UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
PUREPAC, INC. (formerly Moleculon, Inc.)
----------------------------------------
(Name of Issuer)
Common Stock (par value $.01 per share)
----------------------------------------
(Title of Class of Securities)
608551107
---------
(CUSIP Number)
William R. Griffith, Esq.
c/o Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
--------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 9, 1995
--------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Check the following box if a fee is being paid with the statement / /. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 608551107 Page 2 of 17 Pages
------------------- ------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
Faulding Holdings Inc. (formerly Faulding U.S.A. Inc.)
Fed. Emp. ID No. 52-1597982
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) / /
(b) / /
3. SEC USE ONLY:
4. SOURCE OF FUNDS*:
WO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e): / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
--------------
| 7. SOLE VOTING POWER:
NUMBER OF |
| 6,839,980
SHARES |
|
BENEFICIALLY | 8. SHARED VOTING POWER:
|
OWNED BY | None
|
EACH |
| 9. SOLE DISPOSITIVE POWER:
REPORTING |
| 6,839,980
PERSON |
|
WITH | 10. SHARED DISPOSITIVE POWER:
|
-------------- None
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
11,845,108 (which figure contemplates the then issued and outstanding
shares of Common Stock of Issuer being 17,586,351). Reference is made
to Item 5 hereof.
12. CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*:
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
67.35
14. TYPE OF REPORTING PERSON*:
CO.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP No. 608551107 Page 3 of 17 Pages
------------------- ------------------
Note: Pursuant to Item 101(a)(2)(ii) of Regulation S-T,
this first electronic amendment to a paper format
Schedule 13D restates the entire text of the
Schedule 13D.
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $0.01 per
share (the "Common Stock"), of Purepac, Inc., (formerly "Moleculon,
Inc."), a Delaware corporation (the "Issuer"). The address of the
Issuer's principal executive office is:
200 Elmora Avenue
Elizabeth, New Jersey 07207
Item 2. Identity and Background.
(a)-(c): This statement is filed on behalf of Faulding Holdings
Inc. (formerly Faulding U.S.A. Inc.), a Delaware corporation (the
"Purchaser"). Its address is:
c/o United Corporate Services
15 East North Street
Dover, Delaware 19901
The principal activity of the Purchaser is its investment in the
Issuer.
The Purchaser is a wholly-owned subsidiary of F.H. Faulding & Co.
Limited (the "Parent"), a leading Australian pharmaceutical
manufacturer and distributor, the principal activities of which
are the manufacture and wholesale of pharmaceutical, household and
allied products.
Set forth below is the name, business address and information
relating to the present principal occupation or employment of
the executive officers and directors of the Purchaser and the
Parent.
Executive Officers and Directors of
Faulding Holdings Limited
Title Name
--------------------- ------------------------------
Director, Chief Michael R.D. Ashton
Executive Officer, 200 Elmora Avenue
Chairman of the Board Elizabeth, New Jersey 07207
<PAGE>
CUSIP No. 608551107 Page 4 of 17 Pages
------------------- ------------------
Director, Secretary William R. Griffith
529 Fifth Avenue - 8th Floor
New York, New York 10017
Director Edward D. Tweddell
160 Greenhill Road
Parkside, South Australia 5063
Executive Officers and Directors of
F.H. Faulding & Co. Limited
Director, Chairman Alan G. McGregor
Director, Group Edward D. Tweddell
Managing Director
Director Rodney McNeil
Director Richard H. Fidock
Director Richard H. Allert
Director Peter C. Farrell
Director Robert W. Piper
Director John E. Jefferis
Chief Financial Executive, Geoffrey M. Pritchard
Company Secretary
Group Human Resources Steven J. McCallum
Manager
General Manager, Robert J. Weeks
Group Information Services
The business address for all of the above Executive Officers and
Directors of the Parent is:
160 Greenhill Road
Parkside
South Australia 5063
(d)-(f): During the past five years, neither the Purchaser nor the
Parent nor any of the individuals described above
<PAGE>
CUSIP No. 608551107 Page 5 of 17 Pages
------------------- ------------------
(i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to Federal or
State securities laws or finding any violation with respect to such
laws.
