SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 31, 1996
Date of Report (Date of earliest event reported)
AKORN, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 0-13976 72-0717400
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
100 Akorn Drive
Abita Springs, Louisiana 70420
(Address of principal executive offices) (Zip Code)
(504) 893-9300
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. Other Events.
Acquisition of Pasadena research Laboratories, Inc.
On May 31, 1996, the registrant, Akorn, Inc. (the
"Company"), acquired all of the issued and outstanding capital
stock of Pasadena Research Laboratories, Inc., a California
corporation ("PRL"). The acquisition was consummated pursuant to
an Agreement and Plan of Merger dated as of May 7, 1996 (the
"Merger Agreement") by and among the Company, Akorn
Manufacturing, Inc. ("AMI"), an Illinois corporation and a wholly-
owned subsidiary of the Company, PRL and all of the three
shareholders of PRL. Pursuant to the Merger Agreement, PRL
merged with and into AMI (the "Merger") and all of the
outstanding shares of capital stock of PRL were converted into
1.4 million shares of common stock, no par value, of the Company.
The transaction will be accounted for as a pooling-of-interests.
The consideration paid to the three PRL shareholders was arrived
at through arm's length negotiation among the parties. As
contemplated by the Merger Agreement, AMI and Akorn entered into
employment agreements with three former PRL employees, each of
whom was a PRL shareholder. The employment agreements, which are
included as exhibits to this report, provide for compensation and
terms consistent with those applicable to other similarly
situated Company employees.
Prior to consummation of the Merger Agreement, PRL was
engaged in the business of marketing and distributing specialized
injectable products, which business will be continued by AMI.
AMI currently intends to operate such business using the leased
facilities in San Clemente, California occupied by PRL prior to
consummation of the Merger.
Completion of the transactions contemplated by the Merger
Agreement was announced in a press release issued by the Company
on June 5, 1996, a copy of which is an exhibit to this report.
Resignation
On June 13, 1996 the Company announced that Barry D. LaBlanc,
for personal reasons, resigned as president of the Company's
Ophthalmic Division and as a director of the Company. A copy of
the June 13, 1996 press release making this announcement is an
exhibit to this report.
(b) Exhibits.
2.0 Agreement and Plan of Merger dated May 7, 1996, by
and among the Company, Akorn Manufacturing, Inc.
and Pasadena Research Laboratories, Inc.
("PRL").<F1>
10.2 Employment Agreements, dated May 31, 1996, between
the Company, AMI and, respectively, Floyd
Benjamin, Tom Yankoff and David Gencarella.
99.1 Press Release concerning completion of acquisition
of Pasadena Research Laboratories, Inc., issued on
June 5, 1996.
99.2 Press Release issued June 13, 1996 concerning
resignation of Barry D. LeBlanc.
_____________
<F1> The Merger Agreement includes a list briefly identifying the
contents of all omitted schedules. The Company will furnish
supplementally a copy of any omitted schedule to the Commission
upon request.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
By: /s/Eric M. Wingerter
____________________________
Eric M. Wingerter
Vice President-Finance and
Administration
Dated: June 13, 1996.
<PAGE>
AGREEMENT AND PLAN OF MERGER
Among
AKORN, INC.,
AKORN MANUFACTURING, INC.
and
PASADENA RESEARCH LABORATORIES, INC.
DATED
May 7, 1996
<PAGE>
TABLE OF CONTENTS
SECTION 1
THE MERGER.................................................... 1
1.1 Merger.............................................. 1
1.2 The Closing......................................... 1
1.3 Filing of Certificate of Merger..................... 2
1.4 The Effective Time; Effect of Merger................ 2
1.5 Directors and Officers; Articles of Incorporation... 2
SECTION 2
CONVERSION OF STOCK........................................... 3
2.1 Conversion of Shares of PRL......................... 3
2.2 Delivery and Exchange of Certificates............... 3
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND PRL.... 3
3.1 Ownership........................................... 4
3.2 Pending Actions..................................... 4
3.3 No Other Agreements................................. 4
3.4 Restrictions on Resale; Investment Intent........... 4
3.5 Information......................................... 5
3.6 Organization; Qualification; Subsidiaries........... 5
3.7 Capital Stock....................................... 6
3.8 Corporate Authorization; Enforceability............. 6
3.9 No Conflict......................................... 6
3.10 Consents and Approvals.............................. 7
3.11 Financial Statements................................ 7
3.12 Agreements with Shareholders........................ 7
3.13 Absence of Certain Changes.......................... 7
3.14 Properties; Absence of Encumbrances................. 9
3.15 Permits; Compliance with Laws....................... 10
3.16 Material Contracts.................................. 10
3.17 Litigation.......................................... 10
3.18 Regulatory Matters.................................. 10
3.19 Environmental Matters............................... 11
3.20 ERISA and Related Matters........................... 11
3.21 Taxes............................................... 13
3.22 Transactions with Certain Persons................... 18
3.23 Intellectual Properties............................. 18
3.24 Insurance........................................... 18
3.25 Labor Matters....................................... 18
3.26 Bank Accounts; Powers of Attorney................... 18
3.27 Minute Books and Stock Transfer Books............... 19
3.28 Customers and Suppliers............................. 19
3.29 Compensation Agreements............................. 19
3.30 Conduct of Business................................. 19
3.31 Residence........................................... 19
3.32 Director and Officer Indemnification................ 19
3.33 Documents and Written Materials..................... 19
3.34 Effectiveness of Representations and Warranties..... 20
3.35 Effectiveness of Representations and Warranties..... 20
SECTION 4
REPRESENTATIONS AND WARRANTIES OF AKORN....................... 20
4.1 Organization........................................ 20
4.2 Capitalization...................................... 20
4.3 Authority; Enforceability........................... 20
4.4 Consents and Approvals; Conflicts................... 21
4.5 Akorn Stock......................................... 21
4.6 Akorn Disclosure.................................... 21
4.7 Litigation.......................................... 21
4.8 Effectiveness of Representations and Warranties..... 21
SECTION 5
PRE-CLOSING COVENANTS......................................... 22
5.1 Access to Properties and Records.................... 22
5.2 Conduct of Business................................. 22
5.3 Employment Agreements............................... 22
5.4 Corporate Name...................................... 22
5.5 Public Statements................................... 22
5.7 No stock splits or dividends........................ 23
5.8 Notification as to Representations.................. 23
5.9 Akorn Disclosure Documents.......................... 23
SECTION 6
ADDITIONAL AGREEMENTS......................................... 23
6.1 Legal Requirements to Merger........................ 23
6.2 Further Assurances.................................. 23
6.3 Expenses............................................ 24
6.4 Confidentiality..................................... 24
6.5 Termination of PRL Profit-Sharing and Retirement
Plan................................................ 24
6.6 Piggy-Back Registration Rights...................... 24
6.7 Furnished Documents................................. 25
6.8 Tax Returns......................................... 25
6.9 Personal Guarantees................................. 25
6.10 Accumulated Adjustment Account Distribution......... 25
6.11 Steris Rebate....................................... 26
6.12 Extent of Personal Liability........................ 26
6.13 Shareholder Indemnification......................... 26
6.14 Termination of Shareholder's Agreement.............. 26
SECTION 7
CONDITIONS.................................................... 26
7.1 Conditions to Each Party's Obligation to Effect
the Merger.......................................... 26
7.2 Conditions to Obligations of Akorn and AMI.......... 27
7.3 Conditions to Obligations of PRL and Shareholders... 30
SECTION 8
TERMINATION AND AMENDMENT..................................... 31
8.1 Termination......................................... 31
8.2 Effect of Termination............................... 32
8.3 Amendment........................................... 32
8.4 Extension; Waiver................................... 32
SECTION 9
MISCELLANEOUS................................................. 32
9.1 Survival of Representations, Warranties and
Agreements.......................................... 32
9.2 Notices............................................. 32
9.3 Headings; Gender.................................... 34
9.4 Entire Agreement; No Third Party Beneficiaries...... 34
9.5 Governing Law....................................... 34
9.6 Assignment.......................................... 34
9.7 Severability........................................ 34
9.8 Counterparts........................................ 35
9.9 Exhibits and Schedules; Section Numbers............. 35
<PAGE>
INDEX OF SCHEDULES AND EXHIBITS
Schedule 3 - Disclosure Schedule
Exhibit 1.2 - Certificate of Merger
Exhibit 5.3 - Employment Agreements
<PAGE>
INDEX OF DEFINED TERMS
Defined Term Location in Document
"1996 AAA".....................................................25
"1996 Tax Returns".............................................25
"Act" ......................................................5
"Agreement".....................................................1
"Akorn Disclosure Documents"....................................5
"Akorn Stock"...................................................3
"Akorn" ......................................................1
"AMI" ......................................................1
"Balance Sheet Date"............................................7
"Balance Sheet."................................................7
"Benefit Arrangement"..........................................11
"Benjamin"......................................................1
"Benjamin Trust"................................................1
"California EPA"................................................9
"California Law"................................................1
"CBL Expense"..................................................26
"Certificate of Merger".........................................2
"Closing".......................................................1
"Closing Date"..................................................1
"Code" ......................................................1
"Company Personnel".............................................8
"Conversion Rate"...............................................3
"Conversion Shares."............................................3
"Current Employment Agreements".................................7
"DEA" ......................................................9
"Disclosure Schedule"...........................................3
"Effective Time"................................................2
"Employee Plan"................................................12
"Encumbrance"...................................................6
"EPA" ......................................................9
"ERISA" .....................................................11
"Faulding".....................................................28
"FDA" ......................................................9
"Furnished Documents"..........................................19
"Gencarella"....................................................1
"Gencarella Trust"..............................................1
"Governmental Entity"...........................................7
"Guaranteed Obligations".......................................25
"Illinois Act"..................................................1
"Intellectual Property Rights".................................18
"IRS" .....................................................12
"Judgments"....................................................10
"Lease" ......................................................9
"Material Contract"............................................10
"Merger" ......................................................1
"Multiemployer Plan"...........................................12
"OSHA" ......................................................9
"Pasadena Research Laboratories, Inc.".........................22
"Permitted Encumbrances"........................................9
"Plan" .....................................................24
"PRL Financial Statements"......................................7
"PRL Stock".....................................................3
"PRL" ......................................................1
"Purchase Rights"..............................................20
"Registrable Shares"...........................................24
"Regulator"....................................................10
"Returns" .....................................................14
"Rule 144"......................................................4
"Securities Act"................................................4
"Shareholder Agreement".........................................4
"Shareholder."..................................................1
"Shareholders"..................................................1
"Stock Purchase Plans".........................................20
"Suits" .....................................................10
"Surviving Corporation".........................................1
"Taxes" .....................................................13
"Title IV Plan"................................................12
"Yankoff" ......................................................1
"Yankoff Trust".................................................1
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated May 7, 1996 (the
"Agreement"), is by and between, on the one hand, Akorn, Inc., a
Louisiana corporation ("Akorn"), and its wholly owned subsidiary,
Akorn Manufacturing, Inc., an Illinois corporation ("AMI"), and,
on the other hand, Pasadena Research Laboratories, Inc., a
California corporation ("PRL") and the following shareholders of
PRL and their representatives: Floyd Benjamin ("Benjamin") as
representative of The Benjamin Family Trust (the "Benjamin
Trust"), Tom Yankoff ("Yankoff") as representative of The Yankoff
Revocable Living Trust (the "Yankoff Trust") and David Gencarella
("Gencarella") as representative of The Gencarella Revocable
Living Trust (the "Gencarella Trust"). Such Trusts and such
representatives being referred to collectively herein as the
"Shareholders" and sometimes being individually referred to as
"Shareholder."
RECITALS
WHEREAS, the Board of Directors of PRL and the Boards of
Directors of Akorn and AMI have determined it to be desirable and
mutually advantageous to enter into a business combination to be
effected by the merger of PRL into AMI on the terms and subject
to the conditions set forth herein; and
WHEREAS, the parties hereto intend that, for federal income
tax purposes, the merger will constitute a reorganization within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Internal Revenue Code of 1986 (the "Code"), as amended.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
SECTION 1
THE MERGER
1.1 Merger. At the Effective Time (as defined in Section
1.4 below), in accordance with the terms and subject to
conditions of this Agreement, the Illinois Business Corporation
Act (the "Illinois Act") and the California General Corporation
Law (the "California Law"), PRL shall merge with and into AMI
(the "Merger"), the separate existence of PRL shall cease, and
AMI shall continue as the surviving corporation (sometimes
referred to herein as the "Surviving Corporation").
1.2 The Closing. Unless this Agreement shall have been
terminated pursuant to the provisions hereof and subject to
satisfaction or waiver of the conditions specified in Section 7
hereof, the closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Jones, Walker,
Waechter, Poitevent, Carrere & Denegre L.L.P. in New Orleans,
Louisiana, commencing at 10:00 a.m. local time on or before June
30, 1996 (the "Closing Date"). If all conditions set forth in
Section 7 hereof are satisfied or duly waived, at the Closing (a)
the certificates, agreements and instruments specified in Section
7 shall be delivered, (b) the appropriate officers of PRL and AMI
shall execute the certifications and acknowledgments attached as
pages S-1 and S-2 to this Agreement and shall execute, deliver
and acknowledge the Certificate of Merger in the form attached
hereto as Exhibit 1.2 and in such other form as may be
appropriate to comply with the California Law (collectively, the
"Certificate of Merger") and (c) the parties shall take such
further action as is required to consummate the transactions
contemplated by this Agreement.
1.3 Filing of Certificate of Merger. Immediately following
its execution and acknowledgment, the Certificate of Merger shall
be delivered, respectively, to the Secretary of State of Illinois
and the Secretary of State of California for filing, and such
certificate shall thereafter be recorded in the manner required
by the Illinois Law and the California Law.
1.4 The Effective Time; Effect of Merger. The Merger shall
be effective upon the filing of the Certificate of Merger with
the Secretary of State of California in accordance with the
California Law, or at such other time and date as is provided in
the Certificate of Merger pursuant to the mutual agreements of
AMI and PRL (hereinafter referred to as the "Effective Time").
Upon the Effective Time and by virtue of the Merger, the
Surviving Corporation shall possess all the rights, privileges
and franchises possessed by PRL and the Surviving Corporation
shall be responsible for all of the liabilities and obligations
of PRL in the same manner as if the Surviving Corporation had
itself incurred such liabilities or obligations, and the Merger
shall have such other effects as may be specified in the
applicable provisions of the Illinois Law.
1.5 Directors and Officers; Articles of Incorporation.
After the Effective Time and until their successors shall have
been duly elected or appointed, the directors and officers of AMI
will be the directors and officers of the Surviving Corporation;
provided, however, that, subject to the execution and delivery of
the employment agreements provided for in Section 5.3, effective
as of the Effective Time (a) Benjamin shall be a director of the
Surviving Corporation and of Akorn, to serve in each such
position until the next annual meeting of shareholders of such
corporations and until his successor shall have been elected, and
(b) Benjamin shall be the President, Yankoff shall be Vice
President of Sales and Marketing and Gencarella shall be Director
of Business Development of the Surviving Corporation. The
Articles of Incorporation and By-laws of AMI, as in effect
immediately prior to the Effective Time, shall be the articles of
incorporation and bylaws of the Surviving Corporation after the
Effective Time until thereafter duly amended.
SECTION 2
CONVERSION OF STOCK
2.1 Conversion of Shares of PRL.
2.1.1At the Effective Time, by reason of the Merger,
all of the 94.50 shares of common stock, no par value per share,
of PRL (the "PRL Stock") issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger, be
converted into fully-paid and non-assessable shares of the common
stock, no par value per share, of Akorn (the "Akorn Stock"), at a
conversion rate (the "Conversion Rate") of 14,814.815 shares of
Akorn Stock, rounded to the nearest whole share, for each share
of PRL Stock. The shares of Akorn Stock into which the PRL Stock
shall be converted by virtue of the Merger pursuant to this
Section 2.1 are sometimes hereinafter referred to as the
"Conversion Shares."
2.1.2As of the Effective Time, by virtue of the Merger,
each share of common stock of PRL outstanding immediately prior
to the Merger and any shares of capital stock of PRL held in
treasury at the Effective Time shall be cancelled.
2.2 Delivery and Exchange of Certificates. On the Closing
Date, the Shareholders shall deliver to AMI all certificates
representing shares of PRL Stock then outstanding. Upon such
delivery, Akorn shall deliver to each Shareholder a certificate
representing the shares of Akorn Stock into which such shares
will be converted at the Effective Time, as provided in Section
2.1. Until so delivered, each certificate which, before the
Effective Time, represented shares of PRL Stock, shall be deemed
for all purposes to represent the number of whole shares of Akorn
Stock into which the shares of PRL Stock theretofore represented
thereby shall have been converted. Akorn may, at its option,
refuse to pay any dividend or other distribution, if any, payable
after the Effective Time to the holders of shares of Akorn Stock
to the holders of certificates evidencing undelivered shares of
PRL Stock. Whether or not a stock certificate representing PRL
Stock is delivered as provided herein, from and after the Closing
Date, such certificate shall under no circumstances evidence,
represent or otherwise constitute any stock or interest in PRL or
any person, firm or corporation other than Akorn.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND PRL
Except as set forth in the Disclosure Schedule attached
hereto as Schedule 3 (the "Disclosure Schedule"), (a) each
Shareholder, with respect to matters relating to itself and to
its PRL Stock, represents and warrants to and agrees with Akorn
and AMI as set forth as follows in Sections 3.1 through 3.5 and
(b) each Shareholder and PRL, acting jointly, severally and in
solido (i.e., the Louisiana term for jointly and severally)
represent and warrant to and agree with Akorn and AMI as follows
with respect to the matters set forth in Sections 3.6 through
3.35:
3.1 Ownership. Each Shareholder is, and at the Effective
Time will be, the record and beneficial owner of the number of
shares of PRL Stock, which are represented by the certificates
bearing the numbers, shown opposite its name in the Disclosure
Schedule. Each Shareholder has and at the Effective Time will
have good and marketable title to all such shares and the
absolute right to deliver such shares in accordance with the
terms hereof, free and clear of all liens, pledges and
encumbrances of any kind. Each Shareholder has the power,
authority and capacity necessary to approve the Merger, execute
and deliver this Agreement and perform its obligations under this
Agreement.
3.2 Pending Actions. As of the date hereof there are, and
at the Effective Time there will be, no actions, suits or
proceedings pending or threatened involving the ownership by any
Shareholder of its shares of PRL Stock or its ability to approve
the Merger pursuant to this Agreement.
3.3 No Other Agreements. Except for this Agreement, there
are no contracts, agreements, arrangements or understandings
between any Shareholder and Akorn or AMI relating to PRL or the
transactions contemplated by this Agreement. Except as set forth
in the Disclosure Schedule, no Shareholder is a party to any
agreement with respect to the voting, sale or transfer of any of
the PRL Stock or the issuance of any additional shares of PRL
capital stock or the redemption of any such stock (a "Shareholder
Agreement"). The Shareholders have furnished to Akorn a copy of
each currently effective Shareholder Agreement.
3.4 Restrictions on Resale; Investment Intent.
3.4.1Each Shareholder is acquiring the Akorn Stock to
be received by it in connection with the Merger for investment
for its own account and has no present intention of reselling or
otherwise distributing or participating in a distribution of such
stock. Each Shareholder understands that the shares of Akorn
Stock to be issued in the Merger will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), that
such shares will be "restricted securities" as that term is
defined in Rule 144 ("Rule 144") promulgated by the Securities
and Exchange Commission under the Securities Act, and that the
Shareholder cannot transfer any of such shares unless they are
subsequently registered under the Securities Act and under any
applicable state securities law or are transferred in a transfer
that, in the opinion of counsel satisfactory to Akorn, is exempt
from such registration. Each Shareholder further understands
that Akorn is not obligated by this Agreement to register such
shares under the Securities Act or under any such state laws and
that Akorn will, as a condition to the transfer of any such
shares, require that the request for transfer be accompanied by
an opinion of counsel, in form and substance satisfactory to
Akorn, to the effect that the proposed transfer does not result
in a violation of the Securities Act or any applicable state
securities law, unless such transfer is covered by an effective
registration statement. Each Shareholder understands that such
shares of Akorn Stock may not be sold publicly in reliance on the
exemption from registration under the Securities Act afforded by
Rule 144 unless and until the minimum holding period (currently
two years) and other requirements of Rule 144 have been
satisfied.
3.4.2Each Shareholder has been represented by competent
and experienced legal counsel in connection with the negotiation
and execution of this Agreement, has been granted the opportunity
to make a thorough investigation of and to obtain information
with respect to the affairs of Akorn and its acquisition of Akorn
Stock, and has availed itself of such opportunity either directly
or through its legal counsel and other authorized
representatives. Each Shareholder acknowledges that it has
received from Akorn and has reviewed with its representatives a
copy of each of the following documents (the "Akorn Disclosure
Documents"): (a) Akorn's annual report to the SEC on Form 10-K
for the fiscal year ended June 30, 1995, (b) Akorn's Annual
Report to Shareholders for its fiscal year ended June 30, 1995;
(c) Notice of Annual Meeting of Shareholders of Akorn held
October 28, 1995 and the related Proxy Statement dated September
18, 1995; and (d) Akorn's quarterly report to the SEC on Form 10-
Q for the quarters ended September 30, 1995 and December 31,
1995.
