As filed with the Securities and Exchange Commission on
September 5, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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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: [ ]
Calculation of Registration Fee
<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Maximum Maximum Amount of
Class of Offering Aggregate Regis-
Securities to Amount to be Price Per Offering tration
be Registered Registered Share (1) Price Fee
- ------------- -------------- ---------- ---------------- ---------
<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)
</TABLE>
(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.
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 5, 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 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.
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[R]. Virazole[R] is currently approved
for commercial sale in over 40 countries for one or more of a
variety of viral infections, including respiratory syncytial
virus ("RSV"), herpes simplex, influenza, chicken pox, hepatitis
and human immunodeficiency virus (HIV). In the United States,
Virazole[R] is approved only for use in hospitalized infants and
young children with severe lower respiratory infections due to
RSV.
The Company believes it has substantial opportunities to
realize growth from its internally developed compounds. These
compounds are the result of significant investments in its
research and development activities related to nucleic acids
conducted over three decades. 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[R] is approved for
treatment of chronic hepatitis C in Combination Therapy (for
which there can be no assurance), to expand the production and
marketing of Virazole[R] in the countries of the European Union,
where the Company has retained marketing rights under the License
Agreement. It may be desirable 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[R] for Combination
Therapy (if approved). There can be no assurance that the
Company will be successful in raising such additional capital or
entering into such marketing arrangements, if required, or that
such capital will be raised, or such marketing arrangements will
be, on terms favorable to the Company.
LIMITED PATENT PROTECTION
The Company may be dependent on the protection afforded by
its patents relating to Virazole[R] and no assurance can be given
as to the breadth or degree of protection which these patents
will afford the Company. The Company has patent rights in the
United States expiring in 1999 relating to the use of Virazole[R]
to treat specified human viral diseases. If future development
of Virazole[R] in Combination Therapy is successful and approval
is granted in the United States, an additional award of
exclusivity will be granted of up to three years from date of
approval (Waxman-Hatch Act); however, there can be no assurance
that such development will be successful or that such approval
will be obtained. While the Company has patents in certain
foreign countries covering the use of Virazole[R] in the
treatment of certain diseases, which coverage and expiration
varies and which patents expire at various times through 2006,
the Company has no, or limited, patent rights with respect to
Virazole[R] and/or its use in certain foreign countries where
Virazole[R] is currently, or in the future may be, approved for
commercial sale, including France, Germany and Great Britain.
However, the Company and Schering intend to file applications for
approval of Combination Therapy through a centralized procedure
in the European Union (which includes France, Germany and Great
Britain). If such approval is granted, the Company and Schering
would be afforded either six or ten years (depending upon the
particular country) of protection for the Combination Therapy
against competition. There can be no assurance that the loss of
the Company's patent rights with respect to Virazole[R] upon
expiration of the Company's patent rights in the United States,
Europe and elsewhere will not result in competition from other
drug manufacturers or will not otherwise have a significant
adverse effect upon the business and operations of the Company.
As a general policy, the Company expects to seek patents,
where available, on inventions concerning novel drugs,
techniques, processes or other products which it may develop or
acquire in the future. However, there can be no assurance that
any patents applied for will be granted, or that, if granted,
they will have commercial value or as to the breadth or the
degree of protection which these patents, if issued, will afford
the Company. The Company intends to rely substantially on its
unpatented proprietary know-how, but there can be no assurance
that others will not develop substantially equivalent proprietary
information or otherwise obtain access to the Company's know-how.
Patents for pharmaceutical compounds are not available in certain
countries in which the Company markets its products.
Marketing approvals in certain foreign countries provide an
additional level of protection for products approved for sale in
such countries.
UNCERTAIN IMPACT OF ACQUISITION PLANS
The Company intends aggressively to continue its strategy of
targeted expansion through the acquisition of compatible
businesses and product lines and the formation of strategic
alliances, joint ventures and other business combinations.
Should the Company complete any material acquisition, the
Company's success or failure in integrating the operations of the
acquired company may have a material impact on the future growth
or success of the Company. Since some or all of these potential
acquisitions may be affected with the issuance of Common Stock by
the Company to the sellers of the businesses being acquired 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[R] 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 Potenial 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[R]. While to date no
material adverse claim for personal injury resulting from
allegedly defective products, including Virazole[R], has been
successfully maintained against the Company or any of its
predecessors, a substantial claim, if successful, could have a
material adverse effect on the Company.
GOVERNMENT REGULATION
FDA approval must be obtained in the United States and
approval must be obtained from comparable agencies in other
countries prior to marketing or manufacturing new pharmaceutical
products for use by humans in such respective jurisdictions.
Obtaining FDA approval for new products and manufacturing
processes can take a number of years and involves the expenditure
of substantial resources. Numerous requirements must be
satisfied, including preliminary testing programs on animals and
subsequent clinical testing programs on humans, to establish
product safety and efficacy. No assurance can be given that
authorization of the commercial sale of any new drugs or
compounds by the Company for any application 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[R], a prophylactic drug for the treatment of RSV. The
Company is aware of several other ongoing research and
development programs which are attempting to develop new
prophylactic and therapeutic products for treatment of RSV.
Although the Company will follow publicly disclosed developments
in this field, on the basis of currently available data, it is
unable to evaluate whether RespiGam[R] or the other technology
being developed in these programs poses a threat to the Company's
current market position in the treatment of RSV or its revenue
streams. 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 aggrege prinicpal 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
Number of Shares Aggregate Number
of Common Stock of Shares of
Covered by This Common Stock
Name Prospectus Owned[FN]
- ---------------------- ------------------ ------------------
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
Trust dated December
29, 1989 1,623 1,623
Diane F. Keene and
Helene Davidson,
Trustees of the Diane
F. Keene Grantor Trust 325 325
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, 16 16
Trustee
Richard S. Schwartz 16 16
Marvin D. Siegel 17 404
- ---------------------- ------------------ ------------------
Total 6,959
==================
[FN]
The shares of Common Stock owned by the Gly-Derm Stockholders
not covered by the Registration Statement of which this
Prospectus is a part are covered by another registration
statement on Form S-3 filed by the Company with the Commission.
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 owned by it 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.
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
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.
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).
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 5, 1997.
ICN PHARMACEUTICALS, INC.
/s/ Milan Panic
--------------------------------
By: Milan Panic
Chairman, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Milan Panic and
David C. Watt his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to
this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITY INDICATED.
SIGNATURE TITLE DATE
- -------------------------- ------------------- -------------------
/s/ Milan Panic Chairman and Chief September 5, 1997
- ------------------------- Executive Officer
Milan Panic (Principal
Executive
Officer)
/s/ John E. Giordani Executive Vice September 5, 1997
- ------------------------- President, Chief
John E. Giordani Financial Officer
(Principal
Financial and
Accounting
Officer)
/s/ Norman Baker, Jr. Director September 5, 1997
- -------------------------
Norman Barker, Jr.
/s/ Senator Birch E. Bayh, Director September 5, 1997
Jr.
- -------------------------
Senator Birch E. Bayh, Jr.
/s/ Alan F. Charles Director September 5, 1997
- -------------------------
Alan F. Charles
/s/ Roger Guillemin Director September 5, 1997
- -------------------------
Roger Guillemin, M.D.,
Ph.D.
/s/ Adam Jerney Director, September 5, 1997
- ------------------------- President, Chief
Adam Jerney Operating Officer
/s/ Dale Hanson Director September 5, 1997
- -------------------------
Dale M. Hanson
/s/ Weldon B. Jolley Director September 5, 1997
- -------------------------
Weldon B. Jolley, Ph.D.
/s/ Jean-Francois Kurz Director September 5, 1997
- -------------------------
Jean-Francois Kurz
/s/ Thomas Lenagh Director September 5, 1997
- -------------------------
Thomas H. Lenagh
/s/ Charles Manatt Director September 5, 1997
- -------------------------
Charles T. Manatt
/s/ Stephen D. Moses Director September 5, 1997
- -------------------------
Stephen D. Moses
/s/ Michael Smith Director September 5, 1997
- -------------------------
Michael Smith, Ph.D.
/s/ Roberts A. Smith Director September 5, 1997
- -------------------------
Roberts A. Smith, Ph.D.
/s/ Richard W. Starr Director September 5, 1997
- -------------------------
Richard W. Starr
INDEX TO EXHIBITS
4.1 Amended and Restated Certificate of Incorporation of
Registrant, previously filed as Exhibit 3.1 to Registration
Statement No. 33-83952 on Form S-1, which is incorporated
herein by reference, as amended by the Certificate of
Merger, dated November 10, 1994, of ICN Pharmaceuticals,
Inc., SPI Pharmaceuticals, Inc., and Viratek, Inc. with and
into ICN Merger Corp.; previously filed as Exhibit 4.1 to
Registration Statement No. 333-08179 on Form S-3, which is
incorporated herein by reference.
4.2 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.
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).
Exhibit 4.5
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CERTIFICATE OF DESIGNATION OF RIGHTS
AND PREFERENCES OF SERIES C CONVERTIBLE
PREFERRED STOCK OF ICN PHARMACEUTICALS, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
The undersigned, David C. Watt, Executive Vice
President, General Counsel and Corporate Secretary, of ICN
Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
hereby certifies that pursuant to authority conferred upon the
Board of Directors of the Company by the Restated Certificate of
Incorporation of the Company and pursuant to the provisions of
the General Corporation Law of the State of Delaware, the Board
of Directors duly adopted a resolution providing for the
designations, powers, preferences and relative, participating,
optional or other rights, and the qualifications, limitations and
restrictions thereof, of the Series C Convertible Preferred Stock
of the Company, which resolution is as follows:
WHEREAS, Article Fourth of the Restated Certificate of
Incorporation of the Company authorizes a class of shares
designated as Preferred Stock, consisting of 10,000,000 shares,
par value $.01 per share and authorizes the Board of Directors to
fix the designations, preferences and rights granted to or
imposed upon the Preferred Stock; and
WHEREAS, it is now the desire of the Board of
Directors, pursuant to the authority vested in it by the Restated
Certificate of Incorporation to fix and determine the rights,
preferences, privileges, and restrictions of a series of said
Preferred Stock;
NOW, THEREFORE, BE IT RESOLVED that the Board of
Directors does hereby authorize the issuance of a series of
Preferred Stock of the Company and does hereby fix and determine
the rights, preferences, privileges, and restrictions of, and
other matters relating to, said series as follows:
1. DESIGNATION. The series of Preferred Stock shall be
designated and known as "Series C Convertible Preferred Stock."
The number of shares constituting such series shall be 3,000.
2. CONVERSION. The holders of the Series C Convertible
Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series C
Convertible Preferred Stock shall be convertible, subject to the
last sentence of this Section 2(a), without the payment of any
additional consideration by the holder thereof and at the option
of the holder thereof, (i) at any time after the earlier to occur
of (A) July 1, 1998, and (B) the date on which the sale price of
the Common Stock on the New York Stock Exchange reaches $30 per
share, with respect to any and all of the number of shares of
Common Stock into which the Series C Convertible Preferred Stock
shall then be convertible in accordance with the provisions
hereof, at the office of the Company or any transfer agent for
the Series C Convertible Preferred Stock, into such number of
fully paid and nonassessable shares of Common Stock as is
determined by dividing $25,000 by the Conversion Price,
determined as hereinafter provided, in effect at the time of the
conversion (the "Conversion Ratio"). The Conversion Price at
which shares of Common Stock shall be deliverable upon conversion
without the payment of any additional consideration by the holder
thereof (the "Conversion Price") shall initially be $25 per share
of Common Stock. Such initial Conversion Price shall be subject
to adjustment in order to adjust the number of shares of Common
Stock into which the Series C Convertible Preferred Stock is
convertible, as hereinafter provided. Notwithstanding the
foregoing, in no event shall any share of Series C Convertible
Preferred Stock be convertible if, following such conversion,
the holder would be the beneficial owner, as defined in Rule 13d-
3 under the Securities Exchange Act of 1934, of five percent or
more of the outstanding shares of Common Stock.
(b) MECHANICS OF CONVERSION. No fractional shares of
Common Stock shall be issued upon conversion of the Series C
Convertible Preferred Stock. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Company shall
pay cash equal to such fraction multiplied by the then effective
Conversion Price.
Before any holder of Series C Convertible Preferred
Stock shall be entitled to convert the same into full shares of
Common Stock, he shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Company or of any
transfer agent for the Series C Convertible Preferred Stock, and
shall give written notice to the Company at such office that he
elects to convert the same and shall state therein his name or
the name or names of his nominees in which he wishes the
certificate or certificates for shares of Common Stock to be
issued. The Company shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Series C
Convertible Preferred Stock, or to his nominee or nominees, a
certificate or certificates for the number of shares of Common
Stock to which he shall be entitled as aforesaid, together with
cash in lieu of any fraction of a share. Such conversion shall
be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series C
Convertible Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable
upon conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
(c) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING
ISSUES:
(i) In the event the Company shall issue
additional shares of Common Stock pursuant to a stock dividend,
stock distribution or stock subdivision, the Conversion Price in
effect immediately prior to such stock dividend, stock
distribution or stock subdivision shall, concurrently with the
effectiveness of such stock dividend, stock distribution or
subdivision, be proportionately decreased.
(ii) In the event the outstanding shares of
Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Common Stock, the Conversion Price in effect immediately prior to
such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be
proportionately increased.
(iii) In case the Company shall issue or
sell any Common Stock (other than Common Stock issued (a) upon
conversion of convertible securities of the Company outstanding
as of December 31, 1996, (b) pursuant to the Company's stock
option plans or pursuant to any other Common Stock related
employee compensation plan of the Company approved by the
Company's Board of Directors, or (c) upon exercise or conversion
of any security the issuance of which caused an adjustment under
paragraphs (iv) or (v) hereof) without consideration or for a
consideration per share less than the then Conversion Price Per
Common Share (as defined in paragraph (vii)), the Conversion
Ratio to be in effect after such issuance or sale shall be
determined by multiplying the Conversion Ratio in effect
immediately prior to such issuance or sale by a fraction, the
numerator of which shall be the product of the aggregate number
of shares of Common Stock outstanding immediately after such
issuance or sale and the Current Valuation Per Common Share (as
defined in paragraph (vii)) immediately prior to such issuance or
sale and the denominator of which shall be the sum of (x) the
number of shares of Common Stock outstanding immediately prior to
the time of such issuance or sale multiplied by the Current
Valuation Per Common Share immediately prior to such issuance or
sale and (y) the aggregate consideration, if any, to be received
by the Company upon such issuance and sale. In case any portion
of the consideration to be received by the Company shall be in a
form other than cash, the fair market value of such noncash
consideration shall be utilized in the foregoing computation.
Such fair market value shall be determined by the Board of
Directors of the Company; PROVIDED that if the holders of 25% of
the Series C Preferred Stock shall object to any such
determination, the Board of Directors shall retain an independent
appraiser reasonably satisfactory to such holders to determine
such fair market value. The holders shall be notified promptly
of any consideration other than cash to be received by the
Company and furnished with a description of the consideration and
the fair market value thereof, as determined by the Board of
Directors.
(iv) In case the Company shall fix a record
date for the issuance of rights, options or warrants to the
holders of its Common Stock or other securities entitling such
holders to subscribe for or purchase shares of Common Stock (or
securities convertible into shares of Common Stock) at a price
per share of Common Stock (or having a conversion price per share
of Common Stock, if a security convertible into shares of Common
Stock) less that the then Conversion Price Per Common Share on
such record date, the maximum number of shares of Common Stock
issuable upon exercise of such rights, options or warrants (or
conversion of such convertible securities) shall be deemed to
have been issued and outstanding as of such record date and the
Conversion Ratio shall be adjusted pursuant to paragraph (iii)
hereof, as though such maximum number of shares of Common Stock
had been so issued for an aggregate consideration payable by the
holders of such rights, options, warrants or convertible
securities prior to their receipt of such shares of Common Stock.
In case any portion of such consideration shall be in a form
other than cash, the fair market value of such noncash
consideration shall be determined by the Board of Directors.
Such adjustment shall be made successively whenever such record
date is fixed; and in the event that such rights, options or
warrants are not so issued or expire unexercised, or in the event
of a change in the number of shares of Common Stock to which the
holders of such rights, options or warrants are entitled (other
than pursuant to adjustment provisions therein comparable to
those contained in this paragraph (c)), the Conversion Ratio
shall again be adjusted to be the Conversion Ratio which would
then be in effect if such record date had not been fixed, in the
former event, or the Conversion Ratio which would then be in
effect if such holder had initially been entitled to such changed
number of shares of Common Stock, in the latter event.
(v) In case the Company shall issue rights,
options (other than options issued pursuant to a plan described
in clause (iii)(B)) or warrants entitling the holders thereof to
subscribe for or purchase Common Stock (or securities convertible
into shares of Common Stock) or shall issue convertible
securities, and the price per share of Common Stock of such
rights, options, warrants or convertible securities (including,
in the case of rights, options or warrants, the price at which
they may be exercised) is less than the then Conversion Price Per
Common Share, the maximum number of shares of Common Stock
issuable upon exercise of such rights, options or warrants or
upon conversion of such convertible securities shall be deemed to
have been issued and outstanding as of the date of such sale or
issuance, and the Conversion Ratio shall be adjusted pursuant to
paragraph (iii) hereof as though such maximum number of shares
of Common Stock had been so issued for an aggregate consideration
equal to the aggregate consideration paid for such rights,
options, warrants or convertible securities and the aggregate
consideration payable by the holders of such rights, options,
warrants or convertible securities prior to their receipt of such
shares of Common Stock. In case any portion of such
consideration shall be in a form other than cash, the fair market
value of such noncash consideration shall be determined as set
forth in paragraph (iii) hereof. Such adjustment shall be made
successively whenever such rights, options or warrants expire
unexercised, or in the event of a change in the number of shares
of Common Stock to which the holders of such rights, options,
warrants or convertible securities are entitled (other than
pursuant to adjustment provisions therein comparable to those
contained in this paragraph (c)), the Conversion Ratio shall
again be adjusted to be the Conversion Ratio which would then be
in effect if such rights, options, warrants or convertible
securities had not been issued, in the former event, or the
Conversion Ratio which would then be in effect if such holders
had initially been entitled to such changed number of shares of
Common Stock, in the latter event. No adjustment of the
Conversion Ratio shall be made pursuant to this paragraph (v) to
the extent that the Conversion Ratio shall have been adjusted
pursuant to paragraph (iv) upon the setting of any record date
relating to such rights, options, warrants or convertible
securities and such adjustment fully reflects the number of
shares of Common Stock to which the holders of such rights,
options, warrants or Convertible Securities are entitled and
the price payable therefor.
