SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                   FORM 10-K

[X]   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

                   For the fiscal year ended June 30, 1996

[   ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
                             ____________________

                       Commission File Number:  0-13976
                             ____________________

                               AKORN, INC.
         (Name of small business issuer as specified in its charter)

            LOUISIANA                                  72-0717400
   (State or other jurisdiction of           (IRS Employer Identification No.)
    incorporation or organization)

               100 Akorn Drive, Abita Springs, Louisiana 70420
            (Address of principal executive offices and zip code)
                  Issuer's telephone number: (504) 893-9300
                             ____________________

        SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:

                                     None

        SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:

                          Common Stock, No Par Value
                               (Title of Class)


Check  whether  the  Issuer  (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the Registrant  was  required  to file such reports),
and (2) has been subject to such filing requirements for  the  past  90  days.
Yes X    No ____


Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-K  is not contained in this form, and will not be contained, to the best  of
issuer's knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[  ]

The  aggregate  market  value  of  the  voting  stock  held  by  nonaffiliates
(affiliates  being, for these purposes only, directors, executive officers and
holders of more  than  5%  of  the  Issuer's common stock) of the Issuer as of
September 23, 1996 was approximately $27,500,000.

The number of shares of the Issuer's  common  stock,  no  par value per share,
outstanding as of September 23, 1996 was 16,573,915.




                                    PART I

Item 1.      Description of Business.

General Development of Business

   Akorn, Inc. (Akorn or the Company) manufactures, markets and distributes an
extensive  line  of  therapeutic,  diagnostic  and surgical pharmaceutical and
over-the-counter ophthalmic products.  In addition,  through  its wholly-owned
subsidiary Taylor Pharmaceuticals, Inc. (Taylor), the Company manufactures and
distributes  injectable pharmaceutical products and provides sterile  contract
manufacturing  services  to  several large and small pharmaceutical companies.
Akorn, a Louisiana corporation  founded  in  1971,  is  headquartered in Abita
Springs, Louisiana, a suburb of New Orleans.

   Prior to the fiscal year beginning July 1, 1989, the Company  purchased its
entire ophthalmic product line on a contract basis from several suppliers, who
packaged  and  labeled  the  products  under the Company's name.  In September
1989,  in  order  to more vertically integrate  its  operations,  the  Company
acquired Walnut Pharmaceuticals,  Inc.  (Walnut),  a manufacturing facility in
Los Angeles, California that was capable of manufacturing  sterile  ophthalmic
solutions,  suspensions,  and human injectable products, among other products.
This facility operated until  mid  1991, at which time the facility was closed
due to current Good Manufacturing Practices (cGMP) concerns.

   In January 1992, the Company acquired  Taylor  of Decatur, Illinois.  Akorn
immediately  began  the  process  of  transferring  to Taylor  the  operations
formerly conducted at the Los Angeles facility while  maintaining  the sterile
contract manufacturing business conducted by Taylor.  In May 1996, the Company
acquired   Pasadena   Research  Laboratories,  Inc.  (PRL),  a  developer  and
distributor of injectable  products,  and  merged  PRL  into  Taylor,  thereby
creating  a  fully-integrated  injectable  pharmaceutical company.  The merger
also expanded Taylor's current product pipeline.

   For information regarding sales, operating  income  and identifiable assets
for  each  of  the Company's segments, see Note Q to the financial  statements
included in Item 8 of this report.

Ophthalmic Distribution Business

   The Company distributes  a  complete  line  of  therapeutic, diagnostic and
over-the-counter ophthalmic pharmaceutical products  as well as other surgical
and  office-based  non-pharmaceutical  products.   The  Company's  therapeutic
ophthalmic pharmaceutical product line is extensive and includes  antibiotics,
anti-infectives,   steroids,   steroid   combinations,  glaucoma  medications,
decongestants/antihistamines, and anti-edema medications. Diagnostic products,
primarily for use in doctors' offices, include  a  complete line of mydriatics
and  cycloplegics,  anesthetics,  topical  stains, gonioscopic  solutions  and
others.  Surgical products available from Akorn  include  surgical  knives and
other  surgical  instruments,  balanced  salt  solution,  post-operative kits,
surgical tapes, eye shields, anti-ultraviolet goggles, facial  drape supports,
and  other  supplies.   Ophthalmic  over-the-counter products include  various
artificial  tear  solutions,  preservative-free   lubricating  ointments,  lid
cleansers, vitamin supplements and contact lens accessories.

Injectable Manufacturing and Distribution Business

   Taylor markets a line of over 55 niche injectable  pharmaceutical  products
through the newly acquired operations of  PRL.  Founded in 1936, PRL had  over
50  years of history in the generic small volume parenteral market.  The niche
injectable  products  sold  are  used  in the treatment of a broad spectrum of
indications, including rheumatoid arthritis and pain management.

Contract Manufacturing Business

   Taylor also manufactures sterile products,  on  a contract basis, for third
parties.   The  majority  of  Taylor contracts are short-term  in  nature  and
operate on the basis of signed  purchase  orders.   However,  Taylor is in the
process of developing longer-term contracts with minimum quantity requirements
in  order to strengthen the commitments from its contract customers.   Because
of the  present  nature  of  Taylor's contracts, its contract manufacturing is
more volatile than the ophthalmic  distribution  and  injectable  distribution
segments.  Given that sales to contract customers are large in relation to the
distribution  segments,  sharp reductions in contract manufacturing sales  can
occur should customers discontinue the contract for any reason.

Sales and Marketing

   While the Company's distributed  ophthalmic  and  injectable  product lines
include some unique products, the majority are non-proprietary.  As  a result,
the  Company  relies on its expertise in marketing, distribution, development,
and low cost manufacturing in order to maintain and increase market share.

   The Company  maintains  an  efficient three-pronged ophthalmic distribution
sales effort.  This effort includes  23  outside  sales  representatives  who,
together  with  two district managers, make personal calls on customers in the
Northeast, Southeast,  Midwest  and West regions of the country.  In addition,
the Company maintains an in-house  telemarketing  and a customer service sales
group of 25 persons who operate at the Company's facilities  in Abita Springs.
The  Company  also  maintains  a  direct-mail  marketing  effort.   Ophthalmic
distribution  customers  consist  primarily of ophthalmologists, optometrists,
independent pharmacies, and full-service  wholesalers  whose customers include
hospitals and other institutions.

   The  Company's  sales and marketing efforts in the injectable  distribution
business include seven  telemarketing and customer service representatives and
direct-mail activities.   Injectable  distribution customers consist primarily
of  hospitals  and  specialty  physicians.    In  addition,  the  Company  has
established  several  strategic alliances to help  distribute  its  injectable
products to Group Purchasing  Organizations (GPOs). The GPO market is expected
to become a major component of sales to the injectable distribution segment as
the Company aggressively expands  its  generic  injectable product offering to
include more high volume products.  The Company also  intends  to  build a key
account sales force for the injectable segment over the next several  years as
new products are introduced.

   The  Company's  sales  and  marketing efforts in the contract manufacturing
business  have  been limited to personal  contact  with  major  pharmaceutical
companies  and  limited   trade   journal   advertisements.    Attendance   at
manufacturing  trade  shows  and  an  aggressive marketing of the full-service
capabilities of Taylor's contract operations  will  be  implemented  in fiscal
1997.   The  Company's contract customers include several large pharmaceutical
companies.   Throughout   Taylor's   history,   it   has   performed  contract
manufacturing services for some of the largest pharmaceutical companies.

   The Company stresses its service, quality and cost as means  to attract and
keep customers.

Research and Development

   The acquisition of Taylor provided the Company with resources  to begin its
research  and  development program, which began in the last quarter of  fiscal
1992 and has since  expanded.   As  of  June  30,  1996, the Company had 4 new
ophthalmic ANDAs on file with the FDA for products which  the  Company has not
previously manufactured.  See "Government Regulation."  These products,  along
with  a  recently  approved  ANDA  product  which the Company will market upon
patent expiration of the innovator product, have  a  current  aggregate  brand
market  of  approximately  $180 million.  In addition, by the third quarter of
calendar 1996, the Company had seven products in various stages of development
leading  to  ANDA  submission.   These  injectable  products  have  a  current
aggregate brand market  of  approximately  $300  million.  No assurance can be
given  as  to whether the Company will develop marketable  products  based  on
these filings or as to the size of the market for any such products.

   The Company has targeted its research and development efforts over the next
three years  on  25  to  30 additional ophthalmic and injectable products, the
patents on which have expired  or  will  expire in the near future. Production
and marketing of any products developed as  a  result  of  these  efforts  are
expected to take several years.

   The  Company  also  maintains an aggressive product licensing effort.  This
effort allows the Company  to  use  its  strength  in marketing ophthalmic and
injectable products.  The Company also anticipates manufacturing  many  of the
licensed products.

   At  June  30, 1996, 19 full-time employees of the Company were involved  in
research and development  and  product  licensing.  The Company's research and
development  expenditures for 1996, 1995 and  1994  were  $1.9  million,  $1.7
million and $1.4 million, respectively.

   The Company  expects  its research and development expenditures to increase
in fiscal 1997.

Employee Relations

   The Company has 282 full-time  employees,  of  whom  75 are employed in the
Abita Springs facility, 167 are employed in Decatur, Illinois, 15 are employed
in  San Clemente, CA,  and 25 are in outside sales.  The Company  enjoys  good
relations  with  its  employees,  none of whom are represented by a collective
bargaining agent.

Competition

   The   manufacture   and   distribution   of   ophthalmic   and   injectable
pharmaceutical  products  is  highly   competitive,   with   many  established
manufacturers, suppliers and distributors actively engaged in  all  phases  of
the  business.  Most  of  the  Company's competitors have substantially larger
financial and other resources, including  a larger volume of sales, more sales
personnel and larger facilities than the Company.

   The competitors which are dominant in the  ophthalmic distribution industry
are   Alcon  Laboratories,  Inc.,  Allergan  Pharmaceuticals,   Inc.,   Steris
Pharmaceuticals,  Inc.  (Steris)  and  Bausch & Lomb, Inc. (B&L).  The Company
competes primarily on the basis of price and service.  The Company's principal
suppliers,  Steris  and B&L are in direct  competition  with  the  Company  in
several markets.  Both  generic  and  name  brand  companies  compete  in  the
injectable  generic  distribution  industry  and  include Abbott Labs, Gensia,
Marsam, Steris, Elkin Sin and American Regent.

   The  manufacturing  of sterile products must be performed  under  the  most
rigorous FDA-mandated Good Manufacturing Practices.  Therefore the barriers to
entry in the manufacturing  of  sterile  products are very high. The number of
independent contract manufacturers of sterile products continues to decline as
a result of these barriers.  Taylor's competitors in this area, generally, are
larger companies with greater financial and other resources.

Product Supply

   Since the acquisition of Taylor in 1992,  the  Company  has  been  steadily
regaining  control  of  the  supply of its ophthalmic pharmaceutical products,
which had been impacted by the  closure  of  the Los Angeles facility in 1991.
During the fiscal year ended June 30, 1996, approximately 30% of the Company's
net ophthalmic distribution sales were accounted  for by products manufactured
at  Taylor  and approximately 70% by unaffiliated suppliers,  the  largest  of
which is Sight  Pharmaceuticals,  Inc.  (a  division  of  B&L).   This company
supplied  products  accounting  for   13%  of  the  Company's  net  ophthalmic
distribution  sales  during  fiscal 1996.  No other supplier supplied products
accounting for more than 10% of  the  Company's  net  ophthalmic  distribution
sales during fiscal 1996.

   The   Company  uses  several  suppliers  for  its  injectable  distribution
business.   Several of the leading products distributed by this segment are in
the process of  being  transferred  to Taylor's manufacturing facilities.  The
Company  intends  to  produce  the majority  of  its  high  volume  injectable
distribution products over the next several years.

Government Regulation

   All pharmaceutical manufacturers  and distributors are subject to extensive
regulation by the federal government,  principally by the FDA and, to a lesser
extent, by state governments.  The federal  Food,  Drug  and Cosmetic Act (the
FDA  Act),  the  Controlled  Substance  Act,  and other federal  statutes  and
regulations govern or influence the development, testing, manufacture, safety,
labeling,   storage,  recordkeeping,  approval,  pricing,   advertising,   and
promotion of products by the Company and its subsidiaries.  Included among the
requirements  of  these statutes is that the manufacturer's methods conform to
cGMPs provided for  in  FDA regulations.  Pursuant to its powers under the FDA
Act, the FDA inspects drug  manufacturers  and storage facilities to determine
compliance  with its Good Manufacturing Practice  regulations,  non-compliance
with which can  result  in  fines,  recall  and  seizure of products, total or
partial  suspension of production, refusal of the government  to  approve  new
drug applications,  and  criminal  prosecution.  The FDA also has authority to
revoke approval of drug products.

   Except in the case of drugs identified  as  category  B in the FDA Act, FDA
approval  is required before any drug can be manufactured and  marketed.   New
drugs require  the  filing of a New Drug Application (NDA) with the FDA, which
requires clinical studies  demonstrating  the  safety and efficacy of the drug
and compliance with additional regulatory requirements.

   Abbreviated procedures are available for obtaining  FDA  approval for those
generic  drugs  which  are equivalents of existing brand name drugs,  such  as
certain drugs that had been  manufactured  at the Los Angeles facility and are
expected to be manufactured by Taylor.  In order  to  obtain approval of a new
generic  drug,  the Company files an Abbreviated New Drug  Application  (ANDA)
with the FDA.  An  ANDA  is  similar  to a NDA, except that the FDA waives the
requirement of conducting clinical studies  of  safety and efficacy.  Instead,
for drugs which contain the same ingredients as drugs already approved for use
in  the  United  States, the FDA ordinarily requires  data  showing  that  the
generic drug formulation  is  equivalent  to  the brand name drug and that the
product is stable in its formulation.

   Over  the past several years, the FDA has increased  its  scrutiny  of  the
operations  of  generic  drug manufacturers like the Company and has increased
the time required for its  approval  of  ANDAs  and  NDAs  submitted  by  such
companies.   In addition, the Office of Generic Drugs of the FDA, the division
which monitors  and  approves  ANDAs,  has  increased  its  scrutiny regarding
concentrations  of inactive ingredients for generic drugs as compared  to  the
innovator drug.   This change has resulted in an increase in the time spent on
formulating ANDA products.

   In addition, the  Company  manufactures and distributes several controlled-
drug  substances.   The  distribution  and  handling  of  these  products  are
regulated by the Drug Enforcement  Agency  (DEA).   Strict compliance with DEA
regulations  is  necessary  to  continue  distribution  of  controlled  drugs.
Failure to comply with regulations can result in fines or seizure of product.

Item 1A.   Executive Officers of the Registrant

   The executive officers of the Company are listed below. Each officer serves
as such at the pleasure of the Board of Directors.   

John N. Kapoor, Ph.D. Dr. Kapoor, age 53, has served as Chief Executive
                      Officer of the Company since May 1996.  He has also been
                      a director and member of the Executive  Committee of the
                      Company  since  December 1991.   From May 1995,  he  has
                      served as Chairman  of  the  Board  of the Company.  Dr.
                      Kapoor had served as acting Chairman  of  the  Board  of
                      Directors  from  April  1993  to  May 1995; he served as
                      Chairman of the Board of the Company  from December 1991
                      to January 1993. Dr. Kapoor also served  as  Chairman of
                      the  Board  and Chief Executive Officer of Option  Care,
                      Inc., a franchiser  of home infusion therapy businesses,
                      from August 1993 to April  1996.   Since  1990,  he  has
                      served as President of EJ Financial Enterprises, Inc., a
                      privately   held   financial   services  and  consulting
                      company.

Floyd Benjamin        Mr. Benjamin, age 53, was elected   President  of Taylor
                      and  Executive Vice President of the Company on May  31,
                      1996, upon the  merger  of PRL and Taylor. Mr.  Benjamin
                      served as President of PRL  since  October 1994 and  as
                      a  consultant  to  PRL  since  becoming  a shareholder 
                      in October 1993.  Prior to joining   PRL, Mr. Benjamin 
                      served as  President and   Chief Executive  Officer of 
                      Neocrin, a  biomedical venture  company, from February
                      1992 until October  1993.  Prior  to  then, Mr. Benjamin
                      served as Chief Operating Officer of Lyphomed,  Inc.,  a
                      manufacturer     and     distributor    of    injectable
                      pharmaceuticals.

Barry D. LeBlanc       Mr.  LeBlanc,  age  41,  was elected  President,  Chief
                      Executive Officer of the Company  in  December 1991.  In
                      May 1996, Mr. LeBlanc relinquished his  position  of CEO
                      and   became   President  of  the  Company's  Ophthalmic
                      Division and Executive  Vice  President  of the Company.
                      From August 1987 to December 1991, Mr. LeBlanc served as
                      President and Chief Operating Officer of the Company. He
                      also   was  a  director  and  member  of  the  Executive
                      Committee  of  the  Company since August 1987.  Prior to
                      1987,  Mr.  LeBlanc  was   principally   employed  as  a
                      practicing certified public accountant and  served  as a
                      financial consultant to the Company.  Effective July  3,
                      1996, Mr. LeBlanc resigned all of his positions with the
                      Company, including his postion as a director.

Harold O. Koch             Mr.  Koch,  age  47,  has  served  as  Senior  Vice
                      President  since  January  1995.   From  January 1993 to
                      December  1994, he served as Vice President  -  Business
                      Development.   From July 1991 to December 1992, Mr. Koch
                      coordinated  the   reorganization   of   the   Company's
                      manufacturing  operations.   From November 1988 to  June
                      1991, he acted as an independent  consultant in the area
                      of  biotechnology formulation, ophthalmic  manufacturing
                      processes  and  ophthalmic  marketing.  From May 1987 to
                      October  1988,  he served as Vice  President  -  Product
                      Development for the  Cooper  Company.  Prior to this Mr.
                      Koch  served  as  Director  of Product  Development  for
                      Cooper Vision Ophthalmics.

Eric M. Wingerter         Mr. Wingerter, age 34, has  served as Vice President
                      - Finance and Administration since July 1993 and as Vice
                      President - Finance from January 1993 through June 1993.
                      Since  September  1988,  Mr.  Wingerter   has  been  the
                      Company's Chief Financial Officer.  From January 1984 to
                      September  1988,  he  practiced  as  a certified  public
                      accountant in the audit department at Ernst & Young.

Item 2. Description of Property.

   The Company's ophthalmic executive offices, sales and  distribution  center
are based in two adjacent buildings totalling approximately 30,000 square feet
located on ten acres of land in Abita Springs, Louisiana. These buildings  are
believed  adequate  for Akorn's present ophthalmic executive office, sales and
warehousing and distribution  activities.   The  land  owned by the Company in
Abita Springs can accommodate growth in Company executive and ophthalmic sales
and distribution operations for the foreseeable future.

   Through Taylor, the Company owns a 76,000 square-foot  facility  located on
15  acres  of land in Decatur, Illinois.  This facility is currently used  for
packaging, distribution,  warehousing  and  office space.  In addition, Taylor
owns a 55,000 square-foot manufacturing facility,  also  in Decatur, Illinois.
Through  Taylor,  the  Company  also leases 7,000 square feet  of  office  and
warehousing  space in San Clemente,  California  for  use  in  the  injectable
distribution segment,  including  sales,  distribution  and executive offices.
This  space,  along with available space in Decatur, Illinois,  is  considered
adequate to accomodate  growth  in  the  injectable  distribution and contract
manufacturing operations for the foreseeable future.

Item 3. Legal Proceedings.

   From time to time the Company becomes involved, in  the  ordinary course of
its  business, in legal actions and claims.  The amount, if any,  of  ultimate
liability  with  respect  to  such  matters  cannot be determined.  Management
believes, however, that any such liability will  not have a material effect on
the Company's consolidated financial statements.

Item 4. Submission of Matters to a Vote of Security Holders.

No  matters were submitted to a vote of security holders  during  the  quarter
ended June 30, 1996.


                                   PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

   The  Company's  Common  Stock is traded on the Nasdaq National Market under
the symbol AKRN. On September  15, 1996, the Company estimated that the number
of  holders  of its Common Stock was  approximately  3,000,  including  record
holders and individual participants in security position listings.

   High and low prices for the last two years were:

                             1996                         1995
                 _____________________________________________________________  
                                     Cash                            Cash
                 Market Price (1)   Dividends   Market  Price  Dividends
Dividends       Low         High    Declared    Low     High       Declared
                ______________________________________________________________
1st Quarter     $ 2.25   $ 2.81     $  -       $ 2.38   $ 3.19    $    -
2nd Quarter       2.06     3.13        -         2.94     4.00         -
3rd Quarter       2.44     3.19        -         2.88     3.63         -
4th Quarter       2.53     3.50        -         2.25     3.31         -

 Per NASDAQ

   The  Company's  Board  of  Directors  decided  to  suspend  the  payment of
dividends  in the first fiscal quarter of 1992. Any such future payments  will
be,  in part,  contingent  upon  the  level  of  the  Company's  research  and
development  efforts and expansion of operations. The Company's loan agreement
includes restrictions  on  the  payment  of  dividends.   During  fiscal 1996,
dividends  paid  pertain  to  Subchapter  S  distributions made to former  PRL
shareholders for pre-acquisition earnings.



Item 6.  Selected Consolidated Financial Data.

  The following table sets forth selected consolidated  financial  information
for Akorn, Inc. for the five years ended June 30, 1996.
                                                                  
