As filed with the Securities and Exchange Commission on September 24, 1997
Registration No. 333-35241
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ICN PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0628076
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
3300 Hyland Avenue
Costa Mesa, California 92626
(714) 545-0100
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's
Principal Executive Offices)
Copies To:
David C. Watt
Executive Vice President, General Counsel and Corporate Secretary
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
(714) 545-0100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are
being offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
If any of the securities being registered on this form are
to be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered only
in connection with dividend or interest reinvestment plans, check the
following box. [X]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462 (b) under the Securities Act, check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box: []
<TABLE>
Calculation of Registration Fee
<CAPTION>
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Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of Registration
Registered Registered Share (1) Price Fee (4)
- ------------------- -------------- ------------------ ------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, 4,106,959 (3) $36.156 $148,491,209.60 $44,997.34
$.01 par value per
share (2)
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<FN>
(1) 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 5, 1997 (which date is within five business days prior
to the date of the filing of this Registration Statement).
(2) Also includes associated Preferred Stock Purchase Rights.
(3) Includes 2,500,000 shares of Common Stock issuable upon
conversions of Series C Convertible Preferred Stock. Pursuant to
Rule 416, an indeterminate number of additional shares of Common
Stock are registered hereunder which may be issued in the event
that applicable antidilution provisions with respect to
conversion of the Series C Convertible Preferred Stock become
operative.
(4) A fee of $44,997.34 was paid upon the initial filing of this
Registration Statement on September 8, 1997.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(A), MAY DETERMINE.
Subject to Completion, Dated September 24, 1997
PROSPECTUS
ICN PHARMACEUTICALS, INC.
4,106,959 SHARES OF COMMON STOCK
This Prospectus relates to 6,959 shares (the "Gly-Derm Shares")
of common stock, $ .01 par value (the "Common Stock), of ICN
Pharmaceuticals, Inc., a Delaware corporation (the "Company" or
"ICN"), issued as a post-closing adjustment in connection with the
acquisition of Gly-Derm, Inc. ("Gly-Derm") by the Company in February
1996, that may from time to time be sold by certain stockholders
identified herein (the "Gly-Derm Stockholders"). This Prospectus also
relates to the offer and sale by F. Hoffmann-La Roche Ltd ("HLR"), as
more fully described herein, of: (a) 1,600,000 shares of Common Stock;
and (b) 2,500,000 shares of Common Stock issuable upon conversion of
the Company's Series C Convertible Preferred Stock, par value $0.01
per share (the "Series C Preferred Stock") and any undetermined number
of additional shares of Common Stock issuable as a result of any
adjustments to the conversion price of the Series C Preferred Stock
pursuant to the antidilution provisions of the Certificate of
Designation of Rights and Preferences (the "Certificate of
Designation") governing the Series C Preferred Stock (together with
the 1,600,000 shares of Common Stock, the "HLR Shares") (jointly, the
Gly-Derm Shares and the HLR Shares shall be referred to as the
"Shares"). The Company will not receive any of the proceeds from the
sale of the Shares. However, under certain circumstances, HLR will be
required to pay to the Company the amount, if any, by which the
Current Market Price for the Common Stock, as defined herein, exceeds
certain agreed upon price thresholds. Conversely, under certain
circumstances, the Company will be required to pay HLR the amount, if
any, by which the Current Market Price for the Common Stock, as
defined herein, is less than certain agreed upon price thresholds.
Such amount, if any, may be payable in shares of Series C Preferred
Stock. The Company will bear all of the expense of such registration,
other than: (i) selling commissions and fees and expenses of counsel
and other advisors to the Gly-Derm Stockholders, and (ii) underwriting
discounts and selling commissions and fees and disbursements of
counsel to HLR. See "Selling Stockholders -- HLR" and "Plan of
Distribution."
The HLR Shares covered by this Prospectus were originally issued
to HLR in a private placement made by the Company under Section 4(2)
of the Securities Act of 1933, as amended (the "Securities Act"), in
consideration of the assignment to the Company by HLR of a $90,000,000
promissory note (the "Promissory Note") issued by ICN Puerto Rico,
Inc., a wholly-owned subsidiary of the Company (the "Subsidiary"). The
Subsidiary had issued the Promissory Note in connection with its
acquisition, in August 1997, of the worldwide rights (except India) to
seven products: Alloferin, Anoctil, Glutril, Limbitrol, Mestinon,
Prostigmin and Protamin from HLR, a drug manufacturer and distributor
based in Switzerland. The Subsidiary also obtained worldwide rights
outside of the United States and India to Efudix and Librium, with an
option to obtain the U.S. rights to these two products (the "Product
Option") for a purchase price of $95,000,000 (subject to downward
adjustment under certain circumstances), payable in the form of a
promissory note which would be assigned to the Company in exchange for
cash representing one-third of the purchase price, and the balance in
additional shares of Common Stock and shares of Series C Preferred
Stock (or a new series of convertible preferred stock having the same
terms and conditions as the Series C Preferred Stock). See "Selling
Stockholders -- HLR."
The Gly-Derm Stockholders, HLR and any broker-dealers, agents or
underwriters that participate with the Gly-Derm Stockholders or HLR 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 2, 1997, the closing
sale price per share, as reported by the NYSE, was $36.4375.
The Gly-Derm Shares may be sold from time to time by the Gly-Derm
Stockholders or, in certain cases, by transferees or assignees, and
the HLR Shares may be sold from time to time by HLR or, in certain
cases, by transferees or assignees. Such sales may be made in the over
- - the - counter market, on the NYSE 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.
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 September __, 1997.
[RED HERRING]
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.
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 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549 and at the Commission's Regional Offices
in New York, at 7 World Trade Center, 13th Floor, New York, New York
10048 and in Chicago, at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained (at prescribed rates), by writing to the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material also is available through the Commission's
Website (http://www.sec.gov). Such material also can be inspected at
the NYSE, 20 Broad Street, New York, New York 10005, on which the
Common Stock is listed.
This Prospectus is part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the
Securities Act with respect to the Shares. This Prospectus does not
contain all the information set forth or incorporated by reference in
the Registration Statement and the exhibits and schedules relating
thereto, certain portions of which have been omitted as permitted by
the Commission's rules and regulations. For further information with
respect to the Company, 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, 1996, dated March 31, 1997, as amended by Form
10-K/A, dated July 24, 1997.
2. Quarterly Report on Form 10-Q for the three months ended
March 31, 1997, dated May 15, 1997.
3. Quarterly Report on Form 10-Q for the three months ended
June 30, 1997, dated August 14, 1997.
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
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the
offering of the Shares pursuant to this Prospectus (this "Offering")
shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such reports and
documents. Any statement contained herein or in a report or document
incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently
filed report or document that is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement
so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The making of a modifying or superseding statement shall not be
deemed an admission for any purpose that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue
statement of a material fact or an omission to state a material fact
that is required to be stated or that is necessary to make a statement
not misleading in light of the circumstances in which it was made.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM
A COPY OF THIS PROSPECTUS IS DELIVERED, ON THE REQUEST OF SUCH PERSON,
A COPY OF ANY OR ALL OF THE REPORTS AND DOCUMENTS INCORPORATED HEREIN
BY REFERENCE (OTHER THAN EXHIBITS THERETO, UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH REPORTS OR
DOCUMENTS). WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO
DAVID C. WATT, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE
SECRETARY, ICN PHARMACEUTICALS, INC., 3300 HYLAND AVENUE, COSTA MESA,
CALIFORNIA 92626. TELEPHONE INQUIRIES MAY BE DIRECTED TO DAVID C. WATT
AT (714) 545-0100.
