SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant [ ]
Filed by a party other than the registrant [X]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LANNETT COMPANY, INC.
(Name of registrant as specified in its charter)
Blair B. Hysni
Jaffe, Raitt, Heuer & Weiss
Professional Corporation
One Woodward Ave., Ste. 2400
Detroit, Michigan 48226
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ______
(2) Aggregate number of securities to which transaction applies: ________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: __________________________________
(4) Proposed maximum aggregate value of transaction: _____________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid: _____________________________________________
(2) Form, schedule or registration statement no.: _______________________
(3) Filing party: _______________________________________________________
(4) Date filed: _________________________________________________________
<PAGE>
LANNETT COMPANY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 12, 1996
To the Stockholders:
Notice is hereby given that the annual meeting (the "Meeting") of the
stockholders of Lannett Company, Inc. (the "Company") will be held at the
Company's principal office, at 9000 State Road, Philadelphia, Pennsylvania,
19136, on Friday, April 12, 1996, at 10:00 a.m., local time, for the following
purposes:
(1) to elect five Directors to serve until the next annual meeting
of the stockholders; and
(2) to transact such other business as may properly come before the
Meeting.
A Proxy Statement containing information relevant to the Meeting
appears on the following pages. Only holders of record of the Company's common
stock at the close of business on March 7, 1996, are entitled to notice of,
and to vote at, the Meeting or at any adjournment.
All stockholders are cordially invited to attend the Meeting in
person. Whether or not you expect to attend the Meeting, please sign, date and
mark the enclosed proxy card which is being solicited by the Board of
Directors and return it as soon as possible in the postage-paid envelope
provided. If you wish to vote in accordance with the Board of Director's
recommendations, you need only sign, date and return the proxy card. If you
attend the Meeting, you may revoke your proxy and vote your own shares.
By Order of the Board of Directors
AUDREY FARBER
Secretary
Dated: March 15, 1996
<PAGE>
LANNETT COMPANY, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 12, 1996
GENERAL INFORMATION
Introduction
This Proxy Statement has been prepared by the management of Lannett
Company, Inc. (the "Company"), and is furnished in connection with the
solicitation by the Board of Directors of proxies to be used at the annual
meeting (the "Meeting") of the stockholders of the Company to be held at the
Company's principal office, at 9000 State Road, Philadelphia, Pennsylvania,
19136, on Friday, April 12, 1996, at 10:00 a.m., local time, or at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders and in this Proxy Statement. The Company began
distributing this Proxy Statement and the accompanying materials to the
stockholders on March 15, 1996. The mailing address of the Company's principal
executive offices is 9000 State Road, Philadelphia, Pennsylvania 19136.
Voting Rights
Only holders of record of the Company's common stock (the "Common
Stock") at the close of business on March 7, 1996 (the "Record Date") are
entitled to receive notice of, and to vote at, the Meeting or at any
adjournment. On the Record Date, there were 5,206,128 shares of the Common
Stock issued and outstanding. A list of all stockholders entitled to vote at
the Meeting will be available for inspection by any stockholder at the Meeting
and for a period of ten days prior to the Meeting at the Company's principal
executive offices. Shares cannot be voted at the Meeting or at any adjournment
unless the holder is present in person or represented by proxy.
Quorum
The presence at the Meeting, whether in person or by proxy, of the
holders of a majority of the shares of Common Stock outstanding and entitled
to vote on the Record Date will constitute a quorum. If a quorum is not
present, the vote of a majority of the shares of Common Stock present at the
Meeting, whether in person or by proxy, may without notice adjourn the Meeting
from day to day, or for such longer periods not exceeding fifteen days each,
until a quorum can be obtained.
Solicitation
The Board of Directors invites you to use the proxy card which
accompanies this Proxy Statement to vote the shares of Common Stock owned by
you on the Record Date with respect to each matter on which a vote is to be
taken at the Meeting. To do so, sign, date and mark the enclosed proxy card
and return it as soon as possible in the envelope
<PAGE>
provided. If you wish to vote in accordance with the Board of Director's
recommendations, you need only sign, date and return the proxy card.