Years Ended June 30 1996 1995 1994 1993 1992 ______________________________________________________________________________________________________ PER SHARE Equity $ 0.97 $ 0.93 $ 0.76 $ 0.47 $ 0.35 Net income (loss) $ 0.05 $ 0.15 $ 0.14 $ 0.12 $ (0.51) Price: High $ 3.50 $ 4.00 $ 3.88 $ 3.13 $ 4.13 Low $ 2.06 $ 2.25 $ 1.88 $ 1.50 $ 1.25 P/E: High 58x 27x 28x 26x NM Low 34x 15x 13x 13x NM INCOME DATA (000) Net sales 33,925 37,505 31,266 23,612 20,914 Gross profit 11,953 15,177 13,218 9,699 7,942 Operating income (loss) 1,089 3,910 2,654 1,712 (7,237) Interest expense (441) (25) (181) (288) (305) Pretax income (loss) 977 3,738 2,573 1,518 (7,370) Income taxes (benefit) 189 1,232 158 (263) (521) Net income (loss) 788 2,506 2,415 1,781 (6,849) Weighted average shares outstanding 16,788 16,799 16,711 14,799 13,522 BALANCE SHEET (000) Current assets 17,251 15,474 15,044 9,209 9,989 Net fixed assets 11,524 11,060 6,346 5,325 5,174 Total assets 29,817 27,491 22,190 15,008 15,692 Current liabilities 9,601 7,016 7,106 3,764 7,559 Long-term obligations 3,915 4,890 2,380 4,328 3,396 Shareholders' equity 16,301 15,585 12,704 6,916 4,737 FUNDS FLOW DATA (000) From operations 10 712 2,212 (479) (414) Dividends paid (583) - - - - From investing (873) (4,943) (3,745) (531) 2,239 From financing 979 3,112 2,313 (26) (1,001) Change in cash & equivalents 116 (1,119) 780 (1,036) 824 RATIO ANALYSIS Gross margin 35.2% 40.5% 42.3% 41.1% 38.0 % Operating margin 3.2% 10.4% 8.5% 7.3% (34.6)% Pretax margin 2.9% 10.0% 8.2% 6.4% (35.2)% Effective tax rate 19.3% 33.0% 6.1% (17.3)% NM Net margin 2.3% 6.7% 7.7% 7.5% (32.7)% Return on assets 2.8% 10.1% 13.0% 11.6% (39.6)% Return on equity 4.9% 17.7% 24.6% 30.6% (89.0)% All of the information shown in the table above has been restated to reflect the combined operations of Akorn and Pasadena Research Labs, Inc. (PRL). The information shown in the table for 1992 has been restated to reflect the combined operations of Akorn and Taylor Pharmaceuticals, Inc. (Taylor). For information regarding the effects of unusual, infrequently occurring or year end adjustments on reported results for fiscal 1994 through 1996, see Notes B, D and O to the financial statements included in Item 8 of this report. Dividends paid pertain to Subchapter S distributions made to former PRL shareholders for pre-acquisition earnings. Includes the reversal of the provision for a litigation judgment ($0.7 million), the reduction of estimated costs of reorganizing manufacturing operations ($0.4 million), and income tax benefits ($0.3 million). Includes charges for the reorganization of manufacturing operations ($5.3 million), acquisition costs of Taylor ($1.3 million), and provision for a litigation judgment ($0.8 million).
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the accompanying financial statements. Results of Operations Net Sales The Company's consolidated net sales declined 10% to $33.9 million in 1996 compared to the prior year. This follows a 20% increase in the prior year as compared with 1994. The following table sets forth, for the periods indicated, net sales by segment, excluding intersegment sales: Years Ended June 30 (In millions) 1996 1995 1994 __________________________________________ Ophthalmic distribution $ 20.8 $ 23.8 $ 20.7 Injectable distribution 4.2 4.6 2.9 Contract manufacturing 8.9 9.1 7.7 __________________________________________ Total net sales $ 33.9 $ 37.5 $ 31.3 ========================================== Ophthalmic distribution sales include a broad range of therapeutic, diagnostic, surgical and office-based products. Ophthalmic distribution sales declined 13% in 1996 as compared to 1995 and increased 15% in 1995 as compared to 1994. The decline in sales for 1996 is attributable primarily to two factors. These include the loss of sales for AK-Con-A, the Company's previously best-selling allergy product, and the discontinuance of certain discounting practices with wholesalers in the fourth quarter of 1996. As previously announced, AK-Con-A was converted to over-the-counter status by the FDA, which required the filing of a NDA. Sales of AK-Con-A were discontinued in October 1994, pending FDA approval of the NDA. The Company received approval of the OTC version of the product in January 1996. The OTC version is being marketed through a joint venture with Pfizer Inc (Pfizer). Royalties earned under this joint venture totalled $333,000 in fiscal 1996. Sales of AK-Con-A were approximately $2 million and $1.4 million, respectively, in 1995 and 1994. In the fourth quarter of 1996, the Company discontinued the practice employed by the ophthalmic division of giving discounts to wholesalers at the end of every quarter. The Company was willing to forego the additional sales in the quarter to try to maintain margins at an acceptable rate in the future. Because of the discontinuance of this practice, the Company estimates that sales for the quarter and fiscal year ended June 30, 1996 were negatively impacted by approximately $1 million. Excluding the effects of the loss of AK-Con-A and the discontinuance of the wholesaler discounting practice, sales for the ophthalmic segment were relatively flat. Continued erosion of generic pricing along with some product shortages have offset sales increases in other products during 1996. The Company continues to experience increases in its sales of surgical products which includes surgical instruments and surgical packs. The surgical products area will continue to be a major focus for the ophthalmic segment since margins are generally higher than for generic pharmaceuticals and sales are controlled more directly by physicians, a customer base which has been traditionally a strength for Akorn. In 1995, ophthalmic distribution sales were enhanced by sales of AK-Con-A, the introduction of several new surgical products, including new surgical instruments and surgical packs, and sales of the Company's generic therapeutic products. Injectable distribution sales (attributable to PRL, which was acquired by the Company on May 31, 1996 in a pooling of interests transaction) declined 9% in 1996 as compared to 1995 and increased 59% in 1995 as compared to 1994. The current year decline is primarily attributable to delays in new product introductions and additional competition on a few of the Company's injectable products. The sales increase in 1995 is primarily attributable to an expanded offering of certain grandfathered products, including this segment's lead product for the treatment of rheumatoid arthritis. In addition, in 1995, the Company established several marketing alliances which gave it an entree into the Group Purchasing Organization (GPO) market for injectables. Contract manufacturing sales were relatively flat in 1996 versus 1995 and increased 18% in 1995 as compared to 1994. Contract sales for 1995 were enhanced by a new contract from Janssen Pharmaceutica, Inc. (Janssen), which increased sales significantly beginning in the second half of fiscal 1994. Sales to Janssen accounted for 12% and 13% of consolidated net sales in 1996 and 1995, respectively. Janssen had recently notified the Company that it would be transferring the production of certain products during fiscal 1996 and 1997 to its own facilities in Puerto Rico. Such products accounted for $1.3 million and $1.4 million in contract manufacturing sales for 1996 and 1995, respectively. Effective July 1, 1996, Janssen agreed to transfer to the Company ownership of three injectable products in the analgesia/anesthesia area, two of which previously had been produced for Janssen by Taylor, but which Janssen had determined to discontinue. These products accounted for approximately $2.6 million and $2.9 million in sales for Taylor in 1996 and 1995, respectively. The acquisition of these products should help maintain plant volume and provide the injectable distribution segment with two highly recognized products. Income and Expenses The following table sets forth the relationship to sales of various income statement items: Years Ended June 30 1996 1995 1994 ___________________________________________ Net sales 100.0% 100.0% 100.0% Cost of goods sold 64.8 59.5 57.8 ___________________________________________ Gross margin 35.2 40.5 42.2 Selling, general and administrative expenses 26.4 27.7 30.8 Research and development 3.6 2.4 2.9 Acquisition and severance costs 2.0 - - ___________________________________________ Operating income 3.2 10.4 8.5 Interest and other income (expense), net (.3) (.4) (.3) ___________________________________________ Income before income taxes 2.9 10.0 8.2 Income taxes .6 3.3 .5 ___________________________________________ Net income 2.3% 6.7% 7.7% =========================================== Gross Margins The consolidated gross margin percentage declined by 5.3 percentage points from 40.5% in 1995 to 35.2% in 1996. The decline in gross margins is primarily due to continued price pressure in the ophthalmic generic pharmaceuticals area due to competition, as well as the loss of the the Company's high margin sales of AK-Con-A. In addition, lower plant throughput, primarily in the second half of fiscal 1996, resulted in margin declines for the contract manufacturing segment. Also, in the second half of fiscal 1996, the Company increased its estimate for unsaleable inventory by approximately $500,000. In the quarter ended June 30, 1996, the Company increased its estimate for wholesaler chargebacks by approximately $250,000. These changes in estimate are reported as a decrease in gross margin. Excluding these changes, the gross margin for 1996 was 37.4%, a 3.1 percentage point decline from 1995. The gross margin percentage declined 1.7 percentage points from 42.2% in 1994 to 40.5% in 1995. The decline in gross margin percentage in 1995 is primarily due to the effects of price increases from manufacturers (primarily in the second half of the fiscal year), which were not fully offset by price increases to customers. In addition, a shift in the mix of lower margin catalog products added to the decline in gross margin. The decline in gross margin was more prevalent in the second half of the fiscal year as a result of the loss of sales from AK-Con-A discussed earlier. The Company anticipates that gross margins will continue to be impacted by price erosion on generic pharmaceuticals. However, with anticipated growth in certain higher margin niche products, the Company's overall gross margins should remain relatively stable during 1997. As the injectable segment begins the marketing of more commodity generic products, overall Company margins are expected to decline beyond 1997. Selling, General and Administrative Expenses Selling, general and administrative expenses as a percentage of net sales declined 1.3 percentage points from 27.7% in 1995 to 26.4% in 1996. In the quarter ended March 31, 1996, the Company decided to no longer pursue ANDAs for several ophthalmic products which had been produced in previously-owned facilities. This decision was based on the cost of the ANDAs versus the future incremental profit to be derived from the sales of these products, given changed market conditions. This change in estimate was also based on the Company's recent decision to enter into the injectable distribution marketplace and the need to redeploy R&D resources for the pursuit of injectable ANDAs. The total amount of the accrual reversed was approximately $316,000 and is included as a reduction in S,G&A expenses. During the quarter ended March 31, 1995, the Company, based on evaluations made by management, changed the estimated liability related to aged customer credits. This resulted in a reduction in S,G&A expenses of approximately $330,000. The decline in S,G&A expenses as a percentage of net sales, in spite of the decrease in sales from 1995 to 1996, is primarily due to the decision to eliminate approximately $1 million to $1.5 million of S,G&A expenses and other manufacturing operating expenses in response to a slowing in sales growth during the third quarter of fiscal 1995. Selling, general and administrative expenses as a percentage of net sales declined 3.1 percentage points from 30.8% in 1994 to 27.7% in 1995 primarily due to the Company's operating leverage and the increase in net sales from 1994 to 1995. Research and Development Research and development expense increased 36% in 1996 as compared to 1995. This increase was primarily attributable to the increase in R&D associated with the recently acquired operations of PRL. Prior to fiscal 1996, PRL had very little R&D expense. Research and development expense was relatively flat in 1995 as compared to 1994. In 1995, the Company maintained a stable mix of new ophthalmic ANDAs and site-transfers from its previous manufacturing facility in Los Angeles. Throughout 1995 and the first half of 1996, the Company incurred R&D costs associated with its NDA for the over-the-counter version of AK-Con-A in connection with the licensing arrangement with Pfizer. This NDA was approved in January 1996. Costs associated with this NDA have been capitalized in connection with the long-term contract for manufacturing and royalty rights. The Company also continued its work on an NDA for the ophthalmic non-steroidal anti-inflammatory drug Piroxicam licensed from Pfizer. The first $1 million of costs associated with this NDA are offset by funds obtained from Pfizer. Total cash expenditures for all research and development activities were approximately $1.9 million, $1.7 million and $1.4 million in 1996, 1995 and 1994, respectively. With the acquisition of PRL, the Company expects to increase its mix of injectable grandfathered and ANDA products. PRL had several ANDA filings in process through joint venture arrangements. It is anticipated that these arrangements would continue and that the Company would also continue to develop other injectable products for manufacture by Taylor. Several of the products currently marketed and distributed by the injectable distribution segment do not require FDA approval and production of such products will be transferred to the Taylor facilities as soon as practicable. In addition to injectable and ophthalmic ANDAs, the Company will continue its work on the ophthalmic NDA for Piroxicam. The remaining number of products in the R&D pipeline which are being transferred from the Company's previous manufacturing site in Los Angeles is minimal at June 30, 1996. The costs associated with these products had been previously accrued. Accordingly, as the mix of transfer products declines, R&D expense will increase, given a level amount of R&D expenditures. Due to the factors noted above, it is anticipated that the Company's R&D expenditures will increase in 1997. However, the level of R&D will continue to be monitored in light of operating performance. Acquisition and Severance Costs In connection with the merger of PRL and Taylor, the Company recorded certain charges in the fourth quarter of fiscal 1996 for transaction costs ($110,000) and transitional costs ($568,000) associated with the realignment of the Company into two separate reporting divisions. The transaction costs include legal, accounting and other directly related acquisition costs. Transitional costs consist primarily of provisions for severance related costs. Operating Income Operating income in 1996 of $1.1 million or 3.2% of sales was 72% lower than 1995 operating income of $3.9 million. The decline in operating income for 1996 is attributable to several factors noted above. These include acquisition and severance costs, the loss of high-margin sales of AK-Con-A, the Company's decision to discontinue wholesaler discounting practices in the fourth quarter, and the changes in estimate noted above. In addition, the overall reduction in gross margins for the Company, primarily associated with increased price sensitivity for ophthalmic generic pharmaceuticals, reduced operating margins. Operating income in 1995 was $3.9 million or 10.4% of sales compared to the 1994 amount of $2.7 million or 8.5% of sales. The increase in 1995 operating income was primarily the result of increased sales and operating leverage, coupled with stable research and development expenses. The sales increase was somewhat offset by the decline in gross margin resulting from cost increases of products distributed but not manufactured and continued price sensitivity in the generic ophthalmic pharmaceutical market. Interest and Other Income (Expense) Net interest and other expense declined $60,000 from 1995 to 1996. During these periods, interest income remained relatively constant. Interest expense increased significantly in 1996 to $441,000 as compared to $25,000 in 1995. Most interest expense in 1995 was capitalized in connection with construction at Taylor's facilities in Decatur, Illinois. The increase in interest expense in 1996 was offset by a gain on the sale of marketable equity securities of $80,000. In 1995, a $308,000 decline in market value of an equity investment was determined to be other than temporary. This determination was based on the significant deterioration in the value of the investment and the evaluation that a price recovery was not imminent. From 1994 to 1995, net interest and other expense increased $91,000. During these periods, interest income remained relatively constant. Interest expense declined in 1995 from $181,000 to $25,000. As noted above, the majority of interest expense in 1995 was capitalized. The loss of $308,000 related to the decline in market value of an equity investment more than offset the decline in interest expense. The Company anticipates that interest expense will increase significantly in 1997 as a result of the new long-term debt associated with the Janssen product acquisition and 1997 anticipated capital improvements. A portion of this interest is expected to be capitalized during 1997 during validation and construction periods. Income Taxes The Company's consolidated effective income tax rate was 19.3%, 33.0% and 6.1% for 1996, 1995 and 1994, respectively. The effective rate for 1996 varies from the statutory rates primarily due to the inclusion of net income for PRL prior to the acquisition date as a result of the pooling of interests. PRL was a Subchapter S corporation and therefore was not subject to corporate income taxes. The effects of pre-acquisition earnings or loss of PRL did not have a material effect on the 1995 or 1994 effective rate since such income or loss was immaterial to consolidated pretax income. The effective rate for 1994 varies from the statutory rates primarily due to the effects of adoption of Statement of Financial Accounting Standards Board (SFAS) No. 109, "Accounting for Income Taxes," effective July 1, 1993. Under SFAS 109, the Company was able to recognize estimated future tax benefits attributable to expenses recorded for book purposes but not currently deductible for tax purposes. In July 1993, the Company recorded a net deferred tax asset in the amount of $896,000 along with a 100% valuation reserve to reflect the uncertainties surrounding the ultimate realization of the benefits. In the fourth quarter of fiscal 1994, the Company decided to reverse the entire remaining balance of the valuation reserve since uncertainties regarding the ultimate realization of the benefits were reduced to a relatively low level. This resulted in the recording of a $384,000 ($.03 cents per share) benefit in the fourth quarter. The Company has been in discussions with the Internal Revenue Service (IRS) regarding the examination of tax returns for the periods of 1988 through 1993. The IRS has proposed adjustments to such returns, some of which the Company has agreed to and some which the Company has appealed. These adjustments primarily relate to the timing of deductions taken for tax purposes in connection with the reorganization of its manufacturing operations in 1991 and 1992. The agreed upon adjustments, which resulted in additional interest and taxes of approximately $700,000, was paid in fiscal 1996 through a bank line of credit. The Company had previously accrued the financial statement effects of these agreed upon adjustments; accordingly, no material financial statement impact of these adjustments was recorded in 1995 or 1996. With respect to the appealed items, the Company does not anticipate any adverse financial statement effect as accruals for these assessments have been previously recorded. Net Income Net income declined $1.7 million or $.10 cents per share from $2.5 million or $.15 cents per share in 1995. The decline in sales along with certain unusual, infrequently occurring adjustments noted previously, including acquisition and severance costs, and certain other changes in accounting estimates, are the primary reasons for the decline in net income. Net income increased $100,000 or $.01 cent per share from $2.4 million or $.14 cents per share in 1994 to $2.5 million or $.15 cents per share in 1995. This marginal increase, in spite of the significant increase in operating income in 1995, is due to the lower effective tax rate incurred in 1994 as a result of the adoption of SFAS 109 and full realization of the benefit of deferred tax assets. Financial Condition and Liquidity Management assesses the Company's liquidity by its ability to generate cash to fund its operations. The significant components in managing liquidity are: funds generated by operations; levels of working capital items including accounts receivable, inventories and accounts payable; capital expenditure and debt repayment requirements; adequacy of available lines of credit; and availability of long-term capital at competitive prices. The Company traditionally has generated cash from operations in excess of working capital requirements. The net cash provided by operating activities was $10,000 in 1996 compared to $712,000 in 1995 and $2.2 million in 1994. The decline in cash provided from operating activities in 1996 and 1995 is primarily related to the increase in inventory associated with new product additions and a continual increase in the amount of products produced in-house which require Akorn to inventory related raw materials and components. Also in 1996, the majority of new contract manufacturing business requires that the Company inventory raw materials and components. In 1995, cash provided from operations was also negatively impacted by a decrease in the average days outstanding for payables. This decline was due to more timely payments to vendors by the Company resulting from the availability of working capital credit lines. In 1997, the Company will continue to fund the payment of certain previously accrued research and development activities including the site transfer of ANDAs from the Company's Los Angeles facility and the development of the NDA for Piroxicam discussed previously. Management believes that cash flows from operations, funds received from Pfizer and the available working capital line of credit are sufficient to handle these short-term needs. In addition to these short-term needs, the Company may be required to make payments of additional interest and taxes in connection with the ongoing appeal resulting from the examination by the IRS of tax returns for the periods of 1988 through 1993. If unsuccessful in its appeal, the Company could be liable for additional interest and taxes currently due of approximately $700,000. The tax portion of the appeal items would be offset by deferred tax assets; the interest portion of the appeal items is sufficiently reserved for in the financial statements. The Company continues to challenge the findings of the IRS through the appeals process. Payment of the remaining unsettled issues will be based on the timing of the appeals process and the success of the Company in arguing its position. Net cash utilized for investing activities in 1996 of $873,000 includes $1.4 million of property, plant and equipment additions associated with the expansion of the Company's Decatur facilities. These additions were partially funded by net sales of investments of $659,000. In addition, 1996 net cash utilized for investing activities includes approximately $200,000 related to product licensing costs. The Company has plans for capital improvements of $1.5 million to $2 million in 1997. These improvements are for both requirements to meet current FDA and DEA regulations as well as upgrades to the Company's managment information systems. These improvements are expected to be financed through bank financing, of which approximately $1.2 million is currently available under previously approved construction lines of credit. On July 1, 1996, the Company acquired certain high-speed inspection equipment and the rights to two injectable products in the anesthesia/analgesia area from Janssen. The total acquisition cost includes $1.6 million, which was funded primarily through a $1.5 million bank credit facility. In addition, the Company is required to provide other products to Janssen, at no cost, estimated not to exceed $100,000, should certain contingent events occur. Net cash provided by financing activities of approximately $1.0 million in 1996 primarily consists of the net increase in short-term borrowings. Increases in long-term debt were offset by 1996 debt service requirements. Also, in 1996, proceeds from the exercise of options provided $599,000 in cash, while dividends (representing pre-merger Subchapter S earnings) totalling $583,000 were paid to the former shareholders of PRL. On September 30, 1994, the Company entered into a $6.3 million credit facility with First National Bank of Commerce in New Orleans (FNBC). This facility was amended in May 1996 which increased the total facility to include the following: - - $1.3 million Term loan for the payout of existing debt and reimbursement for the early payout of a capital lease on the Taylor manufacturing facility. - - $2.6 million Term construction loan to finance expansion of the Taylor facilities. - - $2.5 million Line of Credit for working capital purposes. - - $1.5 million financing of Janssen product line. - - $1.6 million Revolver/Term construction financing to finance 1996 and 1997 capital requirements. - - $600,000 short-term financing of IRS agreed issues. The entire Term loans have been drawn as of June 30, 1996 and, as of this date, $400,000 has been drawn on the Revolver/Term construction loan and $550,000 on the IRS loan. As of June 30, 1996, $227,000 was outstanding under the Line of Credit. In addition, as of June 30, 1996, $517,000 was outstanding under a Line of Credit with PRL's former bank. Any amounts outstanding under this line were transferred to the FNBC Line of Credit facility subsequent to year end. Selected Quarterly Data In Thousands, Except Per Share Amounts Net Income(Loss) Net Gross Per Sales Profit Amount Share ________________________________________________ 1996 1st Quarter $ 8,739 $ 3,305 $ 499 $ 0.03 2nd Quarter 8,210 3,172 296 0.02 3rd Quarter 8,817 3,066 550 0.03 4th Quarter 8,159 2,410 (557) (0.03) ________________________________________________ $ 33,925 $ 11,953 $ 788 $ 0.05 ================================================ 1995 1st Quarter $ 9,929 $ 4,174 $ 1,043 $ 0.06 2nd Quarter 9,707 4,169 364 0.02 3rd Quarter 8,637 3,225 404 0.02 4th Quarter 9,232 3,609 695 0.04 ________________________________________________ $ 37,505 $ 15,177 $ 2,506 $ 0.15 ================================================ All of the information shown in the table above has been restated to reflect the combined operations of Akorn and PRL. For information regarding unusual, infrequently occurring or year end adjustments, see notes B, D and O to the financial statements included in Item 8 of this report. Item 8. Financial Statements and Supplementary Data. The following financial statements are included in Part II, Item 7 of this Form 10-K. Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheets as of June 30, 1996 and 1995 . . . . . . . . . . . Consolidated Statements of Operations for the years ended June 30, 1996, 1995 and 1994. . . . . . . . . . . . . . Consolidated Statements of Shareholders' Equity for the years ended June 30, 1996, 1995 and 1994. . . . . . . . Consolidated Statements of Cash Flows for the years ended June 30, 1996, 1995 and 1994. . . . . . . . . . . . . . Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . Report of Deloitte & Touche LLP Independent Auditors To the Board of Directors and Shareholders of Akorn, Inc. We have audited the accompanying consolidated balance sheets of Akorn, Inc. and subsidiaries as of June 30, 1996 and 1995, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended June 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material aspects, the financial position of Akorn, Inc. and subsidiaries at June 30, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 1996 in conformity with generally accepted accounting principles. As discussed in Note N to the consolidated financial statements, the Company changed its method of accounting for income taxes in 1994. Also, as discussed in Note D to the consolidated financial statements, the Company changed its method of accounting for certain investments in debt and equity securities in 1995. New Orleans, Louisiana September 11, 1996 AKORN, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
June 30 1996 1995 ___________________________________ ASSETS CURRENT ASSETS Cash and cash equivalents $ 891 $ 775 Short-term investments 902 1,569 Trade accounts receivable (less allowances for uncollectibles of $339 and $291 in 1996 and 1995, respectively) 4,916 5,464 Inventory 8,860 6,476 Deferred income taxes 1,157 709 Prepaid expenses and other assets 525 481 ____________________________________ TOTAL CURRENT ASSETS 17,251 15,474 OTHER ASSETS Intangibles, net 848 728 Other 194 229 ____________________________________ TOTAL OTHER ASSETS 1,042 957 PROPERTY, PLANT AND EQUIPMENT, NET 11,524 11,060 ____________________________________ TOTAL ASSETS $ 29,817 $ 27,491 ==================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term borrowings $ 1,294 $ 288 Current installments of long-term debt 707 513 Current portion of capital lease obligations 151 149 Current portion of pre-funded development costs 650 667 Trade accounts payable 2,680 1,878 Income taxes payable 626 782 Accrued compensation 1,106 905 Accrued reorganization costs 306 727 Deferred royalties 667 - Accrued expenses and other liabilities 1,414 1,107 ____________________________________ TOTAL CURRENT LIABILITIES 9,601 7,016 LONG-TERM DEBT 3,117 3,353 CAPITAL LEASE OBLIGATIONS 427 580 PRE-FUNDED DEVELOPMENT COSTS 174 304 DEFERRED INCOME TAXES 197 327 OTHER LONG-TERM LIABILITIES - 326 SHAREHOLDERS' EQUITY Common stock, no par value--authorized 20,000,000 shares; issued 16,600,927 shares in 1996 and 16,515,673 shares in 1995; outstanding 16,573,915 shares in 1996 and 16,304,653 shares in 1995 14,174 13,959 Treasury stock, at cost--27,012 shares in 1996 and 211,020 shares in 1995 (92) (291) Retained earnings 2,219 1,830 Unrealized gain on marketable equity securities - 87 ____________________________________ TOTAL SHAREHOLDERS' EQUITY 16,301 15,585 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 29,817 $ 27,491 ==================================== See notes to consolidated financial statements.
AKORN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except per Share Data)
Years Ended June 30 1996 1995 1994 __________________________________________________________ Net sales $ 33,925 $ 37,505 $ 31,266 Cost of goods sold 21,972 22,328 18,048 __________________________________________________________ GROSS PROFIT 11,953 15,177 13,218 Selling, general and administrative expenses 8,974 10,376 9,643 Research and development 1,213 891 921 Acquisition and severance costs 677 - - __________________________________________________________ 10,864 11,267 10,564 __________________________________________________________ OPERATING INCOME 1,089 3,910 2,654 Interest and other income (expense): Interest income 113 106 84 Interest expense (441) (25) (181) Gain (loss) on marketable equity securities 80 (308) - Other income, net 136 55 16 __________________________________________________________ (112) (172) (81) __________________________________________________________ INCOME BEFORE INCOME TAXES 977 3,738 2,573 Income taxes 189 1,232 158 __________________________________________________________ NET INCOME $ 788 $ 2,506 $ 2,415 ========================================================== NET INCOME PER SHARE $ .05 $ .15 $ .14 ========================================================== Weighted average shares outstanding 16,788 16,799 16,711 ========================================================== See notes to consolidated financial statements.
AKORN, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In Thousands)
Common Stock Unrealized ________________________ Retained Gain (Loss) Share Earnings Treasury on Marketable Outstanding Amount (Deficit) Stock Equity Securities Total ________________________________________________________________________________ Balances at July 1, 1993 13,715 $ 10,709 $ (3,152) $ (641) $ - $ 6,916 Net income for 1994 2,415 2,415 Exercise of stock options and warrants 2,010 3,000 (1) 20 3,019 Issuance of common stock 467 250 250 Cancellation of shares due to resolution of manufacturing pre-acquisition contingencies (52) - Unrealized loss on marketable equity securities (32) (32) Treasury stock reissued 58 19 118 137 ________________________________________________________________________________ Balances at June 30, 1994 16,198 13,959 (719) (503) (32) 12,705 Net income for 1995 2,506 2,506 Exercise of stock options 35 8 70 78 Unrealized loss on marketable equity securities (276) (276) Reversal of unrealized loss on marketable equity securities 308 308 Unrealized gain on marketable equity securities 87 87 Treasury stock reissued 72 35 142 177 _________________________________________________________________________________ Balances at June 30, 1995 16,305 13,959 1,830 (291) 87 15,585 Net income for 1996 788 788 Exercise of stock options 249 215 186 198 599 Treasury stock received in lieu of cash (36) (123) (123) Dividends paid to Subchapter S shareholders (583) (583) Reversal of unrealized gain on marketable equity securities (87) (87) Treasury stock reissued 56 (2) 124 122 _________________________________________________________________________________ Balances at June 30, 1996 16,574 $ 14,174 $ 2,219 $ (92) $ - $ 16,301 ================================================================================= See notes to consolidated financial statements.
AKORN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
Years Ended June 30 1996 1995 1994 ______________________________________________________ OPERATING ACTIVITIES Net income $ 788 $ 2,506 $ 2,415 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 984 980 763 (Gain) loss on marketable equity securities (80) 308 - Provision for losses on accounts receivable and inventory 825 160 68 Deferred income taxes (578) 2 (387) Other - (1) 11 Changes in operating assets and liabilities: Accounts receivable 424 (350) (2,172) Inventory, prepaid expenses and other assets (3,129) (1,420) (1,047) Refundable income taxes - - 288 Trade accounts payable and accrued expenses 1,229 (1,514) 1,600 Income taxes payable (155) 70 673 Pre-funded development costs (298) (29) - _________________________________________________________ NET CASH PROVIDED BY OPERATING ACTIVITIES 10 712 2,212 INVESTING ACTIVITIES Purchases of property, plant and equipment (1,360) (4,818) (1,671) Product licensing costs (172) (421) (432) Purchases of investments (1,173) (2,023) (2,625) Sales of investments 1,832 2,319 983 _________________________________________________________ NET CASH USED IN INVESTING ACTIVITIES (873) (4,943) (3,745) FINANCING ACTIVITIES Proceeds from sale of stock 599 256 1,805 Repayments of long-term debt (442) (944) (118) Proceeds from issuance of long-term debt 400 3,900 - Pre-funded development receipts 150 - 1,000 Principal payments under capital lease obligations (151) (58) (464) Short-term borrowings, net 1,006 128 90 Dividends paid (583) - - Debt acquisition costs - (170) - _________________________________________________________ NET CASH PROVIDED BY FINANCING ACTIVITIES 979 3,112 2,313 _________________________________________________________ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 116 (1,119) 780 Cash and cash equivalents at beginning of year 775 1,894 1,114 _________________________________________________________ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 891 $ 775 $ 1,894 ========================================================= See notes to consolidated financial statements. Notes to Consolidated Financial Statements Akorn, Inc. Note A - Summary of Significant Accounting Policies Consolidation: The accompanying consolidated financial statements include the accounts of Akorn, Inc. (the Company) and its wholly owned subsidiaries, Spectrum Scientific Pharmaceuticals, Inc. (Spectrum), Walnut Pharmaceuticals, Inc. (Walnut) and Taylor Pharmaceuticals, Inc. (Taylor, formerly Akorn Manufacturing, Inc.). Intercompany transactions and balances have been eliminated in consolidation. The Company acquired Pasadena Research Laboratories, Inc. (PRL) effective May 31, 1996 in a business combination accounted for as a pooling of interests. The acquired operations of PRL were merged into Taylor's operations subsequent to the acquisition (see Note B). Accordingly, all financial information presented has been restated to include the operations of PRL. Revenue Recognition: The Company recognizes sales upon the shipment of goods. Cash Equivalents: The Company considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash equivalents. Investments: Effective July 1, 1994, the Company adopted Statement of Financial Standards No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and Equity Securities." The Company records short-term and long-term investments under the provisions of this Statement (see Note D). Inventory: Inventory is stated at the lower of cost (average cost method) or market (see Note F). Provision is made for slow-moving, unsalable and obsolete items. Intangibles: Intangibles consist primarily of product licensing costs which are capitalized at cost and amortized on the straight-line method over the lives of the related license periods. Amortization expense for the three years ended June 30, 1996 was $53,328, $144,820 and $82,143, respectively. Accumulated amortization at June 30, 1996 and 1995 amounted to $269,828 and $216,500, respectively. Property, Plant and Equipment: Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method in amounts considered sufficient to amortize the cost of the assets to operations over their estimated service lives. The average estimated service lives of buildings and leasehold improvements, furniture and equipment, and automobiles are approximately 30, 8, and 5 years, respectively. Depreciation expense for the three years ended June 30, 1996 was $896,537, $800,330 and $559,321, respectively. Under an agreement with Pfizer, Inc. (see Note H) the Company has received reimbursement for the purchase of certain equipment. As of June 30, 1996 and 1995, the total amount reimbursed was approximately $593,000. The Company has accounted for these reimbursements by reducing its carrying value of the associated equipment. Interest Capitalization: The Company capitalizes interest during periods of construction of qualifying assets. For the year ended June 30, 1995, the Company incurred interest costs of $282,007 relating to construction, all of which was capitalized. No interest was capitalized during 1996 or 1994. Stock Options: The Company records as an expense the difference, if any, between the value of stock options granted with an exercise price below the market value of the Company's stock and the then market value of the Company's stock on the date the options are granted. Income Taxes: Deferred income taxes are provided in the financial statements, where necessary, to account for the tax effects of temporary differences resulting from reporting revenues and expenses for income tax purposes in periods different from those used for financial reporting purposes. The temporary differences result primarily from the use of different methods of accounting for depreciation and amortization, provisions for bad debts, inventory reserves and accrued reorganization and severance costs, and pre-funded development costs. Fair Value of Financial Instruments: The carrying value of the Company's financial instruments, including cash, short-term investments, receivables, payables, and certain accrued liabilities approximate fair market value due to their short-term nature. The fair value of the Company's long-term debt at June 30, 1996 and 1995, based upon available market information, approximated its carrying value. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Effect of Recent Accounting Pronouncements: During March 1995, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of" (SFAS No. 121). SFAS No. 121 establishes accounting standards for recording the impairment of long- lived assets, certain identifiable intangibles, goodwill, and assets to be disposed of. The Company is required to adopt SFAS No. 121 effective for fiscal 1997. Management believes that the implementation of SFAS No. 121 will not have a material impact on the Company's consolidated financial statements. During October 1995, the FASB issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). SFAS No. 123, which the Company is required to adopt effective for fiscal 1997, provides guidance relating to the recognition, measurement and disclosure of stock-based compensation. Management does not expect the new pronouncement to have an impact on the Company's consolidated financial statements since the intrinsic value-based method prescribed by APB Opinion No. 25 and also allowed by SFAS No. 123 will continue to be used for the measurement and recognition of stock-based compensation plans. Note B - Acquisition of Pasadena Research Laboratories, Inc. On May 31, 1996, the Company acquired Pasadena Research Laboratories, Inc. in a business combination accounted for as a pooling of interests. PRL is a specialized distributor of injectable pharmaceuticals. Pursuant to the merger agreement, the Company issued 1.4 million shares of its common stock in exchange for all of the outstanding shares of PRL. As part of the acquisition, PRL was merged into the operations of Taylor and the Company was realigned into two separate reporting divisions, an ophthalmic division and an injectable division. The Company's financial statements as contained herein have been restated to include the results of PRL for all periods presented. Combined and separate results of operations of the Company and PRL during the periods preceding the merger are presented below. Akorn PRL Combined _____________________________________ (in thousands) Eleven months ended May 31, 1996 (unaudited): Net sales $ 27,361 $ 3,684 $ 31,045 Net income 675 409 1,084 Fiscal year ended June 30, 1995: Net sales 32,863 4,642 37,505 Net income 2,280 226 2,506 Fiscal year ended June 30, 1994: Sales 28,404 2,862 31,266 Net income (loss) 2,721 (306) 2,415 The combined financial results presented above include no significant adjustments to conform the accounting policies of the two companies. In connection with the merger, the Company recorded certain charges in the fourth quarter of fiscal 1996 for transaction costs ($109,534) and transitional costs ($567,772) associated with the realignment of the Company into two separate reporting divisions. The transaction costs include legal, accounting and other directly related acquisition costs. Transitional costs consist primarily of provisions for severance related costs. Note C - Acquisition of Manufacturing Operations On January 15, 1992, the Company acquired Taylor Pharmaceuticals, Inc., in a business combination accounted for as a pooling of interests. Taylor is a contract manufacturer of sterile pharmaceuticals, which it produces and delivers pursuant to contracts with third parties. Pursuant to the merger agreement, the Company delivered 926,753 shares of its Common Stock in exchange for all of the outstanding stock of Taylor. Of the total shares issued in the merger agreement, 922,500 shares were held in escrow pending the settlement of a default judgment against Taylor entered on November 8, 1991. During fiscal 1993, a settlement between Taylor's insurer and the plaintiffs was reached. As a result, in 1993 the Company reduced its provision for the judgment to $100,000, the approximate amount of expenses incurred in defending the judgment. In accordance with the terms of the Taylor acquisition agreement, 51,917 shares valued at $2 per share were forfeited and returned as treasury stock by the escrow agent during fiscal 1994 in order to cover these expenses and finally resolve this pre- acquisition contingency. The remaining shares held in escrow of 870,583 were distributed to the former Taylor shareholders thereby terminating the escrow agreement. As part of the acquisition, the Company paid a finder's fee to an affiliate of Dr. John N. Kapoor, Chairman of the Board (the affiliate). This finder's fee was in the form of 250,000 shares of Company Common Stock valued at $3.50 per share. Of the total shares issued, 125,000 were subject to forfeiture if the market price of the Company's Common Stock did not reach at least $5.00 per share by January 15, 1996. In August 1995, the Company, the affiliate 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. Note D - Investments Effective July 1, 1994, the Company adopted Statement of Financial Standards No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and Equity Securities". This Statement requires certain securities to be classified into one of three reporting categories (held-to-maturity, available-for-sale or trading). The Company has completed a review of its securities relative to SFAS 115 and has classified its investments in debt securities (consisting primarily of U.S. Government securities and municipal bonds with a carrying value of $902,120 and $0, respectively, at June 30, 1996 and $1,136,010 and $303,092, respectively, at June 30, 1995) as held-to- maturity. Therefore, in accordance with SFAS 115, these investments, all of which have contractual maturities within one year, are being reported at amortized cost, which approximates fair market value. The Company has classified its investment in equity securities as available-for-sale, requiring that they be carried at fair value with any unrealized gain or loss reflected as a component of shareholders' equity. Such investments had a fair market value of approximately $130,000 at June 30, 1995. The Company held no equity investments at June 30, 1996. At June 30, 1994, the cost of the Company's marketable equity securities exceeded the market value by $32,044. Therefore, a valuation allowance was established by a charge to shareholders' equity representing the net unrealized loss. During fiscal 1995, this allowance was increased by $275,661 due to the continuous decline in market value. At March 31, 1995, management determined the loss to be permanent given the significant decline in market value since June 30, 1994 and the unlikelihood of a recovery in value. Therefore, the $307,705 unrealized loss previously charged to shareholders' equity was accounted for as a realized loss in the 1995 statement of operations. At June 30, 1995, the market value of the marketable equity securities exceeded the adjusted cost, subsequent to the write-down noted above, by $87,397; therefore, an unrealized gain was recorded as a component of shareholders' equity to reflect this increase in value. During fiscal 1996, the Company sold its investment in marketable equity securities for an amount in excess of adjusted cost. Accordingly, the unrealized gain previously charged to shareholders' equity was reversed and a realized gain of $79,859 was recorded in the 1996 statement of operations. Note E - Allowance for Uncollectibles The activity in the allowance for uncollectibles is as follows for the years ended June 30: 1996 1995 1994 ____________________________________ (in thousands) Balance at beginning of year $ 291 $ 272 $ 240 Provision for bad debts 124 60 61 Accounts written off (76) (41) (29) ____________________________________ Balance at end of year $ 339 $ 291 $ 272 ==================================== Note F - Inventory The components of inventory at June 30 are as follows: 1996 1995 _________________________________ (in thousands) Finished goods $ 5,376 $ 4,239 Work in process 1,311 1,043 Raw materials and supplies 2,173 1,194 _________________________________ $ 8,860 $ 6,476 Inventory for 1996 and 1995 is reported net of reserves of $681,920 and $352,143, respectively, for slow-moving, unsalable and obsolete items. The activity in the inventory reserve is as follows for the years ended June 30: 1996 1995 1994 _______________________________ (in thousands) Balance at beginning of year $ 352 $ 290 $ 427 Provision for slow-moving, unsalable and obsolete items 701 100 7 Inventory written off (371) (38) (144) ____________________________________ Balance at end of year $ 682 $ 352 $ 290 ==================================== Note G - Property, Plant and Equipment Property, plant and equipment at June 30 consists of the following: 1996 1995 _______________________________ (in thousands) Land $ 479 $ 479 Buildings and leasehold improvements 7,738 5,516 Furniture and equipment 10,139 7,880 Automobiles 166 133 _______________________________ 18,522 14,008 Accumulated depreciation (7,771) (6,875) _______________________________ 10,751 7,133 Construction in progress 773 3,927 _______________________________ $ 11,524 $ 11,060 =============================== Note H - Pre-Funded Development Costs In April 1994, the Company entered into a series of agreements with Pfizer Inc. (Pfizer) regarding the cross-licensing of several ophthalmic pharmaceutical products. Under this arrangement Akorn granted a license to Pfizer on an Akorn product then under development (the licensed product), and agreed to provide manufacturing services and marketing assistance for the licensed product. In exchange, Akorn received (1) a royalty stream on sales of the licensed product, (2) an exclusive, royalty-free license to manufacture and market a Pfizer prescription ophthalmic non-steroidal anti-inflammatory drug (NSAID), and (3) non-exclusive rights to market an existing Pfizer ophthalmic antibiotic. As part of this agreement, in fiscal 1994 Pfizer paid the Company an advance of $1 million to be used to fund the costs of developing the NSAID, which are estimated at $1.8 million. The Company intends to recognize the pre- funded balance as an offset to development costs as these expenses are incurred. During fiscal 1996 and 1995, the Company incurred $297,463 and $29,012, respectively, of development costs which were charged against the pre-funded balance. The Company's current projections indicate that the remaining costs of development will be paid over the next 15 - 18 months. In addition, the agreement stipulated that Pfizer would reimburse Akorn for one-half of the costs to obtain FDA approval on the licensed product, including the cost of certain agreed upon equipment acquisitions required for the manufacturing of the licensed product. A New Drug Application (NDA) was filed for the licensed product on June 8, 1994. During fiscal 1996, the Company obtained FDA approval of the NDA for the licensed product. Therefore, in accordance with the agreement, Pfizer paid the Company an advance royalty of $1 million for the initial year sales of the licensed product. The Company is recognizing this deferred revenue balance over a one year period beginning in March 1996. Note I - Financing Arrangements The Company's short-term borrowings at June 30 are summarized as follows:
1996 1995 ______________________________ (in thousands) Line of Credit with First National Bank of Commerce; permitting borrowings up to $2.5 million, interest at the Chase Manhattan prime rate (8.25% at June 30, 1996) $ 227 $ - Line of credit with Bank of America; permitting borrowings up to $600,000, interest at the bank's prime rate plus (% (9.00% and 9.75% at June 30, 1996 and 1995); secured by the receivables, inventory and equipment of PRL 517 288 Short-term note payable to First National Bank of Commerce; due 1997, interest at the bank's prime rate (8.75% at June 30, 1996), payable in monthly principal installments of of $50,000 commencing July 1996 550 - ________________________________ $ 1,294 $ 288 ================================ The $2.5 million Line of Credit and $550,000 short-term note payable are pursuant to the credit facility amended during fiscal 1996 as further described below. Long-term debt at June 30 consists of: 1996 1995 _________________________________ (in thousands) Note payable to First National Bank of Commerce; due 1999; interest at 8.03%, payable in monthly principal installments of $33,521 commencing December 1995 $ 2,308 $ 2,600 Note payable to First National Bank of Commerce; due 1999; interest at 10.25%, payable in monthly principal installments of $10,834 with a final installment of $660,794 due in 1999 1,083 1,213 Note payable to First National Bank of Commerce; due 1999; interest at (% over the Chase Manhattan prime rate (9% at June 30, 1996), payable in monthly principal installments of $12,857 commencing July 1996 400 - Other obligations 33 53 ___________________________________ 3,824 3,866 Deduct: Current installments payable within one year (707) (513) ___________________________________ Portion payable after one year $ 3,117 $ 3,353 ===================================
Maturities of long-term debt are as follows (in thousands): Years ending June 30: 1997 $ 707 1998 698 1999 624 2000 1,795 _____________ Total $ 3,824 ============= In September 1992, the Company entered into an agreement to obtain up to $2.5 million of credit financing from the John N. Kapoor Trust (the Trust), an affiliate of John N. Kapoor, Chairman of the Board. Under the terms of the agreement, the Trust, which held warrants to purchase 2 million shares of stock at prices ranging from $1.50 to $2.00 through November 15, 1995, was required to exercise 1,666,667 of those warrants at $1.50 per share on or prior to November 15, 1993. On that date, the Trust exercised the entire two million warrants for a total of $3 million, of which $1.6 million was used to repay debt to the Trust and the remaining $1.4 million was received in cash. Interest expense related to this indebtedness was $61,334 in 1994. As part of the September 1992 arrangement, the Company granted a new warrant to the Trust to purchase an additional 1 million shares at $2.00 per share, exercisable for five years. Upon the issuance of this warrant, Dr. Kapoor became entitled to designate an additional individual as a director of the Company. In 1995 the Company entered into a $6.3 million loan agreement with First National Bank of Commerce to obtain financing for the expansion of its manufacturing facilities in Decatur, Illinois and to refinance existing debt. During fiscal 1996, the loan agreement was amended to provide additional financing and to adjust the interest rate and principal payment requirements for certain facilities. The amendments increased the total loan commitment to $10.1 million including: (1) $2.6 million Term loan, (2) $1.3 million Term loan, (3) $2.5 million Line of Credit, (4) $1.5 million Term loan for financing of Janssen acquisition, (see Note U), (5) $1.6 million Revolver/Term loan, and (6) $600,000 short-term financing for IRS settlements (see Note N). As of June 30, 1996, all of the Term loans and $400,000 of the Revolver/Term loan have been drawn. In addition, $550,000 had been borrowed under the $600,000 IRS facility as of June 30, 1996. Borrowings under the loan agreements are collateralized by substantially all of the Company's receivables, inventory and property, plant and equipment. In addition, the Company is required to comply with positive and negative loan covenants, including restrictions on the payment of dividends and maintenance of specified financial covenants, including minimum net worth and cash flow coverage. The Company failed to meet certain financial covenants specified in the loan agreement relating to cash flow coverage. Effective August 19, 1996, the Company obtained the bank's waiver of these events of default which should enable the Company to comply with the aforementioned provisions of the loan agreement. Note J - Leasing Arrangements The Company leases certain equipment under capital leasing arrangements which expire through the year 2000. Property, plant and equipment at June 30 includes the following amounts relating to such capital leases: 1996 1995 ________________________________ (in thousands) Furniture and equipment $ 806 $ 100 Less accumulated depreciation (147) (53) _______________________________ 659 47 Construction in progress - 706 _______________________________ $ 659 $ 753 =============================== Depreciation expense provided on these assets was $94,254, $25,822 and $18,833 during 1996, 1995 and 1994, respectively. The following is a schedule by years of future minimum lease payments under these capital leases together with the present value of the net minimum lease payments (in thousands). Years ending June 30: 1997 $ 194 1998 177 1999 173 2000 129 ____________ Total Minimum Lease Payments 673 Less: Amount Representing Interest (95) ____________ Present Value of Net Minimum Lease Payments $ 578 ============ The Company leases real property in the normal course of business under various operating leases, including non-cancelable and month-to-month agreements. Payments under these leases were $73,196, $169,825 and $198,072 in 1996, 1995 and 1994, respectively. The following is a schedule by years of future minimum rental payments required under these non-cancelable operating leases (in thousands). Years ended June 30: 1997 $ 74 1998 23 1999 14 2000 6 2001 1 ____________ Total Minimum Payments Required $ 118 ============ During fiscal 1993, the Company entered into a sublease agreement for one of its leased facilities. Sublease rentals were $113,326 and $111,164, respectively, for fiscal years ended June 30, 1995 and 1994. This agreement expired effective May 1995, in conjunction with the expiration of the primary lease. Note K - Stock Option and Stock Purchase Plans The Company has two stock option plans and one stock purchase plan. The first stock option plan is the 1988 Incentive Compensation Program (the Incentive Program). Under the Incentive Program any officer or key employee of the Company is eligible to receive options when designated by the Company's Board of Directors. The number of shares of the Company's Common Stock which may be issued under the Incentive Program upon the exercise of options may not exceed 2,000,000 shares. The exercise price of the options granted under the Incentive Program will be determined by the Board of Directors but may not be less than 50% of the fair market value of the shares subject to the option on the date of grant. All options granted under the Incentive Program during fiscal 1996, 1995 and 1994 have exercise prices equivalent to the market value of the Company's Common Stock on the date of grant. The second stock option plan is the Akorn, Inc. Stock Option Plan for Directors (the Directors' Plan). The Directors' Plan provides for the grant of nonqualified options to persons elected as directors of the Company at the fair market value of the shares subject to option on the date of grant. The total number of shares of the Company's Common Stock for which stock options may be granted under the Directors' Plan may not exceed 500,000 shares. All employees who have been employed by the Company for twelve continuous months are eligible to participate in the Akorn, Inc. Employee Stock Purchase Plan (the Purchase Plan). Participating employees may elect to contribute up to 15% of their gross compensation towards the purchase of Company's Common Stock. At the end of each quarter, the amount contributed is applied to acquire, on behalf of the participating employees, the Company's Common Stock at a purchase price equal to 85% of the current market price. A maximum of 1,000,000 shares of the Company's Common Stock may be acquired under the terms of the Purchase Plan. Purchases of shares were issued from treasury stock under the Purchase Plan and amounted to 56,000, 72,000 and 58,000 shares, respectively, in fiscal 1996, 1995 and 1994. Note L - Stock Options and Warrants The summary of activity in stock options and warrants for each of the three years ended June 30, 1996 is as follows: Outstanding at July 1, 1993 (at prices ranging from $1.50 to to $3.88 per share) 4,241,386 Granted (at prices ranging from $2.00 to $3.50 per share) 228,000 Exercised (at prices ranging from $1.50 to $1.94 per share) (2,010,000) ___________ Outstanding at June 30, 1994 (at prices ranging from $1.50 to $3.88 per share) 2,459,386 Granted (at prices ranging from $2.81 to $3.50 per share) 238,000 Exercised (at prices ranging from $2.00 to $2.81 per share) (73,000) ___________ Outstanding at June 30, 1995 (at prices ranging from $1.50 to $3.88 per share) 2,624,386 Granted (at $2.75 per share) 215,000 Exercised (at prices ranging from $2.00 to $2.88 per share) (249,500) Expired (at prices ranging from $2.00 to $3.88 per share) (346,500) ___________ Outstanding at June 30, 1996 (at prices ranging from $1.50 to $3.50 per share) 2,243,386 =========== The amount of options and warrants exercisable at year end was 2,133,586, 2,368,843 and 2,236,762 for 1996, 1995 and 1994, respectively. All of these options were exercisable at prices ranging from $1.50 to $3.50 per share. Note M - Earnings Per Share Earnings per share is based upon the weighted average number of common shares outstanding. The computation of the weighted average number of shares outstanding includes the effect of dilutive stock options and warrants using the treasury stock method. The weighted average number of shares outstanding used in the per share computations was 16,787,635 shares in 1996, 16,799,350 shares in 1995 and 16,710,885 shares in 1994. Note N - Income Taxes Effective July 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." This standard requires recognition of future tax benefits, attributable to deductible temporary differences between the financial statement and income tax bases of assets and liabilities, to the extent that realization of such benefits is more likely than not. Financial statements of prior years were not restated and the cumulative effect of the accounting change was not material due to the uncertainties that existed at July 1, 1993 concerning the ultimate realization of future tax benefits. As indicated at Note O, uncertainties regarding the ultimate realization of future tax benefits were reduced to a relatively low level by the fourth quarter of fiscal 1994, thereby justifying removal of the valuation allowance applicable to the deferred tax asset. The components of income tax expense (benefit) are as follows: 1996 1995 1994 __________________________________________________ (in thousands) Current: Federal $ 756 $ 1,177 $ 481 State 11 53 61 __________________________________________________ 767 1,230 542 __________________________________________________ Deferred: Federal (516) 2 (343) State (62) - (41) __________________________________________________ (578) 2 (384) __________________________________________________ $ 189 $ 1,232 $ 158 ================================================== A reconciliation of income tax expense at the federal statutory rate to income tax expense at the Company's effective rate is as follows: 1996 1995 1994 (in thousands) Computed tax expense at expected statutory rate $ 332 $ 1,271 $ 875 State income tax expense, net of federal tax benefits 4 32 41 Pre-merger (earnings)/loss of PRL (139) (84) 98 Change in valuation allowance applicable to deferred tax assets - - (896) Other (8) 13 40 _______________________________________ Income tax expense $ 189 $ 1,232 $ 158 _______________________________________ Effective tax rate 19.3% 33.0% 6.1% ======================================= Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of June 30, 1996 and 1995 are as follows: 1996 1995 _______________________________ Deferred Tax Assets: (in thousands) Reserves for reorganization costs not currently deductible $ 118 376 Other reserves not currently deductible 658 380 Difference between book and tax bases of intangible assets 436 43 Pre-funded development costs 305 - Other 133 103 _______________________________ Total 1,650 902 Deferred Tax Liabilities: Difference between book and tax bases of property, plant and equipment $ (478) $ (367) Other (212) (153) _______________________________ Total (690) (520) _______________________________ Net deferred tax asset $ 960 $ 382 =============================== The net deferred tax asset is classified in the accompanying balance sheet as follows: Deferred income tax asset-current $ 1,157 $ 709 Deferred income tax liability non-current (197) (327) _______________________________ $ 960 $ 382 =============================== Income taxes refunded during 1996 and 1994 were $178,690 and $282,641, respectively. The Company is currently in discussions with the Internal Revenue Service (IRS) regarding the examination of tax returns for years 1988 through 1993. The IRS has proposed adjustments to such returns, some of which the Company has agreed to and some of which the Company has appealed. The agreed upon adjustments resulted in additional taxes and interest due of approximately $700,000, all of which was paid in fiscal 1996. The Company does not currently anticipate any adverse financial statement effect from the appealed assessment as accruals for the financial statement effects of these proposed adjustments have been previously recorded. Note O - Changes in Accounting Estimate During the fourth quarter of fiscal 1996, the Company revised its estimate for recording chargeback accruals. As a result, a reduction in net sales of $250,000 ($.01 per share, net of tax) was recorded during the quarter ended June 30, 1996. In addition, during the quarters ended March 31, and June 30 1996, the Company increased its estimate for unsaleable inventory by approximately $300,000 ($.01 per share, net of tax) and $200,000 ($.01 per share net of tax), respectively. These changes in estimate are reported as an increase in cost of goods sold. In the quarter ended March 31, 1996, the Company decided to no longer pursue Abbreviated New Drug Applications (ANDAs) for certain products which had been produced in previously-owned facilities, and for which estimated costs of transferring such ANDAs had been accrued. This decision was based on a reevaluation of the costs of developing such products as compared to their potential market, given the emergence of alternate suppliers, since the Company suspended their production. This change in estimate was also based on the Company's recent decision to enter into the injectable distribution marketplace and the need to redeploy R&D resources for the pursuit of injectable ANDAs. The total amount of the accrual reversed was approximately $316,000 ($.01 per share, net of tax). During the quarter ended March 31, 1995, an evaluation by the Company resulted in a change in the estimated liability related to aged customer credits. This change resulted in a reduction of S,G&A expenses of approximately $330,000 ($.01 per share net of tax) for the quarter ended March 31, 1995. As a consequence of sustained growth in sales and profitability, in particular during the latter part of the year, the Company recorded a reduction of $384,298 ($.03 per share, net of tax) to its valuation allowance for deferred tax assets in the fourth quarter of fiscal 1994. Note P - Supplemental Disclosures of Cash Flow Information The following is a summary of supplemental cash flow and noncash investing and financing information for the years ended June 30: 1996 1995 1994 __________________________________________ (in thousands) Cash paid for: Interest, net of amount capitalized $ 442 $ 25 $ 176 Income taxes 867 1,150 91 Noncash investing and financing activities: Treasury stock received for exercise of stock options 123 - - Conversion of debt to common stock - - 1,600 Issuance of capital lease obligation - 706 49 Note Q - Industry Segment Information The Company classifies its operations into three core business segments: (1) ophthalmic distribution, (2) injectable distribution, and (3) contract manufacturing. The ophthalmic distribution segment includes the marketing and distribution of an extensive line of ophthalmic products, including diagnostic and therapeutic pharmaceuticals, over-the-counter products and surgical instruments and supplies. The injectable distribution segment includes the market and distribution of specialized injectable products. The contract manufacturing segment consists of the manufacture of sterile pharmaceuticals, including human injectable products and ophthalmic solutions pursuant to contracts with others. Selected financial information by industry segment for fiscal years ended June 30 is presented as follows: 1996 1995 1994 ____________________________________________________ (in thousands) NET SALES Ophthalmic distribution $ 20,833 $ 23,791 $ 20,694 Injectable distribution 4,160 4,642 2,862 Contract manufacturing: Sales to unaffiliated customers 8,932 9,072 7,710 Sales to affiliated customer 2,395 2,521 1,666 ____________________________________________________ 36,320 40,026 32,932 Eliminations (2,395) (2,521) (1,666) ____________________________________________________ Total net sales $ 33,925 $ 37,505 $ 31,266 ==================================================== OPERATING INCOME Ophthalmic distribution $ 1,037 $ 3,515 $ 2,821 Injectable distribution 670 238 (280) Contract manufacturing 324 1,228 1,155 General corporate (942) (1,071) (1,042) ____________________________________________________ Total operating income 1,089 3,910 2,654 Interest and other income (expense), net (112) (172) (81) ____________________________________________________ Income before income taxes $ 977 $ 3,738 $ 2,573 ==================================================== IDENTIFIABLE ASSETS Ophthalmic distribution $ 13,287 $ 13,044 $ 12,817 Injectable distribution 1,525 1,235 968 Contract manufacturing 14,863 13,085 8,296 General corporate 142 127 108 ____________________________________________________ Total identifiable assets $ 29,817 $ 27,491 $ 22,189 ==================================================== DEPRECIATION AND AMORTIZATION Ophthalmic distribution $ 323 $ 339 $ 286 Injectable distribution 14 33 37 Contract manufacturing 639 552 433 General corporate 8 56 7 ____________________________________________________ Total depreciation and amortization $ 984 $ 980 $ 763 ==================================================== CAPITAL ADDITIONS Ophthalmic distribution $ 340 $ 354 $ 465 Injectable distribution 5 - 35 Contract manufacturing 1,001 5,162 1,216 General corporate 14 8 4 ____________________________________________________ Total capital additions $ 1,360 $ 5,524 $ 1,720 ==================================================== Fiscal 1996 operating income for the ophthalmic distribution segment was affected by the changes in accounting estimates related to accrued costs of transferring ANDAs, chargeback accruals and inventory reserves (see Note O). In addition, fiscal 1996 operating income for the ophthalmic distribution and contract manufacturing segments, includes the effects of transaction and transitional costs associated with the realignment of the Company into two separate divisions (see Note B) totalling $385,000 and $292,000, respectively. Fiscal 1995 operating income for the ophthalmic distribution segment includes a reduction in selling, general and administrative expense of approximately $330,000 related to a change in accounting estimate for aged customer credits. During fiscal 1996 and 1995, the Company reported sales to one customer, Janssen Pharmaceutica, Inc., (Janssen) which accounted for approximately 12% and 13%, respectively, of consolidated net sales. The net sales attributable to Janssen were accounted for in the contract manufacturing segment. In 1995 this customer notified the Company that it will be transferring the production of certain products to its own facilities in Puerto Rico during 1997. Such products accounted for $1.3 and $1.4 million, respectively, in contract manufacturing sales for 1996 and 1995. In addition, this customer notified the Company that it will be discontinuing the sale of two other products previously produced by the contract manufacturing segment. These products accounted for approximately $2.6 and $2.9 million in sales during 1996 and 1995, respectively. Following this notification, the Company entered into discussions with this customer to assume the licenses to distribute these two injectable products and another injectable product. Effective July 1, 1996, an agreement was reached whereby Akorn acquired ownership of these NDA's, as well as the trade names and trademarks in the United States (see Note U). During 1994, the Company did not derive ten percent or more of its revenues from any single customer. The Company records sales between the segments at fully absorbed cost. Note R - Concentration of Credit Risk The Company specializes in the manufacturing, marketing and distribution of ophthalmic and injectable products to companies and doctors in the healthcare industry. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. Receivables are generally due within 60 days. Credit losses have consistently been within management's expectations. Note S - Defined Contribution Plan The Company sponsors a qualified defined contribution plan which was established under the provisions of Internal Revenue Code Section 401(k). The plan covers all employees with six months of employment and who are 21 years of age or older. The employees can defer a portion of their compensation up to the maximum allowed by the Internal Revenue Code regulations. The plan provides for discretionary contributions by the Company on behalf of the employees. Beginning January 1994, the Company has made a discretionary matching contribution on a quarterly basis. During fiscal years 1996, 1995 and 1994, the Company recorded expenses related to the plan of $100,615, $86,296 and $12,274, respectively. Note T - Reorganization of Manufacturing Operations Following the Taylor acquisition in January 1992, the Company began the process of transferring the manufacture of its product line from previously- owned manufacturing facilities to the Taylor facility. At that time, the Company estimated the cost of completing the FDA approval process at Taylor for products previously manufactured elsewhere and recorded a provision for reorganization costs. As of June 30, 1996 and 1995, the balances remaining in accrued reorganization costs associated with the transfer process were $306,000 and $727,000, respectively. It is anticipated that the filing of all such product approvals will be completed by fiscal 1997. Note U - Subsequent Event Effective July 1, 1996, the Company entered into an agreement with Janssen Pharmaceutica, Inc. (Janssen) to acquire the rights to distribute an injectable product line in the anesthesia/analgesia area. As part of this agreement, the Company also acquired certain high-speed inspection equipment. Pursuant to the agreement, the acquisition transfers ownership of the NDAs for the three products, as well as the trade names and trademarks in the United States. In exchange for these product licenses, the Company paid Janssen $1.6 million on the effective date of the agreement. Of this balance, $1.5 million in cash was obtained through the issuance of a separate note payable with the same commercial bank which maintains the Company's existing credit facility (see Note I). This note payable bears interest at 8.5% and provides for monthly principal payments of $25,000, commencing August 1996. The balance is due July 2001. In addition, in accordance with the agreement, Akorn will be required to provide certain other products to Janssen, at no cost, having a value expected not to exceed $100,000. The portion of the acquisition costs allocated to the acquired products will be amortized over 15 years. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There was no change in the principal independent accountant of the Company or any significant subsidiary of the Company during the Company's fiscal years ended June 30, 1996, 1995 or 1994. PART III Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act. Information concerning directors is incorporated by reference to the Company's Definitive Proxy Statement for its 1996 Annual Meeting of Shareholders. Information concerning the Company's executive officers is included in Item 1A (Executive Officers of the Registrant) of Part I hereof. Item 11. Executive Compensation. The information called for by Item 11 is incorporated by reference to the Company's definitive Proxy Statement for its 1996 Annual Meeting of Shareholders. Item 12. Security Ownership of Certain Beneficial Owners and Management. The information called for by Item 12 is incorporated by reference to the Company's definitive Proxy Statement for its 1996 Annual Meeting of Shareholders. Item 13. Certain Relationships and Related Transactions. The information called for by Item 13 is incorporated by reference to the Company's definitive Proxy Statement for its 1996 Annual Meeting of Shareholders. PART IV Item 14. Exhibits and Reports on Form 8-K. (a) Exhibits. Those exhibits marked with an asterisk (*) refer to exhibits filed herewith and listed in the Exhibit Index which appears immediately before the first such exhibit; the other exhibits are incorporated herein by reference, as indicated in the following list. ( 2.0) Agreement and Plan of Merger dated December 17, 1991, by and among the Company, Aksub, Inc., Taylor Pharmacal Company (currently named Taylor Pharmaceuticals, Inc.) and certain shareholders of Taylor Pharmmacal, Inc., incorporated by reference to the Company's report on Form 8-K dated January 15, 1992. ( 2.1) *Agreement and Plan of Merger among Akorn, Inc., Akorn Manufacturing, Inc. (currently named Taylor Pharmaceuticals, Inc. and referred to hereinafter as "Taylor") and Pasadena Research Laboratories, Inc. dated May 7, 1996. ( 3.1) Restated Articles of Incorporation of the Company dated September 6, 1991, incorporated by reference to Exhibit 3.1 to the Company's report on Form 10-K for the fiscal year ended June 30, 1991. ( 3.2) *Composite of By-laws of the Company, including amendment approved on May 3, 1996. ( 4.1) Specimen Common Stock Certificate, incorporated by reference to Exhibit 4.1 to the Company's report on Form 10-K for the fiscal year ended June 30, 1988. (10.1) Akorn, Inc. Savings and Retirement Plan effective July 1, 1984, incorporated by reference to Form 10-K for the fiscal year ended June 30, 1987. (10.2) Stock Purchase Agreement dated November 15, 1990 by and between the John N. Kapoor Trust dated September 20, 1989, and the Company, incorporated by reference to Exhibit 10.21 to the Company's report on Form 10-K for the fiscal year ended June 30, 1991. (10.3) Common Stock Purchase Warrant dated November 15, 1990 between the John N. Kapoor Trust dated September 20, 1989 and the Company, incorporated by reference to Exhibit 10.22 to the Company's report on Form 10-K for the fiscal year ended June 30, 1991. (10.4) Consulting Agreement dated November 15, 1990 by and between E. J. Financial Enterprises, Inc., a Delaware corporation, and the Company, incorporated by reference to Exhibit 10.23 to the Company's report on Form 10-K for the fiscal year ended June 30, 1991. (10.5) Stock Registration Rights Agreement dated November 15, 1990 by and between the John N. Kapoor Trust dated September 20, 1989 and the Company, incorporated by reference to Exhibit 10.24 to the Company's report on Form 10-K for the fiscal year ended June 30, 1991. (10.6) Agreement dated February 15, 1991 amending Stock Purchase Agreement dated November 15, 1990 by and between the John N. Kapoor Trust dated September 20, 1989, and the Company, incorporated by reference to Exhibit 10.25 to the Company's report on Form 10-K for the fiscal year ended June 30, 1991. (10.7) Akorn, Inc. Stock Option Plan for Directors, incorporated by reference to Exhibit 4.4 to the Company's registration statement on Form S-8, registration number 33-24970. (10.8) Form of Akorn, Inc. Letter Agreement between the Company and its directors under the Stock Option Plan for Directors, incorporated by reference to Exhibit 4.5 to the Company's registration statement on Form S-8, registration number 33- 24970. (10.9) Akorn, Inc. 1988 Incentive Compensation Program, incorporated by reference to Exhibit 4.6 to the Company's registration statement on Form S-8, registration number 33-24970. (10.10) Form of Akorn, Inc., Letter Agreement between the Company and its key employees and executives under the 1988 Incentive Compensation Program, incorporated by reference to Exhibit 4.7 to the Company's registration statement on Form S-8, registration number 33-24970. (10.11) Amended and Restated Akorn, Inc. 1988 Incentive Compensation Program, incorporated by reference to Exhibit 10.32 to the Company's report on Form 10-K for the fiscal year ended June 30, 1992. (10.12) Amendment No. 1 to the Amended and Restated Akorn, Inc. 1988 Incentive Compensation Program, incorporated by reference to Exhibit 10.33 to the Company's report on Form 10-K for the fiscal year ended June 30, 1992. (10.13) Form of Stock Option Agreement under Amendment No. 1 to Amended and Restated Incentive Compensation Program, incorporated herein by reference to the Company's registration statement on Form S- 8, registration number 33-70686. (10.14) 1991 Akorn, Inc. Stock Option Plan for Directors, incorporated by reference to Exhibit 4.3 to the Company's registration statement on Form S-8, registration number 33-44785. (10.15) Form of Pledge Agreement between the Company and each shareholder of Taylor, incorporated by reference to Exhibit 10.1 of the Company's report on Form 8-K dated January 15, 1992. (10.16) Form of Employment Agreement between Taylor and five key employees, incorporated by reference to Exhibit 10.2 of the Company's report on Form 8-K dated January 15, 1992. (10.17) Agreement dated January 15, 1992 among the Company, the John N. Kapoor Trust dated September 20, 1989, John N. Kapoor and EJ Financial Enterprises, Inc., incorporated by reference to Exhibit 10.37 of the Company's report on Form 10-K for the fiscal year ended June 30, 1992. (10.18) Business Promissory Note of Taylor payable to First National Bank of Decatur and Loan Modification Agreement dated January 15, 1992 by and between Taylor and First National Bank of Decatur, incorporated by reference to Exhibit 10.4 of the Company's report on Form 8-K dated January 15, 1992. (10.19) Amendment and Restated Lease Agreement dated January 15, 1991 between Taylor Building Corporation as Landlord and Taylor as tenant, incorporated by reference to Exhibit 10.5 of the Company's report on Form 8-K dated January 15, 1992. (10.20) Loan Agreement dated September 3, 1992, between the Company and the John N. Kapoor Trust dated September 20, 1989, incorporated by reference to Exhibit No. 6 to Amendment No. 3 to Schedule 13D filed by John N. Kapoor and the John N. Kapoor Trust dated September 20, 1989, dated September 10, 1992. (10.21) Common Stock Purchase Warrant dated September 3, 1992, issued by the Company to the John N. Kapoor Trust dated September 20, 1989, incorporated by reference to Exhibit No. 7 to Amendment No. 3 to Schedule 13D, dated September 10, 1992, filed by John N. Kapoor and the John N. Kapoor Trust dated September 20, 1989. (10.22) Agreement, Waiver and Release, dated September 3, 1992, between the Company and the John N. Kapoor Trust dated September 20, 1989, incorporated by reference to Exhibit 10.44 of the Company's report on Form 10-K for the fiscal year ended June 30, 1992. (10.23) Amendment No. 1 to Agreement dated January 15, 1992 among the Company, the John N. Kapoor Trust dated September 20, 1989, John N. Kapoor and EJ Financial Enterprises, Inc., incorporated by reference to Exhibit 10.23 of the Company's report on Form 10-K of the fiscal year ended June 30, 1995. (10.24) *Employment Agreement among Akorn, Inc., Taylor and Floyd Benjamin dated May 31, 1996 (10.25) *Employment Agreement between Akorn, Inc. and Barry D. LeBlanc dated as of January 1, 1996. (10.26) *Separation Agreement between Akorn, Inc. and Barry D. LeBlanc dated July 3, 1996. (10.27) *Employment Agreement between Akorn, Inc. and Eric M. Wingerter dated as of January 1, 1996. (10.28) *Employment Agreement between Akorn, Inc. and Harold O. Koch dated January 1, 1996. (10.29) *Employment Agreement between Taylor and Tim J. Toney dated as of January 1, 1996. (11.1) *Computation of Earnings Per Share. (21.1) *Subsidiaries of the Company. (23.1) *Consent of Deloitte & Touche LLP. (24.1) *Power of Attorney of Floyd Benjamin. (24.2) *Power of Attorney of Daniel E. Bruhl, M.D. (24.3) *Power of Attorney of J. Ed Campbell, M.D. (24.4) *Power of Attorney of George S. Ellis, M.D. (24.5) *Power of Attorney of Doyle S. Gaw. (24.6) *Power of Attorney of David H. Turner, M.D. (24.7) *Power of Attorney of Lawrence A. Yannuzzi, M.D. (27) *Financial Data Schedule (b) Reports on Form 8-K. None. SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AKORN, INC. By: /s/ John N. Kapoor, Ph.D. _______________________________ John N. Kapoor, Ph.D. Chief Executive Officer Date: September 23, 1996 In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, and in the capacities and on the dates indicated. Signature Title Date /s/ John N. Kapoor, Ph.D. Chief Executive September 23, 1996 John N. Kapoor, Ph.D. Officer and Director (Principal Executive Officer) /s/ Eric M. Wingerter Vice President - September 23, 1996 Eric M. Wingerter Finance and Administration (Principal Financial Officer and Principal Accounting Officer) * /s/ Floyd Benjamin Director September 23, 1996 Floyd Benjamin * /s/ Daniel E. Bruhl, M.D. Director September 23, 1996 Daniel E. Bruhl, M.D. * /s/ J. Ed Campbell, M.D. Director September 23, 1996 J. Ed Campbell, M.D. * /s/ George S. Ellis, M.D. Director September 23, 1996 George S. Ellis, M.D. * /s/ Doyle S. Gaw Director September 23, 1996 Doyle S. Gaw * /s/ David H. Turner, M.D. Director September 23, 1996 David H. Turner, M.D. * /s/ Lawrence A. Yannuzzi, M.D. Director September 23, 1996 Lawrence A. Yannuzzi, M.D. *By: /s/ Eric M. Wingerter Eric M. Wingerter Attorney-in-fact
                   AGREEMENT AND PLAN OF MERGER

