<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CARACO PHARMACEUTICAL LABORATORIES LTD
- --------------------------------------------------------------------------------
(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 Act Rule 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:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
<PAGE> 2
CARACO PHARMACEUTICAL LABORATORIES, LTD.
1150 ELIJAH MCCOY DRIVE
DETROIT, MICHIGAN 48202
APRIL 27, 2000
Dear Shareholder,
We invite you to attend our 2000 Annual Meeting of Shareholders at 10:00
a.m., Eastern Daylight Savings Time, on June 8, 2000 at The Hotel St. Regis,
3071 W. Grand Blvd., Detroit, Michigan.
The annual report, which is enclosed, summarizes Caraco's major
developments during 1999 and includes the 1999 financials.
Whether or not you plan to attend the meeting, please complete and mail the
enclosed proxy card promptly so that your shares will be voted as you desire. IF
YOU WISH TO VOTE IN THE MANNER THE BOARD OF DIRECTORS RECOMMENDS, IT IS NOT
NECESSARY TO SPECIFY YOUR CHOICES ON THE PROXY CARD. SIMPLY SIGN, DATE AND
RETURN THE PROXY CARD.
Sincerely,
/s/ Dilip Shanghvi
Dilip Shanghvi
Chairman of the
Board of Directors
<PAGE> 3
CARACO PHARMACEUTICAL LABORATORIES, LTD.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 8, 2000
Date: June 8, 2000
Time: 10:00 a.m., Eastern Daylight Savings Time
Place: The Hotel St. Regis
Detroit, Michigan 48202
We invite you to attend the Caraco Pharmaceutical Laboratories, Ltd. Annual
Meeting of Shareholders to:
1. Elect two directors for three-year terms expiring in 2003 or upon
the election and qualification of their successors.
2. Transact any other business that is properly submitted before the
annual meeting or any adjournments of the meeting.
The record date for the meeting is April 10, 2000 (the "Record Date"). Only
shareholders of record at the close of business on that date can vote at the
annual meeting. Caraco is mailing this Notice of Annual Meeting to those
shareholders.
A proxy statement, proxy card and an annual report are enclosed with this
Notice. Whether or not you plan to attend the meeting and whether you own a few
or many shares of stock, the board of directors urges you to vote promptly. You
may vote by signing, dating and returning the enclosed proxy card.
A list of shareholders who can vote at the annual meeting will be available
for inspection by shareholders at the meeting and for ten days prior to the
meeting during regular business hours at the offices of Caraco, 1150 Elijah
McCoy Drive, Detroit, MI 48202.
By Order of the board of directors,
/s/ Dilip Shanghvi
Dilip Shanghvi
Chairman of the
Board of Directors
April 27, 2000
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Questions and answers....................................... 1
Proposal: Election of Board of Directors.................... 3
Information about nominees and incumbent directors.......... 3
Committees and meetings of directors........................ 5
Compensation of directors................................... 5
Security ownership of certain beneficial owners............. 6
Security ownership of management and directors.............. 7
Section 16(a) beneficial ownership reporting compliance..... 8
Transactions of directors and executive officers with
Caraco.................................................... 8
Executive officers.......................................... 9
Compensation of executive officers.......................... 9
Employment Agreements....................................... 10
Relationships with independent auditors..................... 11
</TABLE>
<PAGE> 5
CARACO PHARMACEUTICAL LABORATORIES, LTD.
1150 ELIJAH MCCOY DRIVE
DETROIT, MICHIGAN 48202
2000 PROXY STATEMENT
QUESTIONS AND ANSWERS
1. Q: WHAT IS A PROXY?
A: A proxy is a document, also referred to as a proxy card (which is
enclosed), by which you authorize someone else to vote for you in the
way that you want to vote. Caraco's board of directors is soliciting
this proxy. You may also abstain from voting.
2. Q: WHAT IS A PROXY STATEMENT?
A: A proxy statement is the document the United States Securities and
Exchange Commission (the "SEC") requires to explain the matters on
which you are asked to vote on the proxy card.
3. Q: WHO CAN VOTE?
A: Only holders of Caraco's common stock at the close of business on April
10, 2000, the Record Date, can vote at the annual meeting. Each
shareholder of record has one vote for each share of common stock on
each matter presented for a vote at the meeting.
