-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q4wVOuEBPhcYR6pb54HHzeQX7hgWFyx3yHn9WP4CaXNh77OdPX3PayTf+pTFiKF5 8XJnxo/i9qXarpfUkByLNg== 0000950116-97-001191.txt : 19970623 0000950116-97-001191.hdr.sgml : 19970623 ACCESSION NUMBER: 0000950116-97-001191 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970620 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970620 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAULDING INC CENTRAL INDEX KEY: 0000729069 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 042769995 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13588 FILM NUMBER: 97627540 BUSINESS ADDRESS: STREET 1: 200 ELMORA AVE CITY: ELIZABETH STATE: NJ ZIP: 07207 BUSINESS PHONE: 9085279100 MAIL ADDRESS: STREET 1: 200 ELMORA AVENUE STREET 2: 200 ELMORA AVENUE CITY: ELIZABETH STATE: NJ ZIP: 07207 FORMER COMPANY: FORMER CONFORMED NAME: PUREPAC INC/ DATE OF NAME CHANGE: 19940908 FORMER COMPANY: FORMER CONFORMED NAME: MOLECULON INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MOLECULON BIOTECH INC DATE OF NAME CHANGE: 19860417 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: June 20, 1997 FAULDING INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Delaware 0-13588 04-2769995 - --------------- --------------------- ------------- (State or Other (Commission File No.) (IRS Employer jurisdiction of Identification incorporation) Number) 200 Elmora Avenue, Elizabeth, New Jersey 07207 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (908) 527-9100 ----------------------------- - -------------------------------------------------------------------------------- This document consists of 4 consecutively numbered pages; Index to Exhibit appears on p. 3. Item 5. Other Events On June 3, 1997, the Registrant received a merger proposal (the "Proposal") from F.H. Faulding & Co. Limited ("Faulding") the parent of Registrant's majority stockholder, Faulding Holdings Inc. ("Holdings"). In the Proposal, Faulding offered to acquire all of the outstanding shares of common stock, par value $0.01 per share (the "Common Stock"), of Registrant not currently owned by Holdings at a price of $12 per share in cash. Faulding currently owns approximately 61.5% of the Company's outstanding Common Stock and would own approximately 73.2% of the Common Stock upon the conversion of its preferred stock in the Registrant. The acquisition contemplated by the Proposal would be structured as a merger pursuant to which a newly organized United States subsidiary of Faulding would be merged into the Registrant as a result of which a subsidiary of Faulding would acquire all of the issued and outstanding shares of Common Stock that are not currently owned by it for $12 per share in cash. The Board of Directors of the Registrant held a meeting on June 3, 1997 and appointed a Special Committee of the Board, consisting of Bruce C. Tully and Joseph C. Minio, who are outside, independent directors of the Registrant, to consider whether the proposal is fair to and in the best interest of the Registrant and its stockholders, and to recommend whether the Board of Directors should accept the proposal. The Special Committee has hired the law firm of White & Case to act as independent legal counsel and intends to hire an investment banking firm to act as independent financial advisors to assist the Special Committee in its evaluation of the Proposal. Following public announcement of the Proposal, four lawsuits, all brought as purported class actions, were filed in the Delaware Chancery Court, naming the Registrant, the members of the Board of Directors of the Registrant, Faulding and Holdings as defendants. Copies of the complaints are annexed hereto. 1 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Financial Statements Inapplicable (b) Pro Forma Financial Information Inapplicable (c) Exhibits 99.1 Letter, dated June 3, 1997 from Edward D. Tweddell, CEO, Group Managing Director, F.H. Faulding & Co. Limited to Board of Directors, Faulding Inc. 99.2 Faulding Inc. press release dated June 3, 1997 99.3 Class Action Complaint in Dechter v. Tweddell, civ. A. No. 15722NC 99.4 Class Action Complaint in Golde v. Faulding Inc., civ. A. No. 15728NC 99.5 Class Action Complaint in Harbor Finance Partners v. Tweddell, civ. A. No. 15724NC 99.6 Class Action Complaint in Zimmerman v. Moldin, civ. A. No. 15723NC 2 SIGNATURE 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. Dated: June 20, 1997 FAULDING INC. (Registrant) By:___________________________ Richard F. Moldin Chief Executive Officer 3 EX-99.1 2 LETTER TO BOARD OF DIRECTORS OF THE ISSUER EXHHIBIT 99.1 LETTER TO BOARD OF DIRECTORS OF THE ISSUER, DATED JUNE 3, 1997 3 June 1997 Board of Directors Faulding Inc 200 Elmora Avenue Elizabeth New Jersey 07207 Dear Sirs, The Board of Directors of FH Faulding & Co Limited ("Faulding") has authorised me to make a proposal on behalf of Faulding to acquire all of the outstanding shares of common stock, par value $0.01 per share (the "Common Stock"), of Faulding Inc not currently owned by Faulding at a price of US$12 per share in cash. As you know, Faulding has owned a substantial majority of the outstanding shares of Common Stock since 1989 and Faulding currently owns approximately 64% of the Company's outstanding Common Stock and approximately 73% of the Common Stock on a fully diluted basis. Faulding believes it would be in the mutual best interest of Faulding, Faulding Inc and the shareholders of Faulding Inc for Faulding to acquire the shares of Common Stock that it does not already own on the terms and conditions set forth in this letter. Faulding is prepared to enter into a merger agreement pursuant to which a newly organised United States subsidiary of Faulding would be merged into Faulding Inc as a result of which a subsidiary of Faulding would acquire all of the issued and outstanding shares of Common Stock that are not currently owned by it at a price of US$12 per share in cash. The merger agreement would be in a form customary for transactions of this type. Our proposal presumes that there will be no material adverse change in the results or operations, business or financial condition of Faulding Inc and its subsidiaries taken together. We believe that this proposal is fair to the minority stockholders of Faulding Inc. It provides a substantial premium to recent market prices to holders of Faulding Inc's Common Stock and enables Faulding Inc's shareholders to receive cash for their shareholdings now at a premium per share price which they are unable to recognise in the market. The US$12 offer price represents a premium of approximately 78%, 28% and 11% over the average of the closing market price of Faulding Inc's Common Stock during the latest twelve-month, three-month and one-month periods, respectively. Furthermore, the offer price represents a multiple of approximately 25 times the average of the publicly forecasted earnings per share for the fiscal year ending June 30, 1998. Because of Faulding's holdings in Faulding Inc and my service on Faulding Inc's Board, I believe that our proposal should be considered by a committee of the Board consisting of independent directors advised by independent legal and financial advisers selected by them. I would like to arrange a telephonic meeting of the Board as soon as possible to create this committee. As with any firm proposal of this nature, time is of the essence. We are in a position to proceed on an expedited basis. Yours sincerely, Edward D. Tweddell CEO/Group Managing Director EX-99.2 3 PRESS RELEASE OF FH FAULDING & CO LIMITED EXHIBIT 99.2 PRESS RELEASE OF FH FAULDING & CO LIMITED, DATED JUNE 3, 1997 3 June, 1997 -- Adelaide, Australia FH Faulding & Co Limited announces US $12 per share merger proposal for US subsidiary Faulding Inc FH Faulding & Co Limited (Faulding) announced today that