                              Among

                           AKORN, INC.,

                    AKORN MANUFACTURING, INC.

                               and

                   PASADENA RESEARCH LABS, INC.



                              DATED

                           May 7, 1996


                        TABLE OF CONTENTS


SECTION 1
THE MERGER....................................................   1
     1.1  Merger..............................................   1
     1.2  The Closing.........................................   1
     1.3  Filing of Certificate of Merger.....................   2
     1.4  The Effective Time; Effect of Merger................   2
     1.5  Directors and Officers; Articles of Incorporation...   2

SECTION 2
CONVERSION OF STOCK...........................................   3
     2.1  Conversion of Shares of PRL.........................   3
     2.2  Delivery and Exchange of Certificates...............   3

SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND PRL....   3
     3.1  Ownership...........................................   4
     3.2  Pending Actions.....................................   4
     3.3  No Other Agreements.................................   4
     3.4  Restrictions on Resale; Investment Intent...........   4
     3.5  Information.........................................   5
     3.6  Organization; Qualification; Subsidiaries...........   5
     3.7  Capital Stock.......................................   6
     3.8  Corporate Authorization; Enforceability.............   6
     3.9  No Conflict.........................................   6
     3.10 Consents and Approvals..............................   7
     3.11 Financial Statements................................   7
     3.12 Agreements with Shareholders........................   7
     3.13 Absence of Certain Changes..........................   7
     3.14 Properties; Absence of Encumbrances.................   9
     3.15 Permits; Compliance with Laws.......................  10
     3.16 Material Contracts..................................  10
     3.17 Litigation..........................................  10
     3.18 Regulatory Matters..................................  10
     3.19 Environmental Matters...............................  11
     3.20 ERISA and Related Matters...........................  11
     3.21 Taxes...............................................  13
     3.22 Transactions with Certain Persons...................  18
     3.23 Intellectual Properties.............................  18
     3.24 Insurance...........................................  18
     3.25 Labor Matters.......................................  18
     3.26 Bank Accounts; Powers of Attorney...................  18
     3.27 Minute Books and Stock Transfer Books...............  19
     3.28 Customers and Suppliers.............................  19
     3.29 Compensation Agreements.............................  19
     3.30 Conduct of Business.................................  19
     3.31 Residence...........................................  19
     3.32 Director and Officer Indemnification................  19
     3.33 Documents and Written Materials.....................  19
     3.34 Effectiveness  of  Representations and Warranties...  20
     3.35 Effectiveness of Representations  and  Warranties...  20

SECTION 4
REPRESENTATIONS AND WARRANTIES OF AKORN.......................  20
     4.1  Organization........................................  20
     4.2  Capitalization......................................  20
     4.3  Authority; Enforceability...........................  20
     4.4  Consents and Approvals; Conflicts...................  21
     4.5  Akorn Stock.........................................  21
     4.6  Akorn Disclosure....................................  21
     4.7  Litigation..........................................  21
     4.8  Effectiveness  of  Representations and Warranties...  21

SECTION 5
PRE-CLOSING COVENANTS.........................................  22
     5.1  Access to Properties and Records....................  22
     5.2  Conduct of Business.................................  22
     5.3  Employment Agreements...............................  22
     5.4  Corporate Name......................................  22
     5.5  Public Statements...................................  22
     5.7  No stock splits or dividends........................  23
     5.8  Notification as to Representations..................  23
     5.9  Akorn Disclosure Documents..........................  23

SECTION 6
ADDITIONAL AGREEMENTS.........................................  23
     6.1  Legal Requirements to Merger........................  23
     6.2  Further Assurances..................................  23
     6.3  Expenses............................................  24
     6.4  Confidentiality.....................................  24
     6.5  Termination of PRL Profit-Sharing  and  Retirement
          Plan................................................  24
     6.6  Piggy-Back Registration Rights......................  24
     6.7  Furnished Documents.................................  25
     6.8  Tax Returns.........................................  25
     6.9  Personal Guarantees.................................  25
     6.10 Accumulated Adjustment Account Distribution.........  25
     6.11 Steris Rebate.......................................  26
     6.12 Extent of Personal Liability........................  26
     6.13 Shareholder Indemnification.........................  26
     6.14 Termination of Shareholder's Agreement..............  26

SECTION 7
CONDITIONS....................................................  26
     7.1  Conditions  to  Each Party's Obligation to  Effect
          the Merger..........................................  26
     7.2  Conditions to Obligations of Akorn and AMI..........  27
     7.3  Conditions to Obligations of PRL and Shareholders...  30

SECTION 8
TERMINATION AND AMENDMENT.....................................  31
     8.1  Termination.........................................  31
     8.2  Effect of Termination...............................  32
     8.3  Amendment...........................................  32
     8.4  Extension; Waiver...................................  32

SECTION 9
MISCELLANEOUS.................................................  32
     9.1  Survival   of  Representations,   Warranties   and
          Agreements..........................................  32
     9.2  Notices.............................................  32
     9.3  Headings; Gender....................................  34
     9.4  Entire Agreement;  No  Third  Party Beneficiaries...  34
     9.5  Governing Law.......................................  34
     9.6  Assignment..........................................  34
     9.7  Severability........................................  34
     9.8  Counterparts........................................  35
     9.9  Exhibits and Schedules; Section Numbers.............  35



                              -iii-

                      INDEX OF DEFINED TERMS


Defined Term                                 Location in Document

"1996 AAA" 25
"1996 Tax Returns" 25
"Act"     ...................................................  5
"Agreement"..................................................  1
"Akorn Disclosure Documents".................................  5
"Akorn Stock"................................................  3
"Akorn"   ...................................................  1
"AMI"     ...................................................  1
"Balance Sheet Date".........................................  7
"Balance Sheet.".............................................  7
"Benefit Arrangement"........................................ 11
"Benjamin"...................................................  1
"California EPA".............................................  9
"California Law".............................................  1
"CBL Expense"................................................ 26
"Certificate of Merger"......................................  2
"Closing"....................................................  1
"Closing Date"...............................................  1
"Code"    ...................................................  1
"Company Personnel"..........................................  8
"Conversion Rate"............................................  3
"Conversion Shares.".........................................  3
"Current Employment Agreements"..............................  7
"DEA"     ...................................................  9
"Disclosure Schedule"........................................  3
"Effective Time".............................................  2
"Employee Plan".............................................. 12
"Encumbrance"................................................  6
"EPA"     ...................................................  9
"ERISA"   ................................................... 11
"Faulding"................................................... 28
"FDA"     ...................................................  9
"Furnished Documents"........................................ 19
"Gencarella".................................................  1
"Governmental Entity"........................................  7
"Guaranteed Obligations"..................................... 25
"Illinois Act"...............................................  1
"Intellectual Property Rights"............................... 18
"IRS"     ................................................... 12
"Judgments".................................................. 10
"Lease"   ...................................................  9
"Material Contract".......................................... 10
"Merger"  ...................................................  1
"Multiemployer Plan"......................................... 12
"OSHA"    ...................................................  9
"Pasadena Research Labs, Inc."............................... 22
"Permitted Encumbrances".....................................  9
"Plan"    ................................................... 24
"PRL Financial Statements"...................................  7
"PRL Stock"..................................................  3
"PRL"     ...................................................  1
"Purchase Rights"............................................ 20
"Registrable Shares"......................................... 24
"Regulator".................................................. 10
"Returns" ................................................... 14
"Rule 144"...................................................  4
"Securities Act".............................................  4
"Shareholder Agreement"......................................  4
"Shareholder"................................................  1
"Shareholders"...............................................  1
"Stock Purchase Plans"....................................... 20
"Suits"   ................................................... 10
"Surviving Corporation"......................................  1
"Taxes"   ................................................... 13
"Title IV Plan".............................................. 12
"Yankoff" ...................................................  1


                               -v-


                   AGREEMENT AND PLAN OF MERGER

     This AGREEMENT AND PLAN OF MERGER, dated  May  7,  1996 (the
"Agreement"), is by and between, on the one hand, Akorn,  Inc., a
Louisiana corporation ("Akorn"), and its wholly owned subsidiary,
Akorn Manufacturing, Inc., an Illinois corporation ("AMI"),  and,
on  the  other  hand,  Pasadena Research Labs, Inc., a California
corporation ("PRL") and the following shareholders of PRL:  Floyd
Benjamin  ("Benjamin"),  Tom   Yankoff   ("Yankoff")   and  David
Gencarella  ("Gencarella"). Benjamin, Yankoff and Gencarella  are
referred to collectively  herein  as the "Shareholders" and, each
is sometimes individually referred to as "Shareholder."


                             RECITALS


     WHEREAS, the Board of Directors  of  PRL  and  the Boards of
Directors of Akorn and AMI have determined it to be desirable and
mutually advantageous to enter into a business combination  to be
effected  by  the merger of PRL into AMI on the terms and subject
to the conditions set forth herein; and

     WHEREAS, the  parties hereto intend that, for federal income
tax purposes, the merger  will constitute a reorganization within
the  meaning of Sections 368(a)(1)(A)  and  368(a)(2)(D)  of  the
Internal Revenue Code of 1986 (the "Code"), as amended.

     NOW,  THEREFORE,  in  consideration  of the representations,
warranties,  covenants  and  agreements  herein   contained,  the
parties hereto agree as follows:


                            SECTION 1
                            THE MERGER

     1.1  Merger.  At the Effective Time (as defined  in  Section
1.4   below),  in  accordance  with  the  terms  and  subject  to
conditions  of  this Agreement, the Illinois Business Corporation
Act (the "Illinois  Act")  and the California General Corporation
Law (the "California Law"),  PRL  shall  merge  with and into AMI
(the  "Merger"), the separate existence of PRL shall  cease,  and
AMI  shall  continue  as  the  surviving  corporation  (sometimes
referred to herein as the "Surviving Corporation").

     1.2  The  Closing.   Unless  this  Agreement shall have been
terminated  pursuant  to  the provisions hereof  and  subject  to
satisfaction or waiver of the  conditions  specified in Section 7
hereof, the closing of the transactions contemplated  hereby (the
"Closing")  shall  take  place  at  the offices of Jones, Walker,
Waechter, Poitevent, Carrere & Denegre  L.L.P.  in  New  Orleans,
Louisiana, commencing at 10:00 a.m. local time on or before  June
30,  1996  (the  "Closing Date").  If all conditions set forth in
Section 7 hereof are satisfied or duly waived, at the Closing (a)
the certificates, agreements and instruments specified in Section
7 shall be delivered, (b) the appropriate officers of PRL and AMI
shall execute the  certifications and acknowledgments attached as
pages S-1 and S-2 to  this  Agreement  and shall execute, deliver
and acknowledge the Certificate of Merger  in  the  form attached
hereto  as  Exhibit  1.2  and  in  such  other  form  as  may  be
appropriate  to comply with the California Law (collectively, the
"Certificate of  Merger")  and  (c)  the  parties shall take such
further  action  as  is required to consummate  the  transactions
contemplated by this Agreement.

     1.3  Filing of Certificate of Merger.  Immediately following
its execution and acknowledgment, the Certificate of Merger shall
be delivered, respectively, to the Secretary of State of Illinois
and the Secretary of State  of  California  for  filing, and such
certificate  shall thereafter be recorded in the manner  required
by the Illinois Law and the California Law.

     1.4  The Effective Time; Effect of Merger.  The Merger shall
be effective upon  the  filing  of the Certificate of Merger with
the Secretaries of State of Illinois and California in accordance
with the Illinois Law and the California  Law,  or  at such other
time  and  date  as  is  provided  in  the  Certificate of Merger
pursuant  to  the mutual agreements of AMI and  PRL  (hereinafter
referred to as  the  "Effective  Time").  Upon the Effective Time
and  by  virtue  of the Merger, the Surviving  Corporation  shall
possess all the rights,  privileges  and  franchises possessed by
PRL and the Surviving Corporation shall be responsible for all of
the liabilities and obligations of PRL in the  same  manner as if
the Surviving Corporation had itself incurred such liabilities or
obligations, and the Merger shall have such other effects  as may
be specified in the applicable provisions of the Illinois Law and
the California Law.

     1.5  Directors  and  Officers;  Articles  of  Incorporation.
After  the Effective Time and until their successors  shall  have
been duly elected or appointed, the directors and officers of AMI
will be  the directors and officers of the Surviving Corporation;
provided, however, that, subject to the execution and delivery of
the employment  agreements provided for in Section 5.3, effective
as of the Effective  Time (a) Benjamin shall be a director of the
Surviving Corporation  and  of  Akorn,  to  serve  in  each  such
position  until  the  next annual meeting of shareholders of such
corporation and until his  successor shall have been elected, and
(b)  Benjamin  shall  be the President,  Yankoff  shall  be  Vice
President of Sales and Marketing and Gencarella shall be Director
of  Business  Development   of  the  Surviving  Corporation.  The
Articles  of Incorporation and  By-laws  of  AMI,  as  in  effect
immediately prior to the Effective Time, shall be the articles of
incorporation  and  bylaws of the Surviving Corporation after the
Effective Time until thereafter duly amended.


                            SECTION 2
                       CONVERSION OF STOCK

     2.1  Conversion of Shares of PRL.

          2.1.1 At the  Effective  Time, by reason of the Merger,
all of the 94.50 shares of common stock,  no par value per share,
of PRL (the "PRL Stock") issued and outstanding immediately prior
to  the  Effective  Time  shall,  by  virtue  of the  Merger,  be
converted into fully-paid and non-assessable shares of the common
stock, no par value per share, of Akorn (the "Akorn Stock"), at a
conversion rate (the "Conversion Rate") of 14,814.815  shares  of
Akorn  Stock,  rounded to the nearest whole share, for each share
of PRL Stock.  The shares of Akorn Stock into which the PRL Stock
shall be converted  by  virtue  of  the  Merger  pursuant to this
Section  2.1  are  sometimes  hereinafter  referred  to   as  the
"Conversion Shares."

          2.1.2  As  of  the  Effective  Time,  by  virtue of the
Merger, each share of common stock of PRL outstanding immediately
prior to the Merger and any shares of capital stock of  PRL  held
in treasury at the Effective Time shall be cancelled.

     2.2  Delivery  and Exchange of Certificates.  On the Closing
Date, the Shareholders  shall  deliver  to  AMI  all certificates
representing  shares  of PRL Stock then outstanding.   Upon  such
delivery, Akorn shall deliver  to  each Shareholder a certificate
representing the shares of Akorn Stock  into  which  such  shares
will  be  converted at the Effective Time, as provided in Section
2.1.  Until  so  delivered,  each  certificate  which, before the
Effective Time, represented shares of PRL Stock,  shall be deemed
for all purposes to represent the number of whole shares of Akorn
Stock into which the shares of PRL Stock theretofore  represented
thereby  shall  have  been  converted.  Akorn may, at its option,
refuse to pay any dividend or other distribution, if any, payable
after the Effective Time to the  holders of shares of Akorn Stock
to the holders of certificates evidencing  undelivered  shares of
PRL  Stock.  Whether or not a stock certificate representing  PRL
Stock is delivered as provided herein, from and after the Closing
Date,  such  certificate  shall  under no circumstances evidence,
represent or otherwise constitute any stock or interest in PRL or
any person, firm or corporation other than Akorn.


                            SECTION 3
    REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND PRL

     Except  as  set  forth in the Disclosure  Schedule  attached
hereto  as  Schedule  3 (the  "Disclosure  Schedule"),  (a)  each
Shareholder, with respect  to  matters relating to himself and to
his PRL Stock, represents and warrants  to  and agrees with Akorn
and AMI as set forth as follows in Sections 3.1  through  3.5 and
(b)  each  Shareholder and PRL, acting jointly, severally and  in
solido (i.e.,  the  Louisiana  term  for  jointly  and severally)
represent and warrant to and agree with Akorn and AMI  as follows
with  respect  to  the  matters set forth in Sections 3.6 through
3.35:
     3.1  Ownership.  Each  Shareholder  is, and at the Effective
Time will be, the record and beneficial owner  of  the  number of
shares  of  PRL  Stock, which are represented by the certificates
bearing the numbers,  shown  opposite  his name in the Disclosure
Schedule.  Each Shareholder has and at the  Effective  Time  will
have  good  and  marketable  title  to  all  such  shares and the
absolute  right  to  deliver such shares in accordance  with  the
terms  hereof,  free  and   clear   of  all  liens,  pledges  and
encumbrances  of  any  kind.   Each Shareholder  has  the  power,
authority and capacity necessary  to  approve the Merger, execute
and deliver this Agreement and perform his obligations under this
Agreement.

     3.2  Pending Actions.  As of the date  hereof there are, and
at  the  Effective  Time  there  will  be, no actions,  suits  or
proceedings pending or threatened involving  the ownership by any
Shareholder of his shares of PRL Stock or his  ability to approve
the Merger pursuant to this Agreement.

     3.3  No Other Agreements.  Except for this  Agreement, there
are  no  contracts,  agreements,  arrangements  or understandings
between any Shareholder and Akorn or AMI relating  to  PRL or the
transactions contemplated by this Agreement.  Except as set forth
in  the  Disclosure  Schedule,  no Shareholder is a party to  any
agreement with respect to the voting,  sale or transfer of any of
the  PRL Stock or the issuance of any additional  shares  of  PRL
capital stock or the redemption of any such stock (a "Shareholder
Agreement").   The Shareholders have furnished to Akorn a copy of
each currently effective Shareholder Agreement.

     3.4  Restrictions on Resale; Investment Intent.

          3.4.1  Each Shareholder is acquiring the Akorn Stock to
be received by him  in  connection with the Merger for investment
for his own account and has  no present intention of reselling or
otherwise distributing or participating in a distribution of such
stock.  Each Shareholder understands  that  the  shares  of Akorn
Stock to be issued in the Merger will not be registered under the
Securities  Act of 1933, as amended (the "Securities Act"),  that
such shares will  be  "restricted  securities"  as  that  term is
defined  in  Rule  144 ("Rule 144") promulgated by the Securities
and Exchange Commission  under  the  Securities Act, and that the
Shareholder cannot transfer any of such  shares  unless  they are
subsequently  registered  under the Securities Act and under  any
applicable state securities  law or are transferred in a transfer
that, in the opinion of counsel  satisfactory to Akorn, is exempt
from  such  registration.  Each Shareholder  further  understands
that Akorn is  not  obligated  by this Agreement to register such
shares under the Securities Act  or under any such state laws and
that  Akorn will, as a condition to  the  transfer  of  any  such
shares,  require  that the request for transfer be accompanied by
an opinion of counsel,  in  form  and  substance  satisfactory to
Akorn, to the effect that the proposed transfer does  not  result
in  a  violation  of  the  Securities Act or any applicable state
securities law, unless such  transfer  is covered by an effective
registration statement.  Each Shareholder  understands  that such
shares of Akorn Stock may not be sold publicly in reliance on the
exemption from registration under the Securities Act afforded  by
Rule  144  unless and until the minimum holding period (currently
two  years)  and   other  requirements  of  Rule  144  have  been
satisfied.

          3.4.2  Each   Shareholder   has   been  represented  by
competent  and experienced legal counsel in connection  with  the
negotiation and execution of this Agreement, has been granted the
opportunity  to  make  a  thorough investigation of and to obtain
information  with  respect  to  the  affairs  of  Akorn  and  his
acquisition  of Akorn Stock, and  has  availed  himself  of  such
opportunity either  directly  or  through  his  legal counsel and
other authorized representatives.  Each Shareholder  acknowledges
that  he  has  received  from  Akorn  and  has reviewed with  his
representatives  a copy of each of the following  documents  (the
"Akorn Disclosure  Documents"):  (a) Akorn's annual report to the
SEC on Form 10-K for  the  fiscal  year  ended June 30, 1995, (b)
Akorn's Annual Report to Shareholders for  its  fiscal year ended
June  30,  1995; (c) Notice of Annual Meeting of Shareholders  of
Akorn held October 28, 1995 and the related Proxy Statement dated
September 18,  1995;  and (d) Akorn's quarterly report to the SEC
on  Form  10-Q for the quarters  ended  September  30,  1995  and
December 31, 1995.

          3.4.3 Each Shareholder has been advised that the shares
of Akorn Stock  issued  hereunder have not been and are not being
registered under the Securities  Act  and  that  Akorn in issuing
such   shares   is   relying   upon,   among  other  things,  the
representations and warranties of the Shareholders  contained  in
this  Section  in  concluding that such issuance does not require
compliance with the  registration  provisions  of  the Securities
Act.

          3.4.4 Each Shareholder understands and agrees  that all
certificates   evidencing   the  shares  of  Akorn  Stock  issued
hereunder  will bear restrictive  legends  in  substantially  the
following form:

               The  securities represented by this
               certificate     have    not    been
               registered under the Securities Act
               of 1933, as amended (the "Act"), or
               any applicable state  law,  and may
               not    be    transferred    without
               registration under the Act and  any
               such  state  law  or  an opinion of
               counsel    satisfactory   to    the
               corporation  that  registration  is
               not required.

     3.5  Information.  The Shareholder acknowledges  that (a) he
has received and has reviewed to his satisfaction this Agreement,
the  Akorn  Disclosure  Documents,  the  PRL Financial Statements
referred  to  in  Section  3.11  and  such  additional   material
information  with  respect  to  the  Merger,  if  any,  as he has
requested  and  (b)  such  information  is sufficient for him  to
determine objectively whether to approve  the  Merger  and  enter
into this Agreement.

     3.6  Organization;  Qualification;  Subsidiaries.  PRL is  a
corporation duly organized, validly existing and in good standing
under the laws of the State of California,  having  all requisite
corporate power and authority to own its property and to carry on
its business as it is now being conducted.  PRL is not  qualified
to   do   business   as   a  foreign  corporation  in  any  other
jurisdiction.   PRL's  non-qualification  to  do  business  as  a
foreign corporation in any  jurisdiction has not had any material
adverse  effect with respect to  PRL,  its  assets,  business  or
financial  condition  and does not adversely affect PRL's ability
to  enforce any right that  is  material  to  PRL.   PRL  has  no
subsidiaries or equity interests in any other entity.

     3.7  Capital  Stock.   The  authorized  capital stock of PRL
consists of 100,000 shares of common capital stock,  no par value
per  share,  of which 94.5 shares are issued and outstanding  and
none are held in its treasury.  All issued and outstanding shares
of capital stock of PRL have been duly authorized and are validly
issued, fully  paid and non-assessable.  There are no outstanding
stock options or  other  rights  to  acquire  any  shares  of the
capital stock of PRL or any security convertible into such shares
and  PRL has no obligation or other commitment to issue, sell  or
deliver  any of the foregoing or any shares of its capital stock.
All shares  of  capital  stock  issued by PRL have been issued in
compliance with all legal requirements  and  without violation of
any pre-emptive or similar rights.  Other than  those  shares  of
capital  stock  listed  in  the Disclosure Schedule, there are no
shares of PRL capital stock issued or outstanding.

     3.8  Corporate  Authorization;   Enforceability.   Benjamin,
Yankoff  and  Gencarella constitute the holders  of  all  of  the
outstanding shares  of  capital  stock  of  PRL  and  all  of the
directors  of PRL.  Their execution of this Agreement constitutes
their written  unanimous consent as shareholders and directors of
PRL to the Merger  and to the execution, delivery and performance
by  PRL  of  this Agreement.   No  further  vote  or  consent  of
shareholders or directors of PRL and no further corporate acts or
other corporate  proceedings  are required of PRL for the due and
valid authorization, execution,  delivery and performance of this
Agreement and the Certificate of Merger  and  the consummation of
the Merger.  Subject to such filings as are required by law, this
Agreement  and  the  Certificate of Merger are legal,  valid  and
binding obligations of  PRL  and  are  enforceable against PRL in
accordance  with  their  terms, except that  enforcement  may  be
limited  by  bankruptcy,  reorganization,  insolvency  and  other
similar laws and court decisions  relating  to  or  affecting the
enforcement   of  creditors'  rights  generally  and  by  general
equitable principles.

     3.9  No Conflict.   Except  as  set  forth in the Disclosure
Schedule,  neither  the  execution  and  the  delivery   of  this
Agreement  by  PRL,  nor  the  consummation  of  the transactions
contemplated  hereby  do or will (a) violate, conflict  with,  or
result in a breach of any provisions of, (b) constitute a default
(or an event which, with  notice  or lapse of time or both, would
constitute a default) under, (c) result  in the termination of or
accelerate  the  performance  required  by,  (d)  result  in  the
creation of any lien, security interest, charge,  claim, mortgage
or   encumbrance   (collectively   referred   to   hereafter   as
"Encumbrance") upon any of its properties or assets  under any of
the   terms,   conditions   or  provisions  of  its  Articles  of
Incorporation or By-laws or any  material  note,  bond, mortgage,
indenture, deed of trust, lease, license, loan agreement or other
instrument or obligation to or by which it or any of  its  assets
is  bound,  or  (e)  violate any order, writ, injunction, decree,
statute, rule or regulation of any Governmental Entity applicable
to it or any of its assets, except for any such conflict, breach,
termination, acceleration, default or Encumbrance which would not
have a material adverse  effect  on  (i)  the business, assets or
financial  condition of PRL or (ii) PRL's ability  to  consummate
any of the transactions contemplated hereby.

     3.10 Consents  and  Approvals.   Except  as set forth on the
Disclosure Schedule, no filing with or notice to,  and no permit,
authorization, consent or approval of, any federal,  state, local
or  foreign court or tribunal or administrative, governmental  or
regulatory body, agency or authority (a "Governmental Entity") is
necessary for the execution and delivery by PRL of this Agreement
or the  consummation  by  PRL  of  the  transactions contemplated
hereby.