4. Q: WHAT WILL I VOTE ON AT THE MEETING?
A: At the annual meeting, shareholders will vote to:
(1) elect two directors for three-year terms expiring in 2003 or upon
the election and qualification of their successors;
(2) transact any other business that is properly submitted before the
annual meeting or any adjournments of the meeting.
5. Q: HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSAL?
A: The board of directors recommends a vote FOR the proposal.
6. Q: HOW CAN I VOTE?
A: You can vote in person or by proxy. To vote by proxy, sign, date and
return the enclosed proxy card. If you return your signed proxy card to
American Stock Transfer before the annual meeting, the persons named as
proxies on the card will vote your shares as you directed. You may
revoke a proxy at any time before the proxy is exercised by:
(1) giving written notice of revocation to the Assistant Corporate
Secretary of Caraco at 1150 Elijah McCoy Drive, Detroit, MI 48202;
(2) submitting another proxy that is properly signed and later dated;
(3) voting in person at the meeting (but only if the shares are
registered in Caraco's records in the name of the shareholder and
not in the name of a broker, dealer, bank or other third party);
7. Q: IS MY VOTE CONFIDENTIAL?
A: Yes, your vote is confidential. Only the inspectors of election and
certain employees associated with processing proxy cards and counting
the vote have access to your vote. All comments you direct to
management (whether written on the proxy card or elsewhere) will remain
confidential unless you ask that your name be disclosed.
1
<PAGE> 6
8. Q: WHAT IS A QUORUM?
A: There were 19,984,618 shares of Caraco's common stock outstanding on
the Record Date. A majority of the outstanding shares, or 9,992,310
shares, present or represented by proxy, constitutes a quorum. For
purposes of a quorum, abstentions and broker non-votes are included. A
broker non-vote is a proxy a broker submits that does not indicate a
vote for some or all the proposals because the broker does not have
discretionary voting authority and the broker did not receive
instructions as to how to vote on those proposals. A quorum must exist
to conduct business at the annual meeting.
9. Q: HOW DOES VOTING WORK?
A: If a quorum exists, each director must receive the favorable vote of a
majority of the shares voted, excluding broker non-votes.
Caraco will vote properly executed proxies it receives prior to the
meeting in the way you direct. IF YOU SIGN THE PROXY CARD BUT DO NOT
SPECIFY INSTRUCTIONS, THE SHARES REPRESENTED BY PROXIES WILL BE VOTED
FOR THE NOMINEES FOR DIRECTORS. No other matters are currently scheduled
to be presented at the meeting.
An independent third party acts as the inspector of the meeting and the
tabulator of votes.
10. Q: WHO PAYS FOR THE COSTS OF THE MEETING?
A: Caraco pays the cost of preparing and printing the proxy statement and
soliciting proxies. Caraco will solicit proxies primarily by mail, but
may also solicit proxies personally and by telephone. Caraco will
reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for their out-of-pocket expenses for forwarding
solicitation material to beneficial owners of Caraco's common stock.
11. Q: WHEN ARE SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING DUE?
A: All shareholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to the Corporate
Secretary, Caraco Pharmaceutical Laboratories, 1150 Elijah McCoy Drive,
Detroit, Michigan 48202, by December 28, 2000.
Additionally, under Caraco's bylaws, shareholders of Caraco must provide
advance notice to Caraco if they wish to nominate persons for election
as directors or propose items of business at an annual meeting of
Caraco's shareholders. The shareholder must deliver this notice not
earlier than the close of business of the 90th day nor later than the
close of business on the 120th day prior to the first anniversary of the
immediately preceding year's annual meeting of shareholders.
2
<PAGE> 7
PROPOSAL ON WHICH YOU ARE VOTING:
ELECTION OF BOARD OF DIRECTORS.
Caraco's board of directors is divided into three classes with each class
of directors elected to a three-year term of office. At each annual meeting of
shareholders, shareholders elect one class of directors for a three-year term to
succeed the class of directors whose term of office expires at that meeting.