Each of the individuals is a citizen of Australia, with
the exception of William R. Griffith, who is a United States
citizen.
Item 3. Source and Amount of Funds or Other Consideration.
Initial Acquisition
-------------------
In September 1987 through December 1988, the Purchaser
utilized its general corporate funds, in part advanced to it by the
Parent, to pay $9,703,042 for the acquisition of an aggregate of
3,514,551 shares of the Issuer's Common Stock from Arthur
Obermayer, formerly the Chief Executive Officer and a principal
stockholder of the Issuer ("Obermayer") and his affiliate,
Moleculon Research Company (herein collectively referred to as the
"Obermayer Group"), as more fully described in Item 5 hereof.
The Purchaser also utilized its general corporate funds
to purchase from the Issuer 834,188 shares of the Issuer's Class A
Preferred Stock at a price of $29.34 per share, for an aggregate
purchase price of $24,475,076.
Put/Call Agreement
------------------
On December 20, 1988, the Purchaser also utilized its
general corporate funds, in part advanced to it by the Parent, to
pay $393,300 to acquire an option pursuant to which the Purchaser
could elect, within a twenty-month period which commenced on
December 20, 1988 (as such period under certain circumstances could
be extended), or to be required, during the final thirty days of
such period, to purchase up to an aggregate of 2,069,600 shares of
the Issuer's Common Stock from the Obermayer Group. To secure its
obligations, the Purchaser obtained an Irrevocable Transferable
Letter of Credit in the maximum amount of $2,801,824.
Distribution Agreement
----------------------
The Parent and Kalipharma, Inc., a Delaware corporation
and wholly-owned subsidiary of the Issuer which has subsequently
been renamed "Purepac Pharmaceutical Co." ("Issuer's Subsidiary"),
entered into a certain distribution agreement dated July 6, 1990
<PAGE>
CUSIP No. 608551107 Page 6 of 17 Pages
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(the "Distribution Agreement") which, among other matters, provided
for appointment of Issuer's Subsidiary as exclusive distributor of
a pharmaceutical product of the Parent within the United States.
The Distribution Agreement also required Issuer's Subsidiary to pay
to the Parent a one-time fee of $200,000 with respect to such
appointment. The Distribution Agreement granted to the Parent, in
lieu of such fee, the right to have the Purchaser receive an
immediately exercisable option to acquire such number of shares of
the Issuer's Common Stock having a market value in the aggregate of
$200,000. In calculating such amount, the shares were valued at
the average of the price of the Issuer's Common Stock during the
30-day period preceding July 6, 1990 (the "Distribution Agreement
Option").
The Option was exercised by the Parent and on September
11, 1991, a total of 152,381 shares of the Issuer's Common Stock
were issued to the Purchaser which reflected an average price per
share, calculated in the manner recited above, of $1-5/16.
Put/Call Stock
--------------
As stated and more fully described above, with respect to
an event occurring December 20, 1988, the Purchaser was also a
party to a certain Put/Call Agreement. The Put/Call Agreement
provided, among other things, that at certain times and under
certain circumstances, the Purchaser could elect, or the Obermayer
Group could require the Purchaser, to purchase from the Obermayer
Group up to an aggregate of 2,069,600 of the Shares of the Issuer's
Common Stock held by it.
The Put/Call Agreement was amended in several non-material
respects by a First Amendment to the Put/Call Agreement dated as of
June 15, 1990 by and among the Purchaser and the Obermayer Group.
On August 22, 1990, the Purchaser purchased an aggregate of 2,069,600
shares of the Issuer's Common Stock (the "Put/Call Stock") from the
Obermayer Group under the Put/Call Agreement, as amended, for $1.0846
per share, an aggregate of $2,244,688. The Purchaser paid this sum out
of its general corporate funds after they were advanced to it by the Parent.
