SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. - )
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Check the appropriate box:
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[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Akorn, Inc.
(Name of Registrant as Specified In Its Charter)
Board of Directors of Akorn, Inc.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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statement number, or the Form or Schedule and the date of its filing.
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4) Date Filed:
<PAGE>
AKORN, INC.
100 Akorn Drive
Abita Springs, Louisiana 70420
______________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held February 28, 1997
______________________________
TO THE SHAREHOLDERS OF AKORN, INC.:
The annual meeting of shareholders of Akorn, Inc. (the
"Company) will be held at 10:00 a.m., local time, on Friday,
February 28, 1997 on the 52nd Floor of Place St. Charles,
201 St. Charles Avenue, New Orleans, Louisiana for the
following purposes, more fully described in the accompanying
proxy statement:
1.To elect a board of four directors.
2.To consider a vote upon a proposal to amend the Company's
Articles of Incorporation to increase the number of
authorized shares of common stock, no par value per share,
from 20 million shares to 40 million shares.
3.To consider a vote upon a proposal to amend the
Company's Articles of Incorporation to authorize 5 million
shares of preferred stock issuable at the discretion of the
Board of Directors.
4.To consider and vote upon amendments to the Amended and
Restated Akorn, Inc. 1988 Incentive Compensation Program.
5.To transact such other business as may properly come
before the meeting and any adjournments thereof.
The Board of Directors has fixed the close of business
on January 6, 1997 as the record date for the determination
of shareholders entitled to notice of and to vote at the
annual meeting and all adjournments thereof.
Your vote is important regardless of the number of
shares you own. Whether or not you plan to attend the
annual meeting, please mark, date and sign the enclosed
proxy card and return it promptly in the enclosed stamped
envelope. Furnishing the enclosed proxy will not prevent
you from voting in person at the meeting should you wish to
do so.
By Order of the Board of
Directors
/s/ George S. Ellis, M.D.
George S. Ellis, M.D.
Secretary
Abita Springs, Louisiana
January 10, 1996
AKORN, INC.
100 Akorn Drive
Abita Springs, Louisiana 70420
PROXY STATEMENT
Annual Meeting of Shareholders
To be Held February 28, 1997
This proxy statement is furnished to shareholders of
Akorn, Inc. (the "Company") in connection with the
solicitation of proxies on behalf of the Company's Board of
Directors for use at its annual meeting of shareholders to
be held at the date, time and place set forth in the
accompanying notice and at any adjournments thereof (the
"Meeting"). The date of this Proxy Statement is January
10, 1997.
On January 6, 1997, the record date for determining
shareholders entitled to notice of and to vote at the
Meeting, the Company had outstanding 16,582,073 shares of
common stock (the Company's only class of authorized capital
stock), each of which is entitled to one vote on all matters
to be considered at the Meeting.
Shares represented by all properly executed proxies on
the enclosed form received in time for the Meeting will be
voted at the Meeting. A proxy may be revoked at any time
before it is exercised by filing with the Secretary of the
Company an instrument revoking it or a duly executed proxy
bearing a later date, or by attending the Meeting and voting
in person. Unless revoked, the proxy will be voted as
specified and, if no specifications are made, will be voted
in favor of the proposed nominees as described herein.
The cost of soliciting proxies in the enclosed form
will be borne by the Company. In addition to the use of the
mails, proxies may be solicited by personal interview,
telephone, telefax and telegraph. Banks, brokerage houses
and other institutions, nominees and fiduciaries will be
requested to forward solicitation materials to the
beneficial owners of the shares of common stock of the
Company; upon request, the Company will reimburse such
persons for reasonable out-of-pocket expenses incurred in
connection therewith. The Company has retained Corporate
Investor Communications, Inc. to assist in the solicitation
of proxies from brokers, banks, nominees and individuals,
for which it will be paid a fee of $4,500 and will be
reimbursed for certain out-of-pocket expenses.
ELECTION OF DIRECTORS
Effective at the time of the Meeting the Company's by-
laws will provide for a Board of four directors and only
four directors can be elected at the Meeting. The Board of
Directors has nominated four candidates for election at the
Meeting and recommends that shareholders vote FOR the
election of all four nominees.
Proxies cannot be voted for more than four candidates.
In the absence of contrary instructions, the proxy holders
will vote for the election of the four nominees listed
below. In the unanticipated event that one or more of such
persons is unavailable as a candidate for director, the
persons named in the accompanying proxy will vote for
another candidate nominated by the Board of Directors.
The following table sets forth as of June 30, 1996 the
age, principal occupation and employment, position with the
Company, directorships in other public corporations, year
first elected a director of the Company, and beneficial
ownership of shares of Company common stock of each nominee
for election as director at the coming meeting. Unless
otherwise indicated, each nominee has been engaged in the
principal occupation or occupations shown for more than the
past five years.
Principal Occupation
and Directorships in
Other Public Director
Name and Age Corporations Since
______________ ____________________ _____________
Floyd Benjamin, 53 Executive Vice President 1996
of the Company and
President of Taylor
Pharmaceuticals, Inc. (a
subsidiary of the
Company) since May 1996;
president of Pasadena
Research Laboratories,
Inc. ("PRL") from
October 1994 to May 1996
and consultant to PRL
from October 1993 to
October 1994; president
and chief executive
officer of Neocrin, Inc.
(biomedical venture
capital company) from
February 1992 to October
1993; prior to October
1993, chief operating
officer of Lyphomed,
Inc. (injectable pharmaceuticals)
Daniel E. Bruhl, M.D. Ophthalmologist; 1983
54 director of Surgical
Care Affiliates, Inc.
(physicians' group
practice management)
Doyle S. Gaw, 65 Private investor 1975
John N. Kapoor, Ph.D., Chief Executive Officer 1991
53 of the Company since
May, 1996; Chairman of
the Board of the Company
since May 1995 and from
December 1991 to January
1993, and acting
Chairman of the Board of
the Company from April
1993 to May 1995;
chairman of the board of
Option Care, Inc.
(infusion services and
supplies); chief
executive officer of
Option Care, Inc. from
August 1993 to April
1996; president of E J
Financial Enterprises,
Inc. since April 1990;
director of Unimed, Inc.
and NeoPharm, Inc.
(specialty pharmaceutical
companies)
_____________________________
During the fiscal year ended June 30, 1996, the Board
of Directors of the Company held four meetings. The Board
of Directors has an Audit Committee, of which Mr. Gaw, Dr.