(vi) In case the Company shall fix the record
date for the making of a distribution to holders of Common Stock
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
Company) of evidences of indebtedness, assets or other property
(other than dividends payable in Common Stock or rights, options
or warrants referred to in, and for which an adjustment is made
pursuant to, paragraph (iv) hereof), the Conversion Ratio to be
in effect after such record date shall be determined by
multiplying the Conversion Ratio in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the Current Valuation Per Common Share on such record date, and
the denominator of which shall be the Current Valuation Per
Common Share on such record date, less the fair market value
(determined by the Board Directors) of the portion of the assets,
other property or evidence of indebtedness so to be distributed
which is applicable to one share of Common Stock. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Conversion Ratio shall again be adjusted to be the
Conversion Ratio which would then be in effect if such record
date had not been fixed.
(vii) For the purpose of any computation
under paragraph (c) hereof, on any determination date, the
"CURRENT VALUATION PER COMMON SHARE" shall be the greater of the
Current Market Price Per Common Share and the Conversion Price
Per Common Share (each as defined below), the "CURRENT MARKET
PRICE PER COMMON SHARE" shall be deemed to be the average
(weighted by daily trading volume) of the Daily Prices (as
defined below) per share of the applicable class of Common Stock
for the 20 consecutive trading days immediately prior to such
date, the "CONVERSION PRICE PER COMMON SHARE" shall be deemed to
be the amount in dollars which is equal to $25,000 divided by the
Conversion Ratio immediately prior to such adjustment, and "DAILY
PRICE" means if the shares of such class of Common Stock then are
listed and traded on the New York Stock Exchange, Inc. ("NYSE"),
the closing price on such day as reported on the NYSE Composite
Transactions Tape; if the shares of such class of Common Stock
then are not listed and traded on the NYSE, the closing price on
such day as reported by the principal national securities
exchange on which the shares are listed and traded; if the shares
of such class of Common Stock then are not listed and traded on
any such securities exchange, the last reported sale price on
such day on the National Market of the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ");
or if the shares of such class of Common Stock then are not
traded on the NASDAQ National Market, the average of the highest
reported bid and lowest reported asked price on such day as
reported by NASDAQ. For purposes of any computation under this
paragraph (c), the number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or
for the account of the Company.
(viii) No adjustment to the Conversion
Ratio shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Conversion Ratio;
PROVIDED, HOWEVER, that any adjustments which by reason of this
paragraph are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All
calculations under this paragraph (c) shall be made to the
nearest four decimal points.
(ix) In the event that, at any time as a
result of the provisions of paragraph (x), the holder of this
Series C Preferred Stock upon subsequent conversion shall become
entitled to receive any shares of capital stock of the Company
other than Common Stock, the number of such other shares so
receivable upon conversion of this Series C Preferred Stock shall
thereafter be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions contained herein.
(x) In the case of any consolidation or
merger of the Company with or into another corporation or the
conveyance of all or substantially all the assets of the Company
to another corporation, each share of Series C Convertible
Preferred Stock shall thereafter be convertible into the number
of shares of stock or other securities or property to which a
holder of the number of shares of Common Stock of the Company
deliverable upon conversion of such Series C Convertible
Preferred Stock would have been entitled upon such consolidation,
merger or conveyance; and, in any such case, appropriate
adjustment (as determined by the Board of Directors) shall be
made in the application of the provisions herein set forth with
respect to the rights and interest thereafter of the holders of
the Series C Convertible Preferred Stock, to the end that the
provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter
deliverable upon the conversion of the Series C Convertible
Preferred Stock.
(xi) The Company will not, by amendment of
its Restated Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the
Company but will at all times in good faith assist in the
carrying out of all the provisions of this Section 2 and in the
taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the holders of the
Series C Convertible Preferred Stock against impairment.
(xii) Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to
this Section 2, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms
hereof and furnish to the holder of Series C Convertible
Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the
written request at any time of any holder of Series C Convertible
Preferred Stock, furnish or cause to be furnished to such holder
a like certificate setting forth (A) such adjustments and
readjustments, (B) the Conversion Price at the time in effect,
and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon
conversion of Series C Convertible Preferred Stock.
(xiii) The Company shall reserve and keep
available at all times out of its authorized but unissued Common
Stock such number of shares of Common Stock as shall from time to
time be sufficient to effect conversion of the Series C
Convertible Preferred Stock.
3. LIQUIDATION RIGHTS. The Series C Convertible Preferred
Stock shall have the following liquidation rights and
preferences:
(a) LIQUIDATION PRICE. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Company, the holders of each share of Series C
Convertible Preferred Stock outstanding shall be entitled to
receive, prior and in preference to any distribution of any of
the assets or surplus funds of the Company to the holders of the
Common Stock of the Company by reason of their ownership thereof,
an amount equal to $25,000 plus in each case an amount equal to
all accrued and unpaid dividends thereon to and including the
date full payment shall be tendered to the holders of the Series
C Convertible Preferred Stock outstanding with respect to such
liquidation, dissolution or winding up.
(b) PRIORITY OVER COMMON STOCK. All the preferential
amounts to be paid to the holders of the Series C Convertible
Preferred Stock under this Section 3 shall be paid or set apart
for payment before the payment or setting apart for payment of
any amount for, or the distribution of any assets of the Company
to, the holders of the Common Stock in connection with such
liquidation, dissolution or winding up. After the payment or the
setting apart of payment to the holders of the Series C
Convertible Preferred Stock of the preferential amounts so
payable to them, and any preferential amounts payable to the
holders of preferred stock ranking as to liquidation on a parity
with or junior to the Series C Convertible Preferred Stock, the
holders of Common Stock shall be entitled to receive all
remaining assets of the Company.
(c) INSUFFICIENCY. If the assets or surplus funds
thus distributed to the holders of the Series C Convertible
Preferred Stock are insufficient to permit the payment to such
holders of their full preferential amount, then the entire assets
and surplus funds of the Company legally available for
distribution shall be distributed ratably among the holders of
the Series C Convertible Preferred Stock and holders of preferred
stock ranking as to liquidation on a parity with the Series C
Convertible Preferred Stock in proportion to the full
preferential amount each such holder is otherwise entitled to
receive.
4. VOTING RIGHTS. Each share of Series C Convertible
Preferred Stock shall entitle the holder thereof to that number
of votes equal to the number of shares into which such share of
Series C Convertible Preferred Stock would be convertible as of
the record date for any matter to be submitted to a vote of
stockholders of the Company. For purposes of calculation of such
number of votes, all shares of Series C Convertible Preferred
Stock then outstanding shall be considered immediately
convertible as of such record date. Except as otherwise
provided by law, the holders of Series C Convertible Preferred
Stock and holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders
of the Company.
5. DIVIDEND RIGHTS. The holders of outstanding shares of
Series C Convertible Preferred Stock shall not be entitled to
receive dividends in respect of shares of Series C Preferred
Stock.
6. COVENANTS. So long as any shares of Series C
Convertible Preferred Stock shall be outstanding (as adjusted for
all subdivisions and combinations), the Company shall not,
without first obtaining the affirmative vote or written consent
of not less than sixty percent (60%) of such outstanding shares
of Series C Convertible Preferred Stock, amend or repeal any
provision of, or add any provision to, the Company's Restated
Certificate of Incorporation or By-laws if such action would
alter or change the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of, the Series C
Convertible Preferred Stock.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Designation of Rights and Preferences of Series C
Convertible Preferred Stock as of this 4th day of August, 1997.
ICN PHARMACEUTICALS, INC.
By:
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David C. Watt,
Executive Vice President,
General Counsel and
Corporate Secretary
Exhibit 4.6
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REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") dated
as of _________, 1997, is entered into by and among F.HOFFMANN -
LA ROCHE LTD., a Swiss corporation (hereinafter referred to as
the "Seller") and ICN PHARMACEUTICALS, INC., a Delaware
corporation (hereinafter referred to as "ICN").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, ICN Puerto Rico, Inc., a Puerto Rico
corporation and wholly owned subsidiary of ICN, as "Buyer", ICN
and the Seller have entered into that certain Asset Purchase
Agreement dated as of June __, 1997 (the "Purchase Agreement"),
pursuant to which Buyer desires to purchase and the Seller
desires to sell certain assets of Seller including certain
pharmaceutical compounds owned by Seller;
WHEREAS, 1,600,000 shares of the Common Stock, $.01 par
value, of ICN (the "Common Stock") and 2,000 shares of the Series
C Convertible Preferred Stock, $.01 par value, of ICN (the
"Preferred Stock") are, concurrently herewith, being issued and
delivered by ICN to Seller upon the Closing of the transactions
contemplated by the Purchase Agreement;
WHEREAS, such shares of Common Stock delivered upon the
Closing are sometimes referred to herein as the "Common Shares";
such shares of Preferred Stock delivered at the Closing are
sometimes referred to herein as the "Preferred Shares"; and such
shares of Common Stock and Preferred Stock are sometimes referred
to herein, collectively, as the "Shares";
WHEREAS, the execution and delivery of this Agreement
is a condition to the consummation of the transactions
contemplated by the Purchase Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. RESTRICTIONS ON TRANSFER, REGISTRATION OF
SHARES, ETC.
1.1 RESTRICTIONS ON TRANSFERABILITY. Any
transfer of the Shares shall be made in compliance with the
provisions of the Securities Act of 1933, as amended (the "Act").
1.2 CERTAIN DEFINITIONS. As used in this
Section 1 the following terms shall have the following respective
meanings:
"Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the time
administering the Act.
"Restricted Securities" shall mean the securities
of ICN required to bear the legend set forth in Section 1.3
hereof.
"Registrable Securities" shall mean the Common
Shares, the Preferred Shares, shares of Common Stock owned or
issuable upon conversion of the Preferred Shares ("Conversion
Shares"), any shares of Common Stock received in payment of the
Guaranteed Price or otherwise in connection with the transactions
contemplated by the Purchase Agreement, and other securities
issued with respect thereto upon any stock split, stock dividend,
recapitalization or similar event.
The terms "register," "registered" and
"registration" shall refer to a registration effected by
preparing and filing a registration statement in compliance with
the Act and applicable rules and regulations thereunder, and the
declaration or ordering of the effectiveness of such registration
statement.
"Registration Expenses" shall mean all expenses
incurred by ICN in compliance with Sections 1.5 and 1.6 hereof,
including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for ICN,
blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration.
"Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of
Registrable Securities and all fees and disbursements of counsel
for the Seller.
1.3 RESTRICTIVE LEGEND. Each certificate
representing (i) the Shares, (ii) Conversion Shares, or (iii) any
other securities issued in respect of the Shares or Conversion
Shares upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise
permitted or unless the securities evidenced by such certificate
shall have been registered under the Act) be stamped or otherwise
imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW. THEY
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO ICN THAT SUCH
REGISTRATION IS NOT REQUIRED. THESE SECURITIES AND THE
TRANSFER THEREOF ARE SUBJECT TO AN ASSET PURCHASE AGREEMENT
DATED AS OF ________, 1997, AMONG SELLER, ICN, AND ICN
PUERTO RICO, INC.
Upon request of the Seller, ICN shall remove the
foregoing legend from the certificate or issue to Seller a new
certificate therefor free of any transfer legend, if, with such
request, ICN shall have received, at Seller's option, either the
opinion referred to in Section 1.4(i) or the "no-action" letter
referred to in Section 1.4(ii) to the effect that any transfer by
the Seller of the securities evidenced by such certificate will
not violate the Act and applicable state securities laws.
1.4 NOTICE OF PROPOSED TRANSFERS. The Seller by
acceptance of the certificates representing Restricted Securities
agrees to comply in all respects with the provisions of this
Section 1.4. Prior to any proposed transfer of any Restricted
Securities (other than under circumstances described in
Sections 1.5 and 1.6 hereof), the Seller shall give written
notice to ICN of its intention to effect such transfer. Each
such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and shall be accompanied
(except in transactions in compliance with Rule 144) by, at
Seller's option either (i) a written opinion of legal counsel who
shall be reasonably satisfactory to ICN, addressed to ICN and
reasonably satisfactory in form and substance to ICN's counsel,
to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the Act, or
(ii) a "no action" letter from the Commission to the effect that
the distribution of such securities without registration will not
result in a recommendation by the staff of the Commission that
action be taken with respect thereto, whereupon the Seller shall
be entitled to transfer such Restricted Securities in accordance
with the terms of the notice delivered by the Seller to ICN.
Each certificate evidencing the Restricted Securities transferred
as above provided shall bear the restrictive legend set forth in
Section 1.3 above, except that such certificate shall not bear
such restrictive legend if the opinion of counsel or "no-action"
letter referred to above is to the further effect that such
legend is not required in order to establish compliance with any
provisions of the Act.
1.5 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. If at any time
during the five-year period following the Closing Date (as
defined in the Purchase Agreement), as such period may be
extended pursuant to Section 1.13, ICN shall receive from the
Seller a written request that ICN effect any registration
(including a shelf registration) with respect to all or a part of
the Registrable Securities, ICN will use its best efforts to
effect each such registration or shelf registration (including,
without limitation, the execution of any undertaking to file post-
effective amendments, appropriate qualification under applicable
blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Act).
ICN shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 1.5:
(i) in any particular jurisdiction in which ICN would be required
to execute a general consent to service of process in effecting
such registration, qualification or compliance, unless ICN is
already subject to service in such jurisdiction and except as may
be required by the Act or applicable rules or regulations
thereunder; or (ii) after ICN has effected three such
registrations pursuant to this Section 1.5(a) and such
registrations have been declared or ordered effective and shall
have been kept effective for the period referred to in
Section 1.8(a); provided, that ICN shall not be required to
effect more than one such registration in any fiscal year of ICN;
and provided, further, that if any Registrable Securities
included in a request by the Seller under this Section 1.5(a)
have not been registered after ICN has effected such three
registrations because they were excluded pursuant to the provisions
of Section 1.5(b) below, then the Seller shall have the right
to request such additional registration or registrations, on the
same terms and conditions as provided in this Section 1.5, as
shall be necessary to effect the registration of such excluded
Registrable Securities; or (iii) if the number of Shares, in the
aggregate, requested to be included in any such registration by
the Seller, is less than the lower of the number of shares equal
to 1/8 of the Shares or the remaining balance of Shares not
previously registered hereunder. Subject to the foregoing
clauses (i), (ii) and (iii), ICN shall file a registration
statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request of
the Seller.
Any registration statement filed pursuant to
the request of the Seller may, subject to the provisions of
Section 1.5(b) below, include other securities of ICN, including
its own securities and securities which are held by persons who,
by virtue of agreements with ICN, are entitled to include their
securities in any such registration.
(b) UNDERWRITING. If the Seller intends to
distribute the Registrable Securities covered by its request by
means of an underwritten offering, it shall so advise ICN as a
part of its request made pursuant to Section 1.5. The Seller may
include in any such underwriting all the Registrable Securities
it holds, subject to the allocation provided hereinbelow.
If holders of securities of ICN who are
entitled, by contract with ICN, to have securities included in
such an underwritten offering (the "Other Shareholders") request
such inclusion, the Seller shall offer to include the securities
of such Other Shareholders in the underwriting and may condition
such offer on their acceptance of the further applicable
provisions of this Section 1. ICN shall (together with the
Seller and the Other Shareholders proposing to distribute their
securities through such underwriting) enter into an underwriting
agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by the
Seller who shall be reasonably acceptable to ICN.
Notwithstanding any other provision of this Section 1.5, if the
managing underwriter advises the Seller in writing that the
inclusion of the number of Shares requested to be included in
such registration exceeds the largest number of shares which can
be sold without having a material and adverse effect on such
offering (the "Maximum Offering Size"), ICN will include in such
registration, in the following priority, up to the Maximum
Offering Size, (1) all the Registrable Securities requested to be
registered by Seller or its Affiliates, (2) all Shares requested
to be included by Other Shareholders in proportion as nearly as
practicable, to the respective amounts of Shares and other
securities which were requested to be included by such Other
Shareholders in such registration statement and (3) any Shares
proposed to be registered by ICN. If the Seller or any Other
Shareholder who has requested inclusion in such registration as
provided above disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to ICN,
the underwriter and the Seller. The securities so withdrawn
shall also be withdrawn from registration.
1.6 COMPANY REGISTRATION.
(a) If at any time during the five-year
period following the Closing Date (as defined in the Purchase
Agreement), as such period may be extended pursuant to
Section 1.13, ICN shall determine to register any of its
securities either for its own account or the account of a
security holder or holders exercising their respective demand
registration rights, other than a registration relating solely to
a Commission Rule 145 transaction, or a registration on any
registration form which does not permit secondary sales or does
not include substantially as much information as would be
required to be included in a registration statement covering the
sale of Registrable Securities, ICN will: (i) promptly give to
the Seller written notice thereof at least 20 days before the
filing of any registration statement (which shall include a list
of the jurisdictions in which ICN intends to attempt to qualify
such securities under the applicable blue sky or other state
securities laws); and (ii) include in such registration (and any
related qualification under blue sky laws or other compliance),
and in any underwriting involved therein, all or a part of the
Seller's Registrable Securities as shall be specified in a
written request or requests, made by the Seller within fifteen
(15) business days after receipt of the written notice from ICN
described in clause (i) above, except (A) as set forth in
Section 1.6(b) below, (B) ICN shall not be required to include
Registrable Securities in any such registration if, and to the
extent, in the opinion of ICN's investment bankers delivered to
the Seller in writing the inclusion of such Registrable
Securities would materially and adversely affect the success of
the offering in which such Registrable Securities are proposed
for inclusion, and (C) that ICN shall not be required to include
Registrable Securities in more than five such registrations which
registrations shall have been kept effective for the period
referred to in Section 1.8(a); provided, that if any Registrable
Securities included in a request by the Seller under this
Section 1.6(a) have not been registered after ICN has effected
three such registrations because they were excluded pursuant to
the provisions of Section 1.6(b) below, then the Seller shall
have the right to request inclusion of such Registrable
Securities in such additional like registrations by ICN, on the
same terms and conditions as provided in this Section 1.6(a), as
shall be necessary to effect the registration of such excluded
Registrable Securities.
