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EXHIBIT 2
VOTING AGREEMENT
THIS AGREEMENT is made and entered into as of this 2th day of August,
1997 , by and among Caraco Pharmaceutical Laboratories, Ltd., a Michigan
corporation (the "Company"), Sun Pharmaceutical Industries Limited, a
publicly-traded Indian company ("Sun"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as Trustee of the
TTEE ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Trust, u/a/d 10/27/93 ("Hagelstein") and ▇▇▇ ▇. ▇▇▇▇▇▇
as Trustee of the ▇▇▇ ▇. ▇▇▇▇▇▇ Qualified Terminable Interest Marital Trust,
u/a/d 4/8/82 ("▇▇▇▇▇▇"). ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ are sometimes hereinafter
collectively referred to as the "Group." Sun, Hagelstein and ▇▇▇▇▇▇ are
sometimes hereinafter collectively referred to as the "Stockholders" and
individually as a "Stockholder." Certain capitalized terms used herein are
defined in Paragraph 13 hereof.
WHEREAS, the Company and Sun intend to enter into a stock purchase
agreement pursuant to which Sun will acquire 5.3 Million Shares of Common Stock
of the Company (the "Stock Purchase Agreement").
WHEREAS, it is intended that the Stock Purchase Agreement will require
that the parties enter into a Voting Agreement with regard to the selection and
election of directors of the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement agree as
follows:
1. EFFECTIVE DATE. This Agreement shall automatically become
effective upon sending First remittance by Sun as per the Stock
Purchase Agreement.
2. BOARD OF DIRECTORS, COMMITTEES AND BYLAWS.
(a) From and after the consummation of the Stock Purchase
Agreement and until the provisions of this Paragraph cease
to be effective, each Stockholder shall vote all of his or its
Shares and any other voting securities of the Company over
which such Stockholder has voting control and shall take all
other necessary or desirable actions within his or its
control (whether in the capacity as a stockholder, director,
member of a board committee, or officer of the Company or
otherwise, and including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a
quorum and execution of written consents in lieu of meetings)
and the Company shall take
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all necessary and desirable actions within its control
(including, without limitation, calling special board and
stockholders meetings) so that:
(i) The authorized number of directors on the Board of
Directors of the Company (the "Board") shall be
established at not less than five (5) and no more than
eleven (11) directors.
(ii) The following persons shall be elected to the Board:
A. Six (6) individuals (the "Sun Directors")
designated by Sun;
B. One (1) individual (the "J Director") designated
by ▇▇▇▇▇▇;
C. One (1) individual (the "H Director") designated
by Hagelstein; and
D. Three (3) individuals ("Independent Directors")
to be appointed with the mutual consent of J & H
and Sun (▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ are hereinafter
collectively referred to as the "Non-Sun
Directors").
(iii) Each of the three classes of directors (whose
current terms expire in 1997, 1998 and 1999) shall
have as close to one-third (1/3) Sun Directors and one-
third (1/3) Non-Sun Directors and one-third (1/3)
Independent Directors as feasible.
(iv) Special meetings of the Board may be called only
by the Chairman of the Board, the Chief Executive
Officer, the Executive Committee or by a majority of
the Board.
(v) The Board shall elect a Chief Executive Officer
selected by Sun who shall report to the Board.
Conditions of his employment and his removal and
replacement will be as per the Board's directions.
(vi) The Board shall elect a Chairman of the Board selected
by Sun from time to time from one of the Sun Directors.
(vii) With respect to shareholder votes to remove a
director, the Group will vote in accordance with Sun's
directions with respect to Sun Directors, and Sun will
vote in accordance with the directions of ▇▇▇▇▇▇ with
respect to J Director and in accordance with directions
of Hagelstein with respect to H Director.
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(viii) With respect to other shareholders votes, the Group
will vote in accordance with Sun's directions with
respect to any matter relating to the investment,
merger, alliance, share dilution, appointment of key
employees, major restructuring or reorganizing, bank
borrowing, funding or giving credit. However, any matter
related to capitalization needing shareholders approval
will be such that it will not affect the relative voting
and ownership position of the Group in relation to Sun's
voting and ownership position. Any such change must
have the same proportionate effect on Sun as it has on
the Group.