Proxies may also be solicited by telephone, telegraph or in person by
directors, officers and employees of the Company. The costs of soliciting
proxies, whether by mail, telephone, telegraph, in person or otherwise, will
be borne by the Company. The Company will reimburse brokerage houses and other
nominees for expenses incurred in sending proxy materials to beneficial
owners.
Revocation
Any proxy given pursuant to this solicitation may be revoked at any
time before it is voted by (a) delivering to the Secretary of the Company, at
or before the time and date of the Meeting, (i) a written notice of revocation
bearing a later date than the proxy, or (ii) a duly-executed proxy bearing a
later date relating to the same shares; or (b) attending the Meeting and
voting in person (attendance at the Annual Meeting will not in and of itself
constitute revocation of a proxy).
Voting Proxies
Shares of Common Stock represented by properly executed proxies
received prior to the Meeting will be voted in accordance with the choices
specified in the proxy. Unless contrary instructions are indicated in the
proxy, the shares will be voted as indicated in this Proxy Statement in
accordance with the recommendations of the Board of Directors. While the
Notice of Annual Meeting indicates that business other than those matters set
forth in this Proxy Statement may come before the Meeting, the Board of
Directors knows of no other matters to be voted on at the Meeting. If any
other matters properly come before the Meeting, the proxies solicited by this
Proxy Statement grant discretionary authority to the proxyholders to vote with
respect to such matters in accordance with their best judgment.
ELECTION OF DIRECTORS
Nominees
The Company's bylaws provide that the number of directors of the
Company may be determined by the stockholders, or in the absence of such
determination, by the Board of Directors. In past years, the Board of
Directors has consisted of six directors. However, effective January 1, 1996,
Barry Weisberg resigned his position as President and a director of the
Company leaving just five directors on the Board. The Board of Directors has
determined that the functions of the Board can be adequately served by five
directors. The Board of Directors nominates the five persons named below for
election to the Board of Directors. Stockholders attending the meeting may
determine that the Company should have fewer or more than five directors and
may nominate and vote for that number of persons to fill such vacancies. If,
due to circumstances not now foreseen, any of the nominees named below are
unable or unwilling to serve for any reason, the proxies will be voted for
such other person or persons as the Board of Directors may deem advisable.
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<PAGE>
In any event, the proxies will be voted for only the five nominees named in
this Proxy Statement or their substitutes. Each director elected at the
Meeting will serve for a term commencing on the date of the Meeting and
continuing until his successor is elected and qualified or until his earlier
resignation or removal.
The following list identifies each nominee for election to the Board
of Directors and sets forth certain information regarding each nominee. Each
nominee is currently serving as a director of the Company.
Roy English, 64, has served as a Director of the Company since
February 1993. Mr. English is a pharmacist by profession. For many years prior
to 1987, Mr. English owned and operated Major Pharmaceuticals - Kentucky
(formerly Murray Drug Corp.), a generic drug distributor. In 1987, Mr. English
sold Murray Drug Corp. From 1987 through 1989, Mr. English served as President
of Major Pharmaceuticals - Kentucky. Mr. English provided consulting services
to Major Pharmaceuticals from 1989 to August 1993. In 1988, Mr. English formed
English Farms, Inc., a closely-held family corporation which sells food
products and is currently Chairman of its Board. In 1991, Mr. English
purchased 50% of Southeastern Book Co., an entity which buys and sells used
college text books. He has retired as President but still serves as a director
of such Company.
Donald Epstein, 62, has served as a Director of the Company since
1989. From 1989 to the present, Mr. Epstein has acted as a financial
consultant. From 1976 through 1989, Mr. Epstein served as President of Little
Donnie's Inc., a Philadelphia-based food distribution company. During the past
23 years, Mr. Epstein has owned and operated a number of food distribution
companies for various lengths of time, including A. Epstein, Inc. and McCray &
Hunter, Inc., and several companies in the business of owning and operating
restaurants in Pennsylvania and New Jersey, including H.A. Winston's, Watson's
and Gibson's restaurants.
David Farber, 36, was elected a Director of the Company in August
1991. Mr. Farber is the owner and President of The Vitamin Outlet Inc. From
October, 1990 to November 1994, when he sold it, Mr. Farber was the President
and owner of Vital Foods, Inc., an eight store chain of health food stores in
the Detroit, Michigan area. Prior to that, Mr. Farber was employed by Michigan
Pharmacal Corporation for 13 years; the most recent six years as Executive
Vice President and, prior to that, as Production Manager. David Farber is the
son of William Farber.