Ellis and Dr. Turner are members, and a Compensation
Committee, of which Drs. Bruhl, Cunningham and Yannuzzi are
members. The Board of Directors does not have a Nominating
Committee. The Audit Committee, which met once during
fiscal 1996, is responsible for consulting with the
independent auditors with regard to the plan of audit,
reviewing the plan and the results of audits of the Company
by its independent auditors and discussing audit
recommendations with management and reporting the results of
its reviews to the Board of Directors. The Compensation
Committee met twice during fiscal 1996 to review various
compensation matters with respect to executive officers and
directors. The Composition of Board committees is reviewed
and redetermined each year at the initial meeting of the
Board after the annual meeting of shareholders.
For services as Chairman of the Board and as a
consultant to the Company, Dr. Kapoor receives a fee of
$50,000 per year. Each other director who is not a salaried
officer or consultant of the Company receives a fee for his
services as a director of $1,000 per regular meeting of the
Board of Directors, $250 per telephone meeting and $500 per
committee meeting, plus reimbursement of his expenses
related to those services. In addition, the chairman of
each committee (other than Dr. Kapoor) receives an annual
fee of $2,500.
All directors of the Company participate in the
Company's Stock Option Plan for Directors, pursuant to which
each director of the Company is granted an option to acquire
5,000 shares of Company common stock on the day after each
annual meeting of shareholders at which he is elected to
serve as a director. Any director appointed between annual
meetings is entitled to receive a pro rata portion of an
option to acquire 5,000 shares. The Committee may, in its
sole discretion, grant an option to purchase up to 100,000
shares to a person who is not already a director and who
becomes a director at any time; no member of the Committee
is eligible to be granted such an option and any director
who has been granted such an option is not permitted to
serve on the Committee for one year after such grant.
Options granted under the plan expire five years from the
date of grant. The option exercise price is the fair market
value of the shares covered by the option at the time of the
grant.
Pursuant to the agreement under which Pasadena Research
Laboratories, Inc. was acquired by the Company in May 1996,
Mr. Benjamin was appointed a director of the Company for a
term expiring at the Meeting.
Under agreements between the Company and the John N.
Kapoor Trust dated September 20, 1989, the Trust is entitled
to designate two individuals to be nominated and recommended
by the Company's Board of Directors for election as a
director. The Trust has designated only Dr. Kapoor for this
purpose and is not expected to designate a second individual
for nomination as a director prior to the Meeting.
During 1996, Dr. Campbell, a director of the Company,
failed to file timely with the Securities and Exchange
Commission two Forms 4 to report three transactions, as
required by Section 16(a) of the Securities Exchange Act of
1934, and Mr. Gaw, also a director, failed to file timely
two Forms 4 to report four such transactions. All such
transactions have been reported on amended annual statements
on Form 5.
BENEFICIAL OWNERS
As of December 12, 1996, the following persons were
directors or named executive officers with beneficial
ownership. Dr. Kapoor is the only person known to the
Company to be the beneficial owner of five percent or more
of the Company's common stock. His address is 225 East
Deerpath, Suite 250, Lake Forest, Illinois, 60045. The
information set forth below has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act
of 1934 based upon information furnished by the persons
listed.
Beneficial Owner Shares Beneficially Owned(1) Percent of Class
---------------- ---------------------------- -----------------
Directors and Nominees
Floyd Benjamin 479,167(2) 2.89%
Daniel E. Bruhl, M.D. 290,517(3) 1.75%
J. Ed Campbell, M.D. 193,691(3) 1.17%
George S. Ellis, M.D. 284,260(3) 1.71%
Doyle S. Gaw 175,824(3) 1.06%
John N. Kapoor, Ph.D. 4,280,485(4) 24.28%
David H. Turner, M.D. 249,650(3) 1.50%
Lawrence A. Yannuzzi, M.D. 200,883(3) 1.21%
Named Executive Officers(5)
Harold O. Koch 127,107 0.76%
Tim J. Toney 179,967 1.08%
Directors and officers
as a group (11 persons) 6,519,276(6) 36.09%
____________________
(1) Beneficial ownership is determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934.
(2) Mr. Benjamin's shares are held by a trust of which Mr.
Benjamin and his wife are trustees and their child is
beneficiary. Includes 12,500 shares issuable pursuant to
options granted by the Company directly to Mr. Benjamin.
(3) These numbers contain options to purchase shares. The
following directors and officers have options to purchase
35,000 shares: Dr. Bruhl, Dr. Campbell, Dr. Ellis, Mr. Gaw,
Dr. Turner, and Dr. Yannuzzi. Furthermore, several
directors' shares are owned partially by family members and
pensions. The following shows the family members and
pensions of each such director and their amounts: Dr.
Bruhl's pension - 64,266; and Dr. Ellis' wife - 101,500.
(4) Of such 4,280,485 shares, (i) 3,204,000 are owned
directly by the John N. Kapoor Trust dated September 20,
1989 (the "Trust") of which Dr. Kapoor is the sole trustee
and beneficiary, (ii) 1,000,000 are issuable pursuant to a
warrant issued to the Trust in 1992, (iii) 30,000 are owned
by a trust, the trustee of which is Dr. Kapoor's wife and
the beneficiaries of which are their children, and (iv)
46,485 are issuable pursuant to options granted by the
Company directly to Dr. Kapoor.
(5) Mr. Benjamin and Dr. Kapoor are named executive officers
of the Company, and information regarding their beneficial
ownership is included in this table under the section,
"Directors and Nominees."
(6) Of such 6,519,276 shares, 1,268,985 are not presently
outstanding, but are issuable pursuant to option and warrant
rights described in the preceding footnotes and 213,950 are
issuable pursuant to options held by three officers of the
Company who are not also directors.
______________________________
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid by
the Company for services rendered during the fiscal years
ended June 30, 1994, 1995 and 1996 to each person who,
during fiscal 1996, served as the chief executive officer of
the Company and to each other executive officer of the
Company whose total annual salary and bonus for fiscal 1996
exceeded $100,000:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
____________________________ _________________
Year ended Number of All Other(1)
Name and Principal Position June 30 Salary Bonus Options Awarded Compensation
____________________________ ________ _________ ________ __________________ ______________
<S> <C> <C> <C> <C>
John N. Kapoor, Ph.D.(2) 1996 $10,000(3) --- --- $40,000(3)
Chief Executive Officer
Barry D. LeBlanc(4) 1996 $210,000 --- --- $2,100
President and Chief 1995 207,731 --- 34,000 2,310
Executive Officer 1994 184,362 $24,667 50,000 2,310
Harold O. Koch(5) 1996 $125,000 --- --- $ 938
Senior Vice President 1995 122,247 --- 58,000 1,530
1994 105,602 $16,444 25,000 791
Tim J. Toney (6) 1996 $120,000 --- --- $1,800
Vice President- 1995 117,292 --- 10,000 2,018
Manufacturing, 1994 115,000 $17,250 --- 359
Taylor Pharmaceuticals, Inc.