This year you are voting on two candidate directors. Based on the recommendation
of the board of directors, the following individuals, each of whom is a current
director, are recommended for re-election: Jay F. Joliat and Dilip S. Shanghvi.
Each of the nominees has consented to his nomination and has agreed to serve as
a director of Caraco if elected.
If any director is unable to stand for re-election, Caraco may vote the
shares to elect any substitute nominee recommended by the board of directors. If
the board of directors does not recommend any substitute nominees, the number of
directors to be elected at the annual meeting may be reduced by the number of
nominees who are unable to serve.
Caraco's board of directors recommends a vote FOR these directors.
NOMINEES FOR DIRECTORS -- TERMS EXPIRING 2003
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
EXPERIENCE DURING PAST 5 YEARS DIRECTOR
NOMINEES AGE AND OTHER DIRECTORSHIPS SINCE
-------- --- -------------------------------------------------------- --------
<S> <C> <C> <C>
Jay F. Joliat........ 43 For more than the past five years, Mr. Joliat has served 1995
as President, Chief Executive Officer and Chairman of
the board of directors of Joliat & Company, a private
investment company involved in general securities
management, venture capital, real estate and business
consulting. Mr. Joliat is also Chairman of the Board,
Chief Executive Officer and Treasurer of a 14-unit
restaurant operation called Sign of the Beefcarver
Restaurants, Inc. (See "Transactions of Directors and
Executive Officers with Caraco.")
Dilip S. Shanghvi.... 44 Chairman of the board of directors of Caraco since 1997. 1997
Mr. Shanghvi is the co-founder of Sun Pharmaceutical
Industries Ltd., a speciality pharmaceutical company
organized under the laws of the Commonwealth of India
("Sun Pharma") and its Managing Director since 1992,
responsible for marketing, research and development and
human resource development.
</TABLE>
3
<PAGE> 8
INCUMBENT DIRECTORS -- TERMS EXPIRING 2002
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
EXPERIENCE DURING PAST 5 YEARS DIRECTOR
NOMINEES AGE AND OTHER DIRECTORSHIPS SINCE
-------- --- ------------------------------------------------------- --------
<S> <C> <C> <C>
David W. Adamany....... 63 Served as President of Wayne State University from 1982 1994
until 1997. Dr. Adamany is President Emeritus and
Distinguished Professor of Law and Political Science at
Wayne State University. He is presently serving as
interim Chief Executive officer of the Detroit Public
Schools.
David A. Hagelstein.... 58 Engaged in the management of his personal real estate 1995
and business investments for the past thirty years. Mr.
Hagelstein is a consultant to several companies in the
pharmaceutical and medical fields. (See "Transactions
of Directors and Executive Officers with Caraco.")
Sailesh T. Desai....... 45 Since 1998, a full time director of Sun Pharma, 2000
responsible for domestic marketing of pharmaceutical
formulations. From 1993 to 1998, Mr. Desai was the
principal shareholder and Managing Director of Milmet
Ophthalmic Industries, a manufacturer and marketer of
ophthalmic solutions which was organized under the laws
of the Commonwealth of India and merged into Sun Pharma
in 1998.
</TABLE>
INCUMBENT DIRECTORS -- TERMS EXPIRING 2001
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
EXPERIENCE DURING PAST 5 YEARS DIRECTOR
NAME AGE AND OTHER DIRECTORSHIPS SINCE
---- --- ------------------------------------------------------ --------
<S> <C> <C> <C>
Narendra N. Borkar....... 59 Chief Executive Officer of Caraco (since August 1997). 1997
Mr. Borkar has been a director of Sun Pharma since
1997. From 1992 until 1997, Mr. Borkar was the head of
the pharmaceutical business in India of Ciba Geigy,
now Novartis, a Swiss corporation, responsible for the
overall performance of the business unit including
marketing, finance, technical, medical and
development. (See "Transactions of Directors and
Executive Officers with Caraco.")
Phyllis Harrison-Ross.... 63 Has served more than 25 years in the community mental 1996
health profession. Dr. Harrison-Ross presents a
remarkably diverse career as a hospital administrator,
researcher, academician, public health consultant,
forensic psychiatrist and public educator. Dr.