3.4.3Each Shareholder has been advised that the shares
of Akorn Stock issued hereunder have not been and are not being
registered under the Securities Act and that Akorn in issuing
such shares is relying upon, among other things, the
representations and warranties of the Shareholders contained in
this Section in concluding that such issuance does not require
compliance with the registration provisions of the Securities
Act.
3.4.4Each Shareholder understands and agrees that all
certificates evidencing the shares of Akorn Stock issued
hereunder will bear restrictive legends in substantially the
following form:
The securities represented by this
certificate have not been
registered under the Securities Act
of 1933, as amended (the "Act"), or
any applicable state law, and may
not be transferred without
registration under the Act and any
such state law or an opinion of
counsel satisfactory to the
corporation that registration is
not required.
3.5 Information. The Shareholder acknowledges that (a) it
has received and has reviewed to its satisfaction this Agreement,
the Akorn Disclosure Documents, the PRL Financial Statements
referred to in Section 3.11 and such additional material
information with respect to the Merger, if any, as it has
requested and (b) such information is sufficient for him to
determine objectively whether to approve the Merger and enter
into this Agreement.
3.6 Organization; Qualification; Subsidiaries. PRL is a
corporation duly organized, validly existing and in good standing
under the laws of the State of California, having all requisite
corporate power and authority to own its property and to carry on
its business as it is now being conducted. PRL is not qualified
to do business as a foreign corporation in any other
jurisdiction. PRL's non-qualification to do business as a
foreign corporation in any jurisdiction has not had any material
adverse effect with respect to PRL, its assets, business or
financial condition and does not adversely affect PRL's ability
to enforce any right that is material to PRL. PRL has no
subsidiaries or equity interests in any other entity.
3.7 Capital Stock. The authorized capital stock of PRL
consists of 100,000 shares of common capital stock, no par value
per share, of which 94.5 shares are issued and outstanding and
none are held in its treasury. All issued and outstanding shares
of capital stock of PRL have been duly authorized and are validly
issued, fully paid and non-assessable. There are no outstanding
stock options or other rights to acquire any shares of the
capital stock of PRL or any security convertible into such shares
and PRL has no obligation or other commitment to issue, sell or
deliver any of the foregoing or any shares of its capital stock.
All shares of capital stock issued by PRL have been issued in
compliance with all legal requirements and without violation of
any pre-emptive or similar rights. Other than those shares of
capital stock listed in the Disclosure Schedule, there are no
shares of PRL capital stock issued or outstanding.
3.8 Corporate Authorization; Enforceability. The Benjamin
Trust, the Gencarella Trust and the Yankoff Trust constitute the
holders of all of the outstanding shares of capital stock of PRL
and Benjamin, Gencarella and Yankoff constitute all of the
directors of PRL. Execution of this Agreement by Benjamin,
Gencarella and Yankoff constitutes their written unanimous
consent as representatives of the shareholders and as directors
of PRL to the Merger and to the execution, delivery and
performance by PRL of this Agreement. No further vote or consent
of shareholders or directors of PRL and no further corporate acts
or other corporate proceedings are required of PRL for the due
and valid authorization, execution, delivery and performance of
this Agreement and the Certificate of Merger and the consummation
of the Merger. Subject to such filings as are required by law,
this Agreement and the Certificate of Merger are legal, valid and
binding obligations of PRL and are enforceable against PRL in
accordance with their terms, except that enforcement may be
limited by bankruptcy, reorganization, insolvency and other
similar laws and court decisions relating to or affecting the
enforcement of creditors' rights generally and by general
equitable principles.
3.9 No Conflict. Except as set forth in the Disclosure
Schedule, neither the execution and the delivery of this
Agreement by PRL, nor the consummation of the transactions
contemplated hereby do or will (a) violate, conflict with, or
result in a breach of any provisions of, (b) constitute a default
(or an event which, with notice or lapse of time or both, would
constitute a default) under, (c) result in the termination of or
accelerate the performance required by, (d) result in the
creation of any lien, security interest, charge, claim, mortgage
or encumbrance (collectively referred to hereafter as
"Encumbrance") upon any of its properties or assets under any of
the terms, conditions or provisions of its Articles of
Incorporation or By-laws or any material note, bond, mortgage,
indenture, deed of trust, lease, license, loan agreement or other
instrument or obligation to or by which it or any of its assets
is bound, or (e) violate any order, writ, injunction, decree,
statute, rule or regulation of any Governmental Entity applicable
to it or any of its assets, except for any such conflict, breach,
termination, acceleration, default or Encumbrance which would not
have a material adverse effect on (i) the business, assets or
financial condition of PRL or (ii) PRL's ability to consummate
any of the transactions contemplated hereby.
3.10 Consents and Approvals. Except as set forth on the
Disclosure Schedule, no filing with or notice to, and no permit,
authorization, consent or approval of, any federal, state, local
or foreign court or tribunal or administrative, governmental or
regulatory body, agency or authority (a "Governmental Entity") is
necessary for the execution and delivery by PRL of this Agreement
or the consummation by PRL of the transactions contemplated
hereby.
3.11 Financial Statements. The "PRL Financial Statements"
are, collectively, the balance sheet as of December 31, 1995 and
related statements of income, stockholders' equity and cash flows
of PRL for the year then ended. The Disclosure Schedule contains
true and complete copies of the PRL Financial Statements. PRL
knows of no facts the existence of which would require material
modification to the PRL Financial Statements in order for them to
be prepared in accordance with generally accepted accounting
principles. The PRL Financial Statements do not contain any
items of a special, extraordinary or nonrecurring nature, except
as expressly noted in such statements and except as disclosed in
the Disclosure Schedule. The balance sheet of PRL as of December
31, 1995 (the "Balance Sheet Date") is referred to herein as the
"Balance Sheet."
3.12 Agreements with Shareholders. The Disclosure Schedule
discloses and describes all agreements between PRL and any of the
Shareholders, including, without limitation, any agreement
pursuant to which any Shareholder is employed by or performs
services for PRL (the "Current Employment Agreements"). PRL and
each of Benjamin, Gencarella and Yankoff is in compliance in all
material respects with the provisions of each Current Employment
Agreement. Except as provided in the Current Employment
Agreements or as otherwise disclosed in the Disclosure Schedule,
PRL has no obligations for the payment of money to any of and no
Shareholder has any obligations for the payment of money to PRL.
3.13 Absence of Certain Changes. Since the Balance Sheet
Date there has been no event or condition of any character that
has had, or can reasonably be expected to have, a material
adverse effect on the financial condition, results of operations,
cash flow, business or prospects of PRL. Except as specifically
disclosed in the PRL Financial Statements or the Disclosure
Schedule or as contemplated herein, PRL has not since the Balance
Sheet Date:
3.13.1 made any material change in the conduct of
its business and operations or failed to operate its business so
as to preserve its business organization intact and to preserve
the good will of its customers, suppliers and others with whom it
has significant business relations;
3.13.2 entered into any agreement or transaction not
in the ordinary course of business;
3.13.3 experienced any material adverse change in
its financial condition, assets, business, operations or
prospects;
3.13.4 incurred any obligation or liability,
absolute or contingent, except trade or business obligations
incurred in the ordinary course of business or sales, income,
franchise, or ad valorem taxes accruing or becoming payable in
the ordinary course of business;
3.13.5 declared or paid any dividend or other
distribution with respect to any of its capital stock, other than
the distributions described in Section 6.10, or purchased any of
its capital stock;
3.13.6 acquired or disposed of any assets material
to its business or operations;
3.13.7 subjected any of its assets to any
Encumbrance other than Permitted Encumbrances (as defined in
Section 3.14 below);
3.13.8 increased the rate of compensation (including
bonuses, contingent severance payments, retirement, profit
sharing, benefit or similar payments) payable or to become
payable to any of its officers, directors or employees
(collectively "Company Personnel");
3.13.9 adopted any employee welfare, pension,
retirement, profit sharing or similar plan or made any material
addition to or modification of existing plans;
3.13.10 experienced any labor trouble or any
controversy or unsettled grievance involving any Company
Personnel;
3.13.11 terminated or received notice of the
termination of any contract, commitment or transaction that is
material to it, or waived any right of material value to it;
3.13.12 made any material change in any accounting
principle, procedure or practice followed by it;
3.13.13 issued any stock or merged or consolidated
with any other business or agreed to do so;
3.13.14 made any capital expenditure or entered into
any lease involving payments in excess of $25,000;
3.13.15 borrowed any money or guaranteed or assumed
any indebtedness of others;
3.13.16 suffered any extraordinary losses or any
material damage, destruction or casualty with respect to its
assets, or experienced any events, conditions, losses or
casualties which have resulted in or might result in claims under
its insurance policies of an aggregate of $25,000 or more;
3.13.17 loaned any money to any person or entity;
3.13.18 experienced any loss of service of any
Company Personnel, material to the conduct of its business;
3.13.19 defaulted under any note, loan, mortgage,
guarantee or other instrument of indebtedness or any material
contractual obligation.
3.13.20 received any notification, warning or inquiry
from or given any notification to or had any communication with
any Governmental Entity, including without limitation the United
States Food and Drug Administration (the "FDA"), the United
States Drug Enforcement Administration ("DEA"), the United States
Environmental Protection Agency ("EPA"), California Environmental
Protection Agency ("California EPA"), the California Board of
Pharmacy, the California Food and Drug Administration or the
United States Occupational Safety and Health Administration
("OSHA") with respect to any proposed remedial action or any
violation or alleged or possible violation of any law, rule,
regulation or order relating to or affecting its business, nor
are any facts known to PRL that may reasonably be expected to
give rise to any such notification, warning or inquiry;
3.13.21 transferred any asset, right or interest to,
or entered into any transaction with any Shareholder or any
affiliate of any Shareholder;
3.13.22 amended its Articles of Incorporation or
Bylaws;
3.13.23 received notice or had knowledge or reason to
believe that any substantial customer or supplier of PRL has
terminated or intends to terminate its relationship with PRL;
3.13.24 waived any right in connection with any
aspect of its business having a material effect on the business
of PRL as a whole; or
3.13.25 made any agreement or commitment to do any of
the foregoing.
3.14 Properties; Absence of Encumbrances.
(a) PRL has good title to all material properties
and assets reflected on the Balance Sheet, free and clear of any
Encumbrances, except those Encumbrances shown on the Disclosure
Schedule (the "Permitted Encumbrances").
(b) The Disclosure Schedule sets forth a complete
and correct list of all leases of real property to which PRL is a
party (a "Lease"), all of which are valid and enforceable and in
full force and effect. Complete and correct copies of each Lease
have been furnished to Akorn. PRL is in full compliance with and
has not received a notice of default under any Lease and PRL is
not involved in any dispute under any Lease, the effect of which
would have a material adverse effect on the business, assets or
financial condition of PRL.
(c) PRL does not own, and has never owned, any
real property other than as described in the Disclosure Schedule.
3.15 Permits; Compliance with Laws. To the best knowledge
of each of the Shareholders PRL (a) has all necessary permits,
licenses and governmental authorizations required for the lease,
ownership, occupancy or operation of its properties and assets
and the carrying on of its business, and (b) has conducted its
business in substantial compliance with and is in substantial
compliance with all applicable laws, regulations, orders,
permits, judgments, ordinances or decrees of any Governmental
Entity.
3.16 Material Contracts. The Disclosure Schedule lists and
describes each agreement, lease, contract or other document to
which PRL is a party, which (a) requires PRL or the other party
to such contract to keep any information confidential or (b)
involves payment by or to PRL of any amount in excess of or
delivery by PRL of goods or services having a value exceeding
$10,000 per annum (a "Material Contract"). A complete and
correct copy of each Material Contract has been furnished to or
made available to Akorn. Each Material Contract is valid,
binding and enforceable, except to the extent that enforcement
may be limited by bankruptcy, reorganization, insolvency and
other similar laws and court decisions relating to or affecting
the enforcement of creditors' rights generally and by equitable
principles. Except as set forth in the Disclosure Schedule, PRL
and each other party to each Material Contract are in compliance
in all material respects with the provisions of such Material
Contract.
3.17 Litigation. Except as disclosed on the Disclosure
Schedule, (a) there are no outstanding orders, writs, judgments,
injunctions, awards or decrees of any Governmental Entity
("Judgments") against or involving PRL; (b) there are no actions,
suits, investigations, labor disputes or proceedings
(collectively, "Suits"), pending or threatened against PRL which
if decided adversely to PRL, in one case or in the aggregate,
would have a material adverse effect on the business, assets or
financial condition of PRL and; (c) to the best knowledge of each
of the Shareholders there have been no events and there are no
facts or circumstances that could result in any matters of the
types described in the preceding clauses (a) and (b). PRL has
delivered or made available complete copies of all pleadings
related to the Judgments or Suits disclosed on the Disclosure
Schedule.
3.18 Regulatory Matters. PRL has provided Akorn with access
to (a) correct and complete copies of all communications
(including, but not limited to, notes and memoranda of oral
communications, if any) between PRL or any of its representatives
and the FDA, the DEA, the California EPA, the California Board of
Pharmacy, the California Food and Drug Administration, and any
other Governmental Entity that administers laws similar to those
administered by any such agency ("Regulator") that has occurred
during the 36-month period preceding the date of this Agreement
and (b) all of the following information that is related to PRL's
business or to any product distributed by PRL and that is in
PRL's possession or maintained on PRL's behalf by others: all
information relating to inspections of any premises by a
Regulator; all facilities master files; all standard operating
procedures; all plant and equipment validation records; all
formulations, stability data and batch records; all books,
records, information and data related to any products that have
been distributed by PRL during the 36-month period preceding the
date of this Agreement; all other written information, data,
records and materials (including, but not limited to, notes and
memoranda of oral communications, if any) relating to or used or
useful in complying with laws, regulations, orders, procedures,
standards or processes administered, adopted, issued or required
by any Regulator.
3.19 Environmental Matters. To the best knowledge of each
of the Shareholders, (a) PRL is not in violation of any
applicable laws or regulations relating to the environment and
PRL is not a party to any proposed removal, remedy or remedial
action nor has PRL received any material claim for compensation
in connection with the foregoing matters contemplated by this
sentence and (b) no Governmental Entity or third party has
claimed that PRL is in material violation of any environmental
permit, law or regulation. PRL has not received any notice that
any investigation, administrative order, consent order and
agreement, removal or remedial action, litigation or settlement
with respect to any environmental permit, law or regulation is
proposed, threatened, anticipated or in existence with respect to
any of PRL's leased or owned properties. The properties
currently and previously leased or owned by PRL are not and to
the best knowledge of each of the Shareholders, have never been
on or associated with any "national priorities" list or any
equivalent state list or any federal or state "superlien" list.
PRL has not received any notice of any complaint from any person
relating to respiratory or other health problems or property
damage attributable to any property currently or previously
leased or owned by PRL. To the best knowledge of each of the
Shareholders, the execution and delivery of this Agreement and
the effectuation of the Merger and other transactions
contemplated hereby are not subject to the consent, review or
approval of, and do not and will not require any disclosure to or
filings with, any Governmental Entity having power under or with
respect to environmental laws.
3.20 ERISA and Related Matters.
3.20.1Definitions:
(a) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder.
(b) "Benefit Arrangement" means any employment,
severance or similar contract, or any other contract, plan,
policy or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option or other stock
related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including
any self-insured arrangement), health or medical benefits,
disability benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health,
medical or life insurance benefits) that (A) is subject to any
provision of ERISA, (B) is maintained, administered or
contributed to by the employer and (C) covers any employee or
former employee of the employer.
(c) "Employee Plan" means a plan or arrangement
as defined in Section 3(3) of ERISA, that (A) is subject to any
provision of ERISA, (B) is maintained, administered or
contributed to by the employer and (C) covers any employee or
former employee of the employer.
(d) "Multiemployer Plan" means a plan or
arrangement as defined in Section 4001(a)(3) and 3(37) of ERISA.
(e) "Title IV Plan" means an Employee Plan, other
than any Multiemployer Plan, subject to Title IV of ERISA.
The Disclosure Schedule lists each Employee Plan
that PRL maintains, administers, contributes to, or has any
contingent liability with respect thereto. PRL has provided a
true and complete copy of each such Plan, current summary plan
description, (and, if applicable, related trust documents) and
all amendments thereto and written interpretations thereof
together with (i) all annual reports, if any, that have been
prepared in connection with each such Employee Plan; (ii) all
material communications received from or sent to the Internal
Revenue Service ("IRS") or the Department of Labor within the
last two years (including a written description of any oral
communications); and (iii) the most recent IRS determination
letter with respect to each Employee Plan and the most recent
application for a determination letter.
3.20.2 The Disclosure Schedule identifies each Benefit
Arrangement that PRL maintains, or administers. Except as set
forth in the Disclosure Schedule, PRL has made all contributions
to and has no contingent liability with respect to any of its
Benefit Arrangements. PRL has furnished to Akorn copies or
descriptions of each Benefit Arrangement. To the knowledge of
each of the Shareholders, each Benefit Arrangement has been
maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules
and regulations which are applicable to such Benefit Arrangement.
3.20.3 Benefits under any Employee Plan or Benefit
Arrangement are as represented in said documents and have not
been increased or modified (whether written or not written)
subsequent to the dates of such documents. PRL has not
communicated to any employee or former employee any intention or
commitment to modify any Employee Plan or Benefit Arrangement or
to establish or implement any other employee or retiree benefit
or compensation arrangement.
3.20.4 PRL does not maintain, administer, or become
obligated to contribute to or have any contingent liability with
respect to any Multiemployer Plan or any Title IV Plan.
3.20.5 Each Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified and
has been so qualified during the period from its adoption to
date, and, to the best knowledge of each of the Shareholders, no
event has occurred since such adoption that would adversely
affect such qualification and each trust created in connection
with each such Employee Plan forming a part thereof is exempt
from tax pursuant to Section 501(a) of the Code. To the best
knowledge of each of the Shareholders, each Employee Plan has
been maintained and administered in compliance with its terms and
with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations, including but not
limited to ERISA and the Code.
3.20.6 To the best knowledge of each of the
Shareholders, full payment has been made of all amounts which PRL
is or has been required to have paid as contributions to any
Employee Plan or Benefit Arrangement under applicable law or
under the terms of any such plan or any arrangement.
3.20.7 To the best knowledge of each of the
Shareholders, neither PRL nor any of its shareholders, directors,
officers or employers has engaged in any transaction with respect
to an Employee Plan that could subject PRL to a tax, penalty or
liability for a prohibited transaction, as defined in Section 406
of ERISA or Section 4975 of the Code. None of the assets of any
Employee Plan are invested in employer securities.
3.20.8 To the best knowledge of each of the
Shareholders, PRL has no current or projected liability in
respect of post-retirement or post-employment welfare benefits
for retired, current or former employees. No health, medical,
death or survivor benefits have been provided under any Benefit
Arrangement to any person who is not an employee or former
employee of PRL or a dependent thereof.
3.20.9 Except as disclosed in the Disclosure Schedule,
there is no litigation, administrative or arbitration proceeding
or other dispute pending or threatened that involves any Employee
Plan or Benefit Arrangement which could reasonably be expected to
result in a liability to PRL, any employees or directors of PRL,
or any fiduciary (as defined in ERISA Section 3(21)) of such
Employee Plan or Benefit Arrangement.
3.20.10 No employee or former employee of PRL will
become entitled to any bonus, retirement, severance, job security
or similar benefit or enhanced benefit (including acceleration of
compensation, an award, vesting or exercise of an incentive
award) or any fee or payment of any kind solely as a result of
any of the transactions contemplated hereby.
3.20.11 PRL is not a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately
or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code (i.e., a
golden parachute).
3.21 Taxes.
3.21.1(a) For purposes of this Agreement the term
"Taxes" shall mean all taxes, however denominated or described,
including any interest, penalties or other additions to tax that
may become payable in respect thereof, imposed by any federal,
territorial, state, local or foreign government or any agency or
political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all
income or profits taxes, payroll or employee withholding taxes,
unemployment insurance, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross
receipts taxes, environmental taxes, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and
other governmental charges, and other obligations of the same or
of a similar nature to any of the foregoing, which PRL is
required to pay, withhold or collect.
(b) For the purpose of this Agreement, the term
"Returns" shall mean all reports, estimates, declarations of
estimated tax, information statements and returns relating to, or
required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding
and other payments to third parties.
3.21.2 Except as disclosed in the Disclosure
Schedule:
(a) PRL and the Shareholders have made all
elections necessary for PRL to be treated as a qualified small
business corporation under Code Section 1361(a)(1).
(b) Neither PRL nor the Shareholders have taken,
or will take prior to the Effective Time, any action that will
terminate PRL's treatment as a small business corporation under
the Code.
