<PAGE>
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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
[_]CONFIDENTIAL, FOR USE OF THE
[X]Definitive Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
PHARMACEUTICAL RESOURCES, INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
[_]Fee paid previously with preliminary materials.
[_]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:
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<PAGE>
PHARMACEUTICAL RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 28, 1997
To the Shareholders:
The 1997 Annual Meeting of Shareholders of Pharmaceutical Resources, Inc.
(the "Company") will be held on October 28, 1997, at Holiday Inn-Suffern, 3
Executive Boulevard, Suffern, New York at 10 a.m. local time for the following
purposes:
I. To elect two members of the Company's Board of Directors, which consists
of six members, to serve for a three-year term and until their
successors have been duly elected and qualified; and
II. To transact such other business as may properly come before the meeting
and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on September 12, 1997
as the record date for the determination of shareholders entitled to notice
of, and to vote at, the 1997 Annual Meeting of Shareholders (the "Meeting").
Only shareholders of record at the close of business on such date will be
entitled to notice of, and to vote at, the Meeting and any adjournment(s)
thereof.
By Order of the Board of Directors
Dennis J. O'Connor
Secretary
September 12, 1997
YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE POSTAGE PREPAID ENVELOPE WHICH HAS BEEN
PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. THE
PROXY MAY BE REVOKED BY YOU AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT
TIME AND EXERCISE YOUR RIGHT TO VOTE YOUR SHARES PERSONALLY.
<PAGE>
PROXY STATEMENT
PHARMACEUTICAL RESOURCES, INC.
ONE RAM RIDGE ROAD
SPRING VALLEY, NEW YORK 10977
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 28, 1997
GENERAL INFORMATION
This Proxy Statement is furnished to shareholders of Pharmaceutical
Resources, Inc. (the "Company"), a New Jersey corporation, in connection with
the solicitation by the Company's Board of Directors (the "Board") of proxies
to be voted at the 1997 Annual Meeting of Shareholders (the "Meeting"), and at
any adjournment(s) thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. The Meeting is to be held on October
28, 1997, at Holiday Inn--Suffern, 3 Executive Boulevard, Suffern, New York at
10 a.m. local time.
The principal executive offices of the Company are located at One Ram Ridge
Road, Spring Valley, New York 10977, and its telephone number is (914) 425-
7100. The enclosed proxy and this proxy statement are being transmitted to
shareholders of the Company on or about September 12, 1997.
SOLICITATION AND REVOCATION
The accompanying proxy in the form enclosed is being solicited by and on
behalf of the Board. The solicitation of proxies will be made principally by
mail and, in addition, may be made by directors, officers and employees of the
Company personally, or by telephone or telegraph, without extra compensation.
The Company has also retained Georgeson & Company Inc. to assist it in the
solicitation of proxies. Brokers, nominees and fiduciaries will be reimbursed
for their out-of-pocket and clerical expenses in transmitting proxies and
related material to beneficial owners. The costs of soliciting proxies will be
borne by the Company. It is estimated that such costs will be approximately
$8,000.
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of common stock, $.01 par value, of the
Company (the "Common Stock") entitled to vote shall constitute a quorum. The
accompanying proxy card is intended to permit a shareholder of record on
September 12, 1997 to vote at the Meeting on the proposals described in this
Proxy Statement, whether or not the shareholder attends the Meeting. Persons
who acquire shares of record after the close of business on September 12, 1997
will not be entitled to vote such shares at the Meeting by proxy or by voting
at the Meeting in person. The persons named in the proxy have been designated
as proxies by the Board. Shares represented by properly executed proxies
received by the Company will be voted at the Meeting in the manner specified
therein or, if no specification is made, will be voted (i) "FOR" the election
of the two nominees for director named herein, and (ii) at the discretion of
the proxy holders in respect of such other business, if any, as may properly
be brought before the Meeting and which the Board did not know would be
presented at the Meeting.
Abstentions and shares of record held by a broker or nominee ("Broker
Shares") that are voted on any matter will be included in determining the
existence of a quorum. Broker Shares that are not voted on any matter will not
be included in determining the existence of a quorum. Abstentions and Broker
Shares that are not voted will not be counted in tabulations of the votes cast
on proposals. Thus, neither abstentions nor non-voted Broker Shares will have
an effect on the outcome of the election of the two nominees for directors,
which requires only that a plurality of the votes cast be in favor of each
nominee. Non-voted Broker Shares will also have no effect on the outcome of
any other proposals to the Company's shareholders. Any proxy given to the
Company by a shareholder pursuant to this solicitation may be revoked by the
shareholder at any time before it is exercised by
<PAGE>
written notification delivered to the Secretary of the Company, by voting in
person at the Meeting, or by executing and delivering another proxy bearing a
later date. Attendance by a shareholder at the Meeting does not alone serve to
revoke the proxy.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
OUTSTANDING SHARES
The Board has fixed the close of business on September 12, 1997 as the
record date (the "Record Date") for the determination of shareholders of the
Company who are entitled to receive notice of, and to vote at, the Meeting. An
aggregate of 18,696,629 shares of Common Stock were outstanding at the close
of business on September 2, 1997. Each share of Common Stock outstanding on
the Record Date is entitled to one vote on each matter to be voted upon at the
Meeting, and the Company's shareholders do not have cumulative voting rights.
The Company has no other class of voting securities entitled to vote at the
Meeting.