     3.11 Financial Statements.  The "PRL  Financial  Statements"
are, collectively, the balance sheet as of December 31,  1995 and
related statements of income, stockholders' equity and cash flows
of PRL for the year then ended.  The Disclosure Schedule contains
true  and  complete copies of the PRL Financial Statements.   PRL
knows of no  facts  the existence of which would require material
modification to the PRL Financial Statements in order for them to
be  prepared in accordance  with  generally  accepted  accounting
principles.   The  PRL  Financial  Statements  do not contain any
items of a special, extraordinary or nonrecurring  nature, except
as expressly noted in such statements and except as  disclosed in
the Disclosure Schedule.  The balance sheet of PRL as of December
31, 1995 (the "Balance Sheet Date") is referred to herein  as the
"Balance Sheet."

     3.12 Agreements  with Shareholders.  The Disclosure Schedule
discloses and describes all agreements between PRL and any of the
Shareholders,  including,   without   limitation,  any  agreement
pursuant  to  which any Shareholder is employed  by  or  performs
services for PRL  (the "Current Employment Agreements").  PRL and
each  of  the Shareholders  is  in  compliance  in  all  material
respects  with   the   provisions   of  each  Current  Employment
Agreement.   Except  as  provided  in  the   Current   Employment
Agreements  or as otherwise disclosed in the Disclosure Schedule,
PRL  has  no  obligations   for  the  payment  of  money  to  any
Shareholder  and  no Shareholder  has  any  obligations  for  the
payment of money to PRL.

     3.13 Absence of  Certain  Changes.   Since the Balance Sheet
Date there has been no event or condition of  any  character that
has  had,  or  can  reasonably  be  expected  to have, a material
adverse effect on the financial condition, results of operations,
cash flow, business or prospects of PRL.  Except  as specifically
disclosed  in  the  PRL  Financial  Statements  or the Disclosure
Schedule or as contemplated herein, PRL has not since the Balance
Sheet Date:

          3.13.1    made  any material change in the  conduct  of
its business and operations  or failed to operate its business so
as to preserve its business organization  intact  and to preserve
the good will of its customers, suppliers and others with whom it
has significant business relations;

          3.13.2    entered into any agreement or transaction not
in the ordinary course of business;

          3.13.3    experienced  any material adverse  change  in
its   financial  condition,  assets,  business,   operations   or
prospects;

          3.13.4    incurred   any   obligation   or   liability,
absolute  or  contingent,  except  trade  or business obligations
incurred  in the ordinary course of business  or  sales,  income,
franchise,  or  ad  valorem taxes accruing or becoming payable in
the ordinary course of business;

          3.13.5    declared   or  paid  any  dividend  or  other
distribution with respect to any of its capital stock, other than
the distributions described in Section  6.10, or purchased any of
its capital stock;

          3.13.6    acquired or disposed  of  any assets material
to its business or operations;

          3.13.7    subjected   any   of   its  assets   to   any
Encumbrance  other  than Permitted Encumbrances  (as  defined  in
Section 3.14 below);

          3.13.8    increased the rate of compensation (including
bonuses,  contingent  severance   payments,   retirement,  profit
sharing,  benefit  or  similar  payments)  payable or  to  become
payable   to   any  of  its  officers,  directors  or   employees
(collectively "Company Personnel");

          3.13.9    adopted   any   employee   welfare,  pension,
retirement, profit sharing or similar plan or made  any  material
addition to or modification of existing plans;

          3.13.10   experienced   any   labor   trouble   or  any
controversy   or   unsettled   grievance  involving  any  Company
Personnel;

          3.13.11   terminated  or   received   notice   of   the
termination  of  any  contract, commitment or transaction that is
material to it, or waived any right of material value to it;

          3.13.12   made  any  material  change in any accounting
principle, procedure or practice followed by it;

          3.13.13   issued  any stock or merged  or  consolidated
with any other business or agreed to do so;

          3.13.14   made any  capital expenditure or entered into
any lease involving payments in excess of $25,000;

          3.13.15   borrowed any  money  or guaranteed or assumed
any indebtedness of others;

          3.13.16   suffered  any  extraordinary  losses  or  any
material  damage, destruction or casualty  with  respect  to  its
assets,  or   experienced   any  events,  conditions,  losses  or
casualties which have resulted in or might result in claims under
its insurance policies of an aggregate of $25,000 or more;

          3.13.17   loaned any money to any person or entity;

          3.13.18   experienced   any  loss  of  service  of  any
Company Personnel, material to the conduct of its business;

          3.13.19   defaulted under  any  note,  loan,  mortgage,
guarantee  or  other  instrument  of indebtedness or any material
contractual obligation.

          3.13.20   received any notification, warning or inquiry
from or given any notification to or  had  any communication with
any Governmental Entity, including without limitation  the United
States  Food  and  Drug  Administration  (the  "FDA"), the United
States Drug Enforcement Administration ("DEA"), the United States
Environmental Protection Agency ("EPA"), California Environmental
Protection  Agency  ("California EPA"), the California  Board  of
Pharmacy, the California  Food  and  Drug  Administration  or the
United  States  Occupational  Safety  and  Health  Administration
("OSHA")  with  respect  to any proposed remedial action  or  any
violation or alleged or possible  violation  of  any  law,  rule,
regulation  or  order  relating to or affecting its business, nor
are any facts known to PRL  that  may  reasonably  be expected to
give rise to any such notification, warning or inquiry;

          3.13.21   transferred any asset, right or  interest to,
or  entered  into  any  transaction  with any Shareholder or  any
affiliate of any Shareholder;

          3.13.22   amended  its  Articles  of  Incorporation  or
Bylaws;

          3.13.23   received notice or had knowledge or reason to
believe that any substantial customer  or  supplier  of  PRL  has
terminated or intends to terminate its relationship with PRL;

          3.13.24   waived  any  right  in  connection  with  any
aspect  of  its business having a material effect on the business
of PRL as a whole; or

          3.13.25   made any agreement or commitment to do any of
the foregoing.

     3.14 Properties; Absence of Encumbrances.

               (a)  PRL has good title to all material properties
and assets reflected  on the Balance Sheet, free and clear of any
Encumbrances, except those  Encumbrances  shown on the Disclosure
Schedule (the "Permitted Encumbrances").

               (b)  The Disclosure Schedule sets forth a complete
and correct list of all leases of real property to which PRL is a
party (a "Lease"), all of which are valid and  enforceable and in
full force and effect.  Complete and correct copies of each Lease
have been furnished to Akorn.  PRL is in full compliance with and
has not received a notice of default under any Lease  and  PRL is
not  involved in any dispute under any Lease, the effect of which
would  have  a material adverse effect on the business, assets or
financial condition of PRL.

               (c)  PRL  does  not  own, and has never owned, any
real property other than as described in the Disclosure Schedule.

     3.15 Permits; Compliance with Laws.   To  the best knowledge
of  each  of the Shareholders PRL (a) has all necessary  permits,
licenses and  governmental authorizations required for the lease,
ownership, occupancy  or  operation  of its properties and assets
and the carrying on of its business, and  (b)  has  conducted its
business  in  substantial  compliance  with and is in substantial
compliance   with  all  applicable  laws,  regulations,   orders,
permits, judgments,  ordinances  or  decrees  of any Governmental
Entity.

     3.16 Material Contracts.  The Disclosure Schedule  lists and
describes  each  agreement, lease, contract or other document  to
which PRL is a party,  which  (a) requires PRL or the other party
to  such  contract to keep any information  confidential  or  (b)
involves payment  by  or  to  PRL  of  any amount in excess of or
delivery  by PRL of goods or services having  a  value  exceeding
$10,000 per  annum  (a  "Material  Contract").   A  complete  and
correct  copy  of each Material Contract has been furnished to or
made  available to  Akorn.   Each  Material  Contract  is  valid,
binding  and  enforceable,  except to the extent that enforcement
may  be  limited by bankruptcy,  reorganization,  insolvency  and
other similar  laws  and court decisions relating to or affecting
the enforcement of creditors'  rights  generally and by equitable
principles.  Except as set forth in the  Disclosure Schedule, PRL
and each other party to each Material Contract  are in compliance
in  all  material  respects with the provisions of such  Material
Contract.

     3.17 Litigation.   Except  as  disclosed  on  the Disclosure
Schedule, (a) there are no outstanding orders, writs,  judgments,
injunctions,   awards  or  decrees  of  any  Governmental  Entity
("Judgments") against or involving PRL; (b) there are no actions,
suits,   investigations,    labor    disputes    or   proceedings
(collectively, "Suits"), pending or threatened against  PRL which
if  decided  adversely  to  PRL, in one case or in the aggregate,
would have a material adverse  effect  on the business, assets or
financial condition of PRL and; (c) to the best knowledge of each
of the Shareholders there have been no events  and  there  are no
facts  or  circumstances  that could result in any matters of the
types described in the preceding  clauses  (a)  and (b).  PRL has
delivered  or  made  available  complete copies of all  pleadings
related to the Judgments or Suits  disclosed  on  the  Disclosure
Schedule.

     3.18 Regulatory Matters.  PRL has provided Akorn with access
to   (a)  correct  and  complete  copies  of  all  communications
(including,  but  not  limited  to,  notes  and memoranda of oral
communications, if any) between PRL or any of its representatives
and the FDA, the DEA, the California EPA, the California Board of
Pharmacy,  the California Food and Drug Administration,  and  any
other Governmental  Entity that administers laws similar to those
administered by any such  agency  ("Regulator") that has occurred
during the 36-month period preceding  the  date of this Agreement
and (b) all of the following information that is related to PRL's
business  or to any product distributed by PRL  and  that  is  in
PRL's possession  or  maintained  on PRL's behalf by others:  all
information  relating  to  inspections   of  any  premises  by  a
Regulator;  all facilities master files; all  standard  operating
procedures; all  plant  and  equipment  validation  records;  all
formulations,  stability  data  and  batch  records;  all  books,
records,  information  and data related to any products that have
been distributed by PRL  during the 36-month period preceding the
date  of this Agreement; all  other  written  information,  data,
records  and  materials (including, but not limited to, notes and
memoranda of oral  communications, if any) relating to or used or
useful in complying  with  laws, regulations, orders, procedures,
standards or processes administered,  adopted, issued or required
by any Regulator.

     3.19 Environmental Matters.  To the  best  knowledge of each
of  the  Shareholders,  (a)  PRL  is  not  in  violation  of  any
applicable  laws  or regulations relating to the environment  and
PRL is not a party  to  any  proposed removal, remedy or remedial
action nor has PRL received any  material  claim for compensation
in  connection  with the foregoing matters contemplated  by  this
sentence and (b)  no  Governmental  Entity  or  third  party  has
claimed  that  PRL  is in material violation of any environmental
permit, law or regulation.   PRL has not received any notice that
any  investigation,  administrative   order,  consent  order  and
agreement, removal or remedial action,  litigation  or settlement
with  respect  to any environmental permit, law or regulation  is
proposed, threatened, anticipated or in existence with respect to
any  of  PRL's  leased   or  owned  properties.   The  properties
currently and previously leased  or  owned  by PRL are not and to
the best knowledge of each of the Shareholders,  have  never been
on  or  associated  with  any  "national priorities" list or  any
equivalent state list or any federal  or  state "superlien" list.
PRL has not received any notice of any complaint  from any person
relating  to  respiratory  or  other health problems or  property
damage  attributable  to  any property  currently  or  previously
leased or owned by PRL.  To  the  best  knowledge  of each of the
Shareholders,  the  execution and delivery of this Agreement  and
the   effectuation  of  the   Merger   and   other   transactions
contemplated  hereby  are  not  subject to the consent, review or
approval of, and do not and will not require any disclosure to or
filings with, any Governmental Entity  having power under or with
respect to environmental laws.

     3.20 ERISA and Related Matters.

          3.20.1 Definitions:

               (a)  "ERISA" means the Employee  Retirement Income
Security  Act of 1974, as amended, and the rules and  regulations
promulgated thereunder.

               (b)  "Benefit  Arrangement"  means any employment,
severance  or  similar  contract,  or  any other contract,  plan,
policy  or  arrangement  (whether or not written)  providing  for
compensation, bonus, profit-sharing,  stock option or other stock
related   rights  or  other  forms  of  incentive   or   deferred
compensation,  vacation  benefits,  insurance coverage (including
any  self-insured  arrangement),  health   or  medical  benefits,
disability  benefits, severance benefits and  post-employment  or
retirement benefits  (including  compensation,  pension,  health,
medical  or  life insurance benefits) that (A) is subject to  any
provision   of  ERISA,   (B) is   maintained,   administered   or
contributed to  by  the  employer  and (C) covers any employee or
former employee of the employer.

               (c)  "Employee Plan"  means  a plan or arrangement
as defined in Section 3(3) of ERISA, that (A)  is  subject to any
provision   of   ERISA,   (B)  is  maintained,  administered   or
contributed to by the employer  and  (C)  covers  any employee or
former employee of the employer.

               (d)  "Multiemployer   Plan"   means   a  plan   or
arrangement as defined in Section 4001(a)(3) and 3(37) of ERISA.

               (e)  "Title IV Plan" means an Employee Plan, other
than any Multiemployer Plan, subject to Title IV of ERISA.

               The  Disclosure Schedule lists each Employee  Plan
that  PRL maintains, administers,  contributes  to,  or  has  any
contingent  liability  with  respect thereto.  PRL has provided a
true and complete copy of each  such  Plan,  current summary plan
description,  (and, if applicable, related trust  documents)  and
all  amendments   thereto  and  written  interpretations  thereof
together with (i) all  annual  reports,  if  any,  that have been
prepared  in connection with each such Employee Plan;  (ii)   all
material communications  received  from  or  sent to the Internal
Revenue  Service  ("IRS") or the Department of Labor  within  the
last two years (including  a  written  description  of  any  oral
communications);  and  (iii) the  most  recent  IRS determination
letter  with  respect to each Employee Plan and the  most  recent
application for a determination letter.

          3.20.2     The   Disclosure  Schedule  identifies  each
Benefit Arrangement that PRL  maintains,  or administers.  Except
as  set  forth  in  the  Disclosure Schedule, PRL  has  made  all
contributions to and has no  contingent liability with respect to
any of its Benefit Arrangements.   PRL  has  furnished  to  Akorn
copies  or  descriptions  of  each  Benefit  Arrangement.  To the
knowledge  of  each of the Shareholders, each Benefit Arrangement
has been maintained  in substantial compliance with its terms and
with the requirements prescribed by any and all statutes, orders,
rules  and regulations  which  are  applicable  to  such  Benefit
Arrangement.

          3.20.3  Benefits  under  any  Employee  Plan or Benefit
Arrangement  are  as represented in said documents and  have  not
been  increased or modified  (whether  written  or  not  written)
subsequent   to  the  dates  of  such  documents.   PRL  has  not
communicated to  any employee or former employee any intention or
commitment to modify  any Employee Plan or Benefit Arrangement or
to establish or implement  any  other employee or retiree benefit
or compensation arrangement.

          3.20.4  PRL does not maintain,  administer,  or  become
obligated to contribute to or have any contingent liability  with
respect to any Multiemployer Plan or any Title IV Plan.

          3.20.5  Each  Employee  Plan  which  is  intended to be
qualified  under  Section 401(a) of the Code is so qualified  and
has been so qualified  during  the  period  from  its adoption to
date, and, to the best knowledge of each of the Shareholders,  no
event  has  occurred  since  such  adoption  that would adversely
affect  such qualification and each trust created  in  connection
with each  such  Employee  Plan  forming a part thereof is exempt
from tax pursuant to Section 501(a)  of  the  Code.  To  the best
knowledge  of  each  of the Shareholders, each Employee Plan  has
been maintained and administered in compliance with its terms and
with  the requirements  prescribed  by  any  and  all  applicable
statutes,  orders,  rules  and  regulations,  including  but  not
limited to ERISA and the Code.

          3.20.6   To   the   best   knowledge  of  each  of  the
Shareholders, full payment has been made of all amounts which PRL
is  or  has been required to have paid as  contributions  to  any
Employee  Plan  or  Benefit  Arrangement  under applicable law or
under the terms of any such plan or any arrangement.

          3.20.7   To   the  best  knowledge  of  each   of   the
Shareholders, neither PRL nor any of its shareholders, directors,
officers or employers has engaged in any transaction with respect
to an Employee Plan that  could  subject PRL to a tax, penalty or
liability for a prohibited transaction, as defined in Section 406
of ERISA or Section 4975 of the Code.   None of the assets of any
Employee Plan are invested in employer securities.

          3.20.8   To  the  best  knowledge  of   each   of   the
Shareholders,  PRL has  no  current  or  projected  liability  in
respect of post-retirement  or  post-employment  welfare benefits
for  retired,  current or former employees.  No health,  medical,
death or survivor  benefits  have been provided under any Benefit
Arrangement  to any person who  is  not  an  employee  or  former
employee of PRL or a dependent thereof.

          3.20.9  Except as disclosed in the Disclosure Schedule,
there is no litigation,  administrative or arbitration proceeding
or other dispute pending or threatened that involves any Employee
Plan or Benefit Arrangement which could reasonably be expected to
result in a liability to PRL,  any employees or directors of PRL,
or any fiduciary (as defined in  ERISA  Section  3(21))  of  such
Employee Plan or Benefit Arrangement.

          3.20.10  No  employee  or  former  employee of PRL will
become entitled to any bonus, retirement, severance, job security
or similar benefit or enhanced benefit (including acceleration of
compensation,  an  award,  vesting  or exercise of  an  incentive
award) or any fee or payment of any kind  solely  as  a result of
any of the transactions contemplated hereby.

          3.20.11 PRL is not a party to any agreement,  contract,
arrangement or plan that has resulted or would result, separately
or  in  the  aggregate,  in  the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code (i.e., a
golden parachute).

     3.21 Taxes.

          3.21.1 (a) For purposes  of  this  Agreement  the  term
"Taxes"  shall  mean all taxes, however denominated or described,
including any interest,  penalties or other additions to tax that
may become payable in respect  thereof,  imposed  by any federal,
territorial, state, local or foreign government or  any agency or
political  subdivision of any such government, which taxes  shall
include, without  limiting  the  generality of the foregoing, all
income or profits taxes, payroll or  employee  withholding taxes,
unemployment  insurance,  social  security taxes, sales  and  use
taxes,  ad valorem taxes, excise taxes,  franchise  taxes,  gross
receipts  taxes,  environmental  taxes,  transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation  premiums  and
other  governmental charges, and other obligations of the same or
of a similar  nature  to  any  of  the  foregoing,  which  PRL is
required to pay, withhold or collect.

               (b)  For  the  purpose of this Agreement, the term
"Returns"  shall  mean all reports,  estimates,  declarations  of
estimated tax, information statements and returns relating to, or
required to be filed  in  connection  with,  any Taxes, including
information returns or reports with respect to backup withholding
and other payments to third parties.

          3.21.2    Except   as   disclosed  in  the   Disclosure
Schedule:

               (a)  PRL  and  the  Shareholders   have  made  all
elections  necessary  for PRL to be treated as a qualified  small
business corporation under Code Section 1361(a)(1).

               (b)  Neither  PRL nor the Shareholders have taken,
or will take prior to the Effective  Time,  any  action that will
terminate  PRL's treatment as a small business corporation  under
the Code.

               (c)  All  Returns  required  to  be filed by or on
behalf  of  PRL have been duly filed on a timely basis  and  such
Returns (including  all  attached  statements  and schedules) are
true, complete and correct.  All Taxes shown to be payable on the
Returns  or on subsequent assessments with respect  thereto  have
been paid  in  full  on  a  timely  basis, and no other Taxes are
payable by PRL with respect to items  or  periods covered by such
Returns (whether or not shown on or reportable  on  such Returns)
or with respect to any period prior to the Effective Date.

               (d)  PRL  has  withheld  and  paid over all  Taxes
required  to  have  been  withheld  and paid over (including  any
estimated taxes), and has complied with all information reporting
and  backup withholding requirements,  including  maintenance  of
required records with respect thereto, in connection with amounts
paid or  owing to any employee, creditor, independent contractor,
or other third party.

               (e)  There  are  no  liens on any of the assets of
PRL with respect to Taxes, other than liens for Taxes not yet due
and payable or for Taxes that are being  contested  in good faith
through   appropriate   proceedings  and  for  which  appropriate
reserves have been established.

               (f)  PRL has  furnished or made available to Akorn
or AMI true and complete copies  of:   (i)  all federal and state
income and franchise tax returns of PRL for all periods beginning
on or after January 1, 1993, and (ii) all tax audit reports, work
papers  statements of deficiencies, closing or  other  agreements
received by PRL or on its behalf relating to Taxes.

          3.21.3    Except   as   disclosed   on  the  Disclosure
Schedule or in documents provided to or made available  to  Akorn
or AMI:

               (a)  The Returns of PRL have never been audited by
a  governmental  or  taxing  authority,  nor is any such audit in
process, pending or threatened (formally or informally).

               (b)  No deficiencies exist  or  have been asserted
(either formally or informally) or are expected  to  be  asserted
with  respect to Taxes of PRL, and no notice (either formally  or
informally)  has  been  received  by  PRL that it has not filed a
Return or paid Taxes required to be filed or paid by it.

               (c)  PRL is not a party  to  any pending action or
proceeding for assessment or collection of Taxes,  nor  has  such
action or proceeding been asserted or threatened (either formally
or informally) against it or any of its assets.

               (d)  Except  as  reflected  in  the  Returns or as
disclosed  on the Disclosure Schedule, no waiver or extension  of
any statute  of limitations is in effect with respect to Taxes or
Returns of PRL.

               (e)  No  action has been taken that would have the
effect of deferring any liability  for  Taxes  for  PRL  from any
period  prior  to  the  Effective  Date  to  any period after the
Effective Date.

               (f)  There are no requests for  rulings, subpoenas
or requests for information pending with respect to PRL.

               (g)  No power of attorney has been granted by PRL,
with respect to any matter relating to Taxes.

               (h)  The amount of liability for  unpaid  Taxes of
PRL  for all periods ending on or before the Effective Date  will
not, in the aggregate, exceed the amount of the current liability
accruals for Taxes, as such accruals are reflected on the balance
sheet of PRL as of the Closing Date.

          3.21.4    Except   as   disclosed   on  the  Disclosure
Schedule,  or  as  described in documents furnished  to  or  made
available to Akorn or AMI:

               (a)  PRL  has  not  made  an  election, and is not
required  to  treat  any  asset  as owned by another  person  for
federal  income  tax  purposes  or as  tax-exempt  bond  financed
property or tax-exempt use property within the meaning of section
168 of the Code.

               (b)  PRL   has   not   issued   or   assumed   any
indebtedness that is subject to section 279(b) of the Code.

               (c)  PRL  has not entered  into  any  compensatory
agreements with respect to  the  performance  of  services  which
payment  thereunder  would  result  in a nondeductible expense to
Section 280G of the Code or an excise  tax  to  the  recipient of
such payment pursuant to Section 4999 of the Code.

               (d)  No  election has been made under Section  338
of the Code with respect to PRL and no action has been taken that
would result in any income  tax  liability  to PRL as a result of
deemed election within the meaning of Section 338 of the Code.

               (e)  No consent under Section  341(f)  of the Code
has been filed with respect to PRL.

               (f)  PRL  has  not  agreed, nor is it required  to
make,  any  adjustment under Code Section  481(a)  by  reason  of
change in accounting method or otherwise.

               (g)  PRL has not disposed of any property that has
been accounted for under the installment method.

               (h)  PRL is not a party to any interest rate swap,
currency swap or similar transaction.

               (i)  PRL  is  not  a  United  States real property
holding corporation within  the meaning of Section  897(c)(2)  of
the  Code  and  Akorn  is  not  required  to  withhold tax on the
acquisition of the stock of PRL.

               (j)  PRL has not participated in any international
boycott as defined in Code Section 999.

               (k)  PRL  is  not  subject  to any joint  venture,
partnership or other arrangement or contract that is treated as a
partnership for federal income tax purposes.

               (l)  PRL  has  not  made  any  of   the  foregoing
elections and is not required to apply any of the foregoing rules
under any comparable state or local income tax provisions.

               (m)  PRL  does  not  have  and  has  never  had  a
permanent establishment in any foreign country, as defined in any
applicable tax treaty or convention between the United States and
such foreign country.

               (n)  The transactions contemplated herein  are not
subject to the tax withholding provisions of Section 3406 of  the
Code,  or  of  Subchapter  A  of Chapter 3 of the Code, or of any
other provision of law.
          3.21.5    Set forth in  the  Disclosure  Schedule or in
documents furnished or made available to Akorn or AMI is accurate
and  complete  information with respect to each of the  following
for all tax periods beginning January 1, 1993:

               (a)  All  material  tax  elections  in effect with
                    respect to PRL;

               (b)  The current tax basis of the assets of PRL;

               (c)  The  current  and  accumulated  earnings  and
                    profits of PRL;

               (d)  The  net  operating losses of PRL by  taxable
                    year;

               (e)  The net capital losses of PRL;

               (f)  The tax credit carry overs of PRL; and

               (g)  The  overall  foreign  losses  of  PRL  under
                    section 904(f) of the Code that is subject to
                    recapture.

          3.21.6 (a) The Shareholders  and  PRL have not taken or
agreed  to  take any action that would prevent  the  Merger  from
constituting  a reorganization qualifying under the provisions of
section 368(a) of the Code.

               (b)  There   is   no  plan  or  intention  by  any
Shareholder to sell, exchange or otherwise dispose of a number of
shares of Akorn Stock to be received  in  the  Merger  that would
reduce the Shareholder's ownership of Akorn Stock to a number  of
shares  having a value, as of the Effective Time, of less than 50
percent of the value of all of the PRL Stock (including shares of
PRL Stock  exchanged  for  cash  in  lieu of fractional shares of
Akorn Stock) outstanding immediately prior to the Effective Time.

               (c)  Immediately following the Effective Time, AMI
will hold at least 90 percent of the fair market value of the net
assets of PRL and at least 70 percent of the fair market value of
the  gross  assets of PRL held immediately  prior  thereto.   For
purposes of this  representation,  amounts  used  by  PRL  to pay
Merger expenses and all redemptions and distributions made by PRL
will  be  included  as  assets  of  PRL  immediately prior to the
Merger.

               (d)  The Shareholders and PRL  will each pay their
respective  expenses,  if  any, incurred in connection  with  the
Merger.

               (e)  There  is   no   intercorporate  indebtedness
existing between PRL and Akorn or between  PRL  and  AMI that was
issued, acquired or will be settled at a discount.

               (f)  PRL  is not an investment company as  defined
in Section 368(a)(3)(A) of the Code.
     3.22 Transactions  with   Certain   Persons.    Except   for
employment  relationships  in the ordinary course of business and
except  as  set  forth  in the Disclosure  Schedule,  no  Company
Personnel or any member of  any such person's family is presently
a party to any transaction with  PRL involving payments in excess
of $10,000 per annum, including without  limitation any contract,
agreement or other arrangement providing for  the  furnishing  of
services  by  or the rental of real or personal property from any
such person or  from any corporation, partnership, trust or other
entity in which any  such person has more than one percent equity
interest or is an officer, director, trustee or general partner.

     3.23 Intellectual Properties.  The Disclosure Schedule lists
all patents, trademarks,  trade  names, service marks, copyrights
or   other   intellectual  property  rights,   or   any   pending
applications for any of the foregoing (collectively "Intellectual
Property Rights"),  used  in  PRL's  business,  identifying those
owned by PRL and those owned by others.  In the operation  of its
business as presently conducted, PRL is not in conflict with  and
does  not  infringe  any  Intellectual Property Rights of others.
PRL is not a party to any agreement  relating to any Intellectual
Property Rights, whether owned by PRL  or  others,  and no person
has   a  right  to  receive  any  royalty  with  respect  to  any
Intellectual Property Rights used by PRL in its business.

     3.24 Insurance.   Akorn  has  been  provided  access  to all
insurance policies or binders which relate to PRL's business.  To
the best knowledge of each of the Shareholders, all premiums  due
under  such policies and binders have been paid or accrued for on
the Balance  Sheet  and all such policies and binders are in full
force and effect.  No notice of cancellation or nonrenewal of any
such policy or binder  has  been  received  by PRL.  No notice of
disallowance of any claim under any insurance  policy  or binder,
whether or not currently in effect, has been received by PRL.  To
the  best  knowledge  of  each  of  the Shareholders, PRL has  no
liability  for  or exposure to any premium  expense  for  expired
policies.  To the  best  knowledge  of  each of the Shareholders,
there  are  no current claims by PRL under  any  such  policy  or
binder nor are there any insured losses for which claims have not
been made.  PRL  owns  no  life  insurance  policies and does not
maintain products liability insurance.

     3.25 Labor  Matters.   There  are  no  agreements  with,  or
pending   petitions  for  recognition  of,  a  labor   union   or
association  as  the  exclusive bargaining agent for any of PRL's
employees.  No such petitions  have  been  pending  at  any  time
within  two  years  of the date of this Agreement and to the best
knowledge of each of  the  Shareholders,  there  has not been any
organizing  effort  by  any  union  or  other  group  seeking  to
represent  any  employees  of  PRL  as their exclusive bargaining
agent at any time within two years of the date of this Agreement.
There  are  no  labor  strikes,  work stoppages  or  other  labor
troubles, other than routine grievance  matters,  now  pending or
threatened  against  PRL,  nor  have  there  been  any such labor
strikes,  work  stoppages  or  other  labor troubles, other  than
routine grievance matters, with respect to the business of PRL at
any time within two years of the date of this Agreement.

     3.26 Bank  Accounts;  Powers  of Attorney.   The  Disclosure
Schedule sets forth with respect to  each  bank  account  or cash
account maintained at any brokerage or other financial firm,  the
name  of the institution at which such account is maintained, the
number  of  the  account, and the names of the individuals having
authority to withdraw funds from such account.  PRL has no letter
of credit or powers of attorney outstanding.

     3.27 Minute Books  and  Stock  Transfer  Books.   The minute
books  and stock transfer books of PRL are correct, complete  and
current  in all material respects and have been made available to
Akorn.

     3.28 Customers  and Suppliers.  The Disclosure Schedule sets
forth  a list of (a) all  customers  of  PRL  during  the  period
commencing  January 1, 1995, and ending on the Balance Sheet Date
which accounted  for  10%  or  more of the revenues of PRL during
such period and (b) the ten largest  suppliers to PRL in terms of
dollars  invoiced.   Except  as  disclosed   on   the  Disclosure
Schedule,  none  of  such  customers  or  suppliers  has provided
written   notice  to  PRL  of  its  intention  to  terminate  its
relationship  with  PRL  or to reduce substantially the amount of
business that it provides  to PRL.  To the best knowledge of each
of the Shareholders, none of  such customers or suppliers intends
to terminate or to change significantly its relationship with PRL
on or after the Closing Date.

     3.29 Compensation Agreements.  The Disclosure Schedule lists
all written employment, commission,  bonus  or other compensation
and consulting agreements to which PRL is a party.  Except as set
forth  on  the Disclosure Schedule, PRL is not  a  party  to  any
written  or  oral   employment,   commission,   bonus   or  other
compensation  or consulting agreement which PRL may not terminate
without any payment  or  penalty, at will, with or without cause,
except to the extent that  employment  at  will may be limited by
applicable law.  Except as set forth in the  Disclosure  Section,
PRL is not in breach of any such agreement.

     3.30 Conduct of Business.  To the best knowledge of each  of
the  Shareholders,  upon consummation of the Merger in accordance
with the terms hereof, the Surviving Corporation will be entitled
to conduct, in all material  respects,  the business of PRL as it
is now being conducted.

     3.31 Residence.  Each holder of shares  of PRL capital stock
is a resident of the State of California.

     3.32 Director  and Officer Indemnification.   The  directors
and officers of PRL are  not  entitled to indemnification by PRL,
except to the extent that indemnification rights are provided for
generally in the California Law  or  in  the  Current  Employment
Agreements;  there are no  pending claims for indemnification  by
any director or officer of PRL.

     3.33 Documents and Written Materials.  Originals or true and
complete copies  of  all  documents  or  other  written materials
underlying items listed in the Schedules have been  furnished  or
made  available  to  Akorn  in  the  form  in  which each of such
documents is in effect, and will not be modified  in any material
respect  prior to the Closing Date without Akorn's prior  written
consent. All  agreements,  contracts,  instruments  or  documents
furnished or made available to Akorn or AMI by PRL or any  of the
Shareholders  (the  "Furnished  Documents") are identified on the
Disclosure Schedule.
     3.34 Effectiveness of Representations  and  Warranties.  All
of  the  representations and warranties of PRL in this  Agreement
shall be true  in  all  material respects on the Closing Date and
shall be deemed to have been  made  again by PRL on and as of the
Closing Date.

     3.35 Effectiveness of Representations  and  Warranties.  All
of the representations and warranties of the Shareholders in this
Agreement shall be true in all material respects on  the  Closing
Date  and  shall  be  deemed  to  have  been  made  again by each
Shareholder on and as of the Closing Date.


                            SECTION 4
             REPRESENTATIONS AND WARRANTIES OF AKORN

     Akorn represents and warrants to and agrees with PRL and the
Shareholders as follows:

     4.1  Organization.   Akorn  and  AMI  are corporations  duly
organized, validly existing and in good standing  under  the laws
of  Louisiana  and Illinois, respectively, and have all requisite
corporate power  and  authority to own their properties and carry
on their businesses as now being conducted.

     4.2  Capitalization.   As of the date of this Agreement, the
authorized  capital stock of (a)  Akorn  consists  of  20,000,000
shares of common stock, no par value, approximately 15,115,000 of
which are validly issued and outstanding and approximately 36,000
of which are  held  as  treasury  shares  and (b) AMI consists of
100,000 shares of common stock, no par value  per  share,  100 of
which  are validly issued and outstanding.  Akorn holds of record
all of the  issued  and  outstanding shares of AMI capital stock.
True and correct information  as  to  all outstanding options and
other rights to purchase shares of Akorn  Stock  and  as  to  all
current   plans  and  agreements  (the  "Stock  Purchase  Plans")
pursuant to  which options and other rights to purchase shares of
Akorn Stock (the  "Purchase  Rights") have been and may be issued
is  set  forth  in  Notes I and J  to  the  financial  statements
included in Akorn's Annual  Report to Shareholders for its fiscal
year ended June 30, 1995.  Excepting  the  Purchase Rights, Akorn
has  no  outstanding  exchangeable or convertible  securities  or
options or other rights to purchase shares of Akorn Stock.

     4.3  Authority; Enforceability.   Each  of Akorn and AMI has
the  requisite  corporate  power  and  authority to  execute  and
deliver  this  Agreement  and  to  carry  out   its   obligations
hereunder.   The  execution,  delivery  and  performance of  this
Agreement  and the consummation of the Merger and  of  the  other
transactions contemplated hereby have been duly authorized by all
necessary corporate  action  on  the part of Akorn and AMI and no
other corporate proceedings on the  part  of  Akorn  or  AMI  are
necessary  to  authorize  this  Agreement  or  to  consummate the
transactions  so  contemplated.   This  Agreement  has been  duly
executed and delivered by each of Akorn and AMI and constitutes a
valid   and   binding  obligation  of  each  of  Akorn  and  AMI,
enforceable against  them in accordance with its terms, except as
may  be  limited by or subject  to  any  bankruptcy,  insolvency,
reorganization,  moratorium  or  other similar laws affecting the
enforcement  of  creditors'  rights  generally,  and  subject  to
general principals of equity and public policy considerations.

     4.4  Consents and Approvals; Conflicts.   No  filing with or
notice to, and no permit, authorization, consent or  approval of,
any  Governmental  Entity  is  necessary  for  the execution  and
delivery  by Akorn and AMI of this Agreement or the  consummation
by Akorn and  AMI of the transactions contemplated hereby, except
where  the  failure   to  obtain  such  permits,  authorizations,
consents or approvals or to make such filings or give such notice
would not have a material  adverse  effect  on  (a) the business,
assets  or  financial  condition  of Akorn or AMI or  (b)  either
Akorn's or AMI's ability to consummate  any  of  the transactions
contemplated hereby.  Neither the execution and delivery  of this
Agreement   by  Akorn  and  AMI,  nor  the  consummation  of  the
transactions   contemplated  hereby,  will  violate  any  of  the
provisions of the  Articles  of Incorporation or Bylaws of either
Akorn or AMI; or conflict with  or result in a breach of, or give
rise to a right of termination of,  or accelerate the performance
required by, any terms of any court order, consent decrees, note,
bond,  mortgage,  indenture, deed of trust,  or  any  license  or
agreement binding on either Akorn or AMI or to which either Akorn
or AMI is subject or a party, or constitute a default thereunder,
or result in the creation  of  any  Encumbrance  upon  any of the
assets or result in the creation of any Encumbrance upon  any  of
the assets of Akorn or AMI, except for any such conflict, breach,
termination, acceleration, default or Encumbrance which would not
have  a  material  adverse  effect on (a) the business, assets or
financial condition of Akorn  or  AMI  or  (b)  either Akorn's or
AMI's ability to consummate any of the transactions  contemplated
hereby.

     4.5  Akorn Stock.  All shares of Akorn Stock which are to be
issued  pursuant  to  the  Merger  will  be,  when  issued,  duly
authorized, validly issued, fully paid and nonassessable and free
of any Encumbrances or preemptive rights.

     4.6  Akorn  Disclosure.   The  Akorn Disclosure Documents do
not include any misstatement of any fact  material to the assets,
business, operations, financial condition and prospects of Akorn,
taken as a whole, or omit to state such a material fact necessary
in   order  to  make  the  statements,  in  the  light   of   the
circumstances  under  which they are made, not misleading.  Akorn
is  current  in the filing  of  all  reports,  schedules,  forms,
statements and  other  documents  required to be filed by it with
the Securities and Exchange Commission  under  the Securities Act
of 1933, as amended, and the Securities Exchange  Act of 1934, as
amended.

     4.7  Litigation.   Akorn  is  not a party to any  litigation
excepting  various products liability  claims  in  which  Akorn's
defense  has  been  undertaken  by  insurers  and  in  which  any
liability  of  Akorn is not expected by Akorn to exceed insurance
coverage limits.

     4.8  Effectiveness  of  Representations and Warranties.  All
of the representations and warranties  of Akorn in this Agreement
shall be true in all material respects on  the  Closing  Date and
shall be deemed to have been made again by Akorn on and as of the
Closing Date.


                            SECTION 5
                      PRE-CLOSING COVENANTS

     5.1  Access  to Properties and Records.  Until the Effective
Time, PRL and the Shareholders  shall  allow  Akorn  and  AMI and
their  authorized  representatives  full  access,  during  normal
business  hours and on reasonable notice, to all of PRL's plants,
properties,  offices,  vehicles,  equipment,  inventory and other
assets, documents, files, books and records, in  order  to  allow
Akorn  and  AMI a full opportunity to make such investigation and
inspection as  they desire of PRL's business and assets.  PRL and
the Shareholders  shall  further  use their best efforts to cause
the employees, counsel and regular  independent  certified public
accountants  of  PRL  to be available upon reasonable  notice  to
answer  questions  of  Akorn's   representatives  concerning  the
business and affairs of PRL, and shall  further  use  their  best
efforts  to  cause  them to make available all relevant books and
records  in connection  with  such  inspection  and  examination,
including  without  limitation  work  papers  for  all audits and
reviews of financial statements of PRL.

     5.2  Conduct of Business.  From and after the date  of  this
Agreement  and  until the Closing Date, PRL, on the one hand, and
Akorn and AMI, on  the other hand, shall conduct their respective
businesses in the ordinary  course  and  consistently  with  past
practice, except as expressly required or otherwise permitted  by
this  Agreement,  and  shall  not take or permit any action which
would cause any of their representations  made  in  Section 3 and
Section  4,  respectively,  not  to  be  true and correct on  the
Closing Date.

     5.3  Employment Agreements.  At the Closing,  the  following
Shareholders  will  execute  and  deliver  to Akorn an employment
agreement  substantially in the form of the employment  agreement
drafted in such shareholder's name and attached hereto as Exhibit
5.3:  Floyd Benjamin, Tom Yankoff and David Gencarella.

