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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CARACO PHARMACEUTICAL LABORATORIES LTD.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1997
To The Shareholders of Caraco Pharmaceutical Laboratories, Ltd.:
Please take notice that the Annual Meeting of Shareholders of Caraco
Pharmaceutical Laboratories, Ltd. (the "Corporation") will be held on
Wednesday, May 21, 1997 at 10:00 a.m., local time, at the Hotel St. Regis, 3071
W. Grand Blvd., Detroit, Michigan 48202 for the purpose of:
1. Electing two directors to serve for terms of three years each;
2. Increasing the number of shares authorized to be issued under the 1993
Stock Option Plan from 450,000 to 550,000;
3. Approving an amendment to the Corporation's Amended and Restated Articles
of Incorporation to increase the number of authorized Common Shares from
20,000,000 to 30,000,000; and
4. Acting on such other business as may properly come before the meeting, or
any adjournments thereof.
You are cordially invited to attend the Annual Meeting.
Holders of Common Shares of record at the close of business on April 21,
1997 will be entitled to vote at the meeting. A list of such shareholders will
be available for inspection during normal business hours from April 30, 1997
through May 20, 1997, at the offices of the Corporation, 1150 Elijah McCoy
Drive, Detroit, Michigan.
A Proxy Statement, Proxy Card, Annual Report and Form 10-KSB are enclosed
with this Notice. Each shareholder is urged to execute and return the enclosed
Proxy Card promptly. In the event a shareholder decides to attend the meeting,
he or she may, if so desired, revoke the Proxy and vote the shares in person.
By Order of the Board of Directors,
Allan J. Hammer, Secretary
Detroit, Michigan
April 22, 1997
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY. IF MAILED
IN THE U. S. IN THE ENCLOSED ENVELOPE, NO POSTAGE IS REQUIRED.
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CARACO PHARMACEUTICAL LABORATORIES, LTD.
1150 ELIJAH MCCOY DRIVE
DETROIT, MICHIGAN 48202
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors of Caraco
Pharmaceutical Laboratories, Ltd. (the "Corporation" or "Caraco") in connection
with its solicitation of proxies for use at the Annual Meeting of Shareholders
on May 21, 1997, and at any and all adjournments thereof. This Proxy Statement
and accompanying Proxy Card are first being mailed on or about April 22, 1997.
The Corporation's Annual Report (including audited financial statements) for
the year ended December 31, 1996 and the Corporation's 1996 Form 10-KSB are
enclosed with this Proxy Statement.
The Annual Report is not incorporated in or part of this Proxy Statement
and does not constitute proxy-soliciting material.
The 10-KSB is not incorporated in or part of this Proxy Statement and does
not constitute proxy-soliciting material.
If the Proxy is properly executed and returned, the Common Shares it
represents will be voted at the 1997 Annual Meeting in accordance with the
instructions noted thereon. If no instructions are indicated, it will be voted:
(1) FOR the nominated director(s); (2) FOR the increase in the number of shares
authorized for issuance under the 1993 Stock Option Plan; (3) FOR the Amendment
of the Amended and Restated Articles of Incorporation; and (4) FOR or AGAINST,
in the discretion of the Proxy holders, such other matters as may properly come
before the meeting. The Corporation's management knows of no matter to be
brought before the meeting which is not referred to in this Proxy Statement.
If, however, any other matters come before the meeting, the Proxy will be voted
in accordance with the judgment of the person or persons voting such Proxy,
unless the Proxy contains instructions to the contrary. Any shareholder
executing a Proxy has the power to revoke it at any time before it is voted by
submitting a duly executed Proxy bearing a later date, by delivering written
notice of such revocation to the Corporation's Secretary prior to the 1997
Annual Meeting or by attending the 1997 Annual Meeting and orally withdrawing
the Proxy. The cost of this solicitation is being paid for by the Corporation.
The Corporation will solicit proxies by mail and may also solicit proxies in
person or by telephone.
The presence, in person or by proxy, of the holders of a majority of the
common shares ("Common Shares") of the Corporation issued and outstanding and
entitled to vote at the Annual Meeting is necessary to constitute a quorum.
Abstentions and broker "non-votes" are counted as present and entitled to vote
for purposes of determining a quorum. A broker "non-vote" occurs when a
nominee
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holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner.
The affirmative vote by the holders of the majority of the Common Shares
present in person or represented by proxy and entitled to vote on the matter is
required to approve "Proposal 1 - Election of Directors". Abstentions and
broker "non-votes are not allowed for the purposes of Proposal 1, which will
have the effect of reducing the total number of shares from which any required
majority is calculated.
The affirmative vote by the holders of a majority of the Common Shares of
the Corporation issued and outstanding and entitled to vote at the Annual
Meeting is required to approve both "Proposal 2 - Amendment to 1993 Stock
Option Plan" and "Proposal 3 - Amendment to Amended and Restated Articles of
Incorporation". An abstention and a broker non-vote, if any, are not
affirmative votes and, therefore, will have the same effect as votes against
Proposal 2 and Proposal 3.
The shareholder vote cast for all items considered at the meeting will be
calculated by American Stock Transfer & Trust Corporation, the Corporation's
Registrar and Transfer Agent, as the Board designated Inspector of Election.
The Inspector of Election shall determine the number of shares outstanding and
the voting power of each, the shares represented at the meeting, the existence
of a quorum, and the validity and effect of proxies, and shall receive votes,
hear and determine challenges and questions arising in connection with the
right to vote, count and tabulate votes, determine the result, and do such acts
as are proper to conduct the election.
The Corporation has 20,000,000 Common Shares authorized, of which
7,842,106 shares were issued and outstanding at the close of business on April
21, 1997, the record date ("Record Date") for determining voting rights. The
Corporation has no other class of voting securities outstanding. Each share
issued and outstanding on April 21, 1997 will be entitled to one vote.
Shareholders presently do not have cumulative voting rights.
ELECTION OF DIRECTORS
Pursuant to Article VI of the Amended and Restated Articles of
Incorporation of the Corporation, the Board of Directors shall be divided into
three classes with terms expiring on three successive annual meeting dates.
The Amended and Restated Bylaws authorize the Board of Directors exclusively to
set the number of directors to serve on the Board of Directors, by resolution,
but at no time shall the number of directors be less than six.
Unless otherwise instructed on the Proxy, the Proxy holders intend to vote
FOR the election of William R. Hurd and Jay F.
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Joliat to three-year terms as directors. The Caraco Board believes
that, if elected, the nominees will be able and willing to serve. However, if
a nominee should be unable or unwilling to serve as a director, the Caraco
Board may select a substitute nominee and, in that event, the Proxy will be
voted for the person so selected.