OWNERSHIP OF VOTING SECURITIES
The following table sets forth, as of the close of business on September 2,
1997, the beneficial ownership of the Common Stock by (i) each person known
(based solely on a review of Schedules 13D) to the Company to be the
beneficial owner of more than 5% of the Common Stock, (ii) each director and
nominee for election as a director of the Company, (iii) the Named Executives,
as defined in the "Executive Compensation" section of this Proxy Statement,
and (iv) all directors and current executive officers of the Company and Par
Pharmaceutical, Inc., the Company's principal operating subsidiary ("Par"), as
a group (based upon information furnished by such persons). Under the rules of
the Securities and Exchange Commission, a person is deemed to be a beneficial
owner of a security if such person has or shares the power to vote or direct
the voting of such security or the power to dispose of or to direct the
disposition of such security. In general, a person is also deemed to be a
beneficial owner of any securities of which that person has the right to
acquire beneficial ownership within 60 days. Accordingly, more than one person
may be deemed to be a beneficial owner of the same securities.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE OF
COMMON COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER STOCK STOCK
------------------------------------ --------- -------------
<S> <C> <C>
Clal Pharmaceutical Industries Ltd.(1)................. 2,313,272 12.3
Kenneth I. Sawyer(2)(3)................................ 706,900 3.7
Melvin H. Van Woert, M.D.(2)(3)........................ 70,050 *
Andrew Maguire, Ph.D.(2)(3)............................ 36,300 *
H. Spencer Matthews(2)(3).............................. 36,900 *
Mark Auerbach(2)(3).................................... 47,000 *
Robin O. Motz, M.D., Ph.D.(2)(3)....................... 42,000 *
Dennis J. O'Connor(2).................................. 27,452 *
Joseph Gokkes(2)....................................... 170 *
All directors and current executive officers (as of
9/2/97) as a
group (8 persons) (2)................................. 966,772 5.0
</TABLE>
- --------
* Less than 1%.
(1) The address of Clal Pharmaceutical Industries Ltd. ("Clal") is Clal House,
5 Druyanov Street, Tel Aviv 63143, Israel.
(2) The business address of each of these individuals, for the purposes
hereof, is in care of Pharmaceutical Resources, Inc., One Ram Ridge Road,
Spring Valley, New York 10977. Includes shares of Common Stock which may
be acquired upon the exercise of options which are exercisable on or prior
to November 1, 1997, under the Company's stock option plans as follows:
Mr. Sawyer, 550,000 shares; Dr. Van Woert, 69,000
2
<PAGE>
shares; Mr. Maguire, 36,000 shares; Mr. Matthews, 36,000 shares; Mr.
Auerbach, 47,000 shares; Dr. Motz, 42,000 shares; Mr. O'Connor, 25,833
shares; and Mr. Gokkes, 0 shares.
(3) A director of the Company.
VOTING ARRANGEMENTS
The Company and Clal entered into a Stock Purchase Agreement, dated March
25, 1995, as amended (the "Stock Purchase Agreement"), pursuant to which Clal,
on May 1, 1995, purchased 2,027,272 shares of Common Stock. Clal acquired the
right to receive an additional 186,000 shares in connection with an amendment
of the Stock Purchase Agreement on July 28, 1997. Under the Stock Purchase
Agreement, Clal agreed to vote all of the shares of Common Stock held by it in
favor of certain business combination transactions of the Company and certain
sales of assets or securities of the Company. See "Certain Relationships and
Related Transactions." In addition, Clal has certain rights under the Stock
Purchase Agreement to nominate directors to the Company's Board and committees
thereof. See "Election of Directors--Directors."
ELECTION OF DIRECTORS
DIRECTORS
The Company's Certificate of Incorporation provides that the Board shall be
divided into three classes, with the term of office of one class expiring each
year. The Class II and Class III directors of the Company have terms which
expire in 1998 and 1999, respectively. The terms of office of Class I
directors expire this year. Mark Auerbach and H. Spencer Matthews are each
nominated to be elected at the Meeting as Class I directors to hold office for
a three-year term until the 2000 Annual Meeting of Shareholders and until
their successors have been duly elected and qualified. The maximum number of
directors is set by the Company's By-laws at fifteen, and the number of
directors is presently set, by resolution, at six.
Proxies in the accompanying form will be voted at the Meeting in favor of
the election of each of the nominees listed on the accompanying form of proxy,
unless authority to do so is withheld as to an individual nominee or all
nominees as a group. Proxies cannot be voted for a greater number of persons
than the number of nominees named. It is expected that each of the nominees
will be able to serve, but if before the election it develops that any one or
more of the nominees will be unable to serve or for good cause will not serve,
the proxies reserve discretion to vote or refrain from voting for a substitute
nominee or nominees. Each of the nominees has consented to serve as a director
of the Company and to be named herein. Messrs. Auerbach and Matthews are
currently members of the Board. Directors will be elected by a plurality of
the votes cast by the holders of shares entitled to vote thereon who are
present at the Meeting in person or by proxy.
Under the Stock Purchase Agreement, Clal has the right to designate one-
seventh of the members of the Board as long as Clal owns 8% of the issued and
outstanding Common Stock, and a total of two-sevenths of the members of the
Board if Clal owns at least 16% of the issued and outstanding Common Stock.
The Company has the right to reject a designee of Clal if such person is not
reasonably acceptable to the Company. The Company also agreed to elect Clal's
designee to the Audit Committee, Compensation and Stock Option Committee and
Strategic Planning Committee of the Board. Additionally, if Clal's appointment
of a director to the Audit Committee is prohibited by the rules and
regulations of the New York Stock Exchange, Inc., the Company will provide
Clal materials which are provided to committee members, the appointment of the
Company's auditors will be approved by the entire Board, the Company will
consult with directors nominated by Clal with respect to Audit Committee
actions and the directors nominated by Clal will have the right to consent to
certain changes in the Company's accounting principles. In the event that Clal
does not nominate directors to the Board or its committees or if Clal's
designees are not elected to the Board or its committees, Clal is permitted,
under the Stock Purchase Agreement, to designate representatives who may
attend meetings of the Board and its committees.
3
<PAGE>
Clal, until September 1997, had one of its representatives serve on the
Board and several of its committees. Clal has subsequently designated one
representative to attend meetings of the Board and its committees. Such
representative will not serve as a director of the Company.
