SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 1, 1995
PHARMACEUTICAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY FILE NUMBER 1-10827 22-3122182
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
ONE RAM RIDGE ROAD, SPRING VALLEY, NEW YORK 10977
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (914) 425-7100
TOTAL NUMBER OF PAGES -- 136
EXHIBIT INDEX IS LOCATED ON PAGE 4
ITEM 5. OTHER EVENTS.
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Stock Purchase Agreement.
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On May 1, 1995 (the "Closing"), the Registrant sold to Clal
Pharmaceutical Industries Ltd., an Israeli corporation ("Clal"), 2,027,272
shares of common stock, $.01 par value per share (the "Shares"), of the
Registrant ("Common Stock") representing approximately 12% of the issued and
outstanding Common Stock. In addition, the Company issued to Clal at the
Closing a Warrant to purchase 936,282 shares of Common Stock (the "Warrant").
The Shares and the Warrant were issued pursuant to a Stock Purchase Agreement,
dated March 25, 1995 (the "Agreement"), with Clal, which Agreement was amended
on May 1, 1995 (the "Amendment").
The following is a description of certain terms of the Agreement, the
Amendment, the Warrant and the Registration Rights Agreement. Such documents
are attached hereto as Exhibit 10.1, 10.2, 10.3 and 10.4, respectively. The
following descriptions of the terms of such documents do not purport to be
complete and are qualified in their entirety by reference to such Exhibits.
The Warrant provides for an exercise price of $10 per share for the
first year and $11 per share for the next two years, with an increase in such
exercise prices of $1 per share in the event of the issuance of the Additional
Warrant described below. The Warrant expires on May 1, 1998, subject to earlier
termination or redemption upon the occurrence of certain events as specified in
the Warrant.
Under the Agreement, the Registrant will issue to Clal an additional
warrant to purchase shares of Common Stock (the "Additional Warrant") if the
Registrant obtains the approval of its shareholders. The Additional Warrant
will have the same terms as the Warrant. The issuance of the Additional Warrant
is intended to allow Clal to purchase an additional number of shares of Common
Stock (approximately 740,000 shares) which, when added to the shares of Common
Stock owned by Clal at the time of issuance of the Additional Warrant and the
shares of Common Stock issuable upon exercise of the Warrant, would represent
19.99% of the Common Stock issued and outstanding as of the date of issuance of
the Additional Warrant (including, for this purpose, the shares of Common Stock
covered by the Warrant and the Additional Warrant).
Under the Agreement, Clal has the right to designate one-seventh of
the members of the Registrant's board of directors as long as Clal owns 8% of
the issued and outstanding Common Stock. Clal also has the right to designate a
total of two-sevenths of the members of the Registrant's board of directors if
Clal owns at least 14% (or, upon issuance of the Additional Warrant, 16%) of the
issued and outstanding Common Stock. In addition, Clal has the right to
designate a senior member of the Registrant's management.
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Clal has a right of first refusal with respect to certain business
combination transactions of the Registrant and certain sales of the assets or
securities of the Registrant as more fully described in the Agreement. Such
right extends for a period of 5 years from the Closing, provided that Clal, at
the time of exercise of such right (i) has not sold or disposed of shares of
Common Stock representing more than 2% of the Registrant's issued and
outstanding Common Stock and (ii) owns, or has the right to acquire under the
Warrant and the Additional Warrant, 14% (or, upon issuance of the Additional
Warrant, 16%) of the issued and outstanding Common Stock. If Clal does not
exercise its first refusal rights with respect to any of the above-mentioned
transactions, Clal will, subject to certain exceptions, be required to vote its
shares of Common Stock in favor of such transactions.
Under the Agreement, the Registrant has the right to participate with
Clal and certain of its affiliates in certain pharmaceutical acquisitions and
transactions. In connection therewith, Clal has agreed to use reasonable
efforts to cause Fine-Tech Ltd., an Israeli pharmaceutical research and
development company in which Clal owns an interest, to issue 10% of its capital
stock to the Registrant for $1,000,000 and to provide the Registrant with access
to certain pharmaceutical compounds developed by Fine-Tech Ltd.
Clal has agreed to limit acquisitions, including under the Warrant and
the Additional Warrant, of the Registrant's securities to 19.99% of the issued
and outstanding Common Stock prior to the third anniversary of the Closing. In
addition, Clal has agreed to limit such acquisitions to 25% of the issued and
outstanding Common Stock after the third anniversary of the Closing. Clal will
have the right to tender for or purchase no less than 70% of the issued and
outstanding Common Stock after the fifth anniversary of the Closing. These
limitations expire six months following the date of expiration of Clal's right
of first refusal as described above (the "Restrictive Period"). Clal also has
the right to acquire up to 20% of any equity securities issued by the Registrant
in an underwritten public offering so long as Clal, at the time, owns 10% of the
issued and outstanding Common Stock (assuming, for this purpose, the full
exercise of the Warrant and the Additional Warrant).
