<PAGE>
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:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Forest Laboratories, Inc.
________________________________________________________________________________
(Name of Registrant as Specified in its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the
appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(j)(3)
/ / 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:
_________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:
_________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
_________________________________________________________________________
3) Filing Party:
_________________________________________________________________________
4) Date Filed:
_________________________________________________________________________
<PAGE>
FOREST LABORATORIES, INC.
----------------
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
--------------------
The Annual Meeting of the Stockholders of Forest Laboratories, Inc. (the
"Company") will be held on August 15, 1994 at 10:30 a.m., at Chemical Bank, 270
Park Avenue, New York, New York for the following purposes:
1. To elect a Board of five Directors to serve until the next Annual
Meeting of Stockholders and until their successors are duly elected
and qualified (Proposal 1);
2. To consider and vote upon a proposal to ratify the adoption by the
Board of Directors of the 1994 Employee Stock Option Plan (Proposal
2)
3. To consider the appointment of BDO Seidman as the Company's
independent auditors for the fiscal year ending March 31, 1995
(Proposal 3); and
4. To transact such other business as may properly be brought before
the Meeting.
Stockholders of record at the close of business on June 24, 1994 shall be
entitled to notice of and to vote at the Meeting. A copy of the Annual Report
for the fiscal year ended March 31, 1994 is being mailed to stockholders
simultaneously herewith.
You are invited to attend the Meeting. Whether or not you plan to be
present, kindly fill in and sign the enclosed proxy exactly as your name appears
on your stock certificates, and mail it promptly in the enclosed return envelope
in order that your vote can be recorded. This may save the Company the expense
of further proxy solicitation.
By order of the Board of Directors
WILLIAM J. CANDEE, III,
SECRETARY
June 30, 1994
New York, New York
<PAGE>
FOREST LABORATORIES, INC.
150 EAST 58TH STREET
NEW YORK, NEW YORK 10155-0015
------------------------
PROXY STATEMENT
--------------------
Your proxy is solicited by the Board of Directors of the Company for use at
the Annual Meeting (the "Meeting") of Stockholders to be held on Monday, August
15, 1994, or any adjournment or adjournments thereof, for the purposes set forth
in the attached Notice of Meeting. This Proxy Statement and form of proxy are
being mailed to stockholders on or about June 30, 1994.
Any stockholder giving a proxy may revoke it at any time prior to its use at
the Meeting by giving written notice of revocation to the Secretary of the
Company; mere attendance at the Meeting, without such notice, will not revoke
the proxy. Properly executed proxies will be voted in the manner directed by a
stockholder and, if no direction is made, will be voted for the election of each
of the five management nominees for election as directors and in favor of the
other proposals described herein.
The Board of Directors does not intend to present at the Annual Meeting any
matters other than those set forth in this Proxy Statement, nor does the Board
of Directors know of any other matters which may come before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed proxy to vote it in accordance
with their judgment.
As of June 24, 1994, the record date fixed for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting, there were
outstanding 43,785,921 shares of the Company's common stock, par value $.10 per
share (the "Common Stock") which is the only outstanding class of voting
securities of the Company. Each outstanding share of Common Stock is entitled to
one vote on each matter to be voted upon.
The Company's by-laws provide that stockholders holding one-third of the
shares of Common Stock shall constitute a quorum at meetings of the
stockholders. Shares represented in person or by proxy as to any matter will be
counted toward the fulfillment of a quorum. The affirmative vote of a majority
of the votes cast in person or by proxy is necessary for the election of
directors. The affirmative vote of a majority of the shares of Common Stock
present in person or by proxy is necessary for the approval of Proposal 2 and 3.
Votes at the Annual Meeting will be tabulated by two independent inspectors
of election appointed by the Company or the Company's transfer agent. As the
affirmative vote of a majority of votes cast is required for the election of
directors, abstentions and broker non-votes will have no effect on the outcome
of such election. As the affirmative vote of a majority of shares of Common
Stock present in person or represented by proxy is necessary for the approval of
Proposals 2 and 3, an abstention will have the same effect as a negative vote,
but "broker non-votes" will have no effect on the outcome of the vote.
Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from beneficial owners. If
specific instructions are not received, brokers may vote those shares in their
discretion, depending on the type of proposal involved. The Company believes
that, in accordance with New York Stock Exchange rules applicable to such voting
by brokers, brokers will have discretionary authority to vote with respect to
any shares as to which no instructions are received from beneficial owners with
respect to the election of directors and Proposal 3 and will not
1
<PAGE>
have discretionary authority with respect to Proposal 2. Shares as to which
brokers have not exercised such discretionary authority or received instructions
from beneficial owners are considered "broker non-votes."
Only stockholders of record at the close of business on June 24, 1994 will
be entitled to vote at the Meeting or any adjournment or adjournments thereof.
IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE STOCKHOLDERS'
INTERESTS BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE
PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY
TO INSURE THAT YOUR STOCK WILL BE REPRESENTED. IF YOU ARE PRESENT AT THE MEETING
AND DESIRE TO DO SO, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON BY GIVING
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY. PLEASE RETURN YOUR EXECUTED
PROXY PROMPTLY.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of June 24, 1994 the name, address and
holdings of the only person (including any "group" as defined in Section 13(d)
of the Securities Exchange Act of 1934) known by the Company to be the
beneficial owner of more than five percent of the Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- - - -------------------------- ----------------------- ------------
<S> <C> <C>
Howard Solomon 2,652,443 shares(1) 5.8%
150 East 58th Street
New York, New York
<FN>
- - - ------------------------
(1) Includes 2,115,000 shares subject to options exercisable by Mr. Solomon
within 60 days from the date hereof, which shares are deemed to be
outstanding for purposes of calculating Mr. Solomon's percentage ownership,
but not for purposes of calculating any other person's percentage owner-
ship.
</TABLE>
PROPOSAL 1
ELECTION OF DIRECTORS
The by-laws of the Company provide that there shall be three to eleven
directors, with such number to be fixed by the Board of Directors. Effective at
the time and for the purposes of the Meeting, the number of directors of the
Company, as fixed by the Board of Directors pursuant to the by-laws of the
Company, is five.