Information concerning the two (2) directors nominated for a term of three
years, and the five (5) continuing Caraco Board members, is set forth below. 1
NOMINEES FOR ELECTION AS DIRECTORS FOR THREE-YEAR TERMS TO EXPIRE 2000.
WILLIAM R. HURD
AGE: 61
COMMITTEES: None
Mr. Hurd was a Director of the Corporation from May 10, 1995 to September
18, 1996. Mr. Hurd commenced employment with the Corporation as its Executive
Vice President and Chief Operating Officer in December 1993 and in May 1995 was
promoted to President and Chief Operating Officer of the Corporation. Prior to
his employment with Caraco Mr. Hurd was employed from 1987 until 1993 as
Director of Operations of the Warner Chilcott Laboratories Division of Warner
Lambert Company, and was responsible for the start up of this then newly
established generic division, including facility design, equipment evaluation
and staffing, and operations, including supervision of manufacturing, quality
assurance, quality control, pharmaceutical technology, finance, purchasing,
production planning, and interfacing with the regulatory, sales and marketing
departments. Mr. Hurd is a registered pharmacist in Massachusetts and
Pennsylvania.
JAY F. JOLIAT
AGE: 40
COMMITTEES: Audit, Executive and Finance Committees
JAY F. JOLIAT has served as a Director of the Corporation since September
1995. Mr. Joliat for more than the past five years has
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(1) As has been previously disclosed in filings with the Securities
and Exchange Commission the Corporation and Sun Pharmaceutical
Industries, Ltd., a corporation organized under the laws of India
("Sun"), have been negotiating for the sale by the Corporation to
Sun of 5,300,000 Common Shares for $7,500,000 payable over a
period of time (anticipated to be one to two years) (the "Stock
Purchase Agreement"). In connection with this, it is anticipated
that the Corporation and Sun shall enter into other ancillary
agreements including a proposed voting agreement between the
Corporation, Sun and certain shareholders (Jay F. Joliat and David
A. Hagelstein (the "Shareholders")) pursuant to which the
Shareholders would vote their shares in favor of persons
designated by Sun and in such number to permit Sun to designate up
to a majority of the Board, and Sun would vote its shares in favor
of persons designated by the Shareholders for the positions not
filled by Sun designees. Also, upon the execution of the Stock
Purchase Agreement, the following Directors have agreed to resign:
David A. Adamany, Cara J. Curry, Phyllis Harrison-Ross and John R.
Morris. There is no assurance that the Corporation and Sun will
enter into the Stock Purchase Agreement or any of the ancillary
agreements, including the above referenced voting agreement or
that if consummated such agreements will be consummate pursuant to
the terms disclosed above.
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served as President, Chief Executive Officer and Chairman of the Board
of Joliat & Company, a registered investment advisor furnishing investment
management surveillance, reporting and consulting services to endowment funds,
charitable foundations, ERISA plans and others who utilize professional money
managers; Chairman of the Board, Chief Executive Officer and Treasurer of Sign
of the Beefcarver Restaurants, Inc., which owns and operates 13
cafeteria style family restaurants, three casual dining/bar restaurants and one
fine dining restaurant in the Detroit metropolitan area; and as trustee and
Chief Executive Officer of several family-related trusts with widely diverse
holdings including foreign and domestic securities, venture capital and real
estate.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 1999.
DAVID W. ADAMANY
AGE: 60
COMMITTEES: Audit, Executive and Compensation Committees
DAVID W. ADAMANY has served as a Director of the Corporation since July,
1994. Dr. Adamany has been President of Wayne State University since 1982.
Previously he served as Academic Vice President for the University of Maryland
System and Academic Vice President at California State University, Long Beach.
CARA J. CURRY
AGE: 60
COMMITTEES: Compensation and Audit Committees
CARA J. CURRY has served as a Director of the Corporation since its
inception. Mrs. Curry has been President of New Center Radiology, Inc. since
1979, owned by Dr. and Mrs. Curry, and was the owner and Chief Executive
Officer, from 1981 to 1986, of Innovative Home Health Care Corporation, which
provided in-home care in the Greater Detroit Metropolitan Area. She has been
active in health care related organizations and was a member of the Board and
Executive Vice President of the Lula Bell Stewart Center, Inc. (a non-profit
women's shelter). Mrs. Curry is a Commissioner of the Detroit Zoo, and a
participant in the National Medical Association Health Summit, Washington,
D.C., and in the Congressional Black Caucus Health Forum.
DAVID A. HAGELSTEIN
AGE: 55
COMMITTEES: Compensation and Executive Committees
DAVID A. HAGELSTEIN has served as a Director of the Corporation since
September 1995. Mr. Hagelstein has been engaged in the management of his
personal real estate and business investments for the past thirty years. In
addition, Mr. Hagelstein has been a consultant to several companies in the
pharmaceutical and medical fields.
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JOHN R. MORRIS
AGE: 66
COMMITTEES: Audit, Compensation and Finance Committees
JOHN R. MORRIS has served as a Director of the Corporation since May 1996.
Since 1978, Mr. Morris has been President of Biotrade Group, a company he
founded. Biotrade, a worldwide healthcare and chemical company has offices in
Australia, Southeast Asia, South Africa, Switzerland and the United Kingdom.
Biotrade is also active in the pharmaceutical and fine chemical industries.
DIRECTORS WHOSE TERM WILL EXPIRE IN 1998
PHYLLIS HARRISON-ROSS, M.D.
AGE: 60
COMMITTEES: Compensation and Finance Committees
DR. HARRISON-ROSS has served as a Director of the Corporation since
September 1996. For more than 25 years, Dr. Harrison-Ross has been the
Director of the Department of Psychiatry and Community Mental Health Clinic and
a Professor of Psychiatry at the New York Medical College at Metropolitan
Hospital Center. During the past year, Dr. Harrison-Ross has also been the
President of the Medical Board at the Metropolitan Hospital Center.
DIRECTOR COMPENSATION
Each non-employee director of the Corporation receives 100 shares of
Common Stock of the Corporation for each Board or Committee meeting in which he
or she participates. Directors are also reimbursed for out-of-pocket expenses
incurred in connection with attending Board and Committee Meetings. In
addition, Directors may also be awarded options for their service on the Board.
During the year ended December 31, 1996, Mr. John Morris received a
non-qualified stock option to purchase 6,000 shares of Common Stock at an
exercise price of $2.50 per share; Dr. Phyllis Harrison-Ross received a
non-qualified stock option to purchase 6,000 shares of Common Stock, at an
exercise price of $1.562 per share, and Mrs. Curry received a non-qualified
stock option to purchase 6,000 shares of Common Stock, at an exercise price of
$1.25 per share. See "Proposal 2 - Amendment to 1993 Stock Option Plan".