Harrison-Ross trained as an adult and child
psychiatrist as well as a pediatrician, and continues
to lend her administrative and clinical talents to
serving the diverse, hard-to reach and underserved
population of New York.
Sudhir Valia............. 43 Has worked for Sun Pharma as a full time director 1997
responsible for finance, commercial, operations,
projects and quality control. For more than the past
five years, Mr. Valia has been a chartered accountant
in private practice.
</TABLE>
4
<PAGE> 9
COMMITTEES AND MEETINGS OF DIRECTORS
The Board of Directors has four committees, as set forth in the following
chart.
CURRENT MEMBERSHIP ROSTER
<TABLE>
<CAPTION>
NAME EXECUTIVE COMPENSATION AUDIT FINANCE
---- --------- ------------ ----- -------
<S> <C> <C> <C> <C>
David W. Adamany......................................... X *
Narendra N. Borkar....................................... * X
Sailesh T. Desai.........................................
David A. Hagelstein...................................... X *
Phyllis Harrison-Ross.................................... X
Jay F. Joliat............................................ X X *
Dilip Shanghvi........................................... X X
Sudhir Valia............................................. X
</TABLE>
- -------------------------
* Chairman
EXECUTIVE COMMITTEE. This committee met one time during 1999. It
exercises, in the intervals between the meetings of the board of directors, the
powers of the board of directors, subject to the Michigan Business Corporation
Act, as it relates to the management of the business and affairs of Caraco.
COMPENSATION COMMITTEE. This committee did not meet in 1999, but took
action through unanimous written consent. It makes recommendations to the board
of directors relating to the overall compensation arrangements for officers and
staff of Caraco. It also interprets Caraco's 1993 Stock Option Plan, as amended,
the 1999 Equity Participation Plan, and such other executive and employee stock
options as may, from time to time, be designated by the board of directors. In
doing so, it has the authority to designate officers, directors or key employees
eligible to participate, to prescribe the terms of any award of stock options,
and to make all other determinations in administering Caraco's Plans.
AUDIT COMMITTEE. This committee did not meet in 1999, however, individual
members of the Committee discussed matters periodically with the auditors. It
recommends to the board of directors a firm of certified public accountants to
conduct audits of the accounts and affairs of Caraco, reviews accounting
objectives and procedures of Caraco and the findings and reports of the
independent certified public accountants, and makes such reports and
recommendations to the board of directors as it deems appropriate.
FINANCE COMMITTEE. This committee did not meet in 1999. It reviews
Caraco's financial structure, and makes recommendations to the board of
directors on financial, short and long term investments and business planning
matters.
COMPENSATION OF DIRECTORS
Directors who are employees of Caraco or Sun Pharma and Sun Pharma's
affiliates do not receive additional compensation for their service on the board
of directors and its committees. Each non-employee director of Caraco receives
100 shares of common stock of Caraco for each board of directors or committee
meeting in which he or she participates. Non-employee directors are also
reimbursed for out-of-pocket expenses incurred in connection with attending
board and committee meetings. In addition, non-employee directors may also be
awarded options for their service on the board of directors. No director
received an option for his or her services on the board of directors during 1999
(however, see "Transactions of Directors and Executive Officers with Caraco" for
disclosure of options granted to certain U.S. non-employee directors).
5
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The SEC requires that Caraco provide information about any shareholder who
beneficially owns more than 5% of Caraco's common stock. The following table
provides the required information, as of April 10, 2000, about the shareholders
(who are not officers or directors) known to Caraco to be the beneficial owner
of more than 5% of Caraco's common stock. Caraco relied solely on information
furnished by its transfer agent to provide this information.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP AS OF APRIL 10, 2000
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
<S> <C> <C>
Cede & Co. ................................................. 2,817,393 14.1
P.O. Box 20
Bowling Green Station
New York, NY 10271
Sun Pharmaceutical Industries, Ltd. ........................ 9,017,323(1) 45.1
Synergy House, Subhanpura
Baroda 390-007 India
C. Arnold Curry............................................. 1,384,447(2) 6.9
TTEE Clevius Arnold Curry Living Trust
17815 Hamilton Road
Detroit, MI 48203
</TABLE>
- -------------------------
(1) Includes 725,333 shares owned by Sun Pharma Advanced Research Centre Pvt.
and 1,722,657 shares owned by Sun Pharma Global Inc., affiliates of Sun
Pharma. (See footnotes 3 and 9 "Security Ownership of Management and
Directors").