THE COMPANY
ICN is a multinational pharmaceutical company that develops,
manufactures, distributes and sells pharmaceutical, research and
diagnostic products and provides radiation monitoring services. The
Company pursues a strategy of international expansion which includes:
(i) the consolidation of the Company's leadership position in Eastern
Europe and Russia; (ii) the acquisition of high margin products that
complement existing product lines and can be registered and introduced
into additional markets to meet the specific needs of those markets;
and (iii) the creation of a pipeline of new products through internal
research and development, as well as strategic partnerships and
licensing arrangements. References to ICN or the Company includes the
subsidiaries of ICN, unless the context requires otherwise.
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. Among the Company's products is the broad spectrum
antiviral agent ribavirin, which is marketed in the United States,
Canada and most of Europe under the trade name Virazole[REGISTERED
TRADEMARK]. Virazole[REGISTERED TRADEMARK] is currently approved for
commercial sale in over 40 countries for one or more of a variety of
viral infections, including respiratory syncytial virus ("RSV"),
herpes simplex, influenza, chicken pox, hepatitis and human
immunodeficiency virus (HIV). In the United States,
Virazole[REGISTERED TRADEMARK] is approved only for use in
hospitalized infants and young children with severe lower respiratory
infections due to RSV.
The Company believes it has substantial opportunities to realize
growth from its internally developed compounds. These compounds are
the result of significant investments in its research and development
activities related to nucleic acids conducted over three decades. On
July 28, 1995, the Company entered into an Exchange License and Supply
Agreement (the "Agreement") and a Stock Purchase Agreement with a
subsidiary of Schering-Plough Corporation ("Schering") to license the
Company's proprietary drug ribavirin as a treatment for chronic
hepatitis C in combination with Schering's alpha interferon (the
"Combination Therapy"). The 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 the drug, 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 in the countries of the European
Economic Community. In addition, Schering will purchase up to
$42,000,000 in Common Stock upon the achievement of certain regulatory
milestones. Under the Agreement, Schering is responsible for all
clinical developments and regulatory activities worldwide. During
1996, clinical trials commenced with the enrollment of more than 2000
patients. See "Risk Factors - No Assurance of Successful Development
and Commercialization of Future Products."
The Company believes it is positioned to expand its presence in
the pharmaceutical markets in Eastern and Central Europe. In 1991, a
75% interest was acquired in Galenika Pharmaceuticals ("Galenika"), a
large drug manufacturer and distributor in Yugoslavia. Galenika was
subsequently renamed ICN Yugoslavia. This acquisition added new
products and significantly expanded the sales volume of the Company.
With the investment in ICN Yugoslavia, the Company became one of the
first Western pharmaceutical companies to establish a direct
investment in Eastern Europe. ICN Yugoslavia 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, the United Nations Security Council adopted
resolutions that, in December 1995, suspended and, in October 1996,
lifted economic sanctions imposed on the Federal Republic of
Yugoslavia since May of 1992. The suspension and lifting of economic
sanctions enabled ICN Yugoslavia to resume exporting certain of its
product lines to Russia, other Eastern European Markets, Africa, the
Middle East and the Far East. See "Risk Factors -- Risk of Operation
in Yugoslavia."
In 1995, the Company acquired a 75% interest in Oktyabr, one of
the largest pharmaceutical companies in the Russian Federation. In
1996, the Company purchased an additional 15% interest in Oktyabr,
raising its ownership to 90%. Additionally, the Company greatly
expanded its Russian presence through the acquisition of two
additional pharmaceutical companies: Leksredstva, located in Kursk,
and Polypharm, located in Chelyabinsk. The combined sales of these
three companies establish the Company among the largest pharmaceutical
companies in Russia today and a pioneer and leader in the
privatization movement. In 1996, the Company acquired a 60% interest
in Alkaloida Chemical Co. ("Alkaloida"), one of the largest
pharmaceutical companies in terms of sales in Hungary and a major
world producer of morphine and related compounds. The Company is
currently exploring acquisition opportunities in Poland, Russia and
the Czech Republic. See "Risk Factors--Risk of Operations in Eastern
Europe, Russia and China."
In August 1997, the Subsidiary acquired the worldwide rights
(except India) to seven Roche products: Alloferin, Ancotil, Glutril,
Limbitrol, Mestinon, Prostigmin and Protamin from HLR. The Subsidiary
also obtained worldwide rights outside of the United States and India
to Efudix and Librium. The Subsidiary also acquired the Product Option
to obtain the U.S. rights to these two products during the one year
period commencing upon the earlier of (i) HLR realizing $90,000,000
from the sale of the HLR Shares and the Series C Preferred Stock or
(ii) August 7, 1999. See "Selling Stockholders."
Also in August 1997, the Subsidiary purchased HLR's Humacao,
Puerto Rico manufacturing plant (the "Humacao, Puerto Rico Plant"),
which meets current U.S. Food and Drug Administration Good
Manufacturing Practices for various products, including: Aleve,
Naprosyn, EC Naprosyn, Anaprox and Cytovene, for $55 million, payable
in a combination of cash and the assumption of certain debt.
In addition to its pharmaceutical operations, the Company also
develops, manufacturers and sells, through its wholly-owned
subsidiary, ICN Biomedicals, Inc., a broad range of research and
diagnostic products and radiation monitoring services. The Company
markets these products internationally to major scientific, academic,
health care and governmental institutions through catalog and direct
mail marketing programs.
The principal executive offices of the Company are located at
3300 Hyland Avenue, Costa Mesa, California 92626. The telephone number
at such address is (714) 545-0100.
RISK FACTORS
An investment in the Shares involves a high degree of risk and
may not be appropriate for investors who cannot afford to lose their
entire investment. Prospective purchasers of the Shares should be
fully aware of the risk factors set forth herein. This Prospectus
contains or incorporates statements that constitute forward looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Those statements appear in a number of places in
this Prospectus and in the documents incorporated by reference and may
include statements regarding, among other matters, the Company's
growth opportunities, the Company's acquisition strategy, regulatory
matters pertaining to governmental approval of the marketing or
manufacturing of certain of the Company's products and other factors
affecting the Company's financial condition or results of operations.
Prospective investors are cautioned that any such forward looking
statements are not guarantees of future performance and involve risks,
uncertainties and other factors which may cause actual results,
performance or achievements to differ materially from the future
results, performance or achievements expressed or implied in such
forward looking known and unknown statements. Such factors include the
various risk factors described below.
DEPENDENCE ON FOREIGN OPERATIONS
Approximately 75% and 80% of the Company's net sales for 1995 and
1996, respectively, and approximately 79% and 81% of the Company's net
sales for the six months ended June 30, 1996 and 1997, 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. The Company does not currently have a hedging program to
protect against foreign currency exposure and, in certain of the
countries in which the Company operates, no effective hedging program
is available.
RISK OF OPERATIONS IN YUGOSLAVIA
ICN Yugoslavia represents a material part of the Company's
business. Approximately 46% and 44% of the Company's net sales for
1995 and 1996, respectively, were from ICN Yugoslavia. In addition,
approximately 39% and 62% of the Company's operating income for 1995
and 1996, respectively, and approximately 46% and 31% of the Company's
net sales for the six months ended June 30, 1996 and 1997,
respectively, were from ICN Yugoslavia. ICN Yugoslavia, a 75% owned
subsidiary, operates in a business environment that is subject to
significant economic volatility and political instability. The
economic conditions in Yugoslavia include continuing liquidity
problems, unemployment, a weakened banking system and a high trade
deficit. Between May 1992 and December 1995, ICN Yugoslavia operated
under United Nations' sanctions that severely limited the ability to
import raw materials and prohibited all exports. While the sanctions
have been suspended, certain risks such as hyperinflation, currency
devaluations, wage and price controls and potential government action
could continue to have material adverse impact on the Company's
financial position and results of operations.