Unless otherwise specified, each proxy received will be voted for the
election as directors of the five nominees named below (each of whom was elected
at the 1993 Annual Meeting of Stockholders) to serve until the 1995 Annual
Meeting of Stockholders and until his successor shall be duly elected and
qualified. Each of the nominees has consented to be named a nominee in the Proxy
Statement and to serve as a director if elected. Should any nominee become
unable or unwilling to accept a nomination or election, the persons named in the
enclosed proxy will vote for the election of a nominee designated by the Board
of Directors or will vote for such lesser number of directors as may be
prescribed by the Board of Directors in accordance with the Company's by-laws.
2
<PAGE>
The following persons have been nominated as directors:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL HAS BEEN A
OCCUPATION OR POSITION AGE DIRECTOR SINCE
- - - ----------------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Howard Solomon 66 1964
President and Chief Executive Officer of the Company since 1977. Mr. Solomon also
serves on the Board of Governors of the American Stock Exchange.
William J. Candee, III 67 1959
Partner, Rivkin, Radler & Kremer, Attorneys at Law, since May 1989. For more than
five years prior thereto, Mr. Candee served as an Executive Vice President of the
Dime Savings Bank, New York.
George S. Cohan 70 1977
President, The George Cohan Company, Inc. consultants, since June 1989. For more
than five years prior thereto, Mr. Cohan served as President of Doremus & Co.,
Inc. and its predecessors, an advertising and public relations firm.
Dan L. Goldwasser 54 1977
Partner, Vedder, Price, Kaufman, Kammholz & Day, Attorneys at Law since May 1992.
For more than five years prior thereto, Mr. Goldwasser served as a shareholder,
officer and director of the New York law firm of Solinger Grosz & Goldwasser, P.C.
Joseph M. Schor 65 1980
Vice-President -- Scientific Affairs of the Company since 1977.
</TABLE>
Certain information regarding the beneficial ownership of Common Stock by
each such director and nominee is set forth below at "Security Ownership of
Management."
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- - - -------------------- --- --------------------------------------
<S> <C> <C>
Howard Solomon 66 President and Chief Executive Officer
Joseph M. Schor 65 Vice-President -- Scientific Affairs
Phillip M. Satow 52 Executive Vice-President -- Marketing
Kenneth E. Goodman 46 Vice-President -- Finance
Ronald F. Albano 51 Vice-President -- Licensing
</TABLE>
See the table of nominees for election as directors for biographical data
with respect to Messrs. Solomon and Schor.
Phillip M. Satow has served as Executive Vice-President -- Marketing of the
Company since January 1985.
Kenneth E. Goodman has served as Vice-President -- Finance of the Company
since April 1980.
Ronald F. Albano was elected Vice-President -- Licensing in May 1990. From
November 1987 through April 1990 Dr. Albano was Corporate Vice-President --
Worldwide Licensing and Product Acquisitions of Erbamont, Inc. For approximately
nine years prior thereto, he was employed by Sterling Drug, Inc. in various
executive capacities.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of shares of Common
Stock of the Company as of June 24, 1994 of (i) the Chief Executive Officer and
each of the Company's other four most highly compensated executive officers at
March 31, 1994, (ii) each director and nominee to serve as a director and (iii)
all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- - - -------------------------------------------------- -------------------- ---------
<S> <C> <C>
Howard Solomon.................................... 2,652,443(1) 5.8%
William J. Candee, III............................ 25,708(2) *
George S. Cohan................................... 30,000(3) *
Dan L. Goldwasser................................. 27,370(4) *
Joseph M. Schor................................... 522,181(5) 1.2%
Phillip M. Satow.................................. 537,500(6) 1.2%
Kenneth E. Goodman................................ 502,500(7) 1.1%
Ronald F. Albano.................................. 20,250(8) *
All directors and executive officers as a group... 4,319,952(9) 9.1%
<FN>
- - - ------------------------
* less than 1%
(1) Includes 2,115,000 shares subject to options exercisable within 60 days of
the date hereof.
(2) Includes 24,000 shares subject to options exercisable within 60 days of the
date hereof.
(3) Includes 21,000 shares subject to options exercisable within 60 days of the
date hereof.
(4) Includes 26,000 shares subject to options exercisable within 60 days of the
date hereof. Does not include 1,300 shares owned by Mr. Goldwasser's wife
as to which shares Mr. Goldwasser disclaims beneficial ownership.
(5) Includes 494,778 shares subject to options which are exercisable within 60
days of the date hereof.
(6) Includes 515,000 shares subject to options exercisable within 60 days of
the date hereof. Also includes 21,000 shares held in trusts, of which Mr.
Satow is a trustee, for the benefit of Mr. Satow's children.
(7) Includes 479,778 shares subject to options exercisable within 60 days of
the date hereof.
(8) Comprised of 20,250 shares subject to options exercisable within 60 days of
the date hereof.
(9) Includes 3,695,806 shares subject to options exercisable within 60 days of
the date hereof.
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended March 31, 1994,
1993 and 1992, compensation paid by the Company to the Chief Executive Officer
and to each of the four other most highly compensated executive officers of the
Company during fiscal year 1994, including salary, bonuses, stock options and
certain other compensation:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION (1)
ANNUAL COMPENSATION AWARDS
- - - --------------------------------------------------------------------------------- ---------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/(#) COMPENSATION ($)(2)
- - - ---------------------------------------------- --------- --------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Howard Solomon, 1994 518,140 60,000 100,000 26,908
President and Chief Executive Officer 1993 482,885 60,000 100,000 5,707
1992 421,539 60,000 0 4,342
Joseph M. Schor, 1994 368,378 50,000 50,000 26,249
Vice President -- Scientific Affairs 1993 341,875 50,000 50,000 5,707
1992 296,154 50,000 0 4,342
Phillip M. Satow, 1994 368,378 50,000 50,000 25,810
Executive Vice President -- Marketing 1993 341,875 50,000 50,000 5,707
1992 296,154 50,000 0 4,342
Kenneth E. Goodman, 1994 339,378 50,000 50,000 25,592
Vice President -- Finance 1993 312,206 50,000 50,000 5,707
1992 267,155 50,000 0 4,342
Ronald F. Albano, 1994 201,252 25,000 0 22,916
Vice President -- Licensing 1993 189,814 25,000 15,000 5,707
1992 168,809 20,000 0 4,342
<FN>
- - - ------------------------
(1) The Company has no long term incentive compensation plan other than its
several Employee Stock Option Plans described herein and various
individually granted options. The Company does not award stock appreciation
rights, restricted stock awards or long term incentive plan pay-outs.