     5.4  Corporate   Name.    After   the  Effective  time,  the
Surviving Corporation shall have the right  to  use the corporate
name  "Pasadena  Research  Labs,  Inc."  and  any derivatives  or
combinations thereof and no Shareholder shall use  or  attempt to
use  such  name  or any derivative or combination thereof as  the
corporate name of  a corporation, partnership or other entity, an
assumed name, a trade name or in any other manner.

     5.5  Public Statements.   Prior  to the Effective Time, none
of the parties to this Agreement shall,  and each party shall use
its  best  efforts  so  that  none  of  its  advisors,  officers,
directors  or  employees  shall,  except with the  prior  written
consent of the other parties, publicize,  announce or describe to
any third person, except their respective advisors and employees,
the execution or terms of this Agreement, the  parties  hereto or
the transactions contemplated hereby, except as required  by  law
or  as  required pursuant to this Agreement to obtain the consent
of such third  person; provided, in any case, that Akorn may make
such  disclosures  and  announcements  as  may  be  necessary  or
advisable under applicable securities laws.

     5.6  No  Solicitation.   The  Shareholders and PRL will not,
prior to the Effective Time or the termination  of this Agreement
pursuant  to  Section  8.1,  (nor will they permit any  of  their
affiliates  or any of PRL's officers,  directors  or  agents  to)
directly or indirectly  solicit  or  participate  or engage in or
initiate  any  negotiations  or  discussions,  or enter  into  or
authorize any agreement or agreements in principle,  or  announce
any  intention  to  do any of the foregoing, with respect to  any
offer or proposal to acquire all or any significant part of PRL's
business and properties  or  any  of its capital stock whether by
merger, purchase of assets, purchase  of stock or otherwise.  The
Shareholders and PRL will notify Akorn  promptly  upon receipt of
any  inquiry, offer or other communication from any  third  party
regarding any such activities.

     5.7  No  stock splits or dividends.  Akorn shall not declare
or  pay  any  dividend  on  or  permit  any  reclassification  or
recapitalization  with  respect  to shares of Akorn Stock, or the
establishment of a record date for any of the foregoing, to occur
during the period between the date  of  this  Agreement  and  the
Effective Time.

     5.8  Notification  as to Representations.  Akorn and AMI, on
the one hand, and PRL and  the  Shareholders,  on the other hand,
will  promptly  disclose in writing to the other any  information
contained  in  its  representations  and  warranties  or  on  the
Disclosure Schedule that, because of an event occurring after the
date hereof, is incomplete or no longer correct.  Such disclosure
will be deemed to  modify  the  representations and warranties of
such party or the Disclosure Schedule, as the case may be.

     5.9  Akorn Disclosure Documents.   Akorn will furnish to PRL
and the Shareholders a copy of each quarterly report on Form 10-Q
and  any other report to or filing with the  SEC  made  by  Akorn
containing  information  that  is  material  to Akorn and that is
filed prior to the Closing Date.


                            SECTION 6
                      ADDITIONAL AGREEMENTS

     6.1  Legal   Requirements   to  Merger.   Subject   to   the
conditions set forth in Section 7  and  to  the  other  terms and
provisions  of  this  Agreement,  each  of  the  parties  to this
Agreement  agrees  to  take, or cause to be taken, all reasonable
actions necessary to comply  promptly with all legal requirements
applicable to it with respect  to  the  Merger  and will promptly
cooperate   with  and  furnish  information  to  each  other   in
connection with any such requirements imposed upon any of them in
connection with  the  Merger.   Each  of  PRL, Akorn, AMI and the
Shareholders  will  take  all  reasonable  actions  necessary  to
obtain,  and  will  cooperate with each other in  obtaining,  any
consent, authorization,  order  or  approval of, or any exemption
by, any Governmental Entity or other  public  or  private  party,
required  to  be  obtained  or  made by it in connection with the
Merger  or  the  taking  or  any  action   contemplated  by  this
Agreement.

     6.2  Further  Assurances.   After  the Effective  Time,  the
Shareholders, Akorn and AMI will, at the expense of Akorn or AMI,
take   all   appropriate   action  and  execute  all   documents,
instruments or conveyances which  may  be reasonably necessary to
carry out the provisions of this Agreement.

     6.3  Expenses.  Except as otherwise  provided  herein,  each
party  will  pay  all  costs  and  expenses  incurred  by  it  in
connection  with this Agreement and the transactions contemplated
hereby.

     6.4  Confidentiality.    Until   the   Effective   Time  and
subsequent  to  the  termination  of  this Agreement pursuant  to
Section  8.1, each of Akorn and AMI will  keep  confidential  and
will not disclose  to any third party any information obtained by
it from PRL or PRL's  representatives  in  connection  with  this
Agreement  except  (a) that information may be disclosed by Akorn
and AMI to their advisors  in  connection with the negotiation of
and the activities conducted pursuant  to  this Agreement, (b) to
the  extent  that  such  information  is  or  becomes   generally
available  to  the public through no act or omission of Akorn  or
AMI  in violation  of  this  Agreement  and  (c)  to  the  extent
permitted by Section 5.5.

     6.5  Termination  of PRL Profit-Sharing and Retirement Plan.
Akorn will cause PRL's Profit-Sharing  and  Retirement  Plan (the
"Plan")  to  be  terminated  by the Surviving Corporation in  due
course  after  the  Closing Date,  but  no  later  than  30  days
thereafter.  Akorn will  not  cause  the trustee or any member of
the administrative committee of the Plan  to  be removed.  To the
extent permitted by law, the Surviving Corporation will amend the
Plan  to  provide that all participants in such Plan  as  of  the
Closing Date will be 100% vested.  The Surviving Corporation will
also amend  such  Plan to comply with law, if necessary, and will
request the Internal  Revenue  Service to approve the termination
of the Plan.  The employees of the  Surviving Corporation will be
entitled to participate in Akorn's defined  contribution  plan in
accordance  with  and  to  the  extent  permitted  by such plan's
eligibility  requirements  and  other terms and conditions.   PRL
employees who continue employment  with the Surviving Corporation
will be given credit in the Akorn defined  contribution  plan for
hours  of service with PRL to the extent PRL provides payroll  or
other records to support the stated hours of service.

     6.6  Piggy-Back Registration Rights.

          6.6.1  If  Akorn  shall  at any time prior to the third
anniversary of the Closing Date propose  an  underwritten  public
offering  of  any  shares of Akorn common stock to be offered and
sold by Akorn exclusively  for  cash  pursuant  to a registration
statement under the Securities Act of 1933 on Form S-1, S-2 or S-
3  and  not  in  connection  with  an acquisition or an  employee
benefit plan, Akorn shall give written  notice  to  each  of  the
Shareholders  who  is  at such time a record holder of Conversion
Shares.   Upon  the written  request  of  any  such  Shareholder,
received by Akorn  no later than the tenth business day after the
giving of such notice  by  Akorn,  to register, on the same terms
and  conditions  as the shares of Akorn  common  stock  otherwise
being sold pursuant  to  such registration, all of the Conversion
Shares  held  by  such  Shareholder,  Akorn  will  use  its  best
reasonable  efforts  to  cause   such   Conversion   Shares  (the
"Registrable  Shares")  to  be included in the securities  to  be
covered by the registration statement  proposed  to  be  filed by
Akorn.    Notwithstanding  the  foregoing,  Akorn  shall  not  be
obligated to  include such Registrable Shares in such offering if
Akorn is advised  in  writing  by  its  managing  underwriter  or
underwriters that the inclusion of the Registrable Shares in such
offering  would  in  its  or  their  opinion adversely affect the
marketing of the securities to be sold  therein  by  Akorn  or by
John  N.  Kapoor  or  his affiliate pursuant to an agreement with
respect to the registration  of  shares of Akorn Stock; provided,
however, that Akorn shall in any case  be  obligated  to  include
such  number of amount of Registrable Shares in such offering  as
such managing  underwriter  or  underwriters shall determine will
not adversely affect such marketing; provided, further, that such
number of Registrable Shares shall  not  be  reduced  unless  the
shares  to  be  included  in such offering for the account of any
other shareholder (not including  Akorn  or John N. Kapoor or his
affiliate) are also reduced on a pro rata  basis.   Akorn  may at
any  time  prior  to  the  effectiveness of any such registration
statement, in its sole discretion  and without the consent of any
Shareholder, abandon the offering to  be  made  pursuant  to such
registration statement.

          6.6.2 Each Shareholder participating in any such public
offering  shall  (i)  pay  the underwriting discounts and selling
commissions applicable to the  Conversion  Shares  sold by him in
the offering and shall pay his pro-rata share of all  filing fees
and  blue sky expenses, and (ii) enter into such agreements  with
Akorn  and with the underwriters with respect to procedures to be
followed  in  connection  with the registration and the offer and
sale  of  the  securities,  indemnification,   the  providing  of
information and other similar matters as Akorn or any underwriter
may  reasonably  request  and  which  are comparable  to  similar
agreements, if any, with any other persons  (not including Akorn)
whose shares are included in the offering.

     6.7  Furnished Documents.  Within ten days  of the execution
of this Agreement, PRL will furnish to Akorn and AMI the original
or a copy of each of the Furnished Documents, except as otherwise
agreed by Akorn or AMI.

     6.8  Tax  Returns.  AMI shall cause the accounting  firm  of
Wright, Ford, Browning  &  Young  to  prepare tax returns for PRL
with  respect to the tax period beginning  January  1,  1996  and
ending as of the Effective Time (the "1996 Tax Returns").

     6.9  Personal  Guarantees.  Akorn,  AMI and the Shareholders
shall cooperate with each other in seeking  to  cause the release
of  the  Shareholders from any guarantees by the Shareholders  of
debt and other  contractual  obligations  of PRL (the "Guaranteed
Obligations"),  provided  that  the  Guaranteed  Obligations  are
identified  as  such, and the amount thereof  disclosed,  in  the
Disclosure Schedule  and provided that each Guaranteed Obligation
that is material to PRL is reflected in the Balance Sheet.

     6.10 Accumulated  Adjustment  Account  Distribution.   It is
acknowledged  and  agreed that the accumulated adjustment account
of PRL as of December  31,  1995,  in the amount of approximately
$27,000.00, will not be paid to the  Shareholders.   Any increase
in  the  accumulated adjustment account of PRL during the  period
beginning  January  1, 1996 and ending at the Effective Time (the
"1996 AAA") shall be  paid  by AMI on or before the seventy-fifth
day following the Effective Time.  The 1996 AAA shall include the
net  profit  of  PRL  that is attributable  and  taxable  to  the
shareholders with respect  to  such  period  and  shall  reflect,
without  limitation,  (a)  the "CBL Expense" as described in  the
Disclosure  Schedule,  in  the  amount  of  $140,000,  which  was
deducted by PRL for tax purposes  in  the income tax return filed
by  PRL  with respect to the year ended December  31,  1995,  but
treated as an expense for financial statement purposes during the
year beginning  January  1, 1996 and (b) the compensation expense
in the aggregate amount of  $100,000  to  be  paid to Yankoff and
Gencarella prior to the Effective Time, as disclosed in paragraph
12 of the Disclosure Schedule, and be treated as  an  expense for
both  tax  and  financial  statement  purposes  during  the  year
beginning January 1, 1996.

     6.11 Steris  Rebate.   It  is understood and agreed that the
rebate  in the form of inventory received  during  calendar  1995
from Steris  in  an amount not exceeding $133,320 will be treated
in the 1996 Tax Returns  as a reduction of cost of goods sold and
thereby increase taxable income  of PRL by the same amount during
the period beginning January 1, 1996  and ending at the Effective
Time.

     6.12 Extent of Personal Liability.  In the event that, after
the Effective Time, any Shareholder is personally liable to Akorn
or AMI for or with respect to a claim made  by a party other than
Akorn or AMI, which claim constitutes a breach by the Shareholder
of   any   of  his  representations,  warranties  or   agreements
hereunder, such liability on the part of the Shareholder shall be
reduced by the  amount of any insurance proceeds paid to Akorn or
AMI with respect thereto.

     6.13 Shareholder Indemnification.  After the Effective Time,
Akorn will indemnify  and hold harmless each Shareholder from and
against any claims made  against  him  (other than claims made by
any person who is or was a shareholder of  PRL)  by reason of the
fact  that, prior to the Effective Time, he was a shareholder  or
served  as  an officer or director of PRL; provided, however that
no such indemnity  shall  be  paid with respect to any such claim
arising  out  of  action or inaction  by  the  Shareholder  which
constitutes, or the  existence  of which constitutes, a breach by
any Shareholder of his representations,  warranties or agreements
hereunder.

     6.14 Termination   of  Shareholder's  Agreement.    At   the
Effective  Time,  by  reason   of  the  Merger,  all  rights  and
obligations under the Shareholder's Agreement entered between PRL
and the Shareholders as referred  to  in  the Disclosure Schedule
shall automatically terminate.


                            SECTION 7
                            CONDITIONS

     7.1  Conditions  to Each Party's Obligation  to  Effect  the
Merger.  The respective  obligations  of each party to effect the
Merger   shall   be  subject  to  the  satisfaction   or,   where
permissible, waiver  by such party of the following conditions at
or prior to the Effective Time:

          7.1.1 No statute,  rule,  regulation,  executive order,
decree, preliminary or permanent injunction or restraining  order
shall have been enacted, entered, promulgated or enforced by  any
court  of  competent  jurisdiction  or  other Governmental Entity
which prohibits or restricts the consummation  of  the Merger and
no  action,  suit,  claim  or  proceeding  by  a state or federal
Governmental Entity before any court or other Governmental Entity
shall have been commenced and be pending which seeks  to prohibit
or  restrict the consummation of the Merger, other than  actions,
suits, claims and proceedings which, in the reasonable opinion of
counsel  to  the  parties  hereto,  are  unlikely to result in an
adverse   judgment;   provided,   however,   that    before   any
determination is made to the effect that this condition  has  not
been  satisfied,  PRL  and  Akorn  shall  each use all reasonable
efforts and take such actions as may be reasonably  necessary, at
its  own  expense,  to have such order, stay, judgment or  decree
lifted or dismissed and  any  such  suit,  action  or  proceeding
dismissed or terminated.

          7.1.2 All filings with and notices to and all  consents
and  waivers from all the Governmental Entities and third parties
listed  in  the Disclosure Schedule under Sections 4.4 shall have
been made, and all waiting periods thereunder with respect to the
transactions contemplated by this Agreement shall have expired or
been terminated.

          7.1.3  Akorn  and PRL shall have received an opinion of
Jones, Walker, Waechter,  Poitevent,  Carrere  &  Denegre  L.L.P.
substantially  to  the  effect  that  the  Merger  constitutes  a
reorganization  within  the  meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code, that the Shareholders will recognize no
gain or loss for federal income  tax purposes with respect to the
Conversion Shares received by them in connection with the Merger,
and that no gain or loss for federal  income tax purposes will be
recognized by Akorn, AMI or PRL as a result of the Merger.

          7.1.4 It shall be a condition  to  the  obligations  of
Akorn  and  AMI  and  of  each  Shareholder  that  Akorn and such
Shareholder  shall  have entered into an Employment Agreement  in
the form attached hereto as Exhibit 5.3.

          7.1.5 Akorn's  Board of Directors shall have taken such
action as is necessary to appoint Floyd Benjamin as a director of
Akorn  with  a term expiring  at  the  annual  meeting  of  Akorn
stockholders that next follows the Closing Date.

     7.2  Conditions  to  Obligations  of  Akorn  and  AMI.   The
obligations  of Akorn and AMI to effect the Merger are subject to
the satisfaction  of  the  following  conditions unless waived by
Akorn and AMI:

          7.2.1 The representations and warranties of PRL and the
Shareholders  set  forth  in this Agreement  shall  be  true  and
correct in all material respects as of the date of this Agreement
and as of the Closing Date  as  though  made  on  and  as  of the
Closing Date, except as otherwise contemplated by this Agreement,
and PRL and the Shareholders shall have performed in all material
respects  all  obligations required to be performed by them under
this Agreement at or prior to the Closing Date.

          7.2.2   All  consents  and  approvals  of  Governmental
Entities  or third parties  necessary  for  consummation  of  the
Merger by the  parties shall have been obtained, other than those
which, if not obtained,  would  not  in  Akorn's  judgment have a
material adverse effect on any party's ability to consummate  any
of  the  transactions  contemplated hereby or on the business and
properties of PRL.  PRL  shall  have  used  its  best  efforts to
obtain   all  necessary  permits,  authorizations,  consents  and
approvals  required  by  such  Governmental Entities prior to the
Closing Date.

          7.2.3 PRL shall have obtained  the  consent of Faulding
Pharmaceutical Company ("Faulding") to assign to AMI all of PRL's
rights  under  and  interests  in  that certain contract  entered
between PRL and Faulding on January  5, 1996 providing for, among
other  things, sharing of profits on Faulding's  distribution  of
certain of PRL's products.

          7.2.4  Akorn and AMI shall have received the opinion of
Walsworth, Franklin,  Bevins  &  McCall, counsel to PRL and, with
respect  to  the  matters  set  forth in  such  opinion,  to  the
Shareholders,   dated  the  Effective   Time,   which   will   be
substantially to the effect that:

               (a)  PRL  is a corporation duly organized, validly
existing and in good standing  under  the  laws  of  the State of
California.

               (b)  PRL  has  the  corporate power to enter  into
this  Agreement and to consummate the  transactions  contemplated
hereby,  and the execution and delivery of this Agreement and the
consummation  of  the  transactions contemplated hereby have been
duly authorized by all requisite  corporate  action  taken on the
part of PRL.

               (c)  This  Agreement  has  been duly executed  and
delivered by PRL and the Shareholders, and is a valid and binding
obligation of each enforceable against each  in  accordance  with
its  terms,  except  (i)  as enforceability may be limited by any
bankruptcy,  insolvency,  fraudulent   transfer,  reorganization,
moratorium  or  other  similar laws now or  hereafter  in  effect
relating  to  creditors'  rights;  (ii)  such  enforceability  is
subject to general principles  of  equity;  and  (iii) no opinion
need be expressed regarding the enforcement of the  choice of law
provision of Section 9.5.

               (d)  The   Merger   has   been   approved  by  PRL
Shareholders in accordance with the California Law  and, assuming
proper  corporate  action on the part of AMI and compliance  with
the  Illinois  Law,  the  Merger  will  be  effective  under  the
California Law upon proper filing of the Certificate of Merger in
the State of California.

               (e)  To   such  counsel's  knowledge,  based  upon
review  of  PRL's Articles of  Incorporation,  Bylaws,  corporate
minute book and  certificates representing PRL Stock, PRL's stock
records and certificates  of  officers  of  PRL,  as  of the date
hereof,  the authorized capital stock of PRL consists of  100,000
shares of  PRL  Stock,  94.5  of  which  are  validly  issued and
outstanding.

               (f)  Neither  the  execution  and the delivery  of
this Agreement by PRL, nor the consummation of  the  transactions
contemplated  hereby,  will (i) violate any of the provisions  of
the Articles of Incorporation  or  Bylaws of PRL; or (ii) to such
counsel's  knowledge,  except  as  disclosed  in  an  Exhibit  or
Schedule  to  or set forth in this Agreement,  conflict  with  or
result in a breach of, or give rise to a right of termination of,
or accelerate the performance required by, any terms of any court
order, consent  decree,  note, bond, mortgage, indenture, deed of
trust, or any license or agreement,  or  any  other instrument or
obligation binding on PRL or constitute a default  thereunder, or
result in the creation of any Encumbrance upon any of  the assets
of any of PRL.

          As to any matter in such opinion which involves matters
of  fact  or  matters  relating  to laws other than United States
federal,  or  California  law,  such counsel  may  rely,  without
independent investigation, upon the  certificates of officers and
directors of PRL and of public officials,  reasonably  acceptable
to Akorn.  Such counsel need not render any opinion with  respect
to any federal or state securities laws.

          7.2.5  Akorn  and AMI shall have had a full opportunity
to conduct inspections of  the  operating  assets  and  books and
records of PRL.

          7.2.6 PRL shall have provided Akorn certified copies of
its  Articles  of  Incorporation  and Bylaws and certificates  of
existence, good standing and qualification  to  do  business as a
foreign   corporation,   certified   by   the  appropriate  state
authorities in PRL's state of incorporation.

          7.2.7 Akorn shall have received a certificate of a duly
authorized officer of PRL, dated the Closing  Date, certifying as
to the incumbency of any person executing this  Agreement  or any
certificate  or  other document delivered in connection with this
Agreement and certifying  as to such other matter as Akorn or AMI
shall reasonably request.

          7.2.8 Akorn will  be  reasonably  satisfied,  and shall
receive  a  certificate  of  each of the Shareholders and of  the
chief executive officer of PRL  that  the  condition specified in
Section 7.2.1 has been fulfilled.

          7.2.9  Akorn  will  be  reasonably satisfied  that  the
Merger will be treated as a pooling  of  interests  for financial
reporting purposes.

          7.2.10 After completing its due diligence review, Akorn
shall be satisfied that (a) the net sales of PRL for the 12-month
period ended March 31, 1996 is not less than the net sales of PRL
for the 12-month period ended December 31, 1995, as shown  in the
PRL  Financial Statements; and (b) total shareholders' equity  of
PRL as  of  March  31,  1996 is not less than total shareholders'
equity of PRL as of December  31,  1995,  as  shown  in  the  PRL
Financial Statements.

          7.2.11  Any  and  all  changes  made  to the Disclosure
Schedule or to the representations and warranties  of PRL and the
Shareholders  as a result of any disclosures made by  them  under
Section 5.8 shall  be  satisfactory  in all respects to Akorn and
AMI.
          7.2.12 The Shareholder Notes  of Yankoff and Gencarella
disclosed in paragraph 12 of the Disclosure  Schedule  shall have
been repaid in full.

     7.3  Conditions to Obligations of PRL and Shareholders.  The
obligations of PRL and the Shareholders to effect the Merger  are
subject  to the satisfaction for the following conditions, unless
waived by PRL and all of the Shareholders:

          7.3.1  The  representations and warranties of Akorn and
AMI set forth in this Agreement  shall be true and correct in all
material respects as of the date of  this Agreement and as of the
Closing Date as though made on and as of the Closing Date, except
as otherwise contemplated by this Agreement,  and  Akorn  and AMI
shall  have  performed  in  all material respects all obligations
required to be performed by them under this Agreement at or prior
to the Closing Date.

          7.3.2  All  consents   and  approvals  of  Governmental
Entities  or  third parties necessary  for  consummation  of  the
Merger by the parties, shall have been obtained, other than those
which, if not obtained,  would not have a material adverse effect
on any party's ability to  consummate  any  of  the  transactions
contemplated  hereby.  Akorn shall have used its best efforts  to
obtain  all  necessary   permits,  authorizations,  consents  and
approvals required by such  Governmental  Entities  prior  to the
Closing Date.

          7.3.3 PRL and the Shareholders shall have received  the
opinion  of Jones, Walker, Waechter, Poitevent, Carrere & Denegre
L.L.P., counsel  to  Akorn  and AMI, dated the Effective Time, in
form  reasonably  satisfactory   to  PRL  and  the  Shareholders,
substantially to the effect that:

               (a)  Akorn  is  a  corporation   duly   organized,
validly existing and in good standing under the laws of the State
of  Louisiana.   AMI  is  a  corporation  duly organized, validly
existing  and in good standing under the laws  of  the  State  of
Illinois.

               (b)  Akorn and AMI each has the corporate power to
enter into  this  Agreement  and  to  consummate the transactions
contemplated  hereby,  and the execution  and  delivery  of  this
Agreement and the consummation  of  the transactions contemplated
hereby  have  been  duly  authorized by all  requisite  corporate
action taken on the part of Akorn and AMI, respectively.

               (c)  This Agreement  has  been  duly  executed and
delivered  by  each  of Akorn and AMI and is a valid and  binding
obligation of Akorn and AMI enforceable against each of Akorn and
AMI in accordance with  its  terms,  except (i) as enforceability
may   be  limited  by  any  bankruptcy,  insolvency,   fraudulent
transfer, reorganization, moratorium or other similar laws now or
hereafter  in  effect relating to creditors' rights; (ii) as such
enforceability is  subject  to  general principles of equity; and
(iii) no opinion need be expressed  regarding  the enforcement of
the choice of law provision of 9.5.

               (d)  The  Merger has been approved  by  Akorn  (as
shareholder of AMI) in accordance  with  the  Illinois  Law  and,
assuming  the  proper  corporate  action  on  the part of PRL and
compliance with the California Law, the Merger  will be effective
under the Illinois Law upon proper filing of the  Certificate  of
Merger in the State of Illinois.

               (e)  The  shares  of  Akorn  Stock to be issued in
connection with the transactions contemplated  by  this Agreement
are duly authorized and reserved for issuance and, when issued as
contemplated  by  this  Agreement, will be validly issued,  fully
paid and nonassessable.

               (f)  Neither  the  execution  and delivery of this
Agreement  by  Akorn  and  by  AMI, nor the consummation  of  the
transactions  contemplated  hereby,   will  violate  any  of  the
provisions of the Articles of Incorporation or Bylaws of Akorn or
AMI.

As to any matter in such opinion which  involves  matters of fact
or matters relating to laws other than United States  federal  or
Louisiana   law,  such  counsel  may  rely,  without  independent
investigation, upon the certificates of officers and directors of
Akorn and AMI  and  of public officials, reasonably acceptable to
PRL.  Such counsel need  not  render  any opinion with respect to
federal or state securities laws.

          7.3.4 PRL and the Shareholders  shall  have  received a
certificate of a duly authorized officer of Akorn and AMI,  dated
the  Closing  Date,  and  certifying  as to the incumbency of any
person  executing  this  Agreement or any  certificate  or  other
document  delivered  in  connection   with   this  Agreement  and
certifying  such  other matters as PRL or the Shareholders  shall
reasonably request.

          7.3.5 PRL  and  the  Shareholders  shall  be reasonably
satisfied,  and  shall  have received a certificate of the  chief
executive officer of Akorn,  that  the  conditions  specified  in
Section 7.3.1 have been fulfilled.

          7.3.6  Any  and all changes made to the representations
and warranties of Akorn  and  AMI  as a result of any disclosures
made  by  them under Section 5.8 shall  be  satisfactory  in  all
respects to PRL and the Shareholders.


                            SECTION 8
                    TERMINATION AND AMENDMENT

     8.1  Termination.   This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time:

          8.1.1 by mutual consent of Akorn and PRL;

          8.1.2 by Akorn or  PRL,  if (a) there shall have been a
material  breach  of any representation,  warranty,  covenant  or
agreement on the part  of  PRL or the Shareholders or on the part
of Akorn or AMI, as the case  maybe,  which breach shall not have
been cured prior to the earlier of (i)  10  days following notice
of such breach and (ii) the Closing Date; or  (b)  any  permanent
injunction   or  other  order  of  a  court  or  other  competent
Governmental Entity  preventing  the  consummation  of the Merger
shall have become final and nonappealable; or

          8.1.3  by  Akorn, PRL or any Shareholder if the  Merger
shall not have been consummated  on  or  before  June  30,  1996;
provided,  that  the right to terminate this Agreement under this
Section 8.1.3 shall not be available to any party whose breach of
its representations  and  warranties  in  this Agreement or whose
failure to perform any of its covenants and agreements under this
Agreement has resulted in the failure of the  Merger  to occur on
or before such date.

     8.2  Effect  of  Termination.  In the event of a termination
of this Agreement by either  PRL  or Akorn as provided in Section
8.1, this Agreement shall forthwith  become  void and there shall
be no liability or obligation under any provisions  hereof on the
part of Akorn, AMI or PRL or their respective officers, directors
or  stockholders,  except  (a)  pursuant  to  the  covenants  and
agreements  contained  in  Section 6.3 and Section 6.4  and  this
Section 8.2 and (b) to the extent  that  such termination results
from the willful material breach by a party  hereto of any of its
representations, warranties, covenants or agreements set forth in
this Agreement, in which case the non-breaching  party shall have
a right to recover its damages caused thereby.

     8.3  Amendment.  This Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.

     8.4  Extension; Waiver.  At any time prior to  the Effective
Time, the parties hereto may, in their respective sole discretion
and  to the extent legally allowed, (a) extend the time  for  the
performance  of any of the obligations or other acts of the other
parties hereto; (b) waive any inaccuracies in the representations
and warranties  contained  herein  or  in  any document delivered
pursuant  thereto;  and  (c)  waive compliance with  any  of  the
agreements or conditions contained  herein.  Any agreement on the
part of a party hereto to any such extension  or  waiver shall be
valid only if set forth in a written instrument signed  by  or on
behalf of such party.


                            SECTION 9
                          MISCELLANEOUS

     9.1  Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements in this
Agreement  (or  in  any  Exhibit  or  Schedule  hereto) or in any
instrument delivered pursuant to this Agreement shall survive the
Closing and shall not be limited or affected by any investigation
by or on behalf of any party hereto.

     9.2  Notices.  All notices hereunder must be  in writing and
shall  be deemed to have given upon receipt of delivery  by:  (a)
personal  delivery to the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally   recognized  overnight  courier  service  (against  a
receipt therefor) or (d) facsimile transmission with confirmation
of receipt.  All  such  notices  must  be addressed as follows or
such other address as to which any party hereto may have notified
the other in writing:

     If to Akorn or AMI, to:

     100 Akorn Drive
     Abita Springs, Louisiana  70420
     Attention:  Mr. Barry D. LeBlanc, President
     Facsimile transmission No. 504-893-1257

     with a copy to:

     Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P.
     201 St. Charles Avenue
     New Orleans, Louisiana  70170-5100
     Attention:  Mr. Carl C. Hanemann
     Facsimile transmission No. 504-582-8012

     if to PRL, to:

     942 Calle Negocio
     Suite 150
     San Clemente, CA  92673
     Attention:  Mr. Floyd Benjamin
     Facsimile transmission No. 714-498-3613

     or if to the Shareholders, to:

     Floyd Benjamin
     8 Greystone Way
     Laguna, Miguel CA  92677
     Facsimile transmission No. 714-498-3613

     Tom Yankoff
     31181 Casa Grande
     San Juan Capistrano, CA  92675
     Facsimile transmission No. 714-498-3613

     David Gencarella
     P. O. Box 4308
     San Clemente, CA  92674
     Facsimile transmission No. 714-498-3613
     in each case, with a copy to:

     Walsworth, Franklin, Bevins & McCall
     1 City Boulevard West
     Suite 308
     Orange, California  92668-3604
     Attention:  Mr. Wayne Allen
     Facsimile Transmission No. 714-634-0686

     9.3  Headings; Gender.  When a reference  is  made  in  this
Agreement to a section, exhibit or schedule, such reference shall
be  to  a  section,  exhibit or schedule of this Agreement unless
otherwise  indicated.    The   table  of  contents  and  headings
contained in this Agreement are  for  reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.  All personal pronouns used  in  this  Agreement shall
include  the  other  genders,  whether  used  in  the  masculine,
feminine  or  neuter  gender, and the singular shall include  the
plural  and  vice  versa,   whenever  and  as  often  as  may  be
appropriate.

     9.4  Entire Agreement; No  Third  Party Beneficiaries.  This
Agreement  (including  the  documents, exhibits  and  instruments
referred  to herein) (a) constitutes  the  entire  agreement  and
supersedes   all   prior   agreements,   and  understandings  and
communications,  both written and oral, among  the  parties  with
respect to the subject  matter hereof, and (b) is not intended to
confer upon any person other  than  the parties hereto any rights
or remedies hereunder.

     9.5  Governing Law.  This Agreement  shall  be  governed and
construed in accordance with the laws of the State of  Louisiana,
without regard to any applicable principles of conflicts of law.

     9.6  Assignment.   Neither  this  Agreement  nor any of  the
rights, interests or obligations hereunder shall be  assigned  by
any  of  the  parties  hereto  (whether  by  operation  of law or
otherwise)  without  the  prior  written  consent  of  the  other
parties,  except  that AMI may assign any or all of AMI's rights,
interests and obligations  hereunder  to  Akorn  or to any wholly
owned  subsidiary  of Akorn.  Subject to the preceding  sentence,
this Agreement will  be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and
assigns.

     9.7  Severability.   If  any term or other provision of this
Agreement is invalid, illegal or  incapable  of being enforced by
reason of any rule of law or public policy, all  other conditions
and  provisions  of this Agreement shall nevertheless  remain  in
full force and effect  so long as the economic or legal substance
of the transactions contemplated  hereby  is  not affected in any
adverse manner to either party.  Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced,  the parties hereto shall negotiate in  good  faith  to
modify this  Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end
that the transactions  contemplated  hereby  are fulfilled to the
extent possible, and in any case such term or  provision shall be
deemed  amended  to  the  extent necessary to make it  no  longer
invalid, illegal or unenforceable.

     9.8  Counterparts.   This   Agreement  may  be  executed  in
multiple counterparts, each of which  shall be deemed an original
and all of which taken together shall constitute one and the same
document.

     9.9  Exhibits and Schedules; Section  Numbers.  All exhibits
and  schedules  to this Agreement are an integral  part  of  this
Agreement.   All  schedules   attached   to  this  Agreement  are
initialed by the presidents of Akorn and PRL.   Any  schedule not
attached  to  this  Agreement  upon  the execution hereof by  the
parties will be initialed by the president  of  PRL and delivered
by PRL to Akorn promptly after the date hereof.  If such schedule
is reasonably satisfactory to Akorn, the president  of Akorn will
initial  such  schedule  and deliver it to the other parties  for
attachment  hereto.   If  such   schedule   is   not   reasonably
satisfactory to Akorn, a material breach of an agreement  on  the
part  of  PRL  shall  be  deemed to exist for purposes of Section
8.1.2.

     IN WITNESS WHEREOF, Akorn,  AMI and PRL and the Shareholders
have caused this Agreement to be signed  themselves  or  by their
respective  duly authorized officers as of the date first written
above.

PASADENA RESEARCH LABS, INC.       AKORN, INC.


By:  /s/ Floyd Benjamin         By: /s/ Barry D. LeBlanc

Name: Floyd Benjamin               Name: Barry D. LeBlanc
Title: President                   Title: President

SHAREHOLDERS:                      AKORN MANUFACTURING, INC.

/s/ Floyd Benjamin                 By: /s/ Eric M. Wingerter
     Floyd Benjamin                Name:   Eric M. Wingerter
                                   Title:  Secretary and Treasurer
/s/ Tom  Yankoff
     Tom Yankoff

/s/ David Gencarella
     David Gencarella


                    CERTIFICATE OF SECRETARIES

     I  hereby  certify  that  I  am  the duly elected  Assistant
Secretary of Akorn Manufacturing, Inc.,  an Illinois corporation,
presently  serving  in  such  capacity,  and that  the  foregoing
Agreement  was,  in  the manner required by law,  duly  approved,
without alteration or  amendment,  by  the  holder  of all of the
shares of capital stock of such corporation having voting  rights
with respect thereto, such number of shares having more than  the
minimum number of votes necessary to adopt such Agreement.

Dated: ____________, 1996.

___________________________________
           Assistant Secretary


     I  hereby  certify  that I am the duly elected Secretary  of
Pasadena Research Labs, Inc., a California corporation, presently
serving in such capacity,  and  that the foregoing Agreement was,
in the manner required by law, duly  approved, without alteration
or amendment, by the holders of 100% of the outstanding shares of
capital  stock  of  such corporation having  voting  rights  with
respect thereto, such  shares having more than the minimum number
of votes necessary to adopt such Agreement.

Dated: ____________, 1996.
___________________________________
              Secretary


                    EXECUTION BY CORPORATIONS

     Pursuant to the Illinois  Business  Corporation  Act and the
California  Business Corporation Act, the foregoing Agreement  is
hereby executed  by  the  undersigned  corporations,  each acting
through   their   respective   officers,   this   _____   day  of
____________, 1996.

                                   AKORN MANUFACTURING, INC.

                                   By: /s/ Eric M. Wingerter
                                          Eric M. Wingerter
                                        Secretary and Treasurer

                                   PASADENA RESEARCH LABS, INC.


                                   By: /s/ Floyd Benjamin
                                        Floyd Benjamin, President



                         ACKNOWLEDGEMENT

STATE OF LOUISIANA
PARISH OF ORLEANS


     BEFORE  ME,  the undersigned authority, personally came  and
appeared Eric M. Wingerter,  who,  being duly sworn, declared and
acknowledged before me to be the Secretary and Treasurer of Akorn
Manufacturing, Inc., an Illinois corporation,  and  that  in such
capacity  he was duly authorized to and did execute the foregoing
Agreement on behalf of such corporation, for the purposes therein
expressed, and as his and such corporation's free act and deed.


                                   /s/ Eric M. Wingerter
                                   Eric M. Wingerter

Sworn to and subscribed before me
this _____ day of ____________, 1996.


___________________________________
Notary Public

                         ACKNOWLEDGEMENT

STATE OF CALIFORNIA
COUNTY OF __________

     BEFORE  ME,  the  undersigned authority, personally came and
appeared Floyd Benjamin,  who,  being  duly  sworn,  declared and
acknowledged  before me to be the President of Pasadena  Research
Labs, Inc., a California  corporation,  and that in such capacity
he was duly authorized to and did execute the foregoing Agreement
on   behalf  of  such  corporation,  for  the  purposes   therein
expressed, and as his and such corporation's free act and deed.


                                   /s/ Floyd Benjamin 
                                   Floyd Benjamin

Sworn to and subscribed before me
this _____ day of ____________, 1996.


___________________________________
Notary Public




                             BY-LAWS
                                of
                           AKORN, INC.

           (COMPOSITE, AS AMENDED THROUGH MAY 3, 1996)

                            ARTICLE I

                           SHAREHOLDERS

     Section  1  - Place of Holding Meeting.  All meetings of the
shareholders shall  be  held  at the principal business office of
the corporation in Metairie, Louisiana, or at such other place as
may be specified in the notice of the meeting.

     Section  2 - Annual Meeting  of  Shareholders.   The  annual
meeting of shareholders  for  the  election of directors, and the
transaction of other business, shall  be  held  at  least once in
each calendar year, on a date fixed by the Board of Directors.

     Section 3 - Voting.

     (a)  On  demand of any shareholder, the vote for  directors,
or on any question  before  a  meeting,  shall be by ballot.  All
elections of directors shall be had by plurality,  and  all other
questions  decided  by  majority,  of  the votes cast, except  as
otherwise provided by the articles or by-laws.

     (b)  At  each  meeting  of  shareholders,   a  list  of  the
shareholders  entitled  to  vote,  arranged  alphabetically   and
certified  by  the  secretary  (or the transfer agent, if one has
been appointed) showing the number  and  class  of shares held by
each such shareholder on the record date for the  meeting,  shall
be produced on the request of any shareholder.

     Section  4 - Quorum.  Except as provided in the next section
hereof, any number  of  shareholders, together holding at least a
majority of the outstanding  shares entitled to vote thereat, who
are present in person or represented  by  proxy  at  any meeting,
constitute  a quorum for the transaction of business despite  the
subsequent withdrawal or refusal to vote of any shareholder.

     Section  5  - Adjournment of Meeting.  If less than a quorum
is in attendance at  any  time for which a meeting is called, the
meeting  may, after the lapse  of  at  least  half  an  hour,  be
adjourned  by  a majority in interest of the shareholders present
or represented and  entitled  to vote thereat.  If notice of such
adjourned meeting is sent to the shareholders entitled to vote at
the meeting, stating the purpose  or  purposes of the meeting and
that the previous meeting failed for lack  of  a quorum, then any
number  of  shareholders,  present  in  person or represented  by
proxy,   and  together  holding  at  least  one-fourth   of   the
outstanding  shares entitled to vote thereat, constitute a quorum
at the adjourned meeting.

     Section 6 - Special Meetings:  How Called.  Special meetings
of the shareholders  for any purpose or purposes may be called by
the  president or secretary  upon  a  written  request  therefor,
stating  the  purpose  or  purposes  thereof,  delivered  to  the
president  or  secretary  and  signed either by a majority of the
directors  or  by  one-fifth  in  interest  of  the  shareholders
entitled to vote.

