AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1996
Registration No. 333-
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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>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------
Title of Each Proposed Proposed
Class of Maximum Maximum
Securities to Offering Aggregate Amount of
be Registered Amount to be Price Per Offering Registration
(1) Registered (1) Share (2) Price (2) Fee (2)
- ------------- -------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock, 213,385 $20.50 $4,374,392.50 $1,508.41
$.01 par
value
<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 September 25, 1996 (which date is
within five business days prior to the date of the filing of
this Registration Statement).
</TABLE>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
=======================================================================
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 SEPTEMBER 30, 1996
PROSPECTUS
ICN PHARMACEUTICALS, INC.
213,385 SHARES OF COMMON STOCK
This Prospectus relates to 213,385 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. 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
to the Selling Stockholders in a private placement made by the
Company under Rule 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), in connection with the acquisition by the
Company of the Cappel division ("Cappel") of Organon Teknika
Corporation, a Delaware corporation ("OTC"), from OTC and its
affiliate Akzo Nobel Pharma International B.V., a Dutch
corporation ("Akzo Nobel Pharma" which together with OTC
constitute the Selling Stockholders). Cappel manufactures and
sells immunochemical reagents used in biotechnology and
biomedical laboratories around the world. The acquisition of
Cappel, together with other acquisitions consummated by the
Company in 1996 and presently proposed acquisitions which may be
consummated by the Company during 1996, do not in the aggregate
constitute the acquisition of a significant business 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 September 30, 1996, the
closing sale price per share, as reported by the NYSE, was
$20.50.
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 October ___, 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 Securities and Exchange
Commission (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
Judiciary Plaza, 450 Fifth Street, N.W., 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 may be obtained (at
prescribed rates), by writing to the Public Reference Section of
the Commission, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material is also available through
the Commission's Web site (http://www.sec.gov). In addition,
such material may 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 of 1933, as amended (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. Quarterly Report on Form 10-Q for the six months
ended June 30, 1996.
4. 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 effective date of this Registration Statement 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(R). Virazole(R) 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(R) 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(R) 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(R) for the treatment of chronic
hepatitis C in the United States. Similar applications for
approval to market Virazole(R) 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(R). Similar questions were raised by foreign reviewers.
Subsequently, the Company withdrew its NDA for Virazole(R) and
the applications for Virazole(R) 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(R)) 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(R) 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(R) 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. The Company subsequently acquired an additional 15%
interest in Oktyabr, increasing its interest in Oktyabr to 90%.
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 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 79% of the Company's net sales for
1995 and the six months ended June 30, 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 46% of the Company's net sales
for 1995 and the six months ended June 30, 1996, respectively,
were from Galenika. In addition, approximately 39% and 51% of
the Company's operating income for 1995 and the six months ended
June 30, 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 and
through June 30, 1996, 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 90%
interest in the Russian pharmaceutical company Oktyabr. In May
1996, the Company purchased a 40% investment in a U.S. company
which has a 51% interest in 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. It is anticipated that the
Company's investment in the joint venture will be approximately
$3 million. In June 1996, the Company acquired an approximately
88% interest in Lekstredstva, a Russian pharmaceutical company,
and intends to make additional purchases from existing
Lekstredstva stockholders to increase its interest to 95%. It is
estimated that the aggregate investment in Lekstredstva will cost
approximately $6.3 million. In September 1996, the Company
signed a definitive agreement to purchase up to a 59% interest in
Alkaloida Chemical Co. ("Alkaloida"), a Hungarian state-owned
pharmaceutical company, for approximately $21.9 million. As
required under the terms of the definitive agreement, on September
27, 1996, the Company made a payment of approximately $8.95
million for an initial 50.02% interest in Alkaloida, with the
shares representing such interest to be issued to the Company on
October 10, 1996. The remaining 8.98% interest in Alkaloida is
anticipated to be acquired in January 1997. See "Recent
Developments." From July 1996 through the date of this
Prospectus, the Company acquired a 65% interest in Polipharm, a
Russian pharmaceutical company, for approximately $1.3 million.
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.
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(R) 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(R) 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(R) 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(R) 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(R)
to treat specified human viral diseases. If future development
of Virazole(R) 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(R) 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(R) and/or its
use in certain foreign countries where Virazole(R) 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 Schering 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(R) 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. Since some or all of these potential
acquisitions may be affected with the issuance of Common Stock by
the Company to the sellers of the businesses being acquired, the
interest of existing stockholders in the Company may be diluted
(which dilution may be material depending on the size and the
number of acquisitions consummated). Subject to sufficient
authorized and unissued shares of Common Stock being available, no
stockholder approval of any acquisition transaction would be
required unless the number of shares of Common Stock issued by the
Company in connection with the transaction (or series of related
transactions) were to exceed 20% of the then outstanding shares of
Common Stock.
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(R),
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(R) for the treatment of chronic hepatitis C (the
"Hepatitis C NDA"). See "Recent Developments."
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 and are
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(R). While to date no
material adverse claim for personal injury resulting from
allegedly defective products, including Virazole(R), 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(R), 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(R) 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
ICN has been a defendant in certain consolidated class
action lawsuits pending in the United States District Court for
the Southern District of New York entitled In re PaineWebber
Securities Litigation (Case No. 86 Civ. 6776 {BMW}) and In re
ICN/Viratek Securities Litigation (Case No. 87 Civ. 4296 {BMW}).
The plaintiffs in these lawsuits have alleged 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(R),
including statements made in 1986 and 1987 concerning the
efficacy and safety of the drug and the market for the drug in
the treatment of AIDS related conditions. On August 22, 1996,
following a trial on the merits, the jury sitting for such trial
rejected a number of the securities fraud claims brought against
ICN. The jury was unable to reach a verdict on the remaining
claims and accordingly, a mistrial was declared on those claims.
There were no findings of violations of securities laws and no
damages were awarded. With respect to the claims rejected by the
jury, the plaintiffs have a right to appeal, and with respect to
the claims for which the jury was unable to reach a verdict, the
plaintiffs have a right to a retrial.
On September 18, 1996, the Company acquired Cappel from the
Selling Stockholders in consideration for the issuance of 213,385
Shares. Cappel manufactures and sells immunochemical reagents
used in biotechnology and biomedical laboratories around the
world. The acquisition of Cappel, together with other
acquisitions consummated by the Company in 1996 and presently
proposed acquisitions which may be consummated by the Company in
1996, do not in the aggregate constitute the acquisition of a
significant business as defined by Regulation S-X promulgated by
the Commission.
On September 25, 1996, ICN China, Inc. ("ICN China") ,
a wholly-owned subsidiary of the Company, entered into a joint
venture agreement with Wuxi Pharmaceutical Corporation ("Wuxi"),
a Chinese state-owned company, to establish a limited liability
company (the "Chinese Joint Venture Entity") for the production
and sale of pharmaceutical products. The Chinese Joint Venture
Entity will be owned 75% by ICN China and 25% by Wuxi. Wuxi will
contribute its existing operation to the Chinese Joint Venture
Entity, and ICN China will contribute to the Chinese Joint
Venture Entity a total of $24 million in cash over three years,
primarily for the construction of a new pharmaceutical production
plant and the purchase of related machinery and equipment. Of
the amount to be contributed by ICN China, $3.6 million is
required to be paid in January 1997, an additional $4.4 million
is required to be paid during 1997, and an additional $8 million
is required to be paid during each of 1998 and 1999. The Company
has not determined the source of the financing for this
obligation.
On September 27, 1996, the Company borrowed
approximately $8.95 million from Union Bank of Switzerland
("UBS") to finance the initial purchase of its interest in
Alkaloida. See "Risk Factors - Risk of Operations in Eastern
Europe and Russia." This loan, which bears an initial annual
interest rate equal to UBS's one month LIBOR rate plus 0.75%, is
repayable on October 27, 1996, with the Company having the option
to extend the term by an additional 30 days. The Company is
presently reviewing alternative arrangements to refinance the
loan upon maturity
On September 30, 1996, the Company issued an additional
195,122 shares of Common Stock (the "Additional Shares") to
Siemens Medical Systems, Inc. ("Siemens Medical"), a Delaware
corporation, in connection with an amendment (the "Amendment") to
the Common Stock Undertaking Agreement (the "Undertaking
Agreement") entered into between the Company and Siemens Medical
at the time of the Company's acquisition (the "Dosimetry
Acquisition") of the Dosimetry Service Business from Siemens
Medical in July 1996. In connection with the Amendment, Siemens
Medical withdrew its previously exercised put (the "Put Option")
to require the Company to repurchase at $23.512493872 per share
(the "Guaranteed Share Price") the 964,833 shares of Common Stock
(the "Acquisition Shares") which had been issued to Siemens
Medical in connection with the Dosimetry Acquisition. The Put
Option had been exercised pursuant to the terms of the
Undertaking Agreement as initially executed. The Amendment
contains terms which, among other things, (i) extend the date by
which Siemens Medical has the right to exercise the Put Option to
December 16, 1996, (ii) require the Company to pay interest on the
amount paid upon exercise of the Put Option at an annual interest
rate (the "Interest Rate") equal to one percent plus the prime or
reference rate of Bank of America, N.T. & S.A. for the period from
September 28, 1996 through (and including) December 23, 1996,
(iii) require the Company to pay interest at the Interest Rate to
Siemens Medical on the Guaranteed Share Price with respect to each
Acquisition Share sold from September 28, 1996 until the receipt
of the proceeds from such sale, (iv) permit the Company to require
Siemens Medical to sell any or all of the Acquisition Shares for
cash pursuant to transactions arranged by the Company (the
"Arranged Sales") provided that the Company pays Siemens Medical
for each share sold pursuant to an Arranged Sale the positive
difference, if any, between the Guaranteed Share Price and the
proceeds, less Siemens Medical's sales commissions, underwriting
discounts, transfer fees and out-of-pocket expenses (the "Net
Proceeds"), received by Siemens Medical from the sale of such
shares, (v) for each share of Common Stock sold pursuant to an
Arranged Sale or repurchased by the Company pursuant to the Put
Option, require the Company to pay Siemens Medical the
positive difference between (A) the lesser of (x) the highest
closing price of a share of Common Stock on the NYSE between
September 28, 1996 and the December 23, 1996 and (y) $28.21 and
(B) the Guaranteed Share Price and (vi) to the extent the then
market value (based upon average of the closing prices of the
Common Stock over specified three week periods) of the Additional
Shares (or, to the extent Additional Shares have previously been
sold, the Net Proceeds from such sales) is less than the amount
that the Company would have been seen required to pay if the Put
Option was then exercised, obligate the Company to issue
additional shares of Common Stock to Siemens Medical valued at
said market value (which shares shall be deemed thereafter to
constitute Additional Shares). Upon satisfaction of all of its
obligations under the Amendment, Siemens Medical is required to
return to the Company any Additional Shares not previously sold
by it and to remit to the Company the Net Proceeds from the sale
of any Additional Shares. Any Net Proceeds received by Siemens
Medical upon a sale of Additional Shares may, at the option of the
Company, be credited against any payments required to be made by
the Company to Siemens Medical under the Amendment.
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 Stockholders."
SELLING STOCKHOLDERS
170,573 Shares are being offered for the account of OTC and
42,812 Shares are being offered for the account of Akzo Nobel
Pharma. 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 Stockholders upon
termination of this Offering. See "Plan of Distribution."
As of September 19, 1996, the Company had outstanding
approximately 33,366,000 shares of Common Stock (as adjusted to
give effect to the issuance of 213,385 Shares to the Selling
Stockholders and the 195,122 shares of Common Share issued to
Siemens Medical as described under "Recent Developments").
The Selling Stockholders acquired their Shares as
consideration for the Company's acquisition of Cappel. 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.
Pursuant to the terms of the Sale and Purchase Agreement
(the "Cappel Agreement") by and between OTC, Akzo Nobel Pharma,
and the Company, if the aggregate net proceeds (after deducting
any broker or dealer fees, discounts and expenses, and all
transfer and other taxes) (the "Aggregate Net Proceeds") received
by the Selling Stockholders from the sales of Shares to
unaffiliated persons in arms-length transactions during the
period ending _______ [insert date 120 days after the the
effectiveness of the Registration Statement] (the "Protected
Period") is less than the sum of (i) the product of the number of
Shares sold during the Protected Period times approximately
$21.01, and (ii) interest on the amount set forth in clause (i)
from September 18, 1996, through the receipt of such proceeds, at
a rate of "Prime" (as defined below) plus 1% (the "Interest
Rate") (less any cash dividends paid on the Shares prior to
sale), the Company shall pay to the Selling Stockholders on a pro
rata basis an amount in cash equal to such shortfall plus
interest on such shortfall at the Interest Rate beginning on the
date of such receipt and ending on the date of payment of such
shortfall.
Conversely, if the Aggregate Net Proceeds received by the
Selling Stockholders from the sales of Shares to unaffiliated
persons in arms-length transactions during the Protected Period
is greater than the sum of (i) 115% of the product of the number
of Shares sold during the Protected Period times approximately
$21.01, and (ii) interest on the amount set forth in clause (i)
from September 18, 1996, through the receipt of such proceeds at
the Interest Rate (less any cash dividends paid on the Shares
prior to sale), the Selling Stockholders shall pay to the Company
an amount in cash equal to such excess.
"Prime" on any given date will mean the rate published
for such date in the Eastern Edition of the Wall Street Journal
in the section entitled "Money Rates" (or any successor section)
and opposite the caption "Prime Rate" (or any sucessor caption).
For each day which is not a business day in New York, Prime shall
be Prime for the preceding day.
The foregoing description of the Cappel Agreement is a
summary of the terms thereof and is qualified by reference to the
entire text of the Capel Agreement which is attached as an
exhibit to the Registration Statement of which this Prospectus is
part and is incorporated by reference herein.
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
Stockholders."
The Shares may be sold from time to time by the Selling
Stockholders. 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.