(2) Consists solely of compensation credited to such executive officers
pursuant to the Forest Laboratories, Inc. Savings and Profit Sharing Plan
(the "Plan"), which covers employees of the Company and certain of its
subsidiaries. Under the Plan, all regular employees of the Company and
certain subsidiaries who are employed for at least six months prior to the
Plan year end become participants of the Plan. Contributions, which are
made at the discretion of the Company's Board of Directors, may not exceed
25 percent of the individual Plan participant's gross salary (up to a
maximum salary of $150,000 in 1994 and $80,000 in each of 1993 and 1992),
including allocated forfeitures for the Plan year. Plan participants vest
over a period of 3 to 7 years of credited service. The Company did not pay
or provide other forms of annual compensation (such as perquisites) to any
of the named executive officers having a value exceeding the lesser of
$50,000 or 10% of the total annual salary and bonus reported for such
officers.
</TABLE>
5
<PAGE>
OPTIONS GRANTED IN FISCAL 1994
The following information is furnished for the fiscal year ended March 31,
1994 with respect to the Company's Chief Executive Officer and each of the four
other most highly compensated executive officers of the Company for stock
options granted during such fiscal year. Stock options were granted without
tandem stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
OF
% OF TOTAL STOCK PRICE APPRECIATION
OPTIONS GRANTED FOR
OPTIONS TO EMPLOYEES EXERCISE PRICE OPTION TERM($)(2)
GRANTED(1) DURING FISCAL PER SHARE EXPIRATION ------------------------
NAME (#) YEAR ($/S) DATE 5% 10%
- - - ---------------------------- ----------- ----------------- -------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Howard Solomon.............. 100,000 23.33 44.5000 12/17/2003 2,798,581 7,092,154
Joseph M. Schor............. 50,000 11.66 44.5000 12/17/2003 1,399,291 3,546,077
Phillip M. Satow............ 50,000 11.66 44.5000 12/17/2003 1,399,291 3,546,077
Kenneth E. Goodman.......... 50,000 11.66 44.5000 12/17/2003 1,399,291 3,546,077
Ronald F. Albano............
<FN>
- - - ------------------------
(1) All such options granted to such officers have a term of 10 years and were
granted under the Company's 1990 Employee Stock Option Plan. The exercise
price per share of such options was the market value per share on the date
of grant. The options are subject to vesting as follows: 15% of the total
shares covered by each option vests on each of the first four anniversaries
of the date of grant and the remaining 40% vests from and after the fifth
anniversary of such date of grant.
(2) Represents the potential value of the options granted at assumed 5% and 10%
rates of compounded annual stock price appreciation from the date of grant
of such options. The increase in shareholders equity to all shareholders of
the Company measured over the same period at the same assumed rates of
appreciation and based upon the market price for the Common Stock on the
date such options were granted would be $1,220,000,000 and $3,092,000,000,
respectively.
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1994 AND FISCAL YEAR END OPTION VALUES
The following information is furnished for the fiscal year ended March 31,
1994 with respect to the Company's Chief Executive Officer and each of the four
other most highly compensated executive officers of the Company for stock option
exercises during such fiscal year.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF UNEXERCISED IN THE MONEY
SHARES OPTIONS AT 3/31/94 (#) OPTIONS AT 3/31/94 ($)
ACQUIRED VALUE ---------------------------- ------------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
- - - ----------------------------- --------------- ----------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Howard Solomon............... -- -- 2,115,000 185,000 53,392,190 5,311
Joseph M. Schor.............. -- -- 494,778 92,500 11,855,619 2,655
Phillip M. Satow............. -- -- 515,000 92,500 12,725,214 2,655
Kenneth E. Goodman........... -- -- 479,778 92,500 11,291,199 2,655
Ronald F. Albano............. -- -- 15,750 29,250 309,372 378,747
</TABLE>
BENEFITS AGREEMENTS
On December 1, 1989 the Board of Directors adopted a policy of granting
certain medical insurance benefits to senior corporate executive officers and
their spouses upon the completion of 10 years of service by such senior
officers. The benefit would be provided to such executives and their spouses for
their lifetimes following the termination of such executive's employment with
the Company, and would be equivalent to the medical insurance benefits provided
to such executives as of the date of their termination or as of December 1,
1989, if more favorable. The benefit need not be provided to the extent and for
any time that the executive obtained comparable insurance from a subsequent
employer. A more limited benefit was granted to certain key corporate executives
who had served in their positions for more than five years. Such benefit
provides that the Company would reimburse such
6
<PAGE>
executive and his or her spouse following the executive's termination of
employment by the Company for the cost of obtaining health insurance providing
comparable coverage to that obtaining as of December 1, 1989 or at the time of
the executive's termination of employment, if more favorable. Such benefit would
not be provided to the extent and for any time that such executive obtained
comparable insurance coverage from a subsequent employer. The Company entered
into formal written benefits agreements with each of Messrs. Solomon, Schor and
Goodman granting the 10 year service benefit and with Mr. Satow granting the 5
year service benefit.
Effective March 31, 1994, the Company entered into "split dollar" life
insurance benefit agreements with each of Messrs. Solomon, Schor, Satow and
Goodman. Each of these agreements provides that the Company will pay the
premiums on a life insurance policy owned by and for the benefit of the
executive. Upon the death of the executive (or other realization by the
executive upon the principal amount of the policy), proceeds of the life
insurance policy will be applied to repay the Company for all premiums paid on
behalf of the executive. The Company is obligated to continue to pay premiums
under these agreements until the covered life insurance policies are paid in
full, notwithstanding the termination of the executive's employment with the
Company. The Company is further obligated to pay all such premiums in a lump sum
in the event the Company undergoes a "change in control."
STOCK OPTIONS
The Company's 1985, 1988 and 1990 Employee Stock Option Plans (the "Plans")
provide that options may be granted to purchase shares of Common Stock at a
price per share fixed by the Board of Directors, provided that, in the case of
incentive stock options, such price may not be less than fair market value on
the date of the option grant. All employees of the Company and its subsidiaries
are eligible to receive options under the Plans.
The Plans provide that the Board of Directors may determine the employees to
whom options are to be granted and the number of shares subject to each option.