(ix) In the event that any representative designated
hereunder by Sun under clause (ii)(A) above ceases to
serve as a member of the Board, the resulting vacancy
on the Board shall be filled by a representative
designated by Sun.
(x) In the event that any representative designated
by ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇, respectively, under clause
(ii)(B) or (ii)(C) above ceases to serve as a member of
the Board, the resulting vacancy on the Board shall be
filled by a representative designated by a majority of
the Shares held by Hagelstein or ▇▇▇▇▇▇, respectively.
(xi) The composition of the Board of Directors of any
Subsidiary of the Company shall be the same as that of
the Board.
(xii) The Executive Committee of the Board shall be
established at three (3) directors. The Executive
Committee will exercise all powers and authority of the
Board in management of the business and affairs of the
Company, subject to statutory restrictions.
(xiii) The following persons shall be elected by the Board to
the Executive Committee:
A. Two (2) Sun Directors designated by Sun; and
B. One (1) Non-Sun Director designated by a
majority of the Shares of the Group.
(xiv) Removal from the Executive Committee (with or without
cause) of any Sun Director designated by Sun under
clause (xiii)(A) above shall be at Sun's sole
determination.
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(xv) Removal from the Executive Committee (with or
without cause) of any Non-Sun Director designated
by the Group under clause (xiii)(B) above shall be at
the Group's sole determination by a majority vote of the
Shares held by the Group.
(xvi) In the event that any Sun Director designated to
be on the Executive Committee by Sun under
clause (xiii)(A) above ceases to serve as a member of
the Executive Committee, the resulting vacancy on the
Executive Committee shall be filled by a Sun Director
designated by Sun.
(xvii) In the event that any Non-Sun Director
designated to be on the Executive Committee by
the Group under clause (xiii)(B) above ceases to serve
as a member of the Executive Committee, the resulting
vacancy on the Executive Committee shall be filled by a
Non-Sun Director designated by a majority of the Shares
held by the Group.
(xviii)The composition of the executive committee of
any Subsidiary of the Company shall be the same as
that of the Executive Committee of the Company.
(xix) The rights of the parties hereto shall
be modified as set forth below in the that Sun sells
within a period of four (4) years from the date of this
Agreement, its shares which exceed in the aggregate, 30%
of the outstanding shares of Caraco at the time of such
sale to any person other than an affiliate of Sun, or in
other words, if at any time, as a result of a sale of
shares to any person other than an affiliate of Sun,
Sun's ownership falls below 30% of the then outstanding
shares of Caraco ("a 30% threshold event"); or if Sun
defaults as defined in Paragraph 5 of the Stock Pledge
Agreement. If, however, Pledgor cannot make any timely
payment due to reasons beyond its control, such as
Reserve Bank of India's balance of payment situation or
any other similar reasons or force majeure, for a period
of six (6) months from the due date of a payment, the
company will not exercise any of its rights or remedies
for this period of six (6) months. Payments within
these six (6) months will be treated as a timely
payment. Upon the occurrence of a 30% threshold event,
or a default as cited above, the Board of Directors
shall be reconstituted in accordance with the
proportionate share holdings of each of the Stockholders
in relation to the total shares outstanding (but Board
representation may not, in any case, be less favorable
to the Non-Sun Director Group immediately prior to such
occurrence as a result of such reconstitution). This
reconstitution of the Board will not effect the
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number of Independent Directors. The Chief
Executive Officer and the Chairman of the Board shall be
elected from one of the Non-Sun Directors selected by
the majority of the shares held by the Group. Upon the
occurrence of a 30% threshold event or a default as
defined, the Executive Committee shall be reconstituted
so that it consists of one (1) Sun Director selected by
Sun and two (2) Non-Sun Directors selected by a majority
of the Shares held by the Group. Also, upon the
occurrence of a 30% threshold event, or a default as
defined, the transfer restriction cited in Section 4(a)
below shall be modified to permit each of the individual
members of the Group to sell a like cumulative
percentage proportion of the shares beneficially owned
or controlled by each respective member as that which
Sun cumulatively anticipates selling the relation to
that amount which Sun holds immediately prior to such an
occurrence. Sun and the Group shall participate
concurrently on a pro-rata basis in like percentage
proportions to their respective total holding in any
such sale (for example: if Sun anticipates cumulatively
selling 40% of their holders (which would trigger this
30% threshold event), Sun would notify the Group of such
intent and allow the members of the Group to
simultaneously sell their shares up to 40% of their
respective holdings). Notwithstanding the above, or any
language that may be to the contrary elsewhere in this
Agreement, in the event that Sun owns 10% or less of the
outstanding Shares of Caraco, all of the provisions of
this Agreement shall terminate and be of no further
force or effect. Sun may, however, make bonafide pledge
of any number of its shares, without attracting
provisions of this Clause.
