section 8.1 of this Agreement.
7.3 Effect of Termination. If this Agreement terminates
pursuant to Section 7.1, this Agreement shall become void and of
no further force and effect, except as set forth in Section
7.1(c).
7.4 Notification of Certain Events.
------------------------------
(a) Each party shall give prompt notice to all other
parties as soon as practicable after it has actual knowledge of
(1) the occurrence, or failure to occur, of any event which would
or would be likely to cause any party's representations or
warranties contained in any of the Transaction Documents to be
untrue or incorrect in any material respect at any time from the
date hereof to the Closing Date, or (2) any failure on its part
or on the part of any of its officers, directors, employees,
representatives or agents to comply with or satisfy in any
material respect any covenant, condition or agreement to be
complied with or satisfied by such party under any of the
Transaction Documents. Each party shall, in connection with such
notices, deliver to the other parties a written disclosure
schedule (a "Schedule of Breaches") as to any matter of which it
becomes aware following execution of this Agreement which would
constitute a breach of any representation, warranty, covenant,
condition or agreement in any of the Transaction Documents by
such party, identifying on such Schedule of Breaches the
representation, warranty, covenant, condition or agreement which
would be so breached.
(b) Upon ICN's receipt of any Schedule of Breaches, or
upon SeaLite' receipt of a Schedule of Breaches from ICN, the
party receiving any such Schedule or Schedules (the
"nondisclosing party") shall have five business days from receipt
of such Schedule or Schedules to give written notice to the party
delivering such Schedule or Schedules (the "disclosing party")
and all other parties hereto that (1) it will close the
transactions contemplated hereby notwithstanding the new Schedule
or Schedules, (2) it will not close the transactions contemplated
hereby based on such new Schedule or Schedules and thereby
terminates this Agreement pursuant to this Article VII, or (3)
further investigation or negotiation is required for it to reach
a determination whether or not to close the transactions
contemplated hereby based on such new Schedule or Schedules.
(c) If the nondisclosing party notifies the disclosing
and other parties that further investigation or negotiation are
required pursuant to (iii) in Section 7.4(b) and the parties
thereafter are unable to reach agreement on a mutually
satisfactory means of resolving the matter(s) disclosed on the
new Schedule or Schedules, the nondisclosing party shall have the
right, in its discretion, to deliver written notice to all other
parties hereto and terminate this Agreement pursuant to this
Article VII.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
8.1 Notices.
-------
(a) All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been given if delivered by hand or if mailed by United
States registered or certified mail, return receipt requested,
first class postage prepaid, or sent by Federal Express or
similar overnight courier service to the parties or their
assignees, addressed as follows:
If to SeaLite: SeaLite Sciences, Inc.
187 Ben Burton Circle
Bogart, Georgia 30622
Telephone: 706/546-4960
Facsimile: 706/546-4962
Attention: H. Lee Herron
With a copy to: Nelson Mullins Riley & Scarborough, L.L.P.
400 Colony Square, Suite 2200
1201 Peachtree Street, N.E.
Atlanta, Georgia 30361
Telephone: 404/817-6000
Facsimile: 404/817-6050
Attention: Philip H. Moise, Esq.
If to ICN: ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
Telephone: 714/545-0100
Facsimile: 714/641-7214
Attention: Ben Lap
With a copy to: Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telephone: (404) 881-7000
Facsimile: (404) 881-7777
Attention: George M. Maxwell, Jr., Esq.
(b) If delivered personally, the date on which a
notice, request, instruction or document is delivered shall be
the date on which such delivery is made and, if delivered by
mail, Federal Express or other overnight courier (and actually
received), the date on which such notice, request, instruction or
document is deemed to be received shall be the date of delivery.
(c) Any party hereto may change its address specified
for notices herein by designating a new address by notice in
accordance with this Section 8.1.
8.2 Waiver. Any failure on the part of any party to comply
with any of its obligations, agreements or conditions hereunder
may be waived by any other party to whom such compliance is owed.
No waiver of any provision of this Agreement shall be deemed, or
shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver.
8.3 Assignment. ICN may assign its rights under this
Agreement to any Affiliate, but otherwise this Agreement shall
not be assignable by either party hereto without the written
consent of all other party.
8.4 Binding Effect. his Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, executors,
administrators, successors and assigns.