During 1992 and 1993, the rate of inflation in Yugoslavia was
over one billion percent per year. Inflation was dramatically reduced
in January 1994 when the government enacted a stabilization program
designed to strengthen its currency. This program reduced the
annualized inflation rate to 5% by the end of 1994, increased the
availability of hard currency, stabilized the exchange rate of the
dinar and improved the overall economy. In 1995, the effectiveness of
the stabilization program began to wane, resulting in a decline in the
availability of hard currency and an acceleration of inflation to an
annual rate of 90% by year end. In November 1995, the dinar was
devalued from a rate of 1.4 dinars per U.S.$1 to a rate of 4.7 dinars
per U.S.$1.
During 1996, inflation increased further to an annual rate of 95%
and the availability of hard and local currency continued to decline.
The lifting of sanctions by the United Nations eventually provided
opportunities to export outside of Yugoslavia. A policy of strict
monetary control in Yugoslavia has kept inflation at a current annual
level of approximately 40%. However, Yugoslavia has not fully
recovered the international status it held before sanctions were
imposed and management believes that economic reform and privatization
is necessary before the economy will improve dramatically. The
Yugoslavian government is still negotiating to regain membership in
the International Monetary Fund and World Bank. Management believes
that the 1997 Presidential and parliamentary elections may result in
political change that would lead to economic reform, although such
elections also have the potential to create additional political
instability and currency devaluations.
In an effort by the National Bank of Yugoslavia to control
inflation through tight monetary controls, Yugoslavia is now
experiencing severe liquidity problems. This has resulted in longer
collection periods on ICN Yugoslavia's receivables. Most of ICN
Yugoslavia's customers are slow to pay due to delays of health care
payments by the government. This has also resulted in ICN Yugoslavia
being unable to make timely payments on its payables. ICN Yugoslavia
is attempting to reduce its receivables and improve its cash flow by
restricting future sales; however, these actions may result in sales
and earnings in 1997 that are lower than such amounts in 1996.
ICN Yugoslavia began the year with a net monetary asset exposure
of $134,000,000 which was subject to foreign exchange loss if a
devaluation of the dinar were to occur. During the first six months of
1997, the Company was successful in reducing its monetary exposure by
converting dinar denominated accounts receivable into notes receivable
from the Yugoslavian government payable in dinars, but fixed in dollar
amounts. The first conversion was made early in the first quarter with
$50,000,000 of accounts receivable converted into a one year note with
interest at the European LIBOR rate plus one percent. A second
conversion was arranged in the middle of the first quarter through an
agreement with the Yugoslavian government to purchase an additional
$50,000,000 of drugs. The accounts receivable under this agreement
were converted into a non-interest bearing short term note receivable
that has special payment guarantees from the Serbian government with
the payment fixed in dollar amounts. Approximately $30,000,000 of
accounts receivable were converted to notes receivable in the first
quarter under this arrangement and the remainder was converted in the
second quarter. The second agreement also allows the Company to offset
payroll tax obligations against outstanding accounts receivable
balances. As of June 30, 1997, ICN Yugoslavia had a net monetary asset
position of $49,000,000 which would be subject to foreign exchange
loss if a devaluation of the dinar were to occur.
The Company was able to reduce its overall accounts receivable
balance from the beginning of the year through collections and the
conversion of $100,000,000 of accounts receivable into notes
receivable discussed above. As of June 30, 1997, the accounts
receivable balance was $93,056,000. Based on current levels of
collections, the Company will impose even stricter credit terms on its
customers which will likely result in lower future domestic sales. The
willingness of the government to provide the Company protection
against devaluation on its receivables in exchange for longer payment
terms is a reflection of the strict adherence to government policy on
controlling inflation by limiting the amount of hard currency in
circulation. This policy was initially established with the start of
the stabilization program in 1994. The Company is currently
negotiating an arrangement with the government of Yugoslavia under
which ICN Yugoslavia would commit to continue to provide products, in
dollar denominated sales, in an amount up to $50,000,000 per calendar
quarter for one year, and the government would pay a minimum of
$9,000,000 per month toward outstanding receivables. However, at no
point in time can the amount due to ICN Yugoslavia from the government
under this arrangement exceed $200,000,000, including both accounts
and notes receivable.
With 80% of ICN Yugoslavia sales arising from government or
government-sponsored entities, ICN Yugoslavia is financially dependent
on the Yugoslavian government. Additionally, ICN Yugoslavia is also
subject to credit risk in that 60% of its December 31, 1996, domestic
accounts receivables and 31% of its year-to-date sales are with three
major customers.
ICN Yugoslavia 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 ICN Yugoslavia products. During 1995, 1996
and the first six months of 1997, ICN Yugoslavia 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 ICN Yugoslavia 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 ICN Yugoslavia receives on its
products. Although the Company expects that ICN Yugoslavia 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, RUSSIA AND CHINA
The Company has invested a total of approximately $21,900,000 for
majority interests in three pharmaceutical companies located in
Russia. The Company also has invested approximately $22,100,000 in its
60.0% interest in ICN Hungary. In September 1996, the Company
committed to invest an aggregate of $24,000,000 in a joint venture
with Jiangsu Provincial Wuxi Pharmaceutical Corporation ("Wuxi"), a
Chinese state-owned pharmaceutical corporation. Although the Company
believes that investment in Russia, Eastern Europe, China and other
emerging markets offers access to growing world markets, the economic
and political conditions in such countries are uncertain. See "--
Dependence on Foreign Operations."
NO ASSURANCE OF SUCCESSFUL DEVELOPMENT AND
COMMERCIALIZATION OF FUTURE PRODUCTS
The Company's future growth will depend, in large part, upon its
ability to develop or obtain and commercialize new products and new
formulations of or indications for current products. The Company is
engaged in an active research and development program involving
compounds owned by the Company or licensed from others which the
Company may, in the future, desire to develop commercially. There can
be no assurance that the Company will be able to develop or acquire
new products, obtain regulatory approvals to use such products for
proposed or new clinical indications in a timely manner, manufacture
its potential products in commercial volumes or gain market acceptance
for such products. In addition, the Company may require financing over
the next several years to fund costs of development and acquisitions
of new products and, if Virazole[REGISTERED TRADEMARK] is approved for
treatment of chronic hepatitis C in Combination Therapy (for which
there can be no assurance), to expand the production and marketing of
Virazole[REGISTERED TRADEMARK] in the countries of the European Union,
where the Company has retained marketing rights under the License
Agreement. It may be desirable or necessary for the Company to enter
into licensing arrangements with other pharmaceutical companies in
order to market effectively any new products or new indications for
existing products such as the License Agreement with Schering for the
marketing of Virazole[REGISTERED TRADEMARK] for Combination Therapy
(if approved). There can be no assurance that the Company will be
successful in raising such additional capital or entering into such
marketing arrangements, if required, or that such capital will be
raised, or such marketing arrangements will be, on terms favorable to
the Company.
LIMITED PATENT PROTECTION
The Company may be dependent on the protection afforded by its
patents relating to Virazole[REGISTERED TRADEMARK] and no assurance
can be given as to the breadth or degree of protection which these
patents will afford the Company. The Company has patent rights in the
United States expiring in 1999 relating to the use of
Virazole[REGISTERED TRADEMARK] to treat specified human viral
diseases. If future development of Virazole[REGISTERED TRADEMARK] in
Combination Therapy is successful and approval is granted in the
United States, an additional award of exclusivity will be granted of
up to three years from date of approval (Waxman-Hatch Act); however,
there can be no assurance that such development will be successful or
that such approval will be obtained. While the Company has patents in
certain foreign countries covering the use of Virazole[REGISTERED
TRADEMARK] in the treatment of certain diseases, which coverage and
expiration varies and which patents expire at various times through
2006, the Company has no, or limited, patent rights with respect to
Virazole[REGISTERED TRADEMARK] and/or its use in certain foreign
countries where Virazole[REGISTERED TRADEMARK] is currently, or in the
future may be, approved for commercial sale, including France, Germany
and Great Britain. However, the Company and Schering intend to file
applications for approval of Combination Therapy through a centralized
procedure in the European Union (which includes France, Germany and
Great Britain). If such approval is granted, the Company and 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[REGISTERED TRADEMARK] upon
expiration of the Company's patent rights in the United States, Europe
and elsewhere will not result in competition from other drug
manufacturers or will not otherwise have a significant adverse effect
upon the business and operations of the Company.