EXECUTIVE OFFICERS
SHERMAN N. GINN (Age 57) -- joined the Corporation in August 1994 as
Director of Sales and Marketing and in December 1994 was promoted to Vice
President -- Sales and Marketing. From February 1994 until August, 1994 Mr.
Ginn was employed by Global Source as Vice President, Sales. From 1992 to
February 1994 Mr. Ginn was Vice President, Sales and Chain Store Sales at
Watson Laboratories. From 1990 to 1992 he was employed by Qualitest Products in
Huntsville, Alabama as Vice President, Marketing.
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ALLAN J. HAMMER (Age 51) -- joined the Corporation in July 1994 as Chief
Financial Officer, Treasurer and Secretary. Prior thereto, Mr. Hammer was
employed, from 1988 until July 1994, with the Warner Chilcott division of
Warner Lambert where, as manager of finance and logistics, he was responsible
for all activities in finance, purchasing, production planning, inventory
control and warehousing.
ROBERT KURKIEWICZ (Age 46) -- commenced employment with the Corporation as
its Vice President -- Quality Assurance in November 1993. Prior thereto, Mr.
Kurkiewicz was employed, from 1988 until November 1993 as Manager, Quality
Assurance by the Warner Chilcott Laboratories Division of Warner Lambert
Company, for which he was responsible for the establishment of the Quality
Control and Quality Assurance Departments at the then inception of this
division (including the design and implementation of all quality
systems for proper operation of a pharmaceutical manufacturing organization)
and the ongoing supervision of Quality Control, and Quality Assurance for
manufacturing and research and development.
PROPOSAL 2
AMENDMENT TO 1993 STOCK OPTION PLAN
The Board of Directors has adopted, subject to shareholder approval, an
amendment to the Corporation's 1993 Stock Option Plan (the "Plan") increasing
the number of shares for which options may be granted under the Plan to
550,000. The Board unanimously recommends that the shareholders approve the
amendment to the Plan. The text of the amendment is set forth as EXHIBIT A to
this Proxy Statement. The Plan was originally adopted by the Board of
Directors and approved by the Corporation's shareholders in 1993. The Plan was
amended in 1995, upon approval by shareholders at the 1995 Annual Meeting of
Shareholders, to increase the number of shares reserved for issuance from
350,000 to 450,000 Common Shares. Options to purchase Common Shares authorized
for issuance under the Plan have been granted to eligible officers, employees
and Directors of the Corporation. Approximately 73% of the option shares are
currently authorized for issuance under the Plan.
The Board's purpose in amending the Plan to add 100,000 additional shares
available for stock options is to allow for the participation in the Plan by
current or future key officers, employees and Directors in subsequent years.
Without this amendment to the Plan and approval of it by shareholders, few
shares will be available for option grants.
As of April 14, 1997 the high and low price of the Corporation's Common
Shares as reported on the OTC Bulletin Board were $0.937 and $0.937,
respectively. The following persons have received options under the Plan (with
the amount of Common Shares underlying such options provided): William R. Hurd
- - 68,040 shares; Allan J. Hammer - 31,920 shares; Robert Kurkiewicz - 22,214
shares; executive officers as a group 142,174 shares; current Directors who are
not executive officers as a group - 36,000 shares; and all
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employees who are not executive officers as a group - 96,489 shares.
DESCRIPTION OF THE AMENDED PLAN
The following description of the amended Plan is a summary of its material
terms.
Under the Plan, as amended, up to 550,000 Common Shares are available for
grant; of which 329,663 shares have already been granted. The Plan and the
grants made thereunder are subject to certain anti-dilution provisions to
adjust the number of shares subject thereto to reflect events such as stock
dividends, stock splits, recapitalization, mergers or reorganizations of the
Corporation.
The Plan is administered by the Compensation Committee. The Committee,
subject to the provisions of the Plan, shall have the authority to determine
the persons to whom options shall be granted and the number of shares subject
to each option.
The Committee may, at any time, amend or terminate the Plan, except that
the Committee, without shareholder approval, may not amend the Plan so as to
(i) materially increase the benefits accruing to participants; (ii) increase
the number of shares deliverable under the Plan; or (iii) materially modify the
requirements as to eligibility for participation in the Plan.
Under the Plan, incentive stock options ("ISO") may be granted to
employees of the Corporation and non-qualified stock options may be granted to
Directors, outside consultants, independent contractors and employees (the
"Participants"). In May 1995, the Board amended the Plan to permit
Compensation Committee members to receive non-qualified stock options for 6,000
Common Shares. ISOs are required to be issued at an option exercise price per
share equal to the fair market value of a share of Common Shares on the date of
grant, except that the exercise price of options granted to any employee who
owns (or, under pertinent Code provisions, is deemed to own) more than 10% of
the outstanding Common Shares must equal at least 110% of fair market value on
the date of grant. Non qualified stock options must be issued at an option
exercise price equal to at least 85% of fair market value on the date of grant.
Generally, the Plan provides that the stock options become exercisable with
respect to 20% of the shares covered thereby beginning one year after the date
of grant and 20% on each anniversary date thereafter, with full vesting
occurring on the fifth anniversary of the date of the grant.
All options will not be transferable by the grantee otherwise than by will
or by the laws of descent and distribution and shall be exercisable during a
grantee's lifetime only by the grantee.
The rules governing the tax treatment of stock options and shares acquired
upon the exercise of stock options are quite technical.
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Therefore, the description of federal income tax consequences set forth
below is necessarily general in nature and does not purport to be complete.
Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the tax consequences under applicable state and local income tax laws
may not be the same as under the federal income tax laws.
ISOS. If a Participant makes no disposition of the shares acquired
pursuant to the exercise of an ISO within one (1) year after the transfer of
the shares to such Participant and within two (2) years from grant of the
option, such Participant will generally realize no taxable income as a result
of the grant or exercise of such option, and any gain or loss that is
subsequently realized may be treated as long-term capital gain or loss, as the
case may be. At the time of exercise, however, the difference between the fair
market value of the stock received and the exercise price will generally be
considered an adjustment which increases alternative minimum taxable income.
Typically, the Corporation will not be entitled to a deduction for Federal
income tax purposes with respect to either the issuance of such ISO or the
transfer of shares upon their exercise.