William Farber, 64, was elected as Chairman of the Board of Directors
in August 1991. From April 1993 to the end of 1993, Mr. Farber was the
President and a director of Auburn Pharmaceutical Company. From 1990 through
March 1993, Mr. Farber served as Director of Purchasing for Major
Pharmaceutical Corporation. From 1965 through 1990, Mr. Farber was the Chief
Executive Officer of Michigan Pharmacal Corporation. Mr. Farber is a
registered pharmacist in the State of Michigan. William Farber is the father
of David Farber and the husband of Audrey Farber, Secretary and Treasurer of
the Company.
Gerald Levinson, 64, has served as a Director of the Company since
1979. Mr. Levinson has been a financial consultant for over twenty years and
was Assistant to the
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<PAGE>
Chairman of the Board of Directors of Tabas Enterprises, a privately-held
diversified company, for almost twenty years. Mr. Levinson is currently a
member of the Board of Directors of Execufirst Bancorp, Inc., a bank holding
company, and its subsidiary, First Executive Bank.
To the best of the Company's knowledge, there are no material
proceedings to which any nominee is a party, or has a material interest,
adverse to the Company. To the best of the Company's knowledge, there have
been no events under any bankruptcy act, no criminal proceedings and no
judgments or injunctions that are material to the evaluation of the ability or
integrity of any nominee during the past five years.
Board Meetings
The Board met three times during the fiscal year ended June 30, 1995
("Fiscal 1995"). Each director attended all Board of Director meetings held in
Fiscal 1995 during the period that he served as director; except that Roy
English was unable to attend one of the meetings.
Committees
Several important functions of the Board of Directors may be performed
by committees that are comprised of members of the Board of Directors. The
Company's bylaws authorize the formation of these committees and grant the
Board of Directors the authority to prescribe the functions of each committee
and the standards for membership of each committee. The Board of Directors
appoints the members of each committee. The Board of Directors has three
standing committees: an Executive Committee, an Audit Committee and a
Compensation Committee. The Board of Directors does not have a standing
nominating committee.
The Executive Committee was established to manage the day-to-day
business and affairs of the Company between regular Board meetings. The
current members of the Executive Committee are William Farber and Donald
Epstein. The Executive Committee did not hold any formal meetings during
Fiscal 1995.
The Audit Committee was established to (i) annually recommend a firm
of independent public accountants to the Board of Directors to act as auditors
of the Company; (ii) review the scope of the annual audit with the auditors in
advance of the audit; (iii) review the results of the audit and the adequacy
of the Company's accounting, financial and operating controls; (iv) review the
Company's accounting and reporting principles, policies and practices; and (v)
perform such other duties as may be delegated to it by the Board of Directors.
The current members of the Audit Committee are William Farber and Gerald
Levinson. The Audit Committee did not hold any formal meetings during Fiscal
1995.
The Compensation Committee was established to make recommendations to
the Board of Directors with respect to salaries and other compensation of the
Company's officers, and to act as the administrator of the Company's 1993 Long
Term Incentive Plan.
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<PAGE>
The current members of the Compensation Committee are William Farber and Roy
English. The Compensation Committee did not hold any formal meetings during
Fiscal 1995.
Required Vote
Directors will be elected by a plurality of the votes of the shares of
Common Stock cast in person or by proxy at the Meeting. Abstentions and broker
non-votes will have no effect on the election of directors. Proxies will be
tabulated by the Company's transfer agent. The Judge of Elections appointed at
the Meeting will combine the proxy votes with the votes cast in person at the
Meeting.
Recommendation
The Board of Directors recommends a vote in favor of, and, unless
instructed otherwise, the proxies solicited by the Board of Directors will be
voted FOR, the election of the five nominees listed above.
MANAGEMENT AND COMPENSATION
Executive Officers
The executive officers of the Company are set forth below.