     Section 7 - Notice of Shareholders'  Meetings.   Written  or
printed  notice,  stating the place and time of any meeting, and,
if a special meeting,  the  general  nature of the business to be
considered, shall be given to each shareholder  entitled  to vote
thereat, at his last known address, at least ten days before  the
meeting in the case of an annual meeting, and fifteen days before
the  meeting  in the case of a special meeting.  Any irregularity
in the notice of  an  annual  meeting  held  at the corporation's
principal business office at the time prescribed  in Section 2 of
this Article I, shall not affect the validity of the  meeting  or
any action taken thereat.

     Section  8 - Waiver.  Any requirements of this Article as to
meetings of shareholders  and  notices thereof may be waived, and
shall be deemed to have been waived  when  all shareholders shall
have signed a consent to the action taken, or to be taken, at the
meeting.  (See Article VII, Section 5.)


                            ARTICLE II

                            DIRECTORS

     Section  1 - Number of Directors.  The number  of  directors
shall be nine.

     The remaining  directors,  even  though  not  constituting a
quorum,  may, by a majority vote, fill any vacancy on  the  Board
(including   any  vacancy  resulting  from  an  increase  in  the
authorized  number   of   directors,   or  from  failure  of  the
shareholders to elect a full number of authorized  directors) for
an unexpired term, provided that the shareholders shall  have the
right,  at  any  special meeting called for the purpose prior  to
such action by the Board, to fill the vacancy.

     Section 2 - Place  of  Holding  Meetings.   Meetings  of the
directors,  regular  or special, may be held at any place, within
or outside Louisiana,  or  pursuant  to a telephone conference as
permitted in Section 81(10) of the Louisiana Business Corporation
Law (LSA-R.S. 12:81(10)), as the board may determine.

     Section 3 - First Meeting.  The first meeting of each newly-
elected  board of directors shall be held  immediately  following
the annual meeting of shareholders, and no notice of such meeting
shall  be necessary  to  the  newly-elected  directors  in  order
legally  to constitute the meeting, provided a quorum is present;
or they may  meet  at such time and place as fixed by the consent
in writing of all of  the directors.  At the first meeting, or at
any subsequent meeting  called  for  the  purpose,  the directors
shall elect the officers of the corporation.

     Section  4 - Regular Directors' Meetings.  Regular  meetings
of the directors  may  be  held  without notice, at such time and
place as may be designated by the directors.

     Section  5  -  Special  Directors'  Meetings:   How  Called.
Special meetings of the directors  may  be called by the Chairman
of the Board or by the President on notice as provided in Section
6.   Special  meetings  shall  be called on like  notice  by  the
Chairman of the Board, the President,  or  the  Secretary  on the
request  of  a  majority  of  the  directors or a majority of the
members  of  the Executive Committee and,  if  any  such  officer
fails, refuses  or  is unable to call a special meeting within 24
hours of such request, any director or Executive Committee member
requesting such a meeting  may  call  the  meeting  on  notice as
provided in Section 6.

     Section 6 - Notice of Special Directors' Meetings.   Special
meetings of the directors (and of the first meeting of the  newly
elected  board,  if  held on notice) may be given on notice of no
less than two days or,  in  the  case  of  meetings called at the
request of a majority of the members of the  Executive Committee,
no less than eight hours, given to each director.   Notice of two
days  or  more  may  be  given either personally or by telephone,
mail, or facsimile transmission.   Notice  of  less than two days
may  be  given  either  personally  or by telephone or  facsimile
transmission.  Notice given by telephone  shall be effective when
given either directly to the director or to  a person believed by
the person calling the meeting to be an employee  or  relative of
the  director  or  a  person  able  to  deliver  a message to the
director promptly.  Notice given by facsimile transmission  shall
be  effective  when  transmitted  to  a  facsimile receiver at an
office  or  a  residence  of the director.  Except  as  otherwise
required by law or by these  by-laws,  the  notice need not state
the purpose or purposes of the meeting.

     Section  7  -  Quorum.   At  all meetings of  the  board,  a
majority  of the directors in office  and  qualified  to  act  in
person or by  proxy  constitute  a  quorum for the transaction of
business, and the action of a majority  of  the directors present
in person or by proxy at any meeting at which a quorum is present
is the action of the board of directors, unless  the  concurrence
of a greater proportion is required for such action by  law,  the
articles  or  these  by-laws.   If a quorum is not present at any
meeting of directors, the directors  present  thereat may adjourn
the  meeting  from  time  to  time,  without  notice  other  than
announcement  at  the meeting, until a quorum is present.   If  a
quorum be present,  the  directors  present in person or by proxy
may  continue  to act by vote of a majority  of  a  quorum  until
adjournment, notwithstanding  the subsequent withdrawal of enough
directors to leave less than a  quorum  or  the  refusal  of  any
directors present to vote.

     Section  8 - Waiver.  Any requirements of this Article as to
meetings of directors  and  notices  thereof  may  be waived, and
shall be deemed to have been waived when all directors  shall  be
present  in  person  or  by  proxy  at  the  meeting, or when the
directors shall have signed a consent to the action  taken, or to
be taken, at the meeting.  (See Article VII, Section 5.)

     Section  9  -  Compensation  of  Directors.   The  Board  of
Directors   may  by  resolution  determine  the  compensation  of
directors for  their  services  as  such and the reimbursement of
directors for their actual expenses of  attending meetings of the
Board   and  committees  thereof.   Directors   may   serve   the
corporation  in  any  other  capacity  and  receive  compensation
therefor.  Directors, as such, may receive such salary  for their
services  and  such reimbursement of their expenses of attendance
at meetings of directors  as  may  be  fixed by resolution of the
board.  This Section does not preclude any  director from serving
the corporation in any other capacity and receiving  compensation
therefor.

     Section 10 - Powers of Directors.  The board of directors is
charged  with  the management of the business of the corporation,
and subject to any  restrictions  imposed by law, the articles or
these by-laws, may exercise all the  powers  of  the corporation.
Without prejudice to such general powers, the directors  have the
following specific powers:

     a -  From time to time, to devolve the powers and duties  of
          any officer upon any other person for the time being.

     b -  To confer upon any officer the power to appoint, remove
          and  suspend,  and  fix and change the compensation of,
          subordinate officers, agents and factors.

     c -  To determine who shall  be  entitled  to  vote,  or  to
          assign   and  transfer  any  shares  of  stock,  bonds,
          debentures  or  other  securities of other corporations
          held by this corporation.

     d -  To  delegate any of the powers  of  the  board  to  any
          standing  or  special  committee  or  to any officer or
          agent (with power to subdelegate) upon  such  terms  as
          they deem fit.

     Section 11 - Resignations and Removal.  The resignation of a
director shall take effect on receipt thereof by the president or
secretary,  or on any later date, not more than thirty days after
such receipt,  specified therein.  The shareholders, by vote of a
majority of the  total voting power at any special meeting called
for the purpose, may  remove  from  office any one or more of the
directors with or without cause.

                           ARTICLE III

                            COMMITTEES

     Section 1 - Executive Committee.   If an executive committee
is appointed, the president shall be a member,  and the committee
shall have all of the powers of the board when the  board  is not
in  session, except the power to declare dividends, make or alter
by-laws,  fill vacancies on the board or the executive committee,
or change the membership of the executive committee.

     Section   2  -  Minutes  of  Meetings  of  Committees.   Any
committees designated  by the board shall keep regular minutes of
their proceedings, and shall  report  the  same to the board when
required,  but  no approval by the board of any  action  properly
taken by a committee shall be required.

     Section 3 -  Procedure.  If the board fails to designate the
chairman of a committee,  the  president,  if  a member, shall be
chairman.  Each committee shall meet at such times  as  it  shall
determine,  and  at any time on call of the chairman.  A majority
of a committee constitutes  a  quorum, and the committee may take
action either by vote of a majority of the members present at any
meeting at which there is a quorum or by written concurrence of a
majority of the members.  In case  of absence of disqualification
of a member of a committee at any meeting  thereof, the qualified
members  present, whether or not they constitute  a  quorum,  may
unanimously  appoint  a director to act in place of the absent or
disqualified member.  The  board  has power to change the members
of any committee at any time, to fill vacancies, and to discharge
any committee at any time.


                            ARTICLE IV

                             OFFICERS

     Section 1 - Titles.  The officers  of  the corporation shall
be  a  president,  one or more vice-presidents,  a  treasurer,  a
secretary, and such  other officers as may, from time to time, be
elected or appointed by  the  board.   Any  two  officers  may be
combined in the same person, and none need be a director.

     Section  2  - Chairman of the Board.  The board of directors
may designate one  of  its members as chairman of the board.  The
chairman  of the board or  another  director  designated  by  the
chairman shall preside at meetings of directors and shareholders.

     Section 3 - President.  The president is the chief executive
officer and  has  the  power  to  make  contracts in the ordinary
course of business.  He shall see that all orders and resolutions
of  the  board  are  carried into effect, and  direct  the  other
officers in the performance of their duties.  He shall have power
to execute all instruments,  and shall generally perform all acts
incident to the office of president,  or  which are authorized or
required  by  law,  or  which are incumbent upon  him  under  the
provisions of the articles  and  these  by-laws.   The  president
shall  preside  at meetings of the directors and shareholders  in
the absence of the chairman of the board or in the event that the
chairman has not designated another director to do so.

     Section 4 - Vice-Presidents.  Each vice-president shall have
such powers, and  shall perform such duties, as shall be assigned
to him by the directors  or  by  the president, and, in the order
determined by the board, shall, in  the  absence or disability of
the president, perform his duties and exercise his powers.

     Section 5 - Treasurer.  The treasurer  has  custody  of  all
funds,  securities,  evidences of indebtedness and other valuable
documents of the corporation.   He  shall  receive  and  give, or
cause  to be given, receipts and acquittances for moneys paid  in
on account  of the corporation, and shall pay out of the funds on
hand all just  debts  of the corporation of whatever nature, when
due.  He shall enter, or  cause  to  be  entered, in books of the
corporation  to  be  kept  for  that purpose, full  and  accurate
accounts of all moneys received and  paid  out  on account of the
corporation,   and,   whenever  required  by  the  president   or
directors, he shall render  a statement of his account.  He shall
keep or cause to be kept such books as will show a true record of
the  expenses,  gains, losses,  assets  and  liabilities  of  the
corporation; and  he  shall  perform  all  of  the  other  duties
incident  to  the office of treasurer.  If required by the board,
he shall give the  corporation  a bond for the faithful discharge
of  his  duties  and for restoration  to  the  corporation,  upon
termination of his  tenure,  of  all  property of the corporation
under his control.

     Section 6 - Secretary.  The secretary  shall  give, or cause
to  be  given, notice of all meetings of shareholders,  directors
and committees, and all other notices required by law or by these
by-laws,  and  in case of his absence or refusal or neglect so to
do, any such notice may be given by the shareholders or directors
upon whose request the meeting is called as provided in these by-
laws.  He shall record all the proceedings of the meetings of the
shareholders, of the directors, and of committees in a book to be
kept for that purpose.   Except  as  otherwise  determined by the
directors,  he  shall  have  charge  of the original stock  book,
transfer books and stock ledgers, and shall act as transfer agent
in  respect  of  the  stock and other securities  issued  by  the
corporation.   He  shall   have   custody  of  the  seal  of  the
corporation, and shall affix it to  all instruments requiring it;
and he shall perform such other duties  as may be assigned to him
by the directors of the president.

     Section 7 - Assistants.  Assistant secretaries or treasurers
shall  have  such  duties  as may be delegated  to  them  by  the
secretary and treasurer respectively.
                            
                            ARTICLE V

                         INDEMNIFICATION

     Section 1 - General.  The  corporation  shall  indemnify any
person who was or is a party or is threatened to be made  a party
to  any  action,  suit  or  proceeding,  whether civil, criminal,
administrative or investigative (including  any  action  by or in
right of the corporation) by reason of the fact that he is or was
a director, officer, employee or agent of the corporation,  or is
or  was  serving at the request of the corporation as a director,
officer, employee  or  agent of another business, foreign or non-
profit  corporation,  partnership,   joint   venture   or   other
enterprise,   against   expenses   (including  attorneys'  fees),
judgments,  fines  and amounts paid in  settlement  actually  and
reasonably incurred  by  him in connection with such action, suit
or proceeding, if he acted  in  good  faith  and  in  a manner he
reasonably believed to be in or not opposed to the best  interest
of  the corporation, and, with respect to any criminal action  or
proceeding,  has  no  reasonable cause to believe his conduct was
unlawful; provided that, in case of actions by or in the right of
the  corporation, the indemnity  shall  be  limited  to  expenses
(including  attorneys'  fees  and  amounts paid in settlement not
exceeding,  in  the  judgment  of  the board  of  directors,  the
estimated  expense  of  litigating  the   action  to  conclusion)
actually and reasonably incurred in connection  with  the defense
or  settlement  of  such action, and no indemnification shall  be
made in respect of any  claim,  issue  or matter as to which such
person shall have been adjudged to be liable  for  negligence  or
misconduct  in  the  performance  of  his duty to the corporation
unless and only to the extent that the court shall determine upon
application that, despite the adjudication  of  liability, but in
view  of  all  the  circumstances of the case, he is  fairly  and
reasonably entitled to  indemnity  for  such  expenses  which the
court shall deem proper.  The termination of any action,  suit or
proceeding by judgment, order, settlement, conviction, or upon  a
plea  of nolo contendere or its equivalent, shall not, of itself,
create  a  presumption  that the person did not act in good faith
and in a manner which he  reasonably  believed  to  be  in or not
opposed  to  the  best  interests  of  the corporation, and, with
respect  to  any  criminal action or proceeding,  and  reasonable
cause to believe that his conduct was unlawful.

     Section 2 - Expenses  of  Litigation.   To the extent that a
director, officer, employee or agent of the corporation  has been
successful  on  the  merits  or  otherwise in defense of any such
action, suit or proceeding, or in  defense of any claim, issue or
matter  therein,  he  shall  be  indemnified   against   expenses
(including  attorneys' fees) actually and reasonably incurred  by
him in connection therewith.

     Section 3 - Determination by Directors.  The indemnification
hereunder (unless  ordered  by  the  court)  shall be made by the
corporation  only  as  authorized  in  a  specific  case  upon  a
determination  that the applicable standard of conduct  has  been
met.  Such determination  shall  be  made  (a)  by  the  board of
directors  by a majority vote of a quorum consisting of directors
who were not  parties  to such action, suit or proceeding, or (b)
if such quorum is not obtainable  or  a  quorum  of disinterested
directors so directs, by independent legal counsel, or (c) by the
shareholders.

     Section 4 - Advance of Expenses.  The expenses  incurred  in
defending such an action, suit or proceeding shall be paid by the
corporation  in  advance  of  the final disposition thereof, upon
receipt  of  an undertaking by or  on  behalf  of  the  director,
officer, employee  or  agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by
the corporation as authorized  hereunder.  The board of directors
may determine, by special resolution, not to have the corporation
pay in advance the expenses incurred  by any persons or person in
the defense of any such action, suit or proceeding.

     Section  5  -  Other  Rights.  The indemnification  provided
hereunder shall not be deemed  exclusive  of  any other rights to
which one indemnified may be entitled, both as  to  action in his
official  capacity  and  as  to action in another capacity  while
holding such office, and shall  continue  as  to a person who has
ceased  to  be a director, officer, employee or agent  and  shall
inure to the benefit of his heirs and legal representatives.

     Section   6   -  Insurance.   The  corporation  may  procure
insurance on behalf  of  any  person  who  is  or was a director,
officer,  employee  or  agent of the corporation, or  is  or  was
serving at the request of the corporation as a director, officer,
employee  or agent of another  business,  non-profit  or  foreign
corporation,  partnership,  joint  venture  or  other enterprise,
against any liability asserted against or incurred  by him in any
such capacity, or arising out of his status as such,  whether  or
not the corporation would have the power to indemnify him against
such liability under the Business Corporation Law of Louisiana.


                            ARTICLE VI

                          CAPITAL STOCK

     Section  1  - Certificates of Stock.  Certificates of stock,
numbered, and with the seal of the corporation affixed, signed by
the  president  or  a   vice-president,   and  the  treasurer  or
secretary,  or  assistant  secretary,  shall be  issued  to  each
shareholder, certifying the number of shares  of  the corporation
owned by him.  If the stock certificates are countersigned  by  a
transfer  agent  and a registrar, the signatures of the corporate
officers may be a facsimile.

     Section 2 - Lost  Certificates.   A new certificate of stock
may be issued in place of any certificate  theretofore  issued by
the corporation, alleged to have been lost, stolen, mutilated  or
destroyed,  or  mailed  and  not  received,  upon  receipt  of an
affidavit  or  affirmation  of that fact from the person claiming
the loss.  The directors may  in  their  discretion  require  the
owner of the replaced certificate to give the corporation a bond,
unlimited  as  to  stated  amount  or  in  any  amount set by the
directors, to indemnify the company against any claim  which  may
be  made  against  it  on  account  of  the  replacement  of  the
certificate  or any payment made or other action taken in respect
thereof.

     Section 3  -  Transfer  of  Shares.   Shares of stock of the
corporation are transferable only on its books,  by  the  holders
thereof in person or by their duly authorized attorneys or  legal
representatives,  and  upon  such  transfer, the old certificates
shall  be  surrendered  to  the person in  charge  of  the  stock
transfer  records,  by whom they  shall  be  cancelled,  and  new
certificates shall thereupon  be  issued.  A record shall be made
of each transfer, and whenever a transfer  is made for collateral
security  and  not absolutely, it shall be so  expressed  in  the
entry  of  the transfer.   The  directors  may  make  regulations
concerning the  transfer  of  shares, and may in their discretion
authorize  the transfer of shares  from  the  names  of  deceased
persons whose  estates are not administered, upon receipt of such
indemnity as they may require.

     Section 4 -  Record  Dates.  The board may fix a record date
for determining shareholders of record for any purpose, such date
to be not more than sixty days  and,  if fixed for the purpose of
determining shareholders entitled to notice  of  and to vote at a
meeting, not less than ten days, prior to the date  of the action
for which the date is fixed.

     Section  5  - Registered Shareholders.  Except as  otherwise
provided by law, the corporation, and its directors, officers and
agents, may recognize  and  treat  a  person  registered  on  its
records  as the owner of shares, as the owner in fact thereof for
all purposes,  and as the person exclusively entitled to have and
to exercise all  rights  and privileges incident to the ownership
of  such shares, and rights  under  this  Section  shall  not  be
affected   by   an   actual  or  constructive  notice  which  the
corporation, or any of  its  directors,  officers  or agents, may
have to the contrary.

     Section 6 - Dividends.  Except as otherwise provided  by law
or the articles of incorporation, dividends upon the stock of the
corporation  may  be  declared  by  the board of directors at any
regular or special meeting.  Dividends  may  be  paid in cash, in
property, or in shares of stock.

     Section 7 - Reserves.  The board of directors may create and
abolish  reserves out of earned surplus for any proper  purposes.
Earned surplus  so reserved shall not be available for payment of
dividends, purchase  or  redemption  of  shares,  or  transfer to
capital surplus or stated capital.

     Section  8  -  Transfer  Agent,  Registrar.   The board  may
appoint and remove transfer agents and registrars for  any  class
of  stock.   If  this  action is taken, the transfer agents shall
effect original issuances  of stock certificates and transfers of
shares, record and advise the corporation and one another of such
issuances   and   transfers,  countersign   and   deliver   stock
certificates, and keep  the  stock,  transfer and other pertinent
records;  and  the  registrars  shall  prevent   over-issues   by
registering and counter-signing any stock certificates issued.  A
transfer  agent  and  registrar  may  be identical.  The transfer
agents and registrars, when covered with  the company as obligees
by an indemnity bond substantially in a form,  and  issued  by  a
surety company, approved by the corporation's general counsel and
providing  indemnity  unlimited  to stated amount, or in form and
amount and signed by a surety approved  by  the  board,  and upon
receipt of an appropriate affidavit and indemnity agreement,  may
(a)  countersign,  register  and  deliver,  in place of any stock
certificate  alleged  to  have  been lost, stolen,  destroyed  or
mutilated, or to have been mailed and not received, a replacement
certificate for the same number of  shares, and make any payment,
credit, transfer, issuance, conversion  or  exchange to which the
holder  may be entitled in respect to such replaced  certificate,
without  surrender  thereof  for  cancellation,  and  (b)  effect
transfers  of  shares  from  the  names of deceased persons whose
estates  (not  exceeding  $20,000  gross   asset  value  and  not
containing any immovable property) are not administered.


                           ARTICLE VII

                     MISCELLANEOUS PROVISIONS

     Section 1 - Corporate Seal.  The corporate  seal is circular
in form, and contains the name of the corporation  and the words,
"SEAL,  LOUISIANA."   The seal may be used by causing  it,  or  a
facsimile  thereof,  to be  impressed  or  affixed  or  otherwise
reproduced.

     Section 2 - Checks,  Drafts,  Notes.   All  checks,  drafts,
other  orders  for  the  payment  of  money,  and  notes or other
evidences of indebtedness, issued in the name of the corporation,
shall be signed by such officer or officers, agent or  agents  of
the  corporation  and in such manner as shall, from time to time,
be determined by the board.

     Section 3 - Fiscal Year.  The fiscal year of the corporation
begins on July 1.

     Section 4 - Notice.   Whenever  any  notice  is  required by
these  by-laws  to be given, personal notice is not meant  unless
expressly so stated.   Any  notice  is  sufficient  if  given  by
depositing  it in the United States mail or by delivering it to a
commercial courier service for next day delivery, with postage or
delivery service  charges  prepaid  and  addressed  to the person
entitled thereto at his last known address as it appears  in  the
records  of  the  corporation;  and such notice is deemed to have
been given on the day of such deposit  in the mail or delivery to
the courier service.

     Section 5 - Waiver of Notice.  Whenever  any  notice  of the
time,  place or purpose of any meeting of shareholders, directors
or committee is required by law, the articles or these by-laws, a
waiver thereof  in  writing,  signed  by  the  person  or persons
entitled to such notice and filed with the records of the meeting
before or after the holder thereof, or actual attendance  at  the
meeting  of  shareholders, directors or committee in person or by
proxy, is equivalent  to  the  giving  of  such  notice except as
otherwise  provided  by  law.   (See  Article I, Section  8,  and
Article II, Section 8.)

     Section  6  -  Except  as  otherwise  provided  herein,  all
meetings of shareholders or directors shall  be  governed  by the
last published revised edition of Robert's Rules of Order.

     Section  7 - Louisiana Control Share Law Inapplicable.   The
provisions  of  Sections  135  through  140.2  of  the  Louisiana
Business Corporation  Law  ("LBCL")  shall  not  apply to control
share acquisitions, as defined in the LBCL, of shares of stock of
the Corporation.


                           ARTICLE VIII

                            AMENDMENTS

     The shareholders or the directors, by affirmative  vote of a
majority  of  those  present or represented, may, at any meeting,
amend or alter any of the by-laws; subject, however, to the right
of the shareholders to  change  or  repeal  any  by-laws  made or
amended by the directors.



               EMPLOYMENT AGREEMENT--FLOYD BENJAMIN

     This  Employment  Agreement ("Agreement") by and between, on
the one hand, Akorn, Inc., a Louisiana corporation ("Akorn"), and
its  wholly  owned  subsidiary,   Akorn  Manufacturing,  Inc.,  a
Louisiana corporation (the "Company"),  and,  on the other, Floyd
Benjamin  (the "Employee") is dated as of May 31 ,  1996  (the
"Agreement Date").

     WHEREAS,  Akorn, the Company and the Employee are parties to
that certain Agreement  and  Plan  of  Merger  dated  May 7, 1996
pursuant  to  which Pasadena Research Laboratories, Inc.  ("PRL")
merged with and into the Company (the "Merger Agreement");

     WHEREAS,  Employee   was   a  shareholder  of  PRL  and,  in
connection with such merger, received  consideration  for his PRL
shares;

     WHEREAS,  the Employee was previously employed by PRL  under
the terms of an employment agreement entered into between PRL and
Employee (the "PRL Employment Agreement");

     WHEREAS, in  connection  with the Merger Agreement, Employee
and the Company desire to supersede the PRL Employment Agreement,
the Company desires to retain the  services  of Employee pursuant
to the terms of this Agreement and Employee desires  to  continue
in the service of the Company on such terms;

     NOW, THEREFORE, for and in consideration of the consummation
of  the  transactions  contemplated by the Merger Agreement,  the
cancellation  of  the  obligations   and  rights  under  the  PRL
Employment Agreement, the continued employment of Employee by the
Company and the payment of wages, salary  and  other compensation
to Employee by the Company, the parties hereto agree as follows:

Section 1.Employment Capacity and Term

     1.1  Capacity  and  Duties  of  Employee.  The  Employee  is
employed  by  the Company to render services  on  behalf  of  the
Company as President, and is employed by Akorn to render services
to Akorn as Executive  Vice  President.   In  such  capacity, the
Employee  shall  perform  such  duties  as  are  assigned to  the
individual  holding such title by the Company's Bylaws  and  such
other duties  as may be prescribed from time to time by the Board
of Directors of the Company (the "Board").

     1.2  Employment  Term.   The  term  of  this  Agreement (the
"Employment Term") shall commence on the Agreement Date and shall
continue until and terminate upon the third anniversary  of  such
date; provided, however, that Employee's status as an employee is
subject  to  earlier  termination  to the extent provided in this
Agreement; and provided, further, that the Employment Term may be
extended by mutual written agreement of the parties.

     1.3  Devotion to Responsibilities.   During  the  Employment
Term, the Employee shall devote all of his business time  to  the
business  of  the  Company  and  its  subsidiaries and affiliated
companies,  shall  use  his reasonable best  efforts  to  perform
faithfully and efficiently  his  duties under this Agreement, and
shall  not  engage  in  or be employed  by  any  other  business;
provided, however, that nothing  contained  herein shall prohibit
the  Employee  from  (a) serving  as  a member of  the  board  of
directors, board of trustees or the like  of  any  for-profit  or
non-profit  entity  that  does  not  compete with the Company, or
performing  services  of  any  type for any  civic  or  community
entity,  whether  or  not  the  Employee   receives  compensation
therefor,  (b) investing  his assets in such form  or  manner  as
shall require no more than  nominal  services  on the part of the
Employee in the operation of the business of or property in which
such  investment  is  made, or (c) serving in various  capacities
with, and attending meetings  of,  industry  or  trade groups and
associations,   as  long  as  the  Employee's  engaging  in   any
activities permitted  by virtue of clauses (a), (b) and (c) above
does not materially interfere with the ability of the Employee to
perform the services and  discharge the responsibilities required
of him under this Agreement.   Notwithstanding  clause (b) above,
during  the Employment Term, the Employee shall not  perform  any
services  for  and shall not beneficially own more than 2% of the
equity interests  of  a  business organization that competes with
the Company or its affiliates.   For  purposes of this paragraph,
"beneficially own" shall have the meaning  given  to that term in
Rule  13d-3  under  the  Securities  Exchange  Act  of 1934  (the
"Exchange Act").

Section 2.Compensation and Benefits

     During  the  Employment Term, the Company shall provide  the
Employee with the compensation and benefits described below:

     2.1  Salary.    Employee   shall  receive  a  salary  ("Base
Salary")  at  the rate of $200,000  per  year.   Employee's  Base
Salary shall be  payable to the Employee at such intervals as the
salaries of other  salaried  employees  of  the Company are paid.
Any increase in Employee's Base Salary shall  take effect for the
payroll period next following the date on which  the condition to
such increase is met.

     2.2  Bonus.   (a)   Employee  will  receive bonuses  in  the
following amounts:  (i) for the fiscal year ending June 30, 1997,
10% of the amount by which the Company's pre-tax  earnings during
such  fiscal year exceed $1,487,735 and, if Akorn's  consolidated
sales and pre-tax earnings during the fiscal year ending June 30,
1997 are  at  least  90%  and  75%  of  their  budgeted  amounts,
respectively,  0.5%  of  Akorn's  consolidated  pre-tax  earnings
during such fiscal year; (ii) for the fiscal year ending June 30,
1998, 7.5% of the increase in the Company's pre-tax earnings  for
such  fiscal year compared to the pre-tax earnings of the Company
during  the  fiscal  year  ended  June  30,  1997 and, if Akorn's
consolidated sales and pre-tax earnings for such  fiscal year are
at  least  90%  and  75% of their budgeted amounts, respectively,
0.5% of Akorn's consolidated  pre-tax earnings; and (iii) if both
the Company's and Akorn's consolidated sales and pre-tax earnings
for the fiscal year ended June  30, 1999 are at least 75% and 90%
of their budgeted amounts, respectively, 1% of the Company's pre-
tax earnings and 0.5% of Akorn's  consolidated  pre-tax  earnings
during such fiscal year.
          (b)  Up  to  50%  of any bonuses paid to Employee under
the terms of this Section may  be  paid  in  options  to purchase
Akorn common stock, with such options being valued at twenty-five
percent of the market price for such stock at time of issuance of
the  option,  as  determined under Akorn's Incentive Compensation
Plan.  Any such option  shall be fully exercisable upon issuance;
the  other  terms  of  such option  will  be  determined  by  the
Compensation  Committee  of   Akorn's   Board  of  Directors  and
consistent  with  other  options  contemporaneously   granted  to
similarly situated employees of Akorn and the Company.

     2.3  Benefits.  The Employee will be eligible to participate
in  the  receipt  of  options  to purchase shares of Akorn common
stock  under  Akorn's Incentive Compensation  Plan  in  a  manner
consistent with  similarly  situated  employees  of Akorn and the
Company.   The  Company  shall  provide  the  Employee  and,   if
applicable,  his  family  members all such (i) incentive, savings
and  retirement plans, practices,  policies  and  programs,  (ii)
welfare benefit plans, practices, policies and programs and (iii)
paid  vacation  and  other  fringe  benefits,  plans,  practices,
policies  and  programs  as  are  applicable  generally  to other
employees  of  the  Company  and its affiliated companies as each
such  plan or benefit listed in  (i),  (ii)  and  (iii)  of  this
Section  2.3  is  described in the Company's employee manual.  To
the extent not inconsistent  with such plans, practices, policies
and programs, Employee will be  credited  with  time served as an
employee of PRL.

Section 3.Termination of Employment

     3.1  Death.   The  Employee's  status  as an employee  shall
terminate immediately and automatically upon the Employee's death
during the Employment Term.

     3.2  Disability.  The Employee's status  as  an employee may
be terminated for "Disability" as follows:

          (a)  The   Employee's  status  as  an  employee   shall
terminate if the Employee has a disability that would entitle him
to  receive benefits under  the  Company's  long-term  disability
insurance  policy in effect at the time of such disability either
because he is  Totally  Disabled  or  Partially Disabled, as such
terms are defined in the Company's policy  in  effect  as  of the
Agreement  Date  or as similar terms are defined in any successor
policy.  Any such termination shall become effective on the first
day on which the Employee  is  eligible to receive payments under
such policy (or on the first day that he would be so eligible, if
he had applied timely for such payments).

          (b)  In the event that  the  Company  has  no long-term
disability  plan  in  effect,  if  (i)  the  Employee is rendered
incapable because of physical or mental illness of satisfactorily
discharging his duties and responsibilities under  this Agreement
for  a  period  of 90 consecutive days and (ii) a duly  qualified
physician chosen  by  the  Company  so  certifies in writing, the
Board  shall have the power to determine that  the  Employee  has
become disabled.   If  the  Board makes such a determination, the
Company shall have the continuing  right  and  option, during the
period that such disability continues, and by notice given in the
manner  provided in this Agreement, to terminate  the  status  of
Employee  as  an  employee.   Any  such  termination shall become
effective  30  days  after such notice of termination  is  given,
unless within such 30-day period, the Employee becomes capable of
rendering services of  the  character  contemplated hereby (and a
physician chosen by the Company so certifies  in writing) and the
Employee in fact resumes such services.

          (c)  The  "Disability Effective Date"  shall  mean  the
date on which termination  of employment becomes effective due to
Disability.

     3.3  Cause.  The Company may terminate the Employee's status
as an employee for Cause.  As  used  herein,  termination  by the
Company of the Employee's status as an employee for "Cause" shall
mean termination as a result of (a) the Employee's breach of  any
of  the provisions of this Agreement, or (b) the willful engaging
by the Employee in misconduct injurious to the Company.

     3.4  Voluntary  Termination  by  the  Parties.   Either  the
Company or the Employee may terminate the Employee's status as an
employee during the Employment Term for reasons other than death,
Disability  or  Cause,  subject to compliance by the Company with
Section 4.2 and by the Employee with Section 4.3.

     3.5  Notice of Termination.   Any termination by the Company
for  Disability  or  Cause  shall be communicated  by  notice  of
termination to the other party  hereto  given  in accordance with
Section 6.2 ("Notice of Termination").

     3.6  Date of Termination.  "Date of Termination"  means  (a)
if  Employee's employment is terminated by reason of his death or
Disability,  the  date  of  death  of  Employee or the Disability
Effective Date, as the case may be, (b) if  Employee's employment
is terminated by the Company for Cause the date  of  delivery  of
the  Notice  of  Termination or any later date specified therein,
(which date shall  not  be  more than 30 days after the giving of
such notice) as the case may be, (c) if the Employee's employment
is terminated by the Company  prior  to the end of the Employment
Term for reasons other than death, Disability  or Cause, the date
on  which  the Company notifies the Employee of such  termination
and  (d) if  the  Employee's  employment  is  terminated  by  the
Employee prior  to  the  end  of the Employment Term, the date on
which the Employee notifies the  Company  of  such termination or
any later date specified therein, (which date shall  not  be more
than 30 days after the giving of such notice).

Section 4.Obligations Upon Termination

     4.1  Death  or  Disability.   If  Employee's  status  as  an
employee   is   terminated  by  reason  of  Employee's  death  or
Disability,  this   Agreement  shall  terminate  without  further
obligations on the part  of the Company to Employee and his legal
representatives under this  Agreement,  other than the obligation
to  make  any  payments  due pursuant to employee  benefit  plans
maintained by the Company or its subsidiaries.

     4.2  Termination for  Cause  or  at  End of Employment Term.
This Agreement shall terminate without further  obligation to the
Employee  other  than obligations imposed by law and  obligations
imposed pursuant to  any  employee benefit plan maintained by the
Company or its subsidiaries  (a)  at  the  end  of the Employment
Term; (b) if the Employee's status as an employee  is  terminated
by  the  Company for Cause or (c) if the Employee terminates  his
status as  an  employee;  provided, however, that nothing in this
Section  4.2  shall  relieve  Employee   from   the  obligations,
limitations and restrictions contained in Section 5 hereof.

     4.3  Termination  by Company for Reasons other  than  Death,
Disability or Cause.  If  the  Company  terminates the Employee's
status as an employee prior to the end of the Employment Term for
reasons other than death, Disability or Cause, then:

          (a)  within  30  days of the Date  of  Termination  the
Company shall pay to the Employee  in  a lump sum an amount equal
to the Employee's Base Salary through the  end  of the Employment
Term had the Notice of Termination been given as  of  the Date of
Termination; and

          (b)  within  90 days of the end of the fiscal  year  in
which the Date of Termination  occurs  and  within 90 days of the
end  of each subsequent fiscal year, the Company  shall  pay  the
Employee  any  bonus  to  which Employee would have been entitled
under the provisions of Section  2.2 if his status as an Employee
had not been terminated; and

          (c)  the  Employee  shall   remain   subject   to   the
obligations, limitations and restrictions contained in Section  5
hereof.

     4.4  Accrued Obligations and Other Benefits.  Subject to the
provisions  of Section 5.3 hereof, upon termination of employment
for  any  reason  the  Employee  shall  be  entitled  to  receive
promptly, and  in  addition  to  any  other benefits specifically
provided,  (a) the Employee's Base Salary  through  the  Date  of
Termination  to  the extent not theretofore paid, (b) any accrued
vacation pay, to the  extent  not theretofore paid, (c) any other
vested benefits the Employee is  entitled  to  receive  under any
plan   or  agreement  of  the  Company  and  (d)  any  bonus  not
theretofore  paid  which  is  attributable  to a full fiscal year
during which Employee was employed by the Company, whether or not
Employee  shall  be  employed  as  of the date of  the  scheduled
payment of such bonus.

     4.5  Resignation as a Director.   If  Employee is a director
of the Company or of Akorn and his employment  is  terminated for
any reason other than death, the Employee shall, if  requested by
the  Company  or Akorn, immediately resign as a director  of  the
Company and Akorn.   If  such resignation is not received when so
requested, the Employee shall  forfeit  any  right to receive any
payments pursuant to this Agreement.

Section 5.Confidentiality and Non-Competition Agreement.

     5.1  Non-disclosure  of Confidential Information.   Employee
acknowledges that both prior  to  and  during  the  term  of this
Agreement  he  may  develop,  acquire  or  be furnished by others
confidential    proprietary    information,   ideas,    concepts,
discoveries, marketing information  or  customer information (all
such  information  referred  to  hereinafter   as   "Confidential
Information") relating to the business interests of the  Company,
Akorn,  their  predecessor companies, subsidiaries and affiliates
(collectively referred  to  hereinafter as the "Akorn Entities").
Employee  recognizes  that the  protection  of  the  Confidential
Information  against  unauthorized   use  and  disclosure  is  of
critical  importance  to the Akorn Entities  and,  therefore,  in
addition to other duties  and  obligations that may be imposed by
law, agrees:

          (a)  During the term of  this  Agreement and thereafter
Employee shall hold in a fiduciary capacity  for  the  benefit of
the Akorn Entities all Confidential Information which shall  have
been  obtained by Employee during Employee's employment and shall
use such  Confidential Information solely within the scope of his
employment  with  and  for  the  exclusive  benefit  of the Akorn
Entities.

          (b)  During  the  term of this Agreement and thereafter
Employee shall not communicate,  divulge or make available to any
person  or  entity  (other  than  the Akorn  Entities  and  their
authorized  representatives) any such  Confidential  Information,
except upon the prior written authorization of the Akorn Entities
or as may be required by law or legal process, and

          (c)  Upon termination of this Agreement, Employee shall
deliver promptly  to  the Company any Confidential Information in
his possession, including any duplicates thereof and any notes or
other records Employee has prepared with respect thereto.  In the
event that the provisions  of  any applicable law or the order of
any court would require Employee  to  disclose  or otherwise make
available any Confidential Information, Employee  shall  give the
Akorn  Entities  prompt  prior  written  notice  of such required
disclosure and an opportunity to contest the requirement  of such
disclosure  or apply for a protective order with respect to  such
Confidential Information by appropriate proceedings.

     5.2. Covenant  Not  to  Compete.  (a)  During the Employment
Term and until termination of  Employee's  obligations under this
Section 5.2 as provided in Section 5.5(b), Employee  agrees that,
with  respect  to  each  State  of  the  United  States  or other
jurisdiction,   or  specified  portions  thereof,  in  which  the
Employee regularly  (a) makes contact with customers of the Akorn
Entities (b) conducts  the  business of the Akorn Entities or (c)
supervises  the  activities  of  other  employees  of  the  Akorn
Entities, as identified in Appendix A attached hereto and forming
a part of this Agreement, and  in  which  any  one  of  the Akorn
Entities   engages   in  business  on  the  Date  of  Termination
(collectively, the "Subject Areas"), Employee will not:

                    (i)  Directly  or  indirectly, for himself or
others,  own,  manage,  operate,  control,  be   employed  in  an
executive,  managerial or supervisory capacity by,  or  otherwise
engage  or  participate   in   or  allow  his  skill,  knowledge,
experience  or  reputation to be used  in  connection  with,  the
ownership, management,  operation  or  control of, any company or
other business enterprise which is competitive to the business of
the  Akorn  Entities; provided, however, that  nothing  contained
herein shall prohibit Employee from making passive investments as
long as Employee  does  not  beneficially own more than 2% of the
equity interests of a business  enterprise  which  is competitive
with  the  Akorn  Entities within any of the Subject Areas.   For
purposes of this paragraph,  "beneficially  own"  shall  have the
same  meaning given to that term in Rule 13d-3 under the Exchange
Act.