On such date, the market price of the Issuer's Common Stock, as
reported by the National Quotation Bureau, was $2-3/4 per share.
Stock Dividend
--------------
As reported above, the Purchaser owns of record and
beneficially, among other securities of the Issuer, 834,188 shares
of the Issuer's Class A Preferred Stock (the "Preferred Stock").
As to dividends that are to be paid on the Preferred Stock, the
Issuer's Certificate of Incorporation, as amended, provides at
Section 1.3, in pertinent part:
<PAGE>
CUSIP No. 608551107 Page 7 of 17 Pages
------------------- ------------------
"if any dividend on any share shall not be
paid at the time such dividend shall become
due, at the option of the Company, such
dividend may be paid at any time . . . [in]
shares of common stock of the Corporation . ."
From December 31, 1989, an aggregate of $2,713,370 of
dividends in respect of the Preferred Stock had accrued, but had
not been paid as of February 14, 1991. On February 14, 1991, the
Board of Directors of the Issuer unanimously authorized payment of
$2,000,000 of such accrued but unpaid dividends through the
issuance of 1,103,448 shares of Common Stock of the Issuer (the
"Stock Dividend"). The shares representing the Stock Dividend were
issued on February 22, 1991.
The shares representing the Stock Dividend were priced at
$1.8125 per share, in accordance with the formula set forth in
Sections 1.5 and 1.6 of the Issuer's Certificate of Incorporation,
as amended, which provides that shares issued in lieu of a cash
dividend shall be valued at the average of the closing bid and
asked prices for such shares reported by the National Association
of Securities Dealers Automated Quotation System for the twenty
(20) consecutive trading days commencing five (5) trading days
preceding the date on which such dividend is declared.
The Purchaser's acquisition of the Stock Dividend did not
involve the expenditure by Purchaser of any funds or other consideration.
Letter of Intent
----------------
On August 9, 1995, the Purchaser and the Issuer entered
into a Letter of Intent, a copy of which is filed as an exhibit to
this Schedule (the "Letter of Intent"), which contemplates the
consummation of a transaction between the Purchaser and the Issuer
(the "Acquisition Transaction") whereby the Issuer will acquire
from the Purchaser all of the outstanding capital shares of each of
the Acquired Companies (as defined in Item 6 hereof) in exchange
for the Share Purchase Price (as hereinafter defined). The Letter
of Intent also contemplates the contemporaneous acquisition by the
Purchaser of 150,000 shares of a newly designated class of
preferred stock of the Issuer, more fully described below (the
"Class B Preferred Stock"), for an aggregate purchase price of
$15,000,000.
It is presently contemplated that the purchase price (the
"Share Purchase Price") for the shares of the Acquired Companies
will be 2,253,521 shares of the Issuer's Common Stock, subject to
adjustment as a result of changes in the net asset value of the
Acquired Companies from June 30, 1995 through the closing date.
<PAGE>
CUSIP No. 608551107 Page 8 of 17 Pages
------------------- ------------------
The $15 million aggregate purchase price of the 150,000
shares of the Issuer's Class B Preferred Stock will be payable in
full on the closing date in cash by the Purchaser to the Issuer
against the issuance of such shares. The Class B Preferred Stock
will accrue dividends at the rate of 4.5% per annum, have a
liquidation preference of $100 per share, plus the amount of any
accrued but unpaid dividends, and be convertible after the first
anniversary of issuance, at the ratio of 10.433 for one, into
shares of the Issuer's Common Stock.
The Purchaser anticipates that it will use its general
corporate funds, which will be advanced to it by the Parent, to
acquire the Class B Preferred Stock if and when such acquisition is
consummated. It is currently anticipated that the Acquisition
Transaction will be consummated on or about December 31, 1995.
Item 4. Purpose of Transaction.