As a general policy, the Company expects to seek patents, where
available, on inventions concerning novel drugs, techniques, processes
or other products which it may develop or acquire in the future.
However, there can be no assurance that any patents applied for will
be granted, or that, if granted, they will have commercial value or as
to the breadth or the degree of protection which these patents, if
issued, will afford the Company. The Company intends to rely
substantially on its unpatented proprietary know-how, but there can be
no assurance that others will not develop substantially equivalent
proprietary information or otherwise obtain access to the Company's
know-how. Patents for pharmaceutical compounds are not available in
certain countries in which the Company markets its products.
Marketing approvals in certain foreign countries provide an
additional level of protection for products approved for sale in such
countries.
UNCERTAIN IMPACT OF ACQUISITION PLANS
The Company intends aggressively to continue its strategy of
targeted expansion through the acquisition of compatible businesses
and product lines and the formation of strategic alliances, joint
ventures and other business combinations. Should the Company complete
any material acquisition, the Company's success or failure in
integrating the operations of the acquired company may have a material
impact on the future growth or success of the Company. 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 or financed with the issuance of Common Stock or securities
convertible into Common Stock, 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 a consolidated class action lawsuit
alleging, among other things, violations of federal securities laws
(the "Class Action"). Plaintiffs alleged that ICN made
misrepresentations of material facts and omitted to state material
facts in 1994 and 1995 concerning the Company's NDA for the use of
Virazole[REGISTERED TRADEMARK] for monotherapy treatment of chronic
hepatitis C (the "Hepatitis C NDA"). In July 1997, the Company and the
plaintiffs in the Class Action agreed to settle the litigation for the
sum of $15,000,000. The settlement is in the process of being
documented and is subject to the approval of the court. A settlement
hearing is expected to be held in the fall of 1997. The Company
intends to urge the district court to approve the settlement of the
Class Action. If the settlement is not approved, and the Class Action
proceeds to trial, the ultimate outcome of any such trial cannot be
predicted with certainty, and any unfavorable outcome could have a
material adverse effect on the Company.
Pursuant to an Order Directing Private Investigation and
Designating Officers to Take Testimony, entitled In the Matter of ICN
Pharmaceuticals, Inc., (P-177) (the "Order"), a private investigation
is being conducted by the SEC with respect to certain matters
pertaining to the status and disposition of the Hepatitis C NDA. As
set forth in the Order, the investigation concerns whether, during the
period June 1994 through February 1995, the Company, persons or
entities associated with it and others, in the offer and sale or in
connection with the purchase and sale of ICN securities, engaged in
possible violations of Section 17(a) of the Securities Act and Section
10(b) of the Exchange Act and Rule 10b-5 thereunder, 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 and continues to produce documents to the SEC pursuant to
a request and the SEC has taken the depositions of certain current and
former officers, directors and employees of the Company.
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, Chairman and Chief Executive Officer, are subjects of the
investigation. The Company has and continues to cooperate in the
production of documents pursuant to the Subpoenas. A number of current
and former employees of the Company have been interviewed by the
government in connection with the investigation.
The ultimate outcome of the SEC and Grand Jury investigations
cannot be predicted and any unfavorable outcome could have a material
adverse effect on the Company. See "Business-Litigation, Government
Investigations and Other Matters."
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 of the Company, as described under
"Potential Litigation Exposure," 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. In
addition, Mr. Panic who served as Prime Minister of Yugoslavia from
July 1992 to March 1993, remains active in Yugoslavian politics and
may serve in a governmental office in Yugoslavia in the future.
POTENTIAL PRODUCT LIABILITY EXPOSURE AND LACK OF INSURANCE
The Company could be exposed to possible claims for personal
injury resulting from allegedly defective products. Even if a drug
were approved for commercial use by an appropriate governmental
agency, there can be no assurance that users will not claim that
effects other than those intended may result from the Company's
products. The Company generally self-insures against potential product
liability exposure with respect to its marketed products, including
Virazole[REGISTERED TRADEMARK]. While to date no material adverse
claim for personal injury resulting from allegedly defective products,
including Virazole[REGISTERED TRADEMARK], has been successfully
maintained against the Company or any of its predecessors, a
substantial claim, if successful, could have a material adverse effect
on the Company.
GOVERNMENT REGULATION
FDA approval must be obtained in the United States and approval
must be obtained from comparable agencies in other countries prior to
marketing or manufacturing new pharmaceutical products for use by
humans in such respective jurisdictions. Obtaining FDA approval for
new products and manufacturing processes can take a number of years
and involves the expenditure of substantial resources. Numerous
requirements must be satisfied, including preliminary testing programs
on animals and subsequent clinical testing programs on humans, to
establish product safety and efficacy. No assurance can be given that
authorization of the commercial sale of any new drugs or compounds by
the Company for any application or of existing drugs or compounds for
new applications 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[REGISTERED TRADEMARK], 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[REGISTERED TRADEMARK] 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. In
addition, a number of companies and researchers are engaged in
developmental efforts for the treatment of Hepatitis C, including
through the use of protease inhibitions. 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.
INDEBTEDNESS AND OTHER OBLIGATIONS OF THE COMPANY
As of June 30, 1997, after giving effect to the issuance in
August 1997 of $275 million of aggregate principal amount of 9 1/4%
Senior Notes due 2005, the Company has outstanding long-term debt of
$497.0 million. The indenture for certain of the Company's debt
contains, and other debt instruments of the Company may in the future
contain, a number of significant covenants that, among other things,
restrict the ability of the Company to dispose of assets, incur
additional indebtedness, repay other indebtedness or amend other debt
instruments, pay dividends, create liens on assets, enter into
investments or acquisitions, engage in mergers or consolidations, make
capital expenditures or engage in certain transactions with
subsidiaries and affiliates, and otherwise restrict certain corporate
activities. The Company's strategy contemplates continued strategic
acquisitions, and a portion of the cost of such acquisitions may be
financed through additional indebtedness. There can be no assurance
that financing will continue to be available on terms acceptable to
the Company or at all. In the absence of such financing, the Company's
ability to respond to changing business and economic conditions, to
fund scheduled investments and capital expenditures, to make future
acquisitions or developments and to absorb adverse operating results
may be adversely affected.
EFFECT OF CONVERSION OF THE SERIES B CONVERTIBLE
PREFERRED STOCK - OUTSTANDING PUT RIGHT
On October 9, 1996, the Company issued 50,000 shares of Series B
Convertible Preferred Stock ("Series B Preferred Stock"). As of August
29, 1997, 18,749 shares of the Series B Preferred Stock remained
outstanding (with the remaining shares of Series B Preferred Stock
having been converted into an aggregate of 1,392,116 shares of Common
Stock). The exact number of shares of Common Stock issuable upon
conversion of all of, or as dividends on, the remaining outstanding
shares of Series B Preferred Stock will vary inversely with the market
price of the Common Stock. The holders of Common Stock may be
materially diluted by conversion of the Series B Preferred Stock
depending on the future market price of the Common Stock and the
discount rate applied to determine the number of shares of Common
Stock issuable upon conversion. On August 29, 1997, the last reported
sales price of the Common Stock on the NYSE was $36.25 per share. If
such market price were used to determine the number of shares of
Common Stock issuable upon conversion of the remaining outstanding
shares of Series B Preferred Stock and using the present discount rate
of 13%, the Company would issue a total of approximately 611,364
shares of Common Stock, if all shares of the outstanding Series B
Preferred Stock were converted. To the extent the market price of the
Common Stock used for determination of the conversion of the Series B
Preferred Stock is lower or higher than such price as of any date on
which shares of Series B Preferred Stock are converted, the Company
would issue more or fewer shares of Common Stock than reflected in
such estimate, and such difference could be material. In addition, the
discount rate that applies in calculating the number of shares of
Common Stock issuable upon conversion is subject to further increases
under certain circumstances, with any such increases resulting in more
shares of Common Stock being issuable upon conversion.