its Board of Directors had approved a proposal to the Board of Directors of Faulding Inc to acquire all of the common shares of Faulding Inc not already owned by Faulding for US $12 per share in cash. Faulding currently owns approximately 62% of the outstanding shares of common stock of Faulding Inc and approximately 73% on a fully diluted basis. Approximately 5,815,868 shares of Faulding Inc's common stock are owned by the public. The proposal, which was made in a letter delivered today to Faulding Inc, involves a cash merger in which a newly formed wholly owned subsidiary of Faulding would be merged into Faulding Inc and would acquire all of the issued and outstanding common shares that are not currently owned by Faulding at a price of US$12 per share in cash. Dr Edward Tweddell, the Group Managing Director/Chief Executive Officer of Faulding and Chairman of the Board of Faulding Inc, indicated that he planned to seek a meeting of the Board of Directors of Faulding Inc as soon as possible and would propose that the Board of Faulding Inc appoint a committee of its independent directors to consider Faulding's proposal. Faulding has appointed Dillon, Read & Co. Inc. to act as its investment banker in this transaction. Faulding intends to fund the merger by means of a rights issue for which an underwriting offer has been received from JB Were & Son. For further information, please contact: Dr. Edward Tweddell Group Managing Director/Chief Executive Officer Telephone: +61 8 8205 6500ENDS (2/6/97) EX-99.3 4 EXHIBIT 99.3 EXHIBIT 99.3 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ------------------------------------------------------x AIMEE DECHTER, : : Plaintiff, : : -against- : Civil Action No. 15722NC : EDWARD D. TWEDDELL, RICHARD : F. MOLDIN, ALAN G. MCGREGOR, : JOSEPH C. MINIO, BRUCE C. TULLY, : WILLIAM R. GRIFFITH, FAULDING INC. : FH FAULDING & CO., LIMITED : and FAULDING HOLDINGS INC. : : Defendants. : - ------------------------------------------------------x CLASS ACTION COMPLAINT Plaintiff alleges the following upon information and belief, except for those allegations which pertain to plaintiff, which allegations are based upon personal knowledge: THE PARTIES 1. Plaintiff is the owner of shares of common stock of Faulding Inc. ("Faulding" or the "Company"), and has been the owner continuously of such shares since prior to the wrongs complained of herein. 2. Faulding is a corporation duly existing and organized under the laws of the State of Delaware, with its principal executive offices located at 200 Elmora Avenue, Elizabeth, New Jersey 07207. Faulding is in the business of developing, 1 manufacturing, and selling generic drugs. Faulding's products include antibiotics, cardiovascular drugs, anti-inflammatories, analgesics, injectable drugs, dispensing devices, and anti-cancer drugs. 3. Defendant FH Faulding & Co., Limited ("FHF") is an Australian pharmaceutical company that, through its subsidiary, defendant Faulding Holdings Inc., currently owns approximately 62% of the common stock of Faulding, or approximately 73% on a fully diluted basis. 4. Defendants Edward D. Tweddell, Richard F. Moldin, Alan G. McGregor, Joseph C. Minio, Bruce C. Tully, and William R. Griffith are and were at all relevant times directors of Faulding and owe fiduciary duties of good faith, care, fair dealing, loyalty, and candor to the public shareholders of Faulding. FHF, as majority shareholder of Faulding, owes the same duties to Faulding public shareholders. 5. Defendant Tweddell is and was at all relevant times Chairman of the Board of Directors and a director of the Company. Tweddell is also Chief Executive Officer and a director of FHF. 6. Defendant Molding is and was at all relevant times President, Chief Executive Officer, and a director of the Company. 7. Defendant McGregor is and was at all relevant times a director of the Company. McGregor is also Chairman of the Board of Directors and a director of FHF. 2 8. Defendant Griffith is and was at all relevant times Secretary and a director of the Company. Griffith is a member of the law firm that is the Company's outside legal counsel and the primary United States counsel to FHF. CLASS ACTION ALLEGATIONS 9. Plaintiff brings this action pursuant to Rule 23 of the Rules of the Court of Chancery on behalf of herself and all other stockholders of the Company, and their transferees and their successors in interest, who are threatened with injury by the wrongful acts of defendants as further described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants. 10. This action is properly maintainable as a class action for the following reasons: (a) The Class is so numerous that joinder of all members is impracticable. While the exact number of class members is unknown to plaintiff at this time and can only be ascertained through appropriate discovery, there are more than 15 million shares of Faulding common stock outstanding held by approximately 472 shareholders or record. The holders of these shares are believed to be geographically dispersed throughout the United States. Faulding common stock is listed and actively traded on the NASDAQ National Market System; (b) There are questions of law and fact which are common to members of the Class including, inter alia, the following: 3 (i) whether defendants have engaged in conduct constituting unfair dealing to the detriment of the Class; (ii) whether the proposed transaction is grossly unfair to the Class; and (iii) whether plaintiff and the other members of the Class would be irreparably damaged were the transaction complained of herein consummated; (c) The claims of plaintiff are typical of the claims of the other members of the Class and plaintiff has no interest that is adverse or antagonistic to the interests of the Class; and (d) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. SUBSTANTIVE ALLEGATIONS 11. Faulding's financial condition has improved and its future growth is expected to increase as well. By way of example, on February 12, 1997, Bloomberg News Service reported that defendant Moldin, in conjunction with announcing the financial results for the second quarter of fiscal 1997, ending December 31, 1996, stated: We have made steady progress since our restructuring last year, and Faulding now is poised for greater sales and profits because of the record number of new products that it has moving through the pipeline at the Food and Drug Administration into the marketplace. . . . 4 Faulding currently has 14 new generic drug and medical device products on file with the FDA. Since last November, we have received FDA approval to market three new products: clonazepam tablets, Safe-Connect(TM) valve, iopamidol injection plus the first and so far, only tentative approval for etodolac tablets. Three of these are expected to be commercialized in the next month . . . . 12. On April 30, 1997, Bloomberg News Service reported Faulding's third quarter results for fiscal 1997. For that period, the Company had net sales of $25.2 million and net income of $1.5 million, compared with sales of $18.5 million and a net loss of $2.1 million for the same quarter in 1996. Defendant Moldin again commented: Faulding has continued to deliver on its promise of greater sales and profits since its restructuring in early 1996. This quarter's success was a direct result of the commercial launch of two new oral products . . . . Our new management team's competence in timely drug development and regulatory approvals now compares very favorably to the best in the industry . . . . We have proved that we can survive in the most challenging of competitive environments, but must continue to move forward aggressively in order to fulfill the commitment we have made to our shareholders. 