The Purchaser entered into the Letter of Intent as a
result of its belief that the Acquired Companies and the Issuer (in
which the Purchaser already has a substantial ownership interest)
would independently and as a group benefit from joint ownership
under the Issuer's corporate structure, due to their complementary
product lines, the Issuer's existing infrastructure and the effects
of diversification and efficiencies of scale. The Purchaser
continues to seek to hold its current security holdings in the
Issuer, as well as the additional securities to be acquired as a
result of the proposed Acquisition Transaction, for investment
purposes.
The Purchaser intends to review, from time to time, its
position with respect to the Issuer and may depending upon
circumstances then existing, including its evaluation of the
Issuer's business, assets, operations, general economic conditions,
prevailing market prices for the Issuer's Common Stock and Class A
and Class B Preferred Stock and other factors, determine to
increase, decrease or dispose of its ownership of the Issuer's
Common Stock in open market, privately negotiated transactions, or
otherwise, or propose possible ways to attain increased
profitability of the Issuer, the restructuring of the Issuer's
operations or any extraordinary corporate transaction.
Except as described above and in Item 6 hereinafter, the
Purchaser does not have and, to the best of the Purchaser's
knowledge, none of the Purchaser's officers or directors has, any
present intention which relates to or would result in: (a) the
acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer; (b) an extraor-
dinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Issuer or any of its subsidiaries; (c)
<PAGE>
CUSIP No. 608551107 Page 9 of 17 Pages
------------------- ------------------
a sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries; (d) any change in the present board of
directors or management of the Issuer, including any plans or
proposals to change the number or terms of directors or to fill any
existing vacancies on the board; (e) any material change in the
present capitalization or dividend policy of the Issuer; (f) any
other material change in the Issuer's business or corporate
structure; (g) changes in the Issuer's charter, by-laws or
instruments corresponding thereto or other actions which may impede
the acquisition of control of the Issuer by any persons; (h)
causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association; (i) a class of equity securities of the
Issuer becoming eligible for termination of registration pursuant
to Section 12(g)(4) of the 1934 Act; or (j) any actions similar to
any of those enumerated above. The Purchaser, however reserves the
right to change its intention with respect to any of the foregoing.
Item 5. Interest in Securities of the Issuer.
(a) The number of issued and outstanding shares of Common
Stock of the Issuer is 12,581,223 (as last reported in the Issuer's
Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1995). The aggregate number and percentage of the class of
securities identified in Item 1 hereof beneficially owned by each
person named in Item 2 as of the date hereof is as follows:
(i) Purchaser owns 6,839,980 shares of Common Stock as
of the date hereof, which shares comprise 54.4% of the Issuer's
issued and outstanding Common Stock. This percentage assumes that
the number of issued and outstanding shares of the Issuer's Common
Stock is not increased subsequent to the date hereof and does not
take into account the consummation of the Acquisition Transaction.
(ii) As described in Item 1 above, the Purchaser may
increase its beneficial ownership of the Issuer's Common Stock, by
conversion of the Issuer's Class A Preferred Stock that is
currently held by the Purchaser, to approximately 67.35%. This
percentage assumes that the number of issued and outstanding shares
of the Issuer's Common Stock is not increased subsequent to the
date hereof, other than by the issuance of shares as set forth in
this Item 5a(ii) and does not take into account the consummation of
the Acquisition Transaction. Assuming such consummation and
subsequent conversion of both the Class A and B Preferred Stock,
the Purchaser's ownership would increase to 73.18% of the Issuer's
then issued and outstanding shares of Common Stock.
(b) The Purchaser owns and has the sole power to vote,
direct the voting of, dispose of and direct the disposition of
<PAGE>
CUSIP No. 608551107 Page 10 of 17 Pages
------------------- -------------------
6,839,980 shares of Common Stock as of the date hereof. These
shares comprise 54.4% of the Issuer's issued and outstanding Common
Stock.