The following table sets forth certain information with respect to each
nominee for election as a Class I director of the Company at the Meeting and
the year each was first elected as a director:
<TABLE>
<CAPTION>
YEAR
OF FIRST
NAME AGE ELECTION
- ---- --- --------
<S> <C> <C>
CLASS I
Mark Auerbach (1)(2).............................................. 58 1990
Since June 1993, the Senior Vice President and Chief Financial
Officer of Central Lewmar L.P., a distributor of fine papers.
From August 1992 to June 1993, a partner of Marron Capital L.P.,
an investment banking firm. From July 1990 to August 1992, Pres-
ident, Chief Executive Officer and Director of Implant Technol-
ogy Inc., a manufacturer of artificial hips and knees.
H. Spencer Matthews (2)........................................... 76 1990
Since 1986, President and Chief Executive Officer of Dispense-
All South Coast, Inc., and Dispense-All of Central Florida,
Inc., two companies which are wholesalers of juice concentrates.
Rear Admiral, United States Navy (Retired).
</TABLE>
The following table sets forth certain information with respect to each of
the Class II directors (terms expire in 1998) and Class III directors (terms
expire in 1999) and the year each was first elected as a director:
<TABLE>
<CAPTION>
YEAR
OF FIRST
NAME AGE ELECTION
- ---- --- --------
<S> <C> <C>
CLASS II
Andrew Maguire, Ph.D. (1)(3)(4).................................. 58 1990
Since January 1990, President and Chief Executive Officer of
Appropriate Technology International, a not-for-profit
corporation providing business development services in Asia,
Africa and Latin America. From January 1989 to December 1994, a
Senior Vice President of Washington Financial Group, an
investment banking firm. From June 1987 to January 1989,
Executive Vice President of the North American Securities
Administrators Association.
Melvin H. Van Woert, M.D. (3)(4)(5).............................. 67 1990
Since 1974, Physician and Professor of Neurology and
Pharmacology and Doctoral Faculty, Mount Sinai Medical Center,
New York.
</TABLE>
<TABLE>
<CAPTION>
YEAR
OF FIRST
NAME AGE ELECTION
- ---- --- --------
<S> <C> <C>
CLASS III
Kenneth I. Sawyer (3)(4)(5)....................................... 51 1989
Since October 1990, Chairman of the Board of the Company. Since
October 1989, President and Chief Executive Officer of the
Company. From September 1989 to October 1989, Interim President
and Chief Executive Officer of the Company. From August 1989 to
September 1989, counsel to the Company. From May 1989 to August
1989, an attorney in private practice. From prior to 1987 to May
1989, Vice President and General Counsel of Orlove Enterprises,
Inc., a company engaged in the manufacture and distribution of
pharmaceutical and other products. Director of Acorn Venture
Capital Corporation, a closed-end investment company.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
Robin O. Motz, M.D., Ph.D. (2)(4)(5)................................... 58 1992
Since July 1978, Assistant Professor of Clinical Medicine, Columbia
University College of Physicians and Surgeons. Physician engaged in a
private practice of internal medicine.
</TABLE>
- --------
(1) A member of the Audit Committee of the Board of the Company.
(2) A member of the Compensation and Stock Option Committee of the Board of
the Company.
(3) A member of the Strategic Planning Committee of the Board of the Company.
(4) A member of the Nominating Committee of the Board of the Company.
(5) A member of the Executive Committee of the Board of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE TWO
NOMINEES NAMED ABOVE AS DIRECTORS OF THE COMPANY.
BOARD AND COMMITTEE MEETINGS
The Board met four times during fiscal year 1996 which ended September 30,
1996. The Audit Committee met once during fiscal year 1996. The primary
function of the Audit Committee is to review the Company's financial
statements with its auditors. See "--Directors." The Compensation and Stock
Option Committee held five meetings during fiscal year 1996. The functions of
the Compensation and Stock Option Committee are to set and approve salary and
bonus levels of corporate officers and to administer the Company's 1986 Stock
Option Plan and 1990 Stock Incentive Plan, including primary responsibility
for the granting of options and other awards thereunder. The Nominating
Committee did not meet during fiscal year 1996. The primary function of the
Nominating Committee is to make recommendations to the Board concerning the
selection of nominees for election as directors. The Nominating Committee will
consider candidates suggested by directors or shareholders. Nominations for
shareholders, properly submitted in writing to the Secretary of the Company,
will be referred to the Nominating Committee for consideration. Neither the
Executive Committee nor the Strategic Planning Committee had any official
meetings during fiscal year 1996. The function of the Executive Committee is
to exercise the powers of the Board in the management of the business and
affairs of the Company, subject to limits imposed by applicable law, and the
function of the Strategic Planning Committee is to review potential material
transactions involving the Company and to communicate with and make
recommendations to the Board in respect of such transactions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As a public company, the Company's directors, executive officers and 10%
beneficial owners are subject to reporting requirements under Section 16(a) of
the Securities Exchange Act of 1934, as amended. Under such Act, Mr. Sawyer
delinquently filed one Statement of Beneficial Ownership of Securities during
fiscal year 1996.
COMPENSATION OF DIRECTORS
For service on the Board in fiscal year 1996, directors received an annual
retainer of $12,000. Directors also received a fee of $1,000 for each meeting
of the Board attended, and a fee of $750 for each committee meeting attended
in person or by telephone conference, subject to a maximum of $1,750 per day.
Chairmen of committees receive an additional annual retainer of $5,000 per
committee. At the 1995 Annual Meeting of Shareholders, the shareholders
approved the 1995 Directors' Stock Option Plan (the "1995 Directors' Plan").
The 1995 Directors' Plan will award options to non-employees who may be
elected in the future. Current directors will obtain no future awards under
the 1995 Directors' Plan.
Directors who are employees of the Company or any of its subsidiaries or who
are designated by Clal receive no additional remuneration for serving as
directors or as members of committees of the Board. All directors are entitled
to reimbursement for out-of-pocket expenses incurred in connection with their
attendance at Board and committee meetings.