(b) UNDERWRITING. If the registration of
which ICN gives notice is for a registered public offering
involving an underwriting, ICN shall so advise the Seller as part
of the written notice given pursuant to Section 1.6(a)(i). In
such event the right of the Seller to registration pursuant to
Section 1.6 shall be conditioned upon the Seller's participation
in such underwriting and the inclusion of the Seller's
Registrable Securities in the underwriting to the extent provided
herein. The Seller, together with ICN and the Other Shareholders
distributing their securities through such underwriting, if any,
shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected by ICN or the Other
Shareholders, as the case may be. Notwithstanding any other
provision of this Section 1.6, if the underwriter determines that
the success of such offering would be materially and adversely
affected by inclusion of all the securities requested to be
included, the underwriter may (subject to the allocation priority
set forth below) exclude from such registration and underwriting
some or all of the Registrable Securities which would otherwise
be underwritten pursuant hereto. ICN shall so advise all holders
of securities requesting registration, and the number of shares
or securities that are entitled to be included in the
registration and underwriting shall be allocated in the following
manner. The securities of ICN held by officers and directors of
ICN shall be excluded from such registration and underwriting to
the extent required by such limitation, and, if a limitation on
the number of shares is still required, the number of shares that
may be included in the registration and underwriting shall be
allocated among the Seller and Other Shareholders in proportion,
as nearly as practicable, to the respective amounts of
Registrable Securities and other securities which they had
requested to be included in such registration at the time of
filing the registration statement. If the Seller or any officer,
director or Other Shareholder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written
notice to ICN and the underwriter. Any Registrable Securities or
other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
1.7 EXPENSES OF REGISTRATION. All Registration
Expenses incurred in connection with any registration, qualification
or compliance pursuant to this Section 1 shall be borne by
ICN, and all Selling Expenses (except fees and disbursements of
counsel, which shall be borne by the party engaging such counsel)
shall be borne by the holders of the securities so registered pro
rata on the basis of the number of their shares so registered.
1.8 REGISTRATION PROCEDURES. In the case of each
registration effected by ICN pursuant to Section 1, ICN will keep
the Seller advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense,
ICN will:
(a) Keep such registration effective (i) for
a period of one hundred twenty (120) days or (ii) in the case
Seller shall have requested a shelf registration, for a period of
three years, or, in each case, until the Seller has completed the
distribution described in the registration statement relating
thereto, whichever first occurs and in furtherance thereof, ICN
shall prepare and file with the Commission such amendments and
supplements to the registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective for such period;
(b) Furnish such number of prospectuses and
other documents incident thereto, as the same shall be amended or
supplemented from time to time, as the Seller from time to time
may reasonably request;
(c) Use its best efforts to register or
qualify the Registrable Securities covered by such registration
statement under the securities or blue sky laws of such
jurisdictions as the underwriter for such offering or any Seller
may reasonably request; provided that ICN shall in no event be
required to qualify to do business as a foreign corporation in
any jurisdiction where it is not otherwise required to be
qualified, to amend its Restated Certificate of Incorporation, as
amended, or to change the composition of its assets at the time
to conform with the securities or blue sky laws of such
jurisdictions, to take any action that would subject it to
service of process in suits other than those arising out of the
offer and sale of the Registrable Securities covered by the
registration statement; or to subject itself to taxation in any
jurisdiction where it has not theretofore done so;
(d) Promptly notify the Seller of any stop
order or similar proceeding initiated by state or federal
regulatory bodies and use its best efforts to expeditiously
remove such stop order or similar proceeding;
(e) Cause all Registrable Securities to be
listed on each securities exchange on which similar securities
issued by ICN are then listed and, if not so listed, to be listed
on the NASDAQ automated quotation system on which similar
securities issued by ICN are listed;
(f) Provide a transfer agent and registrar
for all such Registrable Securities not later than the effective
date of such registration statement;
(g) Otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months beginning with the first day of ICN's first
full calendar quarter after the effective date of the
Registration Statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Act and Rule 158 under the
Act;
(h) prior to filing any registration
statement, prospectus or amendment with the Commission, ICN shall
provide the Seller copies of all information to be included
therein concerning the Seller and give the Seller an opportunity
to furnish corrections or other modifications to such
information; and
(i) Upon the effectiveness of any
registration statement hereunder, deliver to Seller the opinion
of the General Counsel of ICN to the effect that the registration
statement has been declared effective and to the best knowledge
of such counsel no stop order suspending the effectiveness of the
registration statements has been issued and no proceeding for
that purpose is pending or threatened by the Commission.
1.9 INDEMNIFICATION.
(a) ICN will indemnify the Seller and any
other person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, the Seller, with respect to which registration,
qualification or compliance has been effected pursuant to this
Section 1, and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or
other document (including any related registration statement,
notification or the like) or any amendment thereof incident to
any such registration, qualification or compliance, or based on
any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by ICN of the
Act or any rule or regulation thereunder applicable to ICN and
relating to action or inaction required of ICN in connection with
any such registration, qualification or compliance, and will
reimburse the Seller, and any other person that directly or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Seller, each
such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such
claims, loss, damage, liability or action, provided that ICN will
not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information
furnished to ICN by the Seller or any underwriter and stated to
be specifically for use therein.
(b) The Seller will, if Registrable
Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected,
indemnify ICN, each of its directors and officers and each
underwriter, if any, of ICN's securities covered by such a
registration statement, each person who controls ICN or such
underwriter within the meaning of the Act and the rules and
regulations thereunder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission
(or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, and will reimburse ICN and such directors,
officers, partners, persons, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information
furnished to ICN by the Seller and stated to be specifically for
use therein; provided, however, that the obligations of the
Seller hereunder shall be limited to an amount equal to the net
proceeds to the Seller of securities sold as contemplated herein.
(c) Each party entitled to indemnification
under this Section 1.9 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has
actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom
provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense,
and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Section 1.9. No Indemnifying
Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself
or the claim in question as an Indemnifying Party may reasonably
request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation
resulting therefrom.
(d) If for any reason the foregoing
indemnity is unavailable, or is insufficient to hold harmless an
Indemnified Party under Section 1.9(a) or 1.9(b) above in respect
of any claim, then the Indemnifying Party shall contribute to the
amount paid or payable by the Indemnified Party as a result of
such claim in such proportion as is appropriate to reflect the
relative benefits received by, and the relative fault of, the
Indemnifying Party on the one hand and the Indemnified Party on
the other from such offering of securities, as well as any other
relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable in respect of
any claim shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with
investigating or defending any such claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The
provisions of this Section 1.9(d) shall be in addition to any
other rights to indemnification or contribution which any
Indemnified Party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any Indemnified
Party and shall survive the transfer of the Registrable
Securities by any such party.
1.10 INFORMATION BY THE SELLER. The Seller shall
furnish to ICN such information regarding the Seller and the
distribution proposed by the Seller as ICN may reasonably request
in writing and as shall be reasonably required in connection with
any registration, qualification or compliance referred to in this
Section 1.
1.11 RULE 144 REPORTING. With a view to making
available the benefits of certain rules and regulations of the
Commission which may permit the sale of the Restricted Securities
to the public without registration, ICN agrees to:
(a) Make and keep public information
available as those terms are understood and defined in Rule 144
under the Securities Act;
(b) Use its best efforts to file with the
Commission in a timely manner all reports and other documents
required to be filed by ICN under the Act and the Securities
Exchange Act of 1934 (the "Exchange Act");
(c) So long as the Seller owns any
Restricted Securities, furnish to the Seller forthwith upon
request a written statement by ICN as to its compliance with the
current reporting requirements of Rule 144, and of the Act and
the Exchange Act, a copy of the most recent annual or quarterly
report of ICN and such other reports and documents so filed as
the Seller may reasonably request in availing themselves of any
rule or regulation of the Commission allowing the Seller to sell
any such securities without registration.
1.12 TRANSFER OR ASSIGNMENT OF REGISTRATION
RIGHTS. The rights to cause ICN to register securities granted
to the Seller by ICN under Sections 1.5 and 1.6 may be
transferred or assigned by the Seller to a transferee or assignee
of the Seller's Restricted Securities; provided that ICN is given
notice at the time of such transfer or assignment, stating the
name and address of such transferee or assignee and identifying
the securities with respect to which such registration rights are
being transferred or assigned; and provided, further, that the
transferee or assignee of such shall agree to be bound by the
terms of this Agreement. Such transferee or assignee shall be
deemed a Seller for purposes of this Section 1.
1.13 "MARKET STAND-OFF" AGREEMENT. The Seller
agrees, if requested by ICN and an underwriter of Common Stock
(or other securities) of ICN in connection with a firmly
underwritten public offering, not to effect any public sale or
distribution of any Common Stock (or other securities) of ICN
held by the Seller during such period, as the managing
underwriter and ICN shall agree (which period shall not exceed
180 days), after the effective date of a registration statement
of ICN filed under the Act not including Restricted Securities,
provided that (i) all Other Shareholders and officers and
directors of ICN enter into similar agreements, and (ii) the five-
year periods referred in Sections 1.5(a) and 1.6(a) shall be
deemed automatically extended for each such period, in the case
of any such agreements covering any part of the last year of the
term of this Agreement. Such agreement shall be in writing in a
form satisfactory to ICN and such underwriter.
1.14 COVENANT CONCERNING PREFERRED STOCK. ICN
hereby covenants that it shall not issue any shares of Series C
Convertible Preferred Stock to any person other than Seller or an
Affiliate of Seller.
2. MISCELLANEOUS PROVISIONS
2.1 AMENDMENT; WAIVER. Neither this Agreement,
nor any of the terms or provisions hereof, may be amended,
modified, supplemented or waived, except by a written instrument
signed by the parties hereto. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof, nor shall such waiver constitute a
continuing waiver. No failure of either party hereto to insist
upon strict compliance by the other party with any obligation,
covenant, agreement or condition contained in this Agreement
shall operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
2.2 NOTICES. (a) All notices and other
communications required or permitted under this Agreement shall
be in writing and mailed, faxed or delivered:
(i) If to the Seller, to:
F. Hoffmann-La Roche Ltd.
Granzacherstrasse 124
CH-4070 Basel
Switzerland
Attention: Corporate Law Department
(ii) If ICN:
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
fax: 714-641-7206
Attention: General Counsel
(b) All notices that are addressed as provided in
this Section 2.2 (1) if delivered personally against proper
receipt or by confirmed fax shall be effective upon delivery and
(2) if delivered (A) by certified or registered mail with postage
prepaid or (B) by Federal Express or similar courier service with
courier fees paid by the sender shall be effective three business
days following the date when mailed or couriered, as the case may
be. Either party may from time to time change its address for
the purpose of notices to that party by a similar notice
specifying a new address, but no such change shall be deemed to
have been given until it is actually received by the party sought
to be charged with its contents.
2.3 ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
permitted assigns. Except as otherwise provided herein, neither
this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by the parties hereto without the prior
written consent of the other party.
2.4 GOVERNING LAW. This Agreement and the
agreements entered into in connection with the transaction
contemplated by this Agreement are made subject to and shall be
construed under the laws of the State of New York without giving
effect to the principles of conflicts of law thereof.
2.5 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one
and the same instrument.
2.6 HEADINGS. The headings contained in this
Agreement are for convenience of reference only and shall not
constitute a part hereof or define, limit or otherwise affect the
meaning of any of the terms or provisions hereof.
2.7 ENTIRE AGREEMENT. This Agreement together
with the Purchase Agreement embodies the entire agreement and
understanding among the parties hereto with respect to the
subject matter of this Agreement and supersedes all prior
agreements, commitments, arrangements, negotiations or
understandings, whether oral or written, between the parties with
respect thereto. There are no agreements, covenants,
undertakings, representations or warranties with respect to the
subject matter of this Agreement other than those expressly set
forth or referred to herein.
2.8 SEVERABILITY. Each term and provision of
this Agreement constitutes a separate and distinct undertaking,
covenant, term or provision hereof. In the event that any term
or provision of this Agreement shall be determined to be
unenforceable, invalid or illegal in any respect, such
unenforceability, invalidity or illegality shall not affect any
other term or provision of this Agreement, but this Agreement
shall be construed as if such unenforceable, invalid or illegal
term or provision had never been contained herein. Moreover, if
any term or provision of this Agreement shall for any reason be
held to be excessively broad as to time, duration, activity or
subject, it shall be construed, by limiting and reducing it, as
to be enforceable to the extent permitted under applicable law as
it shall then exist.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement, as of the date first above written.
"ICN"
ICN PHARMACEUTICALS, INC.,
a Delaware corporation
By:
Name:
Title:
"SELLER"
F.HOFFMANN-LA ROCHE LTD.,
a Swiss corporation
By:
Name:
Title:
By:
Name:
Title:
Exhibit 5
---------
September 5, 1997
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
RE: Registration Statement of Form S-3
ICN Pharmaceuticals, Inc.
Common Stock
----------------------------------
Ladies and Gentlemen:
I am Executive Vice President, General Counsel and Corporate
Secretary of ICN Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and have been involved with the registration
under the Securities Act of 1933, as amended (the "Act"), of the
shares (the "Shares") of common stock, $.01 par value of the
Company, being offered pursuant to the above described
Registration Statement.
In connection with the offering of the Shares, I have
examined the Amended and Restated Certificate of Incorporation of
the Company, By-laws of the Company, the Common Stock Undertaking,
Certificate of Designation of Rights and Preferences of Series C
Convertible Preferred Stock of the Company, the Registration
Rights Agreement by and among F. Hoffmann-La Roche Ltd
("Hoffmann") and the Company, and other corporate records of the
Company, and such other documents I have deemed relevant to this
opinion.
Based and relying solely upon the foregoing, it is my
opinion that: (1) the Shares issued as a post-closing adjustment
in connection with the acquisition of Gly-Derm, Inc. in February
1996 or issued to Hoffmann are duly authorized, validly issued,
fully paid and nonassessable; and (2) the Shares underlying the
Company's Series C Convertible Preferred Stock, par value $0.01
per share (the "Series C Preferred Stock"), when issued in
accordance with the terms of the Series C Preferred Stock, will
be duly authorized, validly issued, fully paid and
nonassessable. This opinion may be filed as an exhibit to the
above described Registration Statement. Consent is also given to
the reference to me under the caption "Legal Matters" in such
Registration Statement as having passed upon the validity of the
issuance of the Shares. In giving this consent, I do not hereby
admit that I come within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations
of the Securities and Exchange Commission promulgated thereunder.
Respectfully submitted,
/s/ David C. Watt
David C. Watt
Executive Vice President,
General Counsel and Corporate Secretary
Exhibit 10.1
------------
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of 20 June 1997 by and between F.Hoffmann-La Roche Ltd,
Grenzacherstrasse 124, CH-4070 Basel, Switzerland ("Seller") on the
one hand and ICN Puerto Rico, Inc. with registered offices at American
International Plaza, Eighth Floor, 250 Munoz Rivera Avenue, San Juan,
Puerto Rico, 00918 ("Buyer"), a wholly-owned subsidiary of ICN
Pharmaceuticals, Inc., ICN Plaza, 3300 Hyland Avenue, Costa Mesa, CA
92626 ("ICN") and ICN acting either as a direct party to this
Agreement with respect to certain matters or as a guarantor of
performance by Buyer hereunder on the other hand.
WHEREAS Seller and Buyer are both engaged in the pharmaceutical
business;
WHEREAS Seller wishes to sell and Buyer wishes to buy the Assets (as
hereinafter defined) related to certain pharmaceutical products of
Seller,
WHEREAS in connection with the contemplated purchase of the Assets
Seller and ICN wish for ICN to engage also as a party to this
Agreement with regard to specific matters and to guarantee due
performance by Buyer under the Agreement;
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as
follows:
1 DEFINITIONS
1.1 "Active Ingredients" mean the pharmaceutical compounds known
by the chemical names set forth in Schedule 1.1 hereto.
1.2 "Affiliate" of a party means any corporation or other
business entity controlled by, controlling or under common
control with, such party. For this purpose "control" shall
mean direct or indirect beneficial ownership of more than
fifty percent (50%) of the voting or income interest in such
corporation or other business entity; provided, however,
Genentech, Inc., with offices located at 460 Point San Bruno
Boulevard, South San Francisco, California, 94080, shall not
be considered an Affiliate of Seller.
1.3 "Assets" has the meaning ascribed to such term in Article 2.
1.4 "Business" means the business as currently conducted by
Seller and its Affiliates with respect to manufacture and
sale of the Products in the Territory.
1.5 "cGMP's" shall mean the then-current Good Manufacturing
Practices applicable to the manufacture of pharmaceutical
products for human use in the Territory in accordance with
regulations of the competent authority in the Territory.
1.6 "Closing" has the meaning ascribed to such term in Article
10.1.
1.7 "Closing Date" has the meaning ascribed to such term in
Article 10.1.
1.8 "Damages" has the meaning ascribed to such term in Article
12.2.1.
1.9 "Disclosure Schedule" means the disclosure schedule
delivered prior to the Effective Date to Buyer by Seller in
connection with this Agreement. The sections of the
Disclosure Schedule correspond to the sections of this
Agreement, but information disclosed in any section of the
Disclosure Schedule shall be deemed to be disclosed as to
all relevant sections thereof, except as otherwise
specifically provided herein.
1.10 "Distribution Agreements" means the agreements referred to
in Article 8.10.
1.11 "DOJ" means the United States Department of Justice.
1.12 "Effective Date" means 1 July 1997.
1.13 "FDA" means the United States Food and Drug Administration.
1.14 "FTC" means the United States Federal Trade Commission.
1.15 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
thereunder.
1.16 "Indemnifiable Claims" has the meaning ascribed to such term
in Article 12.2.1 and 12.3.
1.17 "Indemnified Party" has the meaning ascribed to such term in
Article 12.4.
1.18 "Indemnifying Party" has the meaning ascribed to such term
in Article 12.4.