The Company has granted to certain persons the right to put
709,988 shares of Common Stock to the Company at $30 per share in
January 2000, subject to acceleration under certain circumstances at a
put price equal to $22.50 plus 10% per annum from December 23, 1996.
This put right would be terminated (in whole or in part) if the market
price of the Common Stock exceeds certain specified levels.
USE OF PROCEEDS
Since this Prospectus relates to the offering of Gly-Derm Shares
by the Gly-Derm Stockholders and to the offering of HLR Shares by HLR,
the Company will not receive any of the proceeds from the sale of the
Shares offered hereby. However, under certain circumstances, HLR will
be required to pay to the Company the amount, if any, by which the
Current Market Price for the Common Stock, as defined herein, exceeds
certain agreed upon price thresholds. Conversely, under certain
circumstances, the Company will be required to pay HLR the amount, if
any, by which the Current Market Price for the Common Stock, as
defined herein, is less than certain agreed upon price thresholds. See
"Selling Stockholders."
SELLING STOCKHOLDERS
GLY-DERM STOCKHOLDERS
An aggregate of 6,959 Gly-Derm Shares are being offered for the
account of the Gly-Derm Stockholders identified in the table below.
The following table provides certain information, as of the date of
this Prospectus, with respect to the Gly-Derm Shares owned by the
Gly-Derm Stockholders (which information has been furnished to the
Company by the Gly-Derm Stockholders). Because the Gly-Derm
Stockholders may sell all or part of the Gly-Derm Shares that 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 Gly-Derm Shares that will be held by the
Gly-Derm Selling Stockholder upon termination of this Offering. See
"Plan of Distribution."
As of August 29, 1997, the Company had outstanding approximately
37,671,166 shares of Common Stock. The Gly-Derm Shares represent in
the aggregate less than 1% of the outstanding shares of Common Stock.
GLY-DERM SELLING STOCKHOLDER INFORMATION
NAME Number of Shares
----- of Common Stock Aggregate Number of
Covered by This Shares of Common
Prospectus Stock Owned*
---------- -----------
Marvin E. Klein, Trustee
Marvin E. Klein Revocable
Trust 7/74 1,293 1,774
Dr. Maurice Belkin, Trustee D.
Maurice Belkin Revocable Trust 1,856 9,474
Irving F. Keene and Diane F.
Keene, Trustees of the
Diane F. Keene Insurance 1,623 1,623
Trust dated December 29, 1989
Diane F. Keene and Helene
Davidson, Trustees of the
Diane F. Keene Grantor 325 325
Trust
Sidney H. Weber 222 222
Steven J. Cohen 82 82
Sylvia Glover 82 82
Patricia Ann Wendel 567 567
Phyllis F. Fine 91 91
Jennifer L. Ermiger 54 54
Noel H. Upfall 532 12,032
Jeffrey M. Weber & Elizabeth
Weber, joint tenants 77 400
Daisy P. Ramos 42 1,003
Daniel B. Seff 64 64
Judith C. Redmond, Trustee 16 16
Richard S. Schwartz 16 16
Marvin D. Siegel 17 404
-----------
Total 6,959
===========
The Gly-Derm Shares were issued to the Gly-Derm Stockholders
under the terms of an Undertaking Agreement (the "Undertaking
Agreement") between the Company and the Gly-Derm Stockholders entered
into in connection with the Company's acquisition of Gly-Derm from the
Gly-Derm Stockholders in February 1996. The Gly-Derm Shares represent
the amount by which the proceeds received by the Gly-Derm Stockholders
from the sale of shares of Common Stock previously issued to the
Gly-Derm Stockholders in connection with the Gly-Derm acquisition was
less than certain price thresholds established in the Undertaking
Agreement. The registration effected hereby is being effected pursuant
to certain registration rights granted by the Company in the
Undertaking Agreement. The registration rights extend to transferees
and assigns. If applicable, this Offering would include sales of
Gly-Derm Shares by such transferees and assigns.
HLR
General
On August 7, 1997, the Company issued to HLR 1,600,000 shares of
Common Stock and 2,000 shares of Series C Preferred Stock in exchange
for the assignment to the Company of the Promissory Note issued by the
Subsidiary to HLR in connection with the acquisition of its product
rights pursuant to the Asset Purchase Agreement (the "Asset
Agreement") between the Company, the Subsidiary and HLR. The 1,600,000
shares of Common Stock, as well as the 2,500,000 shares of Common
Stock issuable upon the conversion of the Series C Preferred and any
undetermined number of additional shares of Common Stock issuable as a
result of any adjustments to the conversion price of the Series C
Preferred Stock pursuant to the antidilution provisions of the
Certificate of Designation, are being offered for the account of HLR.
Because HLR may sell all or part of the HLR Shares that it holds
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 HLR Shares that will be held by HLR upon termination
of this Offering. See "Plan of Distribution."
Of the approximately 37,671,166 shares of Common Stock
outstanding that the Company had, as of August 29, 1997, the shares of
Common Stock owned by HLR represent approximately 4.2% of the
outstanding shares of Common Stock and the 2,500,000 shares of Common
Stock issuable upon conversion of the Series C Preferred Stock would,
if such Series C Preferred Stock had been converted on August 29,
1997, represent 6.6% of the outstanding shares of Common Stock.
The HLR Shares and the Series C Preferred Stock were issued to
HLR under the terms of the Asset Agreement. The following summary of
certain provisions of the Asset Agreement relating to the HLR Shares
is not intended to be complete and is subject to, and qualified in its
entirety by reference to the Asset Agreement, a copy of which is
attached as an exhibit to this Registration Statement and is
incorporated herein by reference.
Pursuant to the term of the Asset Agreement, HLR is required to
vote all of the HLR Shares in accordance with the recommendations of
the Company's Board of Directors.
Registration Rights
The registration effected hereby is being effected pursuant to
certain registration rights granted by the Company at the time of the
closing of the transactions under the Asset Agreement. The
registration rights may be assigned by HLR to certain transferees and
assigns of the HLR Shares. If applicable, this Offering would include
sales of HLR Shares by such transferees and assigns. This description
of the registration rights is a summary and as such is not intended to
be complete and is subject to and qualified in its entirety by
reference to the Registration Rights Agreement, a copy of which is
attached as an exhibit to this Registration Statement and is
incorporated herein by reference.