5
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Clal Agreements. On May 1, 1995, the Company consummated a strategic
alliance with Clal consisting primarily of (i) the sale by the Company of
2,027,272 shares of the Company's Common Stock for $20,000,000, or $9.87 per
share, (ii) the issuance by the Company of warrants to purchase 1,905,107
shares of Common Stock (the "Warrants") and (iii) the formation of a joint
venture, named Clal Pharmaceutical Resources Limited Partnership, to research
and develop generic pharmaceutical products (the "Joint Venture"). The Stock
Purchase Agreement included terms of the Company's and Clal's business
relationship including issuance to Clal of 2,027,272 shares of Common Stock,
rights to nominate Board members, rights of first refusal, voting agreements,
rights to invest in others, standstill agreements and agreements with respect
to the issuance of the Warrants. Subject to the satisfaction of certain
conditions, Clal obtained the right to designate one or more of the members of
the Company's Board of Directors and committees thereof, or in lieu thereof
observers to meetings of the Company's Board of Directors and committees
thereof, and the right to designate a member of the Company's management.
Clal has a right of first refusal with respect to certain business
combination transactions of the Company and certain sales of the assets or
securities of the Company. Such right extends until May 1, 2000, provided that
Clal, when exercising such right (i) has not sold or disposed of shares of
Common Stock representing more than 337,045 shares of Common Stock and (ii)
owns or has the right to acquire 16% of the Common Stock (the "Restricted
Period"). If Clal does not exercise its first refusal rights with respect to
any of the above-mentioned transactions, Clal will, subject to certain
exceptions, be required to vote its shares of Common Stock in favor of such
transactions. Such obligation will terminate upon the expiration of the
Restricted Period. Clal has no obligation to vote its shares of Common Stock
in favor of such a transaction if (i) Clal exercises its right of first
refusal with respect to such transaction, (ii) fewer than 75% of the members
of the Board (excluding member(s) of the Board nominated by Clal) vote in
favor of the transaction or (iii) any member of the Board (excluding member(s)
of the Board nominated by Clal) votes against the transaction. In the event
that Clal has an obligation to vote its shares in favor of such a transaction,
Clal also has agreed to take such other actions reasonably required or
appropriate to facilitate the consummation of the transaction. Clal has no
obligation to vote its shares in favor of, or take other actions to
facilitate, any such transaction if Clal notifies the Company that, in Clal's
opinion, the consummation of such a transaction would be detrimental to the
Company and/or its shareholders, except if the Company, in response to such a
notice, delivers to Clal a fairness opinion from a nationally recognized
investment banking firm.
Clal has agreed to limit acquisitions of the Company's securities to 19.99%
of the issued and outstanding Common Stock prior to May 1, 1998. In addition,
Clal has agreed to limit such acquisitions to 25% of the issued and
outstanding Common Stock after May 1, 1998. Clal has the right to tender for
or purchase no less than 70% of the issued and outstanding Common Stock after
May 1, 2000. These limitations expire six months following the expiration of
the Restricted Period (the "Consent Period"). Clal also has the right to
acquire up to 20% of any equity securities issued by the Company in an
underwritten public offering so long as Clal, at the time, owns 10% of the
issued and outstanding Common Stock (assuming, for this purpose, the full
exercise of the Warrants). Clal has also agreed to not sell or otherwise
dispose of Common Stock or other securities convertible into Common Stock
during the Consent Period unless such securities are registered or may be sold
without registration under Rule 144 promulgated under the Securities Act of
1933, as amended, or are sold in certain business combination transactions,
unless the sale is approved by the Board (excluding member(s) of the Board
nominated by Clal). Clal will limit, during the Consent Period, sales of
Common Stock to any one person, entity or group to no more than 3% of the
issued and outstanding Common Stock, except as otherwise permitted under the
Stock Purchase Agreement.
In consideration of the rights and benefits obtained by the Company under
the Stock Purchase Agreement, the Company also granted to Clal certain
registration rights under the Registration Rights Agreement (the "Registration
Rights Agreement"). In general, Clal will not be able to sell freely the
shares of Common Stock purchased by Clal without registration under applicable
securities laws or unless an exemption from registration
6
<PAGE>
is available. Clal is entitled to two demand registrations. In addition, the
Company granted to Clal the right to register shares of Common Stock owned by
Clal on each occasion that the Company registers shares of Common Stock,
subject to certain limitations and exceptions.
As part of the alliance formed by the Company and Clal on May 1, 1995, the
Company and Clal formed the Joint Venture to research and develop generic
pharmaceutical products. In May 1995, the Company and Clal formed the research
and development joint venture in Israel to develop generic pharmaceuticals for
PRI's manufacture in the United States. On August 14, 1997, the Company,
through one of its subsidiaries, acquired Clal's 51% ownership interest in the
Joint Venture for $447,000 in cash obtained from the sale of FineTech Ltd.
("FineTech") stock owned by the Company and a non-recourse secured promissory
note for $1,500,000 payable over six years at an interest rate of 7%. The
Company has the unconditional option to prepay the note for $600,000 on or
before August 12, 1998. Until the promissory note is repaid in full, the
Company is obligated to invest $1,500,000 annually in the Joint Venture. In
addition, the Company and Clal agreed to modify certain terms of Clal's
investment in the Company, including the surrender by Clal of the Warrants in
exchange for the issuance to Clal of 186,000 shares of the Company's Common
Stock. The Company expects to issue such shares in September 1997.
As of September 2, 1997, Clal owned 2,172,727 shares of Common Stock. Of
such shares, 100,000 were purchased from Mr. Sawyer at a price of $7.125 per
share on June 3, 1996.
Investment in FineTech. Under the Stock Purchase Agreement, the Company
obtained the right to participate with Clal and certain of its affiliates in
connection with pharmaceutical acquisitions and transactions. In connection
therewith, the Company, purchased 10% of the shares of FineTech in December
1995 for $1,000,000. FineTech is an Israeli pharmaceutical research and
development company in which Clal had a significant ownership interest. The
Company's purchases of chemical components from FineTech in fiscal year 1996
totalled approximately $1,500,000. The Company sold all of its interests in
FineTech in May 1997 to a third party for approximately $447,000.