If shares acquired upon exercise of ISOs are disposed of prior to the
expiration of the above time periods, the Participant will recognize as
ordinary income in the year in which the disqualifying deposition occurs, an
amount which will generally be the lesser of (i) the excess of the market value
of the shares on the date of exercise over the option price, or (ii) the gain
(the difference between the exercise price and the sale proceeds) recognized on
such disposition. Such amount will ordinarily be deductible by the Corporation
for Federal income tax purposes in the same year, provided that the amount
constitutes reasonable compensation and the Corporation satisfies certain
Federal income tax withholding requirements. In addition, the excess, if any,
of the amount realized on a disqualifying disposition over the market value of
the shares on the date of exercise will be treated as capital gain. To the
extent that the aggregate, fair market value of ISO stock, exercisable for the
first time by a Participant during any calendar year exceeds $100,000 (based on
the fair market value of the ISO Stock on the date of grant), such option may
be treated as other than an ISO.
NON-QUALIFIED STOCK OPTIONS. Under Federal tax laws as now in effect, a
grantee of a non-qualified stock option generally will recognize taxable income
on exercise of the non-qualified stock option. The amount of ordinary income
recognized on the exercise of a non-qualified stock option will be measured by
the excess, if any, of the fair market value of the shares at the time of
exercise over the exercise price. As ordinary income, the income realized will
be subject to withholding at the time of exercise and the income will be
reported in the Participant's annual earnings statement on his or her Form W-2.
Withholding taxes are principally the obligation of a Participant who must pay
such taxes
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at the time the option is exercised. The Corporation will also be
entitled to a deduction in the amount of ordinary income so recognized by the
Participant provided the Corporation satisfies certain Federal income tax
withholding requirements. The Corporation shall be entitled to withhold from a
Participant's salary or other compensation all or any portion of any
withholdings or other tax due from the Corporation with respect to any Common
Shares deliverable upon exercise of the Participant's option.
Stock which has been acquired as the result of the exercise of a
non-qualified stock option has a basis equal to the amount paid to exercise the
option, plus the amount of ordinary income recognized on the exercise of the
option. Generally, the basis is, accordingly, the fair market value on the
date of exercise. The stock will normally be a capital asset in the hands of
the Participant. The holding period of the stock begins on the date of
exercise. If the stock is held for a period of time in excess of one year, the
Federal capital gains tax rate (a maximum of 28%) would apply to any gain
recognized on the subsequent sale of the stock. Gain or loss is measured by
the difference between the basis of the stock and the sale proceeds. Capital
losses are generally deductible to the extent of capital gains. If capital
losses exceed capital gains, the losses exceeding gains will be deductible only
to the extent of $3,000 per year. Any unused loss can be carried forward
indefinitely.
The favorable vote of a majority of the outstanding Common Shares entitled
to vote represented, in person or by proxy, at the Meeting is required for the
approval of this amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
AMENDMENT TO THE 1993 STOCK OPTION PLAN.
PROPOSAL 3
AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION
The Corporation's Amended and Restated Articles of Incorporation, as
currently in effect (the "Articles") provide that the Corporation's authorized
capital stock shall consist of 20,000,000 Common Shares, and 5,000,000 shares
of Preferred Stock. On March 19, 1997, the Corporation's Board of Directors
approved an amendment to the Articles (the "Amendment") increasing the number
of Common Shares authorized for issuance under the Articles by 10,000,000
shares to a total of 30,000,000 Common Shares. The text of the Amendment is
set forth as EXHIBIT B to this Proxy Statement.
As of the Record Date, 7,842,106 Common Shares were outstanding, 329,663
Common Shares are subject to options under the Corporation's 1993 Stock Option
Plan, 2,661,089 Common Shares are reserved for issuance subject to the exercise
of outstanding options/warrants issued by the Corporation and 285,714 Common
Shares are reserved for issuance with respect to the possible conversion of the
Corporation's Preferred Stock. In addition, the
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Corporation's contract with Hexal-Pharma Gmbh ("Hexal") for the
purchase of two specific generic products includes the grant of sign-up options
for 200,000 Common Shares at an exercise price of $3.50 per share and for
product options which may be exercised and paid only out of royalties payable
to Hexal for sales of the related product. Accordingly, the number of shares
relating to the product option are indeterminate. Also, as disclosed under
"Proposal 2 - Election of Directors" the Corporation and Sun are negotiating a
stock purchase agreement pursuant to which Sun will purchase 5,300,000 million
shares for $7.5 million ("Stock Purchase Agreement") and a products agreement
("Products Agreement") pursuant to which Sun would sell the Corporation 25
generic pharmaceutical products over a five (5) year period for 544,000 Common
Shares each, resulting in an aggregate of 13,600,000 shares. The Stock
Purchase Agreement includes a requirement that the Board approve an increase in
the number of authorized Common Shares to 30,000,000 and present it for the
approval of the shareholders of the Corporation no later than June 30, 1997.
There is no assurance that the proposed Stock Purchase Agreement or Products
Agreement or any agreements will be consummated or, if consummated, will be
consummated pursuant to the terms disclosed above.
Prior to the effectiveness of the Amendment, the Corporation has only
20,000,000 authorized Common Shares, which is less than the Corporation's
potential requirements as set forth above. In the event shareholders approval
of Proposal 3 is obtained, the Corporation believes it will have sufficient
Common Shares available to satisfy the potential Common Share requirements set
forth above as it is anticipated that a number of warrants/options will expire.
The additional Common Shares for which authorization is sought would be
identical to the Common Shares now authorized. Adoption of the proposed
Amendment and the issuance of Common Shares would not affect the rights of
holders of currently outstanding Common Shares of the Corporation,
except for effects incidental to increasing the number of shares of the
Corporation's Common Shares outstanding. Holders of Common Shares do not have
preemptive rights to subscribe to additional securities which may be issued by
the Corporation, which means that current shareholders do not have a prior
right to purchase any new issue of capital stock of the Corporation in order to
maintain their proportionate ownership thereof. If the Amendment is adopted,
it will become effective upon the filing of the Amendment with the Michigan
Department of Commerce, Corporation and Securities Bureau, Corporation
Division. Affirmative votes constituting a majority of the outstanding Common
Shares on the Record Date and entitled to vote will be required to approve this
Amendment to the Corporation's Articles. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED ARTICLES
OF INCORPORATION.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1996, the Corporation's Board of
Directors conducted its business by holding
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sixteen (16) Board Meetings (in accordance with the requirements of the
Michigan Business Corporation Act). The Board of Directors has four (4) active
standing committees, which facilitate the carrying out of its responsibilities.
The Executive, Audit, Compensation and Finance Committees were established by
the Board of Directors on May 31, 1994. The Board of Directors does not have a
standing Nominating Committee.
The Executive Committee, which did not meet during 1996, is empowered to
exercise, in the intervals between the meetings of the Board of Directors, the
powers of the Board, subject to the Michigan Business Corporation Act, as it
relates to the management of the business and affairs of the Corporation.