1.19 "Inventory" has the meaning ascribed to such term in Article
2.6.
1.20 "Know-How" has the meaning ascribed to such term in Article
2.3.
1.21 "Litigation" has the meaning as ascribed to such term in
Art. 4.13.
1.22 "Marketing and Promotional Documents" has the meaning
ascribed to such term in Article 2.5.
1.23 "Material Adverse Effect" means an event that has a material
adverse effect on the Assets, taken as a whole.
1.24 "Patents" means any patent or patent application and any and
all divisions, continuations, continuations-in-part,
re-examinations, reissues, extensions, pending or granted
supplementary protection certificates, substitutions,
confirmations, registrations, revalidations, revisions,
additions and the like, of or to said patent and patent
application.
1.25 "Products" means each packaging size of each finished
pharmaceutical dosage form identified by the Trademarks as
defined in Art. 2.1 below and marketed or formerly marketed
by Seller or its Affiliates or third party distributors of
Seller or Seller's Affiliates in the Territory as defined in
Art. 1.33 hereinbelow. Buyer acknowledges that Seller has
stopped manufacturing and selling MESTINON injectables and
PROSTIGMIN tablets some years ago and in certain countries
(particularly UK, Ireland, Northern Ireland and France)
divested to third parties. Seller shall transfer to Buyer
the assets related to these Products still held by Seller as
well as the proceeds from the divestiture to third parties
received by Seller after the Effective Date of this
Agreement.
1.26 "Purchase Price" means such term as used in Article 3.
1.27 "Registrations" has the meaning ascribed to such term in
Article 2.2.
1.28 "Roche Labeling" means the printed labels, labeling and
packaging materials, including printed carton, container
label and package inserts, as currently used by Seller and
its Affiliates for each Product.
1.29 "Roche Net Sales" means gross sales after deduction of
returns, distributor discounts, sales rebates (price
reduction) and volume (quantity) discount as well as sales
taxes (e.g. value added taxes) and other taxes directly
linked to the sales (e.g. excise taxes).
1.30 "Roche Process" means, for each Product, the manufacturing
process approved in the Registrations for each such Product.
1.31 "Roche Sales Statements" means the monthly Roche Net Sales
by Product in the Territory in local currency for the twelve
month period ended 31 May 1997, attached as Schedule 1.31.
1.32 "Supply Agreements" means the agreements referred to in
Article 8.9.
1.33 "Territory" means worldwide except India and in case of
Librium and Efudix the United States. Buyer acknowledges
that Assets may not exist and Products may not be marketed
in all countries of the Territory.
1.34 "Trademarks" has the meaning ascribed to such term in
Article 2.1.
1.35 "World-wide Safety Reports" has the meaning ascribed to such
term in Article 2.4.
2 ASSETS BEING SOLD
Subject to the terms and conditions of this Agreement, at
Closing, Seller shall sell, transfer, assign, convey and
deliver or cause an Affiliate of Seller to sell, transfer,
assign, convey and deliver to Buyer, forever, all of the
rights, title, and interest of Seller or Seller's Affiliates
in the assets solely and exclusively used for/dedicated to
the Products in the Territory as listed below (collectively,
the "Assets") and Buyer shall assume all rights, title, and
interest of Seller in the Assets and all obligations and
responsibilities associated therewith; provided that Buyer
shall not assume any liabilities relating to the Assets or
the Business arising prior to Closing or from events
preceding Closing.
2.1 Trademarks: Trademarks mean the trademarks, service marks,
registrations and applications for the Territory and all
goodwill related thereto, which are set forth on Schedule
2.1, including for each Trademark the registration or
application number, owner, registration and expiration
dates, marks and class. The trademark files contain, to the
extent available, the pertaining documents, such as the
usual consent letters, coexistence and Prior Right
Agreements which are not included in Schedule 2.1. Schedule
2.1 may contain trademark registrations and applications
which may not be supported by use and therefore may
unavoidably expire due to non-use. Trademarks also includes
any copyrights and any unregistered trade dress that are
owned by Seller which are associated solely with the
Products and (only as to trade dress) currently used on or
in association with such Products in the Territory.
"Trademarks" shall not include copyrights and trade dress
associated with the divisions, companies or corporate
entities of Seller, its Affiliates or distributors.
"Trademarks" also does not include copyrights and trade
dress associated with the Products and also associated with
products not being transferred by Seller. Trademarks does
not include the word "Roche", the Roche logo, the housemark
Roche or the hexagon used by Roche. Trademarks does also not
include the trademarks associated with the hexagon or with
trademarks used by Seller or its Affiliates for other
products which are not subject matter of this Agreement.
Buyer is aware that Trademarks does additionally not include
the following trademarks: (a) trademarks which are subject
matter of agreements with third parties which are listed in
Schedule 2.1 (a); (b) trademarks combined with "Roche" which
are listed in Schedule 2.1(b); and (c) the associated
trademarks which are listed in Schedule 2.1(c). Details and
consequences of the trademarks listed in Schedule 2.1(a),
2.1(b) and 2.1(c) are regulated in Art. 4.16 and 8.3 below.
2.2 Registrations: All marketing approvals, registrations,
regulatory files and approvals, governmental authorizations,
licenses and permits, and applications therefor, required
for the marketing and sale of the Products in the Territory
that are owned by Seller or its Affiliates (the
"Registrations"), as well as the pertaining registration
dossiers. The Registrations include, without limitation,
registrations covering all sales reflected in the Roche
Sales Statements set forth in Schedule 1.31, as well as the
registrations listed in Schedule 2.2, for which there are no
current sales.
2.3 Manufacturing Technology and Know-How: The ownership and/or
beneficial interest of Seller in the Roche manufacturing
technology and know-how that is solely and exclusively used
in the pharmaceutical manufacturing of any Product for the
Territory, including but not limited to specifications and
test methods (Products, raw material, packaging, stability
and other applicable specifications), pharmaceutical
manufacturing and packaging instructions, master
formula, validation reports (process, analytical methods and
cleaning) to the extent available, stability data,
analytical methods, records of complaints, annual product
reviews to the extent available, and other master documents
necessary to manufacture, control, and release of the
Products by Seller (the "Know-How") including all documents
associated therewith; and a non-exclusive, perpetual,
paid-up, irrevocable, royalty-free license, with right to
sub-license, to use any manufacturing technology and
know-how that are necessary or used in pharmaceutical
manufacturing of any Product (but not exclusively used
thereto) with such license or sub-license being restricted
to use for the Products in the Territory and Seller retains
the right to use or to license such manufacturing technology
and know-how for use with any products in the Territory
except for Competing Products as defined in Art. 6.5. Seller
shall, to the extent available, provide a list of all
suppliers of components and raw materials, and copies of GMP
audit reports of all suppliers, whether third parties or
Affiliates.
2.4 World-wide Safety Reports: A copy of the world-wide safety
reports with respect to the Products (the "World-wide Safety
Reports"). Seller shall make available to Buyer for transfer
a print-out and an electronic copy of the World-wide Safety
Reports with respect to the Products but Buyer shall have
all responsibility and shall pay all costs associated with
converting such electronic copy of the World-wide Safety
Reports into the format from which Buyer can access that
information.
2.5 Marketing and Promotional Documents: The marketing and
promotional documents, such as clients lists, promotional
plans and items, promotional materials and training manuals,
that are solely and exclusively used with the Products, to
the extent available in the Territory (the "Marketing and
Promotional Documents"). All such documents shall be shipped
FOB Seller's location.
2.6 Inventory: The Inventory consists of all finished Products
(including samples), that are owned by Seller or an
Affiliate of Seller and that have been approved by Seller as
meeting specifications and otherwise saleable in the
ordinary and normal course of business as of the Effective
Date (the "Inventory"), the location of which shall be as
set forth on Schedule 2.6; the quantity of which shall be
set forth in a document delivered by Seller at Closing, and
based on a physical inventory to be taken on 30 June 1997.
The Inventory shall be shipped FOB Seller's location at
dates mutually agreed upon by Seller and Buyer consistent
with the transfer of the marketing responsibilities from
either party to the other.
2.7 Assumed Agreements: Subject to Art. 6.2 Seller shall assign
or cause an Affiliate to assign to Buyer and Buyer shall
assume the agreements with unaffiliated third parties
relating to the Products listed in Schedule 2.7 (the
"Assumed Agreements") on the same terms now existing,
provided, however, that if such Assumed Agreements cover
also other products than the Products, they shall only be
assigned and assumed to the extent they relate to the
Products.
2.8 Option to Purchase Additional U.S. Assets:
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2.8.1 Commencing on the earlier of (i) that date on which Seller
shall have realized cash consideration equal to the Purchase
Price (as defined in Section 3.1), or (ii) that date two
years from the Closing Date of this Agreement (the date
referred to in (i) or (ii), as applicable, the "Option
Date") and ending on that date one year following the Option
Date, Buyer shall have the option (the "Option") to purchase
all Assets exclusively used for/dedicated to the products
Efudix and Librium (the "Option Products") (including all
dosage forms, and pack sizes then registered or marketed) in
the Territory of the United States, on substantially the
same terms and conditions other than the purchase price as
contained in this Agreement for the Assets now being sold
and purchased hereunder.
2.8.2 Buyer may exercise the Option by giving Seller written
notice in accordance with this Agreement and Buyer and
Seller or an Affiliate of Seller shall thereafter cooperate
to prepare as soon as practicable a counterpart of this
Agreement for the purchase of such Option Products, which
shall have an effective date which is the earlier of (i) as
of the first day of the month following delivery of such
notice to Seller and (ii) the date on which all approvals
and consents necessary to the consummation of the Option
shall have been obtained and any applicable waiting period
under the HSR Act with respect thereto shall have expired or
been terminated. Seller represents and warrants that the
business relating to Efudix and Librium in the United States
will be conducted in the ordinary course from the date
hereof through the closing date of the counterpart agreement
with respect to the Option Products (or through the
expiration of the Option, if not exercised). The purchase
price for the Option Products as of the Closing Date shall
be USD 95,000,000 (the "Option Purchase Price"); provided
that Seller agrees that such purchase price shall be subject
to review in good faith by Seller and Buyer based upon
market conditions and sales volume at the date the Option is
exercised; provided further that such purchase price shall
in no event exceed USD 95,000,000. If the Option is
exercised any time during the period from July 1, 1999
through October 1, 1999, the Option Purchase Price shall be
for EFUDIX 3 times the yearly net sales in US Dollars of
EFUDIX in the US according to Roche Nutley's moving annual
total June 1999 and for LIBRIUM 2.2 times the yearly net
sales in US Dollars of LIBRIUM in the US according to Roche
Nutley's moving annual total June 1999, subject to possible
adjustment in accordance with Art. 2.8.4 below. If the
Option is exercised before July 1, 1999, the Option Purchase
Price will be agreed in good faith between the parties.
2.8.3 Buyer shall pay the Option Purchase Price by delivery of its
promissory note in the principal amount of the Option
Purchase Price, and concurrently Seller shall assign such
note to ICN, in exchange for (i) cash equal to one third of
the Option Purchase Price and (ii) shares of Common Stock
and Series C Convertible Preferred Stock (or a new series of
convertible preferred stock having the same terms and
provisions) valued, as of the closing date of the Option
purchase agreement, in an amount equal to two-thirds of the
Option Purchase Price. The proportion of shares of Common
Stock and Preferred Stock shall be at Seller's option. Such
shares of Common Stock and Preferred Stock will be entitled
to all the rights and obligations, including, without
limitation, as to price guaranty (based upon an annual six
percent return), capital gains (except that any capital gain
shall be shared equally between Buyer and Seller rather than
being delivered to Buyer exclusively), restrictions on
transfer, voting rights (provided that this does not trigger
a filing requirement for Seller), future purchases,
anti-dilution, registration rights, and repurchase price in
the event of a public debt offering by ICN, set forth in
Section 3.2 below with respect to the shares of Common Stock
and Preferred Stock deliverable upon Closing of the original
sale of the Products pursuant to this Agreement; and the
provisions of such Section 3.2 shall be deemed incorporated
in this Section, and applicable hereto, as though fully
restated herein.
2.8.4 Seller covenants that during the two year period after the
Effective Date, the aggregate sales of Librium and Efudix in
the United States will increase at least equal to average
pharma market growth according to IMS GP (general
practician) and that Seller will not increase the sales
prices for these products more than the inflation rate
according to the official consumer price index. In the event
Seller shall fail to comply with the covenant set forth in
this Section 2.8.4, the Option Purchase Price shall be
adjusted downward accordingly.
2.8.5 Buyer acknowledges that Seller shall not have the obligation
to manufacture Librium and Efudix for any period longer than
as required pursuant to the terms of this Agreement.
3 PURCHASE PRICE
3.1 Purchase Price: The purchase price for the sale, conveyance,
assignment, transfer and delivery of the Assets (except the
Inventory) provided for in Article 2 hereof shall be Ninety
Million Dollars (USD 90,000,000) (the "Purchase Price").
3.2 Payment of Purchase Price
3.2.1 Note. At the Closing, Buyer shall deliver to Seller Ninety
Million U.S. Dollars (U.S. $90,000,000) in the form of a
Promissory Note from Buyer, as maker, to Seller, as payee,
in such principal amount, representing the Purchase Price.
Concurrently with the delivery of such Note, Seller shall
assign the Note to ICN in exchange for 1,600,000 shares of
the Common Stock, $.01 par value ("Common Stock") of ICN,
and 2,000 shares of the Series C Convertible Preferred
Stock, $.01 par value ("Preferred Stock") of ICN. For
purposes hereof, the term (i) "Original Common Stock" shall
mean such 1,600,000 shares of Common Stock and any
additional shares of Common Stock issued upon conversion of
the "Original Preferred Stock", and (ii) "Original Preferred
Stock" shall mean such 2,000 shares of Preferred Stock. The
shares of Original Common Stock and Original Preferred Stock
shall be registered in the name of Seller (or an Affiliate
of Seller, as designated by Seller). In the event such
shares are held by an Affiliate of Seller, such Affiliate
shall be deemed "Seller" for purposes of this Section 3.2
and Seller hereby guaranties all obligations of such
Affiliate under this Section 3.2.
3.2.2 Price Guaranty. On December 31, 1997, December 31, 1998,
December 31, 1999 and July 1, 2000 (each a "Guaranty Date"),
ICN guaranties to Seller that the then current market price
per share of ICN's Common Stock, based on the average
closing sale price on the New York Stock Exchange for the 10
trading days prior to each such Guaranty Dates (plus
dividends paid to Seller since the Closing on such shares)
(the "Current Market Price") shall equal or exceed the
applicable Guaranteed Price (as defined below) 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, ICN shall pay to Seller not later than
30 days following such Guaranty Date (which payment shall be
in the form of additional shares of Preferred Stock, each
such share of 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 Preferred Stock is convertible) (which
additional shares of Preferred Stock, together with any
Common Stock issued upon conversion of such 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 shares of Original Common Stock and shares of Common
Stock into which shares of Original Preferred Stock are then
convertible (assuming conversion of all such shares of
Preferred Stock), in each case, owned on such date by Seller
("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 Seller's
Common Stock and number of Additional Shares (assuming, in
the case of Additional Shares which are Preferred Stock,
conversion of such Preferred Stock into Common Stock not
previously returned to ICN as provided in the next sentence,
and (ii) the amount of any dividends paid to Seller since
the Closing on any Additional Shares theretofore received by
Seller (whether or not such Additional Shares are then owned
by Seller) (the "Dividend Payment"); provided that, any such
payment due by ICN on the final Guaranty Date (July 1, 2000)
shall be payable in cash or shares of Preferred Stock valued
in the same manner as stated above (or, at the election of
Seller, shares of Common Stock, valued at the then Current
Market Price as of the date of payment) or both, at ICN's
option. In the event that, on a Guaranty Date, the Current
Market Price per share of ICN's Common Stock exceeds the
Guaranteed Price, for such Guaranty Date, Seller shall,
within 30 days after such Guaranty Date, return to ICN that
number of shares of Common Stock and/or 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, Seller shall have no
obligations to return an amount in excess of the number of
Additional Shares. For purposes hereof, "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, and $28.933 per share for the Guaranty
Date occurring on December 31, 1999, and $29.775 per share
for the Guaranty Date occurring on July 1, 2000 (the third
anniversary of the Effective Date).
3.2.3 Capital Gains. In the event that, Seller shall, at any time
prior to July 1, 2000, sell to any third party, excluding
any Affiliate of Seller, ICN or any Affiliate of ICN, any
shares of Common Stock or Preferred Stock for a net sale
price per share in excess of the Guaranteed Price as of the
Guaranty Date next preceding the date of sale plus pro rata
6% p.a., such excess shall be paid to ICN in the form of the
return of shares of Preferred Stock, valued, based on the
Current Market Price, as of the date of payment, of the
shares of Common Stock into which such shares of Preferred
Stock would then be convertible, assuming no restrictions on
convertibility existed.
3.2.4 Restrictions on Transfer. Except as provided in this Section
3.2.4, prior to July 1, 2000 Seller shall not, without ICN's
prior written consent, sell any of the shares of Common
Stock or Preferred Stock, except as set forth below:
1) On and after the first anniversary of the Effective
Date, or if the stock exchange price of ICN Common
Stock reaches US$ 30 per share, whichever is earlier,
all shares of Common Stock issued and sold to Seller on
the Closing Date may be sold without restriction
pursuant to this Section 3.2.4. Seller undertakes that
such a sale will be made in a way which does not hurt
the market;
2) Following the sale of the Common Stock pursuant to
point 1) above, upon Seller's request, 1,600 shares of
Preferred Stock shall immediately be converted into
1,600,000 shares of registered Common Stock. These
registered Common Stock shares shall not be sold for
one year from the date of conversion, provided that
they may be sold earlier without restriction pursuant
to this Section 3.2.4 if the stock exchange price of
ICN Common Stock reaches US$ 33 per share.
3) Any other shares of Common Stock issued to Seller upon
the conversion of the Preferred Stock upon such
conversion, may be sold without restriction pursuant to
Section 3.2.4 on or after the second anniversary of the
Effective Date, and
4) Any shares of Common Stock or Preferred Stock may be
sold by Seller to an Affiliate of Seller, at any time
without restriction, provided that such Affiliate shall
agree to be bound by the terms of this Agreement
relating to any such shares purchased by it.