The foregoing descriptions of certain terms of the Stock Purchase Agreement,
the Warrants, the Registration Rights Agreement and the Joint Venture do not
purport to be complete and are qualified in their entirety by reference to
such documents, copies of which were filed as exhibits to the Form 8-K filed
by the Company with the Securities and Exchange Commission on May 12, 1995.
Transactions with Officers and Directors. In February 1995, the Company
purchased a condominium for $192,500. The Company leased the condominium to
Mr. Sawyer for $1,800 per month, which represented the fair market value as
determined by a disinterested third party. The Company sold the condominium on
July 31, 1996 for $225,000. See "Executive Compensation--Employment Agreements
and Termination Arrangements."
At various times during fiscal year 1996, the Company made certain unsecured
loans to Mr. Sawyer in connection with the exercise of his options. Such loans
currently are evidenced by a single promissory note which bears interest at
the rate of 8.25% per annum. Interest and principal are due on the earlier of
August 14, 2002 or the termination of Mr. Sawyer's employment with the
Company. As of September 2, 1997, the outstanding balance of the note, with
interest, was approximately $364,218.
During fiscal year 1996, Bio-Dar Ltd., an Israeli company and affiliate of
Clal Industries Ltd., sold chemicals to the Company for approximately
$500,000.
The Company believes that all of the above transactions were on terms that
were fair and reasonable to the Company.
EXECUTIVE OFFICERS
The executive officers of the Company consist of Mr. Sawyer as President,
Chief Executive Officer and Chairman of the Board, and Dennis J. O'Connor as
Vice President, Chief Financial Officer and Secretary. The executive officers
of Par consist of Mr. Sawyer and Mr. O'Connor, and Joseph Gokkes as Chief
Operating Officer of Par.
7
<PAGE>
The following table sets forth certain information with respect to the
executive officers of the Company and Par who are not directors or nominees for
election as a director:
<TABLE>
<CAPTION>
NAME AGE
- ---- ---
<S> <C>
Dennis J. O'Connor......................................................... 45
Since October 1996, Vice President, Chief Financial Officer and Secre-
tary of the Company and Par. From June 1995 to October 1996, he served
as Controller of Par. From November 1989 to June 1995, Vice President--
Controller of Tambrands, Inc., a consumer products company.
Joseph Gokkes.............................................................. 56
Since May 1997, Chief Operating Officer of Par. From April 1996 until
May 1997, he was employed by Clal in its international operations, and
from February 1990 to February 1996 he served in several capacities,
including Vice President for International Marketing and General Manager
of Taro Pharmaceutical Industries Ltd. (Israel) and Taro International,
respectively.
</TABLE>
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth compensation earned by or paid, during fiscal
years 1994 through 1996, to the Chief Executive Officer of the Company and the
three additional most highly compensated executive officers (over $100,000)
serving as executive officers of the Company and/or Par at the end of fiscal
year 1996 (the "Named Executives"). The Company awarded or paid such
compensation to all such persons for services rendered in all capacities
during the applicable fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------- -----------------------
RESTRICTED SECURITIES
NAME AND STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) OPTIONS(#) COMPENSATION ($)(2)
- ------------------ ---- --------- -------- ------------ ---------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth I. Sawyer,...... 1996 370,692 -- 75,000 38,530
President, Chief 1995 427,153 200,000 -- -- 49,806
Executive Officer and
Chairman 1994 407,253 100,000 -- -- 59,018
Robert I. Edinger,...... 1996 190,000 -- -- 20,000 3,481
Executive Vice
President, Chief 1995 189,038 -- -- 40,000 19,628
Financial Officer and
Secretary(3) 1994 180,000 50,000 -- -- 11,072
Robert M. Fisher, Jr.,.. 1996 170,000 -- -- 20,000 3,232
Executive Vice 1995
President, 188,691 -- -- 20,000 15,898
Corporate Development, 1994 122,359 23,500 -- 10,000 3,504
Sales &
Marketing(4)
</TABLE>
- --------
(1) The Named Executives did not hold any shares of restricted stock at the
end of fiscal year 1996.
(2) For fiscal year 1996, includes insurance premiums paid by the Company for
term life insurance for the benefit of the Named Executives as follows:
Mr. Sawyer-$80; Mr. Edinger-$70; and Mr. Fisher-$63. The amount for Mr.
Sawyer also includes $38,376, representing the maximum potential estimated
dollar value of the Company's portion of insurance premium payments from a
split-dollar life insurance policy as if 1996 premiums were advanced to
the executive without interest until the earliest time the premiums may be
refunded by Mr. Sawyer to the Company. Also includes the following amounts
contributed by the Company to the Company 401(k) plan: Mr. Edinger-$3,411
and Mr. Fisher-$3,169. Messrs. Sawyer, Edinger and Fisher waived
contributions of $11,865 each to be made on their behalf in fiscal year
1996 by the Company with respect to the Par Pharmaceutical Inc. Retirement
Plan.
(3) Effective October 7, 1996, Mr. Edinger's employment with the Company
terminated (see "--Employment Agreements and Termination Arrangements").
(4) Effective November 15, 1996, Mr. Fisher's employment with the Company
terminated (see "--Employment Agreements and Termination Arrangements").
9
<PAGE>
The following table sets forth stock options granted to the Named Executives
during fiscal year 1996.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
----------------------------------------------- ------------------------
% OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR PRICE ($) DATE 0% ($) 5% ($) 10% ($)
- ---- ---------- -------------- --------- ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth I. Sawyer(1).... 75,000 15.96% $7.125 5/23/01 $ 0 $682,013 $860,616
Robert I. Edinger(2).... 20,000 4.26% $ 7.00 3/13/01 $ 0 $178,679 $225,471
Robert M. Fisher,
Jr.(3).................. 20,000 4.26% $ 7.00 3/13/01 $ 0 $178,679 $225,471
</TABLE>
- --------
(1) Represents options granted pursuant to the Company's 1990 Incentive Option
Plan on May 24, 1996 of which 25,000 became exercisable immediately,
25,000 became exercisable on May 24, 1997 and 25,000 will become
exercisable on May 24, 1998, respectively.