The Audit Committee, which did not meet in 1996, is empowered to recommend
to the Board of Directors a firm of certified public accountants to conduct
audits of the accounts and affairs of the Corporation and to review accounting
objectives and procedures of the Corporation and the findings and reports of
the independent certified public accountants, and to make such reports and
recommendations to the Board of Directors as it deems appropriate.
The Compensation Committee, conducted its business in 1996 by holding five
(5) meetings (in accordance with the requirements of the Michigan Business
Corporation Act). The Compensation Committee is empowered to make
recommendations to the Board of Directors relating to the overall compensation
arrangements for officers and staff of the Corporation and to make
recommendations to the Board of Directors pertaining to any compensation plans
in which officers and directors of the Corporation are eligible to participate
(including making recommendations regarding the amount they receive as
directors of the Corporation. The Committee also interprets the Corporation's
1993 Stock Option Plan and such other executive and employee stock options as
may, from time to time, be designated by the Board of Directors. In doing so,
it has the authority to designate officers, directors or key employees eligible
to participate in the Plan, to prescribe the terms of any award of
stock options, and to make all other determinations for administering the Plan.
The Committee is also empowered to withdraw, modify and substitute the
Corporation's Stock Bonus Plan.
The Finance Committee, which met six (6) times in 1996, is responsible for
ensuring that the Corporation maintains a sound financial structure, and is
empowered to make recommendations to the Board of Directors on financial, short
and long term investments and business planning matters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information, as of April 1, 1997,
with respect to the Common Stock owned by each director and nominee for
election to the Board of Directors, each executive officer named in the Summary
Compensation Table, all executive officers and directors as a group, and by
each person (including
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any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended) who is known to the Corporation to be the beneficial
owner of more than five (5%) percent of the outstanding shares of the
Corporation's Common Stock. The shares and percentages shown below include
shares which may be acquired by the persons listed pursuant to presently
exercisable and outstanding stock options, warrants, and convertible stock.
Except as indicated below, each person listed has sole voting and investment
power as to the shares listed.
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL BENEFICIAL PERCENTAGE OF
OWNER OWNERSHIP CLASS
- ------------------ ----------- -------------
David W. Adamany(11) 10,200(1) *
C. Arnold Curry(11) 1,384,447(2) 17.65
Cara J. Curry(11) 484,615(3) 6.18
David A. Hagelstein(11) 1,482,452(4) 18.36
Phyllis Harrison-Ross(11) 0 *
William R. Hurd(11) 63,401(5) *
Jay F. Joliat(11) 1,848,591(6) 20.76
John R. Morris(11) 107,600(7) 1.37
Sherman N. Ginn, Jr.(11) 8,000(8) *
Allan J. Hammer(11) 18,648(9) *
Robert Kurkiewicz(11) 16,356(10) *
All executive officers and
directors as a group
(11 persons) 5,424,310 58.79
- -------------------------
* Less than 1.0% of the outstanding shares
(1) Includes stock options that are currently exercisable to purchase 2,400
shares.
(2) Excludes 484,615 shares owned by his wife, Cara J. Curry, as to which he
disclaims beneficial ownership. Includes 10,000 shares of Common Stock
underlying an option granted to a third party pursuant to an option
agreement.
(3) Excludes 1,384,447 shares owned by her husband, C. Arnold Curry, as to
which she disclaims beneficial ownership.
(4) Includes an option to purchase 224,158 shares of Common Stock until
February 20, 2002; stock options to purchase 1,200 shares of Common Stock
until September 7, 2001; and warrants to purchase 5,000 shares of Common
Stock until February 11, 1999. See "Certain Relationships and Related
Transactions."
(5) Includes 900 shares and 100 warrants owned by Richard and Kimberly Hurd
minor children to William R. Hurd; 4,800 shares owned by Joan Hurd, spouse
to William R. Hurd; and stock
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options that are currently exercisable to purchase 39,608 shares.
(6) Includes 285,714 Series A Preferred Stock convertible to Common Stock;
warrants to purchase 65,000 shares which are exercisable through December
31, 2004; warrants to purchase 486,666 shares exercisable through March
31, 2006; option to purchase 225,000 shares which are exercisable through
October 18, 2006; and stock option to purchase 1,200 shares. See "Certain
Relationships and Related Transactions."
(7) Includes 10,000 warrants exercisable until February 11, 1999.
(8) Includes stock options that are currently exercisable to purchase 8,000
shares.
(9) Includes 500 warrants exercisable until February 11, 1999 and stock
options that are currently exercisable to purchase 12,384 shares.
Excludes 1,000 shares of Common Stock beneficially owned by Donna Hammer,
spouse of Allan J. Hammer, in which reporting person disclaims beneficial
ownership.
(10) Includes stock options that are currently exercisable to purchase 12,443
shares.
(11) The mailing address of each of these holders is 1150 Elijah McCoy Drive,
Detroit, Michigan 48202.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the 1993, 1994, 1995
and 1996 annual salary, bonus and all other compensation awards to the
Corporation's former Chief Executive Officer, and three most highly compensated
executive officers, whose respective salary and bonus compensation exceeded
$100,000 in 1996.
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SUMMARY COMPENSATION TABLE
Long Term Compensation
-------------------------
Awards Payouts
------ -------
Restricted Securities
Annual Compensation Other Annual Stock Underlying LTIP All Other
Name and -------------------------------- Compensation Award(s) Options Payouts Compensation
Principal Position Year Salary($) Bonus($) $ $ # $ $
- ------------------ ---- --------- -------- ----------- ---------- ----------- ------- ------------
William R. Hurd...... 1996 $164,307 0 0 0 0 0 0
President and COO 1995 $167,612 $16,000(1) 0 18,827(2) 3,040(3) 0 0
1994 $171,333(5) 0 0 0 0 0 44,697(4)
Allan J. Hammer...... 1996 $120,000 0 0 0 0 0 10,250(4)
CFO and Secretary 1995 $120,000 0 0 12,233(2) 1,920(3) 0 0
1994 $ 55,000 0 0 0 30,000(3) 0 24,153(4)
Robert Kurkiewicz.... 1996 $123,000 0 0 0 0 0 0
VP of QA 1995 $123,000 0 0 12,717(2) 2,214(3) 0 0
1994 $123,000 0 0 0 0 0 30,265(4)
C. Arnold Curry(6)... 1996 $ 87,010 0 0 0 0 0 0
1995 $155,380 0 0 0 0 0 0
1994 $183,876(7) 0 0 0 0 0 32,375(8)
(1) Bonus given per employment contract in Caraco Common Stock (5,334 shares).