(c) Except as otherwise disclosed herein, the Purchaser
is not aware of any transaction in the Common Stock of the Issuer
during the past sixty days by any persons named in Item 2 above.
(d) None.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of Issuer.
On August 9, 1995, the Purchaser and the Issuer entered
into the Letter of Intent providing for the Purchaser (a) to
exchange all of the capital stock of each of Faulding Puerto Rico,
Inc., a Delaware corporation, Faulding Pharmaceutical Co., a
Delaware corporation, and Faulding Medical Device Co., a Delaware
corporation, each a wholly-owned subsidiary of the Purchaser
(collectively, the "Acquired Companies"), for 2,253,521 shares of
the Issuer's Common Stock, subject to adjustment as a result in
changes in the net asset value of the Acquired Companies from June
30, 1995 through the closing date (the "Share Exchange"), and (b)
to purchase on the closing date of the Share Exchange for an
aggregate purchase price of $15 million, 150,000 shares of a newly
designated Class B Preferred Stock, the principal characteristics
of which are set forth in Item 3 of this Schedule.
The transactions are subject to a number of conditions,
including, without limitation, the execution of definitive
documentation, the approval of the Registrant's stockholders and
other conditions listed in the letter of intent, a copy of which is
filed as an exhibit to this Schedule. It is currently anticipated
that a closing will occur on or about December 31, 1995.
Item 7. Material to be Filed as Exhibits.
Sequential
Exhibit Description Page Number
--------- -------------------- -------------
Exhibit 1 Letter of Intent Page 12 of 17
dated August 9, 1995
between the Issuer
and Purchaser
<PAGE>
CUSIP No. 608551107 Page 11 of 17 Pages
------------------- -------------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: August 17, 1995
FAULDING HOLDINGS INC.
(formerly Faulding U.S.A. Inc.)
By: /s/Michael R.D. Ashton
----------------------
Michael R. D. Ashton
Chairman and Chief Executive Officer
<PAGE>
CUSIP No. 608551107 Page 12 of 17 Pages
------------------- -------------------
EXHIBIT 1
<PAGE>
CUSIP No. 608551107 Page 13 of 17 Pages
------------------- -------------------
FAULDING HOLDINGS INC.
August 9, 1995
Purepac, Inc.
200 Elmora Avenue
Elizabeth, New Jersey 07207
Attention: Richard Moldin, Chief Executive Officer
Gentlemen:
The purpose of this Letter of Intent is to set forth in principle
the terms of:
(i ) a proposed acquisition by Purepac, Inc., a Delaware corporation
("Purepac"), of all of the issued and outstanding capital shares of
the following Delaware corporations (collectively, the "Faulding
Companies"), each of which is a wholly owned subsidiary of Faulding
Holdings Inc., a Delaware corporation ("Holdings"):
(A) Faulding Puerto Rico, Inc.,
(B) Faulding Pharmaceutical Co. (formerly Faulding Hospital
Products, Inc.),
(C) Faulding Medical Device Co. (formerly DBL Inc.); and
(ii) the proposed sale by Purepac to Holdings of a newly designated
class of preferred stock of Purepac.
1. Terms of Transaction. Our current understanding of the proposed
terms of such acquisition of the Faulding Companies and the issuance and
sale of such preferred stock (collectively, the "Transaction") is set forth
in the Memorandum annexed hereto as Exhibit A (the "Memorandum").
2. Definitive Agreement. Our signatures on this Letter of Intent
will constitute our mutual consent hereto and to the outline contained in
the Memorandum. Following the signing of this Letter of Intent, we will
complete negotiation of a definitive stock purchase agreement and a
definitive preferred stock agreement (collectively, the "Definitive
Agreements") and any other collateral agreements necessary and proper to
effectuate the Transaction.