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 Selling Stockholders in the Cappel 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
September 30, 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 June 30, 1996 and
1995 and 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 reports included in the Company's
quarterly reports on Form 10-Q for the quarters ended June 30,
1996 and March 31, 1996, and incorporated by reference herein,
state 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.
<TABLE>
<S> <C>
SEC Filing Fee $ 1,508.41
Legal Fees and Expenses $ 20,000.00
Accounting Fees and Expenses $ 15,000.00
Miscellaneous $ 2,500.00
Total $ 39,008.41
</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., previously filed as Exhibit 4.1 to
Registration Statement No. 333-08179 on Form S-3, which is
incorporated herein by reference.
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 Sale and Purchase Agreement, dated September 18, 1996, by
and between Organon Teknika Corporation, Akzo Nobel Pharma
International B.V., 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 Public Accountants regarding
Unaudited Interim Financial Information.
15.2 Review Report of Independent Public Accountants 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.
15.3 Review Report of Independent Public Accountants for the
period ended June 30, 1996, previously filed as Exhibit 15
to Quarterly Report on Form 10-Q for the quarter ended June
30, 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 this 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 September 30, 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 and
amendments pursuant to Rule 462(b) under the Securities Act of
1933, as amended) 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,
as amended, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Milan Panic
- -------------------
Milan Panic Chairman and Chief Executive September 30, 1996
Officer
(Principal Executive Officer)
/s/ John E. Giordani
- -------------------- Executive Vice President, Chief September 30, 1996
John E. Giordani Financial Officer
(Principal Financial and Accounting
Officer)
/s/ Norman Barker, Jr.
- ---------------------- Director September 30, 1996
Norman Barker, Jr.
/s/ Birch E. Bayh, Jr.
- ---------------------- Director September 30, 1996
Senator Birch E. Bayh,
Jr.
/s/ Alan F. Charles
- ------------------- Director September 30, 1996
Alan F. Charles
/s/ Roger Guillemin
- ------------------- Director September 30, 1996
Roger Guillemin, M.D.,
Ph.D.
/s/ Adam Jerney
- ------------------- Director, Executive Vice President, September 30 1996
Adam Jerney Chief Operating Officer
/s/ Dale M. Hanson
- ------------------- Director September 30, 1996
Dale M. Hanson
/s/ Weldon B. Jolley
- -------------------- Director September 30, 1996
Weldon B. Jolley,
Ph.D.
/s/ Jean-Francois Kurz
- ---------------------- Director September 30, 1996
Jean-Francois Kurz
/s/ Thomas H. Lenaugh
- --------------------- Director September 30, 1996
Thomas H. Lenagh
/s/ Charles T. Manatt
- --------------------- Director September 30, 1996
Charles T. Manatt
/s/ Stephen D. Moses
- -------------------- Director September 30 1996
Stephen D. Moses
/s/ Michael Smith
- -------------------- Director September 30, 1996
Michael Smith, Ph.D.
Roberts A. Smith
- -------------------- Director September 30, 1996
Roberts A. Smith,
Ph.D.
/s/ Richard W. Starr
- -------------------- Director September 30, 1996
Richard W. Starr
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., previously filed as Exhibit 4.1 to
Registration Statement No. 333-08179 on Form S-3, which is
incorporated herein by reference.
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 Sale and Purchase Agreement, dated September 18, 1996, by
and between Organon Teknika Corporation, Akzo Nobel Pharma
International B.V., 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 Public Accountants regarding
Unaudited Interim Financial Information.
15.2 Review Report of Independent Public Accountants 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.
15.3 Review Report of Independent Public Accountants for the
period ended June 30, 1996, previously filed as Exhibit 15
to Quarterly Report on Form 10-Q for the quarter ended June
30, 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 4.4
SALE AND PURCHASE AGREEMENT
---------------------------
This Agreement is made on this 18 th day of September, 1996 by
and between
ORGANON TEKNIKA CORPORATION, a Delaware corporation having its
principal place of business at 100 Akzo Avenue, Durham, NC
27712, (hereinafter referred to as "OTC") and
AKZO NOBEL PHARMA INTERNATIONAL B.V., a Dutch corporation having
its principal place of business at Wethouder van Eschstraat 1,
Oss, the Netherlands (hereinafter referred to as "Akzo Nobel
Pharma") on the one hand and
ICN PHARMACEUTICALS, INC., a Delaware corporation having its
place of business at ICN Plaza, 3300 Hyland Avenue, Costa Mesa,
California 92626 (hereinafter referred to as the "Purchaser") on
the other hand.
WITNESSETH THAT:
OTC owns a division known as Cappel which manufactures and sells
immunochemical reagents used in biotechnology and biomedical
laboratories around the world.
The Cappel division is composed of : (i) certain assets and
property (hereinafter referred to as the "Assets") owned by OTC
as of the date hereof; (ii) certain liabilities associated with
the Assets (hereinafter referred to as "Liabilities"); and (iii)
certain employees (hereinafter referred to as the "Employees"),
who are employed by OTC or its affiliated companies having
activities related with the Cappel Operations as defined below.
The Assets, Liabilities and Employees are hereinafter
collectively referred to as the "Cappel Operations".
Purchaser wishes to acquire the Assets, assume certain specified
liabilities and take over certain of the Employees of the Cappel
Operations upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and undertakings contained herein, the
parties do hereby agree as follows:
ARTICLE 1 - SALE AND TRANSFER.
- -----------------------------
1.1 Assets. OTC agrees and undertakes to sell, transfer,
convey, assign and deliver to Purchaser or have sold,
transferred, conveyed, assigned and delivered as
appropriate by Akzo Nobel Pharma and Purchaser agrees and
undertakes to buy and receive from OTC on the Closing Date
(as hereinafter defined) all the right, title and interest
in the Assets. The Assets shall include the following:
(a) All right, title and interest in, to or under, any
contracts, agreements, leases, licenses,
commitments and undertakings, including purchase
orders for the purchase of Cappel products,
relating to the Cappel Operations, all of which
are collectively referred to hereunder as the
"Contracts". A list of each Contract to be
conveyed hereunder is set forth on the "Contracts
List" attached hereto as Schedule 1.1, which to
the best of OTC's knowledge is complete as of the
Closing Date.
(b) Those trademarks and registrations thereof, and
applications for any of the trademarks set forth
on Schedule 1.2 (the "Trademark List") owned by
Akzo Nobel Pharma and licensed to OTC by Agreement
dated December 19, 1986 (the "Trademark License
Agreement") as well as all other trademarks used
in the Cappel Operations other than the name
"Organon Teknika" but including the name "Cappel"
(collectively the "Trademarks").
(c) All copyrights, inventions, technology, know-how,
discoveries, ideas, trade secrets, formulae,
research data, manufacturing directions and
records, including but not limited to device
history records, (hereinafter referred to as
"Technology"), used in the manufacture, sale or
other exploitation of the products and/or services
of the Cappel Operations to the extent necessary
to manufacture, sell or otherwise exploit same as
currently manufactured, sold, or exploited.
(d) The land, buildings, improvements and fixtures
situated in the Township of West Fallowfield,
County of Chester and State of Pennsylvania (the
"Cochranville Facility" or the "Real Property") as
described in the Deed attached hereto as Schedule
1.3 (the "Real Estate List"), known as the William
Engle Farm and whose street address is Center Hall
Road, Cochranville, Pennsylvania 19330.
(e) All furniture, machinery, equipment (including
laboratory equipment), computers, vehicles and
other tangible personal property necessary for the
conduct of the Cappel Operations located at the
West Chester Manufacturing Facility or the
Cochranville Facility, with the exclusion of the
manufacture of Lymphocite Separation Medium
("LSM") (the "Equipment'), except as included in
the Excluded Assets. Substantially all such items
constituting fixed assets with a net book value of
one US Dollar (US $1.00) or more are listed on the
"Equipment List" attached hereto as Schedule 1.4.
(f) All inventories relating to the Cappel Operations
including without limitation all finished goods,
work in process, raw materials (including
biological materials), goods in transit,
components and manufacturing and advertising
supplies, owned by OTC and related to the Cappel
Operations on hand as of the Closing Date as well
as sufficient containers and shipping materials,
to the extent on hand as of the Closing Date, to
ensure an uninterrupted continuation of the Cappel
Operations (the "Inventory").
(g) All books, records and files, including but not
limited to customer lists related to the Cappel
Operations other than those associated with any
Excluded Assets (the "Records").
(h) Those product and facility licenses, approvals or
clearances related to the Cappel Operations as
being transferred to Purchaser hereunder issued by
the United States Food and Drug Administration
(the "FDA"), the United States Department of
Agriculture (the "USDA") and any corresponding
governmental regulatory agency in the USA and
other countries, and all pending applications
therefor (the "Registrations") as set forth on
Schedule 1.5 (the "Regulatory Approval List").
(i) All production animals, with the exception of
those listed in the Excluded Assets List, located
at the Cochranville Facility on hand as of the
Closing Date (the "Production Animals").
(j) Any pre-paid expenses not included in the Excluded
Assets, including but not limited to pre-paid
taxes as specified in Schedule 1.6, attributable
to and/or on the books of the Cappel Operations as
of the Closing Date.
(k) Such other assets related solely to the Cappel
Operations as may reasonably be necessary and
sufficient for the full benefits of the
acquisition of the Cappel Operations as an ongoing
concern by Purchaser.
1.2 Excluded Assets. Notwithstanding anything contained in
Paragraph 1.1 to the contrary, Purchaser shall not acquire
any right, title or interest to any assets or property,
tangible or intangible, set forth below and where
appropriate specified in Schedule 2 (the "Excluded Assets
List") (collectively referred to as the "Excluded Assets):
(a) Cash, accounts receivables and any other moneys
due to OTC from third parties whether or not
affiliated with OTC, attributable to and/or on the
books of the Cappel Operations as of the Closing
Date.
(b) Tax refund claims and insurance coverage claims
(including prepaid premiums) attributable to the
Cappel Operations as of the Closing Date.
(c) All insurance policies maintained by OTC or Akzo
Nobel Inc. and with respect to the Cappel
Operations, all insurance claims and rights, as
well as all uninsured claims and lawsuits to the
extent that they relate to damages sustained on
occurrences and events occurring prior to the
Closing Date.
(d) Any rights in or to the use of the name "Organon
Teknika" or derivations thereof, or OTC's logo,
except to the extent provided in Paragraph 13.2
hereof.
(e) Any ownership interest in the land and buildings
situated in the Township of West Goshen County of
Chester and State of Pennsylvania (the "West
Chester Manufacturing Facility"), identified as
lots 9 and 10 of Brandywine Industrial Park and
whose street address is 1230 Wilson Drive, West
Chester, Pennsylvania 19380.
(f) The ownership in those animals, as identified on
the Excluded Assets List at the Cochranville
Facility (the "OTC Animals").
(g) All fixtures, improvements and certain equipment
and machinery of the Cappel Operations located at
the West Chester Manufacturing Facility and
affixed or attached to the building.
Substantially all such items constituting fixed
assets with a net book value of one U.S. Dollar
(US $1.00) or more are listed on the Excluded
Assets List.
(h) All furniture, machinery, equipment (including
laboratory equipment), computers and other
tangible personal property necessary for the
manufacture of Lymphocyte Separation Medium
("LSM") and jointly used in the manufacture of
OTC's blood group serology products, as listed on
the Excluded Assets list.
1.3 Non Assignable Contracts and Rights. Anything herein to
the contrary notwithstanding, no properties, rights or
other assets, including but not limited to Contracts and
regulatory approvals, of OTC in respect of the Cappel
Operations shall be deemed sold, transferred, conveyed or
assigned to Purchaser pursuant to this Agreement if the
attempted sale, transfer, conveyance or assignment of the
same to Purchaser without the consent or approval of
another party or governmental entity, including but not
limited to the FDA and other governmental regulatory
agencies, would be ineffective or would constitute a
breach thereof or would in any other way adversely affect
the rights of OTC (or Purchaser, as assignee) thereunder.
If any such consent or approval is required but not
obtained on or prior to the Closing Date, OTC covenants
and agrees that in such case the beneficial interest in or
to such properties, rights or assets shall in any event
pass as of the Closing Date to Purchaser hereunder; and
OTC covenants and agrees (a) from and after the Closing
Date to hold and declare that it holds any and all such
properties, rights and assets in trust for the benefit of
Purchaser, (b) to use reasonable efforts without payment
of any penalty or fee to obtain and secure any and all
consents and approvals that may be necessary to effect the
valid sale, transfer, conveyance or assignment of the same
to Purchaser without change in any of the material terms
or conditions thereof, including, without limitation, the
formal assignment or novation of any of the same, if so
required, (c) to make or complete such transfers as soon
as reasonably possible, and (d) to cooperate with
Purchaser in any other reasonable arrangement designed to
provide for Purchaser the benefits of and to such
properties, rights and assets.
1.4 Assumption of Liabilities. At the Closing Date the
Purchaser shall assume and agree to fulfill, discharge or
perform as appropriate, the following liabilities relating
to the Cappel Operations ("Assumed Liabilities"):
(i) all liabilities and obligations arising after the
Closing Date with respect to the Contracts
(subject to Paragraph 10.2 hereinafter), the
Cochranville Facility, the Equipment (including
leases) and the Registrations other than
liabilities or obligations arising out of any
breach by OTC of any provision of any Contract
including but not limited to liabilities or
obligations arising out of OTC's failure to
perform any Contract in accordance with its terms
prior to the Closing Date.
(ii) all liabilities and obligations to be assumed by
Purchaser pursuant to Articles 6 and 7 relating
to Employees and employee benefits (including but
not limited to savings plans);
(iii) all other liabilities and obligations arising out
of or relating to damages sustained or
occurrences and events occurring with respect to
the conduct of the Cappel Operations by Purchaser
after the Closing Date.