The purchase price for shares must be paid in cash or by the tender of shares of
Common Stock having a fair market value, as determined by the Board, equal to
the option exercise price.
The non-employee directors of the Company participate in the Amended
Directors' Stock Option Plan (the "Directors' Plan") under which an initial
grant of options covering 10,000 shares of Common Stock each were granted to
each of the Company's non-employee directors at an exercise price of $9.90625
per share (being the average price for the Common Stock on the American Stock
Exchange on August 15, 1988, the date of stockholder approval of the Directors'
Plan) and pursuant to which an initial grant of options (having an exercise
price equal to average price of the Common Stock on the date of grant) covering
14,000 shares of Common Stock will automatically be granted to persons who
become non-employee directors from and after the adoption of the Directors'
Plan. The Directors' Plan expires on June 9, 1998 and options granted thereunder
have a term of 10 years (but in no event more than three months following the
optionee's ceasing to serve as a member of the Company's Board of Directors).
Twenty-five percent of the options granted under the Directors' Plan become
exercisable on the date of grant and on each anniversary of such date until all
such options are exercisable.
The Directors' Plan further provides for the automatic annual grant to each
of the Company's non-employee directors of options to purchase 2,000 shares of
Common Stock on the date of their annual election or re-election by the
Company's shareholders. Each such option grant will be at an exercise price
equal to the average price of the Common Stock on the American Stock Exchange on
the date of grant and will become exercisable six months after the date of
option grant. Each such option shall have a term of 10 years from the date of
grant (but in no event more than three months following the optionee's ceasing
to serve as a member of the Company's Board of Directors).
DIRECTORS' COMPENSATION
In addition to automatic annual option grants under the Directors' Plan,
each non-employee director of the Company received $22,500 for their services as
director during the fiscal year ended March 31, 1994, except Mr. Candee who
received $25,000 for his services as director and the Company's secretary and
Chairman of the Audit Committee.
7
<PAGE>
COMMITTEES; BOARD MEETINGS
The Company has an audit committee composed of Messrs. Candee and
Goldwasser. During the fiscal year ended March 31, 1994, the audit committee met
on two occasions for the purpose of (i) approving the selection of the Company's
independent auditors; (ii) reviewing the arrangements and scope of the audit;
and (iii) reviewing the Company's internal accounting procedures and controls
and recommendations of the Company's auditors.
The Company does not have a nominating or compensation committee.
The Board of Directors of the Company held four meetings during the fiscal
year ended March 31, 1994 and no incumbent director attended fewer than 75% of
the aggregate of such meetings and the number of meetings of each committee of
which he is a member.
REPORT ON EXECUTIVE COMPENSATION
BY THE BOARD OF DIRECTORS
AND THE STOCK OPTION COMMITTEE
COMPENSATION POLICY
The Company's Board of Directors (the "Board") is responsible for setting
and administering the policies which govern annual executive salaries, raises
and bonuses and the award of stock options (in the case of options to be granted
under the Company's Employee Stock Option Plans, such responsibility is limited
to the recommendation of awards to the Company's Stock Option Committee). The
Board is currently composed of five members, three of whom are non-employee
directors and two of whom, Messrs. Solomon and Schor, are, respectively, the
President and Chief Executive Officer and Vice President -- Scientific Affairs
of the Company. In addition, the three non-employee directors serve as a Stock
Option Committee which administers the granting of options under the Company's
Employee Stock Option Plans, including the award of options to the Company's
executive officers.
The policy of the Board of Directors is to provide compensation to the Chief
Executive Officer and the Company's other executive officers reflecting the
contribution of such executives to the Company's growth in sales and earnings,
the implementation of strategic plans consistent with the long term growth
objectives of the Company and the enhancement of shareholder value as reflected
in the growth of the Company's market capitalization. Contributions to specific
Company objectives, including the development and acquisition of new product
opportunities, the progress of clinical and other studies and development
activities required to bring new ethical pharmaceutical products to market and
the successful marketing of the Company's principal products are evaluated in
setting compensation policy. Growth in sales and earnings as well as the market
capitalization relative to other companies in the industry are the primary
factors in consideration of compensation at the senior executive levels. In
addition, in order to assure the Company's ability to attract and retain
managerial talent, an attempt is made to keep compensation competitive with
compensation offered by other companies of comparable size and performance. The
Company believes that compensation for its executives generally corresponds to
the mean compensation offered by companies which the Board of Directors believe
compete with the Company for executive talent. Executive compensation decisions
have traditionally been made on a calendar year basis.
Long term incentive compensation policy consists exclusively of the award of
stock options under the Company's Employee Stock Option Plans and individual
option grants, which serve to identify the reward for executive performance with
increases in value created for shareholders.
COMPANY PERFORMANCE AND CEO COMPENSATION
Executive compensation for the fiscal year ended March 31, 1994 consisted of
base salary, an annual bonus and the award of stock options by the Stock Option
Committee as indicated at "Options Granted in Fiscal 1994." The Board of
Directors met in December 1993 to review executive compensation for the calendar
year commencing January 1, 1994. The Board had requested, and management had
prepared, data relating to operating and financial goals and achievements (and
specifically
8
<PAGE>
relating to sales growth, earnings growth, the progress of various clinical
development programs and the in-licensing and acquisition of products and
product development opportunities and the Company's market capitalization). In
addition, the Board requested information concerning CEO compensation at other
pharmaceutical companies (many of which are far larger than the Company in terms
of sales and earnings).
The Board noted that for the six months ended September 30, 1993, the
Company's sales grew by more than 19.5% over the comparable period of the prior
year and earnings grew 24.6% over the earnings for the comparable period of the
prior year. The Board noted that sales and earnings for the remainder of the
fiscal year were expected to grow by at least the same rate as experienced
during the first six months of fiscal 1994.
The Board further noted the achievement of the following strategic
objectives during calendar year 1993: approval by the United States Food and
Drug Administration of the marketing by the Company of Flumadine-R-, an
antiviral product used in the treatment and prophylaxis of influenza A and the
successful launch of such product, the entering into of license and development
arrangements for a prostaglandin pessary (a product to enhance cervical ripening
during childbirth) and the continued progress of clinical studies for the
Company's Monurol-R-, Synapton-TM- and Infasurf-R- products. The Board further
noted the continued growth in sales and market share enjoyed by the Company's
Aerobid-R-, Lorcet-R- and Esgic-R- products. Finally, the Board noted the
continuing expansion of the Company's facilities, including new facilities in
St. Louis, progress in the construction of new facilities in Cincinnati and the
Republic of Ireland and the successful negotiation for a new office, packaging
and distribution facility on Long Island.