(2) Excludes 484,615 shares of common stock owned by his wife, Cara J. Curry, as
to which he disclaims beneficial ownership.
6
<PAGE> 11
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table contains information, as of April 10, 2000, about the
number of shares of Caraco's common stock beneficially owned by incumbent
directors, nominees and the executive officers named in the Summary Compensation
Table presented in this Proxy Statement and by all incumbent directors, nominees
and executive officers as a group. The number of shares of common stock
beneficially owned by each individual includes shares of common stock over which
the person shares voting power or investment power and also any shares of common
stock which the individual can acquire by June 10, 2000, through the exercise of
any stock option or other right. Unless indicated otherwise, each individual has
sole investment and voting power (or shares those powers with his or her spouse)
with respect to the shares of common stock listed in the table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS*
------------------------ -------------------- ----------
<S> <C> <C>
David W. Adamany(8)......................................... 17,900(1) *
Narendra N. Borkar(8)....................................... 120,000(2)(3) *
Sailesh T. Desai(10)........................................ 0(3) *
David A. Hagelstein(8)(9)................................... 2,224,749(4) 10.8
Phyllis Harrison-Ross(8).................................... 5,500(5) *
Jay F. Joliat(8)(9)......................................... 3,524,334(6) 16.5
Dilip S. Shanghvi(10)....................................... (3) *
Sudhir Valia(10)............................................ (3) *
Robert Kurkiewicz(8)........................................ 67,906(7) *
All executive officers and directors as a group (10
persons).................................................. 5,960,389(3) 27.1
</TABLE>
- -------------------------
* Less than 1.0% of the outstanding shares
(1) Includes stock options that are currently exercisable to purchase 6,000
shares of common stock.
(2) Includes stock options that are currently exercisable to purchase 70,000
shares of common stock.
(3) Excludes 9,017,323 shares of common stock owned by Sun Pharma and its
affiliates. (See "Transactions of Directors and Executive Officers with
Caraco.") Messrs. Borkar, Desai, Shanghvi and Valia are directors of Sun
Pharma, and, therefore, may be deemed to share investment control over the
shares of common stock held by Sun Pharma and its affiliates. Each of
Messrs. Borkar, Desai, Shanghvi and Valia disclaims beneficial ownership
of the shares of common stock owned by Sun Pharma and its affiliates.
(4) The shares are held in trust (the "Hagelstein Trust"). Includes stock
options that are currently exercisable to purchase 578,958 shares of
common stock. (See "Transactions of Directors and Executive Officers with
Caraco.")
(5) Includes stock options that are currently exercisable to purchase 3,600
shares of common stock.
(6) The majority of shares are held in trust (the "Joliat Trust"). Includes
285,714 Series A Preferred Stock convertible to Common Stock; and stock
options that are currently exercisable to purchase 1,031,466 shares of
common stock. (See "Transactions of Directors and Executive Officers with
Caraco.")
(7) Includes stock options that are currently exercisable to purchase 27,771
shares of common stock.
(8) The mailing address of each of these holders is 1150 Elijah McCoy Drive,
Detroit, Michigan 48202.