                    (ii) Call  upon  any  customer  of  the Akorn
Entities  for  the  purpose  of soliciting, diverting or enticing
away  the  business  of  such  person  or  entity,  or  otherwise
disrupting  any  previously  established   relationship  existing
between such person or entity and the Akorn Entities;

                    (iii) Solicit, induce, influence  or  attempt
to  influence  any supplier, lessor, licensor, potential acquiree
or any other person  who  has  a  business  relationship with the
Akorn  Entities, or who on the day this Agreement  terminates  is
engaged  in  discussions or negotiations to enter into a business
relationship with  the  Akorn  Entities, to discontinue or reduce
the extent of such relationship with the Akorn Entities;

                    (iv) Make contact  with  any of the employees
of the Akorn Entities with whom he had contact  during the course
of  his  employment  with the Akorn Entities for the  purpose  of
soliciting such employee  for  hire,  whether  as  an employee or
independent  contractor, or otherwise disrupting such  employee's
relationship with the Akorn Entities; and

                    (v)  For  a period of one year from and after
this Agreement terminates, hire,  on  behalf  of  himself  or any
company which is competitive with the Akorn Entities any employee
of  the  Akorn Entities as an employee or independent contractor,
whether or not such engagement is solicited by Employee.

               (b)  Employee  agrees  that  he  will from time to
time upon the request of the Akorn Entities promptly  execute any
supplement,  amendment,  restatement  or  other  modification  of
Appendix  A  as  may  be  necessary  or  appropriate to correctly
reflect   the   jurisdictions   which,  at  the  time   of   such
modification, should be covered by Appendix A and this Section 5.
Furthermore, Employee agrees that all references to Appendix A in
this Agreement shall be deemed to  refer  to  Appendix  A  as  so
supplemented,  amended,  restated or otherwise modified from time
to time.

     5.3. Injunctive Relief; Other Remedies.

     Employee acknowledges  that  a  breach  by  Employee  of any
provision of this Section 5 would cause immediate and irreparable
harm  to the Akorn Entities for which an adequate monetary remedy
does not  exist;  hence,  Employee agrees that, in the event of a
breach or threatened breach by Employee of the provisions of this
Section 5 during or after the  term  of this Agreement, the Akorn
Entities  shall  be  entitled  to injunctive  relief  restraining
Employee from such violation without  the  necessity  of proof of
actual  damage or the posting of any bond, except as required  by
non-waivable,  applicable law.  Nothing herein, however, shall be
construed as prohibiting  the  Akorn  Entities  from pursuing any
other remedy at law or in equity to which the Akorn  Entities may
be  entitled  under  applicable  law in the event of a breach  or
threatened  breach  of  this  Agreement  by  Employee,  including
without  limitation the recovery  of  damages  and/or  costs  and
expenses,  such  as  reasonable  attorneys' fees, incurred by the
Akorn Entities as a result of any  such  breach.   In addition to
the exercise of the foregoing remedies, the Akorn Entities  shall
have  the  right upon the occurrence of any such breach to cancel
any  unpaid  compensation   outstanding   at  the  time  of  such
termination.   In  particular,  Employee  acknowledges  that  the
payments provided under Section 2 are conditioned  upon  Employee
fulfilling   any   noncompetition  and  nondisclosure  agreements
contained in this Section  5.  In the event Employee shall at any
time  materially  breach  any  noncompetition   or  nondisclosure
agreements  contained in this Agreement, the Akorn  Entities  may
suspend or eliminate  payments  under Section 2 during the period
of such breach.  Employee acknowledges  that  any such suspension
or  elimination  of payments would be an exercise  of  the  Akorn
Entities' right to suspend or terminate its performance hereunder
upon Employee's breach  of  this  Agreement;  such  suspension or
elimination of payments would not constitute, and should  not  be
characterized as, the imposition of liquidated damages.

     5.4. Governing Law of this Section; Consent to Jurisdiction.

     Any  dispute  regarding  the reasonableness of the covenants
and agreements set forth in this  Section  5,  or the territorial
scope or duration thereof, or the remedies available to the Akorn
Entities upon any breach of such covenants and agreements,  shall
be governed by and interpreted in accordance with the laws of the
State  of  the  United  States or other jurisdiction in which the
alleged prohibited competing  activity or disclosure occurs, and,
with  respect  to  each  such dispute,  the  Akorn  Entities  and
Employee  each  hereby  irrevocably   consent  to  the  exclusive
jurisdiction  of  the  state and federal courts  sitting  in  the
relevant State for resolution  of  such  dispute, and agree to be
irrevocably bound by any judgment rendered  thereby in connection
with such dispute, and further agree that service  of process may
be made upon him or it in any legal proceeding relating  to  this
Section and/or Appendix A by any means allowed under the laws  of
such  jurisdiction.   Each party irrevocably waives any objection
he or it may have as to  the  venue  of  any such suit, action or
proceeding brought in such a court or that  such  a  court  is an
inconvenient forum.

     5.5. Term of Confidentiality and Non-Competition Agreements.

               (a)  Confidentiality      Agreement.      Employee
acknowledges that the provisions of Section  5.1  hereof shall be
binding upon Employee subsequent to the termination  of the Akorn
Entities'  obligations  under  this  Agreement  and  shall remain
effective until such time as the Akorn Entities provide  Employee
with written consent to the contrary.

               (b)  Non-Competition      Agreement.      Employee
acknowledges that his obligations under Section  5.2  hereof (the
"Obligations") shall be binding upon Employee subsequent  to  the
termination   of  the  Akorn  Entities'  obligations  under  this
Agreement and shall terminate as follows:

                    (i)  If  Employee's  status as an employee of
the  Company is terminated for Cause by the  Company  or  by  the
Employee for reasons other than Disability, the Obligations shall
terminate  on  the later to occur of (A) the first anniversary of
the Date of Termination  or (B) the sooner to occur of the end of
the Employment Term or the  second  anniversary  of  the  Date of
Termination.

                    (ii) If  Employee's status as an employee  is
terminated by the Company prior  to the third anniversary of this
Agreement  for  reasons  other  than  by   reason  of  Employee's
Disability or Cause, the Obligations shall terminate  on the Date
of Termination.

                    (iii) If Employee's status as an employee  of
PRL  is terminated on the third anniversary of this Agreement and
is not  renewed, the Obligations of Employee shall continue for a
period of  up  to one year from the end of his Employment Term if
the Company has  within 15 days of the end of the Employment Term
paid to Employee in  a  lump sum an amount equal to the amount of
salary to which Employee  would  have been entitled under Section
2.1 if his employment hereunder had  continued  during the period
that his Obligations are to continue.

Section 6.Miscellaneous

     6.1  Binding Effect.

          (a)  This Agreement shall be binding upon  and inure to
the benefit of the Company and any of its successors or assigns.

          (b)  This  Agreement  is  personal to the Employee  and
shall not be assignable by the Employee  without  the  consent of
the  Company  (there  being  no  obligation to give such consent)
other than such rights or benefits  as are transferred by will or
the laws of descent and distribution.

          (c)  The  Company shall require  any  successor  to  or
assignee of (whether  direct  or  indirect,  by purchase, merger,
consolidation  or  otherwise)  all or substantially  all  of  the
assets or businesses of the Company (i) to assume unconditionally
and expressly this Agreement and  (ii) to agree to perform all of
the obligations under this Agreement  in  the  same manner and to
the same extent as would have been required of the Company had no
assignment  or  succession occurred, such assumption  to  be  set
forth in a writing  reasonably  satisfactory to the Employee.  In
the  event  of  any  such  assignment  or  succession,  the  term
"Company" as used in this Agreement  shall  refer  also  to  such
successor or assign.

          (d)  The   Company  shall  require  all  entities  that
control,  or that after  any  change  of  control  will  control,
directly or  indirectly,  any such successor or assignee to agree
to  cause  to be performed all  of  the  obligations  under  this
Agreement in the same manner and to the same extent as would have
been required  of  the  Company  had  no assignment or succession
occurred, such agreement to be set forth  in  writing  reasonably
satisfactory to the Employee.

     6.2  Notices.  All notices hereunder must be in writing  and
shall  be  deemed  to have given upon receipt of delivery by: (a)
personal delivery to  the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally recognized overnight courier service with confirmation
of receipt or (d) facsimile  transmission  with  confirmation  of
receipt.   All  such notices must be addressed as follows or such
other address as  to which any party hereto may have notified the
other in writing:

     If to the Company or Akorn, to:

     100 Akorn Drive
     Abita Springs, Louisiana  70420
     Attention:  Barry D. LeBlanc, President
     Facsimile transmission No.  504-893-1257

     If to the Employee, to:

     Floyd Benjamin
     8 Greystone Way
     Laguna Miguel, CA  92677
     Facsimile transmission No.  714-498-3613

     6.3  Entire  Agreement.    This  Agreement  constitutes  the
entire understanding and agreement  between  the  parties  hereto
with   respect  to  Employee's  employment  by  the  Company  and
supersedes   all   prior   agreements,  whether  or  not  written
including, without limitation, the PRL Employment Agreement.

     6.4  Governing  Law.  Except  as  provided  in  Section  5.4
hereof,  this  Agreement  shall  be  construed  and  enforced  in
accordance with and governed by the internal laws of the State of
Louisiana.

     6.5  Withholding.   The Employee agrees that the Company has
the right to withhold, from  the amounts payable pursuant to this
Agreement, all amounts required  to  be withheld under applicable
income  and/or employment tax laws, or  as  otherwise  stated  in
documents granting rights that are affected by this Agreement.

     6.6  Severability.   If any term or provision of this Agree-
ment or the application thereof  to  any  person or circumstance,
shall  at  any  time  or  to  any extent be invalid,  illegal  or
unenforceable in any respect as written, Employee and the Company
intend for any court construing this Agreement to modify or limit
such provision temporally, spatially or otherwise so as to render
it valid and enforceable to the  fullest  extent  allowed by law.
Any  such  provision that is not susceptible of such  reformation
shall be ignored  so as to not affect any other term or provision
hereof, and the remainder  of  this Agreement, or the application
of such term or provision to persons  or circumstances other than
those as to which it is held invalid, illegal  or  unenforceable,
shall not be affected thereby and each term and provision of this
Agreement  shall  be  valid  and  enforced to the fullest  extent
permitted by law.

     6.7  Waiver of Breach.  The waiver  by  either  party  of  a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.

     6.8  Remedies  Not  Exclusive.   No  remedy specified herein
shall  be  deemed  to  be  such  party's  exclusive  remedy,  and
accordingly,  in  addition  to  all  of the rights  and  remedies
provided for in this Agreement, the parties  shall have all other
rights and remedies provided to them by applicable  law,  rule or
regulation.

     6.9  Company's Reservation of Rights.  Employee acknowledges
and  understands that the Employee serves at the pleasure of  the
Board and that the Company has the right at any time to terminate
Employee's  status as an employee of the Company, or to change or
diminish his  status  during  the Employment Term, subject to the
rights of the Employee to claim  the  benefits  conferred by this
Agreement.

     6.10 Survival.   Following  the  Date  of Termination,  each
party shall have the right to enforce all rights,  and  shall  be
bound  by  all  obligations,  of  such  party that are continuing
rights and obligations under this Agreement.

     6.11 Counterparts.  This Agreement may be executed in one or
more  counterparts,  each  of  which shall be  deemed  to  be  an
original but all of which together  shall  constitute one and the
same instrument.

     6.12 Arbitration.  Any controversy arising under, out of, in
connection  with,  or  relating  to,  this  Agreement,   and  any
amendment  hereof,  or  the  breach  hereof  or thereof, shall be
determined and settled by arbitration in San Clemente, California
or  Chicago,  Illinois, by an arbitrator or arbitrators  mutually
agreed upon by  the  Company  and  Akorn, on the one hand and the
Employee, on the other or, if the Company, Akorn and the Employee
shall  fail or be unable to so agree  within  ten  business  days
after  the  written  request  therefor,  by  such  arbitrator  or
arbitrators  as  may  be selected in accordance with the rules of
the American Arbitration Association.  Any award rendered therein
shall  specify  the  findings   of  fact  of  the  arbitrator  or
arbitrators and the reasons for such award, with reference to and
reliance on relevant law.  In making  awards  under this Section,
the arbitrator shall have the authority, in his  sole discretion,
to cause the reasonable attorney's fees and costs of one party to
be  assessed  against  and paid by the other party.   Any  awards
under this Section shall  be final and binding on each and all of
the  parties  thereto  and their  personal  representatives,  and
judgment may be entered  thereon in any court having jurisdiction
thereof.

     IN WITNESS WHEREOF, the Company and the Employee have caused
this Agreement to be executed as of the Agreement Date.

                              AKORN MANUFACTURING, INC.


                              By:  /s/ Eric M. Wingerter
                                   Eric M. Wingerter,
                                   Secretary and Treasurer

                              AKORN, INC.


                              By:   /s/ Barry D. LeBlanc
                                    Barry D. LeBlanc, President

                              EMPLOYEE:


                                     /s/ Floyd Benjamin
                                     Floyd Benjamin


              EMPLOYMENT AGREEMENT--BARRY D. LEBLANC

     This Employment Agreement ("Agreement") between Akorn, Inc.,
a  Louisiana  corporation  (the  "Company"), and Barry D. LeBlanc
(the "Employee") is dated as of January  1,  1996 (the "Agreement
Date").

     WHEREAS, Employee currently is employed by the Company;

     WHEREAS,  the  Company  desires  to retain the  services  of
Employee  pursuant to the terms of this  Agreement  and  Employee
desires to continue in the service of the Company on such terms;

     NOW, THEREFORE,  for  and  in consideration of the continued
employment of Employee by the Company  and  the payment of wages,
salary  and other compensation to Employee by  the  Company,  the
parties hereto agree as follows:


Section 1.Employment Capacity and Term

     1.1  Capacity  and  Duties  of  Employee.   The  Employee is
employed  by  the  Company  to  render services on behalf of  the
Company  as  President  and  Chief  Executive  Officer.   As  the
President and Chief Executive Officer, the Employee shall perform
such duties as are assigned to the individual  holding such title
by  the  Company's Bylaws and such other duties, consistent  with
the Employee's  job title, as may be prescribed from time to time
by the Board of Directors of the Company (the "Board").

     1.2  Employment  Term.   The  term  of  this  Agreement (the
"Employment Term") shall commence on the Agreement Date and shall
continue until and terminate one year after either the Company or
the  Employee has notified the other of such termination  of  the
Employment  Term; and provided, further, that the Employment Term
is subject to extension as provided in Section 5.2 and Employee's
status as an  employee  is  subject to earlier termination to the
extent provided in this Agreement.

     1.3  Devotion to Responsibilities.   During  the  Employment
Term, the Employee shall devote all of his business time  to  the
business  of  the  Company  and  its  subsidiaries and affiliated
companies,  shall  use  his reasonable best  efforts  to  perform
faithfully and efficiently  his  duties under this Agreement, and
shall  not  engage  in  or be employed  by  any  other  business;
provided, however, that nothing  contained  herein shall prohibit
the  Employee  from  (a) serving  as  a member of  the  board  of
directors, board of trustees or the like  of  any  for-profit  or
non-profit  entity  that  does  not  compete with the Company, or
performing  services  of  any  type for any  civic  or  community
entity,  whether  or  not  the  Employee   receives  compensation
therefor,  (b) investing  his assets in such form  or  manner  as
shall require no more than  nominal  services  on the part of the
Employee in the operation of the business of or property in which
such  investment  is  made, or (c) serving in various  capacities
with, and attending meetings  of,  industry  or  trade groups and
associations,   as  long  as  the  Employee's  engaging  in   any
activities permitted  by virtue of clauses (a), (b) and (c) above
does not materially interfere with the ability of the Employee to
perform the services and  discharge the responsibilities required
of him under this Agreement.   Notwithstanding  clause (b) above,
during  the Employment Term, the Employee shall not  perform  any
services  for  and shall not beneficially own more than 2% of the
equity interests  of  a  business organization that competes with
the Company or its affiliates.   For  purposes of this paragraph,
"beneficially own" shall have the meaning  given  to that term in
Rule  13d-3  under  the  Securities  Exchange  Act  of 1934  (the
"Exchange Act").

Section 2.Compensation and Benefits

     During  the  Employment Term, the Company shall provide  the
Employee with the compensation and benefits described below:

     2.1  Salary.   A  salary  ("Base  Salary")  at  the  rate of
$210,000 per year; provided, however, that Employee's Base Salary
shall increase to $225,000 per year if the closing price at which
the  Company's  common  stock  is  traded  on the Nasdaq National
Market or other exchange on which such stock  may  be  designated
for  trading,  equals or exceeds $4.00 per share for ten or  more
consecutive trading  days  and shall increase to $250,000 if such
price  equals or exceeds $5.50  per  share  for  ten  consecutive
trading  days; and provided, further, that Employee's Base Salary
shall increase  as of each anniversary of the Agreement Date by a
factor  equal  to  the  increase  in  the  Consumer  Price  Index
maintained by the United  States Department of Labor.  Employee's
Base Salary shall be payable to the Employee at such intervals as
the salaries of other salaried employees of the Company are paid.
Any increase in Employee's  Base Salary shall take effect for the
payroll period next following  the date on which the condition to
such increase is met.

     2.2  Bonus.  Employee shall  be  eligible  to  receive  such
bonuses  and  supplementary   compensation   as   the  Board  may
determine.

     2.3  Benefits.  The Company shall provide the  Employee and,
if  applicable,  his family members, with the following  benefits
and perquisites:

          (a)  The   Company   will   continue   to  provide  for
Employee's use a new Oldsmobile Ninety-Eight or other  equivalent
new  automobile  of  his  choice,  such automobile to be replaced
every other year, and to provide or  reimburse  Employee  for all
gasoline, maintenance, repairs and insurance for such automobile.

          (b)  All  such  (i)  incentive,  savings and retirement
plans,  practices,  policies and programs, (ii)  welfare  benefit
plans,  practices,  policies  and  programs  (including,  without
limitation, medical,  prescription,  dental, disability, employee
life, group life, accident health and  travel  accident insurance
plans  and  programs)  and (iii) paid vacation and  other  fringe
benefits,  plans,  practices,   policies   and  programs  as  are
applicable generally to other peer employees  of  the Company and
its affiliated companies.

     2.4  Office and Support Staff.  Employee shall  be  entitled
to  an  office  or  offices  of the size and with furnishings and
other  appointments,  and  to  personal   secretarial  and  other
assistance, at least equal to the those provided  to  him  on the
Agreement Date.

     2.5  Expenses.    The   Employee  shall  be  reimbursed  for
reasonable out-of-pocket expenses  incurred  from time to time on
behalf of the Company or any subsidiary in the performance of his
duties  under  this  Agreement,  upon  the presentation  of  such
supporting  invoices,  documents  and  forms   as   the   Company
reasonably requests.

Section 3.Termination of Employment

     3.1  Death.   The  Employee's  status  as  an employee shall
terminate immediately and automatically upon the Employee's death
during the Employment Term.

     3.2  Disability.  The Employee's status as an  employee  may
be terminated for "Disability" as follows:

          (a)  The   Employee's   status  as  an  employee  shall
terminate if the Employee has a disability that would entitle him
to  receive  benefits  under the Company's  long-term  disability
insurance policy in effect  at  the  time  either  because  he is
Totally Disabled or Partially Disabled, as such terms are defined
in the Company's policy in effect as of the Agreement Date or  as
similar  terms  are  defined  in  any successor policy.  Any such
termination shall become effective  on the first day on which the
Employee is eligible to receive payments under such policy (or on
the first day that he would be so eligible,  if  he  had  applied
timely for such payments).

          (b)  If the Company has no long-term disability plan in
effect,  the Employee's status as an employee shall terminate  if
(i) the Employee  is  rendered  incapable  because of physical or
mental  illness  of  satisfactorily discharging  his  duties  and
responsibilities  under   this  Agreement  for  a  period  of  90
consecutive days and (ii) a  duly  qualified  physician chosen by
the  Company  and  acceptable  to  the  Employee  or  his   legal
representative so certifies in writing, the Board shall have  the
power to determine that the Employee has become disabled.  If the
Board  makes  such  a  determination,  the Company shall have the
continuing  right  and  option,  during  the   period  that  such
disability continues, and by notice given in the  manner provided
in  this  Agreement,  to terminate the status of Employee  as  an
employee.  Any such termination  shall  become  effective 30 days
after such notice of termination is given, unless within such 30-
day period, the Employee becomes capable of rendering services of
the character contemplated hereby (and a physician  chosen by the
Company   and   acceptable   to   the   Employee   or  his  legal
representative so certifies in writing) and the Employee  in fact
resumes such services.

          (c)  The  "Disability  Effective  Date"  shall mean the
date on which termination of employment becomes effective  due to
Disability.

     3.3  Cause.  The Company may terminate the Employee's status
as  an  employee  for  Cause.  As used herein, termination by the
Company of the Employee's status as an employee for "Cause" shall
mean termination as a result of (a) the Employee's breach of this
Agreement, or (b) the willful  engaging  by the Employee in gross
misconduct injurious to the Company, which  in either case is not
remedied within 10 days after the Company provides written notice
to the Employee of such breach or willful misconduct.

     3.4  Good Reason.  The Employee may terminate  his status as
an  employee  for  Good  Reason.  As used herein, the term  "Good
Reason" shall mean:

          (a)  The occurrence of any  of the following during the
Employment Term:

               (i)  the  assignment  by  the   Board  or  by  any
authorized   person   to   the   Employee   of   any  duties   or
responsibilities   that  are  inconsistent  with  the  Employee's
status,  title and position  as  President  and  Chief  Executive
Officer;

               (ii) any  removal  of  the  Employee  from, or any
failure to reappoint or reelect the Employee to, the position  of
President  and  Chief Executive Officer of the Company, except in
connection with a termination of Employee's status as an employee
as permitted by this Agreement;

               (iii)  the  Company's requiring the Employee to be
based anywhere other than at  or within 50 miles of the Company's
headquarters in Abita Springs,  Louisiana,  except  for  required
travel in the ordinary course of the Company's business;

          (b)  any  breach of this Agreement by the Company  that
continues for a period of 10 days after written notice thereof is
given by the Employee to the Company;

          (c)  the  failure   by   the   Company  to  obtain  the
assumption  of  its  obligations  under  this  Agreement  by  any
successor or assignee as contemplated by Section 6.1(c); or

          (d)  any purported termination by the  Company  of  the
Employee's  status  as an employee for Cause that is not effected
pursuant to a Notice  of  Termination satisfying the requirements
of this Agreement.

     3.5  Voluntary Termination  by  the Company.  Subject to the
terms and conditions provided herein,  the  Company may terminate
the Employee's status as an employee during the  Employment  Term
for reasons other than death, Disability or Cause.

     3.6  Voluntary  Termination by the Employee.  Subject to the
terms and conditions provided  herein, the Employee may terminate
the Employee's status as an employee  during  the Employment Term
for reasons other than Good Reason.

     3.7  Notice of Termination.  Any termination  by the Company
for  Disability  or  Cause,  or by the Employee for Good  Reason,
shall be communicated by Notice of Termination to the other party
hereto given in accordance with  Section  6.2.   For  purposes of
this Agreement, a "Notice of Termination" means a written  notice
that  (a)  indicates  the  specific termination provision in this
Agreement relied upon, (b) to  the  extent applicable, sets forth
in  reasonable  detail  the  facts and circumstances  claimed  to
provide  a basis for termination  of  the  Employee's  employment
under the  provisions  so  indicated  and  (c)  if  the  Date  of
Termination  (as defined below) is other than the date of receipt
of such notice,  specifies the termination date (which date shall
be not more than 30  days  after the giving of such notice).  The
failure by the Employee or the Company to set forth in the Notice
of Termination any fact or circumstance  that  contributes  to  a
showing  of Good Reason, Disability or Cause shall not negate the
effect of  the  notice nor waive any right of the Employee or the
Company, respectively,  hereunder or preclude the Employee or the
Company, respectively, from  asserting  such fact or circumstance
in enforcing the Employee's or the Company's rights hereunder.

     3.8  Date of Termination.  "Date of  Termination"  means (a)
if Employee's employment is terminated by reason of his death  or
Disability, the Date of Termination shall be the date of death of
Employee  or  the  Disability Effective Date, as the case may be,
(b) if Employee's employment  is  terminated  by  the Company for
Cause,  or by Employee for Good Reason, the date of  delivery  of
the Notice  of  Termination  or any later date specified therein,
(which date shall not be more  than  30  days after the giving of
such notice) as the case may be, (c) if the Employee's employment
is terminated by the Company prior to the  end  of the Employment
Term for reasons other than death, Disability or  Cause, the Date
of  Termination  shall be the date on which the Company  notifies
the  Employee  of  such   termination,   (d) if   the  Employee's
employment is terminated by the Employee prior to the  end of the
Employment Term for reasons other than Good Reason, the  Date  of
Termination  shall be the date on which the Employee notifies the
Company of such  termination,  and  (e)  if  the  Employment Term
terminates upon notice by the Company or the Employee as provided
for in Section 1.2 or Section 5.2, the Date of Termination  shall
be the date on which the Employment Term ends.

Section 4.Obligations Upon Termination

     4.1  Death.    If   Employee's  status  as  an  employee  is
terminated by reason of Employee's  death,  this  Agreement shall
terminate   without  further  obligations  to  Employee's   legal
representatives  under  this Agreement, other than the obligation
to  make any payments due  pursuant  to  employee  benefit  plans
maintained by the Company or its subsidiaries.

     4.2  Disability.   If  Employee's  status  as an employee is
terminated  by  reason  of Employee's Disability, this  Agreement
shall terminate without further  obligation  to  Employee,  other
than the obligation to make any payments due pursuant to employee
benefit plans maintained by the Company or its subsidiaries.

     4.3  Termination  by  Company  for Reasons other than Death,
Disability or Cause; Termination by Employee for Good Reason.  If
the Company terminates the Employee's status as an employee prior
to the end of the Employment Term for  reasons  other than death,
Disability  or  Cause, or the Employee terminates his  employment
prior to the end of the Employment Term for Good Reason, then

          (a)  within  30  days  of  the  Date of Termination the
Company shall pay to the Employee in a lump  sum  an amount equal
to  the Employee's Base Salary through the end of the  Employment
Term  had the notice contemplated by Section 1.2 been given as of
the Date of Termination; and

          (b)  the  amount  of  any  performance-based  bonus  or
options  granted to the Employee shall be deemed to be the amount
to which the  Employee  would  have been entitled if the budgeted
goals or other performance goals  applicable thereto had been met
but not exceeded and, whether or not  the  performance goals have
been  met  as  of the Date of Termination, such  bonus  shall  be
payable within 30  days  of  the  Date  of  Termination  and such
options (if not already exercisable) shall become exercisable  as
of  the  Date  of  Termination  and  shall  expire on the date of
expiration  of the options as provided in the  applicable  option
agreement.

     4.4  Termination for Cause, Without Good Reason or at End of
Employment Term.   This Agreement shall terminate without further
obligation to the Employee  other than obligations imposed by law
and obligations imposed pursuant  to  any  employee  benefit plan
maintained  by  the  Company  or  its  subsidiaries  (a)  if  the
Employee's status as an Employee is terminated by the Company for
Cause  or  by  the Employee for reasons other than Good Reason or
(b), except as otherwise  provided  in Section 5.2, at the end of
the Employment Term.  If the Company or the Employee gives notice
of termination of the Employment Term  as provided for in Section
1.2, the Company may, at its option, terminate  Employee's status
as an employee, in which case such termination shall  be deemed a
termination  by  the  Company  without Cause for purposes of  all
provisions of this Agreement.

     4.5  Resignation as Director.   If Employee is a director of
the Company and his employment is terminated for any reason other
than  death,  the Employee shall, if requested  by  the  Company,
immediately resign  as  a  director  of  the  Company.   If  such
resignation is not received when so requested, the Employee shall
forfeit  any  right  to  receive  any  payments  pursuant to this
Agreement.

     4.6  Accrued   Obligations   and   Other   Benefits.    Upon
termination  of employment for any reason the Employee  shall  be
entitled to receive  promptly,  and  in  addition  to  any  other
benefits  specifically  provided,  (a) the Employee's Base Salary
through  the Date of Termination to the  extent  not  theretofore
paid, (b) any accrued vacation pay, to the extent not theretofore
paid, and  (c)  any other amounts or benefits required to be paid
or provided or which  the  Employee  is entitled to receive under
any plan, program, policy practice or agreement of the Company.

     4.7  Stock Options.  The foregoing  benefits are intended to
be  in  addition to the value of any options  to  acquire  Common
Stock  of   the  Company  the  exercisability  of  which  may  be
accelerated pursuant  to the terms of any stock option, incentive
or other similar plan heretofore  or  hereafter  adopted  by  the
Company.

Section 5.Change of Control

     5.1  Definitions.   For  purposes  of  this  Section  5, the
following terms shall have the meanings indicated below.

          (a)  Company.   In  the  event  of  any  assignment  or
succession  as described in Section 6.1(c), the term "Company" as
used in this  Agreement  shall  refer  also  to such successor or
assignee.

          (b)  Change of Control.  A Change of Control shall mean
the occurrence of any of the following events:

               (i)  the acquisition by any individual,  entity or
"person"  (within the meaning of Section 13(d)(3) or 14(d)(2)  of
the Exchange Act) of beneficial ownership of more than 30% of the
outstanding  shares  of  the Company's common stock, no par value
per  share  (the "Common Stock");  provided,  however,  that  for
purposes of this subsection (i), the following acquisitions shall
not constitute a Change of Control:

                    (A)  any acquisition of Common Stock directly
from the Company,

                    (B)  any  acquisition  of Common Stock by the
Company,
                    (C)  any acquisition of  Common  Stock by any
employee benefit plan (or related trust) sponsored or  maintained
by the Company or any corporation controlled by the Company, or

                    (D)  any acquisition of Common Stock  by  any
corporation  pursuant to a transaction that complies with clauses
(A), (B) and (C) of subsection (b)(iii) of this Section 5.1; or

               (ii) individuals  who,  as  of the Agreement Date,
constitute the Board (the "Incumbent Board") cease for any reason
to  constitute  at  least  a  majority  of  the Board;  provided,
however,  that any individual becoming a director  subsequent  to
the Agreement  Date whose election, or nomination for election by
the Company's shareholders,  was approved by a vote of at least a
majority of the directors then  comprising  the  Incumbent  Board
shall  be considered a member of the Incumbent Board, unless such
individual's  initial  assumption of office occurs as a result of
an actual or threatened  election  contest  with  respect  to the
election  or  removal  of directors or other actual or threatened
solicitation of proxies  or  consents by or on behalf of a person
other than the Incumbent Board; or

               (iii) the consummation of a reorganization, merger
or  consolidation,  or  sale  or  other  disposition  of  all  or
substantially  all  of the assets of  the  Company  (a  "Business
Combination"), in any  such case, unless, following such Business
Combination,

                    (A)  all   or   substantially   all   of  the
individuals   and  entities  who  were  the  direct  or  indirect
beneficial owners  of  the Company's outstanding common stock and
the Company's voting securities entitled to vote generally in the
election  of  directors  immediately   prior   to  such  Business
Combination   have   direct  or  indirect  beneficial  ownership,
respectively, of more  than 50% of the then outstanding shares of
common stock, and more than  50%  of the combined voting power of
the then outstanding voting securities entitled to vote generally
in the election of directors, of the  corporation  resulting from
such Business Combination (which, for purposes of this  paragraph
(A) and paragraphs (B) and (C), shall include a corporation which
as  a  result of such transaction controls the Company or all  or
substantially  all  of  the  Company's  assets either directly or
through one or more subsidiaries), and

                    (B)  except to the extent that such ownership
existed prior to the Business Combination,  no  person (excluding
any corporation resulting from such Business Combination  or  any
employee  benefit  plan  or  related trust of the Company or such
corporation   resulting   from   such    Business    Combination)
beneficially  owns,  directly or indirectly, 20% or more  of  the
then  outstanding shares  of  common  stock  of  the  corporation
resulting  from  such  Business Combination or 20% or more of the
combined voting power of  the  then outstanding voting securities
of such corporation, and

                    (C)  at least  a  majority  of the members of
the  board  of directors of the corporation resulting  from  such
Business Combination  were  members  of the board of directors of
the  Company  at  the time of the initial  action  of  the  Board
providing for such Business Combination; or

               (iv) approval  by  the shareholders of the Company
of a complete liquidation or dissolution of the Company.
          (c)  Affiliate.  The term  "affiliate"  or  "affiliated
companies" shall mean any company or other entity controlled  by,
controlling, or under common control with, the Company.

          (d)  Cause.   After  a  Change  of Control, "Cause," as
used in this Agreement, shall have the following  meaning and not
the meaning given in Section 3.3:

               (i)  the  willful  and  continued failure  of  the
Employee to perform substantially the Employee's duties hereunder
(other  than any such failure resulting from  incapacity  due  to
physical   or   mental  illness),  after  a  written  demand  for
substantial performance is delivered to the Employee by the Board
of the Company which  specifically identifies the manner in which
the  Board  believes that  the  Employee  has  not  substantially
performed the Employee's duties, or

               (ii) the  willful  engaging  by  the  Employee  in
illegal  conduct  or  gross  misconduct  which  is materially and
demonstrably injurious to the Company or its affiliates.

For purposes of this provision, no act or failure  to act, on the
part of the Employee, shall be considered "willful"  unless it is
done,  or  omitted  to  be done, by the Employee in bad faith  or
without reasonable belief  that the Employee's action or omission
was in the best interests of  the Company or its affiliates.  Any
act, or failure to act, based upon  authority given pursuant to a
resolution duly adopted by the Board  or upon the instructions of
a  senior  officer of the Company or based  upon  the  advice  of
counsel for  the  Company or its affiliates shall be conclusively
presumed to be done,  or  omitted  to be done, by the Employee in
good  faith  and in the best interests  of  the  Company  or  its
affiliates.  The  cessation  of  employment of the Employee shall
not be deemed to be for Cause unless  and  until there shall have
been  delivered  to  the  Employee  a  copy of a resolution  duly
adopted by the affirmative vote of not less  than  three-quarters
of the entire membership of the Board at a meeting of  the  Board
called  and  held  for  such  purpose (after reasonable notice is
provided  to  the  Employee  and  the   Employee   is   given  an
opportunity,  together  with  counsel,  to  be  heard  before the
Board), finding that, in the good faith opinion of the Board, the
Employee has engaged in the conduct described in subparagraph (i)
or (ii) above, and specifying the particulars thereof in detail.

          (e)  Good  Reason.   After  a Change of Control,  "Good
Reason,"  as  used in this Agreement, shall  have  the  following
meaning and not the meaning given in Section 3.4:

               (i)  Any  failure of the Company or its affiliates
to provide the Employee with  the position, authority, duties and
responsibilities at least equivalent  in  all  material  respects
with  the  most significant of those held, exercised and assigned
at any time  during  the 120-day period immediately preceding the
Change of Control;

               (ii) The  assignment to the Employee of any duties
inconsistent in any respect  with  Employee's position (including
status, offices, titles and reporting  requirements),  authority,
duties or responsibilities as contemplated by Section 1.1, or any
other  action  that  results  in  a  diminution in such position,
authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent  action  not  taken in
bad  faith  that  is  remedied  within  10  days after receipt of
written notice thereof from the Employee to the Company;

               (iii) Any failure by the Company or its affiliates
to  comply  with any of the provisions of this  Agreement,  other
than  an isolated,  insubstantial  and  inadvertent  failure  not
occurring  in  bad  faith  that  is remedied within 10 days after
receipt  of  written notice thereof  from  the  Employee  to  the
Company;

               (iv) The  Company  or its affiliates requiring the
Employee to be based at any office  or  location  other  than  as
provided  in Section 3.4(a)(iii) hereof or requiring the Employee
to travel on  business  to  a  substantially  greater extent than
required immediately prior to the Change of Control;

               (v)  Any purported termination of  the  Employee's
employment   otherwise   than  as  expressly  permitted  by  this
Agreement; or

               (vi) Any failure by the Company to comply with and
satisfy Sections 6.1(c) and (d) of this Agreement.

For purposes of this Section  5,  any good faith determination of
"Good Reason" made by the Employee shall be conclusive.  Anything
in this Agreement to the contrary notwithstanding,  a termination
by   the  Employee  for  any  reason  during  the  30-day  period
immediately  following  the  first  anniversary  of the Change of
Control shall be deemed to be a termination for Good Reason.

          (f)    Beneficial  Ownership.   The  terms  "beneficial
ownership," "beneficial  owner," "beneficially owns," and similar
terms shall have the meanings  set  forth in Rule 13d-3 under the
Exchange Act.

     5.2   Employment Capacity and Term  after Change of Control.
(a) If a Change of Control occurs during the Employment Term, the
Employee's Employment Term (the "Modified Employment Term") shall
be extended until and terminate at the close  of  business on the
later  to  occur  of  the  second  anniversary  of the Change  of
Control; or the date one year after the date on which  either the
Company   or   the  Employee  has  notified  the  other  of  such
termination; and  provided, further, that Employee's status as an
employee is subject to earlier termination to the extent provided
in this Agreement.

          (b)  After  a Change of Control and during the Modified
Employment Term, (i) the  Employee's  position (including status,
offices,  titles and reporting requirements),  authority,  duties
and responsibilities  in and with respect to the Company shall be
at  least  equivalent  in  all  material  respects  to  the  most
significant of those held,  exercised  and  assigned  at any time
during  the  120-day  period immediately preceding the Change  of
Control and (ii) the Employee's service shall be performed at the
location where the Employee  was  employed  immediately preceding
the  Change  of Control or any office or location  less  than  50
miles from such location.

     5.3  Compensation   and   Benefits.    During  the  Modified
Employment  Term,  in addition to the compensation  and  benefits
described in Section  2,  the  Employee  shall be entitled to the
following compensation and benefits:

          (a)  Salary.   During  the  Modified  Employment  Term,
Employee's Base Salary shall be as provided for in Section 2.1.
          (b)  Benefit  Plans.   During the  Modified  Employment
Term, the Employee and his family,  if  any, shall be entitled to
participate in and receive applicable benefits under all such (i)
incentive, savings and retirement plans,  practices, policies and
programs,  (ii)  welfare benefit plans, practices,  policies  and
programs (including,  without  limitation, medical, prescription,
dental, disability, employee life,  group life, accidental health
and travel accident insurance plans and  programs) and (iii) paid
vacation  and other fringe benefits, plans,  practices,  policies
and programs  as are applicable generally to other peer employees
of the Company  and  its affiliated companies in effect generally
after  the  Change  of Control  or,  if  more  favorable  to  the
Employee, as in effect  for  the  Employee at any time during the
120-day period immediately preceding the Change of Control.

          (c)  Expenses.  During the  Modified  Employment  Term,
the  Employee  shall  be entitled to receive prompt reimbursement
for  all  reasonable  expenses   incurred   by  the  Employee  in
accordance  with  the  most  favorable  policies,  practices  and
procedures of the Company and its affiliated  companies in effect
generally after the Change of Control with respect  to other peer
employees of the Company and its affiliated companies or, if more
favorable to the Employee, as in effect for the Employee  at  any
time  during  the 120-day period immediately preceding the Change
of Control.

          (d)  Office  and  Support  Staff.   During the Modified
Employment Term, the Employee shall be entitled  to  an office or
offices  of  a  size and with furnishings and other appointments,
and to personal secretarial  and other assistance, at least equal
to the most favorable of the foregoing  provided  generally after
the Change of Control with respect to other peer employees of the
Company and its affiliated companies or, if more favorable to the
Employee,  as in effect for the Employee at any time  during  the
120-day period immediately preceding the Change of Control.

     5.4  Termination  of  Employment  after a Change of Control.
After  a  Change  of Control and during the  Modified  Employment
Term, the Employee's status as an employee shall terminate or may
be  terminated  as provided  in  Section  3  of  this  Agreement;
provided, however,  that after a Change of Control and during the
Modified Employment Term  the terms "Cause" and "Good Reason," as
used in Section 3 and elsewhere in this Agreement, shall have the
meanings given to them in this  Section  5  and  not the meanings
given to them in Section 3.

     5.5  Obligations  of  the Company upon Termination  after  a
Change of Control.  (a) If,  after  a Change of Control and prior
to  the  end  of  the  Modified  Employment   Term,  the  Company
terminates the Employee's employment other than  for Cause, death
or  Disability,  or the Employee terminates employment  for  Good
Reason, then

                (i) within 30 days of the Date of Termination the
Company shall pay  to  the Employee in a lump sum an amount equal
to the Employee's Base Salary  through  the  end  of the Modified
Employment Term had such termination not occurred; and

               (ii)  Employee  shall be entitled to the  benefits
provided in Section 4.3(b) and the  amounts, if any, contemplated
by Sections 4.6 and 4.7.