(2) Represents options granted pursuant to the Company's 1990 Incentive Option
plan on March 14, 1996. Such options terminated on October 7, 1996 (see
"--Employment Agreements and Termination Arrangements").
(3) Represents options granted pursuant to the Company's 1990 Incentive Option
Plan on March 14, 1997 and 6,667 become exercisable on each of March 14,
1998 and March 14, 1999, respectively. Such options will terminate earlier
than the expiration date in connection with Mr. Fisher's termination of
employment on November 15, 1996 (see "--Employment Agreements and
Termination Arrangements").
The following table sets forth the stock options exercised by the Named
Executives during fiscal year 1996 and the value, as of September 30, 1996, of
unexercised stock options held by the Named Executives.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FY-END (#) AT FY-END ($)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth I. Sawyer....... 380,000 $1,378,862 645,000 50,000 -- --
Robert I. Edinger....... 0 0 60,000 40,000 -- --
Robert M. Fisher, Jr.... 0 0 20,000 30,000 -- --
</TABLE>
EMPLOYMENT AGREEMENTS AND TERMINATION ARRANGEMENTS
The Company has entered into an employment agreement with Mr. Sawyer, which
provides for his employment in his current position through October 4, 2000,
subject to earlier termination by the Company for Cause (as such term as
defined in the agreement). Mr. Sawyer's term of employment will be
automatically extended on October 4 of each year for an additional one-year
period unless either party provides written notice by July 4th of such year
that he or it desires to terminate the agreement. Under the agreement with Mr.
Sawyer, the Company is required to use its best efforts to cause him to be
elected and re-elected to the Board of Directors during his term of
employment. Mr. Sawyer, pursuant to the terms of his employment agreement, is
and will be required to serve, if so elected, on the Board of Directors of the
Company and any subsidiary, as well as any committees thereof.
Mr. Sawyer's agreement provides for certain payments upon termination of his
employment as a result of a material breach by the Company of his employment
agreement following a Change of Control (as such term is defined in the
agreement) of the Company. A material breach by the Company of the employment
agreement includes, but is not limited to, termination without Cause and a
change of his responsibilities. Mr. Sawyer is entitled to receive, if such
termination occurs within two years following the Change of Control of the
Company,
10
<PAGE>
a lump sum payment equal to the lesser of three times the sum of his annual
base salary and most recent bonus or the maximum amount permitted without the
imposition of an excise tax on Mr. Sawyer or the loss of a deduction to the
Company under the Internal Revenue Code of 1986, as amended (the "Code"), plus
reimbursement of certain legal and relocation expenses incurred by Mr. Sawyer
as a result of the termination of his employment and maintenance of insurance,
medical and other benefits for 24 months or until Mr. Sawyer is covered by
another employer for such benefits.
In addition, Mr. Sawyer's employment agreement provides for the Company to
purchase a residence within the vicinity of the Company's principal offices
for Mr. Sawyer to occupy for the duration of his term of employment. In this
connection, the Company purchased a condominium for a price of $192,500, which
Mr. Sawyer leased from the Company from February 1995 until July 1996. The
Company sold the condominium on July 31, 1996. The Company has no further
obligation to provide a residence for Mr. Sawyer. See "Election of Directors--
Certain Relationships and Related Transactions." In fiscal year 1996, Mr.
Sawyer voluntarily agreed to reduce his salary, effective July 1, 1996, to
$350,000 per year.
The Company terminated Mr. Edinger's employment on October 7, 1996, and is
not currently making severance payments to him. The severance arrangement of
Mr. Edinger is the subject of a lawsuit filed against the Company seeking
$427,500 plus punitive damages of at least $106,875.
The Company is paying Mr. Fisher severance payments of 12 months
continuation of his prevailing base salary, payable in weekly installments
from November 12, 1996, the date of termination of his employment. The Company
also has agreed to pay medical and other benefits for twelve months or until
he is covered by another employer for such benefits.
PENSION PLAN
The Company maintains a defined benefit plan (the "Pension Plan") intended
to qualify under Section 401(a) of the Code. Effective October 1, 1989, the
Company ceased benefit accruals under the Pension Plan with respect to service
after such date. The Company intends that distributions will be made, in
accordance with the terms of the Pension Plan, to participants as of such date
and/or their beneficiaries. The Company will continue to make contributions to
the Pension Plan to fund its past service obligations. Generally, all
employees of the Company or a participating subsidiary who completed at least
one year of continuous service and attained 21 years of age were eligible to
participate in the Pension Plan. For benefit and vesting purposes, the Pension
Plan's "Normal Retirement Date" is the date on which a participant attains age
65 or, if later, the date of completion of 10 years of service. Service is
measured from date of employment. The retirement income formula is 45% of the
highest consecutive five-year average basic earnings during the last 10 years
of employment, less 83 1/3% of the participant's Social Security benefit,
reduced proportionately for years of service less than 10 at retirement. The
normal form of benefit is a life annuity, or for married persons, a joint and
survivor annuity. None of the Named Executives have any years of credited
service under the Pension Plan.
Par currently maintains a retirement plan (the "Retirement Plan") and a
retirement savings plan. The Board of Directors of Par has authorized the
cessation of employer contributions to the Retirement Plan effective December
30, 1996. Consequently, participants in the Retirement Plan will no longer be
entitled to any employer contributions under such plan for 1996 or subsequent
years.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
The Compensation and Stock Option Committee of the Board of Directors (the
"Compensation Committee"), consisting entirely of non-employee directors,
approves all of the policies and programs pursuant to which compensation is
paid or awarded to the Company's executive officers and key employees. The
Compensation Committee held five meetings in fiscal year 1996. In reviewing
overall compensation for fiscal year 1996, the Compensation Committee focused
on the Company's objectives to attract executives of the highest caliber from
larger, well-established pharmaceutical manufacturers, to retain the Company's
executives,
11
<PAGE>
to encourage the highest level of performance from such executives and to
align the financial interests of the Company's management with that of its
shareholders by offering awards that can result in the ownership of Common
Stock. The Company did not utilize specific formulae or guidelines in
reviewing and approving executive compensation.