(c) All Returns required to be filed by or on
behalf of PRL have been duly filed on a timely basis and such
Returns (including all attached statements and schedules) are
true, complete and correct. All Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis, and no other Taxes are
payable by PRL with respect to items or periods covered by such
Returns (whether or not shown on or reportable on such Returns)
or with respect to any period prior to the Effective Date.
(d) PRL has withheld and paid over all Taxes
required to have been withheld and paid over (including any
estimated taxes), and has complied with all information reporting
and backup withholding requirements, including maintenance of
required records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent contractor,
or other third party.
(e) There are no liens on any of the assets of
PRL with respect to Taxes, other than liens for Taxes not yet due
and payable or for Taxes that are being contested in good faith
through appropriate proceedings and for which appropriate
reserves have been established.
(f) PRL has furnished or made available to Akorn
or AMI true and complete copies of: (i) all federal and state
income and franchise tax returns of PRL for all periods beginning
on or after January 1, 1993, and (ii) all tax audit reports, work
papers statements of deficiencies, closing or other agreements
received by PRL or on its behalf relating to Taxes.
3.21.3 Except as disclosed on the Disclosure
Schedule or in documents provided to or made available to Akorn
or AMI:
(a) The Returns of PRL have never been audited by
a governmental or taxing authority, nor is any such audit in
process, pending or threatened (formally or informally).
(b) No deficiencies exist or have been asserted
(either formally or informally) or are expected to be asserted
with respect to Taxes of PRL, and no notice (either formally or
informally) has been received by PRL that it has not filed a
Return or paid Taxes required to be filed or paid by it.
(c) PRL is not a party to any pending action or
proceeding for assessment or collection of Taxes, nor has such
action or proceeding been asserted or threatened (either formally
or informally) against it or any of its assets.
(d) Except as reflected in the Returns or as
disclosed on the Disclosure Schedule, no waiver or extension of
any statute of limitations is in effect with respect to Taxes or
Returns of PRL.
(e) No action has been taken that would have the
effect of deferring any liability for Taxes for PRL from any
period prior to the Effective Date to any period after the
Effective Date.
(f) There are no requests for rulings, subpoenas
or requests for information pending with respect to PRL.
(g) No power of attorney has been granted by PRL,
with respect to any matter relating to Taxes.
(h) The amount of liability for unpaid Taxes of
PRL for all periods ending on or before the Effective Date will
not, in the aggregate, exceed the amount of the current liability
accruals for Taxes, as such accruals are reflected on the balance
sheet of PRL as of the Closing Date.
3.21.4 Except as disclosed on the Disclosure
Schedule, or as described in documents furnished to or made
available to Akorn or AMI:
(a) PRL has not made an election, and is not
required to treat any asset as owned by another person for
federal income tax purposes or as tax-exempt bond financed
property or tax-exempt use property within the meaning of section
168 of the Code.
(b) PRL has not issued or assumed any
indebtedness that is subject to section 279(b) of the Code.
(c) PRL has not entered into any compensatory
agreements with respect to the performance of services which
payment thereunder would result in a nondeductible expense to
Section 280G of the Code or an excise tax to the recipient of
such payment pursuant to Section 4999 of the Code.
(d) No election has been made under Section 338
of the Code with respect to PRL and no action has been taken that
would result in any income tax liability to PRL as a result of
deemed election within the meaning of Section 338 of the Code.
(e) No consent under Section 341(f) of the Code
has been filed with respect to PRL.
(f) PRL has not agreed, nor is it required to
make, any adjustment under Code Section 481(a) by reason of
change in accounting method or otherwise.
(g) PRL has not disposed of any property that has
been accounted for under the installment method.
(h) PRL is not a party to any interest rate swap,
currency swap or similar transaction.
(i) PRL is not a United States real property
holding corporation within the meaning of Section 897(c)(2) of
the Code and Akorn is not required to withhold tax on the
acquisition of the stock of PRL.
(j) PRL has not participated in any international
boycott as defined in Code Section 999.
(k) PRL is not subject to any joint venture,
partnership or other arrangement or contract that is treated as a
partnership for federal income tax purposes.
(l) PRL has not made any of the foregoing
elections and is not required to apply any of the foregoing rules
under any comparable state or local income tax provisions.
(m) PRL does not have and has never had a
permanent establishment in any foreign country, as defined in any
applicable tax treaty or convention between the United States and
such foreign country.
(n) The transactions contemplated herein are not
subject to the tax withholding provisions of Section 3406 of the
Code, or of Subchapter A of Chapter 3 of the Code, or of any
other provision of law.
3.21.5 Set forth in the Disclosure Schedule or in
documents furnished or made available to Akorn or AMI is accurate
and complete information with respect to each of the following
for all tax periods beginning January 1, 1993:
(a) All material tax elections in effect with
respect to PRL;
(b) The current tax basis of the assets of PRL;
(c) The current and accumulated earnings and
profits of PRL;
(d) The net operating losses of PRL by taxable
year;
(e) The net capital losses of PRL;
(f) The tax credit carry overs of PRL; and
(g) The overall foreign losses of PRL under
section 904(f) of the Code that is subject to
recapture.
3.21.6(a) The Shareholders and PRL have not taken or
agreed to take any action that would prevent the Merger from
constituting a reorganization qualifying under the provisions of
section 368(a) of the Code.
(b) There is no plan or intention by any
Shareholder to sell, exchange or otherwise dispose of a number of
shares of Akorn Stock to be received in the Merger that would
reduce the Shareholder's ownership of Akorn Stock to a number of
shares having a value, as of the Effective Time, of less than 50
percent of the value of all of the PRL Stock (including shares of
PRL Stock exchanged for cash in lieu of fractional shares of
Akorn Stock) outstanding immediately prior to the Effective Time.
(c) Immediately following the Effective Time, AMI
will hold at least 90 percent of the fair market value of the net
assets of PRL and at least 70 percent of the fair market value of
the gross assets of PRL held immediately prior thereto. For
purposes of this representation, amounts used by PRL to pay
Merger expenses and all redemptions and distributions made by PRL
will be included as assets of PRL immediately prior to the
Merger.
(d) The Shareholders and PRL will each pay their
respective expenses, if any, incurred in connection with the
Merger.
(e) There is no intercorporate indebtedness
existing between PRL and Akorn or between PRL and AMI that was
issued, acquired or will be settled at a discount.
(f) PRL is not an investment company as defined
in Section 368(a)(3)(A) of the Code.
3.22 Transactions with Certain Persons. Except for
employment relationships in the ordinary course of business and
except as set forth in the Disclosure Schedule, no Company
Personnel or any member of any such person's family is presently
a party to any transaction with PRL involving payments in excess
of $10,000 per annum, including without limitation any contract,
agreement or other arrangement providing for the furnishing of
services by or the rental of real or personal property from any
such person or from any corporation, partnership, trust or other
entity in which any such person has more than one percent equity
interest or is an officer, director, trustee or general partner.
3.23 Intellectual Properties. The Disclosure Schedule lists
all patents, trademarks, trade names, service marks, copyrights
or other intellectual property rights, or any pending
applications for any of the foregoing (collectively "Intellectual
Property Rights"), used in PRL's business, identifying those
owned by PRL and those owned by others. In the operation of its
business as presently conducted, PRL is not in conflict with and
does not infringe any Intellectual Property Rights of others.
PRL is not a party to any agreement relating to any Intellectual
Property Rights, whether owned by PRL or others, and no person
has a right to receive any royalty with respect to any
Intellectual Property Rights used by PRL in its business.
3.24 Insurance. Akorn has been provided access to all
insurance policies or binders which relate to PRL's business. To
the best knowledge of each of the Shareholders, all premiums due
under such policies and binders have been paid or accrued for on
the Balance Sheet and all such policies and binders are in full
force and effect. No notice of cancellation or nonrenewal of any
such policy or binder has been received by PRL. No notice of
disallowance of any claim under any insurance policy or binder,
whether or not currently in effect, has been received by PRL. To
the best knowledge of each of the Shareholders, PRL has no
liability for or exposure to any premium expense for expired
policies. To the best knowledge of each of the Shareholders,
there are no current claims by PRL under any such policy or
binder nor are there any insured losses for which claims have not
been made. PRL owns no life insurance policies and does not
maintain products liability insurance.
3.25 Labor Matters. There are no agreements with, or
pending petitions for recognition of, a labor union or
association as the exclusive bargaining agent for any of PRL's
employees. No such petitions have been pending at any time
within two years of the date of this Agreement and to the best
knowledge of each of the Shareholders, there has not been any
organizing effort by any union or other group seeking to
represent any employees of PRL as their exclusive bargaining
agent at any time within two years of the date of this Agreement.
There are no labor strikes, work stoppages or other labor
troubles, other than routine grievance matters, now pending or
threatened against PRL, nor have there been any such labor
strikes, work stoppages or other labor troubles, other than
routine grievance matters, with respect to the business of PRL at
any time within two years of the date of this Agreement.
3.26 Bank Accounts; Powers of Attorney. The Disclosure
Schedule sets forth with respect to each bank account or cash
account maintained at any brokerage or other financial firm, the
name of the institution at which such account is maintained, the
number of the account, and the names of the individuals having
authority to withdraw funds from such account. PRL has no letter
of credit or powers of attorney outstanding.
3.27 Minute Books and Stock Transfer Books. The minute
books and stock transfer books of PRL are correct, complete and
current in all material respects and have been made available to
Akorn.
3.28 Customers and Suppliers. The Disclosure Schedule sets
forth a list of (a) all customers of PRL during the period
commencing January 1, 1995, and ending on the Balance Sheet Date
which accounted for 10% or more of the revenues of PRL during
such period and (b) the ten largest suppliers to PRL in terms of
dollars invoiced. Except as disclosed on the Disclosure
Schedule, none of such customers or suppliers has provided
written notice to PRL of its intention to terminate its
relationship with PRL or to reduce substantially the amount of
business that it provides to PRL. To the best knowledge of each
of the Shareholders, none of such customers or suppliers intends
to terminate or to change significantly its relationship with PRL
on or after the Closing Date.
3.29 Compensation Agreements. The Disclosure Schedule lists
all written employment, commission, bonus or other compensation
and consulting agreements to which PRL is a party. Except as set
forth on the Disclosure Schedule, PRL is not a party to any
written or oral employment, commission, bonus or other
compensation or consulting agreement which PRL may not terminate
without any payment or penalty, at will, with or without cause,
except to the extent that employment at will may be limited by
applicable law. Except as set forth in the Disclosure Section,
PRL is not in breach of any such agreement.
3.30 Conduct of Business. To the best knowledge of each of
the Shareholders, upon consummation of the Merger in accordance
with the terms hereof, the Surviving Corporation will be entitled
to conduct, in all material respects, the business of PRL as it
is now being conducted.
3.31 Residence. Each holder of shares of PRL capital stock
is a resident of the State of California.
3.32 Director and Officer Indemnification. The directors
and officers of PRL are not entitled to indemnification by PRL,
except to the extent that indemnification rights are provided for
generally in the California Law or in the Current Employment
Agreements; there are no pending claims for indemnification by
any director or officer of PRL.
3.33 Documents and Written Materials. Originals or true and
complete copies of all documents or other written materials
underlying items listed in the Schedules have been furnished or
made available to Akorn in the form in which each of such
documents is in effect, and will not be modified in any material
respect prior to the Closing Date without Akorn's prior written
consent. All agreements, contracts, instruments or documents
furnished or made available to Akorn or AMI by PRL or any of the
Shareholders (the "Furnished Documents") are identified on the
Disclosure Schedule.
3.34 Effectiveness of Representations and Warranties. All
of the representations and warranties of PRL in this Agreement
shall be true in all material respects on the Closing Date and
shall be deemed to have been made again by PRL on and as of the
Closing Date.
3.35 Effectiveness of Representations and Warranties. All
of the representations and warranties of the Shareholders in this
Agreement shall be true in all material respects on the Closing
Date and shall be deemed to have been made again by each
Shareholder on and as of the Closing Date.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF AKORN
Akorn represents and warrants to and agrees with PRL and the
Shareholders as follows:
4.1 Organization. Akorn and AMI are corporations duly
organized, validly existing and in good standing under the laws
of Louisiana and Illinois, respectively, and have all requisite
corporate power and authority to own their properties and carry
on their businesses as now being conducted.
4.2 Capitalization. As of the date of this Agreement, the
authorized capital stock of (a) Akorn consists of 20,000,000
shares of common stock, no par value, approximately 15,115,000 of
which are validly issued and outstanding and approximately 36,000
of which are held as treasury shares and (b) AMI consists of
100,000 shares of common stock, no par value per share, 100 of
which are validly issued and outstanding. Akorn holds of record
all of the issued and outstanding shares of AMI capital stock.
True and correct information as to all outstanding options and
other rights to purchase shares of Akorn Stock and as to all
current plans and agreements (the "Stock Purchase Plans")
pursuant to which options and other rights to purchase shares of
Akorn Stock (the "Purchase Rights") have been and may be issued
is set forth in Notes I and J to the financial statements
included in Akorn's Annual Report to Shareholders for its fiscal
year ended June 30, 1995. Excepting the Purchase Rights, Akorn
has no outstanding exchangeable or convertible securities or
options or other rights to purchase shares of Akorn Stock.
4.3 Authority; Enforceability. Each of Akorn and AMI has
the requisite corporate power and authority to execute and
deliver this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this
Agreement and the consummation of the Merger and of the other
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Akorn and AMI and no
other corporate proceedings on the part of Akorn or AMI are
necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly
executed and delivered by each of Akorn and AMI and constitutes a
valid and binding obligation of each of Akorn and AMI,
enforceable against them in accordance with its terms, except as
may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, and subject to
general principals of equity and public policy considerations.
4.4 Consents and Approvals; Conflicts. No filing with or
notice to, and no permit, authorization, consent or approval of,
any Governmental Entity is necessary for the execution and
delivery by Akorn and AMI of this Agreement or the consummation
by Akorn and AMI of the transactions contemplated hereby, except
where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice
would not have a material adverse effect on (a) the business,
assets or financial condition of Akorn or AMI or (b) either
Akorn's or AMI's ability to consummate any of the transactions
contemplated hereby. Neither the execution and delivery of this
Agreement by Akorn and AMI, nor the consummation of the
transactions contemplated hereby, will violate any of the
provisions of the Articles of Incorporation or Bylaws of either
Akorn or AMI; or conflict with or result in a breach of, or give
rise to a right of termination of, or accelerate the performance
required by, any terms of any court order, consent decrees, note,
bond, mortgage, indenture, deed of trust, or any license or
agreement binding on either Akorn or AMI or to which either Akorn
or AMI is subject or a party, or constitute a default thereunder,
or result in the creation of any Encumbrance upon any of the
assets or result in the creation of any Encumbrance upon any of
the assets of Akorn or AMI, except for any such conflict, breach,
termination, acceleration, default or Encumbrance which would not
have a material adverse effect on (a) the business, assets or
financial condition of Akorn or AMI or (b) either Akorn's or
AMI's ability to consummate any of the transactions contemplated
hereby.
4.5 Akorn Stock. All shares of Akorn Stock which are to be
issued pursuant to the Merger will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and free
of any Encumbrances or preemptive rights.
4.6 Akorn Disclosure. The Akorn Disclosure Documents do
not include any misstatement of any fact material to the assets,
business, operations, financial condition and prospects of Akorn,
taken as a whole, or omit to state such a material fact necessary
in order to make the statements, in the light of the
circumstances under which they are made, not misleading. Akorn
is current in the filing of all reports, schedules, forms,
statements and other documents required to be filed by it with
the Securities and Exchange Commission under the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as
amended.
4.7 Litigation. Akorn is not a party to any litigation
excepting various products liability claims in which Akorn's
defense has been undertaken by insurers and in which any
liability of Akorn is not expected by Akorn to exceed insurance
coverage limits.
4.8 Effectiveness of Representations and Warranties. All
of the representations and warranties of Akorn in this Agreement
shall be true in all material respects on the Closing Date and
shall be deemed to have been made again by Akorn on and as of the
Closing Date.
SECTION 5
PRE-CLOSING COVENANTS
5.1 Access to Properties and Records. Until the Effective
Time, PRL and the Shareholders shall allow Akorn and AMI and
their authorized representatives full access, during normal
business hours and on reasonable notice, to all of PRL's plants,
properties, offices, vehicles, equipment, inventory and other
assets, documents, files, books and records, in order to allow
Akorn and AMI a full opportunity to make such investigation and
inspection as they desire of PRL's business and assets. PRL and
the Shareholders shall further use their best efforts to cause
the employees, counsel and regular independent certified public
accountants of PRL to be available upon reasonable notice to
answer questions of Akorn's representatives concerning the
business and affairs of PRL, and shall further use their best
efforts to cause them to make available all relevant books and
records in connection with such inspection and examination,
including without limitation work papers for all audits and
reviews of financial statements of PRL.
5.2 Conduct of Business. From and after the date of this
Agreement and until the Closing Date, PRL, on the one hand, and
Akorn and AMI, on the other hand, shall conduct their respective
businesses in the ordinary course and consistently with past
practice, except as expressly required or otherwise permitted by
this Agreement, and shall not take or permit any action which
would cause any of their representations made in Section 3 and
Section 4, respectively, not to be true and correct on the
Closing Date.
5.3 Employment Agreements. At the Closing, the following
persons will execute and deliver to Akorn an employment agreement
substantially in the form of the employment agreement drafted in
such shareholder's name and attached hereto as Exhibit 5.3:
Floyd Benjamin, Tom Yankoff and David Gencarella.
5.4 Corporate Name. After the Effective time, the
Surviving Corporation shall have the right to use the corporate
name "Pasadena Research Laboratories, Inc." and any derivatives
or combinations thereof and no Shareholder shall use or attempt
to use such name or any derivative or combination thereof as the
corporate name of a corporation, partnership or other entity, an
assumed name, a trade name or in any other manner.
5.5 Public Statements. Prior to the Effective Time, none
of the parties to this Agreement shall, and each party shall use
its best efforts so that none of its advisors, officers,
directors or employees shall, except with the prior written
consent of the other parties, publicize, announce or describe to
any third person, except their respective advisors and employees,
the execution or terms of this Agreement, the parties hereto or
the transactions contemplated hereby, except as required by law
or as required pursuant to this Agreement to obtain the consent
of such third person; provided, in any case, that Akorn may make
such disclosures and announcements as may be necessary or
advisable under applicable securities laws.
5.6 No Solicitation. The Shareholders and PRL will not,
prior to the Effective Time or the termination of this Agreement
pursuant to Section 8.1, (nor will they permit any of their
affiliates or any of PRL's officers, directors or agents to)
directly or indirectly solicit or participate or engage in or
initiate any negotiations or discussions, or enter into or
authorize any agreement or agreements in principle, or announce
any intention to do any of the foregoing, with respect to any
offer or proposal to acquire all or any significant part of PRL's
business and properties or any of its capital stock whether by
merger, purchase of assets, purchase of stock or otherwise. The
Shareholders and PRL will notify Akorn promptly upon receipt of
any inquiry, offer or other communication from any third party
regarding any such activities.
5.7 No stock splits or dividends. Akorn shall not declare
or pay any dividend on or permit any reclassification or
recapitalization with respect to shares of Akorn Stock, or the
establishment of a record date for any of the foregoing, to occur
during the period between the date of this Agreement and the
Effective Time.
5.8 Notification as to Representations. Akorn and AMI, on
the one hand, and PRL and the Shareholders, on the other hand,
will promptly disclose in writing to the other any information
contained in its representations and warranties or on the
Disclosure Schedule that, because of an event occurring after the
date hereof, is incomplete or no longer correct. Such disclosure
will be deemed to modify the representations and warranties of
such party or the Disclosure Schedule, as the case may be.
5.9 Akorn Disclosure Documents. Akorn will furnish to PRL
and the Shareholders a copy of each quarterly report on Form 10-Q
and any other report to or filing with the SEC made by Akorn
containing information that is material to Akorn and that is
filed prior to the Closing Date.
SECTION 6
ADDITIONAL AGREEMENTS
6.1 Legal Requirements to Merger. Subject to the
conditions set forth in Section 7 and to the other terms and
provisions of this Agreement, each of the parties to this
Agreement agrees to take, or cause to be taken, all reasonable
actions necessary to comply promptly with all legal requirements
applicable to it with respect to the Merger and will promptly
cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them in
connection with the Merger. Each of PRL, Akorn, AMI and the
Shareholders will take all reasonable actions necessary to
obtain, and will cooperate with each other in obtaining, any
consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private party,
required to be obtained or made by it in connection with the
Merger or the taking or any action contemplated by this
Agreement.
6.2 Further Assurances. After the Effective Time, the
Shareholders, Akorn and AMI will, at the expense of Akorn or AMI,
take all appropriate action and execute all documents,
instruments or conveyances which may be reasonably necessary to
carry out the provisions of this Agreement.
6.3 Expenses. Except as otherwise provided herein, each
party will pay all costs and expenses incurred by it in
connection with this Agreement and the transactions contemplated
hereby.