____________________
(1) Represents contributions to the Company's Savings and
Retirement Plan, except as indicated in note (3).
(2) Dr. Kapoor became Chief Executive Officer effective May
3, 1996.
(3) During fiscal 1996, Dr. Kapoor received $50,000 for his
services as Chairman of the Board of the Company, $40,000 of
which was waived in exchange for other consideration, as
described under, "Transactions with Shareholders and
Directors."
(4) Mr. LeBlanc ceased being Chief Executive Officer of the
Company effective May 3, 1996.
(5) Mr. Koch became an executive officer of the Company in
February 1993 and became Senior Vice President in January
1995.
(6) Mr. Toney ceased being an executive officer of the
Company in May 1996.
______________________________
Stock Option Exercises
Aggregate Option Exercises in Fiscal 1996 and
Option Values as of June 30, 1996
</TABLE>
<TABLE>
<CAPTION>
No. of Unexercised Value of Unexercised
Options at In-the Money Options
No. of Shares June 30, 1996 at June 30, 1996
Acquired Value __________________________ _____________________________
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
____________ __________________________________________________________ ____________ ______________
<S> <C> <C> <C> <C> <C> <C>
John N. Kapoor 0 $ 0 0 0 $ 0 $ 0
Barry D. LeBlanc 143,500 121,075 328,469 0 399,462 0
Harold O. Koch 0 0 118,700 29,300 86,654 15,091
Tim J. Toney 0 0 45,000 5,000 27,500 0
______________________________
</TABLE>
______________________________
Employment Agreements
In January 1996 the Company entered into employment
agreements with Messrs. LeBlanc, Koch and Toney calling for
annual salaries of, respectively, $210,000, $125,000 and
$120,000, increased annually by the percentage increase in
the consumer price index (and, in the case of Mr. LeBlanc,
by specified increments conditioned on certain increases in
the trading price of the Company's common stock) plus
bonuses determined by the Board of Directors in its
discretion. Messrs. LeBlanc and Koch were provided with the
use of an automobile.
The agreements terminate one year after notice of
termination is given by the Company or the employee. If the
employee's employment is otherwise terminated by the Company
without "cause" (as defined in the agreement) or by the
employee for "good reason" (as defined in the agreement),
the employee is entitled to a lump sum payment equal to his
annual salary plus any performance-based bonus and options
to which the employee would have been entitled had the
performance goals been met. In the event of a change of
control of the Company, the employee is entitled upon
termination of his employment by the Company for "cause" (as
defined in the agreement) or by the employee for "good
reason" (as defined in the agreement), to a lump sum
payment equal to his annual salary until the later of the
second anniversary of the change of control or one year
after the notice of termination, plus any performance-based
bonus and options to which the employee would have been
entitled had the performance goals been met. If any such
payments are considered "excess parachute payments" under
Section 4999 of the Internal Revenue Code of 1996, the
employee is entitled to such additional amounts as would be
necessary to place him in the same position after payment of
federal, state and local taxes as he would have been in if
such provisions had not been applicable to him.
The Company and Mr. LeBlanc entered into a separation
agreement effective as of July 3, 1996 under which Mr.
LeBlanc's employment by the Company and all of his rights
under his employment agreement were terminated in
consideration of payment to him of $213,045 in four equal
installments of principal, plus interest, in July and
October of 1996 and January and April of 1997, plus accrued
but unpaid vacation and sick leave of $23,423.
Compensation Committee Interlocks and Insider Participation
Drs. Campbell, Bruhl and Yannuzzi, who comprise the
Compensation Committee, are all independent, non-employee
directors of the Company.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors
reviews, analyzes and makes recommendations related to
compensation packages for the Company's executive officers,
evaluates the performance of the Chief Executive Officer and
administers the grant of stock options under the Company's
Incentive Compensation Plan. The committee awards all stock
options. As to other matters the committee makes
recommendations that are presented to the full Board for
final approval.
The Company's executive compensation policies are
designed to (a) provide competitive levels of compensation
to attract and retain qualified executives, (b) reward
achievements in corporate performance, (c) integrate pay
with annual and long-term performance goals, and (d) align
the interests of executives with the goals of shareholders.
Compensation paid to Company executives consists of
salaries, annual cash incentive bonuses and long-term
incentive opportunities in the form of stock options.
Salary
Dr. John N. Kapoor, the Chairman of the Company's Board
of Directors, has served as chief executive officer of the
Company since May 3, 1996. During fiscal 1996 Dr. Kapoor
received no additional compensation for serving as the
Company's chief executive officer. The salaries of Mr.
Barry D. LeBlanc, who served as president and chief
executive officer of the Company until May 3, 1996, and the
other executive officers named in the table under Summary of
Executive Compensation, were fixed in their employment
agreements, which are described above under "Employment
Agreements." Such amounts were determined after considering
the executive compensation policies noted above, the impact
the executive has on the Company, the skills and experience
the executive brings to the job, competition in the
marketplace for those skills and the potential of the
executive in the job.
Incentive Bonus
Annual incentive compensation for executive officers
during fiscal 1996 was based on corporate net earnings as
compared to pre-established objectives set at the beginning
of the fiscal year. Based on the Company performance in
relation to such objectives, no incentive bonus was granted
to any of the executive officers or any other officer of the
Company for fiscal 1996.
Mr. Floyd Benjamin, was hired as Executive Vice
President of the Company and president of the Company's
injectable subsidiary effective May 31, 1996. Pursuant to
the three year contract with Mr. Benjamin, he is eligible
for bonuses each fiscal year beginning June 30, 1997 based
on certain performance criteria.
Stock Options
The Committee's practice with respect to stock options
has been to grant options based upon the attainment of
Company performance goals and that vest based on the
passage of time. Based on the Company performance in
relation to pre-established objectives, no stock option
awards were made to executive officers in fiscal 1996.
It is the responsibility of the Committee to address
the issues raised by tax laws under which certain non-
performance based compensation paid to executives of public
companies in excess of $1 million per year is non-deductible
to the Company and to determine whether any actions with
respect to this limit should be taken by the Company. It is
not currently anticipated that any executive officer of the
Company will receive any such compensation in excess of this
limit in the near future. The Committee will continue to
monitor this situation and will take appropriate action if
it is warranted in the future.
The Compensation Committee is currently evaluating its
policies with respect to executive compensation in light of
the recent realignment of the Company into two distinct
operating divisions.