Elements of Executive Compensation Program. The key elements of the
Company's executive compensation program consist of base salary, annual bonus,
stock options through participation in the Company's 1986 Stock Option Plan
and stock options and other incentive awards through participation in the
Company's 1990 Stock Incentive Plan. In awarding or approving compensation to
executives in fiscal year 1996, the Compensation Committee considered the
present and potential contribution of the executive to the Company and the
ability of the Company to attract and retain qualified executives in light of
the regulatory reviews of the Company's operations and its financial
condition.
Base Salary and Annual Bonus. Base salary and annual bonus for executive
officers are determined by reference to Company-wide and individual
performances for the previous fiscal year. The factors considered by the
Compensation Committee included both strategic and operational factors, such
as efforts in responding to regulatory matters, efforts in exploration of
strategic alternatives for the Company, such as the strategic alliance with
Clal, research and development expenditures, review and implementation of
updated systems and operational procedures as a foundation for future growth
and realignment of the Company's internal sales and marketing organization, as
well as the Company's financial performance. In addition to Company-wide
measures of performance, the Compensation Committee considers those
performance factors particular to each executive officer, including the
performance of the area for which such officer had management responsibility
and individual accomplishments.
Base salaries for executives were determined primarily by reference to
industry norms, the principal job duties and responsibilities undertaken by
such persons, individual performance and other relevant criteria. Base salary
comparisons for most executives are made to a group of pharmaceutical
manufacturers in the United States. Such group is selected by the Company
based upon several factors including, but not limited to, the duties and
responsibilities of the executive used in the comparison, size and complexity
of operations, reputation and number of employees of other companies. With
respect to Mr. Sawyer, Chief Executive Officer, a comparison was made by an
independent consulting firm, prior to the signing of his employment agreement
in 1992, to generic pharmaceutical companies and turnaround situations
selected by the consulting firm. In keeping with its goal of recruiting
executives from larger, well-established pharmaceutical manufacturers, the
Compensation Committee considers the performance of the companies used in the
comparisons, as measured by their quality and regulatory profile, as well as
competitive necessity in determining base salaries. The Compensation Committee
considered it appropriate and in the best interest of the Company and its
shareholders to set the levels of base salary for the Company's Chief
Executive Officer and other executives at the median of comparable companies
in order to attract and retain the highest caliber of managers for the Company
so as to position the Company for future growth and improved performance. In
order to attract and retain certain key executives, the Company offers its
executives long-term employment contracts which provide for specified base
salaries.
The Compensation Committee, in determining the annual bonuses to be paid to
its executives for fiscal year 1996, considered the individual's contribution
to the Company's performance as well as the Company's financial performance
and assessments of each executive's participation and contribution to the
other factors described above, as opposed to determination by reference to a
formal, goal-based plan. The non-financial measures varied among executives
depending upon the operations under their management and direction. The
Compensation Committee utilized the award of bonuses, without necessarily
referring to specific benchmarks, to attract and retain high quality
executives for the Company.
Stock Options and Other Awards. The Company's 1986 Stock Option Plan
provides for stock option awards and the Company's 1990 Stock Incentive Plan
provides for stock option and other equity-based awards. Under such Plans, the
size of each award and the persons to whom such awards are granted is
determined by the Compensation Committee based upon the nature of services
rendered by the executive, the present and potential
12
<PAGE>
contribution of the grantee to the Company and the overall performance of the
Company. The Compensation Committee believes that grants of stock options will
enable the Company to attract and retain the best available talent and to
encourage the highest level of performance in order to continue to serve the
best interests of the Company and its shareholders. Stock options and other
equity-based awards provide executives with the opportunity to acquire equity
interests in the Company and to participate in the creation of shareholder
value and to benefit correspondingly with increases in the price of the
Company's Common Stock.
Compensation Committee's Actions for Fiscal Year 1996. In determining the
amount and form of executive compensation to be paid or awarded for fiscal
year 1996, the Compensation Committee considered the criteria discussed above.
In light of the reduction in sales in fiscal year 1996 from fiscal year 1995
and the Company's financial condition, the Compensation Committee did not
award cash bonuses to the Named Executives. In lieu of cash bonuses, the
Compensation Committee awarded stock options to the Named Executives in
consideration of reaching certain quantitative and qualitative objectives and
to increase the incentive for them in the financial success of the Company.
Chief Executive Officer Compensation. The Compensation Committee approved an
employment agreement in October 1992 for Mr. Sawyer. In approving such
employment agreement, the Compensation Committee authorized a base salary of
$366,993 for Mr. Sawyer in fiscal year 1996. Mr. Sawyer agreed to reduce his
salary effective July 1, 1996 to $350,000 per year. No cash bonuses were
awarded to Mr. Sawyer in fiscal year 1996 in view of the Company's operating
results and financial condition. Mr. Sawyer was granted stock options to
purchase 75,000 shares of Common Stock.
In reviewing and setting Mr. Sawyer's compensation, the Compensation
Committee recognized his substantial role in (i) negotiating and implementing
two joint venture and distribution agreements, and (ii) working to explore
numerous strategic alternatives for the Company. The Compensation Committee
also recognized his substantial efforts and personal sacrifices in guiding the
Company in the face of the difficult conditions confronting the generic
pharmaceutical industry and the Company.
Internal Revenue Code Section 162(m) limits deductions for federal income
tax purposes for certain executive compensation in excess of $1 million.
Certain types of compensation are deductible only if performance criteria are
specified in detail and payments are contingent upon shareholder approval of
the compensation arrangement. The level of salaries and bonus to the Named
Executives paid by the Company do not exceed this limit at this time.