13. On June 3, 1997, it was announced that FHF had offered to acquire the remaining shares of Faulding that it does not already own for $12 per share in cash (the "Buyout Transaction"). 14. The purpose of the Buyout Transaction is to enable FHF to acquire one hundred (100%) percent equity ownership of Faulding and its valuable assets for its own benefit at the expense of Faulding's public stockholders who will be deprived of their 5 equity investment and the benefits thereof including, among other things, the expected growth in the Company's profitability. 15. The price of $12 cash per share to be paid to class members is unfair and grossly inadequate because, among other things: (a) the intrinsic value of Faulding's common stock is materially in excess of the amount offered for its securities, giving due consideration to the Company's recent operating results, the recent market price of the Company's stock and Faulding's present and projected net asset value, cash flow, and profitability; (b) analysts following Faulding have projected Faulding's continued profitability over the next few years, a continuation of the increase in revenues and earnings per share for 1995 and 1996; (c) because FHF has an overwhelming controlling interest in the Company's common stock, no third party will likely bid for Faulding. Thus, FHF will be able to proceed with the Buyout Transaction without an auction or other type of market check to maximize value for Faulding's public shareholders; and (d) FHF timed the announcement of the Buyout Transaction to place an artificial lid or cap on the market price for Faulding's stock to enable FHF to acquire the minority stock at the lowest possible price. 16. By reason of their positions with Faulding and FHF's controlling ownership of the Company, defendants are in possession of non-public information concerning the financial condition and prospects of Faulding, and especially the true 6 value and expected increased future value of Faulding and its assets, which they have not disclosed to Faulding's public stockholders. 17. The proposed Buyout Transaction is wrongful, unfair and harmful to Faulding's minority public stockholders, and represents an effort by defendants to aggrandize FHF's financial position and interests at the expense of and to the detriment of class members. The Buyout Transaction is an attempt to deny plaintiff and the other members of the Class their right to share proportionately in the true value of Faulding's valuable technology, future growth in profits, earnings and dividends, while usurping the same for the benefit of FHF on unfair and inadequate terms. 18. Defendants, in failing to disclose the material non-public information in their possession as to the value of Faulding's technology, the full extent of the future earnings potential of Faulding and its expected increase in profitability, have breached and are breaching their fiduciary duties to the members of the Class. 19. As a result of defendants' unlawful actions, plaintiff and the other members of the Class will be damaged in that they will not receive their fair portion of the value of Faulding assets and business and will be prevented from obtaining the real value of their equity ownership of the Company. 20. Unless the proposed Buyout Transaction is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to the plaintiff and the members of the Class, will not engage in arm's-length negotiations on the merger terms, and will consummate and close the proposed merger complained of, to the irreparable harm of the members of the Class. 7 21. Plaintiff and other Class members are immediately threatened by the acts and transactions complained of herein, which if effectuated and continued, will cause irreparable injury to them, in that the defendants' duties to act in the entire best interests of the shareholders have and will continue to be violated as a result of the actions described above which will cause Faulding shareholders significant impairment of their rights as stockholders of the Company. 22. Absent injunctive relief, plaintiff and the other members of the Class have been and will be damaged in that they have not and will not receive their fair proportion of the value of Faulding's assets and businesses, and have been and will be prevented from enhancing the value of their shares of the Company's common stock. 23. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: (a) declaring this action to be a proper class action and certifying plaintiff as representative of the Class; (b) granting preliminary and permanent injunctive relief against consummation of the Buyout Transaction as described herein; (c) in the event the Buyout Transaction is consummated, rescinding the Buyout Transaction or awarding rescissory damages to the Class; (d) ordering defendants, jointly and severally, to account to plaintiff and other members of the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; 8 (e) awarding plaintiff the costs and disbursements of the action including allowances for plaintiff's reasonable attorneys' and experts' fees; and (f) granting such other and further relief as the Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: ______________________________ Suite 1401, Mellon Bank Center P.O. Box 1070 Wilmington, DE 19899 Attorneys for Plaintiff OF COUNSEL: WOLF POPPER LLP 845 Third Avenue New York, New York 10022 (212) 759-4600 9 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY AIMEE DECHTER, : CIVIL ACTION NO. 15722-NC Plaintiff, : : SUMMONS PURSUANT VS. : TO 10 DEL.C. Sec. 3114 : ------ : EDWARD D. TWEDDELL, RICHARD F. MOLDIN, : ALAN G. MCGREGOR, JOSEPH C. MINIO, : BRUCE C. TULLY, WILLIAM R. GRIFFITH, : FAULDING INC., FH FAULDING & CO., : LIMITED, and FAULDING HOLDINGS INC., : : Defendants. : TO THE SPECIAL PROCESS SERVER YOU ARE COMMANDED: To Summon the above named individual defendants by service pursuant to 10 Del.C. Sec. 3114 upon Faulding Inc., a Delaware corporation, by serving its registered agent United Corporate Services Inc., which is designated for service of process in Delaware, so that within the time required by law, such defendants shall serve upon Joseph A. Rosenthal, Esq., plaintiff's attorney whose address is P.O. Box 1070 Wilmington, DE 19899-1070 an answer to the complaint. To serve upon defendants a copy hereof, of the complaint, and of a statement of plaintiff filed pursuant to Chancery Court Rule 4(dc)(1). TO THE ABOVE NAMED DEFENDANTS: In case of your failure, within the time permitted by 10 Del.C. Sec. 3114*, to serve on plaintiff's attorney named above an answer to the complaint, judgment by default may be rendered against you for the relief demanded in the complaint. Dated June 5, 1997 /s/ Diane M. Kempski -------------------------------------------- -------------------- Register in Chancery *The text of 10 Del.C. Sec. 3114 is set out on the reverse of this Summons ------- 1 CIVIL ACTION NO. 15722-NC AIMEE DECHTER, Plaintiff vs. EDWARD D. TWEDDELL, ET AL, Defendant SUMMONS 1. Edward D. Tweddell 2. Richard F. Moldin 3. Alan G. McGregor 4. Joseph C. Minio 5. Bruce C. Tully 6. William R. Griffith by serving the registered agent for Faulding Inc.: United Corporate Services Inc. 15 East North Street Dover, DE 19901 pursuant to 10 Del.C.ss.3114 ------ SERVICE TO BE COMPLETED BY SPECIAL PROCESS SERVER Sec. 3114. Service of process on non-resident, directors, trustees of members of the governing body of Delaware corporations. (a) Every non-resident of this State who after September, 1977, accepts Election or appointment as a director, trustee or member of the governing body of a corporation organized under the laws of this State of who after June 30, 1978, serves in such capacity and every resident of this State who so accepts election or appointment of serves in such capacity and thereafter removes his residence from this State shall, by such acceptance or by such