6.4 Confidentiality. Until the Effective Time and
subsequent to the termination of this Agreement pursuant to
Section 8.1, each of Akorn and AMI will keep confidential and
will not disclose to any third party any information obtained by
it from PRL or PRL's representatives in connection with this
Agreement except (a) that information may be disclosed by Akorn
and AMI to their advisors in connection with the negotiation of
and the activities conducted pursuant to this Agreement, (b) to
the extent that such information is or becomes generally
available to the public through no act or omission of Akorn or
AMI in violation of this Agreement and (c) to the extent
permitted by Section 5.5.
6.5 Termination of PRL Profit-Sharing and Retirement Plan.
Akorn will cause PRL's Profit-Sharing and Retirement Plan (the
"Plan") to be terminated by the Surviving Corporation in due
course after the Closing Date, but no later than 30 days
thereafter. Akorn will not cause the trustee or any member of
the administrative committee of the Plan to be removed. To the
extent permitted by law, the Surviving Corporation will amend the
Plan to provide that all participants in such Plan as of the
Closing Date will be 100% vested. The Surviving Corporation will
also amend such Plan to comply with law, if necessary, and will
request the Internal Revenue Service to approve the termination
of the Plan. The employees of the Surviving Corporation will be
entitled to participate in Akorn's defined contribution plan in
accordance with and to the extent permitted by such plan's
eligibility requirements and other terms and conditions. PRL
employees who continue employment with the Surviving Corporation
will be given credit in the Akorn defined contribution plan for
hours of service with PRL to the extent PRL provides payroll or
other records to support the stated hours of service.
6.6 Piggy-Back Registration Rights.
6.6.1If Akorn shall at any time prior to the third
anniversary of the Closing Date propose an underwritten public
offering of any shares of Akorn common stock to be offered and
sold by Akorn exclusively for cash pursuant to a registration
statement under the Securities Act of 1933 on Form S-1, S-2 or S-
3 and not in connection with an acquisition or an employee
benefit plan, Akorn shall give written notice to each of the
Shareholders who is at such time a record holder of Conversion
Shares. Upon the written request of any such Shareholder,
received by Akorn no later than the tenth business day after the
giving of such notice by Akorn, to register, on the same terms
and conditions as the shares of Akorn common stock otherwise
being sold pursuant to such registration, all of the Conversion
Shares held by such Shareholder, Akorn will use its best
reasonable efforts to cause such Conversion Shares (the
"Registrable Shares") to be included in the securities to be
covered by the registration statement proposed to be filed by
Akorn. Notwithstanding the foregoing, Akorn shall not be
obligated to include such Registrable Shares in such offering if
Akorn is advised in writing by its managing underwriter or
underwriters that the inclusion of the Registrable Shares in such
offering would in its or their opinion adversely affect the
marketing of the securities to be sold therein by Akorn or by
John N. Kapoor or his affiliate pursuant to an agreement with
respect to the registration of shares of Akorn Stock; provided,
however, that Akorn shall in any case be obligated to include
such number of amount of Registrable Shares in such offering as
such managing underwriter or underwriters shall determine will
not adversely affect such marketing; provided, further, that such
number of Registrable Shares shall not be reduced unless the
shares to be included in such offering for the account of any
other shareholder (not including Akorn or John N. Kapoor or his
affiliate) are also reduced on a pro rata basis. Akorn may at
any time prior to the effectiveness of any such registration
statement, in its sole discretion and without the consent of any
Shareholder, abandon the offering to be made pursuant to such
registration statement.
6.6.2Each Shareholder participating in any such public
offering shall (i) pay the underwriting discounts and selling
commissions applicable to the Conversion Shares sold by him in
the offering and shall pay its pro-rata share of all filing fees
and blue sky expenses, and (ii) enter into such agreements with
Akorn and with the underwriters with respect to procedures to be
followed in connection with the registration and the offer and
sale of the securities, indemnification, the providing of
information and other similar matters as Akorn or any underwriter
may reasonably request and which are comparable to similar
agreements, if any, with any other persons (not including Akorn)
whose shares are included in the offering.
6.7 Furnished Documents. Within ten days of the execution
of this Agreement, PRL will furnish to Akorn and AMI the original
or a copy of each of the Furnished Documents, except as otherwise
agreed by Akorn or AMI.
6.8 Tax Returns. AMI shall cause the accounting firm of
Wright, Ford, Browning & Young to prepare tax returns for PRL
with respect to the tax period beginning January 1, 1996 and
ending as of the Effective Time (the "1996 Tax Returns").
6.9 Personal Guarantees. Akorn, AMI and the Shareholders
shall cooperate with each other in seeking to cause the release
of the Shareholders from any guarantees by the Shareholders of
debt and other contractual obligations of PRL (the "Guaranteed
Obligations"), provided that the Guaranteed Obligations are
identified as such, and the amount thereof disclosed, in the
Disclosure Schedule and provided that each Guaranteed Obligation
that is material to PRL is reflected in the Balance Sheet.
6.10 Accumulated Adjustment Account Distribution. It is
acknowledged and agreed that the accumulated adjustment account
of PRL as of December 31, 1995, in the amount of approximately
$27,000.00, will not be paid to the Shareholders. Any increase
in the accumulated adjustment account of PRL during the period
beginning January 1, 1996 and ending at the Effective Time (the
"1996 AAA") shall be paid by AMI on or before the seventy-fifth
day following the Effective Time. The 1996 AAA shall include the
net profit of PRL that is attributable and taxable to the
shareholders with respect to such period and shall reflect,
without limitation, (a) the "CBL Expense" as described in the
Disclosure Schedule, in the amount of $140,000, which was
deducted by PRL for tax purposes in the income tax return filed
by PRL with respect to the year ended December 31, 1995, but
treated as an expense for financial statement purposes during the
year beginning January 1, 1996 and (b) the compensation expense
in the aggregate amount of $100,000 to be paid to Yankoff and
Gencarella prior to the Effective Time, as disclosed in paragraph
12 of the Disclosure Schedule, and be treated as an expense for
both tax and financial statement purposes during the year
beginning January 1, 1996.
6.11 Steris Rebate. It is understood and agreed that the
rebate in the form of inventory received during calendar 1995
from Steris in an amount not exceeding $99,000.00 will be treated
in the 1996 Tax Returns as a reduction of cost of goods sold and
thereby increase taxable income of PRL by the same amount during
the period beginning January 1, 1996 and ending at the Effective
Time.
6.12 Extent of Personal Liability. In the event that, after
the Effective Time, any Shareholder is personally liable to Akorn
or AMI for or with respect to a claim made by a party other than
Akorn or AMI, which claim constitutes a breach by the Shareholder
of any of its representations, warranties or agreements
hereunder, such liability on the part of the Shareholder shall be
reduced by the amount of any insurance proceeds paid to Akorn or
AMI with respect thereto.
6.13 Shareholder Indemnification. After the Effective Time,
Akorn will indemnify and hold harmless each Shareholder from and
against any claims made against him (other than claims made by
any person who is or was a shareholder of PRL) by reason of the
fact that, prior to the Effective Time, he was a shareholder or
served as an officer or director of PRL; provided, however that
no such indemnity shall be paid with respect to any such claim
arising out of action or inaction by the Shareholder which
constitutes, or the existence of which constitutes, a breach by
any Shareholder of its representations, warranties or agreements
hereunder.
6.14 Termination of Shareholder's Agreement. At the
Effective Time, by reason of the Merger, all rights and
obligations under the Shareholder's Agreement entered between PRL
and the Shareholders as referred to in the Disclosure Schedule
shall automatically terminate.
SECTION 7
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction or, where
permissible, waiver by such party of the following conditions at
or prior to the Effective Time:
7.1.1No statute, rule, regulation, executive order,
decree, preliminary or permanent injunction or restraining order
shall have been enacted, entered, promulgated or enforced by any
court of competent jurisdiction or other Governmental Entity
which prohibits or restricts the consummation of the Merger and
no action, suit, claim or proceeding by a state or federal
Governmental Entity before any court or other Governmental Entity
shall have been commenced and be pending which seeks to prohibit
or restrict the consummation of the Merger, other than actions,
suits, claims and proceedings which, in the reasonable opinion of
counsel to the parties hereto, are unlikely to result in an
adverse judgment; provided, however, that before any
determination is made to the effect that this condition has not
been satisfied, PRL and Akorn shall each use all reasonable
efforts and take such actions as may be reasonably necessary, at
its own expense, to have such order, stay, judgment or decree
lifted or dismissed and any such suit, action or proceeding
dismissed or terminated.
7.1.2All filings with and notices to and all consents
and waivers from all the Governmental Entities and third parties
listed in the Disclosure Schedule under Sections 4.4 shall have
been made, and all waiting periods thereunder with respect to the
transactions contemplated by this Agreement shall have expired or
been terminated.
7.1.3Akorn and PRL shall have received an opinion of
Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P.
substantially to the effect that the Merger constitutes a
reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code, that the Shareholders will recognize no
gain or loss for federal income tax purposes with respect to the
Conversion Shares received by them in connection with the Merger,
and that no gain or loss for federal income tax purposes will be
recognized by Akorn, AMI or PRL as a result of the Merger.
7.1.4It shall be a condition to the obligations of
Akorn and AMI and each of Benjamin, Gencarella and Yankoff that
Akorn and each such person shall have entered into an Employment
Agreement in the form attached hereto as Exhibit 5.3.
7.1.5Akorn's Board of Directors shall have taken such
action as is necessary to appoint Floyd Benjamin as a director of
Akorn with a term expiring at the annual meeting of Akorn
stockholders that next follows the Closing Date.
7.2 Conditions to Obligations of Akorn and AMI. The
obligations of Akorn and AMI to effect the Merger are subject to
the satisfaction of the following conditions unless waived by
Akorn and AMI:
7.2.1The representations and warranties of PRL and the
Shareholders set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement,
and PRL and the Shareholders shall have performed in all material
respects all obligations required to be performed by them under
this Agreement at or prior to the Closing Date.
7.2.2All consents and approvals of Governmental
Entities or third parties necessary for consummation of the
Merger by the parties shall have been obtained, other than those
which, if not obtained, would not in Akorn's judgment have a
material adverse effect on any party's ability to consummate any
of the transactions contemplated hereby or on the business and
properties of PRL. PRL shall have used its best efforts to
obtain all necessary permits, authorizations, consents and
approvals required by such Governmental Entities prior to the
Closing Date.
7.2.3PRL shall have obtained the consent of Faulding
Pharmaceutical Company ("Faulding") to assign to AMI all of PRL's
rights under and interests in that certain contract entered
between PRL and Faulding on January 5, 1996 providing for, among
other things, sharing of profits on Faulding's distribution of
certain of PRL's products.
7.2.4Akorn and AMI shall have received the opinion of
Walsworth, Franklin, Bevins & McCall, counsel to PRL and, with
respect to the matters set forth in such opinion, to the
Shareholders, dated the Effective Time, which will be
substantially to the effect that:
(a) PRL is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California.
(b) PRL has the corporate power to enter into
this Agreement and to consummate the transactions contemplated
hereby, and the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate action taken on the
part of PRL.
(c) This Agreement has been duly executed and
delivered by PRL and the Shareholders, and is a valid and binding
obligation of each enforceable against each in accordance with
its terms, except (i) as enforceability may be limited by any
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights; (ii) such enforceability is
subject to general principles of equity; and (iii) no opinion
need be expressed regarding the enforcement of the choice of law
provision of Section 9.5.
(d) The Merger has been approved by PRL
Shareholders in accordance with the California Law and, assuming
proper corporate action on the part of AMI and compliance with
the Illinois Law, the Merger will be effective under the
California Law upon proper filing of the Certificate of Merger in
the State of California.
(e) To such counsel's knowledge, based upon
review of PRL's Articles of Incorporation, Bylaws, corporate
minute book and certificates representing PRL Stock, PRL's stock
records and certificates of officers of PRL, as of the date
hereof, the authorized capital stock of PRL consists of 100,000
shares of PRL Stock, 94.5 of which are validly issued and
outstanding.
(f) Neither the execution and the delivery of
this Agreement by PRL, nor the consummation of the transactions
contemplated hereby, will (i) violate any of the provisions of
the Articles of Incorporation or Bylaws of PRL; or (ii) to such
counsel's knowledge, except as disclosed in an Exhibit or
Schedule to or set forth in this Agreement, conflict with or
result in a breach of, or give rise to a right of termination of,
or accelerate the performance required by, any terms of any court
order, consent decree, note, bond, mortgage, indenture, deed of
trust, or any license or agreement, or any other instrument or
obligation binding on PRL or constitute a default thereunder, or
result in the creation of any Encumbrance upon any of the assets
of any of PRL.
As to any matter in such opinion which involves matters
of fact or matters relating to laws other than United States
federal, or California law, such counsel may rely, without
independent investigation, upon the certificates of officers and
directors of PRL and of public officials, reasonably acceptable
to Akorn. Such counsel need not render any opinion with respect
to any federal or state securities laws.
7.2.5Akorn and AMI shall have had a full opportunity to
conduct inspections of the operating assets and books and records
of PRL.
7.2.6PRL shall have provided Akorn certified copies of
its Articles of Incorporation and Bylaws and certificates of
existence, good standing and qualification to do business as a
foreign corporation, certified by the appropriate state
authorities in PRL's state of incorporation.
7.2.7Akorn shall have received a certificate of a duly
authorized officer of PRL, dated the Closing Date, certifying as
to the incumbency of any person executing this Agreement or any
certificate or other document delivered in connection with this
Agreement and certifying as to such other matter as Akorn or AMI
shall reasonably request.
7.2.8Akorn will be reasonably satisfied, and shall
receive a certificate of each of the Shareholders and of the
chief executive officer of PRL that the condition specified in
Section 7.2.1 has been fulfilled.
7.2.9Akorn will be reasonably satisfied that the Merger
will be treated as a pooling of interests for financial reporting
purposes.
7.2.10After completing its due diligence review, Akorn
shall be satisfied that (a) the net sales of PRL for the 12-month
period ended March 31, 1996 is not less than the net sales of PRL
for the 12-month period ended December 31, 1995, as shown in the
PRL Financial Statements; and (b) total shareholders' equity of
PRL as of March 31, 1996 is not less than total shareholders'
equity of PRL as of December 31, 1995, as shown in the PRL
Financial Statements.
7.2.11Any and all changes made to the Disclosure
Schedule or to the representations and warranties of PRL and the
Shareholders as a result of any disclosures made by them under
Section 5.8 shall be satisfactory in all respects to Akorn and
AMI.
7.2.12The Shareholder Notes of Yankoff and Gencarella
disclosed in paragraph 12 of the Disclosure Schedule shall have
been repaid in full.
7.3 Conditions to Obligations of PRL and Shareholders. The
obligations of PRL and the Shareholders to effect the Merger are
subject to the satisfaction for the following conditions, unless
waived by PRL and all of the Shareholders:
7.3.1The representations and warranties of Akorn and
AMI set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, except
as otherwise contemplated by this Agreement, and Akorn and AMI
shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior
to the Closing Date.
7.3.2All consents and approvals of Governmental
Entities or third parties necessary for consummation of the
Merger by the parties, shall have been obtained, other than those
which, if not obtained, would not have a material adverse effect
on any party's ability to consummate any of the transactions
contemplated hereby. Akorn shall have used its best efforts to
obtain all necessary permits, authorizations, consents and
approvals required by such Governmental Entities prior to the
Closing Date.
7.3.3PRL and the Shareholders shall have received the
opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre
L.L.P., counsel to Akorn and AMI, dated the Effective Time, in
form reasonably satisfactory to PRL and the Shareholders,
substantially to the effect that:
(a) Akorn is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Louisiana. AMI is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Illinois.
(b) Akorn and AMI each has the corporate power to
enter into this Agreement and to consummate the transactions
contemplated hereby, and the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate
action taken on the part of Akorn and AMI, respectively.
(c) This Agreement has been duly executed and
delivered by each of Akorn and AMI and is a valid and binding
obligation of Akorn and AMI enforceable against each of Akorn and
AMI in accordance with its terms, except (i) as enforceability
may be limited by any bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights; (ii) as such
enforceability is subject to general principles of equity; and
(iii) no opinion need be expressed regarding the enforcement of
the choice of law provision of 9.5.
(d) The Merger has been approved by Akorn (as
shareholder of AMI) in accordance with the Illinois Law and,
assuming the proper corporate action on the part of PRL and
compliance with the California Law, the Merger will be effective
under the Illinois Law upon proper filing of the Certificate of
Merger in the State of Illinois.
(e) The shares of Akorn Stock to be issued in
connection with the transactions contemplated by this Agreement
are duly authorized and reserved for issuance and, when issued as
contemplated by this Agreement, will be validly issued, fully
paid and nonassessable.
(f) Neither the execution and delivery of this
Agreement by Akorn and by AMI, nor the consummation of the
transactions contemplated hereby, will violate any of the
provisions of the Articles of Incorporation or Bylaws of Akorn or
AMI.
As to any matter in such opinion which involves matters of fact
or matters relating to laws other than United States federal or
Louisiana law, such counsel may rely, without independent
investigation, upon the certificates of officers and directors of
Akorn and AMI and of public officials, reasonably acceptable to
PRL. Such counsel need not render any opinion with respect to
federal or state securities laws.
7.3.4PRL and the Shareholders shall have received a
certificate of a duly authorized officer of Akorn and AMI, dated
the Closing Date, and certifying as to the incumbency of any
person executing this Agreement or any certificate or other
document delivered in connection with this Agreement and
certifying such other matters as PRL or the Shareholders shall
reasonably request.
7.3.5PRL and the Shareholders shall be reasonably
satisfied, and shall have received a certificate of the chief
executive officer of Akorn, that the conditions specified in
Section 7.3.1 have been fulfilled.
7.3.6Any and all changes made to the representations
and warranties of Akorn and AMI as a result of any disclosures
made by them under Section 5.8 shall be satisfactory in all
respects to PRL and the Shareholders.
SECTION 8
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time:
8.1.1by mutual consent of Akorn and PRL;
8.1.2by Akorn or PRL, if (a) there shall have been a
material breach of any representation, warranty, covenant or
agreement on the part of PRL or the Shareholders or on the part
of Akorn or AMI, as the case maybe, which breach shall not have
been cured prior to the earlier of (i) 10 days following notice
of such breach and (ii) the Closing Date; or (b) any permanent
injunction or other order of a court or other competent
Governmental Entity preventing the consummation of the Merger
shall have become final and nonappealable; or
8.1.3by Akorn, PRL or any Shareholder if the Merger
shall not have been consummated on or before June 30, 1996;
provided, that the right to terminate this Agreement under this
Section 8.1.3 shall not be available to any party whose breach of
its representations and warranties in this Agreement or whose
failure to perform any of its covenants and agreements under this
Agreement has resulted in the failure of the Merger to occur on
or before such date.
8.2 Effect of Termination. In the event of a termination
of this Agreement by either PRL or Akorn as provided in Section
8.1, this Agreement shall forthwith become void and there shall
be no liability or obligation under any provisions hereof on the
part of Akorn, AMI or PRL or their respective officers, directors
or stockholders, except (a) pursuant to the covenants and
agreements contained in Section 6.3 and Section 6.4 and this
Section 8.2 and (b) to the extent that such termination results
from the willful material breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in
this Agreement, in which case the non-breaching party shall have
a right to recover its damages caused thereby.
8.3 Amendment. This Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may, in their respective sole discretion
and to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto; (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered
pursuant thereto; and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed by or on
behalf of such party.
SECTION 9
MISCELLANEOUS
9.1 Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements in this
Agreement (or in any Exhibit or Schedule hereto) or in any
instrument delivered pursuant to this Agreement shall survive the
Closing and shall not be limited or affected by any investigation
by or on behalf of any party hereto.
9.2 Notices. All notices hereunder must be in writing and
shall be deemed to have given upon receipt of delivery by: (a)
personal delivery to the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally recognized overnight courier service (against a
receipt therefor) or (d) facsimile transmission with confirmation
of receipt. All such notices must be addressed as follows or
such other address as to which any party hereto may have notified
the other in writing:
If to Akorn or AMI, to:
100 Akorn Drive
Abita Springs, Louisiana 70420
Attention: Mr. Barry D. LeBlanc, President
Facsimile transmission No. 504-893-1257
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P.
201 St. Charles Avenue
New Orleans, Louisiana 70170-5100
Attention: Mr. Carl C. Hanemann
Facsimile transmission No. 504-582-8012
if to PRL, to:
942 Calle Negocio
Suite 150
San Clemente, CA 92673
Attention: Mr. Floyd Benjamin
Facsimile transmission No. 714-498-3613
or if to the Shareholders, to:
Floyd Benjamin
8 Greystone Way
Laguna Miguel, CA 92677
Facsimile transmission No. 714-498-3613
Tom Yankoff
31181 Casa Grande
San Juan Capistrano, CA 92675
Facsimile transmission No. 714-498-3613
David Gencarella
P. O. Box 4308
San Clemente, CA 92674
Facsimile transmission No. 714-498-3613
in each case, with a copy to:
Walsworth, Franklin, Bevins & McCall
1 City Boulevard West
Suite 308
Orange, California 92668-3604
Attention: Mr. Wayne Allen
Facsimile Transmission No. 714-634-0686
9.3 Headings; Gender. When a reference is made in this
Agreement to a section, exhibit or schedule, such reference shall
be to a section, exhibit or schedule of this Agreement unless
otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. All personal pronouns used in this Agreement shall
include the other genders, whether used in the masculine,
feminine or neuter gender, and the singular shall include the
plural and vice versa, whenever and as often as may be
appropriate.