Submitted by the Compensation Committee of the Board of
Directors
J. Ed Campbell, M.D. Daniel E. Bruhl, M.D.
Lawrence A. Yannuzzi, M.D.
Performance Graph
The graph below compares the cumulative shareholder
return on the Company's Common Stock for the last five
fiscal years with the S&P Small Cap 600 Index and an index
composed of a group of peer issuers. The members of the
peer group were selected by the Company based upon size and
type of business. The peer group consists of the following
companies: Chesapeake Biological, Inc.; Faulding, Inc.; Hi
Tech Pharmacal Co. Inc.; Insite Vision, Inc.; Nutramax
Products, Inc.; Pharmos Corp.; and Unimed Pharmaceuticals,
Inc. The graph assumes $100 was invested in June 1991 in
the Company Common Stock and the two indices presented. The
cumulative total return on the Company's Common Stock for
the period presented was 50%. The cumulative returns for
the S&P Small Cap 600 and the Company's peer group were 132%
and 26%, respectively.
[Insert - Performance Graph]
TRANSACTIONS WITH SHAREHOLDERS AND DIRECTORS
For services performed by Dr. Kapoor in connection with
the Company's acquisition of Taylor Pharmaceuticals, Inc.,
the John N. Kapoor Trust dated September 20, 1989 received,
among other things, 125,000 shares of Company common stock
which were subject to forfeiture if the market price of the
Company common stock were not to reach $5.00 by January 15,
1996. At the time of this issuance, the market price of
Company common stock was $3.50 per share. In August 1995,
the Company, the Trust and Dr. Kapoor entered into an
agreement under which (i) the forfeiture period was extended
to January 15, 1998, (ii) forfeiture would not occur in the
event that persons unaffiliated with Dr. Kapoor acquire
beneficial ownership of more than 50% of the outstanding
common stock of the Company, and (iii) Dr. Kapoor waived his
right to receive $40,000 otherwise payable to him by the
Company for serving as Chairman of the Board in fiscal 1996.
In connection with the acquisition of Pasadena Research
Laboratories, Inc. ("PRL") on May 31, 1996, the Company
issued to Mr. Floyd Benjamin, as a shareholder of PRL,
466,667 shares of Company common stock. This amount was
determined by arm's length negotiation between the Company
and the PRL shareholders.
PROPOSALS TO APPROVE AMENDMENTS
TO ARTICLES OF INCORPORATION
Proposal to Amend Articles of Incorporation to Increase
Authorized Shares of Common Stock
The Company is currently authorized to issue an
aggregate of 20 million shares of capital stock, consisting
of 20 million shares of common stock, no par value per share
("Common Stock"). As of December 12, 1996, there were
16,582,073 shares of Common Stock outstanding and 2,231,407
shares of Common Stock were reserved for issuance pursuant
to outstanding warrants and options. Accordingly, there are
only 1,186,520 shares of Common Stock authorized under the
Company's articles of incorporation and available for
issuance in the future pursuant to stock incentive plans and
for other purposes. For the reasons given below the Board
believes that this number of unreserved shares of Common
Stock available for issuance in the future is inadequate.
Accordingly, the Board proposes Amendment No. 1 to the
Company's articles of incorporation to increase the
authorized number of shares of Common Stock to 40 million
shares. The affirmative vote of the holders of two-thirds
of the voting power present or represented at the Meeting is
required to approve this proposal. See "Other Matters --
Quorum and Voting." The text of Amendment No. 1 is attached
as Exhibit A and this discussion of the amendment is
qualified in its entirety by this reference to Exhibit A.
Proposal to Amend Articles of Incorporation to Authorize
Shares of Preferred Stock
The Board also believes that in order to provide the
flexibility it needs to properly manage the Company and to
raise additional capital, a class of preferred stock should
be authorized. The Preferred Stock may be issued from time
to time in one or more series. Authority would be vested in
the Board to amend the articles of incorporation from time
to time to fix the preferences, limitations and relative
rights as between the Preferred Stock and the Common Stock,
and to fix the variations in the preferences, limitations
and relative rights as between different series of Preferred
Stock. Accordingly, the Board proposes Amendment No. 2 to
the Company's articles of incorporation to authorize five
million shares of preferred stock (the "Preferred Stock").
The affirmative vote of the holders of two-thirds of the
voting power present or represented at the Meeting is
required to approve this proposal. See "Other Matters --
Quorum and Voting." The text of Amendment No. 2 is attached
as Exhibit A and this discussion of the amendment is
qualified in its entirety by this reference to Exhibit A.
Purposes and Effects of the Proposed Amendments
The purpose of the proposed amendments is to allow the
Company to make full use of its stock-based benefit plans
and to increase the Company's flexibility to take advantage,
without the need for further shareholder approval, of
transactions that require the issuance of shares of Common
Stock or Preferred Stock.
The three current benefit plans under which shares of
Common Stock may be issued are the 1991 Stock Option Plan
for Directors, the Amended and Restated Employee Stock
Purchase Plan and the Amended and Restated Akorn, Inc. 1988
Incentive Compensation Program (the "Plans"). On December
12, 1996 1,231,407 shares were authorized for issuance, but
not yet issued, pursuant to the Plans or under options not
yet granted pursuant to the Plans. Because the number of
shares of Common Stock that are authorized by the articles
of incorporation and available for issuance in the future is
less than the number of shares that are currently authorized
for issuance under the Plans, the Board will not be able to
make full and appropriate use of the Plans unless the number
of authorized shares of Common Stock is increased, as
contemplated by one of the proposed amendments. Moreover,
as described below, the Board believes that the number of
shares issuable under the Company's Amended and Restated
Incentive Compensation Program should be increased. See
"Proposal to Approve the Amendment to the Company's Amended
and Restated Incentive Compensation Program."
The Board further believes that the adoption of the
proposed amendments will enable the Company promptly and
appropriately to respond to business opportunities, such as
opportunities to raise additional equity capital or to
finance acquisitions with Common Stock or Preferred Stock,
or to declare stock splits and stock dividends, although no
such transactions are currently planned by the Company.
Given the number of shares currently available for issuance,
the Company would not be able to accomplish any of these
transactions without obtaining shareholder approval of an
increase in the authorized number of shares of Common Stock
and the authorization of the Preferred Stock. The cost,
prior notice requirements and delay involved in obtaining
shareholder approval at the time that corporate action may
become desirable could prevent the accomplishment of the
action or reduce the expected benefits.