(2) 5,793, 3,764, and 3,913 shares were awarded by the Corporation on May 10,
1995, to Messrs. Hurd, Hammer and Kurkiewicz, respectively, as reimbursement
for the payment of the taxable portion of moving expenses they incurred.
(3) The Options were granted pursuant to the Corporation's 1993 Employee Stock
Option Plan. Under the Plan, the options vest over a five year period
commencing one year from date of grant.
(4) Moving expenses paid to employee.
(5) Includes salary actually paid of $160,000, and accrued 1993 salary of
$11,333.
(6) Dr. Curry resigned as Chief Executive Officer in February 1996 and became
the Corporation's Chief Scientific Advisor and Chairman, Emeritus until
November 1996. See "Certain Relationships and Related Transactions".
(7) Includes salary actually paid of $170,000, and accrued 1993 salary of
$13,876.
(8) Caraco purchased 87,500 shares of Caraco Common Stock from Dr. Curry in
1993, payment was made in 1994.
(7) No other executive officer of the Corporation earned more than $100,000
during the 1996 fiscal year.
OPTIONS GRANTED IN LAST FISCAL YEAR
There were no options granted to executive officers in 1996.
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AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS VALUES
The following table sets forth information for the executive officers
named above with regard to the aggregate stock options exercised during the
year ended December 31, 1996, and the stock options held as of December 31,
1996.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
FY-End(#) FY-End($)(1)
Shares Acquired Value Realized
Name on Exercise# ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- -------------- ------------------------- -------------------------
William R. Hurd..... 0 0 39,608/28,432 0/0
Allan J. Hammer..... 0 0 12,384/19,536 0/0
Robert Kurkiewicz... 0 0 12,442/ 9,772 0/0
C. Arnold Curry..... 0 0 0/0 0/0
__________________
(1) Value based on the difference between the closing bid price of the
Corporation's Common Stock on December 31, 1996 and the exercise price.
The options held by the named executive officers have exercise prices
which are higher than the closing bid price of the Corporation's Common
Stock on December 31, 1996.
EMPLOYMENT AGREEMENTS
C. ARNOLD CURRY, who resigned as Chief Executive Officer and Chairman of
the Board of the Corporation in February 1996, entered into a five year
employment agreement with the Corporation to become its Chief Scientific
Advisor and Chairman, Emeritus. Dr. Curry was compensated at an annual base
salary of $90,000 and was entitled to receive certain stock bonuses and
options.
In November 1996 Dr. Curry's employment as Chief Scientific Advisor and
Chairman, Emeritus was terminated without cause by the Corporation, and
pursuant to the employment agreement, Dr. Curry is entitled to receive monthly
base salary payments for eighteen (18) months from the date of termination, and
premium coverage payments for health and life insurance for the same period.
MR. HAMMER, the Chief Financial Officer, Treasurer and Secretary of the
Corporation, entered into a five-year employment agreement with the Corporation
expiring July 1, 1999, subject to automatic renewal for successive one-year
terms unless terminated by the Corporation or Mr. Hammer, upon 30 days written
notice prior to the end of the initial term or the renewal terms, as the case
may be.
In the event that Mr. Hammer terminates his employment for cause not
attributable to himself, or if the Corporation terminates the agreement without
cause, then he shall be entitled to receive monthly base salary payments for
twelve (12) months from the date of termination, and the Corporation shall
continue premium coverage
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payments for health insurance for the same period. In
addition, any stock options that would become available for exercise at the end
of the year during which such termination occurred shall immediately vest.
In event that Mr. Hammer terminates his employment without cause, or his
employment is terminated for cause, death or disability, then he (or his
estate) will receive earned and unpaid salary accrued to the date of
termination.
On April 1, 1997 Mr. Hammer entered into an amendment to his Employment
Agreement. Under the amendment, Mr. Hammer's salary is reduced to $90,000 and
the "termination without Cause" has been revised to read "...shall be entitled
to receive monthly base salary payments for six (6) months from date of
termination. This amendment shall become effective on the date that Sun and
the Corporation execute the Stock Purchase Agreement. See "Proposal 2 -
Election of Directors".
WILLIAM R. HURD, the President and Chief Operating Officer of the
Corporation, entered into an employment agreement with the Corporation expiring
December 6, 2000, subject to automatic renewal for successive one-year terms
unless terminated by the Corporation or Mr. Hurd upon 90 days notice prior to
the end of the initial term or the renewal terms, as the case may be. In
addition Mr. Hurd may receive an annual bonus to be based upon performance
specifications and/or goals to be agreed upon by the Corporation and Mr. Hurd,
with the bonus payable to Mr. Hurd for any year of employment to be not more
than 30% of his base salary for such year.
Under the employment agreement, Mr. Hurd may, upon giving 30 days written
notice, terminate the agreement in the event there is a change of control or
ownership (as defined in the employment agreement) of the Corporation and his
powers and duties significantly change or he has good reason (as defined in the
employment agreement) to terminate or, as a result of the change of control or
ownership, Mr. Hurd reasonably determines that he is unable to exercise or
perform his powers, functions and duties. In the event of such termination, Mr.
Hurd will receive (i) a lump sum severance payment equal to his base salary for
36 months at the rate payable at the time notice of termination was given, (ii)
the bonus which he would otherwise be entitled to for the year in which his
employment is terminated, and (iii) the immediate vesting in any stock option
which would have been exercisable at the close of the year during which the
change of control occurred. Based upon Mr. Hurd's current base salary, the
Corporation estimates that the lump sum severance payment payable to Mr. Hurd
under this provision would be approximately $502,836 for the present fiscal
year.
In the event that Mr. Hurd terminates his employment for cause not
attributable to himself, or if the Corporation terminates the Agreement without
cause, then he shall be entitled to receive monthly base salary payments for
eighteen (18) months from the date
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of termination, and the Corporation shall continue premium coverage
payments for health and life insurance for the same period. In addition, any
stock options that would become available for exercise at the end of the year
during which such termination occurred shall immediately vest.
In event that Mr. Hurd terminates his employment without cause, or his
employment is terminated for cause, death or disability, then he (or
his estate) will receive earned and unpaid salary accrued to the date of
termination.
On April 1, 1997 Mr. Hurd entered into an amendment to his Employment
Agreement. Under the amendment, Mr. Hurd's salary is reduced to $120,000 and
the "termination without Cause" has been revised to read "...shall be entitled
to receive monthly base salary payments for six (6) months from date of
termination. In addition the amendment provides that the signing of final
documents with Sun will not constitute a change in control. This amendment
shall become effective on the date that Sun and the Corporation execute the
Stock Purchase Agreement. See "Proposal 2 - Election of Directors".