COMPENSATION AND STOCK OPTION COMMITTEE
Mark Auerbach
H. Spencer Matthews
Robin O. Motz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee conducted deliberations concerning executive
compensation during the last completed fiscal year. None of the Compensation
Committee members are executive officers of the Company. None of the executive
officers of the Company has served on the board of directors or on the
compensation committee of any other entity, any of whose officers served on
the Board of the Company.
13
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total return of the Company's Common
Stock with the cumulative total return of the New York Stock Exchange
Composite Index and the S&P(R) Health Care Drugs Index for the annual periods
from September 30, 1991 to September 30, 1996. The graph assumes $100 was
invested on September 30, 1991 in the Company's Common Stock and $100 was
invested at that time in each of the Indexes. The comparison assumes that all
dividends are reinvested.
9/91 9/92 9/93 9/94 9/95 9/96
Pharmaceutical Resources Inc. $100 $161 $306 $212 $230 $103
NYSE Composite Index $100 $111 $127 $132 $161 $193
S&P(R) Health Care Drugs Index $100 $ 97 $ 78 $ 94 $149 $201
14
<PAGE>
INDEPENDENT AUDITORS
The Board has selected the firm of Arthur Andersen LLP, independent
certified public accountants, to act as independent public accountants for the
Company for the 1997 fiscal year. Arthur Andersen LLP has acted in such
capacity for the Company's fiscal year from the fiscal year ended September
30, 1995. A representative of Arthur Andersen LLP is expected to be present at
the Meeting, such representative will have the opportunity to make a statement
if he or she so desires and is expected to be available to respond to
appropriate questions.
During the Company's 1993 and 1994 fiscal years, the Company engaged the
accounting firm of Richard A. Eisner & Company, LLP as the independent
accountants to audit its financial statements. The Company notified Richard A.
Eisner & Company, LLP that, effective September 5, 1995, it would no longer
utilize its services as independent accountants. On September 5, 1995, the
Company engaged the firm of Arthur Andersen LLP to act as its independent
accountants for the 1995 fiscal year. The Company's decision to change
independent accountants was recommended and approved by its Audit Committee.
Richard A. Eisner & Company, LLP's reports on the Company's financial
statements for the 1993 and 1994 fiscal years did not contain an adverse
opinion or a disclaimer of opinion nor were they qualified or modified as to
uncertainty, audit scope or accounting principles. There has not occurred,
during the two fiscal years ended as of September 30, 1994, or any subsequent
interim period prior to September 5, 1995, any reportable events (as defined
in Item 304(a)(1)(v) of Regulation S-K of the Securities and Exchange
Commission (the "Commission")) with respect to Richard A. Eisner & Company,
LLP. In connection with the audits of the Company's financial statements for
each of the two fiscal years ended as of September 30, 1994, and in the
subsequent interim period, there were no disagreements with Richard A. Eisner
& Company, LLP on any matters of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which if not resolved to
the satisfaction of Richard A. Eisner & Company, LLP would have caused Richard
A. Eisner & Company, LLP to make reference to the matter in their report on
the Company's financial statements for such periods. Richard A. Eisner &
Company, LLP has previously stated in connection with filings with the
Commission that it agrees with the statements contained in this paragraph.
OTHER MATTERS
At the date of this proxy statement, the Board has no knowledge of any
business which will be presented for consideration at the Meeting, other than
as described above. If any other matter or matters are properly brought before
the Meeting or any adjournment(s) thereof, it is the intention of the persons
named in the accompanying form of proxy to vote proxies on such matters in
accordance with their best judgment.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal which is intended to be presented by any shareholder for action
at the 1998 Annual Meeting of Shareholders must be received in writing by the
Secretary of the Company, at One Ram Ridge Road, Spring Valley, New York
10977, not later than December 31, 1997 in order for such proposal to be
considered for inclusion in the proxy statement and form of proxy relating to
the 1998 Annual Meeting of Shareholders.
By Order of the Board of Directors
Dennis J. O'Connor
Secretary
Dated: September 12, 1997
15
<PAGE>
PROXY
PHARMACEUTICAL RESOURCES, INC.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING TO BE HELD ON OCTOBER 28, 1997
Know All Men By These Presents: That the undersigned shareholder(s) of
Pharmaceutical Resources, Inc., a New Jersey corporation (the "Company"), hereby
constitute(s) and appoint(s) Kenneth I. Sawyer and Dennis J. O'Connor with full
power of substitution in each, as the agents, attorneys and proxies of the
undersigned, for and in the name, place and stead of the undersigned, to vote,
at the Annual Meeting of Shareholders of the Company to be held at the Holiday
Inn-Suffern, Three Executive Boulevard, Suffern, New York, on October 28, 1997,
at 10:00 A.M. (local time) and at all adjournments thereof, the shares of stock
which the undersigned would be entitled to vote if then personally present in
the transaction of such business as may properly come before the meeting. The
undersigned would direct my (our) proxies to vote for me (us) as specified by a
cross (X) in the appropriate spaces,upon the following proposals:
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN BELOW. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF TWO MEMBERS
OF THE BOARD OF DIRECTORS.
<PAGE>
[X] Please mark your WHEN OK TO PRINT -- REMOVE ALL RED ITEMS
votes as in this
example
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR the election of all listed
nominees.
Election of Directors. Nominees: Mark Auerbach and H. Spencer Matthews
1. Election of For All Withhold Authority to Vote
Directors for all Nominees listed
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual
nominee write the nominee's name in the space below.)
2. In their discretion, the proxies are autorized to vote upon such
other business as may properly come before the meeting or any
adjournment thereof.
[NO TEXT PRINT IN THIS ADDRESS AREA]
[ ] I plan on attending the Annual Meeting.
Please mark, sign, date, and return this proxy card promptly.
, 1997
- ----------------------------------------------------------------
SIGNATURE DATE
, 1997
- ----------------------------------------------------------------
SIGNATURE DATE
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by the president or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