The additional shares of Common Stock proposed to be
authorized, and the Preferred Stock proposed to be created,
together with existing authorized and unissued shares,
generally will be available for issuance without any
requirement for further shareholder approval, unless
shareholder action is required by applicable law or by the
rules of the Nasdaq National Market or of any stock exchange
on which the Company's securities may be listed. Although
the Board will authorize the issuance of additional shares
only when it considers doing so to be in the best interest
of shareholders, the issuance of additional shares of Common
Stock and the issuance of Preferred Stock may, among other
things, have a dilutive effect on earnings per share of the
Common Stock and on the voting rights of holders of shares
of Common Stock. The Company's shareholders do not have any
preemptive rights to subscribe for additional shares of
Common Stock that may be issued. Although the Board has not
made a determination as to whether it will adopt a
shareholder rights plan, it may do so in the future, in
which case a portion of the additional shares of Common
Stock could facilitate the operation of such a plan. The
Board will be able to adopt such a plan, however, whether or
not the proposed amendments are approved by the
shareholders. In addition, although the Board has no
current plans to do so, shares of Common Stock could be
issued in various other transactions that would make a
change in control of the Company more difficult or costly
and, therefore, less likely. For example, shares of Common
Stock could be sold privately to purchasers who might
support the Board in a control contest or to dilute the
voting or other rights of a person seeking to obtain
control. The proposed amendments are not the result of any
specific effort to obtain control of the Company by a tender
offer, proxy contest, or otherwise, and the Company has no
present intention to use the increased shares of authorized
Common Stock or the newly authorized shares of Preferred
Stock for anti-takeover purposes.
The Board of Directors unanimously recommends that
shareholders vote FOR both proposals to amend the Company's
Articles of Incorporation.
PROPOSAL TO APPROVE AMENDMENTS TO THE
AMENDED AND RESTATED AKORN, INC.
1988 INCENTIVE COMPENSATION PROGRAM
General
The Company's 1988 Incentive Compensation Program (the
"Program") was originally adopted by the Board of Directors
and approved by the shareholders in 1988. In 1993 the Board
adopted and the shareholders approved an amendment to the
Program to increase the number of shares issuable
thereunder. The Board of Directors has subsequently adopted
additional amendments to the Program.
At the Meeting, the shareholders will be requested to
approve three amendments to the Amended and Restated Akorn,
Inc. 1988 Incentive Compensation Program for the purpose of
increasing the number of shares issuable under the Program
from two million shares to three million shares, changing
the eligibility requirements to allow consultants to
participate, and extending the term of the Program (the
"Amendments"). The following description of the Program and
its amendments is qualified in its entirety by reference to
the Program itself, attached as Exhibit B.
Purpose of the Proposal and Prior Amendment of the Program
The Board of Directors continues to believe that the
growth of the Company depends significantly upon the efforts
of its key employees. The Board of Directors also believes
that providing key employees and consultants with a
proprietary interest in the growth and performance of the
Company is crucial to stimulating individual performance
while at the same time enhancing shareholder value. The
Board of Directors is proposing a one million share increase
in the number of shares issuable through the Program in
order that the Company may continue to provide an effective
means to secure, motivate and retain key personnel. The
Board further believes that such increase in the number of
shares issuable under the Program, in order to be fully
utilized, must be supported by an extension of the duration
of the Program. The Board proposes increasing the duration
of the Program by five years, such that options may be
issued pursuant to the Program until November 2, 2003.
Finally, the Board believes that the category of people
eligible to receive options under the Program should be
broadened to include consultants in order that the Company
may attract consultants who will provide maximum value to
the Company. Former directors who serve as consultants may
also be granted options if the Amendments are approved.
The Amendments are being submitted to the shareholders
for approval in order to satisfy the requirements of the
Nasdaq National Market.
Awards to be Granted
The grant of options under the Program is entirely in
the discretion of the Compensation Committee. The Committee
has made a determination as to the awards to be granted
under the amendment to the Program changing the definition
of Eligible Employees, if it is approved by the
shareholders. Awards are expected to be granted to Drs.
Campbell, Turner, Yannuzzi and Ellis, who are retiring
directors, as consultants to the Company. A determination
of the amount of options to be granted to each has not yet
been made.
Terms of the Program
Eligibility
The Program provides that key employees of the Company,
including directors who are also officers of the Company,
will be eligible to receive options under the Program when
designated by the Compensation Committee. Currently, there
are approximately 30 key employees eligible to receive
options under the Program. Should the Amendment be
approved, the number of people eligible to receive options
under the Program would increase to include these and future
consultants. The Company currently employs approximately 5
consultants.
Shares Issuable through the Program
If the Amendments are approved, a total of 1,000,000
additional shares of Common Stock will be authorized to be
issued under the Program. As of December 12, 1996, a total
of 827,093 shares were available for issuance under the
Program, and 913,490 shares were subject to outstanding
options. On December 12, 1996, the closing sale price of a
share of Common Stock, as reported on the Nasdaq National
Market, was $1.81.
Adjustments under the Program
Proportionate adjustments will be made to the number of
shares of Common Stock subject to the Plan, including shares
subject to outstanding options, in the event of any
recapitalization, stock dividend, stock split, combination
of shares or other change in the Common Stock.
In the event of a dissolution or liquidation of the
Company, or a reorganization, merger or consolidation of the
Company with any other corporation, or a transfer of
substantially all the property or more than two-thirds of
the then outstanding shares to another corporation, notice
must be given to every participant in the Program not less
than 40 days prior to the anticipated effective date of the
proposed transaction, and every option granted under the
Program shall be accelerated and become immeditately
exercisable in full prior to a date specified in such
notice, not more than 10 days prior to the anticipated
effective date of the proposed transaction. If the
transaction is consummated, each previously unexercised
option shall terminate. If the transaction does not occur,
the options will remain unexercised.
Terms of Stock Options
The Compensation Committee determines the number and
purchase price of the shares subject to options, the term of
the options and the time or times that the options become
exercisable, provided that the purchase price may not be
less than 50% of the fair market value of the Common Stock
on the date of grant. The Compensation Committee may
accelerate the exercisability of any option or may determine
to cancel any option in order to make a participant eligible
for the grant of an option at a lower price. The
Compensation Committee may approve the purchase by the
Company of an unexercised stock option for the difference
between the exercise price and the fair market value of the
shares covered by such option.
The option exercise price may be paid in cash, in
shares of Common Stock which must have been held for at
least six months, in a combination of cash and shares of
Common Stock or through a broker assisted exercise
arrangement approved in advance by the Compensation
Committee. The Compensation Committee determines at what
time or times during its term a stock option shall be
exercisable; provided, however, that no stock option granted
to an officer, director or beneficial owner of more than 10%
of the Common Stock who is subject to Section 16 of the 1934
Act may be exercised within the six-month period immediately
following the date of grant.