=========================================================================
Name Age Position
- - - - ---- --- --------
William Farber 64 Chairman
Vlad Mikijanic 44 Vice President of Technical
Affairs
=========================================================================
Vlad Mikijanic was elected Vice President of Technical Affairs in
August 1991. For the prior 17 years, Mr. Mikijanic was employed by Zenith
Laboratories in various positions including Corporate Director of Quality
Control/Quality Assurance, a position which he held at Zenith for three years.
See "ELECTION OF DIRECTORS - Nominees" above for a description of
matters pertaining to Mr. William Farber.
To the best of the Company's knowledge, there are no material
proceedings to which any executive officer is a party, or has a material
interest, adverse to the Company. To the best of the Company's knowledge,
there have been no events under any bankruptcy act, no criminal proceedings
and no judgments or injunctions that are material to the evaluation of the
ability or integrity of any executive officer during the past five years.
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<PAGE>
Executive Compensation
Summary Compensation Table
The following table summarizes all compensation paid to or earned by
the Executive Officers of the Company for Fiscal 1995, the fiscal year ended
June 30, 1994 ("Fiscal 1994") and the fiscal year ended June 30, 1993 ("Fiscal
1993"). There are no other executive officers whose total annual salary and
bonus for services rendered to the Company or any subsidiary exceeded $100,000
during Fiscal 1995.
<TABLE>
<CAPTION>
==================================================================================================================
Long Term
Compensation
-----------------------------
Annual Compensation Awards Payouts
- - - - ------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Restricted LTIP All Other
Principal Fiscal Other Annual Stock Options/ Payouts Compensation
Position Year Salary Bonus(1) Compensation Award(s) SARs Amount Amount
- - - - -------- ------ ------ ------ ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Barry 1995 163,262 10,760 20,000(2) 0 0 0 27,850(3)
Weisberg
President/
CEO
1994 158,556 10,883 20,000(2) 0 20,000(4) 0 27,676(5)
1993 154,500 11,272 20,634(2) 0 20,000(6) 0 22,427(7)
Vlad 1995 101,038 0 7,200(2) 0 0 0 3,268(8)
Mikijanic
Vice
President/
Technical
Affairs
<FN>
===========================================================================
(1) The Company contributed $9,240, $9,117 and $8,728 in Fiscal 1995,
Fiscal 1994 and Fiscal 1993, respectively, on Mr. Weisberg's behalf to the
Company's 401(k) Plan. Pursuant to his employment agreement, Mr. Weisberg
earned an additional bonus of $10,760, $10,883 and $11,272 in Fiscal 1995,
Fiscal 1994 and Fiscal 1993, respectively.
(2) Includes $20,000 paid to Mr. Weisberg, and $7,200 paid to
Mr. Mikijanic for automobile leasing and expenses for all periods presented.
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<PAGE>
(3) Includes $13,740 paid to the Company's 401(k) Plan (including
$9,240 contributed pursuant to Mr. Weisberg's bonus arrangement and an
additional contribution of up to 3% of Mr. Weisberg's salary), $8,624 paid for
life insurance premiums, and $5,486 paid for long term disability insurance.
(4) Represents incentive stock options to purchase 20,000 shares of
Common Stock which were granted to Mr. Weisberg under the Company's 1993 Long
Term Incentive Stock Plan (the "Plan"). The options were granted at a per
share exercise price of $3.78125, which was the fair market value on the date
of issuance. The options are exercisable one-third on or after April 27, 1995,
one-third on or after April 27, 1996 and one-third on or after April 27, 1997.
(5) Includes $13,831 paid to the Company's 401(k) Plan (including
$9,117 contributed pursuant to Mr. Weisberg's bonus arrangement and an
additional contribution of up to 3% of Mr. Weisberg's salary), $8,627 paid for
life insurance premiums, and $5,218 paid for long term disability insurance.
(6) Represents incentive stock options to purchase 20,000 shares of
Common Stock at a per share exercise price of $4,375, which were granted to
Mr. Weisberg under the Plan. The options were granted at a per share exercise
price equal to the fair market value on the date of issuance. The per share
exercise price and the number of shares subject to option were subsequently
adjusted to reflect the Company's four-for-one stock split effected in March
1993. The options are exercisable one-third on or after February 16, 1994,
one-third on or after February 16, 1995 and one-third on or after February 16,
1996.