Price Guaranty
Pursuant to the Asset Agreement, the Company has given HLR
certain guarantees that, on December 31, 1997, December 31, 1998,
December 31, 1999 and July 1, 2000 (each a "Guaranty Date"), the then
current market price per share of the Common Stock, based on the
average closing sale price on the NYSE for the 10 trading days prior
to each such Guaranty Date (plus dividends paid to HLR since August 7,
1997 on such shares) (the "Current Market Price") shall equal or
exceed the applicable Guaranteed Price (as defined herein) for such
Guaranty Date. In the event that the Current Market Price per share of
Common Stock is less than the Guaranteed Price on a Guaranty Date, the
Company will pay to HLR not later than 30 days following such Guaranty
Date (which payment shall be in the form of additional shares of
Series C Preferred Stock, each such share of Series C Preferred Stock
valued at the then Current Market Price as of the date of payment of
one share of Common Stock times the number of shares of Common Stock
into which one share of Series C Preferred Stock is convertible)
(which additional shares of Series C Preferred Stock, together with
any Common Stock issued upon conversion of such Series C Preferred
Stock, shall be referred to as the "Additional Shares") the amount, if
any, by which (A) the product (the "Guaranteed Value") of the
Guaranteed Price for such Guaranty Date times the number of HLR Shares
(assuming conversion of all 2,000 such shares of Series C Preferred
Stock), in each case, owned on such date by HLR (the "Seller's Common
Stock") exceed (B) the sum (the "Actual Value") of (i) the product of
the then Current Market Price times the aggregate of the number of
shares of the Seller's Common Stock and number of Additional Shares
(assuming, in the case of Additional Shares which are Series C
Preferred Stock, conversion of such Series C Preferred Stock into
Common Stock not previously returned to the Company as provided in the
next sentence) and (ii) the amount of any dividends paid to HLR since
August 7, 1997 on any Additional Shares theretofore received by HLR
(whether or not such Additional Shares are then owned by HLR) (the
"Dividend Payment"); provided that, any such payment due by the
Company on the final Guaranty Date (July 1, 2000) shall be payable in
cash or shares of Series C Preferred Stock valued in the same manner
as stated above (or, at the election of HLR, shares of Common Stock,
valued at the then Current Market Price as of the date of payment) or
both, at the Company's option. In the event that, on a Guaranty Date,
the Current Market Price per share of the Common Stock exceeds the
Guaranteed Price, for such Guaranty Date, HLR shall, within 30 days
after such Guaranty Date, return to the Company that number of shares
of Common Stock and/or Series C Preferred Stock, and valued as of the
date of such return, in the same manner as stated above, equal to the
amount, if any, by which the Actual Value exceeds the Guaranteed
Value, provided that, except on the final Guaranty Date, HLR shall
have no obligation to return an amount in excess of the number of
Additional Shares. For purposes of the Asset Agreement, "Guaranteed
Price" shall be $25.750 for the Guaranty Date occurring on December
31, 1997, $27.295 for the Guaranty Date occurring on December 31,
1998, $28.933 per share for the Guaranty Date occurring on December
31, 1999, and $29.775 per share for the Guaranty Date occurring on
July 1, 2000. The Guaranteed Price is subject to certain customary
anti-dilution adjustments, including if the Company issues additional
shares of Common Stock pursuant to a stock dividend, stock
distribution or subdivision, the outstanding shares of Common Stock
are combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock or in the event of any other
event which would give rise to an adjustment of the Conversion Price
of the Series C Preferred Stock pursuant to the Certificate of
Designation.
Purchase Price Adjustment
The purchase price of $90,000,000 may be adjusted under certain
circumstances, including if a regulatory authority refuses, through no
fault of the Company, to assign a registration to the Company within
two years from August 7, 1997. Such purchase price adjustment shall be
paid by HLR to the Company by returning an appropriate amount of
shares of Series C Preferred Stock (or if HLR does not hold any Series
C Preferred Stock at that time, Common Stock), valued at the
Guaranteed Price as of the Guaranty Date next preceding such
adjustment plus pro rata six percent per annum.
Repurchase of the Series C Preferred Stock or the HLR Shares
Until the later of: (i) HLR's receipt of cash for the purchase
price of the products acquired pursuant to the Asset Agreement, (ii)
the payment in full of the purchase price for the Humacao, Puerto Rico
Plant, or (iii) August 7, 2002, HLR has the right to require the
Company to repurchase the Series C Preferred Stock or the HLR Shares
in the event that ICN, or an affiliate of ICN, consummates an
underwritten public offering anywhere in the world of ICN's debt
securities (a "Public Debt Offering") at any time prior to August 7,
2002. Such repurchases would be in the amount of 20% of the Company's
net proceeds from the Public Debt Offering. HLR thereafter may require
the Company to repurchase the HLR Shares or Series C Preferred Stock
with 20% of the net proceeds of any subsequent Public Debt Offering,
until all such securities have been repurchased or returned to the
Company for cash or are sold by HLR in the market. The price per share
at which such shares of Common Stock and Series C Preferred Stock
(based on the number of shares of Common Stock into which it is
convertible) will be repurchased will equal the Guaranteed Price as of
the Guaranty Date next preceding such repurchase plus pro rata six
percent per annum. If the obligation of the Company to pay HLR 20% of
a Public Debt offering occurs prior to the purchase price under the
Asset Agreement and the purchase price for the Humaoco, Puerto Rico
Plant being paid in full, HLR is not required to return any HLR Shares
or shares of Series C Preferred Stock, but is entitled to return,
offset or use such securities as additional security for certain
obligations of the Company under the agreement relating to the
acquisition of the Humaoco, Puerto Rico Plant.
Right to Exchange Common Stock
The Company may not redeem, repurchase or otherwise acquire any
shares of its Common Stock or any other class of capital stock of ICN
or take any other action affecting the voting rights of such shares,
if such action would increase the percentage of Common Stock owned by
HLR without prior written notice (a "Deferral Notice") to HLR. Upon
the receipt of a Deferral Notice, HLR has the right to elect to
exchange a number of shares of Common Stock for Series C Preferred
Stock so that, following such exchange, HLR's ownership of Common
Stock will be less than five percent of the outstanding Common Stock.
Restrictions on Transfer
The 1,600,000 HLR Shares may be sold by HLR without the Company's
prior written consent on the earlier to occur of the date on which the
sale price of the Common Stock reaches $30 per share or August 7,
1998. Following the sale of the HLR Shares, upon HLR's request, all or
any part of the shares of Series C Preferred Stock will, subject to
certain limitations, immediately be converted into shares of
registered Common Stock. Such HLR Shares issued to HLR upon the
conversion of the Series C Preferred Stock may not be sold without the
Company's prior written consent for one year from the date of
conversion, provided that they may be sold earlier without restriction
if the stock exchange price of the Common Stock reaches $33 per share.
Although HLR may sell such shares at any price equal to or above $33
per share, it may not sell any such share at a price below $33 per
share without the consent of the Company. HLR has agreed not to sell
any shares in a way which hurts the market. HLR may sell any shares of
Common Stock or Series C Preferred Stock to an affiliate, but
excluding Genentech, Inc. (an "Affiliate of HLR"), at any time without
restriction, provided that the Affiliate of HLR agrees to be bound by
the terms of the Asset Agreement.
The restrictions on transfer will terminate in the event (the day
of any such event, the "Restriction Termination Date") that: (i) the
Company proposes to, or receives a proposal, (a) to merge or
consolidate with or into any other corporation or entity or other
person (whether or not the Company is the surviving corporation) or
(b) to transfer all or substantially all of the Company's assets to
any other unaffiliated corporation or other entity or person, or (ii)
there occurs any other corporate reorganization or transaction or
series of related transactions, following which the Company's
shareholders would be expected to own less in the aggregate than 50%
of the voting power or equity of the ultimate parent corporation or
other entity surviving or resulting from such merger, consolidation,
reorganization or other transaction, or (iii) any person has commenced
a tender or exchange offer for any shares of Common Stock.