The foregoing restrictions shall terminate in the event (the
day of any such event, the "Restriction Termination Date")
that (i) ICN shall at any time propose, or shall have
received a proposal (x) to merge or consolidate with or into
any other corporation or entity or other person (whether or
not ICN is the surviving corporation), or (y) to transfer
all or substantially all of ICN'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 shareholders of ICN 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 shall have commenced
a tender or exchange offer for any shares of ICN Common
Stock.
3.2.5 Voting Rights. Seller shall take such action as may be
required so that all shares of Common Stock and Preferred
Stock of ICN received hereunder and owned by Seller are
voted in accordance with the recommendations of ICN's Board
of Directors.
3.2.6 Future Purchases. Prior to the earlier to occur of (i) the
date which is three (3) years from the Closing Date or (ii)
the Restriction Termination Date, and subject to the further
provisions hereof:
a) The Seller shall not acquire any shares of Common Stock
(or other securities of ICN convertible into Common
Stock) of ICN (except pursuant to the terms of this
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
ICN convertible into Common Stock) then owned by the
Seller or which it has a right to acquire, including
upon conversion of the Preferred Stock, to more than
20% of the shares of such Common Stock (or other
securities convertible into Common Stock) of ICN on a
fully diluted basis; provided that the Seller will not
be obligated to dispose of any shares of Common Stock
of ICN if the aggregate percentage ownership of the
Purchaser is increased as a result of a
recapitalization of, or a repurchase of securities by,
ICN or as a result of any other similar action taken by
ICN.
3.2.7 Anti-Dilution Adjustments to Guaranteed Price.
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(a) In the event that ICN issues additional shares of
Common Stock pursuant to a stock dividend, stock
distribution or subdivision, the then applicable
Guaranteed Price shall, concurrently with the
effectiveness of such stock dividend, stock
distribution or subdivision, be proportionately
reduced, and in the event the outstanding shares of
Common Stock of ICN shall be combined or consolidated,
by reclassification or otherwise, into a lesser number
of shares of Common Stock, the Guaranteed Price shall,
concurrently with the effectiveness of such combination
or consolidation, be proportionately increased.
(b) In the event of the occurrence of any other event which
would give rise to an adjustment of the Conversion
Ratio of the Series C Convertible Preferred Stock
pursuant to the terms of the Certificate of Designation
therefor, the Guaranteed Price shall be adjusted,
mutatis mutandis, in accordance with the adjustment
provisions set forth in Section 2(c) of the Certificate
of Designation.
3.2.8 Investment Representations of Seller. The Seller represents
and warrants to ICN as follows:
(a) Experience. It is knowledgeable, sophisticated and
experienced in making investments, and is qualified to
make decisions with respect to investment in the Common
Stock and Preferred Stock.
(b) Investment. It is acquiring the Common Stock and
Preferred Stock for investment for its own account and
not with a view to, or for resale in connection with,
any distribution thereof. It understands that the
shares of Common Stock and Preferred Stock, and the
shares of Common Stock issuable upon conversion of the
shares of Preferred Stock (the "Shares") have not been
registered under the Securities Act of 1933, as amended
(the "Securities Act") by reason of a specified
exemption from the registration provisions of the
Securities Act which depends upon, among other things,
the bona fide nature of its investment intent as
expressed herein.
(c) Rule 144. It acknowledges that the Shares must be held
indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such
registration is available. It has been advised or is
aware of the provisions of Rule 144 promulgated under
the Securities Act.
(d) Access to Data. It has had an opportunity to discuss
business, management and financial affairs with its
management and has had the opportunity to view ICN's
facilities.
(e) Financial Condition. Its financial condition is such
that it is able to bear all risks of holding the Shares
for an indefinite period of time.
(f) Authorization. It is duly authorized to enter into this
Agreement and to consummate the transactions
contemplated hereby.
3.2.9 Registration Rights Agreement. ICN shall agree to register
the Shares under the Securities Act pursuant to a
Registration Rights Agreement in the form attached hereto as
Exhibit C, which Agreement shall be executed and delivered
at the Closing.
3.2.10 Terms of the Preferred Stock. The powers, designations,
preferences and other terms and conditions of the Preferred
Stock shall be set forth in a Certificate of Designations,
Preferences and Rights of Series C Convertible Preferred
Stock (the "Certificate of Designation") in substantially
the form of Exhibit D attached hereto. Prior to the Closing
Date, ICN shall file the Certificate of Designation with the
Secretary of State of the State of Delaware.
3.2.11 Repurchase of the Shares. The shares of Common Stock and
Preferred Stock shall be repurchased by ICN from Seller in
accordance with the provisions of this Section 3.2.11. At
Seller's option, in the event that ICN or an Affiliate of
ICN shall consummate Public Debt Offering (as defined below)
at any time prior to the fifth anniversary of the Closing
Date, twenty percent (20%) of the net proceeds of such
Public Debt Offering shall be used by ICN or an Affiliate of
Seller to repurchase shares of Common Stock and Preferred
Stock held by Seller or an Affiliate of Seller, such shares
of Common Stock and Preferred Stock to be designated by
Seller or an Affiliate of Seller. Seller may elect to
require ICN to repurchase Shares with 20% of the net
proceeds of any subsequent Public Debt Offerings, in
Seller's discretion, until such time as all the shares of
Common Stock and Preferred Stock shall have been repurchased
or returned to Buyer against cash pursuant to this Agreement
or sold by Seller in the market. "Public Debt Offering"
means an underwritten public offering by ICN or an Affiliate
of ICN anywhere in the world of its debt securities
(including convertible debt securities), it being understood
that Public Debt Offering shall not include any loan or
indebtedness to finance ordinary working capital needs for
the actual businesses of Buyer. The price per share at which
such shares of Common Stock and Preferred Stock (based on
the number of shares of Common Stock into which it is
convertible) shall be repurchased shall equal the Guaranteed
Price as of the Guaranty Date next preceding such repurchase
plus pro rata 6% p.a.
3.3 Right to Exchange Common Stock. ICN shall not directly or
indirectly redeem, repurchase or otherwise acquire any
shares of 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 shares of Common Stock owned by Seller (other than any
such action taken at the request of Seller or unless Seller
shall have waived in writing its rights under this Section
3.3), unless ICN gives written notice (a "Deferral Notice")
of such action to Seller. The Deferral Notice shall
describe, in reasonable detail, the action proposed to be
taken by ICN with respect to such shares of its capital
stock. ICN shall defer making any such redemption, purchase
or other acquisition or taking any such other action for a
period of ten business days (the "Deferral Period") after
giving the Deferral Notice in order to allow Seller to
determine whether it wishes to exchange or take any other
action with respect to the Common Stock it owns, controls or
has the power to vote. Upon receipt of a Deferral Notice,
Seller shall have the right to elect to, and if so requested
by Seller ICN shall, exchange a number of shares of Common
Stock owned by Seller for such number of shares of Preferred
Stock so that, following such exchange and taking into
account the actions proposed to be taken by ICN described in
the Deferral Notice, Seller's ownership of the Common Stock
shall be less than five percent of the outstanding Common
Stock. Any such exchange shall be effected promptly by ICN
upon the receipt of written notice by Seller exercising such
right to exchange shares of Common Stock. In the event that
such exchange is not effected prior to the end of the
Deferral Period, the Deferral Period shall be automatically
extended until such time as such exchange shall have been
effected.
For the purposes of this Section 3.3, in the event Seller
shall have transferred any shares of Common Stock to any of
its Affiliates, "Seller" shall mean Seller and the
Affiliates of Seller to which any shares of Common Stock
shall have been transferred.
3.4. Termination of Certain Provisions. Notwithstanding any
provision of this Agreement to the contrary, the rights and
obligations of Seller and ICN with respect to shares of
Common Stock and Preferred Stock set forth in Section 3.2.4
and 3.2.5 shall terminate, with respect to any shares of
Common Stock and Preferred Stock, upon the sale of such
shares by Seller to a third party.
3.5 Payment for Inventory: In addition to the Purchase Price
according to Article 3.1 above, Buyer shall pay to Seller or
an Affiliate of Seller in Swiss Francs for the Inventory,
based on the quantity document delivered by Seller at
Closing, price per unit as set forth in Schedule 3.3. Buyer
shall effect such payment so that Seller shall receive it on
its designated bank account within 120 (one hundred twenty)
days from the Closing.
3.6 Purchase Price Adjustment: In the event the annual run rate
of Roche Net Sales of the Products in the Territory at the
Effective Date is less than USD 52,000,000, whether due to
currency fluctuation or otherwise, the Purchase Price shall
be adjusted downward to an amount equal to 1.7 times such
shortfall. In the event a regulatory authority refuses,
through no fault of Buyer, to assign a Registration (i.e. a
Registration needed by Buyer to sell the Products in the
market as currently done by Seller and its Affiliates; not a
registration of a change of manufacturer, process, analysis,
specification or manufacturing site etc.) to Buyer within 2
(two) years from the Closing Date, the Purchase Price shall
be adjusted downward by an amount equal to 1.7 times the
sales associated with such Registration during the 12
(twelve) month period ending on 31 May 1997. Such purchase
price adjustment shall be paid by Seller to Buyer by
returning an appropriate amount of shares of Preferred Stock
(or if Seller does not hold such Preferred Stock any more,
of Common Stock), valued at the Guaranteed Price as of the
Guaranty Date next preceding such adjustment plus pro rata
6% p.a.
4 REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization: Seller is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of Organization, with full corporate power and
authority to consummate the transactions contemplated
hereby.
4.2 Authority: The execution and delivery of this Agreement by
Seller and the consummation and performance of the
transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate and other proceedings,
and this Agreement has been duly authorized, executed, and
delivered by Seller and, assuming the enforceability against
Buyer, constitutes the legal, valid and binding obligation
of Seller, enforceable in accordance with its terms.
4.3 Title to Assets: Except as set forth in Schedule 4.3 Seller
or an Affiliate of Seller has good and marketable title to
all the Assets and will convey good and marketable title at
Closing, free and clear of any and all liens, encumbrances,
charges, claims, restrictions, pledges, security interests,
or impositions of any kind (including those of secured
parties). Seller is the beneficial owner of all the Assets.
None of the Assets is leased, rented, licensed, or otherwise
not owned by Seller.
4.4 No Violation or Conflict: The execution and delivery of this
Agreement by Seller and the performance of this Agreement
(and the transactions contemplated herein) by Seller (a) do
not and will not conflict with, violate or constitute or
result in a default under any law, judgment, order, decree,
the articles of incorporation or bylaws of Seller or any
contract or agreement to which Seller is a party or by which
Seller is bound or (b) will not result in the creation or
imposition of any lien, charge, mortgage, claim, pledge,
security interest, restriction or encumbrance of any kind
on, or liability with respect to, the Assets except as
otherwise provided herein or otherwise disclosed on the
Disclosure Schedule.
4.5 Patents: Seller does not own any Patents with respect to the
Active Ingredients or the Products or the manufacturing of
Active Ingredients or the Products in the Territory.
4.6 Registrations: To the best knowledge of Seller, after due
inquiry, the registrations covering the sales reflected in
the Roche Sales Statements, together with the registrations
listed on Schedule 2.2, constitute all Registrations held by
Seller or its Affiliates in the Territory. In the event
additional registrations are discovered at any time, they
will be transferred forthwith to Buyer at Seller's expense.
Except as set forth on Schedule 4.6 of the Disclosure
Schedule, the Registrations (a) are in the name of Seller or
an Affiliate of Seller, (b) constitute all licenses,
permits, approvals, qualifications, and governmental
specifications, authorizations or requirements which Seller
or its Affiliates have in connection with the marketing and
sale of the Products in the Territory, and (c) to the best
knowledge of Seller after due inquiry made, constitute all
such licenses, permits, approvals, qualifications, and
governmental specifications, authorizations, and
requirements necessary for the marketing and sale of the
Products in the Territory as currently conducted by Seller
and its Affiliates. All Registrations are in full force and
effect. Seller has complied with all its obligations under
these Registrations and all applicable laws and regulations.
To Sellers knowledge, no Registration is likely to be
suspended, cancelled or revoked or is likely not to qualify
for assignment to Buyer provided Buyer makes best efforts to
obtain the authorities' consent to such an assignment. It
is, however, understood that Seller does not warrant the
possibility of continuation of any Registration in the name
of Buyer in the event Buyer decides to have Products
manufactured by an entity other than the company which is
actually manufacturing that Product as of the Closing Date,
and, finally, Seller does not warrant any continuation of
price reimbursement for the Products by social security
institutions following the transfer of the Registrations to
Buyer. Roche shall bear 50% of a total amount of USD one
million of registration fees due by Buyer, any exceeding
fees being borne entirely by Buyer.
4.7 Inventory: As of the Closing, each Product in the Inventory
shall meet the specifications therefor as set forth in the
manufacturing documentation and Registrations for such
Product with the competent authority in the country
concerned of the Territory. The Inventory will be in good
condition, properly stored and in compliance with applicable
laws, usable and saleable in the ordinary course of
business. The Inventory shall in each case be sufficient to
maintain a running business for 90 days. Seller represents
and warrants that since December 1, 1996 it has not made or
instituted any unusual or novel method of sale in the
conduct of the Business inconsistent with past practices.
4.8 Taxes: As of the date hereof, there are no liens for taxes
upon the Assets except for liens for current taxes not yet
due and payable.
4.9 Absence of Certain Changes: As of the date hereof and as of
the Closing Date and except as otherwise disclosed on the
Disclosure Schedule, there has not been any material adverse
change in the Assets and Seller is not aware of any facts,
circumstances, or proposed or contemplated events that would
have a Material Adverse Effect after Closing.
4.10 Violations of Law: Except as set forth in Schedule 4.10, to
the best of Seller's knowledge after due inquiry made, the
operation of the Assets by Seller (i) does not violate or
conflict with any law, governmental specification,
authorization, or requirement, or any decree, judgment,
order, or similar restriction in any material respect, or
(ii) has not been the subject of an investigation or inquiry
by any governmental agency or authority regarding violations
or alleged violations, or found by any such agency or
authority to be in violation, of any law, other than
investigations, inquiries or findings that have not had, or
are reasonably likely not to have, a Material Adverse
Effect.
4.11 Financial Information:
4.11.1 Roche Sales Statements. The Roche Sales Statements are
accurate and complete in all material respects, reflect only
actual bona fide transactions, are consistent with the
accounting records of the Roche legal entities, and were
prepared in accordance with International Accounting
Standards ("IAS") consistently applied.
4.11.2 Liabilities. Seller and its Affiliates have no liabilities,
contingent, absolute, accrued or otherwise, relating to the
Assets.
4.12 No Government Restrictions: Except as set forth on Schedule
4.12 of the Disclosure Schedule or for consents the failure
of which to obtain would not have a Material Adverse Effect,
no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental
agency is required to be obtained or made by or with respect
to Seller in connection with the execution and delivery of
this Agreement by Seller or the consummation by it of the
transactions contemplated hereby to be consummated by it
except with respect to the filing of a pre-merger
notification report under the HSR Act.
4.13 Litigation: Except as set forth on Schedule 4.13 of the
Disclosure Schedule or for adverse drug reports annexed to
Schedule (4.13), the Assets are not the subject of (i) any
outstanding judgment, order, writ, injunction or decree of
any arbitrator or administrative or governmental authority
or agency, limiting, restricting or affecting the Assets in
a way that would have a Material Adverse Effect, (ii) any
pending or, to the best of Seller's knowledge, after due
inquiry made, threatened claim, suit, proceeding, charge,
inquiry, investigation or action of any kind, and (iii) any
court suits filed with respect to the Assets since 1 January
1990. To the best knowledge of Seller, there are no claims,
actions, suits, proceedings or investigations pending or
threatened by or against Seller with respect to the
transactions contemplated hereby, at law or in equity or
before or by any supranational, federal, state, municipal or
other governmental department, commission, board, agency,
instrumentality or authority.
4.14 Agreements; Required Consents for Assignment or Termination:
To the best of Seller's knowledge, Schedule 2.7 sets forth
all of the Assumed Agreements. Seller and its Affiliates
and, to the best knowledge of Seller, each other party to
each Assumed Agreement has performed in all material
respects each term, covenant and condition of each Assumed
Agreement which is to be performed by them at or before the
date hereof. Each of the Assumed Agreements is in full force
and effect and constitutes the legal and binding obligation
of Seller or its Affiliate and, to the best knowledge of
Seller, the other parties thereto. Subject to Art. 6.2 the
Assumed Agreements, to the extent related to the Products,
are assignable to and assumable by Buyer.
4.15 Manufacturing Technology and Know-How: The Manufacturing
Technology and Know-How will be sufficient to enable Buyer
to manufacture the Products to the same standard as Seller
currently enjoys. The Product formulations fully conform
with the pertaining Registrations approved by the competent
government authorities in the Territory.
4.16 Trademarks: Seller or an affiliate of Seller owns the
Trademarks set forth in Schedule 2.1 which are formally
registered or applied. All Trademark registrations set forth
in Schedule 2.1 have been duly issued and have not been
cancelled, abandoned or otherwise terminated to the best
knowledge of Seller. All Trademark applications set forth in
Schedule 2.1 have been duly filed and maintained to the best
knowledge of Seller. Seller shall not be obliged to maintain
any Trademark after the Closing.
Seller will pay any fees for such renewals of any of the
Trademarks as were initiated by it prior to the Closing. All
other renewal and maintenance fees as well as the costs and
expenses of defending the Trademarks against infringements
by third parties occurring after the Closing Date shall be
paid by Buyer.
Seller will arrange for the files relating to the Trademarks
to be handed over to Buyer without delay after the Closing.
Until 31 December 1997 Seller will promptly notify Buyer of
any infringement or threatened infringement of any of the
Trademarks coming to its attention and will, if the
registration of the Trademarks is still in its name, at the
expense of Buyer take such action against the infringer as
Buyer may reasonably request to restrain such infringement,
or alternatively authorize Buyer or its nominee to take such
action in its own name. In the latter event, Seller or its
Affiliate will at Buyer's expense provide reasonable
assistance to Buyer.