In addition, the Board further noted that during calendar year 1993, the
market price of the Common Stock had increased by 11.8%.
The Board considered the foregoing factors with particular emphasis upon the
growth in sales and earnings and the Company's market capitalization and
concluded that the achievement of the objectives described above justified the
recommended increases in compensation being proposed for each of the CEO and the
next four most highly compensated executive officers of the Company.
Based upon the foregoing, the Board approved a salary increase and annual
bonus for Mr. Solomon of $50,000 and $60,000, respectively, representing an
overall increase in cash compensation of 5.8% over such compensation for the
previous year.
During fiscal 1994, the Stock Option Committee awarded stock options to Mr.
Solomon and the other executive officers named in the table set forth at
"Options Granted in Fiscal 1994" in the amounts set forth therein. The Stock
Option Committee determined to continue the Company's long-standing policy of
utilizing the award of stock options (which provide value to the executive over
time as growth in the market price of the Company's shares reflects the
successful achievement of the Company's business objectives) to identify the
success of the Company's executives with the growth in equity value to the
Company's shareholders. The size of the awards made were determined based upon
the level of management responsibility of the various executive officers, their
respective contribution to the achievement of the performance objectives
described above and the Committee's view of an appropriate equity position to be
maintained by the Company's executive officers in light of the Company's market
capitalization.
THE BOARD OF DIRECTORS
Howard Solomon
Joseph M. Schor
George S. Cohan*
William J. Candee, III*
Dan L. Goldwasser*
- - - ------------------------
* Stock Option Committee Member.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each of Howard Solomon, the Company's President and Chief Executive Officer,
and Joseph M. Schor, the Company's Vice President-Scientific Affairs, are
members of the Board and participated in deliberations concerning executive
compensation. Both abstained from voting with respect to their own compensation.
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock for the last five fiscal years with the cumulative total return on
the Standard & Poors Health Care Drugs Index and the Standard & Poors MIDCAP 400
Index over the same period (assuming the investment of $100 in the Common Stock,
the S&P Health Care Drugs Index and the S&P MIDCAP 400 on March 31, 1989, and
the reinvestment of all dividends).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG FOREST LABORATORIES, INC., THE S&P MIDCAP 400 INDEX
AND THE S&P HEALTH CARE DRUGS INDEX
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Forest Laboratories, Inc........... $ 100,000 $ 129,000 $ 259,000 $ 219,000 $ 213,000 $ 277,000
S&P Midcap 400..................... 100,000 120,000 144,000 175,000 204,000 216,000
S&P Health Care Drugs.............. 100,000 125,000 182,000 221,000 171,000 157,000
<FN>
- - - ------------------------
* $100 invested on March 31, 1989 in stock or index including reinvestment of
dividends.
Fiscal year ending March 31.
</TABLE>
10
<PAGE>
PROPOSAL 2
1994 EMPLOYEE STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder approval, and
recommends the adoption of the proposed 1994 Employee Stock Option Plan ("1994
Plan"), under which options may be granted for an aggregate of 2,500,000 shares
of Common Stock prior to May 13, 2004. All of the Company's approximately 1,250
employees are eligible to participate in the 1994 Plan.
The Board of Directors believes that the Company's traditional policy of
providing employees with options (and thereby additional incentive and
proprietary interest in the Company's success) has been a material factor in the
Company's ability to attract, retain and motivate managerial and professional
personnel. As of the date of this Proxy Statement, more than 540 of the
Company's approximately 1,250 employees hold options granted under the Company's
previously adopted Plans. Only an aggregate of 352,681 shares remain available
for grant under such previously adopted Plans. The Board of Directors believes
that the adoption of the 1994 Plan will enable the Company to continue the
Company's policy of offering a competitive compensation package which includes,
as a significant element, stock option based compensation which strongly
identifies the employee's personal financial success with the success of the
Company as a whole. The Company is also of the opinion that affording the Board
of Directors the right to determine the employees to be granted options and the
number of shares as to which options will be granted, will permit the Board of
Directors to take into account various factors as well as special circumstances
with respect to attracting and retaining particular persons, in making its
decision regarding the grant of options.
In addition to the options which would be available for grant under the 1994
Plan, options covering 648 shares, 3,660 shares and 348,373 shares remain
available for grant under the Company's 1985 Plan, 1988 Plan and 1990 Plan
respectively. Stock options are outstanding for 65,900 shares, 606,782 shares,
1,615,376 shares, 1,635,185 shares and 2,200 shares of Common Stock,
respectively, under the 1982 Plan, the 1985 Plan, the 1988 Plan, the 1990 Plan
and the Amended Non-Qualified Plan.
The following description of the 1994 Plan is qualified in its entirety by
reference to such Plan, a copy of which is attached to this Proxy Statement as
Exhibit A and is incorporated by reference herein. Attention is particularly
directed to the description thereof in the prices, expiration dates and other
material conditions upon which the options may be granted and exercised.
The 1994 Plan provides, among other things, that options may be granted to
purchase shares of Common Stock at a price per share fixed by a committee (the
"Committee") composed of the non-employee members of the Board of Directors and,
in the case of an incentive stock option (ISO), at not less than the fair market
value of the applicable class of the Company's Common Stock on the date of
option grant (110% of such fair market value in the case of optionees holding
10% or more of the combined voting rights of the Company's securities). The
Committee may determine the employees to whom options are to be granted and the
number of shares subject to each option. Options may be exercised by the payment
in full in cash or by the tendering of shares of Common Stock having a fair
market value, as determined by the Committee, equal to the option exercise
price. The 1994 Plan provides that the number of shares of Common Stock for
which any employee may be granted options during any twelve month period may not
exceed 300,000 (except that such number shall be 600,000 for the first
twelve-month period following the hiring by the Company of a new employee with
respect to options granted to such employee).