8.5 Headings. The section and other headings in this
Agreement are inserted solely as a matter of convenience and for
reference, and are not a part of this Agreement.
8.6 Entire Agreement. The Transaction Documents and the
Exhibits, Schedules, certificates and other documents delivered
pursuant hereto or incorporated herein by reference, contain and
constitute the entire agreement among the parties and supersede
and cancel any prior agreements, letters of intent,
representations, warranties, or communications, whether oral or
written, among the parties relating to the transactions
contemplated by the Transaction Documents. Neither this
Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an agreement in
writing signed by the party against whom or which the enforcement
of such change, waiver, discharge or termination is sought.
8.7 Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Georgia, United States of America. The provisions of
this Agreement are severable and the invalidity of one or more of
the provisions herein shall not have any effect upon the validity
or enforceability of any other provision.
8.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
8.9 No Brokers. SeaLite and ICN each represent to the
other that except for D.H. Blair Investment Banking Corp. ("D.H.
Blair"), no broker or finder has been employed in connection with
the transactions hereunder. SeaLite shall indemnify and hold
harmless ICN for any and all loss, cost and expense (including,
but not limited to, reasonable attorneys fees) arising out of or
in connection with SeaLite's engagement of D.H. Blair.
8.10 Schedules and Exhibits. All Schedules and Exhibits
attached to this Agreement are by reference made a part hereof.
8.11 Expenses. Except as otherwise set forth in this
Section 8.11, each of the parties hereto shall bear and pay all
costs and expenses incurred by him or it or on his or its behalf
in connection with the transactions contemplated hereunder.
[Signatures on Next Page]
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the Effective Date.
"SEALITE": "ICN":
SEALITE SCIENCES, INC. ICN PHARMACEUTICALS, INC.
By: By:
---------------------- --------------------
H. Lee Herron, D.V.M. Name:
--------------------
President Title:
--------------------
EXHIBIT 5
July 16, 1996
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
RE: Registration Statement of Form S-3
ICN Pharmaceuticals, Inc.
233,274 Shares of Common Stock
Ladies and Gentlemen:
I am Executive Vice President, General Counsel and
Corporate Secretary of ICN Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and have been involved with the
registration under the Securities Act of 1933, as amended (the
"Act"), of an aggregate of 233,274 shares (the "Shares") of
common stock, $.01 par value of the Company, being offered
pursuant to the above described Registration Statement.
In connection with the offering of the Shares, I have
examined the Amended and Restated Certificate of Incorporation,
By-laws and other corporate records of the Company, and such
other documents I have deemed relevant to this opinion.
Based and relying solely upon the foregoing, it is my
opinion that the Shares have been duly authorized, validly issued
and fully paid and are nonassessable.
This opinion may be filed as an exhibit to the above
described Registration Statement. Consent is also given to the
reference to me under the caption "Legal Matters" in such
Registration Statement as having passed upon the validity of the
issuance of the Shares. In giving this consent, I do not hereby
admit that I come within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations
of the Securities and Exchange Commission promulgated thereunder.
Respectfully submitted,
/S/ David C. Watt
David C. Watt
Executive Vice President,
General Counsel and Corporate Secretary
Exhibit 15.1
AWARENESS LETTER
July 16, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: ICN Pharmaceuticals, Inc.
Registration on Form S-3
-------------------------
We are aware that our report dated April 26, 1996, on our
review of interim financial information of ICN Pharmaceuticals,
Inc. for the period ended March 31, 1996 and included in the
Company's quarterly report on Form 10-Q for the quarter then
ended is incorporated by reference in this registration
statement. Pursuant to Rule 436(c) under the Securities Act of
1933, this report should not be considered a part of the
registration statement prepared or certified by us within the
meaning of Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form S-3 (File No. __) of our report, which
includes, as it relates to 1994 and 1993, an emphasis of matter
paragraph related to certain transactions between affiliates,
dated February 19, 1996, appearing in the Annual Report on Form
10-K of ICN Pharmaceuticals, Inc. for the year ended December 31,
1995, on our audits of the consolidated financial statements and
financial statement schedule listed in the index on page 24 of
the Form 10-K. We also consent to the reference to our firm
under the caption "Independent Public Accountants."
\s\ Coopers & Lybrand L.L.P
Coopers & Lybrand L.L.P.
Los Angeles, CA
July 16, 1996