3. Exclusivity. Neither party will negotiate with any third parties
concerning the subject matter of the Transaction, or any part thereof, at
any time prior to 5:00 p.m. Eastern Standard Time on September 30, 1995, it
being understood that the parties will use good faith efforts to execute the
Definitive Agreements prior to such date. If Holdings and Purepac are
<PAGE>
CUSIP No. 608551107 Page 14 of 17 Pages
------------------- -------------------
unable to negotiate and execute the Definitive Agreements by the end of such
period, either party, for any reason whatever, may terminate negotiations by
written notice to the other parties, addressed to the address of such parties
set forth herein. Notwithstanding the foregoing, following termination,
neither party will have any continuing liability to the others hereunder,
except for breaches occurring under Paragraphs 3, 4, 5, 6 and 8 hereunder.
4. Limitation on Publicity. Purepac and Holdings will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Transaction and the matters contemplated
hereby and none of them shall issue any such press release or make any such
public statement without the prior consent of the other as to the content
thereof, except as may be required by law.
5. Expenses. Each of the parties hereto shall pay its own expenses
incident to the Transaction and the matters contemplated hereby, including
all fees of their respective attorneys, brokers or finders or financial
advisers, whether or not the Transaction shall be consummated.
6. Additional Information. Subsequent to the execution of this Letter
of Intent, and in connection with the negotiation and preparation of the
Definitive Agreements and related documents, Purepac shall have the right to
continue to undertake a thorough and complete "due diligence" examination of
the Faulding Companies. In connection therewith, Holdings shall continue to
make available to Purepac all information relating to the Faulding Companies
which Purepac may reasonably request. All non-public information so
furnished by Holdings shall be held by Purepac in strict confidence.
7. Notices. Any notice or other communication to be given hereunder
shall be in writing and either be delivered personally or be mailed,
certified or registered mail, postage prepaid, return receipt requested,
as follows:
If to Holdings, to:
Faulding Holdings Inc.
c/o Faulding Inc.
274 Riverside Drive
Westport, Connecticut 06880
Attention: Michael R. D. Ashton
Chief Executive Officer
With a copy to:
F. H. Faulding & Co. Limited
160 Greenhill Road
Parkside, South Australia 5063
Attention: Company Secretary
<PAGE>
CUSIP No. 608551107 Page 15 of 17 Pages
------------------- -------------------
If to Purepac:
Purepac, Inc.
200 Elmora Avenue
Elizabeth, New Jersey 07207
Attention: Richard F. Moldin, Chief Executive Officer
8. Intent of Parties. The agreements set forth in Paragraphs 3, 4, 5,
6 and 8 of this Letter of Intent shall be binding legal obligations of the
parties hereto. The remaining portions of this Letter of Intent and the
Memorandum are intended only as guidelines for the future negotiation of
binding enforceable agreements and are not intended to and shall not
constitute a binding legal obligation, which shall only arise upon the
execution and delivery of the Definitive Agreements. While the concepts
expressed in the Memorandum represent the mutual understanding of the parties
to date, it is not intended that the specific language of those provisions
shall not be negotiable, and the specific terms of the Definitive Agreements
are finally subject to the mutual approval of all parties thereto.
Nevertheless, this Letter of Intent and the Memorandum have been entered
into in good faith and it is contemplated that the parties will continue to
negotiate in good faith. This Letter of Intent shall be governed and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed solely within such State.
If the foregoing accurately reflects your understanding, please execute
where indicated below and return to the undersigned.
Very truly yours,
Faulding Holdings Inc.
By: /s/Michael R.D. Ashton
----------------------
Michael R. D. Ashton
Chief Executive Officer
Agreed and Accepted:
Purepac, Inc.
By: /s/Richard F. Moldin
--------------------
Richard F. Moldin
Chief Executive Officer
<PAGE>
CUSIP No. 608551107 Page 16 of 17 Pages
------------------- -------------------
EXHIBIT A
---------
to
Letter of Intent
Purepac, Inc
Faulding Holdings Inc.