In no event, however, shall Purchaser assume or incur any
liability or obligation under this Paragraph 1.4 or
otherwise in respect of any of the following:
(a) any product liability or similar claim made by a
third party for injury to person or property,
regardless of when made or asserted, which arises
out of or is based upon any express or implied
representation, warranty, agreement or guarantee
made by OTC, or alleged to have been made by OTC,
or which is imposed or asserted to be imposed by
operation of law, in connection with any product
manufactured or sold by OTC on or prior to the
Closing Date, including without limitation any
claim seeking recovery for consequential damage,
lost revenue or income;
(b) any Taxes (as defined in Article 8) except as
provided in Article 8 of this Agreement;
(c) any liability or obligation under or in connection
with any of the Excluded Assets.
ARTICLE 2 - CONSIDERATION AND PAYMENT THEREOF.
- ---------------------------------------------
2.1 The aggregate consideration for the transfer of the
Assets to be paid by Purchaser shall be four million four
hundred eighty three thousand seven hundred seventy-seven
U.S. Dollars (U.S. $4,483,777) (the "Purchase Price").
Purchaser shall pay the Purchase Price to OTC and Akzo
Nobel Pharma in accordance with Paragraph 2.4 hereof by
issuing the number of shares of the $.01 par value common
stock of Purchaser (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
ten (10) consecutive trading days ending two (2) days
before the Closing Date. The number of shares of ICN
Common Stock issued to OTC and Akzo Nobel Pharma, as the
case may be, 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
Purchaser 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. OTC and Akzo Nobel Pharma shall
receive at the Closing the largest whole number of shares
deliverable pursuant to this Paragraph 2.1 (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
Paragraph 2.1.
2.2 The Purchase Price shall be allocated and adjusted as of
the Closing Date as follows:
(a) one million five hundred ninety-three thousand
eight hundred U.S. Dollars (U.S. $1,593,800) for
the Inventory as of December 31, 1995 adjusted at
the Closing Date on a dollar for dollar basis if
the Inventory as of the Closing Date, valued on
net book value under U.S. generally accepted
accounting principles ("US GAAP") shall be less
than one million five hundred ninety thousand U.S.
Dollars (U.S. $1,590,000);
(b) sixty-six thousand two hundred twenty-three U.S.
Dollars (U.S. $66,223) for the equipment as of
December 31, 1995 adjusted at the Closing Date on
a dollar for dollar basis for the net book value
under US GAAP of the Equipment (i.e. equipment as
of December 31, 1995 minus all equipment disposed
of between December 31, 1995 and the Closing Date
plus all equipment acquired for the Cappel
Operations in that period) as of the Closing Date;
(c) five hundred seventy-four thousand seven hundred
ninety U.S. Dollars (U.S. $574,790) for the
Cochranville Facility of which two hundred fifty
thousand US Dollars (US $250,000) relates to farm
land; and
(d) two million two hundred forty eight thousand nine
hundred sixty-four U.S. Dollars (U.S. $ 2,248,964)
for the Contracts, the Trademarks, the Technology,
the Records, the Registrations, the Production
Animals, the goodwill and all other Assets
(excluding prepaid taxes beyond the Closing Date),
of which eight hundred ninety nine thousand five
hundred ninety three U.S. Dollars and fifty cents
(U.S. $ 899,593.50) shall be paid to Akzo Nobel
Pharma for the transfer of Trademarks and the
remainder to OTC for the Technology, the
Contracts, the Records, the Production Animals,
the goodwill and the other Assets.
2.3 In addition to the adjustments set forth in Paragraphs 2.1
and 2.2 hereof, the Purchase Price will be adjusted as
follows:
(a) Within fifteen (15) days following sale of all
Purchase Price Shares by OTC and Akzo Nobel Pharma
and in any event no later than five (5) days after
the end of the Protected Period, OTC and Akzo
Nobel Pharma shall provide Purchaser with a
certificate (the "Adjustment Certificate") signed
by the Chief Executive officer of OTC and an
authorized representative of Akzo Nobel Pharma, as
the case may be, that sets forth (i) all sales of
the Purchase Price Shares during the Protected
Period by OTC and Akzo Nobel Pharma, as the case
may be, and (ii) the Net Sales Price of such
sales. "Protected Period" means the period that
begins on the Closing Date and ends one hundred
and twenty (120) days after the earlier to occur
of (x) the day that all of the Purchase Price
Shares are eligible to be sold under Rule 144, or
(y) the day that a Registration Statement (as
defined hereinafter) with respect to the Purchase
Price Shares becomes effective. "Net Sales Price"
means the sales price realized by OTC or Akzo
Nobel Pharma, as the case may be, 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 Securities and Exchange
Commission (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.
(b) If the Net Sales Price from the sales of any
Purchase Price Shares during the Protected Period
to persons unaffiliated with OTC or Akzo Nobel
Pharma in an arms-length transaction is less than
the aggregate of (I) the product of the Average
Share Price multiplied by the number of such
Purchase Price Shares sold plus (ii) interest on
the amount under (i) above for the period
commencing on the Closing Date and ending on the
day OTC or Akzo Nobel Pharma, as the case may be,
receives such Net Sales Price at a rate of Prime
plus one percent (1%) (the "Minimum Amount"),
Purchaser shall pay OTC or Akzo Nobel Pharma, as
the case may be, an amount in cash equal to such
shortfall plus interest on such shortfall at such
rate for the period beginning on the date of such
receipt and ending on the date of payment of such
shortfall. Such payment shall be deemed to be an
increase in the Purchase Price. For purposes of
this Agreement, "Prime" on any given date will
mean the rate published for such date in the
Eastern Edition of the Wall Street Journal in the
section entitled "Money Rates" (or any successor
section) and opposite the caption "Prime Rate" (or
any successor caption). For each day which is not
a business day in New York, Prime shall be Prime
for the preceding day. In the event Purchaser
pays any cash dividend on such Purchase Price
Shares prior to the date of sale thereof by OTC or
Akzo Nobel Pharma, Purchaser may deduct the amount
of such cash dividend from any interest due under
(ii) above.
(c) If the Net Sales Price from the sales of Purchase
Price Shares during the Protected Period to
persons unaffiliated with OTC or Akzo Nobel Pharma
in an arms length transaction is greater than the
aggregate of (I) the product of the Average Share
Price multiplied by the number of such Purchase
Price Shares sold plus (ii) fifteen percent (15%)
plus (iii) interest on the amount under (i) above
for the period commencing on the Closing Date and
ending on the day OTC or Akzo Nobel Pharma, as the
case may be, receives such Net Sales Price at a
rate of Prime plus one percent (1%), OTC or Akzo
Nobel Pharma, as the case may be, shall be
obligated to pay Purchaser an amount in cash equal
to such excess. In the event Purchaser pays any
cash dividend on such Purchase Price Shares prior
to the date of sale thereof by OTC or Akzo Nobel
Pharma, the amount of such cash dividend will be
deducted from the interest as meant under (iii)
above.
(d) The payments required by Paragraph 2.3(b) and (c)
shall be due and payable within fifteen (15) days
after the date that Purchaser receives the
Adjustment Certificates.
2.4 The entire Purchase Price shall be paid by Purchaser in
full on the Closing Date as follows:
(a) to OTC the amount of three million five hundred
eighty-four thousand one hundred eighty-three U.S.
Dollars and fifty cents (U.S. $ 3,584,183.50) as
adjusted if appropriate, pursuant to Paragraphs
2.1 and 2.2 above, in ICN Common Stock; and
(b) to Akzo Nobel Pharma the amount of eight hundred
ninety nine thousand five hundred ninety three
U.S. Dollars and fifty cents (U.S. $ 899,593.50)
as adjusted if appropriate, pursuant to Paragraph
2.1 above in ICN Common Stock.
2.5 (a) within ten (10) days after the Closing Date,
Purchaser shall file with 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 OTC
and Akzo Nobel Pharma and thereafter shall use its
best efforts to cause such Registration Statement
to become and remain effective as provided in this
Paragraphs 2. 5.
(b) Purchaser shall furnish to OTC or Akzo Nobel
Pharma such copies of the prospectus constituting
a part of the Registration Statement as OTC or
Akzo Nobel Pharma 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 one hundred and twenty (120) days thereafter
(the "Registration Period").
(c) After filing of the Registration Statement
with the Commission, and as soon as reasonably
practicable, Purchaser shall:
(i) 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 and
shall furnish or cause to be furnished to
each such securities exchange all documents,
instruments, information and undertakings and
publish all advertisements or other material
that may be necessary in order to effect or
maintain such listings, and shall cause such
listing or listings to be continued during
the Protected Period. Further, Purchaser
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 (x) such time
as OTC and Akzo Nobel Pharma have sold all of
the Purchase Price Shares issued to them or
(y) one hundred and twenty (120) days after
the effective date of the Registration
Statement; and
(ii) 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 OTC or Akzo
Nobel Pharma shall reasonably request in
writing, and do any and all other acts and
things which may be necessary or advisable to
enable OTC or Akzo Nobel Pharma or any
underwriter to consummate the disposition in
such jurisdictions of its ICN Common Stock
covered by the Form S-3, to enable OTC and
Akzo Nobel Pharma to consummate the public
sale or other disposition of the Purchase
Price Shares; provided that Purchaser 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 in which
such consent has not been previously filed.
(d) ICN's obligations under this Paragraph 2.5
shall terminate if either OTC or Akzo Nobel Pharma
fails to furnish to Purchaser such information
with respect to OTC and Akzo Nobel Pharma in their
capacity as selling shareholders, as Purchaser may
reasonably request from OTC or Akzo Nobel Pharma
for use in preparing the Registration Statement
(and the prospectus included therein) and
performing its other obligations under this
Paragraph 2.5.
(e) Subject to the satisfaction by Purchaser of
its obligations pursuant to Paragraph 2.5(a)
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 Purchaser.
(f) Except as set forth below, Purchaser 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 Purchaser 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, OTC and Akzo Nobel Pharma shall bear at
its own expense in connection with registration
and sale of the Purchase Price Shares, including
without limitation expenses of their 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
Purchaser shall pay the costs of Rule 144
opinions, if any, rendered by Purchaser's counsel.
(g) In the event that Purchaser is unable to
satisfy its obligations pursuant to Paragraph
2.5(a) above, Purchaser shall have the right to
repurchase all of the Purchase Price Shares at a
price equal to the average quoted closing price
per share of the ICN Common Stock as reported by
the New York Stock Exchange for the ten (10)
consecutive trading days prior to such repurchase,
provided that the price to be paid by Purchaser in
such repurchase shall not be less than the Minimum
Amount.
(h) after the filing of the Registration
Statement, Purchase shall furnish to OTC and Akzo
Nobel Pharma and to each underwriter, dealer or
agent of ICN Common Stock, if any, such number of
copies of the Form S-3 and of each such amendment
and supplement thereto (in each case, including
all exhibits), such number of copies of the
prospectus included in the Form S-3 (including
each preliminary prospectus and any summary
prospectus) or filed under Rule 424 (b) under the
Securities Act in accordance with Rule 430A
thereunder, in conformity with the requirements of
the Securities Act, such documents incorporated by
reference in the Form S-3 or prospectus, and such
other documents, as OTC or Akzo Nobel Pharma or
such underwriter, dealer or agent may reasonably
request;
(I) at any time during which a prospectus
relating to the Form S-3 is required to be
delivered under the Securities Act, Purchaser
shall immediately notify OTC and Akzo Nobel Pharma
of the happening of any event as a result of
which, or the determination by the Purchaser that,
the prospectus included in the Form S-3, as then
in effect, includes an untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make
the statements therein not misleading in the light
of the circumstances then existing, and, at the
request of OTC or Akzo Nobel Pharma, prepare and
furnish to OTC or Akzo Nobel Pharma, as the case
may be, a reasonable number of copies of a
supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter
delivered to the purchasers of ITC Common Stock,
such prospectus shall not include an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading in the light of the circumstances then
existing;
(j) after the filing of the Registration
Statement, Purchaser shall promptly notify OTC and
Akzo Nobel Pharma (i) when the Form S-3 or the
prospectus included therein or any prospectus
amendment or supplement or post-effective
amendment has been filed, and, with respect to the
Form S-3 or any post-effective amendment, when the
same has become effective, (ii) of any comments by
the Commission and by the Blue Sky or securities
commissioner or regulator of any state with
respect thereto or any request by the Commission
for amendments or supplements to the Form S-3 or
prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order
suspending the effectiveness of the Form S-3 or
the initiation or threatening of any proceedings
for that purpose, (iv) if at any time the
representations and warranties of the Purchaser
contemplated by Paragraph 5.11 through Paragraph
5.18 hereof cease to be true and correct in all
material respects, (iv) of the receipt by the
Purchaser of any notification with respect to the
suspension of the qualification of the ICN Common
Stock for sale in any jurisdiction or the
initiation or threatening of any proceeding for
such purpose;
(k) after the filing of the Registration
Statement, if requested by OTC or Akzo Nobel
Pharma, Purchaser shall promptly incorporate in a
prospectus supplement or post-effective amendment
such information as is required by the applicable
rules and regulations of the Commission and as OTC
or Akzo Nobel Pharma specifies should be included
therein relating to the terms of the sale of ICN
Common Stock;
(l) In connection with any sale of the ICN Common
Stock pursuant to the Form S-3, the Purchaser will
allow OTC and Akzo Nobel Pharma and the
underwriters, dealers or agents, if any, and their
respective counsel, accountants and other agents
(collectively, the "Inspectors"), access to the
financial and other books and records, pertinent
corporate documents and properties of the
Purchaser (collectively, the "Records") and
opportunities to discuss the businesses of the
Purchaser with its officers and the independent
public accountants who have certified its
financial statements as shall be necessary or
desirable, in the opinion of OTC and Akzo Nobel
Pharma or such underwriters, dealers or agents, or
their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities
Act.