(7) Includes $13,800 paid to the Company's 401(k) Plan (including
$8,728 contributed pursuant to Mr. Weisberg's bonus arrangement and an
additional contribution of up to 3% of Mr. Weisberg's salary) and $8,627 paid
for life insurance premiums.
(8) Represents $3,268 paid to the Company's 401(k) Plan (a Company
contribution of up to 3% of Mr. Mikijanic's salary).
</TABLE>
<TABLE>
<CAPTION>
Option Exercises and Year End Option Values
======================================================================================================
(a) (b) (c) (d) (e)
Value of
Unexercised
Number of Securities In-the-Money
Shares Underlying Unexercised Options at
Acquired Options at FY-End FY-End
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable *
- - - - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Barry Weisberg - - 20,000 $ 0
President/CEO 20,000 $ 0
<FN>
==============================================================================
* Computed by reference to the average of the bid and asked prices of such
stock as quoted by the NQB.
</TABLE>
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<PAGE>
Compensation of Directors.
Directors received compensation of $300 per meeting attended, for
services provided as directors of the Company or for committee participation
or special assignments during Fiscal 1995. Directors are reimbursed for
expenses incurred in attending Board meetings.
Employment Contracts.
The Company and Barry Weisberg entered into a five-year Employment
Agreement as of August 14, 1991, which provided for an initial salary of
$150,000 with annual salary increases of 3%. In addition, Mr. Weisberg is
entitled to an annual bonus equal to $20,000 less the amount the Company
contributes to a retirement plan for Mr. Weisberg's benefit and an automobile
allowance of $20,000 per annum. Effective January 1, 1996, Barry Weisberg
resigned as President and a director of the Company. In announcing his
resignation, Mr. Weisberg noted that he had accomplished most of what he had
hoped, creating a solid, emerging Company, and that he could relax a little
now that his long commute from his home in eastern New Jersey had ended.
The Company and Mr. Weisberg entered into a Termination of Employment
Agreement dated as of January 1, 1996, pursuant to which, in full satisfaction
of all obligations which may be owed to him under his Employment Agreement,
the Company agreed to pay him, as and when provided under his Employment
Agreement, all compensation and fringe benefits to which he is entitled under
his Employment Agreement through the close of business August 13, 1996. Mr.
Weisberg's annual salary for the year ending August 13, 1996 is $168,826.32.
In addition, under the Termination Agreement, if all or substantially all of
the Company's assets or a majority of its outstanding stock is sold on or
before June 30, 1996, the Company will pay Mr. Weisberg the sum of $220,000 in
immediately available funds within twenty four (24) hours following the
consummation of such transaction.
The Company and Vlad Mikijanic entered into a five-year Employment
Agreement as of February 1, 1994, which provided for an initial salary of
$100,000 with annual salary increases of 3% and an automobile allowance of
$7,200 per annum.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
William Farber, a principal shareholder and a director of the Company,
has provided the Company with a financing package aggregating $5,500,000,
which the Company has used to renovate its manufacturing facility, to acquire
new equipment, to remove hazardous waste materials, to retain new management
and to provide working capital. The financing package was the Company's
primary source of funds with which to operate during Fiscal 1993. The
financing package consists of a $3,500,000 revolving line of credit and a
$2,000,000 convertible debenture. During Fiscal 1995 the Company amended the
shareholder revolving line of credit and convertible debenture agreements to
defer interest accrued from April 1, 1995 to June 30, 1996 which is payable in
twenty-four equal monthly installments, commencing August 15, 1996 and
continuing on the fifteenth day of each
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<PAGE>
month thereafter until paid in full. Mr. Farber is currently the holder of
980,226 shares of Common Stock, or approximately 18.83% of the Company's
issued and outstanding shares. Mr. Farber also has the right to acquire an
additional 8,000,000 shares of Common Stock upon conversion of the debenture.
Prior to the election of Mr. Farber as a director, the Company's Board
of Directors determined that the value of the debenture at the time of its
issuance did not exceed its face amount. In making such determination, the
directors considered the prices at which the Common Stock had been trading
immediately prior to Mr. Farber's purchase of a significant block of such
stock, the Company's dim prospects without the financing facility and the
valuation placed on the Company by an investment banker engaged by Mr. Farber.