(9) The Joliat Trust, the Hagelstein Trust and Sun Pharma have entered into a
Voting Agreement dated August 1997 pursuant to which, among other things,
Sun Pharma may designate a majority of the directors of the board of
directors of the Company and the Joliat Trust and the Hagelstein Trust may
each designate one director. The Voting Agreement also provides that the
Executive Committee shall consist of three directors, two selected by Sun
Pharma and one selected by the Joliat Trust and the
7
<PAGE> 12
Hagelstein Trust. In addition, the Joliat Trust and the Hagelstein Trust
have also agreed that they will respectively vote their shares in
accordance with Sun Pharma's directions with respect to any matter
relating to the investment, merger, alliance, share dilution, appointment
of key executives, major restructuring or reorganizing, bank borrowing,
funding or giving credit. If Sun Pharma sells within a period of four
years shares of Caraco Common Stock so that Sun Pharma's ownership falls
below 30% of the then outstanding shares of Caraco or Sun Pharma defaults
in its payment for the Caraco Common Stock, then the board of directors
will be reconstituted in accordance with the proportionate share holdings
of each of the parties to the Voting Agreement and the Executive Committee
shall be reconstituted so that it consists of one director selected by Sun
Pharma and two directors selected by the Joliat Trust and the Hagelstein
Trust. In the event that Sun Pharma owns 10% or less of the outstanding
shares of Caraco, the Voting Agreement shall terminate. In addition, the
Voting Agreement shall terminate after the fourth anniversary thereof. The
Joliat Trust and the Hagelstein Trust have also agreed not to dispose of
their shares for a period of four years without the consent of Sun Pharma,
and thereafter for a period of three years, to give Sun Pharma a right of
first refusal on the sale of their respective shares. The restriction on
disposition of their respective shares for the four-year period terminates
in the event of (i) any sale of shares by Sun Pharma to anyone other than
an affiliate; (ii) approval by the board of directors of Caraco of a
merger, consolidation, or sale of substantially all of the assets of
Caraco to another entity; or (iii) a tender offer for the shares.
(10) The mailing address of Sun Pharma, S. Desai, D. Shanghvi and S. Valia is
Synergy House Subhanpura, Gorwa Road, Baroda, 390-007, India.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that Caraco's
directors, executive officers and persons who own more than ten percent of a
registered class of Caraco's equity securities file reports of stock ownership
and any subsequent changes in stock ownership with the SEC not later than
specified deadlines. Sun Pharma, Dilip Shanghvi and David W. Adamany each filed
a late report with respect to transactions which occurred during 1999.
TRANSACTIONS OF DIRECTORS AND EXECUTIVE OFFICERS WITH CARACO
The following discloses transactions between Caraco and several of the
incumbent directors, director nominees and executive officers of Caraco during
1999.
During 1999, Caraco issued to Sun Pharma and its affiliates 3,609,333
shares of its common stock for six ANDAs and two DESI products. Sun Pharma and
its affiliates have also earned the right to receive 17,333 common shares, which
will be issued in 2000.
During 1999, Sun Pharma lent Caraco $5.3 million as a secured loan at an
annual interest rate of 10% which matures, no later than October 5, 2003. In
December and part of 2000, Sun Pharma made an additional $2.0 million secured
loan to Caraco at an annual interest rate of 10% which matures no later than
December 2001.
On January 20, 1999, the board of directors granted David A. Hagelstein
non-qualified stock options for 250,000 and 100,000 shares of Caraco's common
stock at an exercise price of $1.50 and $.88 per share, respectively. Both
options are currently exercisable and may be exercised until January 20, 2005.
On January 20, 1999 and on June 2, 1999, the board of directors granted Jay
F. Joliat non-qualified stock options for 100,000 and 150,000 shares of Caraco's
common stock, at an exercise price of $1.50 per share. Both options are
currently exercisable and may be exercised until January 20, 2005.
On June 2, 1999, the board of directors granted to Narendra N. Borkar a
non-qualified stock option for 200,000 shares of Caraco's common stock at an
exercise price of $1.15 per share.
8
<PAGE> 13
On April 1, 2000, Messrs. Hagelstein and Joliat received 416,000 and
960,000 shares of common stock, respectively, in lieu of principal and interest
on their outstanding respective promissory notes, based on a value of $1.00 per
share.
EXECUTIVE OFFICERS
The following table provides information about Caraco's executive officers
who are not directors.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE FIVE-YEAR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------
<S> <C> <C> <C>
Robert Kurkiewicz....... 49 Commenced employment with Caraco as its Vice 1993
President -- Quality Assurance in November 1993 and was
promoted to Sr. Vice President -- Technical, October
1998.
Jayesh Shah............. 44 Commenced employment with Caraco as its Senior Vice 2000
President -- Commercial in March 2000. From March 1997
to March 1999, Mr. Shah was the General
Manager -- Commercial with Gujarat Lyka Organics, a part
of Sun Pharma engaged in the business of pharmaceutical
bulk active products, responsible for all aspects of its
business. From March 1997 to present he is on the board
of directors of M.J. Pharmaceuticals Limited, a part of
Sun Pharma engaged in the business of pharmaceutical
drug manufacturing, responsible for all business
activity. From April 1977 to February 1997, Mr. Shah
worked as a self employed businessman engaged in various
activities.