(m) In the event that the Purchaser sells ICN
Common Stock pursuant to the Form S-3 in an
underwritten offering, OTC and Akzo Nobel Pharma
may require the Purchaser to include the ICN
Common Stock held by OTC or Akzo Nobel Pharma in
such underwriting on the same terms and conditions
as shall be applicable to the other securities
being sold through underwriters under such
registration. In such case, OTC and Akzo Nobel
Pharma shall be a party to any such underwriting
agreement or agreements. Such underwriting
agreement(s) shall contain representations,
warranties and covenants by Purchaser and other
terms and provisions as are customarily contained
in underwriting agreements with respect to
secondary distributions.
2.6 Rule 144. The Purchaser covenants to and with OTC and
Akzo Nobel Pharma that to the extent it shall be required
to do so under the Exchange Act, the Purchaser shall
timely file the reports required to be filed by it under
the Exchange Act or the Securities Act (including, but not
limited to, the reports under Section 13 and 15 (d) of the
Exchange Act referred to in Subparagraph (c) (1) of Rule
144 adopted by the Commission under the Securities Act)
and the rules and regulations adopted by the Commission
thereunder, and shall take such further action as OTC or
Akzo Nobel Pharma may reasonably request, all to the
extent required from time to time to enable OTC or Akzo
Nobel Pharma to sell Purchase Price Shares without
registration under the Securities Act within the
limitations of the exemption provided by Rule 144 under
the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter
adopted by the Commission. Upon the request of OTC or
Akzo Nobel Pharma the Purchaser shall deliver a written
statement as to whether it has complied with such
requirements.
2.7. Restrictions on Sale. OTC or Akzo Nobel Pharma shall not
sell any of the Purchase Price Shares during the Protected
Period except for sales either that are registered under
Paragraph 2.5 or that comply with Rule 144, without the
prior written approval of Purchaser, which approval shall
not be unreasonably withheld. If a Registration Statement
covering all of the Purchase Price Shares has not become
effective within one hundred twenty (120) days after the
Closing Date, OTC and Akzo Nobel Pharma may sell any of
the Purchase Price Shares to an unaffiliated party in an
arms length, unregistered transaction without Purchaser's
consent.
ARTICLE 3 - CLOSING.
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3.1 Ownership of all Assets purchased hereunder shall be
delivered (the "Closing") to Purchaser on September 18th,
1996 (the "Closing Date"). The Closing will be deemed
effective as of midnight Eastern Standard Time September
18th, 1996 at which time title and risk of loss with
respect to the Assets will pass to Purchaser.
Purchaser acknowledges and agrees that ownership of the
Trademarks shall be transferred by Akzo Nobel Pharma to
Purchaser and that ownership of all other Assets shall be
transferred by OTC to Purchaser.
3.2 On the Closing Date OTC will deliver to Purchaser:
(i) all Assets hereby agreed to be sold which are
capable of transfer by delivery;
(ii) a duly executed deed for the transfer of real
property as described in Schedule 1.4;
(iii)a general assignment, bill of sale and assumption
agreement, duly executed on behalf of Akzo Nobel
Pharma, for the Trademarks along with a letter by
OTC surrendering its rights under and terminating
the Trademark License Agreement; and
(iv) such bills of sale, assignments, endorsements,
and other good and sufficient instruments and
documents of conveyance and transfer, in a form
reasonably satisfactory to Purchaser, as shall be
necessary and effective to transfer and assign
to, and vest in, Purchaser all right, title and
interest in and to the Assets, including with
limitation, subject to the provisions of
Paragraph 1.3 above (A) good and valid title in
and to all of the Assets; (B) good and valid
leasehold interests in and to all of the Assets
leased by OTC as lessee, and (C) all rights under
all Contracts and other documents included in the
Assets; and
(v) subject to the provisions of Paragraph 1.3, all
Contracts and Records and other documents, books,
records, papers, files, and data which are part
of the Assets; and
(vi) the agreements referred to in Articles 11 and 12
hereof.
3.3 Delivery as contemplated in Paragraph 3.2 above shall be
made against:
(i) Same day delivery of shares of ICN Common Stock
in the amounts and to the parties as set forth in
Paragraph 2.4 above; and
(ii) Delivery of such instrument of assumption as OTC
may reasonably request to effectuate assumption
of liabilities and obligations of OTC by
Purchaser provided for in Paragraph 1.4 above;
and
(iii)the agreements referred to in Articles 11 and 12
hereof.
3.4 As soon as practicable, but not later than thirty (30)
days after the Closing Date, OTC shall deliver to
Purchaser a detailed statement (the "Statement") setting
forth the quantity and value (on a net book value basis
under US GAAP) of all inventories of finished goods, work
in process, materials (including biological materials),
components and supplies, at the Cappel Operations, and
exclusively related to the Cappel Operations on hand as of
the Closing Date as well as of the Production Animals on
hand as of the Closing Date and any prepaid expenses to be
transferred to Purchaser on the Closing Date.
3.5 After the Closing Date, OTC will from time to time, at
Purchaser's request and without further consideration,
execute and deliver to Purchaser such other and further
instruments of conveyance, assignment and transfer as
Purchaser may reasonably request for more effective
conveyance and transfer of any of the Assets to Purchaser,
including, without limitation, such further instruments of
conveyance, assignment and transfer as may be necessary
to permit Purchaser to record on or in any applicable
record or recording office its ownership of any of the
Assets.
3.6 On the Closing Date, OTC will terminate all banking and
financing services relating to the Cappel Operations as
well as all insurance coverage for the Assets or otherwise
relating to the Cappel Operations for periods after
Closing.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF OTC AND AKZO NOBEL
PHARMA.
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A. OTC and where indicated Akzo Nobel Pharma hereby represent
and warrant as of the date of this Agreement and as of the
Closing Date to Purchaser as an inducement to enter into
this Agreement.
4.1 Status. OTC is a corporation duly organized and validly
existing and in good standing under the laws of the State
of Delaware, which has full power and authority to own or
lease its property and assets and to carry on its business
as it has been, and is, conducted. Akzo Nobel Pharma is a
corporation duly organized and validly existing and in
good standing under the laws of the Netherlands, which has
full power and authority to own or lease its property and
assets and to carry on its business as it has been, and
is, conducted.
4.2 Corporate Authority. Each of OTC and Akzo Nobel Pharma
have full power and authority to enter into this Agreement
and to consummate the transactions contemplated herein.
4.3 Corporate Action. All necessary corporate action has
been duly taken by the Board of Directors of OTC as well
as by Akzo Nobel Pharma in order to authorize the
execution and consummation of this Agreement. This
Agreement has been, and the other agreements, documents
and instruments required to be delivered by OTC and/or
Akzo Nobel Pharma hereunder will be, duly executed and
delivered by duly authorized representatives of OTC and/or
Akzo Nobel Pharma as appropriate. Upon execution hereof
by the Purchaser, this Agreement shall be the legal, valid
and binding obligation of OTC and/or Akzo Nobel Pharma
enforceable in accordance with its terms.
4.4 Title to Assets. Except as provided in Paragraph 4.5
with respect to Trademarks and in Paragraph 4.9 with
respect to real property, OTC has good, valid and
marketable title to all of the Assets, including the
Technology, to be transferred hereunder, free and clear of
any liabilities, liens, encumbrances, security interests,
charges, imperfections of title or restrictions of any
kind or nature whatsoever and on the Closing Date the
Purchaser shall receive good and marketable title to all
of such Assets free and clear of any liabilities, liens,
encumbrances, security interests, charges, imperfections
of title or restrictions of any kind or nature
whatsoever.
4.5 Trademarks. Akzo Nobel Pharma has good, valid and
marketable title to the Trademarks and OTC possesses the
right to use the Trademarks in connection with the conduct
of its business, and to the best of their knowledge there
is no conflict with any trademarks or trade names of
others.
4.6 Contracts. All Contracts assumed by and assigned to
Purchaser under this Agreement and as set forth on the
Contract List hereto are legal, valid and binding
obligations of the parties thereto in full force and
effect and there exists no current breach or default by
either of the parties thereto. To the extent the
assignment thereof requires the approval of another party
or governmental entity, OTC shall use reasonable efforts
to have all such Contracts assigned to Purchaser. Subject
to Paragraph 1.3 above, there exists no actual or, to the
knowledge of OTC, any threatened termination,
cancellation, or limitation of, or any amendment,
modification, or change to any Contract, which would have
an adverse effect on the business or condition, financial
or otherwise, of the Cappel Operations, including without
limitation, (i) the business relationship of the Cappel
Operations with any customer, distributor, or related
group of customers or distributors whose purchases
individually or in the aggregate are material to the
operations and financial condition of the business of the
Cappel Operations, or (ii) the business relationship of
the Cappel Operations with any material supplier.
4.7 Equipment. The Equipment is in good operating condition
and repair (normal wear and tear in relation to age
excepted), is reasonably fit for the purposes for which
such Assets are presently used, are adequate and usable
for the continued operation of the business of the Cappel
Operations as the same is presently conducted, and none of
the Equipment is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs, the cost of
which will not vary materially from historic patterns.
4.8 Litigation. Except as disclosed on Schedule 3.1 attached
hereto, there are no material actions, suits or
proceedings pending or, to the knowledge of OTC or Akzo
Nobel Pharma, threatened against and materially adversely
affecting the Cappel Operations before any court,
administrative agency or other body. The Cappel
Operations (or OTC with respect to its conduct of the
Cappel Operations) has not been charged; nor to the
knowledge of OTC or Akzo Nobel Pharma, is it under
investigation with respect to any charge, concerning any
material violation of any provision of any federal,
state, local or foreign law or administrative regulations.
4.9 Real Property
(a) Except for the West Chester Manufacturing
Facilities and certain office space at OTC's
principal offices in Durham, NC, the real estate
described in the Real Estate List includes all of
the real estate currently used in connection with
or occupied by the Cappel Operations. Such real
estate is not subject to any restrictions which
would prevent its use as presently used in the
conduct of the Cappel Operations.
(b) OTC has good and marketable title to the real
property described on the Real Estate List free
and clear of all liens, mortgages, leases,
charges, encumbrances, restrictions or easements
except (i) for the lien of current taxes not yet
due and payable, (ii) for such imperfections of
title, if any, as are not in the aggregate
substantial in character, amount or extent as
applied to such property, and do not in the
aggregate materially detract from the value or
interfere with the present use of any property
subject thereto or affected thereby, or otherwise
materially impair business operations at such
property, (iii) such state of facts as may be
disclosed by an accurate survey of the property,
and (iv) zoning and other laws affecting the
property.
(c) There is no pending or to OTC's knowledge,
threatened violation, action or proceeding by any
person or governmental agency against OTC with
respect to the Real Property or against the Real
Property, and to the knowledge of OTC there is no
current threat of any litigation or other legal
action being filed against OTC or the Real
Property which would affect the Real Property,
OTC's ability to perform its obligations
hereunder, or Purchaser's ability to conduct the
Cappel Operations after Closing.
(d) There is no pending litigation or dispute, and OTC
has received no notice of any disputes, concerning
the location of the lines and corners of the Real
Property, and OTC has not been served with any
legal action concerning the location of the lines
and corners of the Real Property.
(e) To OTC's knowledge, the improvements constructed
on the Real Property complies with all applicable
zoning, environmental protection, fire,
electrical, building and development codes, rules
and regulations (collectively, the "Codes"). OTC
is not aware of, and has not received any
notification from any governmental or public
authority that the Real Property or any portion
thereof violates any of the codes or that any work
is required to be done upon or in connection with
the Real Property or any portion thereof . No
notice or warning from any governmental authority
with respect to any failure or alleged failure of
OTC to comply with any of the Codes has been
issued or given or, to OTC's knowledge, is any
such notice or warning proposed or threatened. To
OTC's knowledge, the Real Property's continued
compliance with the Codes are not dependent on
facilities located on any real property other than
the Real Property. To OTC's Knowledge, there is
no license, approval or permit, necessary for
either the lawful operation of the Real Property
or the lawful occupancy thereof, including,
without limitation, utility, building, zoning,
subdivision control, land and water use,
environmental protection and flood hazard permits,
which has not been obtained, and all required
permits and licenses have been paid for, are in
full force and effect. To OTC's knowledge,
neither the sale of the Real Property to Purchaser
nor the consummation of any of the transactions
contemplated hereunder (i) shall require that the
consent of any person be obtained in order to keep
any of the permits in full force and effect from
and after the Closing Date or (ii) will result in
a violation of any of the permits or of any Codes
applicable to them. To OTC's knowledge, all
parking facilities, access driveways, and walkways
required in connection with the full and complete
operation and use of the Real Property are located
entirely within the boundaries of the Real
Property and Purchaser will not be required to
grant any easement or license for the use thereof
on account of the development of adjacent or
nearby real property.
(f) To OTC's knowledge, no person other than Purchaser
has any right, agreement, commitment, option right
of first refusal or any other agreement with
respect to the purchase, assignment or transfer of
all or any portion of the Real Property.
(g) Water is supplied by wells on the Property, and
sewer is provided by on-site septic facilities.
All electric, telephone, drainage facilities and
service and other utilities necessary to
adequately supply the Real Property for its
present use are available on the Real Property and
either enter the Real Property through adjoining
public streets or if through private land, do so
in accordance with valid and indefeasible public
easements or private easements that will inure to
the benefit of Purchaser and are not subject to
defeasance. All easements and licenses required
in connection with the utilities have been
granted.
(h) To OTC's knowledge, the Real Property is not
subject to or affected by any special assessment
for public improvements or otherwise, or not
presently a lien upon the Real Property. OTC has
made no commitment to any governmental authority,
utility company, school board, church or other
religious body, homeowner or homeowner's
association or any other organization, group or
individual relating to the Real Property which
would impose an obligation upon OTC or its
successors or assigns to make any contributions or
dedications of money or land, or to construct,
install or maintain any improvements of a public
or private nature as part of the Real Property or
upon separate lands. No governmental authority
has imposed any requirement that OTC pay, directly
or indirectly, any special fees or contributions
or incur any expenses or obligations in connection
with the development of the Real Property or any
portion thereof, other than any regular and
nondiscriminatory local real estate or school
taxes assessed against the Real Property. The
Real Property is separately assessed for real
property tax assessment purposes and is not
combined with any other real property for tax
assessment purposes. OTC has received no notice
of any actual reassessment of the Real Property or
any portion thereof for general real estate tax
purposes. As of the date hereof, all due and
payable taxes, assessments, water charges and
sewer charges affecting the Real Property or any
portion thereof have been paid.