The principal federal income tax consequences of the issuance and granting
of options will be as follows:
(a) Incentive Stock Options, as defined by Section 422 of the Internal
Revenue Code of 1986: Although an individual can receive an unlimited number
of ISO's during any calendar year, the aggregate fair market value
(determined at the time of option grant) of the stock with respect to which
ISO's first become exercisable during any calendar year (under all of the
Company's Plans)
11
<PAGE>
cannot exceed $100,000. For purposes of computing an optionee's regular tax
liability, an optionee will not realize taxable income for federal income
tax purposes upon the grant or exercise of an ISO and the Company will not
be entitled to a deduction in connection with the grant or the exercise of
the option.
Provided that the optionee does not dispose of the shares acquired upon
the exercise of an ISO within two years from the date of grant or within one
year from the date of exercise, the net gain realized on the sale or other
taxable disposition of the shares is subject to tax at capital gains tax
rates. If the optionee disposes of the shares within the two year or one
year periods mentioned above, if Common Stock acquired pursuant to the
exercise of an ISO is disposed of within the two year or one year periods
mentioned above, any gain realized by the optionee generally will be taxable
at the time of such disposition as (i) ordinary income to the extent of the
difference between the exercise price and the lesser of (a) the fair market
value of the Common Stock on the date the ISO is exercised, or (b) the
amount realized on such disposition, and (ii) short-term or long-term
capital gain to the extent of any excess of the amount realized on the
disposition over the fair market value of the Common Stock on the date the
ISO is exercised. The Company will be entitled to a deduction equal to the
amount of ordinary income recognized by the optionee at the time such income
is recognized. The Company will be required to satisfy the applicable
withholding requirements in order to be entitled to a tax deduction.
Payment for Common Stock upon the exercise of an ISO may, at the
discretion of the Committee, be made in whole or in part with other shares
of Common Stock which have been held by the optionee for a period of at
least six months. In such a case, if an optionee uses stock acquired
pursuant to the exercise of any ISO to acquire other stock in connection
with the exercise of an ISO, it may result in ordinary income if the stock
so used has not met the two-year and one-year periods referred to above.
(b) Non-ISO's: There is no limit (subject to the limit contained in the
Plan and described above with respect to the maximum number of options which
may be granted to an employee) on the aggregate fair market value of stock
covered by options which do not qualify as ISO's which may be granted to an
individual in any year or on the aggregate fair market value of non-ISO's
which first become exercisable in any year. Generally, no taxable income
will be recognized by the employee and no deduction will be allowed to the
Company upon the grant of a non-ISO. Upon the exercise of a non-ISO the
optionee will realize an amount of ordinary income equal to the excess of
the fair market value of the shares at the time of exercise over the option
price (even though the optionee will have received no cash), and the Company
will be entitled to a deduction in the same amount. Any difference between
the higher of such market value or exercise price and the price at which the
optionee may subsequently sell the shares will be treated as a short-term or
long-term capital gain or loss.
(c) Limitations on the Company's compensation deduction: Beginning in
the current fiscal year, Section 162(m) of the Internal Revenue Code of 1986
will limit the deduction which the Company may take for otherwise deductible
compensation payable to certain executive officers of the Company to the
extent that compensation paid to such officers for such year exceeds $1
million, unless such compensation is performance-based, is approved by the
Company's stockholders and meets certain other criteria. To date, only
proposed (and not final) Treasury Regulations have been issued with respect
to Section 162(m) of the Code. Although the Company intends that the 1994
Plan will satisfy the requirements that option grants thereunder be
considered performance-based for purposes of Section 162(m) of the Code,
there can be no assurance such awards will satisfy such requirements.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE 1994 PLAN.
12
<PAGE>
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The firm of BDO Seidman has audited the financial statements of the Company
for each of the three fiscal years ended March 31, 1994. The Board of Directors
desires to continue the services of BDO Seidman for the current fiscal year
ending March 31, 1995. Accordingly, the Board of Directors will recommend to the
Meeting that the stockholders ratify the appointment by the Board of Directors
of the firm of BDO Seidman to audit the financial statements of the Company for
the current fiscal year. Representatives of that firm are expected to be present
at the Meeting, shall have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
APPOINTMENT OF BDO SEIDMAN.
MISCELLANEOUS
ANNUAL REPORT
The Company's 1994 Annual Report is being mailed to stockholders
contemporaneously with this Proxy Statement.
FORM 10-K
UPON THE WRITTEN REQUEST OF A RECORD HOLDER OR BENEFICIAL OWNER OF COMMON
STOCK ENTITLED TO VOTE AT THE MEETING, THE COMPANY WILL PROVIDE WITHOUT CHARGE A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE YEAR ENDED MARCH 31, 1994. REQUESTS SHOULD BE MAILED TO
CORPORATE SECRETARY, FOREST LABORATORIES, INC., 150 EAST 58TH STREET, NEW YORK,
NEW YORK 10155-0015.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying form has been or will be
paid by the Company. In addition to solicitation by mail, arrangements will be
made with brokerage houses and other custodians, nominees and fiduciaries to
send proxy material to beneficial owners, and the Company will, upon request,
reimburse them for their reasonable expenses in doing so. To the extent
necessary in order to assure sufficient representation, officers and regular
employees of the Company and a commercial proxy solicitation firm may be engaged
to assist in the solicitation of proxies. Whether either measure will be
necessary depends entirely upon how promptly proxies are received. No outside
proxy solicitation firm has been selected or employed by the Company in respect
of the Meeting as of the date of this Proxy Statement, and the Company is unable
to estimate the costs to it of any such services.
PROPOSALS OF SECURITY HOLDERS
Proposals of security holders to be presented at the 1995 Annual Meeting
must be received by the Company for inclusion in the Company's proxy statement
and form of proxy relating to that meeting no later than March 2, 1995.
Stockholders are urged to send in their proxies without delay.
WILLIAM J. CANDEE, III,
SECRETARY
Dated: June 30, 1994
13
<PAGE>
EXHIBIT A
1994 EMPLOYEE STOCK OPTION PLAN
OF
FOREST LABORATORIES, INC.