MEMORANDUM OF PROVISIONS OF DEFINITIVE AGREEMENTS
-------------------------------------------------
The following is an outline of the provisions intended to be included in
the Definitive Agreements. Defined terms in this Memorandum shall have the
meanings ascribed in the Letter of Intent except as otherwise provided in
this Memorandum.
1. The Transaction. At the closing (the "Closing") of the Transaction:
(a) Purepac will acquire from Holdings all of the issued and
outstanding shares of the capital stock of each of the Faulding
Companies.
(b) Holdings will purchase from Purepac for an aggregate of Fifteen
Million Dollars ($15,000,000) One Hundred Fifty Thousand (150,000)
shares of New Preferred Stock.
It is anticipated that the Closing will occur on December 31, 1995.
2. Preferred Stock. As used herein, the term " New Preferred Stock"
shall mean a newly designated class of preferred stock of Purepac with rights
and preferences substantially similar to the Class A Preferred Stock of
Purepac, except that such New Preferred Stock:
(a) shall have a stated and liquidation value of One Hundred
Dollars ($100) per share,
(b) shall bear dividends, cumulatively, at the rate of 4.5% per
annum of the stated value, to be paid quarterly, and
(c) at the option of the holder thereof, shall be convertible into
shares of the common stock of Purepac, at a conversion rate bearing
a premium of 8% over the share closing price described in paragraph
3 below.
3. Purchase Price.
(a) The purchase price (the " Share Purchase Price") for the shares
of the Faulding Companies shall be Twenty Million Dollars
($20,000,000), subject to adjustment at Closing for any variation
in the Net Asset Value (excluding tax loss carryforwards) of the
Faulding
<PAGE>
CUSIP No. 608551107 Page 17 of 17 Pages
------------------- -------------------
Companies between June 30, 1995 and the Closing Date. As of June 30,
1995, such estimated Net Asset Value (excluding tax loss
carryforwards) is Seventeen Million Seven Hundred Thousand
Dollars ($17,700,000). The Share Purchase Price shall be payable
to Holdings at Closing by delivery of shares of the common stock
of Purepac, valued at $8.875 per share, which represents the
closing price of the common stock of Purepac as reported on the
NASDAQ National Market at the close of business on the date of this
Letter of Intent. Such shares shall not be registered under the
Securities Act of 1933, as amended, provided, however, that Holdings
shall be granted the right to request such registration, at
Purepac's expense, at any time after one year following the issuance
of such shares.
(b) The purchase price for each share of the New Preferred Stock
shall be the stated value thereof and shall be payable in full in
cash by Holdings to Purepac against the issuance of such shares
to Holdings at the Closing.
4. Additional Provisions. The Stock Purchase Agreement, the
Preferred Stock Agreement, and all collateral documents shall contain, among
other things, such terms, covenants, representations, warranties, disclosure
provisions, conditions to Closing and indemnification provisions as are
customary for a transaction of this size and type and as shall be negotiated
and agreed upon between the parties, including, without limitation, the
following conditions to Closing:
(a) there shall be no material changes in the assets, business or
financial condition of the Faulding Companies between the date of
execution of the Definitive Agreements and Closing, without the
consent of Purchaser;
(b) all material and necessary approvals and consents of
governmental authorities and other third parties to the
transaction shall have been obtained;
(c) the stockholders of Purepac, at a meeting of such stockholders
to be held not later than January 6, 1996, shall have consented to
and approved the Transaction in all material respects;
(d) unless waived by Australian Stock Exchange Ltd., the
stockholders of F.H. Faulding & Co. Limited, an Australian company,
the sole stockholder of Holdings, prior to January 6, 1996, shall
have consented to and approved the Transaction in all material
respects; and
(e) as of the date of Closing, all intercompany loans or other
indebtedness of the Faulding Companies to Holdings shall have been
converted by Holdings to equity in the Faulding Companies and there
shall be no outstanding debt due and owing by any of the Faulding
Companies to Holdings or any affiliate of Holdings.