(i) There is no pending or to the knowledge of OTC
threatened condemnation, expropriation, eminent
domain, change in grade of public street or
similar proceeding affecting all or any portion of
the Real Property; OTC has received no notice of
the same and OTC has no knowledge that any such
proceeding is contemplated.
(j) To OTC's knowledge, no portion of the improvements
located on the Real Property is located in an area
designated as a "Flood hazard area" in accordance
with the document entitled "Department of Housing
and Urban Development, Federal Insurance
Administration - Special Flood Hazard Area Maps"
or within the 100-year flood plain as depicted on
the U.S. Army Corps of Engineers Geodetic Maps of
such flood plain areas. No portion of the
improvements located on the Real Property is
located within wetlands.
(k) There is no default or breach by OTC nor any other
party thereto, under any covenants, conditions,
restrictions or easements which may affect the
Real Property or any portion or portions thereof
which are to be performed or complied with by the
owner of the Real Property, and no condition or
circumstance exists which, with the giving of
notice or the passage of time, or both, would
constitute a default or breach by OTC nor, to
OTC's knowledge, any other party thereto, under
any such covenants, conditions, restrictions,
rights-of-way or easements.
(l) Presently neither OTC nor any of its affiliates
has received any notice from any insurance company
which has issued a policy with respect to any of
the Real Property or from any board of fire
underwriters (or other body exercising similar
functions) claiming any defect or deficiency in
the Real Property or requires the performance of
repairs, alterations or other work to the Real
Property which have not been corrected.
(m) the Real Property has free, complete and adequate
vehicular and pedestrian access to paved and
publicly-dedicated streets abutting or adjoining
the Real Property, without the necessity of
private easements over or across the property of
third parties.
The foregoing representations and warranties contained in
this Paragraph 4.9 are effective as of the Closing Date
and are collectively referred to as the "Real Property
Warranties". Prior to the Closing Date, Purchaser will
not have had time to obtain a current survey of the Real
Property nor a title insurance commitment and owner's
policy insuring Purchaser's title to the Real Property.
After the Closing, OTC shall assist Purchaser in obtaining
owner's title insurance by executing the customary owner's
affidavits and other documents reasonably required by the
title insurance company. In consideration of Purchaser
closing on the Closing Date, OTC hereby indemnifies,
agrees to defend and hold harmless Purchaser from and
against any and all claims, demands, liabilities, costs
and expenses (including, but not limited to, reasonable
attorneys' fees), penalties, damages and losses, payments,
obligations, actions or causes of action, final
assessments, and any legal or other expenses reasonably
incurred in connection with investigating or defending
claims or actions, whether or not resulting in any
liability, resulting from the inaccuracy of any Real
Property Warranties (irrespective of whether the Real
Property Warranties are limited to OTC's knowledge) which
materially and adversely effects the current use or title
to the Real Property. This provision and the indemnity
contained herein, shall expressly survive the Closing
until such time as Purchaser has obtained a survey of the
Real Property and an owner's title insurance policy (or
title commitment "marked" by the title insurance company
in which the title company unequivocally commits to issue
an owner's title insurance policy in the form marked)
insuring Purchaser's title to the Real Property in the
amount of $574,790 (the "Title Policy), both of which
shall be in form and content acceptable to Purchaser.
Purchaser shall diligently pursue obtaining said survey
and Title Policy and OTC shall cooperate with Purchaser in
such endeavor. If the survey or Title Policy reveals a
matter which materially and adversely effects the current
use or title to the Real Property, Purchaser shall notify
OTC of said defect and OTC shall fully cooperate with
Purchaser to remedy said defect. Purchaser shall have
sixty (60) days after Closing in which to notify OTC of
any matter which materially and adversely effects the
current use or title to the Real Property.
4.10 Conflicts with Other Agreements. Neither the execution
and delivery of this Agreement nor the consummation of the
sale and other transactions contemplated hereunder will
conflict with, or result in a breach of, any of the terms
and conditions or provisions of any law or any regulation,
order, writ, injunction or decree of any court or
government instrumentality or the corporate Charter or
Bylaws of OTC or the Statutes of Akzo Nobel Pharma, or of
any agreement or other instrument to which OTC or Akzo
Nobel Pharma is bound or by which any of the Assets may be
affected, or will constitute a default or result in any
lien or encumbrance on any of the Assets being sold
hereunder, or except in the cases as foreseen in Paragraph
1.3 above give any party any right to terminate, modify,
accelerate or otherwise change the existing rights
thereunder.
4.11 No Bankruptcy. No proceeding has been commenced against
or by OTC or Akzo Nobel Pharma under the federal
Bankruptcy Code or any similar state statute or law or, as
to Akzo Nobel Pharma, the Dutch Bankruptcy Law.
4.12 No Third Party Options. There are no existing agreements,
options, commitments or rights with, of or to any person
to acquire any of the Assets, or any interest therein,
except for those contracts entered into in the normal and
ordinary course of business reasonably consistent with
past practice.
4.13 Inventory. All Inventory, whether reflected on the most
recent balance sheet for the Cappel Operations or
subsequently acquired, is now and at the closing Date will
be located at the West Chester Manufacturing Facility, has
been or will be acquired by OTC only in bona fide
transactions entered into in the ordinary course of
business, is of good and merchantable quality, is not
subject to any write-down or write-off and valued in
accordance with generally accepted accounting principles
("GAAP"). Seller is not under any liability or obligation
with respect to the return of Inventory in the possession
of others.
4.14 Absence of Undisclosed Liabilities. There are no
liabilities or obligations with respect to the Cappel
Operations, either direct or indirect, matured or
unmatured or absolute, contingent or otherwise, except:
(a) liabilities arising in the ordinary course of
business consistent with past practice, relating
to the Contracts, the Cochranville Facility, the
Equipment (including leases) and the
Registrations;
(b) those liabilities or obligations incurred,
consistent with past business practice, in or as a
result of the normal and ordinary course of
business of the Cappel Operations; and
(c) liabilities relating to the Employees and Employee
Benefits as meant in Article 6.
4.15 Compliance with Law; Authorizations. Except as set forth
in Schedule 3.2, OTC has complied with each, and is not in
violation of any, law, ordinance, or governmental or
regulatory rule or regulation, whether federal, state,
local or foreign, to which the Cappel Operations or the
Assets are subject ("Regulations") the non compliance of
which would have a material adverse effect on the Cappel
Operations. OTC owns, holds, possesses or lawfully uses
in the operation of the Cappel Operations all franchises,
licenses, permits, easements, rights, applications,
filings, registrations and other authorizations
("Authorizations") which are in any manner necessary for
its to conduct its business as now or previously conducted
or for the ownership and use of the Assets, except as
explicitly provided otherwise herein, free and clear of
all liens, charges, restrictions and encumbrances and in
compliance with all Regulations except when the failure to
do so would not have a material adverse effect on the
Cappel Operations. OTC is not in default, nor has it
received any notice of any claim of default, with respect
to any such Authorization.
4.16 Labor Matters. OTC is not a party to any collective
bargaining agreement affecting or covering Employees, no
such agreement determines the terms and conditions of
employment of any of the Employees, no collective
bargaining agent has been certified as a representative of
any of the Employees, and no representation campaign or
election is now in progress with respect to any of such
Employees.
4.17 Environmental Matters.
(a) OTC has no knowledge concerning the environmental
conditions or the existence of any contamination at the
Cochranville Facility.
(b) To the best of its knowledge, OTC has obtained,
and is in material compliance with all permits, license
and other authorizations appropriate for, or needed by,
the Cappel Operations and which are currently required
by applicable environmental laws and regulations
relating to the pollution by hazardous chemicals of the
air, waters or soil.
(c) To the best of its knowledge, OTC is not aware of
nor has it received any notice of any non-compliance
situation or incident related to any applicable
environmental law or regulation which would impede or
prevent continued operations at the Cappel Operations.
(d) To the best of its knowledge, the Cochranville
Facility and OTC operations therein comply with all
applicable regulations and OTC is not aware of nor has
it received any notice of non-compliance with any
applicable regulation regarding manufacturing at,
operations of, or transporting materials to or from,
the Cochranville Facility.
4.18 No Violations. Except as set forth in Schedule 3.2., the
Cochranville Facility and the present uses thereof comply
with all Regulations of the governmental bodies having
jurisdiction over the Cochranville Facility the non
compliance of which would have a material adverse effect
on the Cappel Operations, and OTC has received no written
notices from any governmental body, and has no reason to
believe that the Cochranville Facility or any improvements
erected or situate thereon, or the uses conducted thereon
or therein, violate any Regulations of any governmental
body having jurisdiction over the Cochranville Facility.
4.19 Assets. Except for the Excluded Assets, the Assets
include all rights and property necessary to the conduct
of the Cappel Operations by Purchaser in the manner it is
presently conducted by OTC with the exception of the
manufacture of LSM.
4.20 No Claims for Infringement or Invalidity or
Unenforceability. Neither OTC nor Akzo Nobel Pharma has
received any claims alleging infringement of any patent
trademark, trade name, service marks, copyright or trade
secrets owned or claimed by any third party. Neither OTC
nor Akzo Nobel Pharma has received any claims alleging
that any Trademarks are invalid or unenforceable.
4.21 Conduct of the Cappel Operations prior to the Closing
Date. OTC has conducted the Cappel Operations in the
period between December 31, 1995 and the date of this
Agreement only in the normal and ordinary course of
business reasonably consistent with past practices, except
as otherwise approved in writing by Purchaser. Without
limiting the generality of the preceding sentence, OTC has
not:
(a) Amended or terminated the Contracts, except in the
normal and ordinary course of business;
(b) Entered into any agreement relating to the Cappel
Operations except in the normal and ordinary
course of business;
(c) Sold, leased, licensed, transfer, pledged or
assigned any of the Assets, except in the normal
and ordinary course of business.
4.22 Delivery As Is. Except as explicitly warranted herein all
Assets, including but not limited to the Cochranville
Facility, will be delivered to Purchaser and Purchaser
will accept such Assets on an as is basis.
4.23. Purchase Entirely for Own Account. The Purchase Price
Shares will be acquired for OTC's or Akzo Nobel Pharma'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 neither OTC nor Akzo
Nobel Pharma has a 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
Paragraph 2.5 hereof or in a transaction exempt from the
registration requirements under the Securities Act and
applicable state securities laws. Except as set forth in
Paragraph 2.5, neither OTC nor Akzo Nobel Pharma has any
contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such
person or to any third party with respect to any of the
Purchase Price Shares.
4.24 Reliance Upon OTC's and Akzo Nobel Pharma's
Representations. OTC and Akzo Nobel Pharma understand
that the issuance of the Purchase Price Shares to OTC and
Akzo Nobel Pharma pursuant to this Agreement, 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 Purchaser's reliance on such
exemption is predicated in part on OTC's and Akzo Nobel
Pharma's representations set forth herein.
4.25 Receipt of Information. Each of OTC and Akzo Nobel Pharma
has received all the information it considers necessary or
appropriate for deciding whether to purchase the Purchase
Price Shares. Each of OTC and Akzo Nobel Pharma has had
an opportunity to ask questions and receive answers from
Purchaser regarding the terms and conditions of the
offering of the Purchase Price Shares and the business,
properties, prospects, and financial condition of
Purchaser and to obtain additional information (to the
extent Purchaser possessed such information or could
acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information
furnished to OTC and Akzo Nobel Pharma or to which OTC or
Akzo Nobel Pharma had access, provided however that such
opportunity and verification shall in no way effect or
limit the representation and warranties of Purchaser
herein or OTC's and Akzo Nobel Pharma's right to
indemnification hereunder.
4.26 Investment Experience. Each of OTC and Akzo Nobel Pharma
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.
4.27 Restricted Securities. Each of OTC and Akzo Nobel Pharma
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 subject to Paragraph 2.5 (g) hereof. 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.
4.28. 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 Sale and
Purchase Agreement dated September 18, 1996 between
Organon Teknika Corporation and Akzo Nobel Pharma
International B.V. on the one hand and the Company on the
other hand, a copy of which is available at the Company's
headquarters."
4.29 No Additional Warranties. EXCEPT AS EXPLICITLY STATED
ABOVE IN THIS ARTICLE 4 OR ELSEWHERE IN THIS AGREEMENT,
OTC MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO
THE ASSETS, INCLUDING NO WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
4.30 Meaning of Knowledge. For purposes of this Article 4
knowledge means the knowledge of facts or circumstances
which would indicate to a reasonable person the existence
of the fact or circumstance.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PURCHASER.
- -------------------------------------------------------
Purchaser hereby represents and warrants as of the date of
this Agreement and as of the Closing Date to OTC as an
inducement to enter into this Agreement.
5.1 Status. Purchaser is a corporation duly organized and
validly existing and in good standing under the laws of
the State of Delaware.
5.2 Corporate Authority. Purchaser has full power and
authority to enter into this Agreement and to consummate
the transaction contemplated herein.
5.3 Corporate Action. All necessary corporate action has been
duly taken by the Board of Directors and stockholders of
Purchaser in order to authorize the execution and
consummation of this Agreement. This Agreement has been,
and the other agreements or instruments required to be
delivered by Purchaser hereunder will be delivered by
Purchaser hereunder will be, duly executed and delivered
by duly authorized representatives of Purchaser. Upon
execution hereof by the Purchaser, this Agreement shall be
the legal, valid and binding obligation of Purchaser
enforceable in accordance with its terms.
5.4 Consents. No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for consummation
by Purchaser of the transactions contemplated under this
Agreement, which shall include the sale of the Assets
hereunder to Purchaser.