With respect to the trademarks listed in Schedule 2.1 (a)
Buyer is aware that such a trademark cannot be assigned to
Buyer unless the third party gives its consent to the
assignment as may be required by the third party or unless
it is clarified that Buyer is entitled to enter in the
agreement with the third party or unless the agreement with
the third party is terminated. After Closing Seller and
Buyer will enter into negotiation with the third parties in
good faith.
With respect to the trademarks listed in Schedule 2.1(b)
Buyer is aware that such a trademark cannot be assigned to
Buyer as long as the third party is entitled to insist on
the use of the trademark in combination with the trademark
ROCHE. After Closing Seller and Buyer will enter into
negotiations with the third parties in good faith to obtain
their permission to the use of the trademark without the
trademark ROCHE or to obtain their permission to use
trademark in combination with a trademark owned by Buyer.
With respect to the trademarks listed in Schedule 2.1(c)
Buyer is aware that such an associated trademark can only be
assigned under the conditions that the trademark is not
associated with the hexagon or with a trademark used by
Roche for other products which are not subject matter of
this Agreement and the association can be dissolved. After
Closing Seller will use all reasonable effort to obtain the
consent of the competent Trademark Authorities that the
according trademark can be assigned separately to Buyer.
Seller grants to Buyer the non-exclusive right, subject to
the Assumed Agreements according to Art. 2.7 and 6.2 hereof,
to use the Trademarks listed in Schedule 2.1(a) and 2.1(c)
until the aforesaid obstacles have been removed. Seller will
not grant to any further third party the right to use the
trademarks listed in Schedule 2.1 a), 2.1 b) and 2.1 c).
When the aforesaid obstacles have been removed Seller is
obliged to assign the according Trademark listed in Schedule
2.1 a), 2.1 b) and 2.1 c) to Buyer without any culpable
delay according to Art. 8.3.
4.17 No Infringement of Third Party Rights: Except as set forth
herein or in the Disclosure Schedule, the use of the Assets
by Seller in the Territory does not infringe any third party
rights.
5 REPRESENTATIONS AND WARRANTIES OF BUYER AND ICN
5.1 Organization: Buyer and ICN each is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of Organization, with full
corporate power and authority to consummate the transactions
contemplated hereby.
5.2 Authority: The execution and delivery of this Agreement and
all other Agreements to be executed in connection with this
Agreement by Buyer and ICN, and the consummation and
performance of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all
necessary corporate and other proceedings, and this
Agreement and all other Agreements to be executed in
connection with this Agreement has been duly authorized,
executed, and delivered by Buyer and ICN and, assuming the
enforceability against Seller, constitutes the legal, valid
and binding obligation of Buyer and ICN respectively,
enforceable in accordance with its terms.
5.3 No Violation or Conflict: The execution and delivery of this
Agreement and all other Agreements to be executed in
connection with this Agreement by Buyer and ICN and the
performance of this Agreement and all other Agreements to be
executed in connection with this Agreement (and the
transactions contemplated herein and thereby) by Buyer and
ICN do not and will not conflict with, violate or constitute
or result in a default under any law, judgment, order,
decree, the articles of incorporation or bylaws of Buyer or
ICN, or any contract or agreement to which Buyer or ICN is a
party or by which Buyer or ICN is bound.
5.4 No Government Restrictions: Except as set forth on Schedule
5.4 and for consents the failure of which to obtain would
not have a material adverse effect no consent, approval,
order or authorization of, or registration, declaration or
filing with, any governmental agency is required to be
obtained or made by or with respect to Buyer or ICN in
connection with the execution and delivery of this Agreement
and all other Agreements to be executed in connection with
this Agreement by Buyer or ICN or the consummation by either
Buyer or ICN of the transactions contemplated hereby to be
consummated by either Buyer or ICN except with respect to
the filing of a pre-merger notification report under the HSR
Act.
5.5 Litigation: There are no claims, actions, suits, proceedings
or investigations pending or, to the best of Buyer's or
ICN's knowledge, threatened by or against Buyer or ICN with
respect to the transactions contemplated hereby, at law or
in equity or before or by any supranational, federal, state,
municipal or other governmental department, commission,
board, agency, instrumentality or authority.
5.6 Capitalization: The authorized capital stock of ICN consists
of 100,000,000 authorized shares of Common Stock, $.01 par
value, and 10,000,000 authorized shares of Preferred Stock,
$.01 par value. As of May 2, 1997 there were outstanding
34,495,039 shares of Common Stock, as of June 6, 1997,
41,190 shares of Series B Convertible Preferred Stock, and
as of December 31, 1996 employee stock options to purchase
an aggregate of 5,810,000 shares of ICN Common Stock (of
which options to purchase an aggregate of 3,773,000 shares
of ICN Common Stock were exercisable). As of June 10, 1997 a
total of 519,057 shares of Common Stock were issuable upon
conversion of ICN's 8.5% Convertible Subordinated Notes due
1999, a total of 2,127,857 shares of Common Stock were
issuable upon conversion of ICN's Series B Convertible
Preferred Stock, and a total of 1,484,503 shares of Common
Stock were issuable upon the conversion of certain other
convertible debt securities of ICN. All outstanding shares
of capital stock of ICN have been duly authorized and
validly issued and are fully paid and non-assessable. Except
as set forth in this Section and this Agreement and except
for changes since December 31, 1996 resulting from the
exercise of employee stock options outstanding on such date,
there are outstanding (a) no shares of capital stock or
other voting securities of ICN, (b) no securities of ICN
convertible into or exchangeable for shares of capital stock
or voting securities of ICN, and no options or other rights
to acquire from ICN, and (c) no obligation of ICN to issue,
any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting
securities of ICN (the items in clauses (a), (b) and (c)
being referred to collectively as "Company Securities").
Except for that certain Agreement dated December 23, 1996 by
and among ICN and those persons named as Purchasers therein,
filed as Exhibit 4 (c)(i) to ICN's form 8-K dated December
24, 1996, filed with the SEC, there are no outstanding
obligations of ICN or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities.
5.7 Shares to be Issued to Seller. Upon the consummation of the
transactions contemplated hereby, all shares of capital
stock of ICN to be issued to Seller will have been validly
issued, fully paid and non-assessable and will be free and
clear of any lien, charge or other encumbrance or claim and
the issuance thereof will not be subject to any preemptive
or similar rights. Upon the consummation of the transactions
contemplated hereby, the shares of Common Stock issuable
upon conversion of the shares of Series C Convertible
Preferred Stock to be issued to Seller will have been duly
authorized and reserved for issuance upon the conversion of
the Series C Convertible Preferred Stock, and when issued
upon such conversion, will be validly issued, fully paid and
non-assessable, and the issuance of such shares is not
subject to any preemptive or similar rights.
5.8 SEC Filings.
(a) ICN has made available to Seller the annual reports on
Form 10-K for its fiscal years ended December 31, 1996
and 1995, its quarterly reports on Form 10-Q for its
fiscal quarter ended March 31, 1997 its proxy or
information statements relating to meetings of, or
actions taken without a meeting by, the stockholders of
ICN held since December 31,1995, and all of its other
reports, statements, schedules and registration
statements filed with the Securities and Exchange
Commission (the "SEC") since December 31, 1996.
(b) As of its filing date, each such report or statement
filed pursuant to the Securities Exchange Act of 1934,
as amended, did not contain any untrue statement of a
material fact or omit to state any material fact
necessary in order to make the statements made therein,
in the light of the circumstances under which they were
made, not misleading.
(c) Each such registration statement, as amended or
supplemented, if applicable, filed pursuant to the
Securities Act of 1933, as amended, as of the date such
statement or amendment became effective did not contain
any untrue statement of a material fact or omit to
state any material fact required to be stated therein
or necessary to make the statements therein not
misleading.
5.9. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial
statements of ICN included in its annual reports on Form
10-K and the quarterly reports on Form 10-Q referred to in
Section 5.8 fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto), the
consolidated financial position of ICN and its consolidated
subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for
the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial
statements). For purposes of this Agreement, "Balance Sheet"
means the consolidated balance sheet of ICN as of December
31, 1996 set forth in ICN 10-K and "Balance-Sheet Date"
means December 31, 1996.
5.10. Absence of Certain Changes. Since the Balance Sheet Date,
ICN and its subsidiaries have conducted their business in
the ordinary course consistent with past practice and there
has not been any event, occurrence or development of a state
of circumstances or facts which has had or reasonably could
be expected to have a material adverse effect on ICN.
5.11 No Undisclosed Material Liabilities. There are no
liabilities of ICN or any of its subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which
could reasonably be expected to result in such a liability,
other than: (i) liabilities disclosed or provided for in the
Balance Sheet; (ii) liabilities incurred in the ordinary
course of business consistent with past practice since the
Balance Sheet Date, which in the aggregate are not material
to ICN and its subsidiaries, taken as a whole; and (iii)
liabilities under this Agreement.
6 SELLER'S COVENANTS
6.1 Maintenance of Assets: Seller agrees that from the date
hereof until the Closing Date that, except as specifically
disclosed in Schedule 6.1 or unless otherwise consented to
by Buyer in writing, Seller shall
6.1.1 except as disclosed on the Disclosure Schedule maintain the
Assets in good status and condition and not sell or dispose
of any of the Assets except in the ordinary course of
business;
6.1.2 continue the Business in the ordinary course of business and
not make or institute any unusual or novel methods of
purchase, sale, management, operation, or other business
practice in the conduct of the Business inconsistent with
past practices;
6.1.3 not enter into any material contract or commitment, engage
in any transaction, extend credit or incur any obligation
with respect to the Assets/Business, in each case not in the
usual and ordinary course of business and consistent with
normal business practices;
6.1.4 use best efforts to maintain Roche Net Sales of the Products
in the Territory at the Closing at a run rate of at least
US$ 53 million annually it being understood that Seller is
not liable for the effects of exchange rate fluctuations and
the effects of currency translations, subject to the
limitations in Article 3.6 above; and
6.1.5 promptly inform Buyer of any change in the Assets that could
have a Material Adverse Effect.
6.2 Consents: Seller shall use all reasonable best efforts to
obtain the consents of the third parties to the assignment
to Buyer of the Assumed Agreements, to the extent they
relate to the Products, at the same terms as currently
contained in the Assumed Agreements; provided, however,
Seller shall not be required to make any payment of any kind
whatsoever to Buyer or any third party, or waive any rights
or assume any obligations other than those obligations set
forth in the Assumed Agreements, in connection with
obtaining any such required consents. If Seller is unable to
obtain a required consent within a reasonable period of
time, Seller may, but is not obliged to terminate the
pertaining Assumed Agreement (for the Products or as a
whole). For as long as Seller has neither assigned an
Assumed Agreement nor terminated it with respect to the
Products, Seller shall continue to honor the terms of the
relevant Assumed Agreement, for the Products for the account
and benefit of Buyer, and Buyer shall indemnify Seller for
all liability relating to the Products (and only the
Products) under such Assumed Agreement other than any
liability arising from Seller's negligence or failure to
perform. Buyer shall give Seller all licenses and marketing
authorizations necessary or required to continue to fulfill
its obligations under these Assumed Agreements until such
Assumed Agreements expire, terminate or are assigned to
Buyer with respect to the Products.
6.3 Disclosure Supplements: From time to time prior to the
Closing Date, Seller will promptly inform Buyer, in writing,
with respect to any matter that may arise hereafter and
that, if existing or occurring prior to the Closing Date,
would have been required to be set forth or described herein
or in the Disclosure Schedule.
6.4 Access: From and after the date hereof and up to Closing
(except as otherwise provided herein), Buyer and its
authorized agents, officers, and representatives shall have
access to the Assets during normal business hours upon
reasonable prior notice and at a time and manner mutually
agreed upon between Buyer and Seller in order to conduct
such examination and investigation of the Assets as is
reasonably necessary, provided that such examinations shall
not unreasonably interfere with Setter's operations and
activities.
6.5 Non-Compete: Seller covenants and agrees that for a period
of five years following the Closing Date, neither Seller nor
any of its Affiliates will directly or indirectly engage in
the Territory in the manufacture, marketing and distribution
of products having both the same chemical substance and
being promoted for the same indication as the Products
(hereinafter "Competing Products"). Should, during the
aforesaid five year period, either Seller or an Affiliate of
Seller as a consequence of an acquisition of a company or a
business acquire any Competing Products, Buyer shall have
the right of first refusal to acquire such Competing
Products from Seller or its Affiliate at conditions to be
negotiated in good faith. Should Buyer not exercise its
right of first refusal or should subsequently held
negotiations between Seller and Buyer fail, Seller shall
make good faith-efforts to divest the Competing Products to
a third party.
6.6 Further Assurances: Seller shall use all reasonable efforts
to implement the provisions of this Agreement, and for such
purpose Seller, at the request of Buyer, at or after
Closing, will, without further consideration, execute and
deliver, or cause to be executed and delivered, to Buyer
such deeds, assignments, bills of sale, consents and other
instruments in addition to those required by this Agreement,
in form and substance satisfactory to Buyer, as Buyer may
reasonably deem necessary or desirable to implement any
provision of this Agreement.
7 BUYER'S COVENANTS
7.1 Consents: Buyer shall use all reasonable best efforts to
cooperate with Seller in obtaining the consents of the third
parties to the assignment to Buyer of the Assumed
Agreements, to the extent they relate to the Products, at
the same terms as currently contained in the Assumed
Agreements; provided, however, Buyer shall not be required
to make any payment of any kind whatsoever to Seller or any
third party, or waive any rights or assume any obligations
other than those obligations set forth in the Assumed
Agreements, in connection with obtaining any such required
consents.
7.2 Transfer of Products: Following Closing, Buyer shall use all
reasonable efforts and, except as otherwise set forth
herein, at its own expense, obtain as expeditiously as
possible such governmental approvals and registrations from
the competent regulatory authorities in the Territory, as
may be necessary with respect to the manufacture and sale of
the Products by Buyer or its designee (other than Seller or
an Affiliate of Seller). Notwithstanding the foregoing,
Seller shall at its expense assist with such transfers by
making available to Buyer 1,000 man-hours of time with DRAC
company (Dr. Peter).
7.3 Labeling: Following Closing, Buyer shall at its own expense
and as expeditiously as possible use all reasonable efforts
to obtain such approvals of competent government authorities
in the Territory as may be necessary to change Buyer's
labeling for each Product in such a way that any reference
to Seller or its Affiliates are removed as well as implement
such change of labeling. Buyer may use the current Labeling
on the Inventory existing at Closing approved by Seller
prior to such use until such inventory is exhausted, subject
to applicable laws and regulations in the Territory. Buyer
may, however, use the Roche labeling only in connection with
clearly identifying Buyer as the responsible person for
commercializing the Products in a way which is customary in
the industry and is to be approved in advance by Seller.
7.4 References to Seller: Other than as set forth in Article 7.3
hereinabove, any reference to Seller or its Affiliates or
any use of the trademarks, tradenames, or logos of Seller or
its Affiliates by Buyer in connection with the Products
after Closing must be approved by Seller prior to such use.
It is understood that the Trademarks do not fall under this
provision.
7.5 Further Assurances: Buyer shall use all reasonable efforts
to implement the provisions of this Agreement, and for such
purpose Buyer, at the request of Seller, at or after
Closing, will, without further consideration, execute and
deliver, or cause to be executed and delivered, to Seller
such consents and other instruments in addition to those
required by this Agreement, in form and substance
satisfactory to Seller, as Seller may reasonably deem
necessary or desirable to implement any provision of this
Agreement.
8 COVENANTS BY BUYER AND SELLER
8.1 Technology Transfer: Buyer and Seller shall work together to
commence transfer of the Know-How to Buyer promptly after
Closing. Seller shall use all reasonable efforts to assist
Buyer in assuming manufacture of the Products, provided,
however, that Seller cannot ensure Buyer's ability to
successfully manufacture the Products. Seller shall have no
obligation to provide manufacturing support for any Product
and Seller shall not be responsible for any delay and other
consequences, if Buyer elects to use a process that is
materially different from a Roche Process. If Buyer elects
to transfer a Roche Process, Seller shall provide reasonable
access to Seller's manufacturing facilities and for a period
of up to two years up to 50 (fifty) total man-days of
technical support free-of-charge . Thereafter, Buyer shall
reimburse Seller for providing such technical assistance at
Seller's then-standard hourly charge for rendering technical
assistance, which as of the date of this Agreement is US$
150.00 (one hundred fifty United States Dollars) per hour,
plus all reasonable out-of-pocket expenses incurred by
Seller in rendering such assistance. Seller's obligation to
provide hands-on manufacturing support for a transferred
Product shall cease following successful manufacture of the
registration batch for such Product.
8.2 Stability Studies: As soon as possible following execution
of this Agreement, Buyer shall qualify appropriate testing
sites for future stability studies. Seller shall continue
through completion all on-going stability studies for the
Products and provide Buyer with copies of the resulting data
as available.
8.3 Assignment of Trademarks: By or before Closing, Buyer and
Seller shall prepare in good faith an assignment pursuant to
which Seller agrees the Trademarks shall be assigned to
Buyer. Schedule 2.1 contains trademark registrations and
applications which, as indicated by Seller, are not
supported by use and therefore may unavoidably expire due to
non-use prior to Closing. Following Closing, Buyer shall
prepare and Seller shall execute such documents as Buyer may
reasonably request in order to assign and record the
assignment of the Trademarks. Buyer shall use all reasonable
efforts to record, as expeditiously as possible, the
transfer of the Trademarks in the major markets with the
competent authorities in the Territory, provided that Buyer
shall not have an obligation to transfer Trademarks in minor
markets which Buyer may not want to use. Buyer will inform
Seller within a reasonable period of time about the
Trademarks Buyer does not wish to transfer. The
responsibility and expense of preparing and filing such
documents and any actions required ancillary thereto, shall
be borne solely by Buyer. Notwithstanding anything contained
elsewhere herein, Buyer shall hold Seller and its Affiliates
harmless from and against any loss or damage, including but
not limited to fees, penalties, fines or third party claims,
due to Buyer's failure to record any assignment of any such
Trademarks pursuant to this Article, except if such loss or
damage is due to the conduct of Seller. The aforesaid is
applicable accordingly in case that an assignment has to be
made regarding a trademark which is listed in Schedule
2.1(a), 2.1(b) and 2.1(c).