ROBERT KURKIEWICZ, the Vice President of Quality Assurance, entered into a
five-year employment agreement with the Corporation expiring November 22, 1998,
subject to automatic renewal for successive one-year terms unless terminated by
the Corporation or Mr. Kurkiewicz upon 30 days notice prior to the commencement
of any such renewal period.
In the event that Mr. Kurkiewicz terminates his employment for cause not
attributable to himself, or if the Corporation terminates this Agreement
without cause, then he shall be entitled to receive monthly base salary
payments for twelve (12) months from the date of termination, and the
Corporation shall continue premium coverage payments for health insurance for
the same period. In addition, any stock options that would become available for
exercise at the end of the year during which such termination occurred shall
immediately vest.
In the event that Mr. Kurkiewicz terminates his employment without cause,
or his employment is terminated for cause, death or disability, then he (or his
estate) will receive earned and unpaid salary accrued to the date of
termination.
On April 1, 1997 Mr. Kurkiewicz entered into an amendment to his
Employment Agreement. Under the amendment, Mr. Kurkiewicz's salary is reduced
to $92,250 and the "termination without Cause" has been revised to read
"...shall be entitled to receive monthly base salary payments for six (6)
months from date of termination. This amendment shall become effective on the
date that Sun and the Corporation execute the Stock Purchase Agreement. See
"Proposal 2 - Election of Directors".
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 21, 1996, the Corporation borrowed $250,000 from Jay F. Joliat
which was converted on March 31, 1996 into 111,111 Common Shares and six
warrants for each Common Share exercisable at $2.625 through March 31, 2006.
In connection with a private placement ended in March 1996, Jay F. Joliat
and David Hagelstein purchased 100,000 and 126,250 Common Shares, respectively,
at $2.25 per share in which a total of 572,444 Common Shares were sold.
In May 1996, the Corporation sold, in a private placement to Mr. Joliat 250,000
Common Shares at $2.00 per share.
On August 21, 1996, the corporation borrowed $100,000 from Messrs.
Hagelstein, Joliat and Morris for working capital purposes. On October 18,
1996, the Corporation borrowed $300,000 from Mr. Joliat for working capital
purposes and, in connection therewith, granted Mr. Joliat a warrant for 300,000
Common Shares at the purchase price of $1.31 per share. On November 15, 1996,
the Corporation borrowed $90,000, $100,000 and $100,000 from Messrs.
Hagelstein, Joliat and Morris, respectively, for working capital purposes.
These notes are payable on demand, accrue interest at 10%, and are secured by
specific assets of the Corporation. The Corporation, Sun, and Messrs.
Hagelstein and Joliat entered into a subordination agreement with respect to
these loans in connection with a loan by Sun to the Corporation of $350,000.
On December 19, 1996, the Corporation borrowed $65,000 from a relation of
Mr. Joliat for working capital purposes. This secured loan accrued interest at
10% and was repaid in January 1997.
On January 30, 1997 and February 3, 1997, the Corporation borrowed
$100,000 and $300,000 respectively, from Mr. Joliat for working capital
purposes. On February 11, 1997, the Corporation borrowed $200,000 from Mr.
Hagelstein for working capital purposes. The loans accrue interest at 10%
(payable in cash or Common Shares) are currently due and payable and are
secured by specific equipment. The Corporation, Sun and Messrs. Hagelstein and
Joliat entered into an Inter-Creditor Agreement with respect to these loans
which generally provides for equal priority in collateral and principal
repayments based on each creditor's respective share of total debt.
On February 21, 1997, the Corporation granted Mr. Hagelstein an option for
224,158 Common Shares at an exercise price of $1.50 per share for a five year
period expiring February 20, 2002 and cancelled prior options/warrants granted
to Mr. Hagelstein for an aggregate of 224,158 Common Shares at exercise prices
ranging from $3.50 to $4.81 per share in recognition of Mr. Hagelstein's
proposed agreement to contribute up to $500,000 to the Corporation in cash or
Common Shares (up to 250,000 Common Shares) in connection with the proposed
Stock Purchase Agreement between the
19
21
Corporation and Sun. (See "Proposal 1 - Election of Directors" above.)
On April 11, 1997 the Corporation borrowed $150,000 from Mr. Joliat for
working capital purposes. The loan accrues interest at 10% per annum (payable
in cash or Common Shares), is payable generally on the earlier of May 31, 1997
or if the Stock Purchase Agreement between the Corporation and Sun is not
consummated, and is secured by specific assets of the Corporation. (See
"Proposal 1 - Election of Directors" above.)
During the year ended December 31, 1996, the Corporation purchased raw
materials from Biotrade Group in the amount of $211,500. Mr. Morris is the
President of Biotrade Group. The Corporation believes the raw materials were
purchased at market prices.
COMPLIANCE WITH SECTION 16 (A)
To the Corporation's knowledge based solely on review of the copies of
reports on Form 3, 4 and 5 required by Section 16(a) of the Securities Exchange
Act of 1934, as amended, and written representations furnished to the
Corporation, all of the directors, officers and persons who own more than ten
percent of the Corporation's Common Stock filed the Forms 3 and Forms 4
required by Section 16(a) in a timely manner, except for Dr. Harrison-Ross who
did not file a Form 3 timely.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Effective November 6, 1995, the Corporation dismissed Grant Thornton LLP
as the Corporation's principal accountant to audit its financial statements.
On November 8, 1995, the Board of Directors of the Corporation ratified the
approval of the appointment of Rehmann Robson effective November 6, 1995 as the
Corporation's principal independent accountants for the year ending December
31, 1995. The decision to invite proposals for a change in accountants was
recommended by the Board of Directors on May 10, 1995.
The reports on the financial statements of Grant Thornton LLP on the
Corporation for either of the past two years did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the Corporation's two most recent years ended December 31, 1993 and
1994, and the subsequent interim period preceding the former accountant's
dismissal, the Corporation had no disagreements with the former accountants on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
The Board of Directors selected Rehmann Robson to audit the Corporation's
financial statements for the year ended December 31,
20
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1996. Representatives of Rehmann Robson are expected to be present at
the Annual Meeting and will be given the opportunity to make a statement if
they desire to do so. It is also expected that they will be available to
respond to appropriate questions from stockholders at that time.
1997 ANNUAL MEETING
Shareholders may present proposals to be considered for inclusion in the
Proxy Statement for the 1997 Annual Meeting of the Shareholders provided such
proposals are submitted in accordance with all applicable rules and regulations
of the SEC and received by the Corporation no later than December 22
, 1997.