5.5 Financing. Purchaser has, and will maintain at all times
until Purchase fulfills its obligation pursuant to
Paragraph 2.3 above, if appropriate, sufficient cash,
available lines of credit or other sources of immediately
available funds to enable Purchaser to fulfill such
obligations.
5.6 Litigation. There are no actions, suits or proceedings
pending, or to the knowledge of Purchaser, threatened
against, Purchaser before any court, administrative agency
or other body, in which any third party challenges or
seeks to prevent, alter or materially delay the
transactions contemplated under this Agreement.
5.7 Conflicts with Other Agreements. Neither the execution
and delivery of this Agreement nor the consummation of the
sale and other transactions contemplated hereunder will
conflict with, or result in a breach of, any of the terms
and conditions or provisions of any law or any regulation,
order, writ, injunction or decree of any court or
government instrumentality or the corporate Charter or
Bylaws of Purchaser, or of any agreement or other
instrument to which Purchaser is bound.
5.8 No Bankruptcy. No proceeding has been commenced against
or by Purchaser under the Federal Bankruptcy Code or any
similar state statute.
5.9 No Broker. Purchaser has not dealt with or retained a
broker in connections with this transaction and no entity
or individual is entitled to receive a fee as the result
of the consummation of the transactions contemplated under
this Agreement.
5.10 Investigation. Purchaser has had the opportunity, prior
to the execution of this Agreement, to investigate the
properties, assets, liabilities and financial conditions
of the Cappel Operations and to have access to all the
books and records, key personnel and facilities related to
the Cappel Operations; provided, however, that such
investigations shall in no way effect or limit the
representations and warranties of OTC or Akzo Nobel Pharma
herein or Purchaser's rights to indemnification hereunder.
5.11 Purchaser's 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 (the "Form 10-K"); Quarterly Reports on
Form 10-Q for the three months ended March 31, 1996 and
six months ended June 30, 1996; and the Registration
Statement on Form 8-A, dated November 16, 1994 (the "Form
8-A"), each when filed with the Commission, conformed in
all material respects to the requirements of the
Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable, and the rules
and regulations of the Commission thereunder, and none of
such documents contained an untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein
not misleading;
5.12 The unissued ICN Common Stock to be issued and sold by the
Purchaser to OTC and Akzo Nobel Pharma have been duly and
validly authorized and, when issued and delivered against
payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable.
5.13 During the period commencing one month before the Closing
Date, Purchaser has not taken, directly or indirectly, any
action which was designed or which has constituted or
which might have reasonably be expected to cause or result
in stabilization or manipulation of the price of the ICN
Common Stock.
5.14 Meaning of Knowledge. For purposes of this Article 5
knowledge means the knowledge of facts or circumstances
which would indicate to a reasonable person the existence
of the fact or circumstance.
ARTICLE 6 - EMPLOYEES/EMPLOYEE BENEFITS.
- ---------------------------------------
6.1 Employees of OTC who prior to the Closing Date were
dedicated to the Cappel Operations and which are
identified in Schedule 4 hereto (the "Transferred
Employees") will be offered employment by Purchaser as
soon as practical following the Closing Date which
employment, if accepted by the Transferred Employees,
shall become effective upon the earlier of the date such
Transferred Employees commence employment with Purchaser
or December 31, 1996 (such actual employment date shall
hereinafter be referred to as "Purchaser Employment
Date"). Except as explicitly provided otherwise
hereinafter Purchaser shall become responsible for all
costs and liabilities attributable to Transferred
Employees who accept and actually commence employment with
Purchaser accruing on and after the Purchaser Employment
Date; provided, however, that Purchaser shall not be
responsible for any liabilities arising under the OTC's
employee benefit plans. To the extent necessary, OTC may
continue to communicate with the Transferred Employees
regarding their rights and entitlement to any benefits
under OTC's employee benefit plans, subject to Purchaser's
prior approval, which shall not be unreasonably withheld.
Effective on the Purchaser Employment Date, OTC shall, and
hereby does, release all Transferred Employees who accept
employment with Purchaser from any employment and/or
confidentiality agreement previously entered into between
OTC and such Transferred Employees to the extent (but only
to the extent) necessary for Purchaser to operate the
business acquired from OTC hereunder in the same manner as
operated by OTC prior to the Closing Date. OTC has
previously delivered to Purchaser a list of its employment
policies and practices.
The amount of severance pay entitlement on the Purchaser
Employment Date under the OTC's severance policy is a
preserved severance pay entitlement ("Preserved Severance
Pay") for each Transferred Employee who accepts and
actually commences employment with Purchaser. Should a
Transferred Employee who accepts and actually commences
employment with Purchaser be laid off by Purchaser after
transfer due to a reduction in force or position
elimination, such employee will receive from Purchaser the
greater of their Preserved Severance Pay or the amount of
severance pay due under the Purchaser's severance pay
policy unless and except to the extent such Transferred
Employee has previously been paid severance by OTC at the
time OTC acquired the Cappel business.
Notwithstanding anything herein to the contrary, Purchaser
undertakes no obligation to employ any persons other than
a Transferred Employee and Purchaser shall assume no
obligation or liability with respect to any Employee who
is not a Transferred Employee or with respect to any
Transferred Employee who does not accept or actually
commence employment with Purchaser. An individual shall
be included as a Transferred Employee notwithstanding the
fact that the individual, on the Closing Date or the
Purchaser Employment Date, is on leave of absence,
vacation or on short-term disability.
6.2 All Transferred Employees who accept and actually commence
employment with Purchaser shall become participants in the
Purchaser's health and medical plans on the Purchaser
Employment Date, or the first day of the calendar month
following, if the Purchaser Employment Date is not the
first day of a month. Purchaser further agrees to waive
the exclusions from coverage under group health, life and
disability insurance for "pre-existing conditions" for
such Transferred Employees.
6.3 On and after the Purchaser Employment Date, or the first
day of the calendar month following, if the Purchaser
Employment Date is not the first day of a month, Purchaser
shall be solely responsible for any and all benefits and
the cost of any and all benefits to which the Transferred
Employees who accept and actually commence employment with
Purchaser are entitled pursuant to the terms of the
Purchaser`s plans or programs, in effect from time to
time, provided, however, that liabilities relating to the
claims of such Transferred Employees for medical benefits
incurred for medical services rendered to, and purchases
of prescription drugs and other health care products made
by such persons while actively employed by OTC and
thereafter through the last day of the calendar month in
which their employment with OTC terminates shall be
retained by OTC, subject to the provisions of its medical
benefit plans as in effect on such date.
The amount of medical expenses applied at the Purchaser
Employment Date to satisfy the annual deductible and
annual out of pocket expenses under the OTC Medical Plan
for each Transferred Employee who accepts employment with
Purchaser, will be recognized by the Purchaser as being
applied to the Purchaser's health and medical plans'
deductible and out of pocket expenses for the Purchaser's
current plan year.
6.4 Through the Purchaser Employment Date, Purchaser shall
grant paid vacation days to all Transferred Employees who
accept and actually commence employment with Purchaser and
who have accrued and unused vacation days due from OTC as
of the Purchaser Employment Date, under OTC's vacation
policy.
6.5 OTC shall, with respect to Transferred Employees, up to
and including the last day of the month in which they
become employed by Purchaser and/or OTC terminates their
employment be solely responsible for the cost of any and
all benefits to which Transferred Employees are entitled
under the terms of OTC's retirement, health and welfare
plans while employed by OTC, and subject to the terms of
the applicable plan as in effect from time to time. OTC
shall be responsible for and Purchaser shall. assume no
obligation with respect to the payment of all liabilities
and obligations (including without limitation all accrued
but unpaid wages, commissions, severance pay, vacation
pay, sick pay, and holiday pay) for any Employees of OTC
who are not Transferred Employees as well as for
Transferred Employees who do not accept or do not actually
commence employment with Purchaser. OTC shall be
responsible for the payment of any amounts due to its
Employees (including the Transferred Employees) pursuant
to its employee benefit plans as a result of the
employment of its Employees, provided that in determining
bonuses and other similar payments due to Transferred
Employees who accept employment with Purchaser for any
period ended on or prior to the Purchaser Employment Date,
OTC shall, if payment thereof will occur after the
Purchaser Employment Date, waive any requirement that
employees be employees of OTC on the date such bonuses or
other similar payments are paid. OTC shall be responsible
for reporting all employee-related costs and liabilities
of Transferred Employees who accept employment with
Purchaser accruing prior to the Purchaser Employment Date,
whether payable on or after the Purchaser Employment Date.
OTC is responsible for all incurred but unreported or
unpaid medical claims occurring prior to the Purchaser
Employment Date and for the cost associated with any
hospital confinement which commences prior to the
Purchaser Employment Date.
6.6 OTC and Purchaser agree to provide any information and to
take any actions reasonably required to effect the
provision of this Article 6. OTC and Purchaser
acknowledge, that it is their intention that no group
health plan maintained by Purchaser shall constitute a
successor plan to any of the OTC's group health plans, and
Purchaser is not a successor employer with respect to
OTC's group health plans, and OTC is not a predecessor
employer with respect to Purchaser's group health plans,
within the meaning of the COBRA health continuation
coverage provisions contained in Internal Revenue Code
Section 4908B(f) and the corresponding provisions of the
Employee Retirement Income Security Act of 1974.
ARTICLE 7 - SAVINGS PLANS
- -------------------------
As of the Closing Date all Transferred Employees shall
become eligible to participate in Purchaser's savings plan
(401K).
ARTICLE 8. - TAXES
- ------------------
8.1. Definition. For purposes of this Agreement, the term
"Taxes" shall mean all federal, state, local, foreign, and
other net income gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property,
customs, duties or other taxes, fees assessments, or
charges of any kind whatever, together with any interest
and any penalties, additions to tax or additional amounts
with respect thereto, and the term "Tax" means any one of
the foregoing Taxes.
8.2. Responsibility for Taxes.
(a) OTC shall be responsible for (and shall indemnify
and hold harmless Purchaser from and against) all
Taxes (i) with respect to all tax periods ending
on or prior to the Closing Date, or (ii) with
respect to any tax periods beginning before the
Closing Date and ending after the Closing Date,
but only with respect to the portion of such
period up to and including the Closing Date, or
(iii) which respect to which a Tax Return was not
timely filed or did not accurately pay or reflect
taxes owed, due or becoming due.
(b) Purchaser shall be responsible for (and shall
indemnify and hold harmless OTC and Akzo Nobel
Pharma from and against) all Taxes (i) with
respect to all tax periods beginning after the
Closing Date or (ii) with respect to any tax
period beginning before the Closing Date and
ending after the Closing Date, but only with
respect to the portion of such period commencing
after the Closing Date.
(c) With respect to any tax period beginning before
the Closing Date and ending after the Closing
Date, any Taxes for such period shall be
apportioned between the pre-Closing and post-
Closing partial periods based, in the case of
property Taxes, on a per diem basis and, in the
case of other Taxes, on the basis of actual
activities, taxable income or loss during such
partial periods.
(d) Except as provided in Paragraph 8.2 under (b)
Purchaser shall assume no Tax obligations of OTC
or Akzo Nobel Pharma currently accrued on the
books and records of OTC or Akzo Nobel Pharma as
the case may be.
8.3. Allocation of Purchase Price. In accordance with section
1060 of' the Internal Revenue Code of 1986, OTC, Akzo
Nobel Pharma and Purchaser shall discuss the allocation of
the Purchase Price among the Assets and attempt in good
faith to reach agreement with respect thereto (within the
parameters of Paragraph 2.2). If such agreement is
reached prior to the Closing Date, a document
memorializing the agreement shall be executed by OTC and
Purchaser at the Closing,
8.4 Resale Certificate. As a condition precedent to the
consummation of the transactions contemplated by this
Agreement, Purchaser shall provide OTC with a Pennsylvania
or other applicable state resale certificate or similar
document(s) that may be required by the Pennsylvania or
other applicable state taxing authority in order to
relieve OTC of the obligation to collect sales Tax on the
sale of any inventory described in Paragraph 1.1(f).
8.5. Transfer Taxes. Purchaser shall be solely responsible for
the payment of any Taxes associated with the transfer of
title or beneficial interest to the Assets from OTC and/or
Akzo Nobel Pharma to Purchaser, including any Pennsylvania
Realty Transfer Tax or any similar local Tax and any
recordation Tax or fee.
ARTICLE 9 - INDEMNIFICATION.
- ---------------------------
9.1 Definitions
For the purposes of this Article:
(a) "Indemnification Claim" shall mean a claim for
indemnification hereunder.
(b) "Indemnitees" shall mean the party seeking
indemnification hereunder, its agents,
representatives, employees, officers, directors,
shareholders, controlling persons and affiliates.
(c) "Indemnitor" shall mean the party against whom
indemnity hereunder is sought and shall refer to
OTC, Akzo Nobel Pharma or to Purchaser, as the
case may be, depending on the party seeking
indemnification.
(d) "Losses" shall mean any and all demands, claims,
actions or causes of action, final assessments,
losses, damages, liabilities, costs, and expenses,
including without limitation, penalties, cost of
investigation and defense, and reasonable
attorneys' and other professional fees and
expenses, but shall not include any special or
consequential damages.
(e) "Third Party Claim" shall mean any claim, suit or
proceeding (including, without limitation, an
audit by any taxing authority) that is instituted
against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted
successfully, would result in a Loss for which
such Indemnitee is entitled to indemnification
hereunder.
(f) "Environmental Laws" shall mean all applicable,
state, federal, and municipal laws and regulations
relating to pollution or the environment,
including but not limited to the Comprehensive
Environmental Recovery, Compensation, and
Liability act, as amended, 42 U.S.C. 9601, et
seq. ("CERCLA"); the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. 9601, et
seq. ("RCRA"), the Occupational Safety and Health
Act, 29 U.S.C. 600, et seq. ("OSHA") and other
laws and regulations relating to emissions,
discharges, releases, or threatened releases of
pollutants, contaminants, chemicals, pesticides,
or industrial, toxic, or hazardous substances or
wastes into the environment (including, without
limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or
otherwise relating to the processing, generation,
distribution, use, treatment, storage, disposal,
transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic, or
hazardous substances or wastes.