8.4 Assignment of Registrations: As soon as practicable and in
any event within 45 (forty five) days from Closing Seller
shall deliver to Buyer current box, label and package
inserts for each pack of Products as registered in the
Territory. At or following Closing, Buyer shall prepare and
Seller shall execute such documents as Buyer may reasonably
request in order to record the assignment of the
Registrations. Buyer shall pay any user fees associated with
any Product that accrues after Closing but prior to transfer
of such Registration. Notwithstanding anything contained
elsewhere herein, Buyer shall hold Seller and its Affiliates
harmless from and against any loss or damage, including but
not limited to fees, penalties, fines or third party claims,
due to Buyer's failure to record any assignment of any such
Registrations pursuant to this Article, except if such loss
or damage is due to the conduct of Seller.
8.5 Access to Information: Buyer and Seller will, upon
reasonable prior notice, make available to the other, to the
extent reasonably required for the purpose of assisting
Seller or Buyer in obtaining governmental approvals and
preparation of tax returns relating to the Assets, and
prosecuting or defending or preparing for the prosecution or
defense of any action, suit, claim, complaint, proceeding or
investigation at any time brought by or pending against
Seller or Buyer relating to the Assets or the Supply
Agreement, other than in the case of litigation between the
parties hereto, such information or records (or copies
thereof) in their possession after Closing, it being
understood that attorney-client privileged information shall
be excepted. In the event Buyer or ICN are required under
accounting Regulation S-X of the U.S. Securities and
Exchange Commission to file audited financial statements of
the business acquired hereunder, Buyer and Seller shall
cooperate to produce any required documents and Seller shall
use all reasonable efforts to provide Buyer in a timely
manner with all information available to Seller and
necessary for Buyer to prepare such financial statements, it
being understood that Buyer shall be responsible and pay for
preparing and auditing such financial statements.
Notwithstanding any provision of this Agreement it is
understood that neither party shall be required to have any
information audited or to reconcile such information with
the accounting standards used by the receiving party or
required by any government authority.
8.6 Press Releases: Neither the Seller nor the Buyer, nor any
Affiliate thereof, will issue or cause publication of any
press release or other announcement or public communication
with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the
other party, which consent will not be unreasonably withheld
or delayed. Unless otherwise required by applicable law, the
Purchase Price shall not be disclosed.
8.7 Customer Information: Buyer and Seller shall agree on the
text of a joint announcement informing the customers in the
Territory of the transfer of the Products to Buyer or its
relevant Affiliate. Should it be appropriate for any party
to make an announcement on its own, it will have to be
approved by the other party, which approval will not be
unreasonably withheld or delayed.
8.8 Government Filings: Each of the parties will use its
respective reasonable good faith efforts to obtain, and to
cooperate with the other in obtaining, all authorizations,
consents, orders and approvals of any governmental agencies,
that may be or become necessary in connection with the
consummation of the transactions contemplated by this
Agreement prior to or after Closing, and to take all
reasonable actions to avoid the entry of any order or decree
by any governmental agency prohibiting the consummation of
the transactions contemplated hereby, provided, however,
that Seller and its Affiliates shall not be required to
agree to any consent decree or order in connection with the
objections of the FTC or DOJ to the transactions
contemplated by the Agreement.
8.9 Supply Arrangements: Buyer and Seller, or their Affiliates,
at Closing shall enter into the Supply Agreement negotiated
in good faith between the date hereof and the Closing based
on the term sheet attached as Exhibit A hereto, under which
Seller or its Affiliate shall supply finished Products to
Buyer or its Affiliate for up to 2 years (plus, if necessary
thereafter because Buyer has despite best efforts not been
able to re-register certain Products, up to 1 year
additional inventory) at fixed prices as shown in the
relevant price list annexed to Exhibit A.
8.10 Distribution Arrangements: Buyer and Seller, or their
Affiliates, at Closing shall enter into the Distribution
Agreement negotiated in good faith between the date hereof
and the Closing based on the term sheet attached as Exhibit
B hereto, under which Seller or its Affiliates shall
distribute for Buyer or its Affiliates the Products for a
period of up to 2 years after Closing in geographical areas
in which such Products are currently sold, but in which
Buyer and its Affiliates do not currently conduct sales
activities.
8.11 Returns: Until the Closing Date, Seller shall be responsible
for all returns. From and after the Closing Date, Seller
shall be responsible for all returns arising from sales
before Closing and Buyer shall be responsible for all
returns arising from sales after Closing. The situation
whereby returns after Closing increase materially beyond the
level of the previous business year, shall be governed by
particular provisions in the Distribution Agreement, the
principle thereof being to split the responsibility of such
returns in a fair way between the parties.
8.12 Adverse Events Reports: Seller shall, for as long as Seller
or an Affiliate of Seller markets products identical with
the Products outside the Territory, provide Buyer with a
copy of all serious (as defined by the International
Conference on Harmonization) adverse events concerning the
Products which come to the attention of Seller. Buyer shall,
for as long as Buyer or an Affiliate of Buyer markets the
Products, provide Seller with a copy of all serious (as
defined by the International Conference on Harmonization)
adverse events concerning the Products which come to the
attention of Buyer. The copies shall be supplied as CIOMS I
forms within 2 days of being processed by either Seller or
Buyer, as the case may be.
9 CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions to Obligations of Buyer: The obligation of Buyer
to complete the transactions contemplated hereby is subject
to the satisfaction on or prior to the Closing Date of the
following conditions (all or any of which may be waived in
whole or in part by Buyer):
9.1.1 Representations and Warranties: The representations and
warranties made by Seller in this Agreement shall have been
true and correct in all respects as of the Closing Date with
the same force and effect as though said representations and
warranties had been made on the Closing Date (except for
representations and warranties made as of a specified date,
which will be true and correct in all respects as of the
specified date).
9.1.2 Performance: Seller shall have performed and complied in all
material respects with all agreements, obligations and
conditions required by this Agreement to be so performed or
complied with by it prior to or at Closing.
9.1.3 HSR Act Approvals: All required waiting periods under the
HSR Act shall have expired or been terminated or approval
has been received from the FTC or DOJ.
9.1.4 Government Approvals: All approvals of the competent
authorities in the Territory required for the consummation
of the transactions contemplated by this Agreement, if any,
have been obtained and all waiting periods under applicable
laws, if any, shall have expired or been terminated.
9.1.5 Litigation: No investigation, suit, action, or other
proceeding shall be threatened or pending before any court
or governmental agency that seeks the restraint,
prohibition, damages, or other relief in connection with
this Agreement or the consummation of the transactions
contemplated by this Agreement unless such action would not
have a Material Adverse Effect,
9.1.6 No Adverse Change: During the period from the date of this
Agreement to the Closing Date there shall not have occurred
or been discovered, and there shall not exist on the Closing
Date except for that which has been otherwise disclosed
elsewhere in this Agreement or in the Disclosure Schedule,
any condition or fact that would have a Material Adverse
Effect.
9.1.7 SEC Accounting Requirements: Seller shall provide Buyer
prior to Closing with information sufficient to allow Buyer
to prepare any financial statements concerning the business
to be acquired by Buyer, required under accounting
Regulation S-X of the U.S. Securities and Exchange
Commission, to be filed by Buyer.
9.2 Conditions to Obligations of Seller: The obligation of
Seller to complete the transactions contemplated hereby is
subject to the satisfaction on or prior to the Closing Date
of the following conditions (all or any of which may be
waived in whole or in part by Seller):
9.2.1 Representations and Warranties: The representations and
warranties made by Buyer in this Agreement shall have been
true and correct in all respects as of the Closing Date with
the same force and effect as though said representations and
warranties had been made on the Closing Date (except for
representations and warranties made as of a specified date,
which will be true and correct in all respects as of the
specified date).
9.2.2 Performance: Buyer shall have performed and complied in all
material respects with all agreements, obligations and
conditions required by this Agreement to be so performed or
complied with by it prior to or at Closing.
9.2.3 HSR Act Approvals: All required waiting periods under the
HSR Act shall have expired or been terminated or approval
has been received from the FTC or DOJ.
9.2.4 Government Approvals: All approvals of the competent
authorities in the Territory required for the consummation
of the transactions contemplated by this Agreement, if any,
have been obtained and all waiting periods under applicable
laws, if any, shall have expired or been terminated.
9.2.5 Litigation: No investigation, suit, action, or other
proceeding shall be threatened or pending before any court
or governmental agency that seeks the restraint,
prohibition, damages, or other relief in connection with
this Agreement or the consummation of the transactions
contemplated by this Agreement unless such action would not
have a Material Adverse Effect.
9.2.6 No Adverse Change: During the period from the date of this
Agreement to the Closing Date there shall not have occurred
or been discovered, and there shall not exist on the Closing
Date except for that which has been otherwise disclosed
elsewhere in this Agreement any condition or fact that would
have a material adverse effect.
9.2.7 Certificate of Designation: The Certificate of Designation
for the Series C Convertible Preferred Stock shall have been
accepted for filing by the Secretary of State of the State
of Delaware.
9.2.8 Purchase of Humacao Plant: The closing of the purchase by
Buyer from Syntex (U.S.A) Inc. of the latter's plant located
at Mariana Ward, Road 909 Km 1.1, Humacao, Puerto Rico,
shall have occurred prior to or occur simultaneously with
the Closing hereunder.
10 THE CLOSING
10.1 The Closing: Subject to the satisfaction of all of the
conditions to each party's obligations set forth in Article
9 hereof (or, with respect to any condition not satisfied,
the waiver in writing thereof by the party or parties for
whose benefit the condition exists), the closing of the
transactions contemplated by this Agreement (the "Closing")
shall take place at 10.00 a.m. (local time) on August 1,
1997 or, if any approval from any competent authority in the
Territory required for the consummation of the present
transaction has not been obtained or any waiting period to
be observed has not expired or terminated by August 1, 1997,
the Closing shall take place at a date after the receipt of
all required government approvals and after the expiry or
termination of all waiting periods agreed between the
parties in good faith (the "Closing Date"). The transfer of
the Assets shall be deemed to have occurred as of 00.01 a.m.
of the Closing Date.
10.2 Deliveries by Seller. At Closing, Seller shall deliver to
Buyer:
10.2.1 The general form of assignment of the Trademarks as set
forth in Article 8.3;
10.2.2 a general form of assignment of the Registrations;
10.2.3 subject to the Distribution Agreement(s) the Inventory and
the statement of the quantity of the Inventory as set forth
in Article 2.4;
10.2.4 subject to contrary provisions in the Distribution
Agreement(s) the Marketing and Promotional Documents as set
forth in Article 2.7;
10.2.5 to the extent available and possible/practicable hard copies
of the Registration files, Know-How documents, World-wide
Safety Reports, all as set forth in Article 2 hereinabove.
All such documents, which cannot be delivered to Buyer at
Closing, shall be delivered by Seller to Buyer as soon as
practicable after Closing.
10.2.6 the Supply Agreement(s);
10.2.7 the Distribution Agreement(s);
10.2.8 except at otherwise provided herein, such agreements,
licenses, notices, and authorizations as may be necessary
and sufficient to enable Buyer to use or operate under the
Registrations (if legally permissible) and Know-How and that
Buyer has requested from Seller; and
10.2.9 the Registration Rights Agreement
10.2.10 a receipt for the Purchase Price in accordance with Art. 3.
10.3 Deliveries by Buyer. At Closing, Buyer shall deliver or
cause to be delivered to Seller:
10.3.1 The Purchase Price payable in accordance with Article 3
including certificates representing the Shares;
10.3.2 the Supply Agreements;
10.3.3 the Distribution Agreement(s);
10.3.4 the Registration Rights Agreement.
10.4 Effects of Closing: Upon Closing the ownership of the Assets
as well as the full responsibility for the use of the Assets
and the full responsibility for the conduct of the business
comprising the use of the Assets shall pass from Seller to
Buyer. Seller shall remain exclusively responsible for the
conduct of the Business prior to Closing (including any
consequences therefrom which may appear after the Closing).
Buyer shall be exclusively responsible for the conduct of
the Business from Closing. Buyer acknowledges that as per
the Closing the product liability insurance of Seller and
its Affiliates will terminate and Buyer shall be responsible
for proper insurance of the product liability and other
risks relating to the Products.
At the Closing the License Agreement and the Manufacturing
Agreement between Hoffmann-La Roche Inc. ("HLR Inc.") and
ICN., both dated July 1, 1988, as well as the related
Transfer Agreement between HLR Inc. and ICN dated November
1, 1996 pertaining to the transfer of the manufacturing of
MESTINON and PROSTIGMIN shall terminate with respect to
MESTINON and PROSTIGMIN effective as per the Effective Date
hereof to the extent superseded by this Agreement, in
particular the license and the royalty provisions, it being
understood that the provisions pertaining to the transfer of
the manufacturing from HLR Inc. to ICN shall continue to
apply and that HLR Inc. shall continue to supply MESTINON
and PROSTIGMIN to ICN until completion of the transfer of
manufacturing pursuant to the Transfer Agreement. In the
event that a third party toll manufacturer manufactures
these Products for Hoffmann-La Roche Inc., the pertaining
toll manufacturing agreement(s) shall be assigned to and
assumed by Buyer at Closing effective as per the Effective
Date on the same terms now existing, provided such terms are
commercially reasonable, subject to any necessary consent of
the toll manufacturer. If such a consent must be obtained
Art. 6.2 and 7.1 hereof shall apply mutatis mutandis.
Similarly, at the Closing the License Agreement and the
Supply Agreement between Hoffmann-La Roche Limited ("Roche
Canada") and ICN Canada Limited ("ICN Canada"), both dated
July 1, 1988 shall terminate with respect to MESTINON and
PROSTIGMIN effective as per the Effective Date hereof to the
extent superseded by this Agreement, in particular the
license and the royalty provisions, it being understood that
Roche Canada or an Affiliate of Roche Canada shall continue
to supply MESTINON and PROSTIGMIN for the period provided by
this Agreement.
The Closing shall further have the other effects provided
for in this Agreement.
11 TERMINATION
11.1 Termination: This Agreement and the transactions
contemplated hereby may be terminated at any time prior to
the Closing Date:
11.1.1 By the mutual written consent of Seller and Buyer;
11.1.2 By either Seller or Buyer if Closing shall not have occurred
on or before October 3l, 1997;
11.1.3 By either Seller or Buyer if consummation of the
transactions contemplated hereby shall violate any
non-appealable final order, decree or judgment of any court
or governmental body having competent jurisdiction; or
11.1.4 By either Seller or Buyer if there has been a material
violation or breach by the other party of any of the
agreements, representations or warranties contained in this
Agreement that has not been waived in writing, or if there
has been a material failure of satisfaction of a condition
to the obligations of the other party that has not been
waived in writing, and such violation, breach, or failure
has not been cured within sixty (60) days of written notice
to the other party.
11.2. Effect of Termination: If this Agreement is terminated
pursuant to Article 11.1, all further obligations of Seller
and Buyer under this Agreement shall terminate without
further liability of Seller or Buyer except (a) for the
obligations of Buyer and Seller under Articles 8.6, 14, and
15.2; and (b) that such termination shall not constitute a
waiver by any party of any claim it may have for damages
caused by reason of a breach by the other party of a
representation, warranty, covenant or agreement.
12 INDEMNIFICATION
12.1 Remedy for Breach:
12.1.1 General Principle: After the Closing, the sole and exclusive
remedy of Buyer and Seller for any breach or inaccuracy of
any representation or warranty or any breach of any covenant
under this Agreement by the other party hereto shall be the
indemnities contained in this Article 12.
12.1.2 Notice: Any claims that a party may have arising out of the
other party's breach of its representations and warranties
or breach of a covenant hereunder shall be notified to the
other party promptly, but in no event later than 90 (ninety)
days after having reasonably sufficient knowledge of the
existence of a potential claim, by written notice describing
the claim in reasonable detail then known. Failure to give
such notice on time shall not affect the other party's
indemnification obligations hereunder except to the extent
it is prejudiced thereby.
12.1.3 Survival of representations and warranties: The
representations, warranties, covenants of Seller and Buyer
contained in this Agreement shall survive the Closing Date,
but any claim for breach of representations and warranties
or of a covenant shall be entitled to indemnification
hereunder only if written notice of such claim is given to
the other party hereto no later than 18 (eighteen) months
following Closing Date except that (i) the representations
and warranties contained in Art. 5.6 and 5.7 shall survive
indefinitely and (ii) Buyer's right to notify claims with
respect to the following matters shall only terminate as
follows:
a) Claims for breach of warranties and representations
concerning Litigation (Art. 4.13) insofar as such
Litigation relates to product liability matters shall
be notified to Seller no later than 5 (five) years
following the Closing Date;
b) Claims for breach of warranties and representations
concerning Trademarks (Art. 4.16) shall be notified to
Seller no later than 2 (two) years following the
Closing Date;
c) Claims for breach of warranties and representations
concerning taxes (Art. 4.8) may be notified to the
Seller until the expiration of the applicable statutes
of limitations for taxes relevant to such claims.
It is understood that if and when either party has done the
notification for the pertaining matter within the applicable
notification time, it may start court proceedings pursuant
to Art. 14 at any time within one year of the date such
claim was duly notified. Seller and Buyer shall agree to use
all reasonable efforts to mitigate any loss or damage for
which they may seek indemnification under this Article 12.
12.2 Indemnification by Seller:
12.2.1 Claims: Subject to the limitations set forth in Article
12.2.2 to the fullest extent permitted under applicable law,
Seller shall indemnify Buyer and its Affiliates against and
agrees to hold Buyer and its Affiliates harmless from any
and all damage, loss, liability, third party claims, and
expense (collectively, "Damages") (including, without
limitation, reasonable expenses of investigation and
attorneys' fees and expenses in connection with any action,
suit or proceeding brought against Buyer or its Affiliates)
incurred or suffered by Buyer or its Affiliates arising out
of (a) any misrepresentation or breach of a warranty or
covenant made by Seller herein, (b) the maintenance of the
Assets by Seller prior to Closing or (c) the conduct of the
Business by Seller or its Affiliates prior to Closing
(collectively, "Indemnifiable Claims").
