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EXHIBIT 3
ALPHARMA INC.
XXX XXXXXXXXX XXXXX
XXXX XXX, XXX XXXXXX 00000
July 11, 2001
A. L. Industrier AS
Harbitzalleen 3
Postboks 158 Xxxxxx
N-0212 Xxxx 0, Xxxxxx
Gentlemen:
This letter agreement between A. L. Industrier AS ("ALI") and Alpharma
Inc. ("ALO") will confirm our following agreement regarding (i) 5 3/4% series B
subordinated convertible note due 2005 in the principal amount of $67,850,000
which ALI holds (the "B Note") and (ii) the proposed purchase of the oral
pharmaceutical business of X.X. Xxxxxxxx & Co Limited ("Faulding") by ALO
previously disclosed to ALI and known as Project FIG II (the "FIG II
Acquisition"):
1. Except as set forth below, ALI agrees that upon not less than
five (5) days written notice, ALI (or one of its subsidiaries)
will deliver to ALO the B Note in exchange (the "Exchange")
for (i) 2,372,897 shares (such number of shares being the
number of shares that ALI would be entitled to upon a
conversion of the B Note pursuant to its terms) of fully paid
and non-assessable Class B common stock of ALO ("Class B
Common Stock") and (ii) the agreement of ALO to pay to ALI (or
such subsidiaries) a payment equal to the amount of interest
equal to the greater of (x) the interest accrued through the
date of the Exchange on the B Note or (y) that interest which
would accrue on the B Note from April 1, 2001 through October
1, 2001 (less any accrued interest with respect to such period
otherwise paid with respect to the B Note).
2. It is understood that the Exchange is being done to provide
equity financing for the FIG II Acquisition, and is contingent
upon Mayne Health Logistics Pty Limited ("BidCo") closing the
Offer Period (as defined in the Put and Call Option Agreement
by and among ALO, Oral Pharmaceuticals Acquisition Corp.,
Mayne Xxxxxxxx Limited ("Mayne") and BidCo (the "Put and Call
Option Agreement")) after it becomes entitled to proceed to
compulsory acquisition as contemplated by clause 2.5 of the
Put and Call Option Agreement (the "Offer Closing"). The
Exchange shall occur prior to the
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acquisition by Mayne of 100% of Faulding's outstanding capital
stock. In the event that the Put and Call Option Agreement
terminates prior to the Offer Closing, this agreement shall
terminate and be of no further effect.
3. Nothing in this agreement shall preclude or affect any
decision by ALO calling for redemption of all of the 5 3/4%
Subordinated Convertible Notes due 2005 convertible into Class
A common stock (the "A Notes") at any time in accordance with
the terms of the A Notes.
4. If, at any time prior to the Offer Closing, ALO calls all of
the A Notes for redemption and the holders of a majority of
the A Notes elect to receive cash, it is agreed that upon the
Exchange, ALI (or its appropriate subsidiaries) shall receive,
in addition to the amount described in paragraph 1, an amount
equal to 3.286% of the face amount of the B Note.
5. If, at any time prior to the Offer Closing, ALO calls all of
the A Notes for redemption and the holders of a majority of
the A Notes elect to convert the A Notes into Class A common
stock, it is agreed that ALI (or its appropriate subsidiaries)
shall remain obligated to effect the Exchange pursuant to
paragraph 1 above, but ALO shall not be obligated to pay to
ALI (or its appropriate subsidiaries), and ALI (or such
subsidiaries) shall not be entitled to receive, any payments
pursuant to clause (ii) of paragraph 1 above.
6. If, at any time prior to the Offer Closing, ALO, pursuant to
an offer to the holders of all of the A Notes, makes a payment
to the holders of a majority of the A Notes to induce the
conversion of the A Notes into Class A common stock, it is
agreed that upon the Exchange, ALI (or its appropriate
subsidiaries) shall receive a payment which is equal to that
received by the holders of the A Notes (on a pro rata basis
based upon the relative face value of the converted A Notes
with the B Note).
7. If ALO makes an offer to enter into any of the transactions
contemplated by paragraphs 4 through 6 above to less than all
of the holders of the A Notes (and such transaction occurs
prior to the Offer Closing), it is agreed that upon the
Exchange, ALI (or its appropriate subsidiary) shall receive
payments in an aggregate amount equal to, (i) the amount that
is determined by multiplying (a) the amount that ALI (or such
subsidiary) would have received pursuant to paragraph 4, 5, or
6 above if such offer had been made to the holders of all of
the A Notes, by (b) the percentage represented by the value of
the A Notes which accepted such offer in relation to the total
value of A Notes outstanding, plus (ii) the amount that is
determined by multiplying (x) the amount that ALI (or such
subsidiary) would have received pursuant to paragraph 1 above,
by (y) the percentage represented by the value of the A Notes
which did not receive or did not accept such offer in relation
to the total value of A Notes outstanding.
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8. Both ALI (or its appropriate subsidiary) and ALO shall execute
such documents, deliver such certificates and take such other
actions as are necessary and appropriate to effect the
transactions contemplated hereby.
Yours truly,
ALPHARMA INC.
By:
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Acknowledged and agreed:
A. L. INDUSTRIER AS
By:
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By:
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By:
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