Future Purchases
Prior to the earlier of August 7, 2000, the Restriction
Termination Date or the date on which HLR has sold to third parties
all of the HLR Shares and the Series C Preferred Stock received, HLR
may not acquire any shares of Common Stock (or other securities of the
Company convertible into Common Stock) (except pursuant to the Asset
Agreement or by way of stock dividends or other distributions or
offerings made available to holders of shares of Common Stock
generally) if the effect of such acquisition would be to increase the
aggregate number of shares of such Common Stock (or other securities
of the Company convertible into Common Stock) then owned by HLR or
that it has a right to acquire, including upon conversion of the
Series C Preferred Stock, to more than 20% of the shares of such
Common Stock (or other securities convertible into Common Stock) of
the Company on a fully diluted basis; provided that, HLR will not be
obligated to dispose of any shares of Common Stock of the Company if
its aggregate percentage ownership is increased as a result of a
recapitalization of, or a repurchase of securities by, the Company or
as a result of any other similar action taken by the Company.
Capital Gains
If HLR sells any shares of Common Stock to any third party (other
than any Affiliate of HLR, the Company or any affiliate of the
Company) prior to July 1, 2000 for a net sale price per share in
excess of the Guaranteed Price as of the Guaranty Date next preceding
the date of sale plus pro rata six percent per annum, such excess
shall be paid to the Company in the form of the return of shares of
Series C Preferred Stock, valued, based on the Current Market Price,
as of the date of payment, of the shares of Common Stock into which
such shares of Series C Preferred Stock would then be convertible,
assuming no restrictions on convertibility existed; provided, however,
that such gain may be retained by HLR and offset or used (i) to
realize cash for the purchase price paid under the Asset Agreement in
HLR Shares and Series C Preferred Stock, (ii) as additional security
for certain obligations of the Company under the agreement relating to
the acquisition of the Humacao, Puerto Rico Plant, and (iii) as
security in connection with the exercise of the Product Option or for
other purposes upon the mutual agreement of the Company and HLR.
PLAN OF DISTRIBUTION
The Gly-Derm Stockholders are offering the Gly-Derm Shares for
their own account and HLR is offering the HLR Shares for its own
account, and neither the Gly-Derm Stockholders, nor HLR are offering
such securities for the account of the Company. The Company will not
receive any proceeds from the sale of the Shares, except to the extent
that under certain circumstances HLR is required to pay to the Company
the amount, if any, by which the Current Market Price for the Common
Stock exceeds the applicable Guaranteed Price as more fully described
under "Selling Stockholders - Price Guaranty".
Gly-Derm Shares may be sold from time to time by the Gly-Derm
Stockholders, or by their transferees and assigns, and the HLR Shares
may be sold from time to time by HLR or by its transferees or assigns.
Such sales may be made in the over-the-counter market, on the NYSE 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 Gly-Derm Stockholders, HLR and any broker-dealers, agents or
underwriters that participate with Gly-Derm or HLR 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 "restricted period" prior to
the commencement of such distribution. In addition, and without
limiting the foregoing, the Gly-Derm Stockholders and HLR will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder including, without limitation, Regulation M,
the provisions of which may limit the timing of purchases and sales of
Common Stock by the Gly-Derm Stockholders and HLR.
In the Undertaking Agreement, the Company has agreed to indemnify
the Gly-Derm Stockholders and each person controlling a Gly-Derm
Stockholder against all claims, losses, damages and liabilities (or
actions in respect thereof), including any legal and any other
expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, arising
out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in the Registration Statement, or based
on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the
Securities Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with the Registration Statement; provided that the Company
will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished
to the Company by the Gly-Derm Stockholders and stated to be
specifically for use in the Registration Statement. The Gly-Derm
Stockholders have each agreed to indemnify the Company, each of its
directors and officers and each person who controls the Company within
the meaning of the Securities Act and the rules and regulations
thereunder, against all claims, losses, damages and liabilities (or
actions in respect thereof), including any legal or any other expenses
reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, arising out of or based
on any untrue statement (or alleged untrue statement) of a material
fact contained in the Registration Statement or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in the Registration Statement in reliance
upon and in conformity with written information furnished to the
Company by the Gly-Derm Stockholders and stated to be specifically for
use in the Registration Statement; provided, however, that the
obligations of the Gly-Derm Stockholders are limited to an amount
equal to the proceeds to the Gly-Derm Stockholders of Gly-Derm Shares
sold pursuant to the Registration Statement or otherwise as
contemplated by the Undertaking Agreement.
In the Registration Rights Agreement, the Company has agreed to
indemnify HLR and any person that directly or indirectly through one
or more intermediaries controls, is controlled by or is in under
common control with HLR and each underwriter, if any, and each person
who controls any underwriter against all claims, losses, damages and
liabilities (or actions in respect thereof), including any legal and
any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or
action, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related
registration statement, notification or the like) or amendment
thereof, incident to any registration, qualification or compliance
(including without limitation) the Registration Statement and this
Prospectus, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification
or compliance and will reimburse HLR, and any other person that
directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, HLR, each such
underwriter and each person who controls any such underwriter, for any
legal or other expenses reasonably incurred in connection with
investigating and defending such claim, loss, damage, liability or
action; provided that the Company will not be liable in any such case
to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by HLR and stated to
be specifically for use in the Registration Statement. HLR has agreed
to indemnify the Company, each of its directors and officers and each
underwriter, if any, of the Company securities covered by such a
registration statement and each person who controls the Company or
such underwriter within the meaning of the Securities Act and the
rules and regulations thereunder, against all claims, losses, damages
and liabilities (or actions in respect thereof), including any legal
or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other
document or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading and will reimburse the Company and
said directors, officers, partners, persons, underwriters or control
persons for any legal or other expenses reasonably incurred in
connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance
upon and in conformity with written information furnished to the
Company by HLR and stated to be specifically for use in the
Registration Statement; provided, however, that the obligations of HLR
are limited to an amount equal to the net proceeds to HLR of HLR
Shares sold pursuant to the Registration Statement or otherwise as
contemplated by the Registration Rights Agreement.
There can be no assurance that the Gly-Derm Stockholders will
sell any or all of the Gly-Derm Shares, or that HLR will sell any or
all of the HLR Shares, offered by them hereunder. To the extent
required, the Company will use its best efforts to file, during any
period in which offers or sales are being made, one or more
supplements to this Prospectus to describe any material information
with respect to the plan of distribution not previously disclosed in
this Prospectus or any material change to such information in this
Prospectus.
The registration effected hereby is being effected pursuant to
certain registration rights previously granted by the Company to the
Gly-Derm Stockholders in the Undertaking Agreement, and to HLR in the
Registration Rights Agreement. The Company will bear all of the
expense of such registration, other than: (i) selling commissions and
fees and expenses of counsel and other advisors to the Gly-Derm
Stockholders, and (ii) underwriting discounts and selling commissions
and fees and disbursements of counsel to HLR.
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 3,
1997, Mr. Watt beneficially owned 129,673 shares of Common Stock,
including 127,678 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, 1996 and 1995,
and the consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December
31, 1996, incorporated by reference in this Prospectus, have been
included herein in reliance on the report, which includes an emphasis
of matter paragraph related to the Company's net monetary assets at
ICN Yugoslavia which would be subject to foreign exchange loss if a
devaluation of the dinar were to occur, 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, 1997 and
1996 incorporated by reference in this Prospectus, the independent
accountants have reported that they have applied limited procedures in
accordance with professional standards for a review of such
information. However, their separate report included in the Company's
quarterly report on Form 10-Q for the quarter ended June 30, 1997, and
incorporated by reference herein, states that they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the
review procedures applied. The accountants are not subject to the
liability provisions of Section 11 of the Securities Act for their
report on the unaudited interim financial information because that
report is not a "report" or a "part" of the Registration Statement
prepared or certified by the accountants within the meaning of
Sections 7 and 11 of the Securities Act.