9.4 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents, exhibits and instruments
referred to herein) (a) constitutes the entire agreement and
supersedes all prior agreements, and understandings and
communications, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to
confer upon any person other than the parties hereto any rights
or remedies hereunder.
9.5 Governing Law. Except for issues related to the
effectiveness of the Merger, which shall be governed by the
Illinois Law, this Agreement shall be governed and construed in
accordance with the laws of the State of Louisiana, without
regard to any applicable principles of conflicts of law.
9.6 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other
parties, except that AMI may assign any or all of AMI's rights,
interests and obligations hereunder to Akorn or to any wholly
owned subsidiary of Akorn. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and
assigns.
9.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by
reason of any rule of law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any
adverse manner to either party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the
extent possible, and in any case such term or provision shall be
deemed amended to the extent necessary to make it no longer
invalid, illegal or unenforceable.
9.8 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original
and all of which taken together shall constitute one and the same
document.
9.9 Exhibits and Schedules; Section Numbers. All exhibits
and schedules to this Agreement are an integral part of this
Agreement. All schedules attached to this Agreement are
initialed by the presidents of Akorn and PRL. Any schedule not
attached to this Agreement upon the execution hereof by the
parties will be initialed by the president of PRL and delivered
by PRL to Akorn promptly after the date hereof. If such schedule
is reasonably satisfactory to Akorn, the president of Akorn will
initial such schedule and deliver it to the other parties for
attachment hereto. If such schedule is not reasonably
satisfactory to Akorn, a material breach of an agreement on the
part of PRL shall be deemed to exist for purposes of Section
8.1.2.
IN WITNESS WHEREOF, Akorn, AMI and PRL and the Shareholders
have caused this Agreement to be signed themselves or by their
respective duly authorized officers as of the date first written
above.
PASADENA RESEARCH LABORATORIES, INC. AKORN, INC.
By: By:
Name:Floyd Benjamin Name:Barry D. LeBlanc
Title:President Title:President
SHAREHOLDERS: AKORN MANUFACTURING, INC.
THE BENJAMIN FAMILY TRUST
By: By:
Floyd Benjamin, Co-TrusteeName:Eric M. Wingerter
Title:Secretary and Treasurer
THE YANKOFF REVOCABLE LIVING TRUST
By:
Tom Yankoff, Co-Trustee
THE GENCARELLA REVOCABLE LIVING TRUST
By:
David Gencarella, Co-Trustee
- 1 -
CERTIFICATE OF SECRETARIES
I hereby certify that I am the duly elected Assistant
Secretary of Akorn Manufacturing, Inc., an Illinois corporation,
presently serving in such capacity, and that the foregoing
Agreement was, in the manner required by law, duly approved,
without alteration or amendment, by the holder of all of the
shares of capital stock of such corporation having voting rights
with respect thereto, such number of shares having more than the
minimum number of votes necessary to adopt such Agreement.
Dated:____________, 1996.
___________________________________
Stacey W. Goff, Assistant Secretary
I hereby certify that I am the duly elected Secretary of
Pasadena Research Laboratories, Inc., a California corporation,
presently serving in such capacity, and that the foregoing
Agreement was, in the manner required by law, duly approved,
without alteration or amendment, by the holders of 100% of the
outstanding shares of capital stock of such corporation having
voting rights with respect thereto, such shares having more than
the minimum number of votes necessary to adopt such Agreement.
Dated:____________, 1996.
___________________________________
Tom Yankoff, Secretary
EXECUTION BY CORPORATIONS
Pursuant to the Illinois Business Corporation Act and the
California Business Corporation Act, the foregoing Agreement is
hereby executed by the undersigned corporations, each acting
through their respective officers, this _____ day of
____________, 1996.
AKORN MANUFACTURING, INC.
By: ______________________________
Eric M. Wingerter
Secretary and Treasurer
PASADENA RESEARCH LABORATORIES, INC.
By: ______________________________
Floyd Benjamin, President
ACKNOWLEDGEMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned authority, personally came and
appeared Eric M. Wingerter, who, being duly sworn, declared and
acknowledged before me to be the Secretary and Treasurer of Akorn
Manufacturing, Inc., an Illinois corporation, and that in such
capacity he was duly authorized to and did execute the foregoing
Agreement on behalf of such corporation, for the purposes therein
expressed, and as his and such corporation's free act and deed.
___________________________________
Eric M. Wingerter
Sworn to and subscribed before me
this _____ day of ____________, 1996.
___________________________________
Notary Public
ACKNOWLEDGEMENT
STATE OF CALIFORNIA
COUNTY OF __________
BEFORE ME, the undersigned authority, personally came and
appeared Floyd Benjamin, who, being duly sworn, declared and
acknowledged before me to be the President of Pasadena Research
Laboratories, Inc., a California corporation, and that in such
capacity he was duly authorized to and did execute the foregoing
Agreement on behalf of such corporation, for the purposes therein
expressed, and as his and such corporation's free act and deed.
___________________________________
Floyd Benjamin
Sworn to and subscribed before me
this _____ day of ____________, 1996.
___________________________________
Notary Public
EMPLOYMENT AGREEMENT--FLOYD BENJAMIN
This Employment Agreement ("Agreement") by and between, on
the one hand, Akorn, Inc., a Louisiana corporation ("Akorn"), and
its wholly owned subsidiary, Akorn Manufacturing, Inc., an
Illinois corporation (the "Company"), and, on the other, Floyd
Benjamin (the "Employee") is dated as of May 31, 1996 (the
"Agreement Date").
WHEREAS, Akorn, the Company and the Employee are parties to
that certain Agreement and Plan of Merger dated May 7, 1996
pursuant to which Pasadena Research Laboratories, Inc. ("PRL")
merged with and into the Company (the "Merger Agreement");
WHEREAS, Employee was a shareholder of PRL and, in
connection with such merger, received consideration for his PRL
shares;
WHEREAS, the Employee was previously employed by PRL under
the terms of an employment agreement entered into between PRL and
Employee (the "PRL Employment Agreement");
WHEREAS, in connection with the Merger Agreement, Employee
and the Company desire to supersede the PRL Employment Agreement,
the Company desires to retain the services of Employee pursuant
to the terms of this Agreement and Employee desires to continue
in the service of the Company on such terms;
NOW, THEREFORE, for and in consideration of the consummation
of the transactions contemplated by the Merger Agreement, the
cancellation of the obligations and rights under the PRL
Employment Agreement, the continued employment of Employee by the
Company and the payment of wages, salary and other compensation
to Employee by the Company, the parties hereto agree as follows:
Section 1.Employment Capacity and Term
1.1 Capacity and Duties of Employee. The Employee is
employed by the Company to render services on behalf of the
Company as President, and is employed by Akorn to render services
to Akorn as Executive Vice President. In such capacity, the
Employee shall perform such duties as are assigned to the
individual holding such title by the Company's Bylaws and such
other duties as may be prescribed from time to time by the Board
of Directors of the Company (the "Board").
1.2 Employment Term. The term of this Agreement (the
"Employment Term") shall commence on the Agreement Date and shall
continue until and terminate upon the third anniversary of such
date; provided, however, that Employee's status as an employee is
subject to earlier termination to the extent provided in this
Agreement; and provided, further, that the Employment Term may be
extended by mutual written agreement of the parties.
1.3 Devotion to Responsibilities. During the Employment
Term, the Employee shall devote all of his business time to the
business of the Company and its subsidiaries and affiliated
companies, shall use his reasonable best efforts to perform
faithfully and efficiently his duties under this Agreement, and
shall not engage in or be employed by any other business;
provided, however, that nothing contained herein shall prohibit
the Employee from (a) serving as a member of the board of
directors, board of trustees or the like of any for-profit or
non-profit entity that does not compete with the Company, or
performing services of any type for any civic or community
entity, whether or not the Employee receives compensation
therefor, (b) investing his assets in such form or manner as
shall require no more than nominal services on the part of the
Employee in the operation of the business of or property in which
such investment is made, or (c) serving in various capacities
with, and attending meetings of, industry or trade groups and
associations, as long as the Employee's engaging in any
activities permitted by virtue of clauses (a), (b) and (c) above
does not materially interfere with the ability of the Employee to
perform the services and discharge the responsibilities required
of him under this Agreement. Notwithstanding clause (b) above,
during the Employment Term, the Employee shall not perform any
services for and shall not beneficially own more than 2% of the
equity interests of a business organization that competes with
the Company or its affiliates. For purposes of this paragraph,
"beneficially own" shall have the meaning given to that term in
Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Exchange Act").
Section 2.Compensation and Benefits
During the Employment Term, the Company shall provide the
Employee with the compensation and benefits described below:
2.1 Salary. Employee shall receive a salary ("Base
Salary") at the rate of $200,000 per year. Employee's Base
Salary shall be payable to the Employee at such intervals as the
salaries of other salaried employees of the Company are paid.
Any increase in Employee's Base Salary shall take effect for the
payroll period next following the date on which the condition to
such increase is met.
2.2 Bonus. (a) Employee will receive bonuses in the
following amounts: (i) for the period beginning June 1, 1996 and
ending June 30, 1997, 10% of the amount by which the Company's
pre-tax earnings during such fiscal year exceed $1,487,735 and,
if Akorn's consolidated sales and pre-tax earnings during the
fiscal year ending June 30, 1997 are at least 90% and 75% of
their budgeted amounts, respectively, 0.5% of Akorn's
consolidated pre-tax earnings during such fiscal year; (ii) for
the fiscal year ending June 30, 1998, 7.5% of the increase in the
Company's pre-tax earnings for such fiscal year compared to the
pre-tax earnings of the Company during the fiscal year ended June
30, 1997 and, if Akorn's consolidated sales and pre-tax earnings
for such fiscal year are at least 90% and 75% of their budgeted
amounts, respectively, 0.5% of Akorn's consolidated pre-tax
earnings; and (iii) if both the Company's and Akorn's
consolidated sales and pre-tax earnings for the fiscal year ended
June 30, 1999 are at least 75% and 90% of their budgeted amounts,
respectively, 1% of the Company's pre-tax earnings and 0.5% of
Akorn's consolidated pre-tax earnings during such fiscal year.
(b) Up to 50% of any bonuses paid to Employee under
the terms of this Section may be paid in options to purchase
Akorn common stock, with such options being valued at twenty-five
percent of the market price for such stock at time of issuance of
the option, as determined under Akorn's Incentive Compensation
Plan. The terms of any options granted under this Section will
be determined by the Compensation Committee of Akorn's Board of
Directors and consistent with other options contemporaneously
granted to similarly situated employees of Akorn and the Company.
2.3 Benefits. The Employee will be eligible to participate
in the receipt of options to purchase shares of Akorn common
stock under Akorn's Incentive Compensation Plan in a manner
consistent with similarly situated employees of Akorn and the
Company. The Company shall provide the Employee and, if
applicable, his family members all such (i) incentive, savings
and retirement plans, practices, policies and programs, (ii)
welfare benefit plans, practices, policies and programs and (iii)
paid vacation and other fringe benefits, plans, practices,
policies and programs as are applicable generally to other
employees of the Company and its affiliated companies as each
such plan or benefit listed in (i), (ii) and (iii) of this
Section 2.3 is described in the Company's employee manual. To
the extent not inconsistent with such plans, practices, policies
and programs, Employee will be credited with time served as an
employee of PRL.
Section 3.Termination of Employment
3.1 Death. The Employee's status as an employee shall
terminate immediately and automatically upon the Employee's death
during the Employment Term.
3.2 Disability. The Employee's status as an employee may
be terminated for "Disability" as follows:
(a) The Employee's status as an employee shall
terminate if the Employee has a disability that would entitle him
to receive benefits under the Company's long-term disability
insurance policy in effect at the time of such disability either
because he is Totally Disabled or Partially Disabled, as such
terms are defined in the Company's policy in effect as of the
Agreement Date or as similar terms are defined in any successor
policy. Any such termination shall become effective on the first
day on which the Employee is eligible to receive payments under
such policy (or on the first day that he would be so eligible, if
he had applied timely for such payments).
(b) In the event that the Company has no long-term
disability plan in effect, if (i) the Employee is rendered
incapable because of physical or mental illness of satisfactorily
discharging his duties and responsibilities under this Agreement
for a period of 90 consecutive days and (ii) a duly qualified
physician chosen by the Company so certifies in writing, the
Board shall have the power to determine that the Employee has
become disabled. If the Board makes such a determination, the
Company shall have the continuing right and option, during the
period that such disability continues, and by notice given in the
manner provided in this Agreement, to terminate the status of
Employee as an employee. Any such termination shall become
effective 30 days after such notice of termination is given,
unless within such 30-day period, the Employee becomes capable of
rendering services of the character contemplated hereby (and a
physician chosen by the Company so certifies in writing) and the
Employee in fact resumes such services.
(c) The "Disability Effective Date" shall mean the
date on which termination of employment becomes effective due to
Disability.
3.3 Cause. The Company may terminate the Employee's status
as an employee for Cause. As used herein, termination by the
Company of the Employee's status as an employee for "Cause" shall
mean termination as a result of (a) the Employee's breach of any
of the provisions of this Agreement, or (b) the willful engaging
by the Employee in misconduct injurious to the Company.
3.4 Voluntary Termination by the Parties. Either the
Company or the Employee may terminate the Employee's status as an
employee during the Employment Term for reasons other than death,
Disability or Cause, subject to compliance by the Company with
Section 4.2 and by the Employee with Section 4.3.
3.5 Notice of Termination. Any termination by the Company
for Disability or Cause shall be communicated by notice of
termination to the other party hereto given in accordance with
Section 6.2 ("Notice of Termination").
3.6 Date of Termination. "Date of Termination" means (a)
if Employee's employment is terminated by reason of his death or
Disability, the date of death of Employee or the Disability
Effective Date, as the case may be, (b) if Employee's employment
is terminated by the Company for Cause the date of delivery of
the Notice of Termination or any later date specified therein,
(which date shall not be more than 30 days after the giving of
such notice) as the case may be, (c) if the Employee's employment
is terminated by the Company prior to the end of the Employment
Term for reasons other than death, Disability or Cause, the date
on which the Company notifies the Employee of such termination
and (d) if the Employee's employment is terminated by the
Employee prior to the end of the Employment Term, the date on
which the Employee notifies the Company of such termination or
any later date specified therein, (which date shall not be more
than 30 days after the giving of such notice).
Section 4.Obligations Upon Termination
4.1 Death or Disability. If Employee's status as an
employee is terminated by reason of Employee's death or
Disability, this Agreement shall terminate without further
obligations on the part of the Company to Employee and his legal
representatives under this Agreement, other than the obligation
to make any payments due pursuant to employee benefit plans
maintained by the Company or its subsidiaries.
4.2 Termination for Cause or at End of Employment Term.
This Agreement shall terminate without further obligation to the
Employee other than obligations imposed by law and obligations
imposed pursuant to any employee benefit plan maintained by the
Company or its subsidiaries (a) at the end of the Employment
Term; (b) if the Employee's status as an employee is terminated
by the Company for Cause or (c) if the Employee terminates his
status as an employee; provided, however, that nothing in this
Section 4.2 shall relieve Employee from the obligations,
limitations and restrictions contained in Section 5 hereof.
4.3 Termination by Company for Reasons other than Death,
Disability or Cause. If the Company terminates the Employee's
status as an employee prior to the end of the Employment Term for
reasons other than death, Disability or Cause, then:
(a) within 30 days of the Date of Termination the
Company shall pay to the Employee in a lump sum an amount equal
to the Employee's Base Salary through the end of the Employment
Term had the Notice of Termination been given as of the Date of
Termination; and
(b) within 90 days of the end of the fiscal year in
which the Date of Termination occurs and within 90 days of the
end of each subsequent fiscal year, the Company shall pay the
Employee any bonus to which Employee would have been entitled
under the provisions of Section 2.2 if his status as an Employee
had not been terminated; and
(c) the Employee shall remain subject to the
obligations, limitations and restrictions contained in Section 5
hereof.
4.4 Accrued Obligations and Other Benefits. Subject to the
provisions of Section 5.3 hereof, upon termination of employment
for any reason the Employee shall be entitled to receive
promptly, and in addition to any other benefits specifically
provided, (a) the Employee's Base Salary through the Date of
Termination to the extent not theretofore paid, (b) any accrued
vacation pay, to the extent not theretofore paid, (c) any other
vested benefits the Employee is entitled to receive under any
plan or agreement of the Company and (d) any bonus not
theretofore paid which is attributable to a full fiscal year
during which Employee was employed by the Company, whether or not
Employee shall be employed as of the date of the scheduled
payment of such bonus.
4.5 Resignation as a Director. If Employee is a director
of the Company or of Akorn and his employment is terminated for
any reason other than death, the Employee shall, if requested by
the Company or Akorn, immediately resign as a director of the
Company and Akorn. If such resignation is not received when so
requested, the Employee shall forfeit any right to receive any
payments pursuant to this Agreement.
Section 5.Confidentiality and Non-Competition Agreement.
5.1 Non-disclosure of Confidential Information. Employee
acknowledges that both prior to and during the term of this
Agreement he may develop, acquire or be furnished by others
confidential proprietary information, ideas, concepts,
discoveries, marketing information or customer information (all
such information referred to hereinafter as "Confidential
Information") relating to the business interests of the Company,
Akorn, their predecessor companies, subsidiaries and affiliates
(collectively referred to hereinafter as the "Akorn Entities").
Employee recognizes that the protection of the Confidential
Information against unauthorized use and disclosure is of
critical importance to the Akorn Entities and, therefore, in
addition to other duties and obligations that may be imposed by
law, agrees:
(a) During the term of this Agreement and thereafter
Employee shall hold in a fiduciary capacity for the benefit of
the Akorn Entities all Confidential Information which shall have
been obtained by Employee during Employee's employment and shall
use such Confidential Information solely within the scope of his
employment with and for the exclusive benefit of the Akorn
Entities.
(b) During the term of this Agreement and thereafter
Employee shall not communicate, divulge or make available to any
person or entity (other than the Akorn Entities and their
authorized representatives) any such Confidential Information,
except upon the prior written authorization of the Akorn Entities
or as may be required by law or legal process, and
(c) Upon termination of this Agreement, Employee shall
deliver promptly to the Company any Confidential Information in
his possession, including any duplicates thereof and any notes or
other records Employee has prepared with respect thereto. In the
event that the provisions of any applicable law or the order of
any court would require Employee to disclose or otherwise make
available any Confidential Information, Employee shall give the
Akorn Entities prompt prior written notice of such required
disclosure and an opportunity to contest the requirement of such
disclosure or apply for a protective order with respect to such
Confidential Information by appropriate proceedings.
5.2. Covenant Not to Compete. (a) During the Employment
Term and until termination of Employee's obligations under this
Section 5.2 as provided in Section 5.5(b), Employee agrees that,
with respect to each State of the United States or other
jurisdiction, or specified portions thereof, in which the
Employee regularly (a) makes contact with customers of the Akorn
Entities (b) conducts the business of the Akorn Entities or (c)
supervises the activities of other employees of the Akorn
Entities, and in which any one of the Akorn Entities engages in
business on the Date of Termination (collectively, the "Subject
Areas"), Employee will not:
(i) Directly or indirectly, for himself or
others, own, manage, operate, control, be employed in an
executive, managerial or supervisory capacity by, or otherwise
engage or participate in or allow his skill, knowledge,
experience or reputation to be used in connection with, the
ownership, management, operation or control of, any company or
other business enterprise which is competitive to the business of
the Akorn Entities; provided, however, that nothing contained
herein shall prohibit Employee from making passive investments as
long as Employee does not beneficially own more than 2% of the
equity interests of a business enterprise which is competitive
with the Akorn Entities within any of the Subject Areas. For
purposes of this paragraph, "beneficially own" shall have the
same meaning given to that term in Rule 13d-3 under the Exchange
Act.
(ii) Call upon any customer of the Akorn
Entities for the purpose of soliciting, diverting or enticing
away the business of such person or entity, or otherwise
disrupting any previously established relationship existing
between such person or entity and the Akorn Entities;
(iii)Solicit, induce, influence or attempt to
influence any supplier, lessor, licensor, potential acquiree or
any other person who has a business relationship with the Akorn
Entities, or who on the day this Agreement terminates is engaged
in discussions or negotiations to enter into a business
relationship with the Akorn Entities, to discontinue or reduce
the extent of such relationship with the Akorn Entities;
(iv) Make contact with any of the employees
of the Akorn Entities with whom he had contact during the course
of his employment with the Akorn Entities for the purpose of
soliciting such employee for hire, whether as an employee or
independent contractor, or otherwise disrupting such employee's
relationship with the Akorn Entities; and
(v) For a period of one year from and after
this Agreement terminates, hire, on behalf of himself or any
company which is competitive with the Akorn Entities any employee
of the Akorn Entities as an employee or independent contractor,
whether or not such engagement is solicited by Employee.