(xx) The Company shall pay the reasonable out-of-pocket
expenses incurred by each Director in connection
with attending the meetings of the Board, the board
of directors of any Subsidiary and any committee of
the Board of Directors.
(xxi) The Bylaws shall be amended, as applicable, in
accordance with the provisions of this Paragraph 2.
3. TERM. Unless terminated earlier pursuant to the
provisions of Paragraph 2(xix), this Agreement shall terminate and be of no
further force or effect from and after the fourth anniversary hereof.
4. TRANSFER.
(a) Each of the members of the Group agrees, except with the
consent of Sun, for a period of four (4) years from the date
of this Agreement, not to sell or otherwise dispose of his
Shares except to an Affiliate which specifically agrees in
writing to be bound by the terms of this Agreement. Members
of the Group may, however, make a bona fide pledge of their
Shares if Pledgor agrees to be bound by the terms of this
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Agreement and also agrees to bind any subsequent person(s)
claiming through him. Notwithstanding the foregoing, the
above restrictions shall terminate in the event of (i) any
sale of Shares by Sun to anyone other than an Affiliate, (ii)
approval by the Board of the Company of a merger,
consolidation, or sale of substantially all of the assets of
the Company to another entity, or (iii) a tender offer for
Shares.
(b) Each of the members of the Group agrees that for a subsequent
three-year period after the expiration of the first four years
of this Agreement, that if an when he (or any person claiming
through or under him) decides to sell any of their Shares
anywhere and to any person or entity other than through the
open public market on the established Stock Exchange where the
Company's stock is regularly traded, he will first offer the
same exact transaction with the same exact terms and
conditions to Sun or its nominee(s). The price of shares for
such transaction shall not exceed 25% higher than the
prevailing market price, that is the average price of at least
10 days closing prices on the Stock Exchange where the shares
are listed. If Sun or its nominee(s) does not purchase the
same within 60 days of the receipt of such offer from a member
of the Group, then such member shall be free to sell the said
shares to anyone.
(c) Each of the members of the Group agrees, that for a subsequent
three-year period after the expiration of the first four years
of this Agreement, that if and when he (or any person claiming
through or under him) decides to sell any of their Shares, he
will first offer such shares to Sun or its nominee(s) at the
then prevailing market price. If Sun or its nominee(s) does
not purchase same within 60 days of the receipt of such offer
from a member of the Group, then such member shall be free to
sell the said shares to any person or entity he wishes.
"Prevailing market price" shall mean the average price of the
last 10 days closing prices on the established Stock Exchange
where the Company's stock is regularly traded. If there is no
public market for the shares at the time a member of the Group
wishes to sell his shares as a result of the Company being
delisted and/or otherwise not quoted on any recognized
exchange, the price that will be used shall be determined by:
(i) the average of two independent appraisals. One appraisal
to be performed by a certified appraiser selected by Sun, and
one appraisal to be performed by a certified appraiser
selected by the selling member(s) of the Group with the two
appraisals not to differ by more than 25% in relation to the
higher of the two appraisals. If the two appraisers cannot
agree on a valuation with this allowable deviation, then a
third appraisal shall be performed by an independent appraiser
from any one of the "Big Six" accounting firms that is
mutually satisfactory to both parties. The average of the
three appraisals shall then be the valuation used. To
encourage a good faith attempt at arriving at a fair market
value for the Shares to be sold, both parties will share
equally in the cost of this valuation process; or (ii) a
mutually agreed upon price satisfactorily negotiated between
the two parties.