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, as to the Chief Executive Officer, and as to the
one most highly compensated executive officer whose salary plus bonus exceeded
$100,000 during the last fiscal year, information concerning all compensation
paid for services to Caraco during the last three fiscal years:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- -----------------------------------
AWARDS PAYOUTS
SECURITIES
UNDERLYING
OTHER ANNUAL RESTRICTED OPTIONS LTP ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK AWARDS SARS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) $ $ # $ $
------------------ ---- --------- -------- ------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Narendra N.
Borkar(1)............ 1999 120,000 0 0 75(2) 200,000(3) 0 4,560(4)
Chief Executive 1998 120,000 0 0 33,000(5) 150,000(6) 0 4,560(4)
Officer 1997 45,592 0 0 0 0 0 0
Robert Kurkiewicz.... 1999 120,000 0 0 75(2) 0 0 4,560(4)
Sr. Vice
President -- 1998 120,000 0 0 0(2) 65,000(7) 0 0
Technical 1997 92,000 0 0 0 0 0 0
</TABLE>
- -------------------------
(1) Mr. Borkar began his employment with Caraco August 1997.
(2) 100 shares of restricted stock were awarded by the board of directors to all
employees during the month of December (with a fair market value of $.75 per
share on such date).
(3) A stock option of 200,000 shares was awarded to Mr. Borkar on June 2, 1999.
(See "Option Grants in Last Fiscal Year.")
(4) $380.00 per month is given for car allowance.
9
<PAGE> 14
(5) 50,000 shares of restricted stock was awarded by Caraco on September 22,
1998 (with a fair market value of $.66 per share on such date) as part of
Mr. Borkar's employment agreement dated September 22, 1998.
(6) A stock option of 150,000 shares was awarded to Mr. Borkar as part of his
employment agreement dated September 22, 1998. (See
"Executive -- Compensation -- "Employment Agreements".)
(7) A stock option of 65,000 shares was awarded to Mr. Kurkiewicz on June 1,
1998.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on stock options granted in 1999
to the named executive officers:
<TABLE>
<CAPTION>
INDIVIDUAL
GRANTS
--------------
(A) (B) (C) (D) (E)
PERCENT OF
TOTAL OPTIONS
NUMBER OF SECURITIES GRATED TO ALL
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR PER SHARE DATE
- ---- -------------------- ------------- -------------- ----------
<S> <C> <C> <C> <C>
Narendra N. Borkar...................... 200,000 100% $1.15 6/2/05
Robert Kurkiewicz....................... 0 -- --
</TABLE>
- -------------------------
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTIONS VALUES
The following table sets forth information for the named executive officers
with regard to the aggregate stock options exercised during the year ended
December 31, 1999, and the stock options held as of December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FY-END(#) FY-END($)(1)
SHARES ACQUIRED VALUE REALIZED ------------------------- -------------------------
NAME ON EXERCISE ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Narendra N. Borkar...... 0 0 30,000/320,000 825/3,300
Robert Kurkiewicz....... 0 0 27,771/39,443 0/0(2)
</TABLE>
- -------------------------
(1) Value based on the difference between the closing bid price of the
Corporation's Common Stock on December 31, 1999 and the exercise price.
(2) The options held by Mr. Kurkiewicz have exercise prices which are higher
than the closing bid price of the Corporation's Common Stock on December 31,
1999.
EMPLOYMENT AGREEMENTS
NARENDRA N. BORKAR, the Chief Executive Officer of Caraco, entered into an
employment agreement dated September 22, 1998. The employment agreement provides
Mr. Borkar with a salary at the rate of $120,000 annually, a cash bonus in an
amount up to 25% of the base salary contingent upon achievement of corporate
objectives, a stock bonus of 50,000 shares of Caraco common stock and a stock
option of 150,000 shares, at an exercise price of $.66 per share. The option
expires on September 22, 2004 and vests over a five-year period.