12.2.2 Limitations: Notwithstanding anything to the contrary set
forth elsewhere herein, Buyer and its Affiliates shall not
be entitled to indemnification hereunder with respect to any
Indemnifiable Claim brought under Article 12.2.1 unless the
amount of Damages with respect to such Indemnifiable Claim
exceeds US$ 30,000. However, Seller shall in no event be
required to pay Buyer and its Affiliates more than half of
the Purchase Price (Art. 3.1) in respect of aggregate
damages asserted pursuant to Article 12.2.1 (a) and (b)
except that the aforesaid limitation in respect of aggregate
damages shall not apply to any Indemnifiable Claim based on
breach of Seller's warranties and representations concerning
Litigation in the field of product liability.
12.2.3 Form of Indemnification: Indemnification by Seller to Buyer
shall, at Seller's option, be effected in ICN Shares, valued
at the Guaranteed Price as of the Guaranty Date next
preceding such indemnification plus pro rata 60% p.a.,
and/or cash. To effect any such payment Seller shall
surrender to ICN one or more certificates representing such
number of shares of Common Stock and/or, at Seller's option,
Preferred Stock as shall represent the aggregate value of
the amount of any such indemnification payment and ICN shall
promptly thereupon issue to Seller new certificates
representing such number of shares of Common Stock and/or
Preferred Stock retained by Seller.
12.3 Indemnification by Buyer: Buyer shall indemnify Seller and
its Affiliates against and agrees to hold Seller and its
Affiliates harmless from any and all Damages (including
without limitation, reasonable expenses of investigation and
attorneys' fees and expenses in connection with any action,
suit or proceeding brought against Seller or its Affiliates)
incurred or suffered by Seller or its Affiliates arising out
of (a) any misrepresentation or breach of warranty or
covenant made by Buyer herein; or (b) the conduct of the
Business by Buyer and its Affiliates after Closing
(collectively, "Indemnifiable Claims"). Notwithstanding the
foregoing, Buyer shall in no event be required to pay Seller
and its Affiliates more than half of the Purchase Price
(Art. 3.1) in respect of aggregate damages asserted pursuant
to Article 12.3 (a) and (b), except that the aforesaid
limitation shall not apply to Buyer's obligation to pay the
Purchase Price under Art. 3.1 above and the Inventory under
Art. 3.5 above and all provisions related to these payments,
including but not limited to all obligations of Buyer
relating to the shares of Common Stock and Preferred Stock
set forth in this Agreement and its Exhibits.
12.4 Notice: A party seeking indemnification pursuant to Article
12.2 or 12.3 (an "Indemnified Party") shall give prompt
notice to the party from whom such indemnification is sought
(the "Indemnifying Party") of the assertion of any claim, or
the commencement of any action, suit or proceeding, in
respect of which indemnity is or may be sought hereunder
(whether or not the limits set forth in Article 12.2.2 have
been exceeded) and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party
may reasonably request, but no failure to give such notice
shall relieve the Indemnifying Party of any liability
hereunder (except to the extent the Indemnifying Party has
suffered actual prejudice thereby).
12.5 Participation in Defense: The Indemnifying Party may, at its
expense, participate in or assume the defense of any such
action, suit or proceeding involving a third party. In such
case the Indemnified Party shall have the right (but not the
duty) to participate in the defense thereof, and to employ
counsel, at its own expense, separate from counsel employed
by the Indemnifying Party in any such action and to
participate in the defense thereof. The Indemnifying Party
shall be liable for the fees and expenses of one firm as
counsel (and appropriate local counsel) employed by the
Indemnified Party if the Indemnifying Party has not assumed
the defense thereof. Whether or not the Indemnifying Party
chooses to defend or prosecute any claim involving a third
party, all the parties hereto shall cooperate in the defense
or prosecution thereof and shall furnish such records,
information and testimony, and attend such conferences,
discovery proceedings, hearings, trials and appeals, as may
be reasonably requested in connection therewith.
12.6 Settlements: The Indemnifying Party shall not be liable
under this Article for any settlement effected without its
consent of any claim, litigation or proceedings in respect
of which indemnity may be sought hereunder, unless the
Indemnifying Party refuses to acknowledge liability for
indemnification under this Article 12 and/or declines to
defend the Indemnified Party in such claim, litigation or
proceeding.
13 NOTICES
Any notice required or permitted to be given hereunder shall
be deemed sufficient if sent by facsimile letter or
overnight courier, or delivered by hand to Seller or Buyer
at the respective addresses and facsimile numbers set forth
below or at such other address and facsimile number as
either party hereto may designate. If sent by facsimile
letter, notice shall be deemed given when the transmission
is completed if the sender has a confirmed transmission
report and if the sender has sent a confirmation copy by
registered mail. If a confirmed transmission report does not
exist, then the notice will be deemed given when the notice
is actually received by the person to whom it is sent. If
delivered by overnight courier, notice shall be deemed given
when it has been signed for. If delivered by hand, notice
shall be deemed given when received.
if to Buyer, to:
ICN Puerto Rico, Inc.
c/o ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California, USA
Attention: Bill A. MacDonald
Fax: ++1 714 641 7207
if to ICN, to:
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California, USA
Attention: General Counsel
Fax: ++l 714 641 7274
if to Seller, to:
F.Hoffmann-La Roche Ltd
CH-4070-Basel, Switzerland
Attention: Head of Corporate
Finance Business Development (CFD) department
Fax: ++41 61 688 4169
with a copy to:
F.Hoffmann-La Roche Ltd
CH-4070 Basel, Switzerland
Attention: Corporate Law Department
Fax: ++41 61 688 1396
14 ARBITRATION AND GOVERNING LAW
14.1 Except for the right of either party to apply to a court of
competent jurisdiction for a temporary restraining order to
preserve the status quo or prevent irreparable harm pending
the selection and confirmation of a panel of arbitrators,
any dispute, controversy, or claims arising under, out of or
relating to this Agreement (and subsequent amendments
thereof), its valid conclusion, binding effect,
interpretation, performance, breach or termination,
including tort claims, shall be referred to and finally
determined by arbitration, to the exclusion of any courts of
law, in accordance with the Rules of Arbitration of the
International Chamber of Commerce as in force at the time
when initiating the arbitration. The arbitral tribunal shall
consist of three arbitrators. The place of arbitration shall
be Paris, France. The language to be used in the arbitral
proceedings shall be English. The arbitration decision shall
be final and binding upon the parties and the parties agree
that any award granted pursuant to such decision may be
entered forthwith in any court of competent jurisdiction.
This arbitration clause and any award rendered pursuant to
it shall be governed by the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitration Awards
signed in New York of 10 June, 1958. The party to whom a
favorable ruling is awarded shall be entitled to
reimbursement of all its reasonable costs and expenses in
arbitration by the other party.
14.2 The present Agreement shall be subject to the substantive
law of Switzerland (regardless of its or any other
jurisdiction's choice of law principles).
15 ADDITIONAL TERMS
15.1 Brokers: Buyer represents to Seller that it has not employed
any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who
might be entitled to a fee or any commission from Seller
upon consummation of the transactions contemplated hereby.
Seller represents to Buyer that it has not employed any such
Person in such connection who might be entitled to a fee or
any commission from Buyer upon consummation of the
transactions contemplated hereby.
15.2 Expenses, Taxes and Fees: Except as otherwise expressly
provided in this Agreement, all legal, accounting and other
costs and expenses incurred in connection herewith and the
transactions contemplated hereby shall be paid by the party
incurring such expenses. Any possible value added, excise or
transfer taxes or HSR filing fees or similar filing fees in
other countries levied in connection with the present
Agreement shall be paid and borne solely by Buyer and are
not included in the Purchase Price according to Art. 3
above.
15.3 Successors and Assigns: This Agreement shall be binding upon
and shall inure to the benefit of the parties and their
respective successors and assigns; provided that this
Agreement may not be assigned by any party without the
written consent of the other party except that either party
may assign the Agreement to any of its Affiliates provided
it guarantees due performance of the Agreement by such
Affiliate.
15.4 Amendments: No Waiver: No provision of this Agreement may be
amended, revoked or waived except by a writing signed and
delivered by an authorized officer of each party. No failure
or delay on the part of either party in exercising any right
hereunder will operate as a waiver of, or impair, any such
right. No single or partial exercise of any such right will
preclude any other or further exercise thereof or the
exercise of any other right. No waiver of any such right
will be deemed a waiver of any other right hereunder.
15.5 Counterparts: This Agreement may be executed in one or more
counterparts all of which shall together constitute one and
the same instrument and shall become effective when a
counterpart has been signed by Buyer and delivered to Seller
and a counterpart has been signed by Seller and delivered to
Buyer.
IN WITNESS WHEREOF, this Agreement has been signed by duly authorized
representatives of each of the parties hereto as of the date first
above written.
F.Hoffmann-La Roche Ltd ICN Puerto Rico, Inc.
By _____________________ By _____________________
Name _____________________ Name _____________________
Title _____________________ Title _____________________
ICN Pharmaceuticals, Inc.
By _____________________
Name _____________________
Title _____________________
GUARANTY
The undersigned hereby irrevocably and unconditionally guarantees the
performance by ICN Puerto Rico, Inc. and its Affiliates of all their
respective obligations under this Agreement and the ancillary
documents entered pursuant thereto.
ICN Pharmaceuticals, Inc.
By _____________________
Name _____________________
Title _____________________
List of Schedules and Exhibits
Schedules
1. Schedule 1.1 (chemical names of transferred compounds)
2. Disclosure Schedule (Section 1.9)
3. Schedule 1.31 (monthly Roche Net Sales by Product for the 12
months ended 5/31/97)
4. Schedule 2.1 (Trademarks)
Schedule 2.1(a) (Other trademark license agreements)
Schedule 2.1(b) (Trademarks combined with Roche)
Schedule 2.1(c) (Other exclusions)
5. Schedule 2.2 (Registrations)
6. Schedule 2.6 (Locations of Inventory)
7. Schedule 2.7 (Assumed Agreements)
8. Schedule 2.8 (Option)
9. Schedule 3.3 (Inventory Prices)
10. Schedule 4.3 (Title to Assets)
11. Schedule 4.6 (Registrations)
12. Schedule 4.10 (Violations of Law)
13. Schedule 5.4 (No Government Restrictions)
14. Schedule 6.1 (Maintenance of Assets)
Exhibits
Exhibit A Supply Agreement (Term Sheet)
Exhibit B Transition / Distribution Agreement (Term Sheet)
Exhibit C Registration Rights Agreement
Exhibit D Certificate of Designation of Series C Convertible
Preferred Stock
AMENDMENT AGREEMENT
This AMENDMENT AGREEMENT (this "Amendment") is made and entered
into as of 7 August 1997 by and between F.Hoffmann-La Roche Ltd,
Grenzacherstrasse 124, CH-4070 Basel, Switzerland ("Seller") on
the one hand and ICN Puerto Rico, Inc. with registered offices at
American International Plaza, Eighth Floor, 250 Munoz Rivera
Avenue, San Juan, Puerto Rico, 00918 ("Buyer"), a wholly-owned
subsidiary of ICN Pharmaceuticals, Inc., ICN Plaza, 3300 Hyland
Avenue, Costa Mesa, CA 92626 ("ICN") and ICN acting either as
direct party to this Agreement with respect to certain matters or
as a guarantor of performance by Buyer hereunder on the other
hand.
WHEREAS Seller, Buyer and ICN have entered into an Asset Purchase
Agreement dated 20 June 1997 (the "Agreement");
WHEREAS Seller, Buyer and ICN wish to amend the Agreement;
NOW THEREFORE, the parties hereto agree as follows:
1. Art. 2.8.1 of the Agreement shall be amended by adding the
following new sentence at its end:
"Upon mutual agreement of Seller, Buyer and ICN the Option
may be exercised earlier."
2. Art. 3.2.3 of the Agreement is amended by adding a new
second para reading as follows:
"Seller is authorised to retain any such capital gains (as
described in the first para above) made, without having to
return shares of Preferred Stock, and offset or use such
capital gain or have it offset or used by Affiliates of
Seller for the following purposes at Seller's option in
addition to realising in cash the Purchase Price under the
Agreement received in the form of ICN shares according to
the first para above:
1) As a first priority as additional security for the
payment of the portion of the purchase price specified in
section 3.1(ii) under the Asset Purchase Agreement dated 13
June 1997 between Syntex (F.P.), Inc., Syntex (USA), Inc.,
Buyer and ICN as amended by the letter agreement dated 1
August 1997 (the "Humacao Agreement") in accordance with the
terms of that letter agreement as well as for all loss or
damages which Syntex (F.P.), Inc., Syntex (U.S.A.), Inc. or
their Affiliates (including Seller) may incur in connection
with the Humacao Agreement in the event title reverts to
Syntex due to failure of the condition subsequent.
2) As a second priority to be retained by Seller in a
special interest bearing (according to Art. 5 hereinbelow)
account for as long as Buyer has not exercised its option
for the Additional U.S. Assets according to Art. 2.8 of the
Agreement. If Buyer exercises such Option, Seller and/or
its Affiliates may use the retained amount plus interest as
down payment for the Option Purchase Price due to Seller
and/or its Affiliates. If Buyer decides not to exercise the
Option the retained amount plus interest exceeding the
Purchase Price under the Agreement and the unpaid portion of
the purchase price under the Humacao Agreement shall be paid
to Buyer. Upon mutual agreement of Seller and Buyer such
retained capital gain may be used for other purposes."
3. Art. 3.2.4 of the Agreement is amended by merging the former
subclauses 2) and 3) into one single subclause, reading as
follows:
"2) and 3) Following the sale of the Common Stock pursuant
to point 1) above, upon Seller's request, all or any part of
the shares of Preferred Stock shall immediately be converted
into shares of registered Common Stock. Notwithstanding the
foregoing, in no event shall any share of Series C
Convertible Preferred Stock be convertible if, following
such conversion, the holder would be the beneficial owner,
as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, of five percent or more of the outstanding shares
of Common Stock. Such registered Common Stock shares
resulting from conversion of Series C Convertible Preferred
Stock shall not be sold for one year from the date of
conversion, provided that they may be sold earlier without
restriction pursuant to this Section 3.2.4 if the stock
exchange price of ICN Common Stock reaches US$33 per share.
Seller agrees to conduct such sale in a way which does not
hurt the market. Seller shall be free to sell such shares
at any price equal to or above US$33 per ICN Common Stock
share. Seller shall not sell any such share at a price
below US$33 per ICN Common Stock share without the consent
of ICN."
4. Art. 3.2.6 first para of the Agreement is amended, reading
new as follows:
"FUTURE PURCHASES. Prior to the earlier to occur of (i) the
date which is three (3) years from the Closing Date, (ii)
the Restriction Termination Date or (iii) the date on which
Seller has sold to third parties all shares of ICN Common
and Preferred Stock received at the Closing of this
Agreement, and subject to the further provisions hereof."
5. Art 3.2.11 of the Agreement is amended by adding a new
second para reading as follows:
"The obligation of ICN to pay to Seller 20% of all Public
Debt Offering (as defined in para 1 above) shall continue
for at least as long as the Purchase Price under the
Agreement and the purchase price under the Humacao Agreement
(i.e. US$ 55 million) have not been fully paid, whatever is
later, and for this period Seller shall not be required to
return to ICN any share of ICN Common or Preferred Stock as
contemplated by para 1 above. Instead of serving as
repurchase price for such shares to be returned, Seller is
authorised to retain, offset or use such ICN payments or
have them offset or used by Affiliates of Seller for the
following purposes:
1) As a first priority as additional security for the
payment of the portion of the purchase price specified in
section 3.1(ii) under the Asset Purchase Agreement dated 13
June 1997 between Syntex (F.P.), Inc., Syntex (USA), Inc.,
Buyer and ICN as amended by the letter agreement dated 1
August 1997 (the "Humacao Agreement") in accordance with the
terms of that letter agreement as well as for all loss or
damages which Syntex (F.P.), Inc., Syntex (USA), Inc. or
their Affiliates (including Seller) may incur in connection
with the Humacao Agreement in the event title reverts to
Syntex due to failure of the condition subsequent.
2) Upon mutual agreement of Seller and Buyer such retained
amount plus interest may be used for other purposes."
6. Any capital gains or Public Debt Offering proceeds retained
by Seller under paragraphs 2 and 5 above shall, unless and
for as long as they are not used by Seller and/or its
Affiliates for an other purpose under the Agreement or this
Amendment (i.e. (i) payment of the Purchase Price under the
Agreement, (ii) payment of the portion of the purchase price
under the Humacao Agreement specified in its section 3.1(ii)
in accordance with the terms of that letter agreement or
(iii) down payment for the Option Purchase Price for the
Additional U.S. Assets), bear interest according to the
interest paid by the bank for the bank account mutually
agreed by the parties hereto.
7. The special discount of US$ 4 million on the supplies of
Products granted by F.Hoffman-La Roche Ltd in its letter to
ICN Pharmaceuticals, Inc. dated 20 June 1997 for the first
year shall not become due before full payment of the
purchase price under the Humacao Agreement and Seller may
offset against or use for or have offset against or used for
by its Affiliates payment under the Humacao Agreement.
8. With respect to additional security provisions for the
payment of the purchase price under the Humacao Agreement
the present Amendment supplements the letter agreement dated
1 August 1997, by giving additional rights and protection to
Seller and its Affiliates.
IN WITNESS WHEREOF, this Agreement has been signed by duly
authorized representatives of each of the parties hereto as of
the date first above written.
F.Hoffman-La Roche Ltd ICN Puerto Rico, Inc.
By: ------------------------ By: ------------------------
Name: ------------------------ Name: ------------------------
Title:------------------------ Title:------------------------
ICN Pharmaceuticals, Inc.
By: ------------------------
Name: ------------------------
Title:------------------------
GUARANTY
The undersigned hereby irrevocably and unconditionally guarantees
the performance by ICN Puerto Rico, Inc. and its Affiliates of
all their respective obligations under this Amendment and the
ancillary documents entered pursuant thereto.
ICN Pharmaceuticals, Inc.
By: ------------------------
Name: ------------------------
Title:------------------------
Exhibit 15.1
September 5, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: ICN Pharmaceuticals, Inc.
Registrations on Form S-3
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 registration
statement on Form S-3 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 5, 1997