Any financial statements and schedules hereafter incorporated by
reference in the Registration Statement of which this Prospectus is a
part, that have been audited and are the subject of a report by
independent accountants will be so incorporated by reference in
reliance upon such reports and upon the authority of such firms as
experts in accounting and auditing to the extent covered by consents
filed with the Commission.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, IN CONNECTION WITH THIS OFFERING, AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS
PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses of the
Registrant in connection with the distribution of the securities being
registered hereunder. HLR will not bear any of these expenses.
<TABLE>
<S> <C>
SEC Filing Fee......................................$44,997.34
Legal Fees and Expenses.............................$25,000.00
Accounting Fees and Expenses........................$20,000.00
Miscellaneous.......................................$ 5,000.00
Total ...............................$94,997.34
</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 By laws of the Registrant, previously filed as Exhibit 3.2 to
Registration Statement No. 33-83952 on Form S-1, which is
incorporated herein by reference.
4.3 Form of Rights Agreement, dated as of November 2, 1994 between
the Registrant and American Stock Transfer & Trust Company as
Trustee, previously filed as Exhibit 4.3 to Registration
Statement on Form 8-A, dated November 10, 1994.
4.4 Common Stock Undertaking, dated as of February 28, 1996, by and
among Gly-Derm, Inc., certain stockholders listed therein and the
Registrant, previously filed as Exhibit 4.4 to Registration
Statement No. 333-08179 on Form S-3, which is incorporated herein
by reference.
4.5 Certificate of Designation of Rights and Preferences of Series C
Convertible Preferred Stock.**
4.6 Registration Rights Agreement by and among F. Hoffmann-La Roche
Ltd and ICN Pharmaceuticals, Inc.**
4.7 Indenture between ICN Pharmaceuticals, Inc. and American Stock
Transfer and Trust Company, as trustee, relating to $115,000,000
8 1/2% Convertible Subordinated Notes due 1999 (incorporated by
reference to the Company's Annual Report on Form 10-K for the
Year ended December 31, 1996)*
4.8 Indenture dated as of August 14, 1997, by and among ICN and
United States Trust Company of New York (incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the
Three Months ended June 30, 1997)*
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.**
10.1 Asset Purchase Agreement between F. Hoffmann-La Roche Ltd, ICN
Puerto Rico, Inc. and ICN Pharmaceuticals, Inc., as amended by
the Amended Agreement, dated August 7, 1997.**
15.1 Awareness Letter of Independent Accountant regarding Unaudited
Interim Financial Information.
15.2 Review Report of Independent Accountants for the period ended
June 30, 1997, previously filed as Exhibit 15.1 to Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997, 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).**
- -----------------
[FN]
* None of the other indebtedness of the Registrant exceeds 10% of
its total consolidated assets. The Registrant will furnish copies
of the instruments relating to such other indebtedness upon
request.
** Previously filed.
</FN>
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 24, 1997.
ICN PHARMACEUTICALS, INC.
/s/ David C. Watt
-------------------------------
By: David C.Watt
Executive Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITY INDICATED.
SIGNATURE TITLE DATE
*
- ------------------------
Milan Panic Chairman and Chief Executive September 24, 1997
Officer (Principal Executive
Officer)
*
- ------------------------ Executive Vice President, September 24, 1997
John E. Giordani Chief Financial Officer
(Principal Financial and
Accounting Officer)
*
- ------------------------
Norman Barker, Jr. Director September 24, 1997
*
- ------------------------
Senator Birch E. Bayh, Jr. Director September 24, 1997
*
- ------------------------
Alan F. Charles Director September 24, 1997
*
- ------------------------
Roger Guillemin, M.D., Director September 24, 1997
Ph.D.
*
- ------------------------
Adam Jerney Director, President, Chief
Operating Officer September 24, 1997
*
- ------------------------
Dale M. Hanson Director September 24, 1997
*
- ------------------------
Weldon B. Jolley, Ph.D. Director September 24, 1997
*
- ------------------------
Jean-Francois Kurz Director September 24, 1997
*
- ------------------------
Thomas H. Lenagh Director September 24, 1997
*
- ------------------------
Charles T. Manatt Director September 24, 1997
*
- ------------------------
Stephen D. Moses Director September 24, 1997
*
- ------------------------
Michael Smith, Ph.D. Director September 24, 1997
*
- ------------------------
Roberts A. Smith, Ph.D. Director September 24, 1997
*
- -------------------------
Richard W. Starr Director September 24, 1997
*By: David C. Watt
Power of Attorney
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 By laws of the Registrant, previously filed as Exhibit 3.2 to
Registration Statement No. 33-83952 on Form S-1, which is
incorporated herein by reference.
4.3 Form of Rights Agreement, dated as of November 2, 1994 between
the Registrant and American Stock Transfer & Trust Company as
Trustee, previously filed as Exhibit 4.3 to Registration
Statement on Form 8-A, dated November 10, 1994.
4.4. Common Stock Undertaking, dated as of February 28, 1996, by and
among Gly-Derm, Inc., certain stockholders listed therein and
the Registrant, previously filed as Exhibit 4.4 to Registration
Statement No. 333-08179 on Form S-3, which is incorporated
herein by reference.
4.5 Certificate of Designation of Rights and Preferences of Series
C Convertible Preferred Stock.**
4.6 Registration Rights Agreement by and among F. Hoffmann-La Roche
Ltd and ICN Pharmaceuticals, Inc.**
4.7 Indenture between ICN Pharmaceuticals, Inc. and American Stock
Transfer and Trust Company, as trustee, relating to
$115,000,000 8 1/2% Convertible Subordinated Notes due 1999
(incorporated by reference to the Company's Annual Report on
Form 10-K for the Year ended December 31, 1996).*
4.8 Indenture, dated as of August 14, 1997, by and among ICN and
United States Trust Company of New York (incorporated by
reference to the Company's Quarterly Report on Form 10-Q for
the Three Months ended June 30, 1997).*
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.**
10.1 Asset Purchase Agreement between F. Hoffmann-La Roche Ltd, ICN
Puerto Rico, Inc. and ICN Pharmaceuticals, Inc., as amended by
the Amended Agreement dated August 7, 1997.**
15.1 Awareness Letter of Independent Accountant regarding Unaudited
Interim Financial Information.
15.2 Review Report of Independent Accountants for the period ended
June 30, 1997, previously filed as Exhibit 15.1 to Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997, 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).**
- ---------------------
[FN]
* None of the indebtedness of the Registrant exceeds 10% of its
total consolidated assets. The Registrant will furnish copies
of the instruments relating to such other indebtedness upon
request.
** Previously filed
</FN>
Exhibit 15.1
------------
September 23, 1997
Securities and Exchange commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: ICN Pharmaceuticals, Inc.
Amendment No. 1 to Registration Statement on Form S-3
(File No. 333-35241)
We are aware that our report dated July 31, 1997, on our review
of interim financial information of ICN Pharmaceuticals, Inc. for the
three and six month periods ended June 30, 1997 and included in the
Company's quarterly report on Form 10-Q for the quarter then ended is
incorporated by reference in this Registration Statement. Pursuant to
Rule 436(c) under the Securities Act of 1933, this report should not
be considered a part of the registration statement prepared or
certified by us within the meaning of Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
-----------------------------
Coopers & Lybrand L.L.P.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No.
1 to Registration Statement on Form S-3 (File No. 333-35241) of our
report dated March 4, 1997, which includes an emphasis of a matter
paragraph related to the Company's net monetary assets at ICN
Yugoslavia, which would be subject to foreign exchange loss if a
devaluation of the Yugoslavian dinar were to occur, on our audits
of the consolidated financial statements and financial statement
schedule of ICN Pharmaceuticals, Inc. We also consent to the
reference to our firm under the caption "Independent Public
Accountants."
Coopers & Lybrand L.L.P.
Newport Beach, California
September 23, 1997
