PHARMACEUTICAL FORMULATIONS INC
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<TYPE>EX-10.1
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<FILENAME>pfi-ex101_110901.htm
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<TITLE> EXHIBIT 10.1 </TITLE>
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<P ALIGN=RIGHT><FONT SIZE=3>Exhibit 10.1</FONT></P>


<P><IMG SRC="icclogo.jpg"><BR>
<FONT SIZE=4><B>4460 ParkAvenue<BR>
New York, NY 10022<BR>
Tel: (212) 521-1780<BR>
Fax: (212) 521-1949<BR>
Internet Address: jlo@iccchem.com</B></FONT></P>

<P><FONT SIZE=4><B>ICC INDUSTRIES INC.<BR>
JOHN L. ORAM<BR>
PRESIDENT</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;October 25, 2001</FONT></P>

<P><FONT SIZE=3>Pharmaceutical Formulations Inc.<BR>
460 Plainview Avenue<BR>
Edison, New Jersey 08818</FONT></P>

<P><FONT SIZE=3>Attention:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr. James Ingram, President</FONT></P>

<P><FONT SIZE=3><U>Re:</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conversion of ICC's Preferred Shares and Rights Offering</U></FONT></P>


<P><FONT SIZE=3>Gentlemen:</FONT></P>

<P><FONT SIZE=3>In connection with ICC&#146;s conversion of its 2,500,000 shares of Series A
Cumulative Redeemable Convertible Preferred Stock, this will confirm that ICC
and PFI have agreed that ICC will convert its preferred stock and unpaid
dividends at a conversion price of $.34 per share of common stock (instead of
the $.075 per share conversion price at which ICC is entitled to convert such
shares). This means that 10,441,176 shares would be issued to ICC on such
conversion, instead of the 47,333,333 shares that would have been issued at a
$.075 conversion price.</FONT></P>

<P><FONT SIZE=3>The conversion shall occur on the date of completion of the
formalities required to increase PFI&#146;s authorized capital (i.e. immediately
following the filing of the appropriate Certificate of Amendment to PFI&#146;s
Certificate of Incorporation, after approval at PFI&#146;s next annual
meeting).</FONT></P>

<P><FONT SIZE=3>This will also confirm that ICC and PFI have agreed that ICC shall convert
$15,000,000 of debt owed to ICC by PFI at the same price and on the same date as
the conversion of the preferred shares, resulting in the issuance of an
additional 44,117,647 shares to ICC, for a total of 54,558,823 shares to be
issued to ICC at that time.</FONT></P>

<P><FONT SIZE=3>After the above issuances of common stock, ICC would own 74,194,718 shares (or
87.40%) of the outstanding common shares.</FONT></P>

<P><FONT SIZE=3>This will also confirm the agreement between ICC and PFI that PFI may offer the
minority shareholders the right to subscribe to a proportionate number of common
shares, also at $.34 per share, in order that their interests will not be
diluted.</FONT></P>

<P><FONT SIZE=3>If the shareholders do not approve an increase in the authorized
capital of the Company at the next shareholders&#146; meeting, currently
scheduled for November 28, 2001, the conversion rights under the preferred stock
and accumulated dividends will revert to the original conversion rights as
outlined in the Certificate of Designation, Preferences and Rights of Series A
Cumulative Redeemable Convertible Preferred Stock of Pharmaceutical
Formulations, Inc.; provided, however, that the conversion price shall never be
lower than the then-par value of the Company&#146;s common stock.</FONT></P>

<P><FONT SIZE=3>If no rights offering substantially as outlined in the proxy
statement for the annual meeting takes place on or prior to December 31, 2002,
the agreements between the Company and ICC as set forth in this letter with
regard to offering stock to the minority shareholders will be null and
void.</FONT></P>

<P><FONT SIZE=3>If the Company makes a rights offering on or prior to December
31, 2002 (and no other rights offering has been made after the date of this
letter) and the price of shares that may be subscribed to by other shareholders
with regard to conversion of the preferred stock and accrued dividends and the
conversion of ICC debt is lower than $.34 per share, the conversions of
preferred stock and debt noted above shall be revised such that ICC will receive
for no additional consideration such number of additional shares at that price
per share as it would have received had it converted its preferred shares and
existing debt at that conversion price and the Company&#146;s rights offering to
the minority shareholders shall be based on such new number of shares being
issued to ICC; provided, however, that no shares shall be issued to ICC or in
any rights offering at a price less than the par value of such
shares.</FONT></P>


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<TD WIDTH=50% ALIGN=LEFT><P>&nbsp;</P></TD>
<TD WIDTH=50%><P>Very truly yours,<BR>
<BR>
<B>ICC INDUSTRIES INC.</B><BR><BR><BR>
<U>/s/ John L. Oram&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
John L. Oram
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<P><FONT SIZE=3>JLO:leb</FONT></P>

<P><FONT SIZE=3>AGREED:</FONT></P>

<P><FONT SIZE=3><B>PHARMACEUTICAL FORMULATIONS, INC.</B></FONT></P>

<P><FONT SIZE=3>By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>/s/  James C. Ingram&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;James C. Ingram<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President</FONT></P>

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