(g) "Environmental Condition" shall mean any
conditions or circumstances related in any manner
whatsoever to (i) the spill emission, discharge,
disposal, release or threatened release of any
hazardous or toxic substance or waste (as defined
by any applicable Environmental Laws) and any
chemicals, pollutants, petroleum, petroleum
products, or oil ("Hazardous Substance"), into the
environment, or (ii) the treatment, storage or
other handling of any Hazardous Substance or (iii)
the placement of structures or materials into
waters of the United States, or (iv) the presence
of any Hazardous Substance, including, but not
limited to, asbestos, in any building, structure
or workplace or on any portion of the Cochranville
Facility.
(h) "Environmental Claim" shall mean any claim
(including, without limitation, any written notice
or other communication alleging potential
liability for investigatory costs, cleanup costs,
governmental response costs, natural resources
damages, property damages, personal injuries, or
penalties) arising out of, based upon, or
resulting from (I) any Environmental Condition or
(ii) any circumstances or state of facts forming
the basis of any violation or alleged violation
of, or any liability or alleged liability under
any Environmental Law.
(I) "Diminution of Value Claim" shall mean a claim
against OTC by Purchaser for decreased property
value due to on-site contamination arising from
OTC's breach of its obligation to remedy pursuant
to this Article 9.
9.2 Agreement of Indemnitor to Indemnify
(a) Subject to the terms and conditions of this
Article 9 OTC agrees to indemnify, defend, and
hold harmless Purchaser Indemnitees, and each of
them, from, against, for, and in respect of any
and all Losses or a Diminution of Value Claim
asserted against, or paid, suffered or incurred
by, a Purchaser Indemnitee and resulting from,
upon, or arising out of:
(i) the inaccuracy, untruth, or incompleteness of
any representation or warranty of OTC
contained in or made pursuant to this
Agreement or in any certificate, Schedule, or
Exhibit furnished by OTC in connection
herewith (except as otherwise provided in
Paragraph 4.9 above);
(ii) a breach of or failure to perform any
material covenant or agreement of OTC made in
this Agreement;
(iii)any Excluded Asset;
(iv) failure of OTC to cause all liens and
encumbrances on the Assets to be released as
set forth in this Agreement;
(v) any obligations and liabilities arising out
of acts or omissions of OTC with respect to
the Cappel Operations, other than
environmental liabilities, prior to the
Closing Date including without limitation,
liability arising from a claim for product
liability or any tax liabilities of OTC
pursuant to Article 8 hereof; and
(vi) any Environmental Claim, which subject to
reasonable investigation by Indemnitor and
Indemnitee as described in Paragraph 9.3 (c),
is found to have existed at the time of
Closing.
(b) Subject to the terms and conditions of this
Article 9 Akzo Nobel Pharma agrees to indemnify,
defend, and hold harmless Purchaser Indemnitees,
and each of them, from, against, for, and in
respect of any and all Losses asserted against, or
paid, suffered or incurred by, a Purchaser
Indemnitee and resulting from, upon, or arising
out of:
(i) the inaccuracy, untruth, or incompleteness of
any representation or warranty of Akzo Nobel
Pharma contained in or made pursuant to this
Agreement or in any certificate, Schedule, or
Exhibit furnished by Akzo Nobel Pharma in
connection herewith;
(ii) a breach of or failure to perform any
material covenant or agreement of Akzo Nobel
Pharma made in this Agreement;
(iii)any Excluded Asset;
(iv) failure of Akzo Nobel Pharma to cause all
liens and encumbrances on the Assets to be
released as set forth in this Agreement, and
(v) any obligations and liabilities arising out
of acts or omissions of Akzo Nobel Pharma
with respect to the Cappel Operations, other
than environmental liabilities, prior to the
Closing Date including without limitation,
liability arising from a claim for product
liability or any tax liabilities of Akzo
Nobel Pharma pursuant to Article 8 hereof.
(c) Subject to the terms and conditions of this
Article 9, the Purchaser agrees to indemnify,
defend, and hold harmless OTC Indemnitees and Akzo
Nobel Pharma Indemnitees, and each of them, from,
against, for, and in respect of any and all Losses
asserted, against or paid, suffered or incurred by
an OTC Indemnitee or an Akzo Nobel Pharma
Indemnitee and resulting from, based upon or
arising out of:
(i) the inaccuracy, untruth, or incompleteness of
any representation or warranty of the
Purchaser contained in or made pursuant to
this Agreement or in any certificate,
Schedule, or Exhibit furnished by the
Purchaser in connection herewith;
(ii) a breach of or failure to perform any
material covenant or agreement of Purchaser
made in this Agreement;
(iii)any Assumed Liabilities; and
(iv) all obligations and liabilities arising out
of acts or omissions of Purchaser with
respect to the Cappel Operations after the
Closing Date including without limitation,
any tax liabilities of Purchaser pursuant to
Article 8 hereof.
(v) any Environmental Claim which, subject to a
reasonable investigation by Indemnitor and
Indemnitee as described in Paragraph 9.3 (c)
is not found to have existed at the time of
Closing nor is found to have been caused by a
subsequent owner of the Cochranville
Facility, provided however that such
subsequent owner is not affiliated to
Purchaser and further that the environmental
condition is not found to have been caused by
Purchaser or Purchaser's affiliate during any
period of occupancy as owner or in another
capacity.
9.3 Procedures for Indemnification.
(a) An Indemnification Claim shall be made by an
Indemnitee by delivery of a written notice to the
Indemnitor requesting indemnification and
specifying the basis on which indemnification is
sought and the amount of asserted Losses and, in
the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as
such Indemnitee shall have concerning such Third
Party Claim.
(b) If the Indemnification Claim involves a Third
Party Claim, the procedures set forth in Paragraph
9.4 hereof shall be observed by the Indemnitee and
the Indemnitor.
(c) If the Indemnification Claim involves a matter
other than a Third Party Claim, the Indemnitor
shall have ninety (90) days to object to such
Indemnification Claim by delivery of a written
notice of such objection to such Indemnitee
specifying in reasonable detail the basis for such
objection. If the Indemnification Claim is an
Environmental Claim, Indemnitor and Indemnitee
shall immediately commence and shall attempt to
complete within the ninety (90) day period such
investigations as are necessary to determine
whether the pollutants triggering a clean up
existed at the time of Closing. Failure to timely
so object shall constitute a final and binding
acceptance of the Indemnification Claim by the
Indemnitor, and the Indemnification Claim shall be
paid in accordance with subparagraph (d) hereof.
If an objection is timely interposed by the
Indemnitor, then the parties shall negotiate in
good faith for a period of not less than sixty
(60) days from the date the Indemnitee receives
such objection prior to commencing any formal
legal action, suit or proceeding with respect to
such Indemnification Claim.
(d) If Indemnitee requests a sum of money then upon
determination of the amount due the Indemnitee for
an Indemnification Claim, whether by agreement
between the Indemnitor and the Indemnitee or by an
arbitration award or by any other final
adjudication ("Determined Amount of
Indemnification"), the Indemnitor shall pay the
amount of such Indemnification Claim within ten
(10) days of the date such amount is determined.
(e) If the Indemnitor assumes the defense of an
Environmental Claim:
(i) no compromise or settlement thereof may be
effected by the Indemnitor without the
Indemnitee's consent, which consent shall not
be unreasonably withheld. In the event that
Indemnitee objects to Indemnitor's acceptance
of a compromise or settlement proposed in
resolution of an Environmental Claim
Indemnitor shall tender to Indemnitee funds
equal to the amount of the proposed
settlement or equal to the sum required to
conduct any necessary remediation, and
Indemnitee shall thereafter assume any
further expenses incurred in the continuation
of such litigation or remediation, provided,
however, that Indemnitor shall in no event
accept or request that Indemnitee accept a
compromise or settlement containing terms
obligating Indemnitee to undertake any
actions which Indemnitee is not legally
required to undertake, or which would require
Indemnitee to materially impair its ongoing
operations;
(ii) the Indemnitee shall have no liability with
respect to any compromise or settlement
thereof effected without its consent; and
(iii)in the event that Purchaser seeks
indemnification from OTC, Purchaser shall
allow OTC, as Indemnitor, such access as is
reasonably necessary to conduct such
remediation of the property as is required
for the resolution of any Environmental Claim
for which OTC is liable.
Consent shall be presumed in the case of
settlements of $10,000 or less where the
Indemnitor has not responded within five (5)
business days of notice of a proposed settlement.
(f) OTC will perform a study of the Environmental
Conditions at the Cochranville Facility within six
(6) months after the Closing Date ("Study"). Such
Study will establish contaminants levels as of the
Closing Date for any specific pollutant measured.
Purchaser agrees to provide access during normal
business hours to enable OTC and its agents to
perform said study.
(g) Access to the Cochranville Facility by OTC. OTC
shall have access to the Cochranville Facility
during normal business hours under the following
conditions:
(i) OTC or its contractors shall have access to
the Cochranville Facility to carry out any
necessary and appropriate activities to
investigate and/or remediate an Environmental
Claim at the Cochranville Facility, and to
install, maintain, and monitor such
environmental remediation units (including,
without limitation, monitoring and recovery
wells) (collectively, the "Activities") on or
under the Premises, as necessary for the
remediation of an Environmental Claim.
(ii) OTC shall have access to the Cochranville
Facility in order to perform the Study
referenced in Paragraph 9.3 (g) above.
(h) At any time during which OTC has access to the
Cochranville Facility:
(i) OTC will comply with all applicable
Environmental Laws.
(ii) OTC will provide Purchasers with courtesy
copies of any document regarding the
Cochranville Facility, including test
results, which OTC makes public, provided,
however that should such document contain
test results, OTC makes no representations or
warranties regarding any aspect of any such
test results as delivered to Purchaser.
(iii)OTC's access is predicated upon the
understanding that OTC shall, to the extent
practicable and consistent with sound
remediation practices, undertake the
Activities in a manner that will not
materially impair the operations of Purchaser
at the Cochranville Facility.
(i) Third-Party Responsibility - In any agreement with
a lessee, tenant, or other third party for
occupancy of the Cochranville Facility or any part
thereof, Purchaser will require such third party
to comply with the terms of this Agreement and
will obligate such third party to assume
Purchaser's obligations under this Agreement.
9.4 Third Party Claims. The obligations and liabilities of
the parties hereunder with respect to a Third Party Claim
shall be subject to the following terms and conditions:
(a) The Indemnitee shall give the Indemnitor written
notice of a Third Party Claim, promptly after
receipt by the Indemnitee of notice thereof, and
the Indemnitor may undertake the defense,
compromise and settlement thereof by
representatives of its own choosing reasonably
acceptable to the Indemnitee. The failure of the
Indemnitee to notify the Indemnitor within ninety
(90) days of such claim shall relieve the
Indemnitor of the obligation to indemnify the
Indemnitee for such claim. The assumption of the
defense, compromise and settlement of any such
Third Party Claim by the Indemnitor shall be made
without prejudice, in the event that
investigations reveal facts proving that the
Indemnitor is not liable for such claim. If the
Indemnitee desires to participate in, but not
control, any such defense, compromise and
settlement, it may do so at its sole cost and
expense. If, however, the Indemnitor fails or
refuses to undertake the defense of such Third
Party Claim within forty-five (45) days after
written notice of such claim has been given to
the Indemnitor by the Indemnitee, the Indemnitee
shall have the right to undertake the defense,
compromise and settlement of such claim with
counsel of its own choosing reasonably acceptable
to Indemnitor. In the circumstances described in
the preceding sentence, the Indemnitee shall,
promptly upon its assumption of the defense of
such claim, make an indemnification Claim as
specified in Paragraph 9.3 which shall be deemed
an Indemnification Claim that is not a Third Party
Claim for the purposes of the procedures set forth
herein.
(b) If, in the reasonable opinion of the Indemnitee,
any Third Party Claim or the litigation or
resolution thereof involves an issue or matter
which could have a material adverse effect on the
business, operations, assets, properties, or
prospects of the Indemnitee (including, without
limitation, the administration of the tax returns
and responsibilities under the tax laws of the
Indemnitee), the Indemnitee shall have the right
to fully participate in the defense, compromise
and settlement of such Third Party Claim
undertaken by the Indemnitor and the costs and
expenses of the Indemnitee in connection therewith
shall be included as part of the Indemnification
obligations of the Indemnitee hereunder. If the
Indemnitee shall elect to exercise such right, the
Indemnitee shall have the right to participate in,
but not control, the defense, compromise and
settlement of such Third Party Claim at its sole
cost and expense.
(c) If the Indemnitor assumes the defense of a Third
Party Claim,
(i) no compromise or settlement thereof may be
effected by the Indemnitor without the
Indemnitee's consent which consent shall not
be unreasonably withheld. In the event that
Indemnitee objects to Indemnitor's acceptance
of a compromise or settlement proposed in
resolution of a Third Party Claim, Indemnitor
shall tender to Indemnitee funds equal to the
amount of the proposed settlement, and
Indemnitee shall thereafter assume any
further expenses incurred in the continuation
of such litigation, provided, however, that
Indemnitor shall in no event accept or
request that Indemnitee accept a compromise
or settlement containing terms obligating
Indemnitee to undertake any actions which
Indemnitee is not legally required to
undertake, and
(ii) the Indemnitee shall have no liability with
respect to any compromise or settlement
thereof effected without its consent.
Consent shall be presumed in the case of
settlements of ten thousand US Dollars (US
$10,000) or less where the Indemnitor has not
responded within five (5) business days of notice
of a proposed settlement.
(d) In connection with the defense, compromise or
settlement of any Third Party Claim, the parties
to this Agreement shall execute such powers of
attorney as may reasonably be necessary or
appropriate to permit participation of counsel
selected by any party hereto, and, as may
reasonably be related to any such claim or action,
shall provide access during normal business hours
to all properties, personnel, books, tax records,
contracts, commitments and all other business
records of such other party reasonably related to
such claim or action and will furnish to such
other party copies of all such documents as may
reasonably be requested (certified, if requested).