(b) Employee agrees that he will from time to
time upon the request of the Akorn Entities promptly execute any
supplement, amendment, restatement or other modification of this
Section 5 as may be necessary or appropriate to correctly reflect
the jurisdictions which, at the time of such modification, should
be covered by this Section 5.
5.3. Injunctive Relief; Other Remedies.
Employee acknowledges that a breach by Employee of any
provision of this Section 5 would cause immediate and irreparable
harm to the Akorn Entities for which an adequate monetary remedy
does not exist; hence, Employee agrees that, in the event of a
breach or threatened breach by Employee of the provisions of this
Section 5 during or after the term of this Agreement, the Akorn
Entities shall be entitled to injunctive relief restraining
Employee from such violation without the necessity of proof of
actual damage or the posting of any bond, except as required by
non-waivable, applicable law. Nothing herein, however, shall be
construed as prohibiting the Akorn Entities from pursuing any
other remedy at law or in equity to which the Akorn Entities may
be entitled under applicable law in the event of a breach or
threatened breach of this Agreement by Employee, including
without limitation the recovery of damages and/or costs and
expenses, such as reasonable attorneys' fees, incurred by the
Akorn Entities as a result of any such breach. In addition to
the exercise of the foregoing remedies, the Akorn Entities shall
have the right upon the occurrence of any such breach to cancel
any unpaid compensation outstanding at the time of such
termination. In particular, Employee acknowledges that the
payments provided under Section 2 are conditioned upon Employee
fulfilling any noncompetition and nondisclosure agreements
contained in this Section 5. In the event Employee shall at any
time materially breach any noncompetition or nondisclosure
agreements contained in this Agreement, the Akorn Entities may
suspend or eliminate payments under Section 2 during the period
of such breach. Employee acknowledges that any such suspension
or elimination of payments would be an exercise of the Akorn
Entities' right to suspend or terminate its performance hereunder
upon Employee's breach of this Agreement; such suspension or
elimination of payments would not constitute, and should not be
characterized as, the imposition of liquidated damages.
5.4. Governing Law of this Section; Consent to Jurisdiction.
Any dispute regarding the reasonableness of the covenants
and agreements set forth in this Section 5, or the territorial
scope or duration thereof, or the remedies available to the Akorn
Entities upon any breach of such covenants and agreements, shall
be governed by and interpreted in accordance with the laws of the
State of the United States or other jurisdiction in which the
alleged prohibited competing activity or disclosure occurs, and,
with respect to each such dispute, the Akorn Entities and
Employee each hereby irrevocably consent to the exclusive
jurisdiction of the state and federal courts sitting in the
relevant State for resolution of such dispute, and agree to be
irrevocably bound by any judgment rendered thereby in connection
with such dispute, and further agree that service of process may
be made upon him or it in any legal proceeding relating to this
Section and/or Appendix A by any means allowed under the laws of
such jurisdiction. Each party irrevocably waives any objection
he or it may have as to the venue of any such suit, action or
proceeding brought in such a court or that such a court is an
inconvenient forum.
5.5. Term of Confidentiality and Non-Competition Agreements.
(a) Confidentiality Agreement. Employee
acknowledges that the provisions of Section 5.1 hereof shall be
binding upon Employee subsequent to the termination of the Akorn
Entities' obligations under this Agreement and shall remain
effective until such time as the Akorn Entities provide Employee
with written consent to the contrary.
(b) Non-Competition Agreement. Employee
acknowledges that his obligations under Section 5.2 hereof (the
"Obligations") shall be binding upon Employee subsequent to the
termination of the Akorn Entities' obligations under this
Agreement and shall terminate as follows:
(i) If Employee's status as an employee of
the Company is terminated for Cause by the Company or by the
Employee for reasons other than Disability, the Obligations shall
terminate on the later to occur of (A) the first anniversary of
the Date of Termination or (B) the sooner to occur of the end of
the Employment Term or the second anniversary of the Date of
Termination.
(ii) If Employee's status as an employee is
terminated by the Company prior to the third anniversary of this
Agreement for reasons other than by reason of Employee's
Disability or Cause, the Obligations shall terminate on the Date
of Termination.
(iii)If Employee's status as an employee of
PRL is terminated on the third anniversary of this Agreement and
is not renewed, the Obligations of Employee shall continue for a
period of up to one year from the end of his Employment Term if
the Company has within 15 days of the end of the Employment Term
paid to Employee in a lump sum an amount equal to the amount of
salary to which Employee would have been entitled under Section
2.1 if his employment hereunder had continued during the period
that his Obligations are to continue.
Section 6.Miscellaneous
6.1 Binding Effect.
(a) This Agreement shall be binding upon and inure to
the benefit of the Company and any of its successors or assigns.
(b) This Agreement is personal to the Employee and
shall not be assignable by the Employee without the consent of
the Company (there being no obligation to give such consent)
other than such rights or benefits as are transferred by will or
the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase, merger,
consolidation or otherwise) all or substantially all of the
assets or businesses of the Company (i) to assume unconditionally
and expressly this Agreement and (ii) to agree to perform all of
the obligations under this Agreement in the same manner and to
the same extent as would have been required of the Company had no
assignment or succession occurred, such assumption to be set
forth in a writing reasonably satisfactory to the Employee. In
the event of any such assignment or succession, the term
"Company" as used in this Agreement shall refer also to such
successor or assign.
(d) The Company shall require all entities that
control, or that after any change of control will control,
directly or indirectly, any such successor or assignee to agree
to cause to be performed all of the obligations under this
Agreement in the same manner and to the same extent as would have
been required of the Company had no assignment or succession
occurred, such agreement to be set forth in writing reasonably
satisfactory to the Employee.
6.2 Notices. All notices hereunder must be in writing and
shall be deemed to have given upon receipt of delivery by: (a)
personal delivery to the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally recognized overnight courier service with confirmation
of receipt or (d) facsimile transmission with confirmation of
receipt. All such notices must be addressed as follows or such
other address as to which any party hereto may have notified the
other in writing:
If to the Company or Akorn, to:
100 Akorn Drive
Abita Springs, Louisiana 70420
Attention: Barry D. LeBlanc, President
Facsimile transmission No. 504-893-1257
If to the Employee, to:
Floyd Benjamin
8 Greystone Way
Laguna Miguel, CA 92677
Facsimile transmission No. 714-498-3613
6.3 Entire Agreement. This Agreement constitutes the
entire understanding and agreement between the parties hereto
with respect to Employee's employment by the Company and
supersedes all prior agreements, whether or not written
including, without limitation, the PRL Employment Agreement.
6.4 Governing Law. Except as provided in Section 5.4
hereof, this Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of
Louisiana.
6.5 Withholding. The Employee agrees that the Company has
the right to withhold, from the amounts payable pursuant to this
Agreement, all amounts required to be withheld under applicable
income and/or employment tax laws, or as otherwise stated in
documents granting rights that are affected by this Agreement.
6.6 Severability. If any term or provision of this Agree-
ment or the application thereof to any person or circumstance,
shall at any time or to any extent be invalid, illegal or
unenforceable in any respect as written, Employee and the Company
intend for any court construing this Agreement to modify or limit
such provision temporally, spatially or otherwise so as to render
it valid and enforceable to the fullest extent allowed by law.
Any such provision that is not susceptible of such reformation
shall be ignored so as to not affect any other term or provision
hereof, and the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than
those as to which it is held invalid, illegal or unenforceable,
shall not be affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent
permitted by law.
6.7 Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.
6.8 Remedies Not Exclusive. No remedy specified herein
shall be deemed to be such party's exclusive remedy, and
accordingly, in addition to all of the rights and remedies
provided for in this Agreement, the parties shall have all other
rights and remedies provided to them by applicable law, rule or
regulation.
6.9 Company's Reservation of Rights. Employee acknowledges
and understands that the Employee serves at the pleasure of the
Board and that the Company has the right at any time to terminate
Employee's status as an employee of the Company, or to change or
diminish his status during the Employment Term, subject to the
rights of the Employee to claim the benefits conferred by this
Agreement.
6.10 Survival. Following the Date of Termination, each
party shall have the right to enforce all rights, and shall be
bound by all obligations, of such party that are continuing
rights and obligations under this Agreement.
6.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
6.12 Arbitration. Any controversy arising under, out of, in
connection with, or relating to, this Agreement, and any
amendment hereof, or the breach hereof or thereof, shall be
determined and settled by arbitration in San Clemente, California
or Chicago, Illinois, by an arbitrator or arbitrators mutually
agreed upon by the Company and Akorn, on the one hand and the
Employee, on the other or, if the Company, Akorn and the Employee
shall fail or be unable to so agree within ten business days
after the written request therefor, by such arbitrator or
arbitrators as may be selected in accordance with the rules of
the American Arbitration Association. Any award rendered therein
shall specify the findings of fact of the arbitrator or
arbitrators and the reasons for such award, with reference to and
reliance on relevant law. In making awards under this Section,
the arbitrator shall have the authority, in his sole discretion,
to cause the reasonable attorney's fees and costs of one party to
be assessed against and paid by the other party. Any awards
under this Section shall be final and binding on each and all of
the parties thereto and their personal representatives, and
judgment may be entered thereon in any court having jurisdiction
thereof.
IN WITNESS WHEREOF, the Company and the Employee have caused
this Agreement to be executed as of the Agreement Date.
AKORN MANUFACTURING, INC.
By: ___________________________
Eric M. Wingerter,
Secretary and Treasurer
AKORN, INC.
By: ___________________________
Barry D. LeBlanc, President
EMPLOYEE:
__________________________
Floyd Benjamin
<PAGE>
EMPLOYMENT AGREEMENT--TOM YANKOFF
This Employment Agreement ("Agreement") by and between, on
the one hand, Akorn, Inc., a Louisiana corporation ("Akorn"), and
its wholly owned subsidiary, Akorn Manufacturing, Inc., an
Illinois corporation (the "Company"), and, on the other, Tom
Yankoff (the "Employee") is dated as of May 31, 1996 (the
"Agreement Date").
WHEREAS, Akorn, the Company and the Employee are parties to
that certain Agreement and Plan of Merger dated May 7, 1996
pursuant to which Pasadena Research Laboratories, Inc. ("PRL")
merged with and into the Company (the "Merger Agreement");
WHEREAS, Employee was a shareholder of PRL and, in
connection with such merger, received consideration for his PRL
shares;
WHEREAS, the Employee was previously employed by PRL under
the terms of an employment agreement entered into between PRL and
Employee (the "PRL Employment Agreement");
WHEREAS, in connection with the Merger Agreement, Employee
and the Company desire to supersede the PRL Employment Agreement,
the Company desires to retain the services of Employee pursuant
to the terms of this Agreement and Employee desires to continue
in the service of the Company on such terms;
NOW, THEREFORE, for and in consideration of the consummation
of the transactions contemplated by the Merger Agreement, the
cancellation of the obligations and rights under the PRL
Employment Agreement, the continued employment of Employee by the
Company and the payment of wages, salary and other compensation
to Employee by the Company, the parties hereto agree as follows:
Section 1.Employment Capacity and Term
1.1 Capacity and Duties of Employee. The Employee is
employed by the Company to render services on behalf of the
Company as Vice President of Sales and Marketing. In such
capacity, the Employee shall perform such duties as are assigned
to the individual holding such title by the Company's Bylaws and
such other duties as may be prescribed from time to time by the
Board of Directors of the Company (the "Board").
1.2 Employment Term. The term of this Agreement (the
"Employment Term") shall commence on the Agreement Date and shall
continue until and terminate upon the third anniversary of such
date; provided, however, that Employee's status as an employee is
subject to earlier termination to the extent provided in this
Agreement; and provided, further, that the Employment Term may be
extended by mutual written agreement of the parties.
1.3 Devotion to Responsibilities. During the Employment
Term, the Employee shall devote all of his business time to the
business of the Company and its subsidiaries and affiliated
companies, shall use his reasonable best efforts to perform
faithfully and efficiently his duties under this Agreement, and
shall not engage in or be employed by any other business;
provided, however, that nothing contained herein shall prohibit
the Employee from (a) serving as a member of the board of
directors, board of trustees or the like of any for-profit or
non-profit entity that does not compete with the Company, or
performing services of any type for any civic or community
entity, whether or not the Employee receives compensation
therefor, (b) investing his assets in such form or manner as
shall require no more than nominal services on the part of the
Employee in the operation of the business of or property in which
such investment is made, or (c) serving in various capacities
with, and attending meetings of, industry or trade groups and
associations, as long as the Employee's engaging in any
activities permitted by virtue of clauses (a), (b) and (c) above
does not materially interfere with the ability of the Employee to
perform the services and discharge the responsibilities required
of him under this Agreement. Notwithstanding clause (b) above,
during the Employment Term, the Employee shall not perform any
services for and shall not beneficially own more than 2% of the
equity interests of a business organization that competes with
the Company or its affiliates. For purposes of this paragraph,
"beneficially own" shall have the meaning given to that term in
Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Exchange Act").
Section 2.Compensation and Benefits
During the Employment Term, the Company shall provide the
Employee with the compensation and benefits described below:
2.1 Salary. Employee shall receive a salary ("Base
Salary") at the rate of $130,000 per year. Employee's Base
Salary shall be payable to the Employee at such intervals as the
salaries of other salaried employees of the Company are paid.
Any increase in Employee's Base Salary shall take effect for the
payroll period next following the date on which the condition to
such increase is met.
2.2 Bonus. (a) Employee will receive bonuses in the
following amounts: (i) for the period beginning June 1, 1996 and
ending June 30, 1997, 10% of the amount by which the Company's
pre-tax earnings during such fiscal year exceed $1,487,735, (ii)
for the fiscal year ending June 30, 1998, 7.5% of the increase in
the Company's pre-tax earnings for such fiscal year compared to
the pre-tax earnings of the Company during the fiscal year ended
June 30, 1997; and (iii) if the Company's sales and pre-tax
earnings for the fiscal year ended June 30, 1999 are at least 75%
and 90% of their budgeted amounts, respectively, 1% of the
Company's pre-tax earnings during such fiscal year.
(b) Up to 50% of any bonuses paid to Employee under
the terms of this Section may be paid in options to purchase
Akorn common stock, with such options being valued at twenty-five
percent of the market price for such stock at time of issuance of
the option, as determined under Akorn's Incentive Compensation
Plan. The terms of any options granted under this Section will
be determined by the Compensation Committee of Akorn's Board of
Directors and consistent with other options contemporaneously
granted to similarly situated employees of Akorn and the Company.
2.3 Benefits. The Employee will be eligible to participate
in the receipt of options to purchase shares of Akorn common
stock under Akorn's Incentive Compensation Plan in a manner
consistent with similarly situated employees of Akorn and the
Company. The Company shall provide the Employee and, if
applicable, his family members all such (i) incentive, savings
and retirement plans, practices, policies and programs, (ii)
welfare benefit plans, practices, policies and programs and (iii)
paid vacation and other fringe benefits, plans, practices,
policies and programs as are applicable generally to other
employees of the Company and its affiliated companies as each
such plan or benefit listed in (i), (ii) and (iii) of this
Section 2.3 is described in the Company's employee manual. To
the extent not inconsistent with such plans, practices, policies
and programs, Employee will be credited with time served as an
employee of PRL.
2.4 Severance Benefits. If Employee's status as an Employee
hereunder is terminated by Employee after the first anniversary
of this Agreement and prior to the third anniversary of this
Agreement, the Company shall (i) pay to Employee a severance
benefit equal to 1.15 times the amount of salary that Employee
would have earned under Section 2.1 had Employee's status as an
employee hereunder continued until the earlier to occur of (A)
one year from the Date of Termination or (B) the third
anniversary of this Agreement and (ii) continue Employee as a
participant in the Company's health, life and disability
insurance programs until the earlier to occur of (A) one year
from the Date of Termination or (B) the third anniversary of this
Agreement.
Section 3.Termination of Employment
3.1 Death. The Employee's status as an employee shall
terminate immediately and automatically upon the Employee's death
during the Employment Term.
3.2 Disability. The Employee's status as an employee may
be terminated for "Disability" as follows:
(a) The Employee's status as an employee shall
terminate if the Employee has a disability that would entitle him
to receive benefits under the Company's long-term disability
insurance policy in effect at the time of such disability either
because he is Totally Disabled or Partially Disabled, as such
terms are defined in the Company's policy in effect as of the
Agreement Date or as similar terms are defined in any successor
policy. Any such termination shall become effective on the first
day on which the Employee is eligible to receive payments under
such policy (or on the first day that he would be so eligible, if
he had applied timely for such payments).
(b) In the event that the Company has no long-term
disability plan in effect, if (i) the Employee is rendered
incapable because of physical or mental illness of satisfactorily
discharging his duties and responsibilities under this Agreement
for a period of 90 consecutive days and (ii) a duly qualified
physician chosen by the Company so certifies in writing, the
Board shall have the power to determine that the Employee has
become disabled. If the Board makes such a determination, the
Company shall have the continuing right and option, during the
period that such disability continues, and by notice given in the
manner provided in this Agreement, to terminate the status of
Employee as an employee. Any such termination shall become
effective 30 days after such notice of termination is given,
unless within such 30-day period, the Employee becomes capable of
rendering services of the character contemplated hereby (and a
physician chosen by the Company so certifies in writing) and the
Employee in fact resumes such services.
(c) The "Disability Effective Date" shall mean the
date on which termination of employment becomes effective due to
Disability.
3.3 Cause. The Company may terminate the Employee's status
as an employee for Cause. As used herein, termination by the
Company of the Employee's status as an employee for "Cause" shall
mean termination as a result of (a) the Employee's breach of any
of the provisions of this Agreement, or (b) the willful engaging
by the Employee in misconduct injurious to the Company.
3.4 Voluntary Termination by the Parties. Either the
Company or the Employee may terminate the Employee's status as an
employee during the Employment Term for reasons other than death,
Disability or Cause, subject to compliance by the Company with
Section 4.2 and by the Employee with Section 4.3.
3.5 Notice of Termination. Any termination by the Company
for Disability or Cause shall be communicated by notice of
termination to the other party hereto given in accordance with
Section 6.2 ("Notice of Termination").
3.6 Date of Termination. "Date of Termination" means (a)
if Employee's employment is terminated by reason of his death or
Disability, the date of death of Employee or the Disability
Effective Date, as the case may be, (b) if Employee's employment
is terminated by the Company for Cause the date of delivery of
the Notice of Termination or any later date specified therein,
(which date shall not be more than 30 days after the giving of
such notice) as the case may be, (c) if the Employee's employment
is terminated by the Company prior to the end of the Employment
Term for reasons other than death, Disability or Cause, the date
on which the Company notifies the Employee of such termination
and (d) if the Employee's employment is terminated by the
Employee prior to the end of the Employment Term, the date on
which the Employee notifies the Company of such termination or
any later date specified therein, (which date shall not be more
than 30 days after the giving of such notice).
Section 4.Obligations Upon Termination
4.1 Death or Disability. If Employee's status as an
employee is terminated by reason of Employee's death or
Disability, this Agreement shall terminate without further
obligations on the part of the Company to Employee and his legal
representatives under this Agreement, other than the obligation
to make any payments due pursuant to employee benefit plans
maintained by the Company or its subsidiaries.
4.2 Termination for Cause or at End of Employment Term.
This Agreement shall terminate without further obligation to the
Employee other than obligations imposed by law and obligations
imposed pursuant to any employee benefit plan maintained by the
Company or its subsidiaries (a) at the end of the Employment
Term; (b) if the Employee's status as an employee is terminated
by the Company for Cause or (c) if the Employee terminates his
status as an employee; provided, however, that nothing in this
Section 4.2 shall relieve Employee from the obligations,
limitations and restrictions contained in Section 5 hereof.
4.3 Termination by Company for Reasons other than Death,
Disability or Cause. If the Company terminates the Employee's
status as an employee prior to the end of the Employment Term for
reasons other than death, Disability or Cause, then:
(a) within 30 days of the Date of Termination the
Company shall pay to the Employee in a lump sum an amount equal
to the Employee's Base Salary through the end of the Employment
Term had the Notice of Termination been given as of the Date of
Termination; and
(b) within 90 days of the end of the fiscal year in
which the Date of Termination occurs and within 90 days of the
end of each subsequent fiscal year, the Company shall pay the
Employee any bonus to which Employee would have been entitled
under the provisions of Section 2.2 if his status as an Employee
had not been terminated; and
(c) the Employee shall remain subject to the
obligations, limitations and restrictions contained in Section 5
hereof.