At the time of issuance, the inter-dealer prices quoted for the Common Stock
exceeded the conversion price for the Debenture. If Mr. Farber exercises the
conversion feature of the Debenture, the per share earnings will be
significantly diluted. It is likely that Mr. Farber will exercise the
conversion feature prior to its expiration so long as quoted market prices for
the Common Stock continue to exceed the conversion price.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of February 15, 1996, information
regarding the security ownership of the directors and certain executive
officers of the Company and persons known to the Company to be beneficial
owners of more than five (5%) percent of the Common Stock:
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<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================
Excluding Options Including Options
and Debentures and Debentures
------------------------ ------------------------
Name and Address of Number Percent Number Percent
Beneficial Owner Office of Shares of Class of Shares of Class
- - - - ------------------- ------ --------- -------- --------- --------
Directors/Executive Officers:
<S> <C> <C> <C> <C> <C>
Roy English Director 34,000(1) .65% 34,000(1) .65%
English Farms
511 No. 10th Street
Murray, KY 42071
Donald Epstein Director 181,616 3.49% 181,616 3.49%
8848 Rising Sun
Philadelphia, PA 19115
David Farber(2) Director 59,472(3) 1.14% 59,472(3) 1.14%
6874 Torybrooke Circle
W. Bloomfield, MI 48323
William Farber(2) Chairman of 980,226 18.83% 8,980,226(4) 68.00%
32640 Whatley the Board
Franklin, MI 48025
Gerald Levinson Director 138,800(5) 2.67% 138,800(5) 2.67%
309 Harner Drive
Ambler, PA 19002
Vlad Mikijanic
9000 State Road Vice President 0 0 3,999(6) .03%
Philadelphia, PA 19136 of Technical
Affairs
Barry Weisberg Former 10,260(7) .20% 30,259(7,8) .23%
9000 State Road President and
Philadelphia, PA 19136 Director
All directors and 1,404,374 26.98% 9,428,372(9) 71.39%
executive officers
as a group
(7 persons)
Other 5% Shareholders:
Samuel Gratz 1,018,724(10) 19.56% 1,018,724(10) 19.56%
1139 Kerper Street
Philadelphia, PA 19111
<FN>
==============================================================================
(1) Includes 3,500 shares owned by the spouse of Mr. English.
(2) William Farber is the father of David Farber and the husband of
Audrey Farber, the Secretary and Treasurer of the Company.
(3) Includes 6,192 shares held by David Farber's minor child and 4,000
shares held in an individual retirement account.
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<PAGE>
(4) Includes 8,000,000 shares of Common Stock subject to issuance upon
conversion of the debenture held by Mr. Farber. Mr. Farber may convert all or
any portion of such indebtedness at any time prior to payment in full of the
outstanding indebtedness represented by the debenture at a rate of 4,000
shares of Common Stock for each $1,000 of outstanding indebtedness (adjusted
to reflect the Company's 4 for 1 stock splits in April 1992 and March 1993),
subject to anti-dilution provisions. The current outstanding indebtedness
represented by the debenture is $2,000,000.
(5) Includes 400 shares held by Mr. Levinson's child, who resides in the
same household.
(6) Represents 2,666 shares of Common Stock subject to currently
exercisable options to purchase shares at an exercise price of $4.375 per
share, and 1,333 shares of Common Stock subject to currently exercisable
options to purchase shares at an exercise price of $3.78125 per share.
(7) Includes 4,060 shares held by Mr. Weisberg's minor child.
(8) Includes 13,333 shares of Common Stock subject to currently
exercisable options to purchase shares at an exercise price of $4.375 per
share, and 6,667 shares of Common Stock subject to currently exercisable
options to purchase shares at an exercise price of $3.78125.
(9) Includes 15,999 shares of Common Stock subject to currently
exercisable options to purchase shares at an exercise price of $4.375 per
share, and 8,000 shares of Common Stock subject to currently exercisable
options to purchase shares at an exercise price of $3.78125 and 8,000,000
shares of Common Stock subject to issuance on the conversion of the debenture
held by William Farber.
(10) Includes 496 shares which are held by the wife of Samuel Gratz.