The Committee shall determine the term of each Option
granted under the Program, but such term shall not exceed
ten years and one day from the date of grant.
Amendments to the Program
The Board of Directors may amend or discontinue the
Program at any time. No amendment or discontinuance,
however, may change or impair, without the consent of the
optionee, an option previously granted. Under the terms of
the Program, shareholder approval is required for an
amendment if it is necessary to comply with Rule 16b-3 under
the Securities Exchange Act of 1934. Pursuant to recent
amendments to Rule 16b-3, shareholder approval of amendments
is no longer required. The Board seeks approval of the
Amendments for purposes of compliance with Nasdaq National
Market rules, which require approval by shareholders of an
amendment to a compensation plan for officers or directors
that materially increases the number of shares issuable
under the plan. Shareholder approval of subsequent
amendments to the Program will be sought if required by
Nasdaq National Market or other applicable rules.
Federal Income Tax Consequences
Under existing federal income tax provisions, a
participant who receives non-qualified stock options will
not normally realize any income, nor will the Company
normally be entitled to any deduction for federal income tax
purposes, in the year of grant.
When a non-qualified stock option is exercised, the
participant will realize ordinary income measured by the
difference between the aggregate fair market value of the
shares of Common Stock on the exercise date and the
aggregate purchase price of the shares of Common Stock as to
which the option is exercised, and, subject to compliance
with Section 162(m) of the Code, the Company will be
entitled to a deduction in the year the option is exercised
equal to the amount the employee is required to treat as
ordinary income.
If the exercise price of an option is paid by the
surrender of previously-owned shares, the basis and the
holding period of the previously-owned shares carries over
to some of the shares received in exchange therefor. The
income recognized on exercise is added to the basis of the
remaining shares received.
When the exercisability of a stock option granted under
the Program is accelerated upon a change of control, any
excess on the date of the change of control of the fair
market value of the shares subject to the option over the
exercise price may be characterized as "parachute payments"
(within the meaning of Section 280G of the Code) if the sum
of such amounts and any other such contingent payments
received by the employee in connection with the change of
control exceeds an amount equal to three times the "base
amount" for such employee. The base amount generally is the
average of the annual compensation of such employee for the
five years preceding such change in ownership or control.
An "excess parachute payment" with respect to any employee
is the excess of the present value of the parachute payments
to such person, in the aggregate, over and above such
person's base amount. If the amounts received by an
employee upon a change of control are characterized as
parachute payments, such employee will be subject to a 20%
excise tax on the excess parachute payments pursuant to
Section 4999 of the Code, and the Company will be denied any
deduction with respect to such excess parachute payments.
This summary of federal income tax consequences of non-
qualified stock options does not purport to be complete.
Reference should be made to the applicable provisions of
Code.
Vote Required
The affirmative vote of the holders of a majority of
the voting power present or represented at the Meeting is
required for the approval of the amendments to the Program.
The Board of Directors unanimously recommends that
shareholders vote FOR the proposal to approve the amendment
to the Company's Amended and Restated 1988 Incentive
Compensation Program.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
A representative of Deloitte & Touche, the Company's
independent accountant for the fiscal year ended June 30,
1996, is expected to attend the Meeting, will have an
opportunity to make a statement if he wishes to do so, and
will be available to respond to appropriate questions.
OTHER MATTERS
Quorum and Voting
The presence, in person or by proxy, of a majority of
the outstanding shares of common stock of the Company is
necessary to constitute a quorum. Shareholders voting, or
abstaining from voting, by proxy on any issue will be
counted as present for purposes of constituting a quorum.
If a quorum is present, (i) the election of the four
directors to be elected at the Meeting will be determined by
plurality vote (that is, the four nominees receiving the
largest number of votes will be elected), (ii) the
affirmative vote of the holders of two-thirds of the voting
power present or represented at the Meeting is required to
approve both proposals to approve the amendments to the
Company's articles of incorporation to increase the number
of authorized shares and to authorize shares of preferred
stock, (iii) a majority of votes actually cast at the
Meeting is required to approve the proposal to amend the
Company's Amended and Restated Incentive Compensation
Program and (iv) a majority of votes actually cast will
decide any other matter properly brought before the Meeting
for a vote of shareholders. Shares for which proxy
authority to vote for any nominee for election as a director
is withheld by the shareholder and shares that have not been
voted by brokers who may hold shares on behalf of the
beneficial owners ("broker non-votes") will not be counted
as voted for the affected nominee. With respect to the
proposal to approve the amendment to the Company's articles
of incorporaiton, shares abstained from voting will be
considered present or represented at the Meeting for
purposes of determining whether or not two-thirds of such
shares were voted for such proposal, but shares not voted as
a result of broker non-votes will not be so considered.
With respect to all other matters, shares not voted as a
result of abstentions and broker non-votes will not be
considered as voted for purposes of determining whether or
not a majority of votes were cast for such matters.
Other Business
Management is unaware of any matter for action by
shareholders at the Meeting other than those described in
the accompanying notice. The enclosed proxy, however, will
confer discretionary authority with respect to any other
matter that may properly come before the Meeting or any
adjournment thereof. It is the intention of the persons
named in the enclosed proxy to vote in accordance with their
best judgment on any such matter.
Shareholder Proposals
Any shareholder who desires to present a proposal
qualified for inclusion in the Company's proxy materials for
the annual meeting of shareholders to be held in 1998 must
forward the proposal in writing to the President of the
Company at the address shown on the first page of this proxy
statement in time to arrive at the Company no later than
September 11, 1997.
By Order of the Board of
Directors
/s/ George S. Ellis, M.D.
George S. Ellis, M.D.
Secretary
Abita Springs, Louisiana
January 10, 1997
<PAGE>
EXHIBIT A
Set Forth Below is the Text of the Amendments to the
Articles of Incorporation
Increasing the Number of Authorized Shares of Common Stock
and authorizing shares of Preferred Stock. Material to be
Added as a
Result of the Amendments is Shown in Bold Face, and Material
to be Deleted is Shown in Brackets.
AMENDMENT NO. 1
ARTICLE V
CAPITAL
A. The Corporation shall have authority to issue an
aggregate of [20 million] 40 million shares of common stock,
no par value per share.
AMENDMENT NO. 2
ARTICLE V
CAPITAL
B. The Corporation shall have authority to issue 5
million shares of Preferred Stock, $1.00 par value per
share. Shares of Preferred Stock may be issued from time to
time in one or more series. Authority is hereby vested in
the Board of Directors of the Corporation to amend these
Articles of Incorporation from time to time to fix the
preferences, limitations and relative rights as between the
Preferred Stock and the Common Stock, and to fix the
variations in the preferences, limitations and relative
rights as between different classes and series of Preferred
Stock.