4.4 Accrued Obligations and Other Benefits. Subject to the
provisions of Section 5.3 hereof, upon termination of employment
for any reason the Employee shall be entitled to receive
promptly, and in addition to any other benefits specifically
provided, (a) the Employee's Base Salary through the Date of
Termination to the extent not theretofore paid, (b) any accrued
vacation pay, to the extent not theretofore paid, (c) any other
vested benefits the Employee is entitled to receive under any
plan or agreement of the Company and (d) any bonus not
theretofore paid which is attributable to a full fiscal year
during which Employee was employed by the Company, whether or not
Employee shall be employed as of the date of the scheduled
payment of such bonus.
Section 5.Confidentiality and Non-Competition Agreement.
5.1 Non-disclosure of Confidential Information. Employee
acknowledges that both prior to and during the term of this
Agreement he may develop, acquire or be furnished by others
confidential proprietary information, ideas, concepts,
discoveries, marketing information or customer information (all
such information referred to hereinafter as "Confidential
Information") relating to the business interests of the Company,
Akorn, their predecessor companies, subsidiaries and affiliates
(collectively referred to hereinafter as the "Akorn Entities").
Employee recognizes that the protection of the Confidential
Information against unauthorized use and disclosure is of
critical importance to the Akorn Entities and, therefore, in
addition to other duties and obligations that may be imposed by
law, agrees:
(a) During the term of this Agreement and thereafter
Employee shall hold in a fiduciary capacity for the benefit of
the Akorn Entities all Confidential Information which shall have
been obtained by Employee during Employee's employment and shall
use such Confidential Information solely within the scope of his
employment with and for the exclusive benefit of the Akorn
Entities.
(b) During the term of this Agreement and thereafter
Employee shall not communicate, divulge or make available to any
person or entity (other than the Akorn Entities and their
authorized representatives) any such Confidential Information,
except upon the prior written authorization of the Akorn Entities
or as may be required by law or legal process, and
(c) Upon termination of this Agreement, Employee shall
deliver promptly to the Company any Confidential Information in
his possession, including any duplicates thereof and any notes or
other records Employee has prepared with respect thereto. In the
event that the provisions of any applicable law or the order of
any court would require Employee to disclose or otherwise make
available any Confidential Information, Employee shall give the
Akorn Entities prompt prior written notice of such required
disclosure and an opportunity to contest the requirement of such
disclosure or apply for a protective order with respect to such
Confidential Information by appropriate proceedings.
5.2. Covenant Not to Compete. (a) During the Employment
Term and until termination of Employee's obligations under this
Section 5.2 as provided in Section 5.5(b), Employee agrees that,
with respect to each State of the United States or other
jurisdiction, or specified portions thereof, in which the
Employee regularly (a) makes contact with customers of the Akorn
Entities (b) conducts the business of the Akorn Entities or (c)
supervises the activities of other employees of the Akorn
Entities, and in which any one of the Akorn Entities engages in
business on the Date of Termination (collectively, the "Subject
Areas"), Employee will not:
(i) Directly or indirectly, for himself or
others, own, manage, operate, control, be employed in an
executive, managerial or supervisory capacity by, or otherwise
engage or participate in or allow his skill, knowledge,
experience or reputation to be used in connection with, the
ownership, management, operation or control of, any company or
other business enterprise which is competitive to the business of
the Akorn Entities; provided, however, that nothing contained
herein shall prohibit Employee from making passive investments as
long as Employee does not beneficially own more than 2% of the
equity interests of a business enterprise which is competitive
with the Akorn Entities within any of the Subject Areas. For
purposes of this paragraph, "beneficially own" shall have the
same meaning given to that term in Rule 13d-3 under the Exchange
Act.
(ii) Call upon any customer of the Akorn
Entities for the purpose of soliciting, diverting or enticing
away the business of such person or entity, or otherwise
disrupting any previously established relationship existing
between such person or entity and the Akorn Entities;
(iii)Solicit, induce, influence or attempt to
influence any supplier, lessor, licensor, potential acquiree or
any other person who has a business relationship with the Akorn
Entities, or who on the day this Agreement terminates is engaged
in discussions or negotiations to enter into a business
relationship with the Akorn Entities, to discontinue or reduce
the extent of such relationship with the Akorn Entities;
(iv) Make contact with any of the employees
of the Akorn Entities with whom he had contact during the course
of his employment with the Akorn Entities for the purpose of
soliciting such employee for hire, whether as an employee or
independent contractor, or otherwise disrupting such employee's
relationship with the Akorn Entities; and
(v) For a period of one year from and after
this Agreement terminates, hire, on behalf of himself or any
company which is competitive with the Akorn Entities any employee
of the Akorn Entities as an employee or independent contractor,
whether or not such engagement is solicited by Employee.
(b) Employee agrees that he will from time to
time upon the request of the Akorn Entities promptly execute any
supplement, amendment, restatement or other modification of this
Section 5 as may be necessary or appropriate to correctly reflect
the jurisdictions which, at the time of such modification, should
be covered by this Section 5.
5.3. Injunctive Relief; Other Remedies.
Employee acknowledges that a breach by Employee of any
provision of this Section 5 would cause immediate and irreparable
harm to the Akorn Entities for which an adequate monetary remedy
does not exist; hence, Employee agrees that, in the event of a
breach or threatened breach by Employee of the provisions of this
Section 5 during or after the term of this Agreement, the Akorn
Entities shall be entitled to injunctive relief restraining
Employee from such violation without the necessity of proof of
actual damage or the posting of any bond, except as required by
non-waivable, applicable law. Nothing herein, however, shall be
construed as prohibiting the Akorn Entities from pursuing any
other remedy at law or in equity to which the Akorn Entities may
be entitled under applicable law in the event of a breach or
threatened breach of this Agreement by Employee, including
without limitation the recovery of damages and/or costs and
expenses, such as reasonable attorneys' fees, incurred by the
Akorn Entities as a result of any such breach. In addition to
the exercise of the foregoing remedies, the Akorn Entities shall
have the right upon the occurrence of any such breach to cancel
any unpaid compensation outstanding at the time of such
termination. In particular, Employee acknowledges that the
payments provided under Section 2 are conditioned upon Employee
fulfilling any noncompetition and nondisclosure agreements
contained in this Section 5. In the event Employee shall at any
time materially breach any noncompetition or nondisclosure
agreements contained in this Agreement, the Akorn Entities may
suspend or eliminate payments under Section 2 during the period
of such breach. Employee acknowledges that any such suspension
or elimination of payments would be an exercise of the Akorn
Entities' right to suspend or terminate its performance hereunder
upon Employee's breach of this Agreement; such suspension or
elimination of payments would not constitute, and should not be
characterized as, the imposition of liquidated damages.
5.4. Governing Law of this Section; Consent to Jurisdiction.
Any dispute regarding the reasonableness of the covenants
and agreements set forth in this Section 5, or the territorial
scope or duration thereof, or the remedies available to the Akorn
Entities upon any breach of such covenants and agreements, shall
be governed by and interpreted in accordance with the laws of the
State of the United States or other jurisdiction in which the
alleged prohibited competing activity or disclosure occurs, and,
with respect to each such dispute, the Akorn Entities and
Employee each hereby irrevocably consent to the exclusive
jurisdiction of the state and federal courts sitting in the
relevant State for resolution of such dispute, and agree to be
irrevocably bound by any judgment rendered thereby in connection
with such dispute, and further agree that service of process may
be made upon him or it in any legal proceeding relating to this
Section and/or Appendix A by any means allowed under the laws of
such jurisdiction. Each party irrevocably waives any objection
he or it may have as to the venue of any such suit, action or
proceeding brought in such a court or that such a court is an
inconvenient forum.
5.5. Term of Confidentiality and Non-Competition Agreements.
(a) Confidentiality Agreement. Employee
acknowledges that the provisions of Section 5.1 hereof shall be
binding upon Employee subsequent to the termination of the Akorn
Entities' obligations under this Agreement and shall remain
effective until such time as the Akorn Entities provide Employee
with written consent to the contrary.
(b) Non-Competition Agreement. Employee
acknowledges that his obligations under Section 5.2 hereof (the
"Obligations") shall be binding upon Employee subsequent to the
termination of the Akorn Entities' obligations under this
Agreement and shall terminate as follows:
(i) If Employee's status as an employee of
the Company is terminated for Cause by the Company or by the
Employee for reasons other than Disability, the Obligations shall
terminate on the later to occur of (A) the first anniversary of
the Date of Termination or (B) the sooner to occur of the end of
the Employment Term or the second anniversary of the Date of
Termination.
(ii) If Employee's status as an employee is
terminated by the Company prior to the third anniversary of this
Agreement for reasons other than by reason of Employee's
Disability or Cause, the Obligations shall terminate on the Date
of Termination.
(iii)If Employee's status as an employee of
PRL is terminated on the third anniversary of this Agreement and
is not renewed, the Obligations of Employee shall continue for a
period of up to one year from the end of his Employment Term if
the Company has within 15 days of the end of the Employment Term
paid to Employee in a lump sum an amount equal to the amount of
salary to which Employee would have been entitled under Section
2.1 if his employment hereunder had continued during the period
that his Obligations are to continue.
Section 6.Miscellaneous
6.1 Binding Effect.
(a) This Agreement shall be binding upon and inure to
the benefit of the Company and any of its successors or assigns.
(b) This Agreement is personal to the Employee and
shall not be assignable by the Employee without the consent of
the Company (there being no obligation to give such consent)
other than such rights or benefits as are transferred by will or
the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase, merger,
consolidation or otherwise) all or substantially all of the
assets or businesses of the Company (i) to assume unconditionally
and expressly this Agreement and (ii) to agree to perform all of
the obligations under this Agreement in the same manner and to
the same extent as would have been required of the Company had no
assignment or succession occurred, such assumption to be set
forth in a writing reasonably satisfactory to the Employee. In
the event of any such assignment or succession, the term
"Company" as used in this Agreement shall refer also to such
successor or assign.
(d) The Company shall require all entities that
control, or that after any change of control will control,
directly or indirectly, any such successor or assignee to agree
to cause to be performed all of the obligations under this
Agreement in the same manner and to the same extent as would have
been required of the Company had no assignment or succession
occurred, such agreement to be set forth in writing reasonably
satisfactory to the Employee.
6.2 Notices. All notices hereunder must be in writing and
shall be deemed to have given upon receipt of delivery by: (a)
personal delivery to the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally recognized overnight courier service with confirmation
of receipt or (d) facsimile transmission with confirmation of
receipt. All such notices must be addressed as follows or such
other address as to which any party hereto may have notified the
other in writing:
If to the Company or Akorn, to:
100 Akorn Drive
Abita Springs, Louisiana 70420
Attention: Barry D. LeBlanc, President
Facsimile transmission No. 504-893-1257
If to the Employee, to:
Tom Yankoff
31181 Casa Grande
San Juan Capistrano, CA 92675
Facsimile transmission No. 714-498-3613
6.3 Entire Agreement. This Agreement constitutes the
entire understanding and agreement between the parties hereto
with respect to Employee's employment by the Company and
supersedes all prior agreements, whether or not written
including, without limitation, the PRL Employment Agreement.
6.4 Governing Law. Except as provided in Section 5.4
hereof, this Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of
Louisiana.
6.5 Withholding. The Employee agrees that the Company has
the right to withhold, from the amounts payable pursuant to this
Agreement, all amounts required to be withheld under applicable
income and/or employment tax laws, or as otherwise stated in
documents granting rights that are affected by this Agreement.
6.6 Severability. If any term or provision of this Agree-
ment or the application thereof to any person or circumstance,
shall at any time or to any extent be invalid, illegal or
unenforceable in any respect as written, Employee and the Company
intend for any court construing this Agreement to modify or limit
such provision temporally, spatially or otherwise so as to render
it valid and enforceable to the fullest extent allowed by law.
Any such provision that is not susceptible of such reformation
shall be ignored so as to not affect any other term or provision
hereof, and the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than
those as to which it is held invalid, illegal or unenforceable,
shall not be affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent
permitted by law.
6.7 Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.
6.8 Remedies Not Exclusive. No remedy specified herein
shall be deemed to be such party's exclusive remedy, and
accordingly, in addition to all of the rights and remedies
provided for in this Agreement, the parties shall have all other
rights and remedies provided to them by applicable law, rule or
regulation.
6.9 Company's Reservation of Rights. Employee acknowledges
and understands that the Employee serves at the pleasure of the
Board and that the Company has the right at any time to terminate
Employee's status as an employee of the Company, or to change or
diminish his status during the Employment Term, subject to the
rights of the Employee to claim the benefits conferred by this
Agreement.
6.10 Survival. Following the Date of Termination, each
party shall have the right to enforce all rights, and shall be
bound by all obligations, of such party that are continuing
rights and obligations under this Agreement.
6.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
6.12 Arbitration. Any controversy arising under, out of, in
connection with, or relating to, this Agreement, and any
amendment hereof, or the breach hereof or thereof, shall be
determined and settled by arbitration in San Clemente, California
or Chicago, Illinois, by an arbitrator or arbitrators mutually
agreed upon by the Company and the Employee or, if the Company
and the Employee shall fail or be unable to so agree within ten
business days after the written request therefor by the Company
or the Employee to the other, such arbitrator or arbitrators as
may be selected in accordance with the rules of the American
Arbitration Association. Any award rendered therein shall
specify the findings of fact of the arbitrator or arbitrators and
the reasons for such award, with reference to and reliance on
relevant law. In making awards under this Section, the
arbitrator shall have the authority, in his sole discretion, to
cause the reasonable attorney's fees and costs of one party to be
assessed against and paid by the other party. Any awards under
this Section shall be final and binding on each and all of the
parties thereto and their personal representatives, and judgment
may be entered thereon in any court having jurisdiction thereof.
IN WITNESS WHEREOF, the Company and the Employee have caused
this Agreement to be executed as of the Agreement Date.
AKORN MANUFACTURING, INC.
By: _________________________
Eric M. Wingerter,
Secretary and Treasurer
AKORN, INC.
By: __________________________
Barry D. LeBlanc, President
EMPLOYEE:
__________________________
Tom Yankoff
<PAGE>
EMPLOYMENT AGREEMENT--DAVID GENCARELLA
This Employment Agreement ("Agreement") by and between, on
the one hand, Akorn, Inc., a Louisiana corporation ("Akorn"), and
its wholly owned subsidiary, Akorn Manufacturing, Inc., an
Illinois corporation (the "Company"), and, on the other, David
Gencarella (the "Employee") is dated as of May 31, 1996 (the
"Agreement Date").
WHEREAS, Akorn, the Company and the Employee are parties to
that certain Agreement and Plan of Merger dated May 7, 1996
pursuant to which Pasadena Research Laboratories, Inc. ("PRL")
merged with and into the Company (the "Merger Agreement");
WHEREAS, Employee was a shareholder of PRL and, in
connection with such merger, received consideration for his PRL
shares;
WHEREAS, the Employee was previously employed by PRL under
the terms of an employment agreement entered into between PRL and
Employee (the "PRL Employment Agreement");
WHEREAS, in connection with the Merger Agreement, Employee
and the Company desire to supersede the PRL Employment Agreement,
the Company desires to retain the services of Employee pursuant
to the terms of this Agreement and Employee desires to continue
in the service of the Company on such terms;
NOW, THEREFORE, for and in consideration of the consummation
of the transactions contemplated by the Merger Agreement, the
cancellation of the obligations and rights under the PRL
Employment Agreement, the continued employment of Employee by the
Company and the payment of wages, salary and other compensation
to Employee by the Company, the parties hereto agree as follows:
Section 1.Employment Capacity and Term
1.1 Capacity and Duties of Employee. The Employee is
employed by the Company to render services on behalf of the
Company as Director of Business Development. In such capacity,
the Employee shall perform such duties as are assigned to the
individual holding such title by the Company's Bylaws and such
other duties as may be prescribed from time to time by the Board
of Directors of the Company (the "Board").
1.2 Employment Term. The term of this Agreement (the
"Employment Term") shall commence on the Agreement Date and shall
continue until and terminate upon the third anniversary of such
date; provided, however, that Employee's status as an employee is
subject to earlier termination to the extent provided in this
Agreement; and provided, further, that the Employment Term may be
extended by mutual written agreement of the parties.
1.3 Devotion to Responsibilities. During the Employment
Term, the Employee shall devote all of his business time to the
business of the Company and its subsidiaries and affiliated
companies, shall use his reasonable best efforts to perform
faithfully and efficiently his duties under this Agreement, and
shall not engage in or be employed by any other business;
provided, however, that nothing contained herein shall prohibit
the Employee from (a) serving as a member of the board of
directors, board of trustees or the like of any for-profit or
non-profit entity that does not compete with the Company, or
performing services of any type for any civic or community
entity, whether or not the Employee receives compensation
therefor, (b) investing his assets in such form or manner as
shall require no more than nominal services on the part of the
Employee in the operation of the business of or property in which
such investment is made, or (c) serving in various capacities
with, and attending meetings of, industry or trade groups and
associations, as long as the Employee's engaging in any
activities permitted by virtue of clauses (a), (b) and (c) above
does not materially interfere with the ability of the Employee to
perform the services and discharge the responsibilities required
of him under this Agreement. Notwithstanding clause (b) above,
during the Employment Term, the Employee shall not perform any
services for and shall not beneficially own more than 2% of the
equity interests of a business organization that competes with
the Company or its affiliates. For purposes of this paragraph,
"beneficially own" shall have the meaning given to that term in
Rule 13d-3 under the Securities Exchange Act of 1934 (the
"Exchange Act").
Section 2.Compensation and Benefits
During the Employment Term, the Company shall provide the
Employee with the compensation and benefits described below:
2.1 Salary. Employee shall receive a salary ("Base
Salary") at the rate of $110,000 per year. Employee's Base
Salary shall be payable to the Employee at such intervals as the
salaries of other salaried employees of the Company are paid.
Any increase in Employee's Base Salary shall take effect for the
payroll period next following the date on which the condition to
such increase is met.
2.2 Bonus. (a) Employee will receive bonuses in the
following amounts: (i) for the period beginning June 1, 1996 and
ending June 30, 1997, 10% of the amount by which the Company's
pre-tax earnings during such fiscal year exceed $1,487,735; (ii)
for the fiscal year ending June 30, 1998, 7.5% of the increase in
the Company's pre-tax earnings for such fiscal year compared to
the pre-tax earnings of the Company during the fiscal year ended
June 30, 1997; and (iii) if the Company's sales and pre-tax
earnings for the fiscal year ended June 30, 1999 are at least 75%
and 90% of their budgeted amounts, respectively, 1% of the
Company's pre-tax earnings during such fiscal year.
(b) Up to 50% of any bonuses paid to Employee under
the terms of this Section may be paid in options to purchase
Akorn common stock, with such options being valued at twenty-five
percent of the market price for such stock at time of issuance of
the option, as determined under Akorn's Incentive Compensation
Plan. The terms of options issued under this Section will be
determined by the Compensation Committee of Akorn's Board of
Directors and consistent with other options contemporaneously
granted to similarly situated employees of Akorn and the Company.
2.3 Benefits. The Employee will be eligible to participate
in the receipt of options to purchase shares of Akorn common
stock under Akorn's Incentive Compensation Plan in a manner
consistent with similarly situated employees of Akorn and the
Company. The Company shall provide the Employee and, if
applicable, his family members all such (i) incentive, savings
and retirement plans, practices, policies and programs, (ii)
welfare benefit plans, practices, policies and programs and (iii)
paid vacation and other fringe benefits, plans, practices,
policies and programs as are applicable generally to other
employees of the Company and its affiliated companies as each
such plan or benefit listed in (i), (ii) and (iii) of this
Section 2.3 is described in the Company's employee manual. To
the extent not inconsistent with such plans, practices, policies
and programs, Employee will be credited with time served as an
employee of PRL.
2.4 Severance Benefits. If Employee's status as an
Employee hereunder is terminated by Employee after the first
anniversary of this Agreement and prior to the third anniversary
of this Agreement, the Company shall (i) pay to Employee a
severance benefit equal to 1.15 times the amount of salary that
Employee would have earned under Section 2.1 had Employee's
status as an employee hereunder continued until the earlier to
occur of (A) one year from the Date of Termination or (B) the
third anniversary of this Agreement and (ii) continue Employee as
a participant in the Company's health, life and disability
insurance programs until the earlier to occur of (A) one year
from the Date of Termination or (B) the third anniversary of this
Agreement.
Section 3.Termination of Employment
3.1 Death. The Employee's status as an employee shall
terminate immediately and automatically upon the Employee's death
during the Employment Term.
3.2 Disability. The Employee's status as an employee may
be terminated for "Disability" as follows:
(a) The Employee's status as an employee shall
terminate if the Employee has a disability that would entitle him
to receive benefits under the Company's long-term disability
insurance policy in effect at the time of such disability either
because he is Totally Disabled or Partially Disabled, as such
terms are defined in the Company's policy in effect as of the
Agreement Date or as similar terms are defined in any successor
policy. Any such termination shall become effective on the first
day on which the Employee is eligible to receive payments under
such policy (or on the first day that he would be so eligible, if
he had applied timely for such payments).