The employment agreement is for a term of five years, however, the
agreement automatically renews for successive one year periods unless terminated
by Caraco or Mr. Borkar upon ninety (90) days notice. In the event Caraco
terminates Mr. Borkar without cause, he will receive base salary payments, his
bonus and his
10
<PAGE> 15
benefits for six (6) months from the date of termination. In the event of a
change in control of ownership of Caraco and a significant change in Mr.
Borkar's duties, then Mr. Borkar may terminate and receive a lump sum amount
equal to his base salary for six (6) months. Mr. Borkar would also be entitled
to immediate vesting of any stock option which would have been exercised at the
close of the year during the change in control.
ROBERT KURKIEWICZ, the senior vice president -- technical, entered into a
five-year employment agreement on November 22, 1993 which was amended on January
1, 1999 to extend the term until January 1, 2003. The agreement increases Mr.
Kurkiewicz' salary to $120,000 per year and a car allowance of $380.00 per month
has been granted. The agreement is renewable for successive one-year terms. In
the event that Caraco terminates the agreement without cause, Mr. Kurkiewicz is
entitled to receive monthly base salary payments for six (6) months from the
date of termination together with premium benefits for such period. In addition,
any stock options that would become available for exercise at the end of the
year during which such termination occurred shall immediately vest.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors on June 1, 1999 selected Rehmann Robson PC,
independent accountants, to audit the financial statements for the year ended
December 31, 1999. A representative of Rehmann Robson is expected to be present
at the meeting with the opportunity to make a statement if such representative
desires to do so and is expected to be available to respond to appropriate
questions.
/s/ Narendra Borkar
Narendra N. Borkar
Chief Executive Officer
11
<PAGE> 16
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CARACO PHARMACEUTICAL LABORATORIES, LTD.
The undersigned shareholder hereby appoints Jennifer Evans and Robert
Kurkiewicz, and each of them, with full power of substitution, as true and
lawful attorneys and proxies of the undersigned to represent and vote the
shares of Common Stock owned by the undersigned in Caraco Pharmaceutical
Laboratories, Ltd. at the Annual Meeting of Shareholders to be held on June 8,
2000 at 10:00 a.m., local time, at the Hotel St. Regis, 3071 W. Grand Blvd.,
Detroit, MI 48202, and at any adjournment thereof, with like effect and as if
the undersigned was personally present and voting, upon all business that may
properly come before the meeting, including the business identified (and in the
manner indicated) on this proxy and described in the Notice of Meeting and
Proxy Statement furnished herewith (the receipt of which is hereby
acknowledged).
The undersigned hereby revokes any proxy or proxies heretofore given by
the undersigned to any person or persons with respect to such Common Shares and
ratifies any and all actions taken by the above-named proxies hereunder.
Set forth on the reverse side are the number of Common Shares held of
record by the undersigned as of April 10, 2000. You are asked to vote on the
business identified on the reverse.
(TO BE SIGNED AND DATED ON THE REVERSE SIDE)
<PAGE> 17
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
CARACO PHARMACEUTICAL LABORATORIES, LTD.
June 8, 2000
\/ PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED \/
<TABLE>
<S><C>
/X/ Indicate your
vote by marking
an (X) in the
appropriate
boxes below.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE FOLLOWING PROPOSAL.
FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below)
1. ELECTION OF
DIRECTORS / / / / NOMINEES: JAY F. JOLIAT
DILIP S. SHANGHVI
(INSTRUCTION: To withhold
authority to vote for any
individual, write the nominee's
name in the space provided below.)
IF YOU DO NOT WITHHOLD AUTHORITY
- -------------------------------- TO VOTE FOR THE ELECTION OF ANY
NOMINEE, YOUR PROXIES WILL VOTE
FOR ALL NOMINEES ABOVE.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES
SHALL BE VOTED FOR THE PROPOSAL, AND FOR OR AGAINST ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
PLEASE RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
DATE , 2000 DATE , 2000
- --------------------------------------- ------------- ----------------------------------------- -------------
SIGNATURE OF SHAREHOLDER SIGNATURE(S) OF JOINT OWNERS(S)
</TABLE>