COR\48806.7
EXHIBIT B
Set Forth Below is the Text of the Amended and Restated
Akorn, Inc.
1988 Incentive Compensation Program,as Proposed to be
Amended.
Material to be Added as a Result of the Amendments is Shown
in
Bold Face, and Material to be Deleted is Shown in Brackets.
AMENDED AND RESTATED
AKORN, INC.
1988 INCENTIVE COMPENSATION PROGRAM
October 26, 1996
1. Purpose. The purpose of the 1988 Incentive
Compensation Program (the "Program") of Akorn, Inc. (the
"Company") is to advance the interests of the Company by
furnishing economic incentives in the form of stock options
("Options") designed to attract, retain and motivate key
employees.
2. Administration.
2.1 Composition. The Program shall be
administered by a committee consisting of two or more
members of the Board (the "Committee") who are disinterested
persons in accordance with Rule 16b-3 under the Securities
Exchange Act of 1934.
2.2 Authority. The Committee shall have plenary
authority to award Options under the Program, to interpret
the Program, to establish any rules or regulations relating
to the Program which it determines to be appropriate, and to
make any other determination which it believes necessary or
advisable for the proper administration of the Program. Its
decisions in matters relating to the Program shall be final
and conclusive on the Company and participants.
3. Eligible Employees. Key employees and consultants
of the Company (including officers who also serve as
directors of the Company) and its subsidiaries shall become
eligible to receive Options under the Plan when designated
by the Committee. Employees may be designated individually
or by groups or categories, as the Committee deems
appropriate. With respect to participants not subject to
Section 16 of the 1934 Act, the Committee may delegate to
appropriate personnel of the Company its authority to
designate participants and to determine the number of
Options to be received by those participants.
4. Shares Subject to the Program.
4.1 Number of Shares. Subject to adjustment as
provided in Section 6.5, the number of shares of common
stock, no par value, of the Company ("Common Stock"), which
may be issued under the Program shall not exceed [2,000,000]
3,000,000 shares of Common Stock.
4.2 Cancellation. In the event that an Option
granted hereunder expires or is terminated or cancelled
unexercised as to any shares of Common Stock, such shares
may again be issued under the Program pursuant to Options.
The Committee may also determine to cancel, and agree to the
cancellation of, Options in order to make a particular
participant eligible for the grant of an Option at a lower
price than the Option to be cancelled.
4.3 Type of Common Stock. Common Stock issued
under the Program in connection with Options may be
authorized and unissued shares or issued shares held as
treasury shares.
5. Options. An Option is a right to purchase shares
of Common Stock from the Company. Each Option granted by
the Committee under this Program shall be subject to the
following terms and conditions:
5.1 Price. The Option price per share shall be
determined by the Committee but shall not be less than 50%
of the fair market value on the date of grant of the Option.
"Fair Market Value" shall be determined as follows: if the
Common Stock is listed on any national exchange or any
automatic quotation system which provides sale quotations,
the fair market value shall be the average of high and low
sale prices quoted on such exchange or quotation system as
reported in the Wall Street Journal for the trading day next
preceding the applicable date (i.e., date of grant, exercise
or tax withholding) or if there are no trades on such date,
then on the preceding date on which a trade did occur,
subject to adjustment under Section 6.5
5.2 Number. The number of shares of Common Stock
subject to the Option shall be determined by the Committee,
subject to adjustment as provided in Section 6.5.
5.3 Duration and Time for Exercise. Subject to
earlier termination as provided in Section 6.5, the term of
each Option shall be determined by the Committee but shall
not exceed ten years and one day from the date of grant.
Each Option shall become exercisable at such time or times
during its term as shall be determined by the Committee at
the time of grant. The Committee may accelerate the date on
which an Option becomes exercisable.
5.4 Repurchase. Upon approval of the Committee,
the Company may repurchase a previously granted Option from
a participant by mutual agreement before such Option has
been exercised by payment to the participant of the amount
per share by which (i) the Fair Market Value (as defined in
Section 5.1) of the Common Stock subject to the Option on
the date of repurchase exceeds (ii) the Option price.
5.5 Manner of Exercise. An Option may be
exercised in whole or in part, by giving written notice to
the Company, specifying the number of shares of Common Stock
to be purchased and accompanied by the full purchase price
for such shares. The Option price shall be payable in
United States dollars upon exercise of the Option and may be
paid by (i) cash; (ii) uncertified or certified check; (iii)
bank draft; (iv) delivery of shares of Common Stock held for
a period of six months in payment of all or any part of the
Option price, which shares shall be valued for this purpose
at the Fair Market Value on the date such Option is
exercised; (v) delivery of a properly executed exercise
notice together with irrevocable instructions to a broker
approved by the Company (with a copy to the Company) to
promptly deliver to the Company the amount of sale or loan
proceeds to pay the exercise price; (vi) or in such other
manner as may be authorized from time to time by the
Committee. In the case of delivery of an uncertified check
or bank draft upon exercise of an Option, no shares shall be
issued until the check or draft has been paid in full.
Prior to the issuance of shares of Common Stock upon the
exercise of an Option, a participant shall have no rights as
a shareholder.
6. General.
6.1 Effective Date. The Program will become
effective upon its approval by the affirmative vote of the
holders of a majority of the voting power present or
represented at a meeting of the shareholders. Unless
approved within one year after the date of the Program's
adoption by the Board of Directors, the Program shall not be
effective for any purpose. Prior to the approval of the
Program by the Company's shareholders, the Board may award
Options, but if such approval is not received in the
specified period, then such awards shall be of no effect.
6.2 Duration. The Program shall remain in effect
until all Options granted under the Program have either been
satisfied by the issuance of shares of Common Stock or been
terminated under the terms of the Program. No Option may be
granted under the Program after the [tenth] fifteenth
anniversary of the date the Program is approved by the
Company's shareholders.
6.3 Non-transferability of Options. No Option
may be transferred, pledged or assigned by the holder
thereof (except, in the event of the holder's death, by will
or the laws of descent and distribution) and the Company
shall not be required to recognize any attempted assignment
of such rights by any participant. During a participant's
lifetime, an Option may be exercised only by him or by his
guardian or legal representative.