(b) In the event that the Company has no long-term
disability plan in effect, if (i) the Employee is rendered
incapable because of physical or mental illness of satisfactorily
discharging his duties and responsibilities under this Agreement
for a period of 90 consecutive days and (ii) a duly qualified
physician chosen by the Company so certifies in writing, the
Board shall have the power to determine that the Employee has
become disabled. If the Board makes such a determination, the
Company shall have the continuing right and option, during the
period that such disability continues, and by notice given in the
manner provided in this Agreement, to terminate the status of
Employee as an employee. Any such termination shall become
effective 30 days after such notice of termination is given,
unless within such 30-day period, the Employee becomes capable of
rendering services of the character contemplated hereby (and a
physician chosen by the Company so certifies in writing) and the
Employee in fact resumes such services.
(c) The "Disability Effective Date" shall mean the
date on which termination of employment becomes effective due to
Disability.
3.3 Cause. The Company may terminate the Employee's status
as an employee for Cause. As used herein, termination by the
Company of the Employee's status as an employee for "Cause" shall
mean termination as a result of (a) the Employee's breach of any
of the provisions of this Agreement, or (b) the willful engaging
by the Employee in misconduct injurious to the Company.
3.4 Voluntary Termination by the Parties. Either the
Company or the Employee may terminate the Employee's status as an
employee during the Employment Term for reasons other than death,
Disability or Cause, subject to compliance by the Company with
Section 4.2 and by the Employee with Section 4.3.
3.5 Notice of Termination. Any termination by the Company
for Disability or Cause shall be communicated by notice of
termination to the other party hereto given in accordance with
Section 6.2 ("Notice of Termination").
3.6 Date of Termination. "Date of Termination" means (a)
if Employee's employment is terminated by reason of his death or
Disability, the date of death of Employee or the Disability
Effective Date, as the case may be, (b) if Employee's employment
is terminated by the Company for Cause the date of delivery of
the Notice of Termination or any later date specified therein,
(which date shall not be more than 30 days after the giving of
such notice) as the case may be, (c) if the Employee's employment
is terminated by the Company prior to the end of the Employment
Term for reasons other than death, Disability or Cause, the date
on which the Company notifies the Employee of such termination
and (d) if the Employee's employment is terminated by the
Employee prior to the end of the Employment Term, the date on
which the Employee notifies the Company of such termination or
any later date specified therein, (which date shall not be more
than 30 days after the giving of such notice).
Section 4.Obligations Upon Termination
4.1 Death or Disability. If Employee's status as an
employee is terminated by reason of Employee's death or
Disability, this Agreement shall terminate without further
obligations on the part of the Company to Employee and his legal
representatives under this Agreement, other than the obligation
to make any payments due pursuant to employee benefit plans
maintained by the Company or its subsidiaries.
4.2 Termination for Cause or at End of Employment Term.
This Agreement shall terminate without further obligation to the
Employee other than obligations imposed by law and obligations
imposed pursuant to any employee benefit plan maintained by the
Company or its subsidiaries (a) at the end of the Employment
Term; (b) if the Employee's status as an employee is terminated
by the Company for Cause or (c) if the Employee terminates his
status as an employee; provided, however, that nothing in this
Section 4.2 shall relieve Employee from the obligations,
limitations and restrictions contained in Section 5 hereof.
4.3 Termination by Company for Reasons other than Death,
Disability or Cause. If the Company terminates the Employee's
status as an employee prior to the end of the Employment Term for
reasons other than death, Disability or Cause, then:
(a) within 30 days of the Date of Termination the
Company shall pay to the Employee in a lump sum an amount equal
to the Employee's Base Salary through the end of the Employment
Term had the Notice of Termination been given as of the Date of
Termination; and
(b) within 90 days of the end of the fiscal year in
which the Date of Termination occurs and within 90 days of the
end of each subsequent fiscal year, the Company shall pay the
Employee any bonus to which Employee would have been entitled
under the provisions of Section 2.2 if his status as an Employee
had not been terminated; and
(c) the Employee shall remain subject to the
obligations, limitations and restrictions contained in Section 5
hereof.
4.4 Accrued Obligations and Other Benefits. Subject to the
provisions of Section 5.3 hereof, upon termination of employment
for any reason the Employee shall be entitled to receive
promptly, and in addition to any other benefits specifically
provided, (a) the Employee's Base Salary through the Date of
Termination to the extent not theretofore paid, (b) any accrued
vacation pay, to the extent not theretofore paid, (c) any other
vested benefits the Employee is entitled to receive under any
plan or agreement of the Company and (d) any bonus not
theretofore paid which is attributable to a full fiscal year
during which Employee was employed by the Company, whether or not
Employee shall be employed as of the date of the scheduled
payment of such bonus.
Section 5.Confidentiality and Non-Competition Agreement.
5.1 Non-disclosure of Confidential Information. Employee
acknowledges that both prior to and during the term of this
Agreement he may develop, acquire or be furnished by others
confidential proprietary information, ideas, concepts,
discoveries, marketing information or customer information (all
such information referred to hereinafter as "Confidential
Information") relating to the business interests of the Company,
Akorn, their predecessor companies, subsidiaries and affiliates
(collectively referred to hereinafter as the "Akorn Entities").
Employee recognizes that the protection of the Confidential
Information against unauthorized use and disclosure is of
critical importance to the Akorn Entities and, therefore, in
addition to other duties and obligations that may be imposed by
law, agrees:
(a) During the term of this Agreement and thereafter
Employee shall hold in a fiduciary capacity for the benefit of
the Akorn Entities all Confidential Information which shall have
been obtained by Employee during Employee's employment and shall
use such Confidential Information solely within the scope of his
employment with and for the exclusive benefit of the Akorn
Entities.
(b) During the term of this Agreement and thereafter
Employee shall not communicate, divulge or make available to any
person or entity (other than the Akorn Entities and their
authorized representatives) any such Confidential Information,
except upon the prior written authorization of the Akorn Entities
or as may be required by law or legal process, and
(c) Upon termination of this Agreement, Employee shall
deliver promptly to the Company any Confidential Information in
his possession, including any duplicates thereof and any notes or
other records Employee has prepared with respect thereto. In the
event that the provisions of any applicable law or the order of
any court would require Employee to disclose or otherwise make
available any Confidential Information, Employee shall give the
Akorn Entities prompt prior written notice of such required
disclosure and an opportunity to contest the requirement of such
disclosure or apply for a protective order with respect to such
Confidential Information by appropriate proceedings.
5.2. Covenant Not to Compete. (a) During the Employment
Term and until termination of Employee's obligations under this
Section 5.2 as provided in Section 5.5(b), Employee agrees that,
with respect to each State of the United States or other
jurisdiction, or specified portions thereof, in which the
Employee regularly (a) makes contact with customers of the Akorn
Entities (b) conducts the business of the Akorn Entities or (c)
supervises the activities of other employees of the Akorn
Entities, and in which any one of the Akorn Entities engages in
business on the Date of Termination (collectively, the "Subject
Areas"), Employee will not:
(i) Directly or indirectly, for himself or
others, own, manage, operate, control, be employed in an
executive, managerial or supervisory capacity by, or otherwise
engage or participate in or allow his skill, knowledge,
experience or reputation to be used in connection with, the
ownership, management, operation or control of, any company or
other business enterprise which is competitive to the business of
the Akorn Entities; provided, however, that nothing contained
herein shall prohibit Employee from making passive investments as
long as Employee does not beneficially own more than 2% of the
equity interests of a business enterprise which is competitive
with the Akorn Entities within any of the Subject Areas. For
purposes of this paragraph, "beneficially own" shall have the
same meaning given to that term in Rule 13d-3 under the Exchange
Act.
(ii) Call upon any customer of the Akorn
Entities for the purpose of soliciting, diverting or enticing
away the business of such person or entity, or otherwise
disrupting any previously established relationship existing
between such person or entity and the Akorn Entities;
(iii)Solicit, induce, influence or attempt to
influence any supplier, lessor, licensor, potential acquiree or
any other person who has a business relationship with the Akorn
Entities, or who on the day this Agreement terminates is engaged
in discussions or negotiations to enter into a business
relationship with the Akorn Entities, to discontinue or reduce
the extent of such relationship with the Akorn Entities;
(iv) Make contact with any of the employees
of the Akorn Entities with whom he had contact during the course
of his employment with the Akorn Entities for the purpose of
soliciting such employee for hire, whether as an employee or
independent contractor, or otherwise disrupting such employee's
relationship with the Akorn Entities; and
(v) For a period of one year from and after
this Agreement terminates, hire, on behalf of himself or any
company which is competitive with the Akorn Entities any employee
of the Akorn Entities as an employee or independent contractor,
whether or not such engagement is solicited by Employee.
(b) Employee agrees that he will from time to
time upon the request of the Akorn Entities promptly execute any
supplement, amendment, restatement or other modification of this
Section 5 as may be necessary or appropriate to correctly reflect
the jurisdictions which, at the time of such modification, should
be covered by this Section 5.
5.3. Injunctive Relief; Other Remedies.
Employee acknowledges that a breach by Employee of any
provision of this Section 5 would cause immediate and irreparable
harm to the Akorn Entities for which an adequate monetary remedy
does not exist; hence, Employee agrees that, in the event of a
breach or threatened breach by Employee of the provisions of this
Section 5 during or after the term of this Agreement, the Akorn
Entities shall be entitled to injunctive relief restraining
Employee from such violation without the necessity of proof of
actual damage or the posting of any bond, except as required by
non-waivable, applicable law. Nothing herein, however, shall be
construed as prohibiting the Akorn Entities from pursuing any
other remedy at law or in equity to which the Akorn Entities may
be entitled under applicable law in the event of a breach or
threatened breach of this Agreement by Employee, including
without limitation the recovery of damages and/or costs and
expenses, such as reasonable attorneys' fees, incurred by the
Akorn Entities as a result of any such breach. In addition to
the exercise of the foregoing remedies, the Akorn Entities shall
have the right upon the occurrence of any such breach to cancel
any unpaid compensation outstanding at the time of such
termination. In particular, Employee acknowledges that the
payments provided under Section 2 are conditioned upon Employee
fulfilling any noncompetition and nondisclosure agreements
contained in this Section 5. In the event Employee shall at any
time materially breach any noncompetition or nondisclosure
agreements contained in this Agreement, the Akorn Entities may
suspend or eliminate payments under Section 2 during the period
of such breach. Employee acknowledges that any such suspension
or elimination of payments would be an exercise of the Akorn
Entities' right to suspend or terminate its performance hereunder
upon Employee's breach of this Agreement; such suspension or
elimination of payments would not constitute, and should not be
characterized as, the imposition of liquidated damages.
5.4. Governing Law of this Section; Consent to Jurisdiction.
Any dispute regarding the reasonableness of the covenants
and agreements set forth in this Section 5, or the territorial
scope or duration thereof, or the remedies available to the Akorn
Entities upon any breach of such covenants and agreements, shall
be governed by and interpreted in accordance with the laws of the
State of the United States or other jurisdiction in which the
alleged prohibited competing activity or disclosure occurs, and,
with respect to each such dispute, the Akorn Entities and
Employee each hereby irrevocably consent to the exclusive
jurisdiction of the state and federal courts sitting in the
relevant State for resolution of such dispute, and agree to be
irrevocably bound by any judgment rendered thereby in connection
with such dispute, and further agree that service of process may
be made upon him or it in any legal proceeding relating to this
Section and/or Appendix A by any means allowed under the laws of
such jurisdiction. Each party irrevocably waives any objection
he or it may have as to the venue of any such suit, action or
proceeding brought in such a court or that such a court is an
inconvenient forum.
5.5. Term of Confidentiality and Non-Competition Agreements.
(a) Confidentiality Agreement. Employee
acknowledges that the provisions of Section 5.1 hereof shall be
binding upon Employee subsequent to the termination of the Akorn
Entities' obligations under this Agreement and shall remain
effective until such time as the Akorn Entities provide Employee
with written consent to the contrary.
(b) Non-Competition Agreement. Employee
acknowledges that his obligations under Section 5.2 hereof (the
"Obligations") shall be binding upon Employee subsequent to the
termination of the Akorn Entities' obligations under this
Agreement and shall terminate as follows:
(i) If Employee's status as an employee of
the Company is terminated for Cause by the Company or by the
Employee for reasons other than Disability, the Obligations shall
terminate on the later to occur of (A) the first anniversary of
the Date of Termination or (B) the sooner to occur of the end of
the Employment Term or the second anniversary of the Date of
Termination.
(ii) If Employee's status as an employee is
terminated by the Company prior to the third anniversary of this
Agreement for reasons other than by reason of Employee's
Disability or Cause, the Obligations shall terminate on the Date
of Termination.
(iii)If Employee's status as an employee of
PRL is terminated on the third anniversary of this Agreement and
is not renewed, the Obligations of Employee shall continue for a
period of up to one year from the end of his Employment Term if
the Company has within 15 days of the end of the Employment Term
paid to Employee in a lump sum an amount equal to the amount of
salary to which Employee would have been entitled under Section
2.1 if his employment hereunder had continued during the period
that his Obligations are to continue.
Section 6.Miscellaneous
6.1 Binding Effect.
(a) This Agreement shall be binding upon and inure to
the benefit of the Company and any of its successors or assigns.
(b) This Agreement is personal to the Employee and
shall not be assignable by the Employee without the consent of
the Company (there being no obligation to give such consent)
other than such rights or benefits as are transferred by will or
the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase, merger,
consolidation or otherwise) all or substantially all of the
assets or businesses of the Company (i) to assume unconditionally
and expressly this Agreement and (ii) to agree to perform all of
the obligations under this Agreement in the same manner and to
the same extent as would have been required of the Company had no
assignment or succession occurred, such assumption to be set
forth in a writing reasonably satisfactory to the Employee. In
the event of any such assignment or succession, the term
"Company" as used in this Agreement shall refer also to such
successor or assign.
(d) The Company shall require all entities that
control, or that after any change of control will control,
directly or indirectly, any such successor or assignee to agree
to cause to be performed all of the obligations under this
Agreement in the same manner and to the same extent as would have
been required of the Company had no assignment or succession
occurred, such agreement to be set forth in writing reasonably
satisfactory to the Employee.
6.2 Notices. All notices hereunder must be in writing and
shall be deemed to have given upon receipt of delivery by: (a)
personal delivery to the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally recognized overnight courier service with confirmation
of receipt or (d) facsimile transmission with confirmation of
receipt. All such notices must be addressed as follows or such
other address as to which any party hereto may have notified the
other in writing:
If to the Company or Akorn, to:
100 Akorn Drive
Abita Springs, Louisiana 70420
Attention: Barry D. LeBlanc, President
Facsimile transmission No. 504-893-1257
If to the Employee, to:
David Gencarella
P. O. Box 4308
San Clemente, CA 92674
Facsimile transmission No. 714-498-3613
6.3 Entire Agreement. This Agreement constitutes the
entire understanding and agreement between the parties hereto
with respect to Employee's employment by the Company and
supersedes all prior agreements, whether or not written
including, without limitation, the PRL Employment Agreement.
6.4 Governing Law. Except as provided in Section 5.4
hereof, this Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the State of
Louisiana.
6.5 Withholding. The Employee agrees that the Company has
the right to withhold, from the amounts payable pursuant to this
Agreement, all amounts required to be withheld under applicable
income and/or employment tax laws, or as otherwise stated in
documents granting rights that are affected by this Agreement.
6.6 Severability. If any term or provision of this Agree-
ment or the application thereof to any person or circumstance,
shall at any time or to any extent be invalid, illegal or
unenforceable in any respect as written, Employee and the Company
intend for any court construing this Agreement to modify or limit
such provision temporally, spatially or otherwise so as to render
it valid and enforceable to the fullest extent allowed by law.
Any such provision that is not susceptible of such reformation
shall be ignored so as to not affect any other term or provision
hereof, and the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than
those as to which it is held invalid, illegal or unenforceable,
shall not be affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent
permitted by law.
6.7 Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.
6.8 Remedies Not Exclusive. No remedy specified herein
shall be deemed to be such party's exclusive remedy, and
accordingly, in addition to all of the rights and remedies
provided for in this Agreement, the parties shall have all other
rights and remedies provided to them by applicable law, rule or
regulation.
6.9 Company's Reservation of Rights. Employee acknowledges
and understands that the Employee serves at the pleasure of the
Board and that the Company has the right at any time to terminate
Employee's status as an employee of the Company, or to change or
diminish his status during the Employment Term, subject to the
rights of the Employee to claim the benefits conferred by this
Agreement.
6.10 Survival. Following the Date of Termination, each
party shall have the right to enforce all rights, and shall be
bound by all obligations, of such party that are continuing
rights and obligations under this Agreement.
6.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
6.12 Arbitration. Any controversy arising under, out of, in
connection with, or relating to, this Agreement, and any
amendment hereof, or the breach hereof or thereof, shall be
determined and settled by arbitration in San Clemente, California
or Chicago, Illinois, by an arbitrator or arbitrators mutually
agreed upon by the Company and the Employee or, if the Company
and the Employee shall fail or be unable to so agree within ten
business days after the written request therefor by the Company
or the Employee to the other, such arbitrator or arbitrators as
may be selected in accordance with the rules of the American
Arbitration Association. Any award rendered therein shall
specify the findings of fact of the arbitrator or arbitrators and
the reasons for such award, with reference to and reliance on
relevant law. In making awards under this Section, the
arbitrator shall have the authority, in his sole discretion, to
cause the reasonable attorney's fees and costs of one party to be
assessed against and paid by the other party. Any awards under
this Section shall be final and binding on each and all of the
parties thereto and their personal representatives, and judgment
may be entered thereon in any court having jurisdiction thereof.
6.13 Indemnification. The Corporation shall indemnify and
hold Employee harmless against judgments, fines, damages, amounts
paid in settlement and reasonable attorney's fee and costs
incurred by the Employee, in connection with the defense of or as
a result of any action or proceeding (or appeal of any action or
proceeding or any investigation which might result in any such
action or proceeding) in which the Employee is made or is
threatened to be made party by reason of actions taken by him
after the Effective Time that are within the scope of his
expressly authorized duties as a director, officer or employee of
the Corporation or any of its subsidiaries or affiliates. The
Corporation will pay the reasonable costs and expenses in
defending any such action or proceeding as such costs and
expenses are incurred. No indemnification shall be payable
hereunder with respect to negligent action or inaction or
intentional misdeeds of Employee and Employee shall reimburse the
Corporation for any amounts paid hereunder as a result thereof.
IN WITNESS WHEREOF, the Company and the Employee have caused
this Agreement to be executed as of the Agreement Date.
AKORN MANUFACTURING, INC.
By: _______________________
Eric M. Wingerter,
Secretary and Treasurer
AKORN, INC.
By: ___________________________
Barry D. LeBlanc, President
EMPLOYEE:
__________________________
David Gencarella
AT AKORN: AT FRB:
Eric Wingerter Jack Quenney Kathy Brunson
VP-Finance & General Information Analyst
Administration (312) 640-6726 Contact
(504) 893-9300 (312) 640-6696
FOR IMMEDIATE RELEASE
WEDNESDAY, JUNE 5, 1996
AKORN COMPLETES ACQUISITION OF INJECTABLE DISTRIBUTOR
ABITA SPRINGS, LA, JUNE 5, 1996 --- Akorn, Inc. (Nasdaq: AKRN)
today announced it has finalized the acquisition of Pasadena
Research Laboratories, Inc. ("PRL"), a specialized distributor of
injectable products based in southern California. As previously
disclosed, Akorn issued 1.4 million shares of its common stock,
in exchange for all of the outstanding shares of PRL, in a
pooling-of-interests transaction. The merger between Akorn's
injectable subsidiary, Akorn Manufacturing, Inc. and PRL, creates
an injectable division with approximately $13-$14 million in
sales.
Akorn, Inc. manufactures sterile ophthalmic and injectable
pharmaceuticals, and markets and distributes an extensive line of
ophthalmic products.
For additional information about Akorn, Inc. free of charge via
fax,
dial 1-800-PRO-INFO and enter "AKRN."
AT AKORN: AT FRB:
Eric Wingerter Jack Quenney Kathy Brunson
VP-Finance & General Information Analyst
Administration (312) 640-6726 Contact
(504) 893-9300 (312) 640-6696
FOR IMMEDIATE RELEASE
THURSDAY, JUNE 13, 1996
BARRY D. LEBLANC, PRESIDENT OF AKORN'S OPHTHALMIC DIVISION
RESIGNS
ABITA SPRINGS, LA, JUNE 13, 1996 --- Akorn, Inc. (Nasdaq: AKRN)
today announced that Barry D. LeBlanc, president of the newly
formed ophthalmic division has resigned for personal reasons. He
also resigned from his position as a director of the company.
Mr. LeBlanc will assist the company for a limited period during
the transition. John Kapoor, who had added CEO responsibilities
to his role as chairman, will assume the responsibilities of the
ophthalmic division.
Akorn, Inc. manufactures sterile ophthalmic and injectable
pharmaceuticals, and markets and distributes an extensive line of
ophthalmic products.
For additional information about Akorn, Inc. free of charge via
fax,
dial 1-800-PRO-INFO and enter "AKRN."