Allan J. Hammer, Secretary
Detroit, Michigan
April 22, 1997
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APPENDIX A
Section 5 of the 1993 Stock Option Plan shall be amended to read as
follows:
5. Shares Subject to Plan. Subject to adjustments as provided in
Section 7b and 8 hereof, the aggregate number of shares of common stock
of the Corporation ("Shares") as to which Options may be granted under
the Plan shall not exceed 550,000 shares.
24
APPENDIX B
- --------------------------------------------------------------------------------------------------
MICHIGAN DEPARTMENT OF COMMERCE - CORPORATION AND SECURITIES BUREAU
- --------------------------------------------------------------------------------------------------
Date Received (FOR BUREAU USE ONLY)
- ------------------------------------------------------------------
Name Caraco Pharmaceutical Laboratories, Ltd.
Jennifer Evans
- ------------------------------------------------------------------
Address
1150 Elijah McCoy Drive
- ------------------------------------------------------------------
City State Zip Code
Detroit MI 48202
- ------------------------------------------------------------------
DOCUMENT WILL BE RETURNED TO THE NAME AND ADDRESS YOU ENTER ABOVE EFFECTIVE DATE:
- ------------------------------------------------------------------
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
FOR USE BY DOMESTIC PROFIT CORPORATIONS
(Please read information and instructions on the last page)
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the
undersigned corporation executes the following Certificate:
1. The present name of the corporation is:
2. The identification number assigned by the Bureau is: 345-364
3. The location of the registered office is:
1150 Elijah McCoy Drive Detroit, Michigan 48202
- -------------------------------------------------------- -------------
(Street Address) (City) (Zip Code)
4. Article III, Section 1 of the Articles of Incorporation is hereby amended
--------------
to read as follows:
1. The total authorized capital stock is:
Common Shares 30,000,000
Preferred Shares 5,000,000
25
5. COMPLETE SECTION (a) IF THE AMENDMENT WAS ADOPTED BY THE UNANIMOUS CONSENT
OF THE INCORPORATOR(S) BEFORE THE FIRST MEETING OF THE BOARD OF DIRECTORS OR
TRUSTEES; OTHERWISE, COMPLETE SECTION (b). DO NOT COMPLETE BOTH.
a. / / The foregoing amendment to the Articles of Incorporation was duly
adopted on the _________ day of __________________, 19 ________, in accordance
with the provisions of the Act by the unanimous consent of the incorporator(s)
before the first meeting of the Board of Directors or Trustees.
Signed this________day of _____________, 19_______________.
________________________________ ________________________________
(Signature) (Signature)
________________________________ ________________________________
(Type or Print Name) (Type or Print Name)
________________________________ ________________________________
(Signature) (Signature)
________________________________ ________________________________
(Type or Print Name) (Type or Print Name)
b. /X/ The foregoing amendment to the Articles of Incorporation was duly
adopted on the _________ day of__________________, 19 __________. The
amendment: (check one of the following)
/X/ was duly adopted in accordance with Section 611(2) of the Act by the vote
of the shareholders if a profit corporation, or by the vote of the shareholders
or members if a nonprofit corporation, or by the vote of the directors if a
nonprofit corporation organized on a nonstock directorship basis. The
necessary votes were cast in favor of the amendment.
/ / was duly adopted by the written consent of all directors pursuant to
Section 525 of the Act and the corporation is a nonprofit corporation organized
on a nonstock directorship basis.
/ / was duly adopted by the written consent of the shareholders or members
having not less than the minimum number of votes required by statue in
accordance with Section 407(1) and (2) of the Act if a nonprofit corporation,
or Section 407(1) of the Act if a profit corporation. Written notice to
shareholders who have not consented in writing has been given. (Note: Written
consent by less than all of the shareholders or members is permitted only if
such provision appears in the Articles of incorporation.)
/ / was duly adopted by the written consent of all the shareholders or members
entitled to vote in accordance with section 407(3) of the Act if a nonprofit
corporation, or Section 407(2) of the Act if a profit corporation.
Signed this______________ day of _____________, 19 ______________
By_______________________________________________________________
(Only Signature of President, Vice-President, Chairperson, or
Vice-Chairperson)
_________________________________________________________________
(Type or Print Name) (Type or Print Title)
26
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CARACO PHARMACEUTICAL LABORATORIES, LTD.
The undersigned shareholder hereby appoints Jennifer Evans and Allan J.
Hammer, and each of them, with full power of substitution, as true and lawful
attorneys and proxies of the undersigned to represent and vote the shares of
Common Stock owned by the undersigned in Caraco Pharmaceutical Laboratories,
Ltd. at the Annual Meeting of Shareholders to be held on May 21, 1997 at 10:00
a.m. at the Hotel St. Regis, 3071 W. Grand Blvd., Detroit, MI 48202, and at any
adjournment thereof, with like effect and as if the undersigned was personally
present and voting, upon all business that may properly come before the
meeting, including the business identified (and in the manner indicated) on
this proxy and described in the Notice of Meeting and Proxy Statement furnished
herewith (the receipt of which is hereby acknowledged).
The undersigned hereby revokes any proxy or proxies heretofore given by
the undersigned to any person or persons with respect to such Common Shares and
ratifies any and all actions taken by the above-named proxies hereunder.
Set forth on the reverse side are the number of Common Shares held of
record by the undersigned as of April 22, 1997. You are asked to vote on the
business identified below.
Indicate your vote by marking an (X) in the appropriate boxes below. The
Board of Directors recommends voting FOR each of the nominees named in the
following proposal.
ITEM
1. ELECTION OF DIRECTORS
/ / FOR / / FOR
Jay F. Joliat William R. Hurd
/ / WITHHOLD / / WITHHOLD
2. Increasing the number of shares authorized to be issued under the 1993
Stock Option Plan from 450,000 to 550,000
/ / FOR / / AGAINST / / ABSTAIN
3. Amending the Company's Amended and Restated Articles of Incorporation to
increase the number of authorized shares of Common Stock from 20,000,000
to 30,000,000
/ / FOR / / AGAINST / / ABSTAIN
__________(To be signed and dated on the reverse side)______________
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THE SHARES SHALL BE VOTED FOR EACH OF THE NOMINEES NAMED
IN THE PROPOSAL LISTED ABOVE, AND FOR OR AGAINST ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
IF YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE CHECK BOX:
DATED:__________________, 1997
__________________________________________
Signature of Shareholder
__________________________________________
Signature(s) of Joint Owner(s)
Please sign exactly as your name(s) is
imprinted on this proxy. If your shares
are held in a joint account, each joint
owner should sign. If you are signing for
a corporation or partnership or as agent,
attorney, executor, administrator,
trustee, guardian or other fiduciary,
indicate the capacity in which you are
signing.
PLEASE RETURN THIS PROXY IN THE ENCLOSED ENVELOPE