1. THE PLAN. This 1994 Employee Stock Option Plan (the "Plan") is intended
to encourage ownership of stock of Forest Laboratories, Inc. (the "Corporation")
by specified employees of the Corporation and its subsidiaries and to provide
additional incentive for them to promote the success of the business of the
Corporation.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 14
hereof, the total number of shares of Common Stock, par value $.10 per share, of
the Corporation (the "Stock") which may be issued pursuant to Incentive Stock
Options (as hereinafter defined) and non-Incentive Stock Options granted under
the Plan (the "Options") shall be 2,500,000. Such shares of Stock may be in
whole or in part, either authorized and unissued shares or treasury shares as
the Board of Directors of the Corporation (the "Board") shall from time to time
determine. If an Option shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares covered thereby shall (unless the
Plan shall have been terminated) again be available for Options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee (the "Committee") composed of the non-employee members of the Board
which shall have plenary authority, in its discretion, to determine the
employees of the Corporation and its subsidiaries to whom Options shall be
granted ("Optionees"), the number of shares to be subject to each Option
(subject to the provisions of Paragraph 2) and the terms of each Option. The
Board shall have plenary authority, subject to the express provisions of the
Plan, to interpret the Plan, to prescribe, amend and rescind any rules and
regulations relating to the Plan and to take such other action in connection
with the Plan as it deems necessary or advisable. The interpretation and
construction by the Board of any provisions of the Plan or of any Option granted
thereunder shall be final and no member of the Board shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted thereunder by the Committee.
4. EMPLOYEES ELIGIBLE FOR OPTIONS. All employees of the Corporation or its
subsidiaries shall be eligible for Options. In making the determination as to
employees to whom Options shall be granted and as to the number of shares to be
covered by such Options, the Committee shall take into account the duties of the
respective employees, their present and potential contributions to the success
of the Corporation and such other factors as it shall deem relevant in
connection with accomplishing the purpose of the Plan.
5. TERM OF THE PLAN. The Plan shall terminate on, and no Options shall be
granted after May 13, 2004 provided that the Committee may at any time terminate
the Plan prior thereto.
6. MAXIMUM OPTION GRANT. With respect to Options which are intended to
qualify as Incentive Stock Options, the aggregate fair market value (determined
as of the time the Option is granted) of the Stock with respect to which ISO's
granted to any employee (whether under this Plan or under any other stock option
plan of the Corporation) become exercisable for the first time in any calendar
year may not exceed $100,000. The number of shares of Stock for which any
employee may be granted Options under the Plan during any twelve-month period
shall not exceed 300,000 (except that such number shall be 600,000 for the first
twelve-month period following the hiring by the Corporation of a new employee
with respect to Options granted to such employee).
7. OPTION PRICE. Each Option shall state the option price, which shall be,
in the case of Incentive Stock Options, not less than 100% of the fair market
value of the Stock on the date of the granting of the Option, nor less than 110%
in the case of an Incentive Stock Option granted to an individual
A-1
<PAGE>
who, at the time the Option is granted, is a 10% Holder (as hereinafter
defined). The fair market value of shares of Stock shall be determined by the
Board and shall be the mean between the high and low prices of the Stock on the
American Stock Exchange on the date of the granting of the Option.
8. TERM OF OPTIONS. The term of each Option shall be for a maximum of ten
years from the date of granting thereof, and a maximum of five years in the case
of an Incentive Stock Option granted to a 10% Holder, but may be for a lesser
period or be subject to earlier termination as hereinafter provided.
9. EXERCISE OF OPTIONS. An Option may be exercised from time to time as to
any part or all of the Stock to which the Optionee shall then be entitled,
provided, however, that an Option may not be exercised (a) as to less than 100
shares at any time (or for the remaining shares then purchasable under the
Option, if less than 100 shares), (b) prior to the expiration of at least six
months from the date of grant except in case of the death or disability of the
Optionee and (c) unless the Optionee shall have been in the continuous employ of
the Corporation or its subsidiaries from the date of the granting of the Option
to the date of its exercise, except as provided in Paragraphs 12 and 13. The
purchase price of the Stock issuable upon exercise of an Option shall be paid in
full at the time of the exercise thereof (i) in cash or (ii) by the transfer to
the Corporation of shares of its Stock with a fair market value (as determined
by the Committee) equal to the purchase price of the Stock issuable upon
exercise of such Option, provided that such shares have been beneficially owned
by the Optionee for at least six months. The holder of an Option shall not have
any rights as a stockholder with respect to the Stock issuable upon exercise of
an Option until certificates for such Stock shall have been delivered to him
after the exercise of the Option.
10. NON-TRANSFERABILITY OF OPTIONS. Except as provided in the following
sentence, an Option shall not be transferable otherwise than by will or the laws
of descent and distribution and is exercisable during the lifetime of the
employee only by him or his guardian or legal representative. The Committee
shall have discretionary authority to grant Options which will be transferable
to members of an Optionee's immediate family, including trusts for the benefit
of such family members and partnerships in which such family members are the
only partners. A transferred Option would be subject to all of the same terms
and conditions as if such Option had not been transferred.
11. FORM OF OPTIONS. Each Option granted pursuant to the Plan shall be
evidenced by an agreement (the "Option Agreement") which shall clearly identify
the status of the Options granted thereunder (i.e., whether an Incentive Stock
Option or non-Incentive Stock Option) and which shall be in such form as the
Committee shall from time to time approve. The Option Agreement shall comply in
all respects with the terms and conditions of the Plan and may contain such
additional provisions, including, without limitation, restrictions upon the
exercise of the Option, as the Committee shall deem advisable.
12. TERMINATION OF EMPLOYMENT. In the event that the employment of an
Optionee shall be terminated (otherwise by reason of death), such Option shall
be exercisable (to the extent that such Option was exercisable at the time of
termination of his employment) at any time prior to the expiration of a period
of time not exceeding three months after such termination, but not more than ten
years (five years in the case of an Incentive Stock Option granted to a 10%
Holder) after the date on which such Option shall have been granted. Nothing in
the Plan or in the Option Agreement shall confer upon the Optionee any right to
be continued in the employ of the Corporation or its subsidiaries or interfere
in any way with the right of the Corporation or any subsidiary to terminate or
otherwise modify the terms of Optionee's employment, provided, however, that a
change in Optionee's duties or position shall not affect such Optionee's Option
so long as such Optionee is still an employee of the Corporation or its
subsidiaries.