service, be deemed thereby to have consented to the appointment of the registered agent of such corporation (or, if there is none, the Secretary of State) as his agent upon whom service of process may be made in all civil actions or proceedings brought in this State, by or on behalf of, or against such corporation, in which such director, trustee or member is a necessary or proper party, or in any action or proceeding against such director, trustee or member for violation of his duty in such capacity, whether or not he continues to serve as such director, trustee or member at the time suit is commenced. Such acceptance of service as such director, trustee or member shall be a signification of the consent of such director, trustee or member that any process when so served shall be of the same legal force and validity as if served upon such director, trustee or member within this State and such appointment of the registered agent (or, if there is none, the Secretary of State) shall be irrevocable. (b) Service of process shall be effected by serving the registered agent (or, if there is none, the Secretary of State) with 1 copy of such process in the manner provided by law for service of writs of summons. In addition, the Prothonotary or the Register in Chancery of the court in which the civil action or proceeding is copies of the process, together with a statement that service is being made pursuant to this section, addressed to such director, trustee or member at the corporation's principal Place of business and at his residence address as the same appears on the records of the Secretary of State, or, if no such residence address appears, at his address last known to the party desiring to make such service. (c) In any action in which any such director, trustee of member has been served with process as hereinabove provided, the time in which a defendant shall be required to appear and file a responsive pleading shall be computed from the 2 date of mailing by the Prothonotary of the Register in Chancery as provided in subsection b) of this section; however, the court in which such action has been commenced may order such continuance of continuances as may be necessary to afford such director, trustee of member reasonable opportunity to defend the action. (d) Nothing herein contained limits or affects the rights to seve process in any other manner now or ehreafter provided by law. This section is an extension of and not a limitation upon the right otherwise existing of service of legal process upon non-residents. (e) The Court of Chancery and the Superior Court may make all necessary rules respecting the form of process, the manner of issuance and return thereof and such other rules which may be necessary to implement this section and are not inconsistent with this section (61 Del. Laws, c. 119 Sec.1) EX-99.4 5 CLASS ACTION COMPLAINT EXHIBIT 99.4 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - --------------------------------------------------- : C.A. No. 15728-NC MICHAEL J. GOLDE I/R/A, on behalf of : itself and all others similarly situated, : : Plaintiff, : CLASS ACTION : COMPLAINT -against- : : FAULDING INC., EDWARD D. TWEDDELL, : ALAN G. MCGREGOR, RICHARD F. MOLDIN : DAVID BERETTA and BRUCE C. TULLY : : Defendants. : - --------------------------------------------------- Plaintiff, by its attorneys, alleges upon information and belief, except as to paragraph 1 which plaintiff alleges upon knowledge, as follows: 1. Plaintiff Michael J. Golde I/R/A/ is and was, at all times relevant to this action, a stockholder of defendant Faulding Inc. ("Faulding" or the "Company"). 2. Defendant Faulding is a corporation duly organized and existing under the laws of the state of Delaware, with its principal offices located at 20 Elmora Avenue, Elizabeth, New Jersey 07207. There are currently over 15 million shares of Faulding common stock outstanding. Faulding is a holding company with subsidiaries which develop and manufacture generic oral drug products and generic injectable pharmaceutical products. The Company also designs, develops and commercializes disposable medical devices and injectable drug delivery system devices. Approximately 62% of the 15 million outstanding shares of Faulding are held by F.H. Faulding & Co. ("FHFC"), a healthcare products company based in Australia. 3. Defendant Edward D. Tweddell ("Tweddell"), at all times relevant hereto, held the position of Chairman of the Board of Faulding. 4. Defendant Richard F. Moldin ("Moldin"), at all times relevant hereto, held the positions of President, Chief Executive Officer and Chief Operating Officer of Faulding. 5. Defendants Alan G. McGregor, David Beretta and Bruce C. Tully are and were together with Tweddell and Moldin, at all times relevant hereto, members of the boards of directors of Faulding. They are sometimes referred to herein as the "Individual Defendants". 6. The Individual Defendants as officers and directors of Faulding have a fiduciary relationship and responsibility to plaintiff and the other common public stockholders of Faulding and owe to plaintiff and the other class members the highest obligations of good faith, loyalty, fair dealing, due care and candor. CLASS ACTION ALLEGATIONS 7. Plaintiff brings this action pursuant to Rule 23 of the Rules of the Court of Chancery on behalf of himself and all other stockholders of the Company (except defendants and any person, firm, trust, corporation, or other entity related to or affiliated with any defendant), who are or will be adversely affected by the conduct of the defendants as more fully described herein (the "Class"). 2 8. This action is properly maintainable as a class action for the following reasons: (a) This Class action is so numerous that joinder of all members is impracticable. As of February 6, 1997, Faulding had approximately 15 million shares of common stock outstanding; (b) The members of the Class are scattered throughout the United States and are so numerous as to make it impracticable to bring them all before this Court; (c) There are questions of law and fact which are common to the Class including, inter alia, the following: i. whether defendants are breaching their fiduciary duties owed by them to plaintiff and members of the class and/or have aided and abetted in such breach, by virtue of their participation and/or acquiescence and by their other conduct complained of herein; ii. whether defendants are breaching their fiduciary obligations to plaintiff and members of the class by failing and refusing to attempt in good faith to maximize stockholder value; iii. whether defendants have wrongfully failed and refused to seek a purchaser of Faulding and/or any and all of its various assets or divisions at the best price obtainable; and iv. whether plaintiff and the other members of the Class will be irreparably damaged by defendants' wrongful conduct alleged herein and if so, what is the proper remedy and/or measure of damages. 3 (d) The claims of plaintiff are typical of the claims of the Class in that all members of the Class will be damaged by defendants' actions. (e) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff is an adequate representative of the Class. (f) The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class. (g) Defendants have acted or refused to act on grounds generally applicable to the Class, thereby making appropriate injunctive relief and/or corresponding declaratory relief with respect to the Class as a whole. CLAIM FOR RELIEF 9. On June 3, 1997, it was reported over the Dow Jones News Wire that Faulding had received a cash merger proposal from FHFC to acquire all Faulding common shares it did not already own for $12 a share. As reported, FHFC expects to fund the merger through a rights issue. 