9.5 Other Rights and Remedies Excluded. The rights of the
Indemnitees under this Article 9 are exclusive of any
other rights and remedies the Indemnitees may have at law
or in equity or otherwise for any misrepresentation,
breach of warranty or the failure to fulfill any agreement
or covenant hereunder on the part of Indemnitor, including
without limitation the right to seek specific performance,
recession or restitution, none of which rights or remedies
shall be affected or diminished hereby.
9.6 Survival. All representations, warranties and agreements
contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the
Closing notwithstanding any investigation conducted with
respect thereto or any knowledge acquired as to the
accuracy or inaccuracy of any such representation or
warranty. Environmental Claims shall survive the Closing
without limit of time, notwithstanding any investigation
conducted with respect thereto or any knowledge acquired
as to the accuracy or inaccuracy of any such
representation or warranty.
9.7 Time Limitations. The Indemnitor shall have no liability
under clause (i), of Paragraph 9.2 (a), clause (I) (except
as otherwise provided in Paragraph 4.9 above) of Paragraph
9.2 (b) and clause (I) of Paragraph 9.2. (c) unless within
two (2) years after the Closing Date, the Indemnitor is
given notice asserting an Indemnification Claim with
respect thereto. An Indemnification Claim based upon the
provisions of Paragraph 9.2 (a) (ii) and Paragraph 9.2 (b)
(ii) and Paragraph 9.2 (c) (ii) may not be made after the
third (3rd) anniversary of the Closing Date. An
Indemnification Claim based upon the provision of
Paragraph 9.2 (a) (iv) and (v) and Paragraph 9.2 (b) (iv)
and (v) may not be made after the expiration of the
applicable Statute of Limitations. The indemnification
obligations contained in Paragraphs 9.2 (a) (iii) and
(vi), 9.2. (b) (iii) and 9.2. (c) (iii), (iv) and (v)
shall not expire.
9.8 Any time that a party undertakes remediation of an
Environmental Claim, the party shall: (a) comply with the
requirements of the applicable federal, state, or local
governmental agency with jurisdiction over the
Cochranville Facility ("Governmental Authority") in
conducting the investigation and remediation required by
any Environmental Laws applicable to the Environmental
Claim; and (b) continue such remediation until receipt of
written notice from the applicable Governmental Authority
that no further remediation or action is required.
ARTICLE 10 - CERTAIN SUBSTANTIVE PROVISIONS
- -------------------------------------------
10.1 Transition. Prior to and after the Closing Date, OTC and
Purchaser will mutually cooperate to (a) assist Purchaser
in a smooth transition of the ownership of the Assets; (b)
for their mutual benefit take all precautions possible to
keep the negotiations of the parties to this Agreement and
future plans of the parties confidential and not to
disclose such plans to third parties.
10.2 Orders. All orders placed before the Closing Date for
delivery of Cappel products after the Closing Date shall
be deemed orders accepted by OTC for the benefit and
account of Purchaser and Purchaser undertakes to accept
and deliver those orders on the terms and conditions as
agreed upon by OTC with the pertaining customer so long as
terms and conditions are consistent with past practice.
10.3 Books and Records. Purchaser agrees that it will
cooperate with and make available to OTC, during normal
business hours, all books and records pertaining to the
Cappel Operations, information and employees (without
substantial disruption of employment) which are necessary
or useful in connection with any tax inquiry, audit,
investigation or dispute, any litigation or investigation
or any other matter requiring any such books and records,
information or employees for any reasonable business
purpose; it being understood that all books and records
pertaining to the Cappel Operations shall be maintained by
Purchaser for seven (7) years following the Closing Date.
OTC shall bear all of the out-of-pocket costs and expenses
(including, without limitation, attorney's fees, but
excluding reimbursement for salaries and employee
benefits) reasonably incurred in connection with providing
such books and records of the Cappel Operations,
information and employees. Notwithstanding the foregoing,
Purchaser shall retain all such books and records relevant
to any tax return until sixty (60) days following the
expiration of the relevant statute of limitations.
ARTICLE 11- TRANSITIONAL PERIOD
- -------------------------------
11.1 Transitional Services. OTC and Purchaser agree that OTC
shall enter into, on the Closing Date, a transitional
services agreement with Purchaser whereby OTC will provide
to Purchaser for a period commencing on the Closing Date
and ending December 31, 1996, certain employee services,
(including overtime services) support services and
ancillary services related to manufacturing operations
relating to the Cappel Products as well as customer
services and accounting and administration as set forth in
and substantially in the form of Schedule 5 hereto (the
"Transitional Services Agreement"), to the extent that OTC
will be allowed to use software and electronic data
processing services licensed from third parties in
providing the services as contemplated hereunder. The
aforementioned services shall be charged on cost pass-
through basis to Purchaser.
11.2 Use of OTC Name and Logo. Notwithstanding the provisions
of Paragraphs 1.1 and 1.2 of this Agreement, Purchaser
shall be permitted to use in the conduct and operation of
the business of the Cappel Operations the existing
inventories of raw materials, work-in-progress and
finished goods of the Cappel Operations which bear the
name "Organon Teknika" or OTC's logo, for the period
necessary to exhaust the same, but in no event longer than
six (6) months from and after the Closing Date. In
addition, to the extent as legally permitted, OTC shall
allow Purchaser to use in the conduct and operation of the
business of the Cappel Operations the permits, consents,
registrations, approvals, orders and authorizations
necessary thereto previously obtained or applied for by
OTC and the name "Organon Teknika" as applicable thereto,
pending Purchaser's receipt of any such necessary permits,
consents, approvals, etc. which Purchaser agrees to use
its best efforts to obtain as soon as possible.
ARTICLE 12 - SUPPLY AGREEMENTS/SERVICES BY PURCHASER
- ----------------------------------------------------
12.1 Supplies to OTC. OTC, acting on its own behalf, including
for its blood group serology division which is presently
for sale, and on behalf of its relevant affiliates, and
Purchaser agree to enter into, on the Closing Date, an
agreement for the supply by Purchaser of certain raw
materials as described in the Supply Agreement as attached
in Schedule 6 hereto manufactured with the use of the
Production Animals on the terms and conditions as set
forth in such Supply Agreement. Such agreement shall be
for an initial period of one (1) year and will
automatically be renewed at the end of such period for an
indefinite period of time unless or until it is terminated
by either party by written notice.
Purchaser agrees, if OTC sells its blood group serology
division and its successor wishes to continue to purchase
rabbit erythrocytes from the Cappel Operations, OTC may
partially assign the Supply Agreement (i.e. to the extent
it relates to the purchase of rabbit erythrocytes) to such
successor.
12.2 Services by Purchaser. OTC and Purchaser agree that
Purchaser shall enter into, on the Closing Date, a service
agreement with OTC whereby Purchaser agrees to take care
of and maintain the OTC Animals at the Cochranville
Facility for the risk and benefit of OTC and to
manufacture, at the request of and with antigen supplied
by OTC, with the use of such OTC Animals goat anti-human
IgG. Such services shall be provided by Purchaser to OTC
on the terms and conditions set forth in the Services
Agreement attached in Schedule 7 hereto. The goat anti-
human IgG manufactured by Purchaser with the use of the
OTC Animals shall be supplied to OTC at a price of one US
Dollar (US $1.00) per milliliter. If Purchaser needs to
replace an OTC Animal, at the prior request of OTC,
Purchaser may charge OTC the amount of one hundred
fourteen US Dollars (US $114.00) per goat. Purchaser may
charge OTC for care and maintenance of the OTC Animals an
amount of one hundred sixty US Dollars (US $160.00) per
month per goat; provided, however, that if Purchaser
replaces any OTC Animals with new goats, Purchaser may,
because of the cost of cultivating those goats into
production animals, charge for the period of three (3)
months after the purchase of such goats an amount of seven
hundred forty-two Dollars (US $742.00) per replacement
goat for care and maintenance.
12.3 Various Raw Materials. Purchaser acknowledges that
various raw materials other than those as described in
Paragraph 12.1 above, such as but not limited to the raw
material specified in Schedule 8 hereto, are supplied to
other divisions of OTC, including the blood group
serology division which is presently for sale. Purchaser
agrees, if OTC or its successor wishes to continue to
purchase such raw materials from the Cappel Operations, to
continue the supply of such raw materials to OTC or its
successor on terms and conditions to be negotiated in good
faith or if OTC sells the blood group serology division,
to continue the supply of such raw materials on terms and
conditions to be negotiated in good faith to such
purchaser of the blood group serology division. However,
Purchaser shall not be obligated to continue the supply of
raw materials if it discontinues the manufacture thereof,
provided it gives six (6) months prior written notice to
OTC or its successors of its intention to discontinue such
manufacture.
ARTICLE 13 - MISCELLANEOUS.
- --------------------------
13.1 Notices. All notices in connection with this Agreement
shall be in writing and be in the English language (as
shall all other written communications and correspondence)
and may be given by personal delivery, prepaid registered
airmail letter, courier, or telefax (with a confirmation
copy by courier), addressed to the party required or
entitled to receive same at its address set forth below,
or to such other address as it shall later designate by
like notice to the other party. The effective date of any
notice if served by telefax shall be deemed the first
business day in the city of destination following the
dispatch thereof and if given by courier or prepaid
registered airmail letter only respectively, it shall
unless earlier received, be deemed served not later than
three (3) business days or seven (7) calendar days
respectively after date of dispatch.
If to OTC:
Organon Teknika Corporation
100 Akzo Avenue
Durham, NC 27712
USA
fax number: 1/919/620-2211
Attn.: President
Copy to: General Counsel
If to Akzo Nobel Pharma:
Akzo Nobel Pharma International B.V.
P. O. Box 20
5345 BH Oss
The Netherlands
fax number: 011-31-412-666373
Attn.: General Counsel
If to Purchaser:
ICN Pharmaceuticals, Inc.
ICN Plaza
3300 Hyland Avenue
Costa Mesa, California 92626
fax number: 1/714/641-7274
Attn.: General Counsel
13.2 Expenses. Each party shall be required to pay its own
expenses, including expenses of its counsel and
accountants, even in the event that the transactions which
are the subject matter hereof are not consummated for any
reason whatsoever.
13.3 Entire Agreement: Successors. This Agreement together
with the Exhibits constitute the entire agreement between
the parties and there are no representations, warranties
or commitments except as provided herein and therein.
This Agreement and such other documents supersede all
prior and contemporaneous agreements, understandings,
negotiations and discussions, whether written or oral.
All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit and be enforceable
by the respective heirs, personal representatives,
successors and permitted assigns of the parties hereto.
13.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Delaware,
excluding its principles of conflicts of laws.
13.5 No Waiver. No exercise or waiver, in whole or in part,
of any right or remedy provided for in this Agreement
shall operate as a waiver of any other right or remedy.
No delay on the part of any party in the exercise of any
right or remedy shall operate as a waiver thereof.
13.6 Publicity. The parties shall consult with each other
before issuing any press release or otherwise making any
public statements with respect to this Agreement, and
shall submit to the other party for prior written approval
the contents of any such release and/or publication before
release thereof, provided, however that no release and/or
publication shall be made by either party prior to the
Closing Date and that nothing contained herein shall
prohibit either party from making any disclosure which is
required by law.
13.7 Legal Advice. Each party acknowledges that it has had the
opportunity to consult with independent counsel of its
choice with regard to the transactions contemplated under
this Agreement, prior to the execution of this Agreement.
13.8 Severability. In the event that one or more of the
provisions hereof shall be held to be void, unlawful or
unenforceable by any court, tribunal or administrative
authority under any law or regulation, the validity,
lawfulness and enforceability of the other provisions
hereof shall not be affected thereby in any way.
13.9 Assignment. This Agreement is intended to be solely for
the benefit of the parties hereto and is not intended to
confer any benefits upon, or create any right in favor of,
any person other than the parties hereto. Accordingly this
Agreement may not be assigned by either party without the
prior written consent of the other party, except in case
an assignment is made to an Affiliated Company of either
party and such party gives prior written notice of such
assignment to the other party. For the purpose of this
Agreement Affiliated Company means a company which by
means of a majority of shares or otherwise controls, is
controlled by or is under common control with either party
hereto.
13.10 Preamble and Headings. The preamble and headings
contained in this Agreement are for convenience of
reference only and are not intended to have any
substantive significance in interpreting this Agreement.
13.11 Terminology. Any reference in this Agreement to OTC's
severance policy, OTC's health and medical plans, OTC's
vacation policy, OTC's retirement, health and welfare
plans, OTC's pension plan, OTC's incentive savings plan
and any other OTC employment policies and practices shall
be deemed to include any such plans and policies of Akzo
Nobel, Inc. to the extent they apply on the Closing Date
to Employees dedicated to the Cappel Operations.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement under seal effective as of the day and year first above
written.
ORGANON TEKNIKA CORPORATION ICN PHARMACEUTICALS, INC.
By:---------------------- By:----------------------
Title:------------------- Title:-------------------
By:----------------------
Title:-------------------
AKZO NOBEL PHARMA
INTERNATIONAL B.V.
By:----------------------
Title:-------------------
By:----------------------
Title:-------------------
Exhibit 5
September 30, 1996
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
RE: Registration Statement of Form S-3
ICN Pharmaceuticals, Inc.
213,385 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
213,385 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 are duly authorized, validly issued, fully paid and 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
September 30, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: ICN Pharmaceuticals, Inc.
Registration Statement on
Form S-3 (File No. 333- )
------------------------------
We are aware that our reports dated July 30, 1996 and April
26, 1996, on our reviews of interim financial information of ICN
Pharmaceuticals, Inc. for the three and six month periods ended
June 30, 1996 and for the three month period ended March 31, 1996
and included in the Company's quarterly reports on Form 10-Q for
the periods then ended, are 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. 333- ) 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
September 30, 1996