(d) For a period of seven years from the date of this
Agreement no member of the Group shall sell or otherwise
transfer its Shares to any competitor or distributor or buyer
or seller or business associate of the Company without the
consent of Sun.
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5. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provisions of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved by each of (i) the Company, (ii) Sun, and the
holder of a majority of shares held by the Group. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provision and shall not affect the right of such party
thereafter to enforce each and every provision of the Agreement in accordance
with its terms.
6. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision, but this Agreement shall be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
7. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this document embodies the complete Agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral which may be related to the subject matter hereof
in any way.
8. COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same Agreement.
9. REMEDIES. The Stockholders shall be entitled to enforce their
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that a Stockholder may in his or its sole discretion apply for
specific performance in order to enforce or prevent any violation of the
provisions of this Agreement.
10. NOTICES. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, sent via facsimile
(receipt confirmed), mailed first class mail (postage pre-paid and receipt
confirmed) or sent by reputable over-night courier service (charges pre-paid
and receipt confirmed) to the Company, to Sun and to the Group at their
respective addresses set forth below or the attention of such other person as
the recipient party has specified by prior written notice to the sending
parties. Notices will be deemed to have been given hereunder when delivered
personally, upon transmitting a facsimile, three days after deposit in the U.S.
Mail and one day after deposit with a reputable overnight courier service.
Notices shall be sent to the following addresses:
If to Caraco: Caraco Pharmaceutical Laboratories, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
President
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With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Seyburn, Kahn, Ginn, Bess, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Sun: Sun Pharmaceutical Industries Limited
Synergy House, Subhanpura
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇-▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Managing Director
and
Sun Pharmaceutical Industries Limited
▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇, ▇.▇. ▇▇▇▇
▇▇▇▇▇ (▇), ▇▇▇▇▇▇ - 400 014 India
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the of the Group:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as Trustee of the
TTEE ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Trust, u/a/d 10/27/93
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇, as Trustee of the
▇▇▇ ▇. ▇▇▇▇▇▇ Qualified Terminable Interest
Marital Trust, u/a/d 4/8/82
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11. GOVERNING LAW. The corporate law of Michigan shall govern all
issues concerning the relative rights of the Company and Stockholders. All of
the questions concerning the construction, validity, and interpretation of this
Agreement shall be governed by the internal law, and not the law of conflicts
of Michigan.
12. DESCRIPTIVE HEADINGS. Descriptive headings of this Agreement
are inserted for convenience only and do not constitute part of this Agreement.
13. DEFINITIONS.
"Affiliate" of a Person means any other Person, entity or investment
fund controlling, controlled by or under common control with such Person and
any partner of such Person which is a partnership or, in the case of a trust,
the trustee or any beneficiary of such trust.
"Person" means an individual, partnership, corporation, association,
joint stock company, trust, joint venture, unincorporated organization or
governmental entity or any department, agency or political subdivision thereof.
"Shares" means (i) any of the Company's capital stock purchased or
otherwise acquired by any Stockholder and (ii) any securities issued or
issuable directly or indirectly with respect to the
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securities referred to in clause (i) above by way of stock dividend or stock
split or in connection with a combination of Shares, recapitalization, merger,
consolidation or other reorganization.
"Subsidiary" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are,
at the time as of which any determination is being made, owned by the Company
either directly or through one or more Subsidiaries.
"Arbitration" Any dispute between the parties regarding any provision
of this Agreement shall be resolved by binding arbitration before the London
Court of International Arbitration according to its rules of commercial
arbitration. Judgment upon the award of the arbitrators may be entered by any
court of competent jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
INDIVIDUALS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as
Trustee of the TTEE ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Trust, u/a/d 10/27/93
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇ ▇. ▇▇▇▇▇▇, as Trustee of the
▇▇▇ ▇. ▇▇▇▇▇▇ Qualified Terminable
Interest Marital Trust, u/a/d 4/8/82
SUN PHARMACEUTICAL INDUSTRIES LIMITED
By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
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