6.4 Additional Condition. Anything in this
Program to the contrary notwithstanding: (a) the Company
may, if it shall determine it necessary or desirable for any
reason, at the time of award of an Option or the issuance of
any shares of Common Stock pursuant to an Option, require
the recipient of the Option, as a condition to the receipt
thereof or to the receipt of shares of Common Stock issued
upon exercise thereof, to deliver to the Company a written
representation of present intention to acquire the Option or
the shares of Common Stock issued pursuant thereto for his
own account for investment and not for distribution; and (b)
if at any time the Company further determines, in its sole
discretion, that the listing, registration or qualification
(or any updating of any such document) of any Option or the
shares of Common Stock issuable pursuant thereto is
necessary on any securities exchange or under any federal or
state securities or blue sky law, or that the consent or
approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with the grant
of any Option or the issuance of shares of Common Stock upon
exercise thereof, such Option shall not be granted or such
shares of Common Stock shall not be issued, as the case may
be, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the
Company.
6.5 Adjustment upon Changes in Capitalization or
Control.
(a) In the event of any recapitalization,
stock dividend, stock split, combination of shares or other
change in the Common Stock, the number of shares of Common
Stock then subject to the Program, shall be adjusted in
proportion to the change in outstanding shares of Common
Stock. In the event of any such adjustments, the purchase
price of any Option and the shares of Common Stock issuable
pursuant to any Option shall be adjusted as and to the
extent appropriate, in the reasonable discretion of the
Committee, to provide participants with the same relative
rights before and after such adjustment.
(b) If there is proposed a dissolution or
liquidation of the Company, or a reorganization, merger or
consolidation of the Company with one or more corporations
in which the Company is not the surviving corporation, or a
transfer of substantially all the property or more than two-
thirds of the then outstanding shares of the Company to
another corporation, the Committee shall cause written
notice of the proposed transaction to be given to every
participant in the Program not less than 40 days prior to
the anticipated effective date of the proposed transactions,
and every Incentive granted under the Program shall be
accelerated and become immediately exercisable in full by
such participant prior to a date specified in such notice,
which date shall be not more than 10 days prior to the
anticipated effective date of the proposed transaction. The
participant shall notify the Company, in writing, that he
intends to exercise his Options, in whole or in part, and
the participant may condition such exercise upon, and
provide that such exercise shall become effective at the
time immediately prior to, the consummation of the proposed
transaction. If the proposed transaction is consummated,
each Option, to the extent not previously exercised prior to
the date specified in the foregoing notice, shall terminate
on the effective date of such consummation. If the proposed
transaction is not consummated and the participant has so
provided, the Options shall remain unexercised.
6.6 Option Agreements. The terms of each Option
shall be stated in an agreement, the form of which has been
approved by the Committee.
6.7 Withholding.
(a) The Company shall have the right to
withhold from any shares issuable under the Program or to
collect as a condition of issuance, any taxes required by
law to be withheld. At any time when a participant is
required to pay to the Company an amount required to be
withheld under applicable income tax laws upon exercise of
an Option, the participant may satisfy this obligation in
whole or in part by electing (the "Election") to have the
Company withhold from the distribution shares of Common
Stock having a value equal to the amount required to be
withheld. The value of the shares to be withheld shall be
based on the Fair Market Value of the Common Stock on the
date that the amount of tax to be withheld shall be
determined ("Tax Date").
(b) Each Election must be made prior to the
Tax Date. The Committee may disapprove of any Election, may
suspend or terminate the right to make Elections, or may
provide with respect to any Option that the right to make
Elections shall not apply to such Option. An Election is
irrevocable.
(c) If a participant is an officer of the
Company within the meaning of Section 16 of the 1934 Act,
then an Election is subject to the following additional
restrictions:
(1) No Election shall be effective for
a Tax Date which occurs within six months of the grant of
the award.
(2) The Election either (i) must be
made six months prior to the Tax Date, (ii) must be made
during a period beginning on the third business day
following the date of release for publication of the
Company's quarterly or annual summary statements of earnings
and ending on the twelfth business day following such date
(a "Window Period") or (iii) may be made in advance but must
take effect during a Window Period.
6.8 No Continued Employment. No participant
under the Program shall have any right, because of his or
her participation, to continue in the employ of the Company
for any period of time or to any right to continue his or
her present or any other rate of compensation.
6.9 Amendment of the Program. The Board may
amend or discontinue the Program at any time; provided,
however, that no such amendment or discontinuance shall
change or impair, without the consent of the recipient, an
Option previously granted; and further provided that if any
such amendment requires shareholder approval to meet the
requirements of Rule 16b-3 under the Securities Exchange Act
of 1934 or any successor rule, such amendment shall be
subject to the approval of the shareholders of the Company.
[FRONT]
PROXY This Proxy is Solicited on Behalf of the Board of Directors of
AKORN, INC.
The undersigned hereby constitutes and appoints _______________ and
_______________ or either of them proxy for the undersigned, with full
power of substitution, to represent the undersigned and to vote, as
designated below, all of the shares of Common Stock of Akorn, Inc. (the
"Company") that the undersigned is entitled to vote held of record by the
undersigned on January 6, 1997, at the annual meeting of shareholders of
the Company to be held on February 28, 1997 (the "Annual Meeting"), and at
all adjournments thereof.
The Board of Directors recommends a vote FOR the nominees listed below.
1. Election of Directors.
FOR [ ] all nominees listed below (except as WITHHOLD AUTHORITY [ ] to vote
marked to the contrary below) for all nominees listed
below
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name
in the list below:
Daniel E. Bruhl, M.D. Doyle S. Gaw [Name of Fifth Nominee]
Floyd Benjamin John N. Kapoor, Ph.D.
2. Proposal to amend the Company's Articles of Incorporation to increase
the number of authorized shares of capital stock to 45 million
shares of capital stock of which 40 million would be shares of
common stock and 5 million would be shares of preferred stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to amend the Amended and Restated Akorn, Inc. 1988 Incentive
Compensation Program.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion to vote upon such other business as may properly
come before the Annual Meeting and any adjournments thereof.
(Please See Reverse Side)
[REVERSE SIDE]
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this
proxy will be voted FOR the nominees and FOR the proposals listed over.
The individuals designated above will vote in their discretion on any other
matter that may properly come before the meeting.
Date:
, 1997
Signature of Shareholder
Signature if held jointly
Please sign exactly as name
appears on the certificate or
certificates representing
shares to be voted by this
proxy, as shown on the label
to the left. When signing as
executor, administrator,
attorney, trustee, or guar-
dian please give full title
as such. If a corporation,
please sign full corporation
name by president or other
authorized officer. If a
partnership, please sign in
partnership name by author-
ized persons.
Please mark, sign, date and return this proxy promptly using
the enclosed envelope.