13. DEATH OF OPTIONEE. In the event of the death of an Optionee, any
unexercised portion of this Option shall be exercisable (to the extent that such
Option was exercisable at the time of his death) at any time prior to the
expiration of a period not exceeding three months after his death but not more
than ten years (five years in the case of an Incentive Stock Option granted to a
10% Holder) after the
A-2
<PAGE>
date on which such Option shall have been granted and only by such person or
persons to whom such deceased Optionee's rights shall pass under such Optionee's
will or by the laws of descent and distribution.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of changes in
the outstanding Stock of the Corporation by reason of stock dividends, splitups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations or liquidations, the number and class of shares or
the amount of cash or other assets or securities available upon the exercise of
any Option granted hereunder and the maximum number of shares as to which
Options may be granted to an employee shall be correspondingly adjusted, to the
end that the Optionee's proportionate interest in the Corporation, any successor
thereto or in the cash, assets or other securities into which shares are
converted or exchanged shall be maintained to the same extent, as near as may be
practicable, as immediately before the occurrence of any such event. All
references in this Plan to "Stock" from and after the occurrence of such event
shall be deemed for all purposes of this Plan to refer to such other class of
shares or securities issuable upon the exercise of Options granted pursuant
hereto.
15. SHAREHOLDER AND STOCK EXCHANGE APPROVAL. This Plan is subject to and
no Options shall be exercisable hereunder until after (i) the approval by the
holders of a majority of the Stock of the Corporation voting at a duly held
meeting of the stockholders of the Corporation within twelve months after the
date of the adoption of the Plan by the Board and (ii) the approval by the
American Stock Exchange, Inc. of a listing application covering the shares of
Stock covered by this Plan.
16. AMENDMENT OF THE PLAN. The Board shall have complete power and
authority to modify or amend the Plan (including the form of Option Agreement)
from time to time in such respects as it shall deem advisable; provided,
however, that the Board shall not, without the approval of the votes represented
by a majority of the outstanding Stock of the Corporation present or represented
at a meeting duly held in accordance with the applicable laws of the
Corporation's jurisdiction of incorporation and entitled to vote at a meeting of
stockholders or by the written consent of stockholders owning stock representing
a majority of the votes of the corporation's outstanding stock, (i) increase the
maximum number of shares which in the aggregate are subject to Options under the
Plan (except as provided by Paragraph 14), (ii) extend the term of the Plan or
the period during which Options may be granted or exercised, (iii) reduce the
Option price, in the case of Incentive Stock Options below 100% (110% in the
case of an Incentive Stock Option granted to a 10% Holder) of the fair market
value of the Stock issuable upon exercise of Options at the time of the granting
thereof, other than to change the manner of determining the fair market value
thereof, (iv) increase the maximum number of shares of Stock for which any
employee may be granted Options under the Plan pursuant to Paragraph 6, (v)
materially increase the benefits accruing to participants under the Plan, (vi)
modify the requirements as to eligibility for participation in the Plan, or
(vii) with respect to options which are Incentive Stock Options amend the plan
in any respect which would cause such options to no longer qualify for Incentive
Stock Option treatment pursuant to the Internal Revenue Code; provided, however,
that none of the provisions referred to in Section (c)(2)(ii) of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended, may be
amended more frequently than once every six months other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act or the rules thereunder. No termination or amendment of the Plan shall,
without the consent of the individual Optionee, adversely affect the rights of
such Optionee under an Option theretofore granted to him or under such
Optionee's Option Agreement.
17. TAXES. The Corporation may make such provisions as it may deem
appropriate for the withholding of any taxes which it determines is required in
connection with any Options granted under the Plan. The Corporation may further
require notification from the Optionees upon any disposition of Stock acquired
pursuant to the exercise of Options granted hereunder.
18. CODE REFERENCES AND DEFINITIONS. Whenever reference is made in this
Plan to a section of the Internal Revenue Code, the reference shall be to said
section as it is now in force or as it may hereafter
A-3
<PAGE>
be amended by any amendment which is applicable to this Plan. The term
"subsidiary" shall have the meaning given to the term "subsidiary corporation"
by Section 425(f) of the Internal Revenue Code. The terms "Incentive Stock
Option" and "ISO" shall have the meanings given to them by Section 422 of the
Internal Revenue Code. The term "10% Holder" shall mean any person who, for
purposes of Section 422 of the Internal Revenue Code owns more than 10% of the
total combined voting power of all classes of stock of the employer corporation
or of any subsidiary corporation.
A-4
<PAGE>
FOREST LABORATORIES, INC.
Proxy -- For the Annual Meeting of Stockholders -- August 15, 1994
The undersigned stockholder of FOREST LABORATORIES, INC., revoking any
previous proxy for such stock, hereby appoints Howard Solomon and Kenneth E.
Goodman, or either of them, the attorneys and proxies of the undersigned, with
full power of substitution, and hereby authorizes them to vote all shares of
Common Stock of FOREST LABORATORIES, INC. which the undersigned is entitled
to vote at the Annual Meeting of Stockholders to be held on August 15, 1994
at 10:30 a.m. at Chemical Bank, 270 Park Avenue, New York, New York, and any
adjournments thereof on all matters coming before said meeting.
In the event no contrary instructions are indicated by the undersigned
stockholder, the proxies designated hereby are authorized to vote the shares as
to which this proxy is given FOR each of the proposals set forth on this card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The Board of Directors recommends a Vote FOR each of the proposals.
(continued on reverse side)
See Reverse Side
<PAGE>
x
PLEASE MARK YOUR CHOICES LIKE THIS
- - - -----------------------
ACCOUNT NUMBER
- - - ----------------
COMMON
Item 1. Election of a Board of five Directors:
Howard Solomon, William J. Candee, III, George S. Cohan, Dan L. Goldwasser and
Joseph M. Schor
FOR ALL WITHHOLD
NOMINEES AUTHORITY
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
the nominee's name on the line provided below.)
- - - ------------------------------------------------------------------------------
Item 2. Approval of the 1994 Employee Stock Option Plan
FOR AGAINST ABSTAIN
Item 3. Ratification of BDO Seidman as Accountants
Please sign here exactly as your name(s) appear(s) on this proxy. If signing for
an estate, trust or corporation, title or capacity should be used. If shares are
held jointly, each holder should sign. If a partnership, sign in partnership
name by authorized person.
Dated
-------------------------------------------------
- - - ------------------------------------------------------
Signature
- - - ------------------------------------------------------
Signature
PLEASE SIGN, DATE AND MAIL IN THE ENVELOPE PROVIDED