10. As reported by the Reuter Asia-Pacific Business Report on June 4, 1997, defendant Tweddell, the Chairman of the Board of Faulding and FHFC managing director, commented that while forming a committee to consider the proposal, "[W]e believe the offer is fair to both the F.H. Faulding shareholders and the Faulding Inc. minorities." Tweddell also commented that he expected to finalize the $70 million mop-up" of Faulding by late September. 4 11. As set forth above, FHFC already owns 62% of the outstanding common stock of Faulding and would own approximately 73% of Faulding's common shares on a fully diluted basis if convertible preferred share conversion were factored in. The loyalties of the Individual Defendants, all of whom are directors of Faulding are, at best, divided in the transaction proposed by Faulding's controlling stockholder. The Individual Defendants are beholden to FHFC, the majority owner and controlling stockholder of Faulding, and can not be expected to act in the best interest of Faulding's minority stockholders. 12. The purpose of the proposed merger transaction is to enable FHFC to acquire the remaining shares of Faulding it does not already own and to acquire Faulding's valuable assets for FHFC's own benefit at the expense of Faulding's public stockholders. 13. The proposed acquisition comes at a time when Faulding has performed well and FHFC expects it will continue to perform well because it is already poised to do so. FHFC has timed this transaction to capture Faulding's positive performance and use it to their own ends, without paying an adequate or fair price for Faulding's remaining shares. 14. On April 30, 1997, Faulding announced net income for the third quarter ended March 31, 1997 of $.05 per share as compared with a loss of $.18 in the same quarter of 1996. Analysts expect Faulding to earn $.14 per share in the current quarter ending June 30, 1997. In the month prior to the announcement of the proposed transaction, Faulding's stock has traded in the $10.00 to $12.00 per share range and in 5 mid-May was trading at over $12.00 per share. Thus the proposed transaction, at $12 per share, represents a meager, if any, premium over Faulding's current trading price. 15. Defendants and FHFC are in a position of control and power over the Faulding minority stockholders and have access to internal financial information about Faulding, its true value, expected increase in true value and the benefits to FHFC of 100% ownership of Faulding to which plaintiff and the Class members are not privy. Defendants would be using their positions of power and control to benefit FHFC in this transaction, to the detriment of the Faulding common stockholders. 16. The individual Defendants have clear and material conflicts of interest and are acting to better the interests of FHFC at the expense of Faulding's public stockholders. 17. Defendants have breached their fiduciary and other common law duties owed to plaintiff and other members of the Class in that they have not and are not exercising independent business judgment and have acted and are acting to the detriment of the Class in order to benefit themselves. Any contemplated transaction would not be the product of arm's length negotiations and is not based upon any independent evaluation of the current value of Faulding's common stock, assets or business. 18. Defendants have failed and refused to take those steps necessary to ensure that the Company's shareholders will receive maximum value of their shares of Faulding stock. Defendants have thus far failed to announce any active auction or open bidding procedures best calculated to maximize shareholder value in selling the Company. As a result, defendants are acting to put their own interests ahead of the public 6 shareholders, all at the expense and to the detriment of the Company's public shareholders. 19. By virtue of the acts and conduct alleged herein, the defendants, who control the actions of the Company, have carried out a preconceived plan and scheme to place the interests of FHFC ahead of the interests of Faulding's public shareholders. The defendants have violated their fiduciary duties owed to plaintiff and the Class in that they have not and are not exercising independent business judgment and have acted and are acting to the detriment of the Faulding's public shareholders for their own personal benefit. 20. The defendants have breached their fiduciary duties by reason of the acts and transactions complained of herein, including their apparent decision to effect a transaction without making an effort to obtain the best offer possible and by affirmatively attempting to prevent a better offer. 21. As a result of the actions of the defendants, plaintiff and the other members of the Class have been and will be damaged in that they have not and will not receive their fair proportion of the value of Faulding's assets and businesses and/or have been and will be prevented from obtaining a fair and adequate price for their shares of Faulding's common stock. 22. In light of the foregoing, the Individual Defendants must, as their fiduciary obligations require: o undertake an appropriate evaluation of Faulding's worth as an acquisition candidate; 7 o act independently so that the interests of Faulding's public stockholders will be protected, including but not limited to the retention of independent advisors to any committee of the Faulding board formed to consider the FHFC offer and negotiate with FHFC on behalf of Faulding's minority stockholders; o adequately ensure that no conflicts of interest exist between defendants' own interests and their fiduciary obligation to maximize stockholder value or, if such conflicts exist, to ensure that all conflicts be resolved in the best interests of Faulding's public stockholders; and o if a merger transaction is to go forward, require that it be approved by a majority of Faulding's public stockholders. 23. Plaintiff seek preliminary and permanent injunctive relief and declaratory relief preventing defendants from inequitably and unlawfully depriving plaintiff and the Class of their right to realize a full and fair value for their stock at a substantial premium over the market price, and to compel defendants to carry out their fiduciary duties to maximize shareholder value. 24. Plaintiff and the class have no adequate remedy at law. Only through the exercise of this Court's equitable powers can plaintiff be fully protected from the immediate and irreparable injury which defendants' actions threaten to inflict. 25. Unless enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the other members of the Class, and will consummate the sale of Faulding at an inadequate and unfair price, or upon inequitable terms, all to the irreparable harm of plaintiff and the other members of the Class. 8 26. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff prays for judgment and relief as follows: A. Ordering that this action may be maintained as a class action and certifying plaintiff as the Class representative; B. Declaring that defendants have breached their fiduciary and other duties to plaintiff and the other members of the Class; C. Entering an order requiring defendants to take the steps set forth hereinabove; D. Preliminarily and permanently enjoining the defendants and their counsel, agents, employees and all persons acting under, in concert with, or for them, from proceeding with, consummating or closing the proposed merger transaction; E. In the event the proposed merger is consummated, rescinding it and setting it aside; F. Awarding compensatory damages against defendants individually and severally in an amount to be determined at trial, together with prejudgment interest at the maximum rate allowable by law; G. Awarding costs and disbursements, including plaintiff's counsel's fees and experts' fees; and 9 H. Granting such other and further relief as the Court may deem just and proper. Dated: June 6, 1997 ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By:____________________________ 919 North Market Street Mellon Bank Center, Suite 1401 Wilmington, Delaware 19801 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: ABBEY, GARDY & SQUITIERI, LLP 212 East 39th Street New York, New York 10016 (212) 889-3700 10 EX-99.5 6 EXHIBIT 99.5 EXHIBIT 99.5 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - --------------------------------------------------------------- : C.A. No. 15724 HARBOR FINANCE PARTNERS, a : Colorado Limited Partnership, : Individually And On Behalf : All Others Similarly Situated, : : Plaintiff, : CLASS ACTION : COMPLAINT -against- : : EDWARD D. TWEDDELL, ALAN G. : MCGREGOR, RICHARD F. MOLDIN, : JOSEPH C. MINIO, BRUCE C. TULLY, : WILLIAM R. GRIFFITH, F.H. FAULDING : & COMPANY LIMITED and FAULDING INC., : : Defendants. : - --------------------------------------------------------------- Plaintiff, by its undersigned attorneys, for its complaint against defendants alleges upon information and belief, except for paragraph 2 which is alleged upon knowledge, as follows: NATURE OF THE ACTION 1. Plaintiff brings this action individually and as a class action on behalf of all persons, other than defendants, who own the securities of Faulding Inc. ("Faulding" or the "Company") and who are similarly situated, for injunctive and other appropriate relief in connection with the acquisition offer (the "Offer") announced by defendant Faulding on June 3, 1997 pursuant to which F.H. Faulding & Company Limited ("F.H.F.") which, through its wholly-owned subsidiary, Faulding Holdings Inc., already controls 62% of the approximately 15 million outstanding shares of Faulding's common stock and about 73% of such common shares on a fully diluted basis, would acquire the Company's shares that it does not already control for $12.00 per share. Alternatively, in the event that the transaction is consummated, plaintiff seeks to recover rescissory and/or compensatory damages sustained by Faulding's public shareholders as a result of the wrongs complained of herein. PARTIES 2. Plaintiff is and has been the owner of shares of Faulding common stock at all times material hereto. 3. Faulding is a corporation duly organized and existing under the laws of the State of Delaware, with its principal offices located at 20 Elmora Avenue, Elizabeth, New Jersey. As of February 6, 1997, the Company had approximately 15,000,000 shares of common stock outstanding. Faulding is a holding company with subsidiaries which develop, manufacture, and sell generic drugs and injectable pharmaceutical products on a wholesale basis. 4. Defendant F.H.F. is an Australian pharmaceutical company conducting business in the United States. F.H.F. has numerous business relationships with Faulding, including, among other things, license agreements, consulting agreements, and supply agreements. 2 5. Defendant Edward D. Tweddell ("Tweddell") at all times material hereto has been the Chairman of the Board of Directors of Faulding. He is also a director of F.H.F. 6. Defendant Alan G. McGregor ("McGregor") at all times material hereto has been a director of Faulding. McGregor is also the Chairman of the Board of Directors of F.H.F. 7. Defendant Richard F. Moldin ("Moldin") at all times material hereto has been the President and Chief Executive Officer since March of 1996 and a director of the Company. Moldin has also served as Chief Executive Officer of Faulding Medical Device Co., President of Faulding Puerto Rico, Inc., and since July 1996 President of Faulding Pharmaceutical Co. 8. Defendant Joseph C. Minio ("Minio") at all times material hereto has been a director of the Company. 9. Defendant Bruce C. Tully ("Tully") at all times material hereto has been a director of the Company. 10. Defendant William R. Griffith ("Griffith") has served as Secretary of the Company since October 1993 and as a member of the law firm of Parker Duryee Rosoff & Haft, counsel for the Company and F.H.F. 11. Defendants Tweddell, McGregor, Moldin, Minio, Tully, and Griffith are collectively referred to as the Individual Defendants. 3 12. The Individual Defendants and F.H.F. owe fiduciary obligations to the Company's public shareholders to act with loyalty, entire fairness and good faith in dealings between F.H.F. and Faulding's public shareholders. CLASS ACTION ALLEGATIONS 13. Plaintiff brings this action individually and as a class action on behalf of all stockholders of the Company (except the defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants) and their successors in interest, who are or will be threatened with injury arising from defendants' actions as more fully described herein (the "Class"). 14. This action is properly maintainable as a class action because: (a) The Class is so numerous that joinder of all members is impracticable. There are hundreds of shareholders who hold the approximately 15 million shares of Faulding common stock outstanding. (b) There are questions of law and fact common to the Class including, inter alia, the following: (1) whether the proposed buy-out is grossly unfair to the public stockholders of Faulding; and (2) whether plaintiffs and the other members of the Class would be irreparably damaged were the transaction complained of herein consummated. 15. Plaintiff is a member of the Class and is committed to prosecuting this action. Plaintiff has retained competent counsel experienced in litigation of this nature. The claims of the plaintiff are typical of the claims of other members of the Class, and 4 plaintiff has the same interests as the other members of the Class. Plaintiffs do not have interests antagonistic to or in conflict with those they seek to represent. Plaintiff is an adequate representative of the Class. SUBSTANTIVE ALLEGATIONS 16. On June 3, 1997, the Dow Jones News Wire reported that F.H.F. had made a definitive offer to buy the remaining Faulding stock that it does not already own for $12.00 per share. F.H.F. announced that it expects to fund the merger through a rights issue. Upon announcement of the offer, the market price of the Company's stock rose $1.50 to $12.25 per share. 17. The offer was made at a time which is particularly beneficial to F.H.F. because Faulding is now poised to reap significant increases in net income over past earnings. On May 6, 1997 the Dow Jones News Wire estimated that it will earn 14(cent) per share for the fourth fiscal quarter ended June 1997. 18. An April 30, 1997 Business Wire article, emphasized the potential growth and future earnings potential of Faulding. Defendant Moldin stated Faulding has continued to deliver on its promise of greater sales and profits since its restructuring in early 1996. This quarter's success was a direct result of the commercial launch of two new oral products that were cleared for marketing less than a year after our initial submission to the FDA. Our new management team's competence in timely drug development and regulatory approvals now compares very favorably to the best in the industry. * * * We have proved that we can survive in the most challenging of competitive environments, but must continue to move 5 forward aggressively in order to fulfill the commitment we have made to our shareholders. 19. In announcing the merger, defendants have failed to disclose, inter alia, the full extent of the future earnings potential of Faulding and its expected increase in profitability. 20. Defendants' knowledge and economic power and that of the investing public is unequal because F.H.F. and the other insiders who own in excess of 62% of the Company control the business and corporate affairs of Faulding and are in possession of material non-public information concerning the Company's assets, businesses, and future prospects. This disparity makes it inherently unfair for F.H.F. to obtain 100% ownership of Faulding from its public stockholders at such an unfair and grossly inadequate price. 