In connection with the Agreement, the Registrant granted to Clal
certain demand and piggy-back registration rights with respect to the shares of
Common Stock owned by Clal under the Registration Rights Agreement between the
Registrant and Clal. During the Restrictive Period, Clal has agreed to limit
any sales of Common Stock to any one person or entity or group of related
persons or entities in any transaction or series of related transactions to no
more than 3% of the issued and outstanding Common Stock.
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Joint Venture Agreements.
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The Registrant and Clal formed a joint venture at the Closing for the
research and development of generic pharmaceutical products. The joint venture,
organized as an Israeli limited partnership under the name of Clal
Pharmaceutical Resources Limited Partnership, and is owned 51% by Clal and 49%
by the Registrant. The parties have contributed $4 million to the joint
venture, and have agreed to contribute an additional $11 million over the next
two years. The joint venture's facilities will be primarily located in Israel.
Both Clal and the Registrant have certain manufacturing, sales and distribution
rights with respect to products developed by the joint venture and by each
other. Attached hereto as Exhibits 10.5, 10.6, 10.7, 10.8 and 10.9 are
agreements concerning the formation and operation of the joint venture. The
foregoing description of the terms of the joint venture agreements does not
purport to be complete and is qualified in its entirety by reference to such
Exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(c) Exhibits.
10.1 Stock Purchase Agreement, dated March 25, 1995, between the
Registrant and Clal Pharmaceutical Industries Ltd.
10.2 Amendment No. 1 to Stock Purchase Agreement, dated May 1,
1995, between the Registrant and Clal Pharmaceutical
Industries Ltd.
10.3 Warrant to Purchase Common Stock, dated May 1, 1995,
delivered by the Registrant to Clal Pharmaceutical
Industries Ltd.
10.4 Registration Rights Agreement, dated May 1, 1995, between
the Registrant and Clal Pharmaceutical Industries Ltd.
10.5 Clal Pharmaceutical Resources L.P. Limited Partnership
Agreement, dated as of May 1, 1995, among PRI-Research,
Inc., C.T.P. Research and Development (1995) Ltd. and Clal
Pharmaceutical Resources (1995) Ltd.
10.6 Clal Pharmaceutical Resources (1995) Ltd. Stockholders
Agreement, dated May 1, 1995, among PRI Research, Inc.,
C.T.P. Research and Development (1995) Ltd. and Clal
Pharmaceutical Resources Ltd.
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10.7 Supplemental Agreement, dated as of May 1, 1995, among the
Registrant, Clal Pharmaceutical Industries Ltd. and Clal
Pharmaceutical Resources L.P.
10.8 Guarantee of the Registrant, dated May 1, 1995.
10.9 Guarantee of Clal Pharmaceutical Industries Ltd., dated May
1, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PHARMACEUTICAL RESOURCES, INC.
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(Registrant)
May 12, 1995 /s/ Robert I. Edinger
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Robert I. Edinger
Vice President and Chief Officer
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Exhibit Index
Exhibit No. Description Seq. Page No.
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10.1 Stock Purchase Agreement, 9
dated March 25, 1995, between
the Registrant and Clal
Pharmaceutical Industries Ltd.
10.2 Amendment No. 1 to Stock 48
Purchase Agreement, dated May
1, 1995, between the
Registrant and Clal
Pharmaceutical Industries Ltd.
10.3 Warrant to Purchase Common 50
Stock, dated May 1, 1995,
delivered by the Registrant to
Clal Pharmaceutical Industries
Ltd.
10.4 Registration Rights Agreement, 59
dated May 1, 1995, between the
Registrant and Clal
Pharmaceutical Industries Ltd.
10.5 Clal Pharmaceutical Resources 70
L.P. Limited Partnership
Agreement, dated as of May 1,
1995, among PRI-Research,
Inc., C.T.P. Research and
Development (1995) Ltd. and
Clal Pharmaceutical Resources
(1995) Ltd.
10.6 Clal Pharmaceutical Resources 100
(1995) Ltd. Stockholders
Agreement, dated May 1, 1995,
among PRI-Research, Inc.,
C.T.P. Research and
Development (1995) Ltd. and
Clal Pharmaceutical Resources
Ltd.
10.7 Supplemental Agreement, dated 114
as of May 1, 1995, among the
Registrant, Clal
Pharmaceutical Industries Ltd.
and Clal Pharmaceutical
Resources L.P.
10.8 Guarantee of the Registrant, 134
dated May 1, 1995.
Exhibit No. Description Seq. Page No.
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10.9 Guarantee of Clal 135
Pharmaceutical Industries
Ltd., dated May 1, 1995