</TABLE>
Section 16(a) Compliance
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
and certain written representations furnished to the Company during Fiscal
1995, the Company is not aware of the failure to file on a timely basis, any
of the reports required by Section 16(a) of the Securities Exchange Act of
1934.
Independent Public Accountants
In December 1992, the Board of Directors selected Grant Thornton,
L.L.P. to act as the Company's independent public accountants. Representatives
of Grant Thornton, L.L.P. are expected to be present at the Meeting and will
have the opportunity to make a statement if they desire to do so and respond
to appropriate questions.
Stockholder Proposals
Any stockholder proposals to be presented at the next annual meeting
of stockholders to be held in 1997 which are eligible for inclusion in the
Company's proxy statement for such meeting must comply with the rules and
regulations promulgated under the Securities Exchange Act of 1934, as amended,
and must be received by the Company no later than November 16, 1996. Proposals
should be addressed to the Company's Secretary at 9000 State Road,
Philadelphia, Pennsylvania 19136.
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<PAGE>
1995 Annual Report to Stockholders
The Company's 1995 Annual Report to Stockholders has been mailed with
this Proxy Statement or previously delivered to stockholders.
Other Matters
Management knows of no matters which will be presented for
consideration at the Meeting other than those stated in the Notice of Meeting.
However, if any other matters do properly come before the Meeting, the
proxyholders named in the accompanying proxy will vote the proxy in accordance
with their best judgment regarding such matters.
By Order of the Board of Directors
AUDREY FARBER
Secretary
Dated: March 15, 1996
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[ FRONT OF PROXY CARD ]
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LANNETT COMPANY, INC.
Proxy for the Annual Meeting of Stockholders
April 12, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
LANNETT COMPANY, INC.
The undersigned stockholder of LANNETT COMPANY, INC. (the "Company") hereby
appoints WILLIAM FARBER and DONALD EPSTEIN, or either of them, the attorneys
and proxies of the undersigned stockholder, with full power of substitution,
to vote all of the shares of the Company's common stock standing in the name
of the undersigned stockholder at the close of business on March 7, 1996, at
the annual meeting (the "Annual Meeting") of the Company's stockholders to be
held on Friday, April 12, 1996, and at any adjournment thereof, with all of
the powers the undersigned stockholder would possess if then and there
present.
I. ELECTION OF DIRECTORS
[ ] FOR all of the nominees listed below:
Roy English William Farber
Donald Epstein Gerald Levinson
David Farber
[ ] FOR all of the nominees listed above EXCEPT those nominees
with a line drawn through their name.
[ ] AUTHORITY IS WITHHELD for all of the nominees listed above.
II. OTHER BUSINESS
The above-appointed proxies are authorized to vote upon all matters
incidental to the conduct of the Annual Meeting and such other
business as may properly come before the Annual Meeting in accordance
with their best judgment.
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[ BACK OF PROXY CARD ]
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The undersigned stockholder acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement dated March 15, 1996.
The giving of this Proxy does not affect the right of the undersigned
stockholder to vote in person should the undersigned stockholder attend the
Annual Meeting. This Proxy may be revoked at any time before it is voted.
This Proxy, when properly executed, will be voted by the above-appointed
proxies in the manner directed herein by the undersigned stockholder. If no
choices are specified, this Proxy will be voted FOR the election of the
nominees listed above. The undersigned stockholder confers upon the
above-appointed proxies the discretionary authority to vote for any other
person or persons for election to the Board of Directors if any of the
nominees listed above are unable to serve or for good cause will not serve as
director due to circumstances not now foreseen.
Please sign exactly as your name appears below. If signing as attorney,
executor, personal representative, trustee or in some other representative
capacity, sign name and give full title. If a corporation, sign in corporate
name by authorized officer. If a partnership, sign in partnership name by
authorized person. When shares are held by joint tenants, both tenants must
sign. Brokers executing proxies should indicate in the space below the number
of shares with respect to which authority is conferred by this Proxy if less
than all shares held by such broker as nominee are to be voted.
Signature: ___________________________________
Signature: ___________________________________
(if held jointly)
Date: _____________________
Brokers - Number of Shares: __________________
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
IN THE ENCLOSED ENVELOPE PROMPTLY.
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