21. The consideration to be paid to the public shareholders in the buy-out is grossly unfair, inadequate, and substantially below the fair or inherent value of the Company. The intrinsic value of the equity of Faulding is materially greater than the consideration being considered, taking into account Faulding's assets value, liquidation value, its expected growth, and the strength of its business. 22. The offer price is not the result of arm's-length negotiations, but was fixed arbitrarily by F.H.F. as part of its unlawful plan to obtain the entire ownership of Faulding at the lowest possible price. 23. The proposed going private transaction is wrongful, unfair, and harmful to Faulding public stockholders, and represents an attempt by F.H.F. to aggrandize its personal interests at the expense of and to the detriment of the public stockholders of the 6 Company. The proposed transaction will deny class members their right to share proportionately in the true value of Faulding's valuable assets, profitable business, and future growth in profits and earnings, while usurping the same for the benefit of F.H.F. at an unfair and inadequate price. 24. As a result of the wrongs complained of, plaintiff and the Class have been and will be damaged in that they are and will be the victims of unfair dealing and will not receive the fair value of Faulding's assets and businesses. 25. Unless enjoined by this Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the Class and F.H.F. will succeed in its plan to enrich itself at the expense and to the irreparable harm of the Class. 26. Plaintiff and the Class have no adequate remedy of law. WHEREFORE, plaintiff prays for judgment and relief as follows: (a) declaring that this lawsuit is properly maintainable as a class action and certifying plaintiff as representative of the Class; (b) preliminarily and permanently enjoining defendants and their counsel, agents, employees, and all persons acting under, in concert with, or for them, from proceeding with, consummating or closing the transaction complained of; (c) in the event the transaction is consummated, rescinding it and setting it aside; (d) awarding rescissory and/or compensatory damages to the Class, in an amount to be determined at trial, together with prejudgment interest at the maximum rate allowable by law; 7 (e) awarding plaintiff and the Class their costs and disbursements and reasonable allowances for plaintiffs' counsel and experts' fees and expenses; and (f) granting such other and further relief as may be just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By:____________________________ 919 Market Street Mellon Bank Center, Suite 1401 Wilmington, Delaware 19899-1070 (302) 656-4433 Of Counsel: WECHSLER HARWOOD HALEBIAN & FEFFER 805 Third Avenue New York, New York 10022 (212) 935-7400 8 EX-99.6 7 IN THE COURT OF CHANCERY EXHIBIT 99.6 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY
- -------------------------------------------------------------- : C.A. No. 15723NC CHARLES ZIMMERMAN, on behalf of : himself and all others similarly situated, : CLASS ACTION COMPLAINT : Plaintiff, : : -against- : : RICHARD F. MOLDIN, EDWARD D. : TWEDDELL, ALAN G. McGREGOR, : JOSEPH C. MINIO, BRUCE C. TULLY, : F.H. FAULDING & CO., LIMITED, : WILLIAM R. GRIFFITH, FAULDING : HOLDINGS INC. and FAULDING INC. : : Defendants. : - --------------------------------------------------------------
INTRODUCTION Plaintiff brings this action individually and on behalf of the public shareholders of Faulding Inc. ("Faulding" or the "Company") seeking redress for defendants' breaches of fiduciary duties in connection with F.H. Faulding & Co., Limited's offer to purchase the Faulding shares which it does not already own for $12.00 per Faulding share (the "Buyout"). THE PARTIES 1. Plaintiff Charles Zimmerman owns, and since prior to the announcement of the transaction complained of, has owned, shares of Faulding common stock. 2. Defendant Faulding is a Delaware corporation with executive offices in Elizabeth, New Jersey. Faulding develops, manufactures, and markets human pharmaceutical and medical devices. As of June 3, 1997, Faulding had approximately 15 million shares of common stock outstanding. 3. Defendant F.H. Faulding & Co., Limited ("F.H. Faulding" or the "Purchaser"), owns approximately 73% of Faulding's shares on a fully diluted basis through its wholly owned subsidiary, Faulding Holdings Inc. ("Holdings"), a corporation incorporated in Delaware with its principal place of business in Connecticut. Through F.H. Faulding's controlling ownership of Faulding stock, it effectively controls Faulding and thus owes Faulding's public shareholders fiduciary duties of loyalty and good faith. 4. Defendant Richard F. Moldin ("Moldin") is, and has been since July 1995, Chief Executive Officer, President and Director of defendant Faulding. 5. Defendant Edward D. Tweddell ("Tweddell") is, and has been since 1990, a director and Chairman of the Board of Directors of Faulding. In addition, Tweddell has been a director of F.H. Faulding since March 1989. 6. Defendant Alan G. McGregor ("McGregor") is, and has been, a director of Faulding since June 1988. In addition, McGregor is also Chairman of F.H. Faulding. 7. Defendant Joseph C. Minio ("Minio") is, and has been since January 1997, a director of defendant Faulding. 8. Defendant Bruce Tully ("Tully") is, and has been since April 1989, a director of defendant Faulding. 2 9. William R. Griffith is and has been, at all relevant times, a director and secretary of Faulding. 10. The foregoing individuals, as officers and/or directors of Faulding (collectively, the "Individual Defendants"), owe fiduciary duties to plaintiff and the other members of the Class (as described below). CLASS ACTION ALLEGATIONS 11. Plaintiff bring this action pursuant to Rule 23 of the Rules of this Court, on behalf of himself and all other shareholders of the Company (except the defendants herein and any persons, firm, trust, corporation, or other entity related to or affiliated with them and their successors in interest), and their successors in interest, who are or will be threatened with injury arising from defendants' actions, as more fully described herein (the "Class"). 12. This action is properly maintainable as a class action for the following reasons: a. The Class is so numerous that joinder of all members is impracticable. There are hundreds if not thousands of stockholders of Faulding who are members of the Class. b. Members of the Class are scattered throughout the United States and are so numerous that it is impracticable to bring them all before this Court. c. There are questions of law and fact that are common to the Class and that predominate over questions affecting any individual class member. The common questions include, inter alia, the following: 3 (i) Whether defendants have engaged in and are continuing to engage in conduct which unfairly benefits F.H. Faulding at the expense of the members of the Class; (ii) Whether the individual defendants, as officers and/or directors of the Company, some of whom are also directors of F.H. Faulding, the controlling stockholder of Faulding, have fulfilled, and are capable of fulfilling, their fiduciary duties to plaintiff and the other members of the Class; (iii) Whether plaintiff and the other members of the Class would be irreparably damaged were defendants not enjoined from the conduct described herein; and (vi) Whether defendants have initiated and timed the Buyout unfairly to benefit F.H. Faulding at the expense of Faulding's public shareholders. d. The claims of plaintiff are typical of the claims of the other members of the Class in that all members of the Class will be identically damaged by defendants' actions. e. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff is an adequate representative of the Class. SUBSTANTIVE ALLEGATIONS 13. On June 3, 1997, Faulding announced that F.H. Faulding was offering $12.00 per share to purchase all outstanding shares of Faulding that are not already owned by F.H. Faulding. This price offers virtually no premium to the historic trading price 4 of Faulding common stock and the intrinsic value of Faulding common stock. As recently as May 15, 1997, the closing price of Faulding common stock traded above the offering price at $12 3/16 per share. F.H. Faulding is attempting to acquire Faulding at a grossly unfair and inadequate price. 14. The aforesaid proposal is in furtherance of a plan and scheme which, if its consummation is not enjoined, will result in forcing Faulding public shareholders to sell their investment in the Company for grossly inadequate consideration. 15. The consideration to be paid to Class members in the proposed stock acquisition is unfair and grossly inadequate because, among other things, the intrinsic value of Faulding common stock is materially in excess of the amount offered, giving due consideration to the promising products of Faulding that will be entering the marketplace and considering Faulding's anticipated operating results, net asset value and profitability. Similarly, the amount offered does not take into account that F.H. Faulding's ownership of 73% of the outstanding shares of Faulding has effectively suppressed the market price of Faulding for at least the past year. 16. F.H. Faulding is the research and development partner of Faulding and is well aware of the progress of several of Faulding's new products. In making its grossly inadequate and unfair offer to acquire the remaining stock of Faulding, F.H. Faulding has tried to take advantage of the fact that the market price of Faulding stock does not fully reflect the progress of these new products. 17. The proposed acquisition price offered by F.H. Faulding is not the result of arms length negotiations, but rather represents a maneuver by Faulding and its 5 representatives on the Faulding board of directors to take advantage of F.H. Faulding's control over Faulding to force Faulding's minority shareholders to relinquish their Faulding shares at a grossly unfair and inadequate price. 18. Because of F.H. Faulding's inherent conflict of interest as the 73% owner of Faulding, the Faulding board cannot properly evaluate the proposed offer. Given the dominance and control of F.H. Faulding over Faulding and its board of directors, none of the directors is capable of vigorously representing and protecting the interests of Faulding's minority shareholders or bargaining at arm's length on their behalf. 19. In addition, although the Faulding board will "consider appointing a special committee" to review the proposal, any such committee will apparently be authorized only to evaluate F.H. Faulding's proposed stock acquisition and not to explore any other alternative transaction or means to assure that Faulding's minority shareholders will receive full and fair value for their shares. 20. F.H. Faulding, by reason of its 73% ownership of Faulding's outstanding shares, is in a position to ensure effectuation of the transaction without regard to its fairness to Faulding's public shareholders. 21. Because F.H. Faulding is in possession of proprietary corporate information concerning Faulding's future financial prospects, the degree of knowledge and economic power between F.H. Faulding and the Class members is unequal, making it grossly and inherently unfair for F.H. Faulding to obtain the remaining 23% of Faulding's shares at the unfair and grossly inadequate price that it has proposed. 6 22. By offering a grossly inadequate price for Faulding's shares, F.H. Faulding has violated its duties as majority shareholder of Faulding to treat the minority fairly in its dealings with the minority public shareholders, and to provide full and fair disclosure to the minority shareholders in connection with the proposed buyout. 23. Plaintiff and the Class will suffer irreparable harm unless the defendants are enjoined from breaching their fiduciary duties and from carrying out the aforesaid plan and scheme. 24. The Buyout is in furtherance of an unfair plan to take Faulding private, which, if not enjoined, will result in the elimination of the public shareholders of Faulding. More particularly, the Buyout is in violation of defendants' fiduciary duties and has been timed and structured unfairly in that: a. The Buyout is structured to eliminate members of the Class as shareholders of the Company from continued equity participation in the Company at a price per share which defendants know or should know is grossly unfair and inadequate; b. F.H. Faulding, by virtue of, among other things, its voting and ownership power, controls and dominate Faulding and the Faulding Board of Directors; c. Given F.H. Faulding's domination and control of Faulding and its Board, the Faulding Board of Directors cannot be expected independently to advocate, and protect the best interests of, and to obtain the best price for, Faulding's public shareholders; 7 d. The law firm that is legal counsel to Faulding also is counsel to F.H. Faulding. This conflicting allegiance of Faulding's counsel to the interests of Faulding's shareholders renders Faulding's consideration of the Buyout suspect; e. F.H. Faulding has unique knowledge of the Company and has access to non-public information relating to the true value of the Company denied or unavailable to other potential bidders; f. F. H. Faulding does significant business with Faulding and thus has unique knowledge of Faulding's business and effectively controls Faulding's business operations. g. Given F. H. Faulding's domination and control, the individual defendants cannot be expected independently and actively to advocate and negotiate in the best interest of Faulding's public shareholders; and h. The Buyout does not provide plaintiff and the Class with a fair price for their shares. 25. By reason of the foregoing acts, practices and course of conduct, plaintiff and the other members of the Class have been and will be damaged because they will not receive their rightful proportion of the true value of Faulding's assets and business. 26. Unless enjoined by this Court, defendants will continue to breach fiduciary duties owed to plaintiff and the Class and will consummate the Buyout to the irreparable harm of plaintiff and the Class. 27. Plaintiff and the other members of the Class have no adequate remedy at law. 8 28. WHEREFORE, plaintiff demands judgment as follows: a. Declaring this to be a proper class action and naming plaintiff as Class representatives; b. Granting preliminary and permanent injunctive relief against the consummation of the Buyout; c. In the event the Buyout is consummated, rescinding the Buyout or awarding rescissory damages to the Class; d. Ordering defendants, jointly and severally, to account to plaintiff and to other members of the Class for all damages suffered and to be suffered by them as the result of the conduct alleged herein; e. Awarding plaintiff the costs and disbursements of the action including allowances for plaintiff' reasonable attorneys and experts fees; and f. Granting such other and further relief as may be just and proper in the premises. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By:___________________________________ Suite 1401, Mellon Bank Center P.O. Box 1070 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: KAUFMAN MALCHMAN KIRBY & SQUIRE, LLP Peter S. Linden 919 Third Avenue New York, New York 10022 (212) 371-6600 9 -----END PRIVACY-ENHANCED MESSAGE-----