          (b)  If, after a Change of Control and prior to the end
of  the Modified Employment Term, the  Employee's  employment  is
terminated  (i) for death, (ii) for Disability or (iii) for Cause
(as defined in this Section 5), by the Employee for reasons other
than Good Reason  (as defined in this Section 5) or at the end of
the Modified Employment Term, then the Employee shall be entitled
to the benefits described  in Section 4.1, Section 4.2 or Section
4.4, as the case may be, and  shall  be  entitled to the benefits
described  in  Sections  4.6  and  4.7.  If the  Company  or  the
Employee gives notice of termination  of  the Modified Employment
Term  as  provided for in Section 5.2, the Company  may,  at  its
option, terminate Employee's status as an Employee, in which case
such termination  shall be deemed a termination without Cause for
purposes of all provisions of this Agreement.

          (c)  The  rights  and  obligations  of  the Company and
Employee  contained  in  Section 4.5 ("Resignation as  Director")
shall continue to apply after a Change of Control.

     5.6  Certain Additional  Payments.   If  after  a  Change of
Control Employee is subjected to an excise tax as a result of the
"excess  parachute  payment"  provisions  of section 4999 of  the
Internal Revenue Code of 1986, as amended,  whether  by virtue of
the benefits of this Agreement or by virtue of any other benefits
provided  to  Employee  in  connection  with  a Change of Control
pursuant to Company plans, policies or agreements  (including the
value of any options to acquire Common Stock of the  Company  the
exercisability  of  which is accelerated pursuant to the terms of
any  stock  option,  incentive  or  similar  plan  heretofore  or
hereafter adopted by the  Company),  the  Company  shall  pay  to
Employee  (whether  or  not  his  employment has terminated) such
amounts as are necessary to place Employee  in  the same position
after payment of federal income and excise taxes  and  state  and
local  income  taxes as he would have been if such provisions had
not been applicable to him.

Section 6.Miscellaneous

     6.1  Binding Effect.

          (a)  This  Agreement shall be binding upon and inure to
the benefit of the Company and any of its successors or assigns.

          (b)  This Agreement  is  personal  to  the Employee and
shall  not be assignable by the Employee without the  consent  of
the Company  (there  being  no  obligation  to give such consent)
other than such rights or benefits as are transferred  by will or
the laws of descent and distribution.

          (c)  The  Company  shall  require  any successor to  or
assignee  of  (whether  direct or indirect, by purchase,  merger,
consolidation or otherwise)  all  or  substantially  all  of  the
assets or businesses of the Company (i) to assume unconditionally
and  expressly this Agreement and (ii) to agree to perform all of
the obligations  under  this  Agreement in the same manner and to
the same extent as would have been required of the Company had no
assignment or succession occurred,  such  assumption  to  be  set
forth  in  a writing reasonably satisfactory to the Employee.  In
the  event  of  any  such  assignment  or  succession,  the  term
"Company" as  used  in  this  Agreement  shall refer also to such
successor or assign.

          (d)  The  Company  shall  require  all   entities  that
control,  or  that  after  the  Change  of  Control will control,
directly or indirectly, any such successor or  assignee  to agree
to  cause  to  be  performed  all  of  the obligations under this
Agreement in the same manner and to the same extent as would have
been  required  of  the Company had no assignment  or  succession
occurred, such agreement  to  be  set forth in writing reasonably
satisfactory to the Employee.

     6.2  Notices.  All notices hereunder  must be in writing and
shall be deemed to have given upon receipt of  delivery  by:  (a)
personal  delivery to the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally   recognized  overnight  courier  service  (against  a
receipt therefor) or (d) facsimile transmission with confirmation
of receipt.  All  such  notices  must  be addressed as follows or
such other address as to which any party hereto may have notified
the other in writing:

     If to the Company, to:

     Akorn, Inc.
     100 Akorn Drive
     Abita Springs, Louisiana  70420
     Attn:  Chairman of the Board
     Facsimile transmission No. (504) 893-1257

     If to the Employee, to:

     Barry D. LeBlanc
     15 Neron Place
     New Orleans, Louisiana  70118
     Facsimile transmission No. (504) 861-9649

     6.3  Governing Law.  This Agreement  shall  be construed and
enforced in accordance with and governed by the internal  laws of
the State of Louisiana.

     6.4  Withholding.  The Employee agrees that the Company  has
the  right to withhold, from the amounts payable pursuant to this
Agreement,  all  amounts required to be withheld under applicable
income and/or employment  tax  laws,  or  as  otherwise stated in
documents granting rights that are affected by this Agreement.

     6.5  Severability.  If any term or provision  of this Agree-
ment  or  the  application thereof to any person or circumstance,
shall at any time  or  to  any  extent  be  invalid,  illegal  or
unenforceable in any respect as written, Employee and the Company
intend for any court construing this Agreement to modify or limit
such provision temporally, spatially or otherwise so as to render
it  valid  and  enforceable to the fullest extent allowed by law.
Any such provision  that  is  not susceptible of such reformation
shall be ignored so as to not affect  any other term or provision
hereof, and the remainder of this Agreement,  or  the application
of such term or provision to persons or circumstances  other than
those  as  to which it is held invalid, illegal or unenforceable,
shall not be affected thereby and each term and provision of this
Agreement shall  be  valid  and  enforced  to  the fullest extent
permitted by law.

     6.6  Waiver  of  Breach.  The waiver by either  party  of  a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.

     6.7  Remedies Not  Exclusive.   No  remedy  specified herein
shall  be  deemed  to  be  such  party's  exclusive  remedy,  and
accordingly,  in  addition  to  all  of  the  rights and remedies
provided for in this Agreement, the parties shall  have all other
rights and remedies provided to them by applicable law,  rule  or
regulation.

     6.8  Company's Reservation of Rights.  Employee acknowledges
and  understands  that the Employee serves at the pleasure of the
Board and that the Company has the right at any time to terminate
Employee's status as  an employee of the Company, or to change or
diminish his status during  the  Employment  Term, subject to the
rights  of the Employee to claim the benefits conferred  by  this
Agreement.

     6.9  Survival.   Following  the  Date  of  Termination, each
party shall have the right to enforce all rights,  and  shall  be
bound  by  all  obligations,  of  such  party that are continuing
rights and obligations under this Agreement.

     6.10 Counterparts.  This Agreement may be executed in one or
more  counterparts,  each  of  which shall be  deemed  to  be  an
original but all of which together  shall  constitute one and the
same instrument.

     IN WITNESS WHEREOF, the Company and the Employee have caused
this Agreement to be executed as of the Agreement Date.

                              AKORN, INC.



                              By:    /s/ George S. Ellis, M.D.
                                       George S. Ellis, M.D.
                                  Compensation Committee Chairman

                              EMPLOYEE:
                                          /s/ Barry D. LeBlanc
                                          Barry D. LeBlanc

                       SEPARATION AGREEMENT

     THIS  SEPARATION  AGREEMENT  (the  "Agreement")  is made and
entered   into   as   of  July  3,  1996  by  and  between  Akorn
Incorporated, a Louisiana  corporation  ("Akorn")  and  Barry  D.
LeBlanc,  an  individual residing at 15 Neron Place, New Orleans,
LA 70118 (referred to herein as "Executive").

                       W I T N E S S E T H:

     WHEREAS, the  Executive  has  served  as President and Chief
Executive Officer and a Director of Akorn; and

     WHEREAS, Akorn and Executive have determined  that  it is in
their mutual best interest that Executive discontinue his service
as  President,  Chief  Executive Officer and a Director of Akorn;
and

     WHEREAS, Executive  has  agreed to resign from his positions
as President, Chief Executive Officer  and  a  Director  of Akorn
effective July 3, 1996; and

     WHEREAS, Executive and Akorn have each agreed to release the
other   from  any  liability,  including,  but  not  limited  to,
liability  arising  out  of Executive's employment with Akorn and
Executive's resignation from his present positions with Akorn,

     NOW,  THEREFORE, it is  agreed  by  and  between  Akorn  and
Executive as follows:

     1.   Resignation.   Executive  hereby  resigns as President,
Chief Executive Officer and a Director of Akorn  all effective as
of July 3, 1996.

     2.   Compensation.

          (a)   Akorn  will,  in  consideration  for  Executive's
     resignation  and execution of the releases contained in this
     Agreement, pay  to  Executive  Two Hundred Thirteen Thousand
     Forty-Five  and 00/100 Dollars ($213,045)  (the  "Separation
     Payment"), payable in four equal installments of Fifty-Three
     Thousand  Two   Hundred   Sixty-One   and   25/100   Dollars
     ($53,261.25)  with  the  first such payment being made eight
     (8)  days  after  execution  of  this  Agreement,  with  two
     subsequent payments on October  3,  1996 and January 3, 1997
     and a final payment on April 3, 1997.

          (b) The amount of the Separation  Payment which remains
     unpaid from time to time shall bear interest until paid at a
     rate   equal  to  the  "prime  rate"  as  published   and/or
     announced,  from time to time, by the Northern Trust Company
     (the "Bank")  as  its "prime rate" of interest, which is not
     necessarily the lowest  rate of interest offered by the Bank
     to its customers, such rate  of  interest  fluctuating  from
     time  to  time  concurrently  with and in an amount equal to
     each change in said prime rate published and/or announced by
     the Bank; provided, however, that  at  the  election  of the
     Executive,  the amount of interest that would be payable  on
     the Separation  Payment  (which  amount,  as  calculated  in
     Exhibit A which is attached hereto, equals $6,713.14) may be
     applied  by Executive as a credit toward the purchase of the
     1996 Ford  Explorer  automobile which the Executive has been
     provided with by Akorn  and which automobile will be offered
     to Executive for purchase  eight (8) days after execution of
     this Agreement at a price of $23,000.00.

          (c) In addition to the  Separation  Payment, Akorn will
     also  make a lump sum payment to Executive  of  Twenty-Three
     Thousand   Four   Hundred   Twenty-Two  and  72/100  Dollars
     ($23,422.72) representing accrued  but  unpaid  vacation and
     sick  pay (the "Accrued Compensation"), such payment  to  be
     made eight (8) days after execution of this Agreement.

     3.   Confidentiality.

          (a)    Executive    agrees   that   the   "Confidential
     Information" (as herein defined)  obtained  or  developed by
     him  during  the  course  of  his  employment with Akorn  is
     confidential  and,  accordingly, agrees  that  he  will  not
     disclose to any person  or  use  for his own account, or for
     the account of others, directly or  indirectly,  any  of the
     Confidential  Information  without the prior written consent
     of Akorn, unless and then only  to  the  extent  that,  such
     matters  may be otherwise generally available for use by the
     public and not as a result of his acts or omissions to act.

          As used  herein,  "Confidential  Information" means any
     and all information in the possession of  the  Executive (i)
     that  pertains or belongs to Akorn or its customers  and  is
     not generally  available  to  the public, including, but not
     limited to, personnel information,  customer lists, supplier
     lists,  product  specifications and names,  the  nature  and
     scope  of  research   activities,  product  composition  and
     formulas,   trade   secrets,    drawings   and   schematics,
     manufacturing processes, know how,  computer  and  any other
     processed  or  collated  data,  computer  programs, pricing,
     marketing and advertising data; or (ii) that  is  related to
     product  development  plans  or  distribution  and marketing
     plans.

          (b)   Executive  agrees  to  keep  the  terms  of  this
     Agreement confidential  except that the source and amount of
     his  income  may be revealed  as  necessary  for  tax,  loan
     purposes and the like.

          (c)  Executive   agrees   that   money  damages  cannot
     adequately  compensate  Akorn  in  case  of   a   breach  or
     threatened  breach  of  this promise of confidentiality  and
     that, accordingly, Akorn  would  be  entitled  to injunctive
     relief upon such breach.  Executive understands  that  it is
     Akorn's  intent  to  have  this  promise  of confidentiality
     enforced to its fullest extent.  Accordingly,  Executive and
     Akorn  agree  that,  if  any  portion  of  this  promise  of
     confidentiality  is  unenforceable,  the court should  still
     construe and enforce this promise of confidentiality  to the
     fullest extent permitted by law.

     4.   Non-Derogation.   Executive  covenants  and agrees with
Akorn  to  refrain,  and to use his good faith efforts  to  cause
family members and business  associates  to  refrain, from making
any written or oral statements to any third party  which are of a
derogatory nature with respect to Akorn, its officers, directors,
shareholders, business, products or services.

     5.   Mutual Assent and Release.

          (a)  Akorn  agrees  that  it  has  entered  into   this
     agreement  on a purely voluntary basis and, in consideration
     of the benefits  provided  to  Akorn  herein,  Akorn further
     agrees  to  release  and  discharge  Executive,  his  heirs,
     agents,   attorneys   and   representatives  (the  "Released
     Parties"),  from  any  and all claims,  actions,  causes  of
     actions,  grievances,  charges,   lawsuits,  damages  and/or
     liabilities whatsoever that it ever had, or now has, whether
     fixed or contingent, liquidated or  unliquidated and whether
     arising  in tort, contract, statute or  equity,  before  any
     federal, state,  local or private court, agency, arbitrator,
     mediator, or other  entity,  regardless  of  the  relief  or
     remedy.   It  is  agreed  that  this paragraph shall survive
     termination  of this Agreement.  Without  limitation,  Akorn
     expressly acknowledges  and  agrees  that,  by entering into
     this Agreement, Akorn is waiving and releasing  any  and all
     rights  or  claims  that  it  may  have  against  any of the
     Released  Parties  arising out of the negotiation, execution
     and  implementation  of  any  employment  contracts  by  and
     between Akorn and its  executive  employees,  including, but
     not limited to, the Executive.

          (b)  Executive  agrees  that  he has entered into  this
     Agreement on a purely voluntary basis  and, in consideration
     of  the  benefits  provided  to Executive herein,  Executive
     further  agrees  to  release  and   discharge   Akorn,   its
     shareholders,  directors,  officers,  managers, supervisors,
     agents,  attorneys,  representatives  and   employees   (the
     "Released  Parties"),  from  any  and  all  claims, actions,
     causes  of  action,  grievances, charges, lawsuits,  damages
     and/or liabilities whatsoever  that he ever had, or now has,
     whether fixed or contingent, liquidated  or unliquidated and
     whether arising in tort, contract, statute or equity, before
     any   federal,  state,  local  or  private  court,   agency,
     arbitrator,  mediator,  or  other  entity, regardless of the
     relief or remedy.  It is agreed that  this  paragraph  shall
     survive  termination of this Agreement.  Without limitation,
     Executive   expressly   acknowledges  and  agrees  that,  by
     entering  into  this Agreement,  Executive  is  waiving  and
     releasing any and  all  rights  or  claims  that he may have
     against  any of the Released Parties arising under  the  Age
     Discrimination and Employment Act of 1967, as amended; Title
     VII of the  Civil  Rights  Act  of  1964,  as  amended;  the
     Rehabilitation   Act  of  1973,  as  amended;  the  Employee
     Retirement Income  Security  Act  of  1974,  as amended; the
     Civil  Rights  Act  of 1991; the Americans with Disabilities
     Act; the Family and Medical  Leave  Act;  or,  any  acts  or
     statutes  of  Louisiana or the common law providing remedies
     for wrongful discharge,  defamation  or invasion of privacy.
     Executive further expressly acknowledges and agrees that:

               (i)   In return for this Agreement, Executive will
          receive consideration beyond that  which he was already
          entitled   to   receive  before  entering   into   this
          Agreement;

               (ii)   Executive  has  been  advised  by  Akorn to
          consult with an attorney before signing this Agreement;

               (iii)    Executive   was  given  a  copy  of  this
          Agreement on June 28, 1996, and informed that he had up
          to  twenty-one (21) days within  which  to  review  and
          consider this Agreement.

               (iv)    Executive  was informed that Executive had
          seven (7) days following execution of this Agreement in
          which to revoke the Agreement.   After  seven  (7) days
          this  Agreement will become effective, enforceable  and
          irrevocable  unless  written  revocation is received by
          the undersigned from Executive  on  or before the close
          of business on the seventh day after Executive executed
          this Agreement.  If Executive attempts  to  revoke this
          Agreement it shall not be effective or enforceable  and
          Executive will not receive the compensation or benefits
          described in this Agreement.

     6.   Non-Assignability;   Assignment   in   the   Event   of
Acquisition   or   Merger.   This  Agreement,  and  the  benefits
hereunder are not assignable  or  transferrable  by Executive and
the  rights  and  obligations of Akorn under this Agreement  will
automatically  be  deemed   to   be  assigned  by  Akorn  to  any
corporation or entity acquiring all  or  substantially all of the
assets of Akorn or to any corporation or entity  into which Akorn
may  be merged or consolidated; provided, however,  that  in  the
event of Executive's death, Akorn shall make such payments as may
then  be  due  and  owing  to  the  Executive,  if  any,  to  the
Executive's estate.

     7.   Miscellaneous.

          (a)   Entire Agreement; Amendment.  This Agreement, and
     all documents  delivered  herewith,  constitute  the  entire
     Agreement  and  understanding among the parties with respect
     to the matters contained  herein,  shall supersede all prior
     oral or written agreements or covenants  of the parties, and
     shall  be  binding  upon  and  inure to the benefit  of  the
     parties and their respective heirs,  predecessors,  personal
     representatives,  successors and assigns, present or future.
     This Agreement shall  not  be  modified or changed except by
     instrument in writing signed by  or on behalf of each of the
     parties hereto.

          (b)  Counterparts.  This Agreement  and  all  documents
     delivered pursuant  hereto  may  be  executed in one or more
     counterparts and each and every fully  executed  counterpart
     may be deemed to be an original hereof.

          (c)   Headings.    The  descriptive  headings  in  this
     Agreement are inserted for  convenience  only  and shall not
     control or affect the meaning or construction of  any of the
     provisions hereof.

          (d) Waiver.  The failure of any party hereto to enforce
     at any time any of the provisions of this Agreement shall in
     no  way  be  construed to be a waiver of any such provision,
     nor in any way  to  effect the validity of this Agreement or
     any provision, it being  agreed  that  each provision hereof
     is,  material,  significant and essential  to  each  of  the
     parties agreements and undertakings hereunder.  No waiver of
     any breach of this Agreement shall be held to be a waiver of
     any other or subsequent breach.

          (e)  Notice.    Any  notice,  request,  instruction  or
     instrument to be given by any party to the other party shall
     be in writing and shall be deemed to have been given if sent
     by Federal Express (or  similar  overnight delivery service)
     or   by  registered  or  certified  mail,   return   receipt
     requested,

          (i) if to Executive at: 15 Neron Place
                                        New Orleans, LA 70118

          (ii) if to Akorn at:          100 Akorn Drive
                                        Abita Springs, LA 70420

          (f) Invalidity.  If any provision of this Agreement, or
     the application thereof to any person or circumstance, shall
     be construed  for any reason and to any extent to be invalid
     or unenforceable,  but  the  extent  of  the  invalidity  or
     unenforceability  does  not destroy the basis of the bargain
     between the parties contained  herein, the remainder of this
     Agreement, and the application of  such  provision  to other
     persons or circumstances, shall not be effected thereby, but
     shall be enforced to the greatest extent permitted by law.

          (g) Expenses.  Each of the parties hereto shall pay its
     own expenses, including, but not limited to, the fees of its
     separate counsel, in connection with this Agreement.

          (h)  Choice  of Law.  This Agreement shall be construed
     in accordance with  the  laws  of the State of Delaware, and
     the rights and obligations of the parties hereunder shall be
     construed and enforced in accordance  with,  and governed by
     the  laws  of  the  State  of  Delaware,  without regard  to
     principals of conflict of laws.

     Akorn  and  Executive,  having  read  and  understood   this
Agreement,  and  having  consulted  with advisors as appropriate,
hereby each agree to be bound by its terms.

     IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and date first above written.




                              AKORN INCORPORATED


                              By:
                              Its:





                              Barry D. LeBlanc




                            EXHIBIT A

 INTEREST PAYABLE ON QUARTERLY INSTALLMENTS OF SEPARATION PAYMENT


                                              Days from
                                                7/3/96
Installment               Payment   Interest    Until   Interest
   Number       Amount      Date      Rate     Payment
Amount
     1        $ 53,261.25    *       8.25%          0       $   -
     2          53,261.25 10/3/96    8.25%         92       1,122.92
     3          53,261.25  1/3/96    8.25%        184       2,245.85
     4          53,261.25  4/3/97    8.25%        274       3,344.36
             _____________                                 ___________
              $213,045.00                                   $6,713.14

*    Eight (8) days after execution of the Agreement.

             EMPLOYMENT AGREEMENT--ERIC M. WINGERTER

     This Employment Agreement ("Agreement") between Akorn, Inc.,
a  Louisiana  corporation  (the "Company"), and Eric M. Wingerter
(the "Employee") is dated as  of  January 1, 1996 (the "Agreement
Date").

     WHEREAS, Employee currently is employed by the Company;

     WHEREAS,  the  Company desires to  retain  the  services  of
Employee pursuant to  the  terms  of  this Agreement and Employee
desires to continue in the service of the Company on such terms;

     NOW, THEREFORE, for and in consideration  of  the  continued
employment  of Employee by the Company and the payment of  wages,
salary and other  compensation  to  Employee  by the Company, the
parties hereto agree as follows:


Section 1.Employment Capacity and Term

     1.1  Capacity  and  Duties  of  Employee.  The  Employee  is
employed  by  the Company to render services  on  behalf  of  the
Company as Vice  President  -  Finance & Administration and Chief
Financial Officer.  In that capacity  the  Employee shall perform
such duties as are assigned to the individual  holding  any  such
title  by  the Company's Bylaws and such other duties, consistent
with the Employee's  job title, as may be prescribed from time to
time by the Board of Directors of the Company (the "Board").

     1.2  Employment Term.   The  term  of  this  Agreement  (the
"Employment Term") shall commence on the Agreement Date and shall
continue until and terminate one year after either the Company or
the  Employee  has  notified the other of such termination of the
Employment Term; and  provided, further, that the Employment Term
is subject to extension as provided in Section 5.2 and Employee's
status as an employee is  subject  to  earlier termination to the
extent provided in this Agreement.

     1.3  Devotion to Responsibilities.   During  the  Employment
Term, the Employee shall devote all of his business time  to  the
business  of  the  Company  and  its  subsidiaries and affiliated
companies,  shall  use  his reasonable best  efforts  to  perform
faithfully and efficiently  his  duties under this Agreement, and
shall  not  engage  in  or be employed  by  any  other  business;
provided, however, that nothing  contained  herein shall prohibit
the  Employee  from  (a) serving  as  a member of  the  board  of
directors, board of trustees or the like  of  any  for-profit  or
non-profit  entity  that  does  not  compete with the Company, or
performing  services  of  any  type for any  civic  or  community
entity,  whether  or  not  the  Employee   receives  compensation
therefor,  (b) investing  his assets in such form  or  manner  as
shall require no more than  nominal  services  on the part of the
Employee in the operation of the business of or property in which
such  investment  is  made, or (c) serving in various  capacities
with, and attending meetings  of,  industry  or  trade groups and
associations,   as  long  as  the  Employee's  engaging  in   any
activities permitted  by virtue of clauses (a), (b) and (c) above
does not materially interfere with the ability of the Employee to
perform the services and  discharge the responsibilities required
of him under this Agreement.   Notwithstanding  clause (b) above,
during  the Employment Term, the Employee shall not  perform  any
services  for  and shall not beneficially own more than 2% of the
equity interests  of  a  business organization that competes with
the Company or its affiliates.   For  purposes of this paragraph,
"beneficially own" shall have the meaning  given  to that term in
Rule  13d-3  under  the  Securities  Exchange  Act  of 1934  (the
"Exchange Act").

Section 2. Compensation and Benefits

     During  the  Employment Term, the Company shall provide  the
Employee with the compensation and benefits described below:

     2.1  Salary.   A  salary  ("Base  Salary")  at  the  rate of
$90,000  per year; provided, however, that Employee's Base Salary
shall increase  as of each anniversary of the Agreement Date by a
factor  equal  to  the  increase  in  the  Consumer  Price  Index
maintained by the United  States Department of Labor.  Employee's
Base Salary shall be payable to the Employee at such intervals as
the salaries of other salaried employees of the Company are paid.
Any increase in Employee's  Base Salary shall take effect for the
payroll period next following  the date on which the condition to
such increase is met.

     2.2  Bonus.  Employee shall  be  eligible  to  receive  such
bonuses  and  supplementary   compensation   as   the  Board  may
determine.

     2.3  Benefits.  The Company shall provide the  Employee and,
if  applicable, his family members, with all such (i)  incentive,
savings  and  retirement plans, practices, policies and programs,
(ii) welfare benefit  plans,  practices,  policies  and  programs
(including,  without  limitation,  medical, prescription, dental,
disability, employee life, group life, accident health and travel
accident insurance plans and programs)  and  (iii)  paid vacation
and  other  fringe  benefits,  plans,  practices,  policies   and
programs  as  are applicable generally to other peer employees of
the Company and its affiliated companies.

     2.4  Office  and  Support Staff.  Employee shall be entitled
to an office or offices  of  the  size  and  with furnishings and
other  appointments,  and  to  personal  secretarial   and  other
assistance,  at least equal to the those provided to him  on  the
Agreement Date.

     2.5  Expenses.    The   Employee  shall  be  reimbursed  for
reasonable out-of-pocket expenses  incurred  from time to time on
behalf of the Company or any subsidiary in the performance of his
duties  under  this  Agreement,  upon  the presentation  of  such
supporting  invoices,  documents  and  forms   as   the   Company
reasonably requests.

Section 3. Termination of Employment

     3.1  Death.   The  Employee's  status  as  an employee shall
terminate immediately and automatically upon the Employee's death
during the Employment Term.
     
     3.2  Disability.  The Employee's status as an  employee  may
be terminated for "Disability" as follows:

          (a)  The   Employee's   status  as  an  employee  shall
terminate if the Employee has a disability that would entitle him
to  receive  benefits  under the Company's  long-term  disability
insurance policy in effect  at  the  time  either  because  he is
Totally Disabled or Partially Disabled, as such terms are defined
in the Company's policy in effect as of the Agreement Date or  as
similar  terms  are  defined  in  any successor policy.  Any such
termination shall become effective  on the first day on which the
Employee is eligible to receive payments under such policy (or on
the first day that he would be so eligible,  if  he  had  applied
timely for such payments).

          (b)  If the Company has no long-term disability plan in
effect,  the Employee's status as an employee shall terminate  if
(i) the Employee  is  rendered  incapable  because of physical or
mental  illness  of  satisfactorily discharging  his  duties  and
responsibilities  under   this  Agreement  for  a  period  of  90
consecutive days and (ii) a  duly  qualified  physician chosen by
the  Company  and  acceptable  to  the  Employee  or  his   legal
representative so certifies in writing, the Board shall have  the
power to determine that the Employee has become disabled.  If the
Board  makes  such  a  determination,  the Company shall have the
continuing  right  and  option,  during  the   period  that  such
disability continues, and by notice given in the  manner provided
in  this  Agreement,  to terminate the status of Employee  as  an
employee.  Any such termination  shall  become  effective 30 days
after such notice of termination is given, unless within such 30-
day period, the Employee becomes capable of rendering services of
the character contemplated hereby (and a physician  chosen by the
Company   and   acceptable   to   the   Employee   or  his  legal
representative so certifies in writing) and the Employee  in fact
resumes such services.

          (c)  The  "Disability  Effective  Date"  shall mean the
date on which termination of employment becomes effective  due to
Disability.

     3.3  Cause.  The Company may terminate the Employee's status
as  an  employee  for  Cause.  As used herein, termination by the
Company of the Employee's status as an employee for "Cause" shall
mean termination as a result of (a) the Employee's breach of this
Agreement, or (b) the willful  engaging  by the Employee in gross
misconduct injurious to the Company, which  in either case is not
remedied within 10 days after the Company provides written notice
to the Employee of such breach or willful misconduct.

     3.4  Good Reason.  The Employee may terminate  his status as
an  employee  for  Good  Reason.  As used herein, the term  "Good
Reason" shall mean:

          (a)  The occurrence of any  of the following during the
Employment Term:

               (i)  the  assignment  by  the   Board  or  by  any
authorized   person   to   the   Employee   of   any  duties   or
responsibilities   that  are  inconsistent  with  the  Employee's
status,  title  and  position  as  Vice  President  -  Finance  &
Administration and Chief Financial Officer;
               (ii) any  removal  of  the  Employee  from, or any
failure to reappoint or reelect the Employee to, the position  of
Vice  President  -  Finance  & Administration and Chief Financial
Officer of the Company, except  in  connection with a termination
of  Employee's  status  as  an  employee  as  permitted  by  this
Agreement;

               (iii) the Company's requiring  the  Employee to be
based anywhere other than at or within 50 miles of the  Company's
headquarters  in  Abita  Springs,  Louisiana, except for required
travel in the ordinary course of the Company's business;

          (b)  any breach of this Agreement  by  the Company that
continues for a period of 10 days after written notice thereof is
given by the Employee to the Company;

          (c)  the   failure   by  the  Company  to  obtain   the
assumption  of  its  obligations  under  this  Agreement  by  any
successor or assignee as contemplated by Section 6.1(c); or

          (d)  any purported termination  by  the  Company of the
Employee's  status as an employee for Cause that is not  effected
pursuant to a  Notice  of Termination satisfying the requirements
of this Agreement.

     3.5  Voluntary Termination  by  the Company.  Subject to the
terms and conditions provided herein,  the  Company may terminate
the Employee's status as an employee during the  Employment  Term
for reasons other than death, Disability or Cause.

     3.6  Voluntary  Termination by the Employee.  Subject to the
terms and conditions provided  herein, the Employee may terminate
the Employee's status as an employee  during  the Employment Term
for reasons other than Good Reason.

     3.7  Notice of Termination.  Any termination  by the Company
for  Disability  or  Cause,  or by the Employee for Good  Reason,
shall be communicated by Notice of Termination to the other party
hereto given in accordance with  Section  6.2.   For  purposes of
this Agreement, a "Notice of Termination" means a written  notice
that  (a)  indicates  the  specific termination provision in this
Agreement relied upon, (b) to  the  extent applicable, sets forth
in  reasonable  detail  the  facts and circumstances  claimed  to
provide  a basis for termination  of  the  Employee's  employment
under the  provisions  so  indicated  and  (c)  if  the  Date  of
Termination  (as defined below) is other than the date of receipt
of such notice,  specifies the termination date (which date shall
be not more than 30  days  after the giving of such notice).  The
failure by the Employee or the Company to set forth in the Notice
of Termination any fact or circumstance  that  contributes  to  a
showing  of Good Reason, Disability or Cause shall not negate the
effect of  the  notice nor waive any right of the Employee or the
Company, respectively,  hereunder or preclude the Employee or the
Company, respectively, from  asserting  such fact or circumstance
in enforcing the Employee's or the Company's rights hereunder.

     3.8  Date of Termination.  "Date of  Termination"  means (a)
if Employee's employment is terminated by reason of his death  or
Disability, the Date of Termination shall be the date of death of
Employee  or  the  Disability Effective Date, as the case may be,
(b) if Employee's employment  is  terminated  by  the Company for
Cause,  or by Employee for Good Reason, the date of  delivery  of
the Notice  of  Termination  or any later date specified therein,
(which date shall not be more  than  30  days after the giving of
such notice) as the case may be, (c) if the Employee's employment
is terminated by the Company prior to the  end  of the Employment
Term for reasons other than death, Disability or  Cause, the Date
of  Termination  shall be the date on which the Company  notifies
the  Employee  of  such   termination,   (d) if   the  Employee's
employment is terminated by the Employee prior to the  end of the
Employment Term for reasons other than Good Reason, the  Date  of
Termination  shall be the date on which the Employee notifies the
Company of such  termination,  and  (e)  if  the  Employment Term
terminates upon notice by the Company or the Employee as provided
for in Section 1.2 or Section 5.2, the Date of Termination  shall
be the date on which the Employment Term ends.

Section 4. Obligations Upon Termination

     4.1  Death.    If   Employee's  status  as  an  employee  is
terminated by reason of Employee's  death,  this  Agreement shall
terminate   without  further  obligations  to  Employee's   legal
representatives  under  this Agreement, other than the obligation
to  make any payments due  pursuant  to  employee  benefit  plans
maintained by the Company or its subsidiaries.

     4.2  Disability.   If  Employee's  status  as an employee is
terminated  by  reason  of Employee's Disability, this  Agreement
shall terminate without further  obligation  to  Employee,  other
than the obligation to make any payments due pursuant to employee
benefit plans maintained by the Company or its subsidiaries.

     4.3  Termination  by  Company  for Reasons other than Death,
Disability or Cause; Termination by Employee for Good Reason.  If
the Company terminates the Employee's status as an employee prior
to the end of the Employment Term for  reasons  other than death,
Disability  or  Cause, or the Employee terminates his  employment
prior to the end of the Employment Term for Good Reason, then

          (a)  within  30  days  of  the  Date of Termination the
Company shall pay to the Employee in a lump  sum  an amount equal
to  the Employee's Base Salary through the end of the  Employment
Term  had the notice contemplated by Section 1.2 been given as of
the Date of Termination; and

          (b)  the  amount  of  any  performance-based  bonus  or
options  granted to the Employee shall be deemed to be the amount
to which the  Employee  would  have been entitled if the budgeted
goals or other performance goals  applicable thereto had been met
but not exceeded and, whether or not  the  performance goals have
been  met  as  of the Date of Termination, such  bonus  shall  be
payable within 30  days  of  the  Date  of  Termination  and such
options (if not already exercisable) shall become exercisable  as
of  the  Date  of  Termination  and  shall  expire on the date of
expiration  of the options as provided in the  applicable  option
agreement.

     4.4  Termination for Cause, Without Good Reason or at End of
Employment Term.   This Agreement shall terminate without further
obligation to the Employee  other than obligations imposed by law
and obligations imposed pursuant  to  any  employee  benefit plan
maintained  by  the  Company  or  its  subsidiaries  (a)  if  the
Employee's status as an Employee is terminated by the Company for
Cause  or  by  the Employee for reasons other than Good Reason or
(b), except as otherwise  provided  in Section 5.2, at the end of
the Employment Term.  If the Company or the Employee gives notice
of termination of the Employment Term  as provided for in Section
1.2, the Company may, at its option, terminate  Employee's status
as an employee, in which case such termination shall  be deemed a
termination  by  the  Company  without Cause for purposes of  all
provisions of this Agreement.

     4.5  Resignation as Director.   If Employee is a director of
the Company and his employment is terminated for any reason other
than  death,  the Employee shall, if requested  by  the  Company,
immediately resign  as  a  director  of  the  Company.   If  such
resignation is not received when so requested, the Employee shall
forfeit  any  right  to  receive  any  payments  pursuant to this
Agreement.

     4.6  Accrued   Obligations   and   Other   Benefits.    Upon
termination  of employment for any reason the Employee  shall  be
entitled to receive  promptly,  and  in  addition  to  any  other
benefits  specifically  provided,  (a) the Employee's Base Salary
through  the Date of Termination to the  extent  not  theretofore
paid, (b) any accrued vacation pay, to the extent not theretofore
paid, and  (c)  any other amounts or benefits required to be paid
or provided or which  the  Employee  is entitled to receive under
any plan, program, policy practice or agreement of the Company.

     4.7  Stock Options.  The foregoing  benefits are intended to
be  in  addition to the value of any options  to  acquire  Common
Stock  of   the  Company  the  exercisability  of  which  may  be
accelerated pursuant  to the terms of any stock option, incentive
or other similar plan heretofore  or  hereafter  adopted  by  the
Company.

Section 5. Change of Control

     5.1  Definitions.   For  purposes  of  this  Section  5, the
following terms shall have the meanings indicated below.

          (a)  Company.   In  the  event  of  any  assignment  or
succession  as described in Section 6.1(c), the term "Company" as
used in this  Agreement  shall  refer  also  to such successor or
assignee.

          (b)  Change of Control.  A Change of Control shall mean
the occurrence of any of the following events:

               (i)  the acquisition by any individual,  entity or
"person"  (within the meaning of Section 13(d)(3) or 14(d)(2)  of
the Exchange Act) of beneficial ownership of more than 30% of the
outstanding  shares  of  the Company's common stock, no par value
per  share  (the "Common Stock");  provided,  however,  that  for
purposes of this subsection (i), the following acquisitions shall
not constitute a Change of Control:

                    (A)  any acquisition of Common Stock directly
from the Company,

                    (B)  any  acquisition  of Common Stock by the
Company,

                    (C)  any acquisition of  Common  Stock by any
employee benefit plan (or related trust) sponsored or  maintained
by the Company or any corporation controlled by the Company, or

                    (D)  any acquisition of Common Stock  by  any
corporation  pursuant to a transaction that complies with clauses
(A), (B) and (C) of subsection (b)(iii) of this Section 5.1; or

               (ii) individuals  who,  as  of the Agreement Date,
constitute the Board (the "Incumbent Board") cease for any reason
to  constitute  at  least  a  majority  of  the Board;  provided,
however,  that any individual becoming a director  subsequent  to
the Agreement  Date whose election, or nomination for election by
the Company's shareholders,  was approved by a vote of at least a
majority of the directors then  comprising  the  Incumbent  Board
shall  be considered a member of the Incumbent Board, unless such
individual's  initial  assumption of office occurs as a result of
an actual or threatened  election  contest  with  respect  to the
election  or  removal  of directors or other actual or threatened
solicitation of proxies  or  consents by or on behalf of a person
other than the Incumbent Board; or

               (iii) the consummation of a reorganization, merger
or  consolidation,  or  sale  or  other  disposition  of  all  or
substantially  all  of the assets of  the  Company  (a  "Business
Combination"), in any  such case, unless, following such Business
Combination,

                    (A)  all   or   substantially   all   of  the
individuals   and  entities  who  were  the  direct  or  indirect
beneficial owners  of  the Company's outstanding common stock and
the Company's voting securities entitled to vote generally in the
election  of  directors  immediately   prior   to  such  Business
Combination   have   direct  or  indirect  beneficial  ownership,
respectively, of more  than 50% of the then outstanding shares of
common stock, and more than  50%  of the combined voting power of
the then outstanding voting securities entitled to vote generally
in the election of directors, of the  corporation  resulting from
such Business Combination (which, for purposes of this  paragraph
(A) and paragraphs (B) and (C), shall include a corporation which
as  a  result of such transaction controls the Company or all  or
substantially  all  of  the  Company's  assets either directly or
through one or more subsidiaries), and

                    (B)  except to the extent that such ownership
existed prior to the Business Combination,  no  person (excluding
any corporation resulting from such Business Combination  or  any
employee  benefit  plan  or  related trust of the Company or such
corporation   resulting   from   such    Business    Combination)
beneficially  owns,  directly or indirectly, 20% or more  of  the
then  outstanding shares  of  common  stock  of  the  corporation
resulting  from  such  Business Combination or 20% or more of the
combined voting power of  the  then outstanding voting securities
of such corporation, and

                    (C)  at least  a  majority  of the members of
the  board  of directors of the corporation resulting  from  such
Business Combination  were  members  of the board of directors of
the  Company  at  the time of the initial  action  of  the  Board
providing for such Business Combination; or

               (iv) approval  by  the shareholders of the Company
of a complete liquidation or dissolution of the Company.

          (c)  Affiliate.  The term  "affiliate"  or  "affiliated
companies" shall mean any company or other entity controlled  by,
controlling, or under common control with, the Company.

          (d)  Cause.   After  a  Change  of Control, "Cause," as
used in this Agreement, shall have the following  meaning and not
the meaning given in Section 3.3:

               (i)  the  willful  and  continued failure  of  the
Employee to perform substantially the Employee's duties hereunder
(other  than any such failure resulting from  incapacity  due  to
physical   or   mental  illness),  after  a  written  demand  for
substantial performance is delivered to the Employee by the Board
of the Company which  specifically identifies the manner in which
the  Board  believes that  the  Employee  has  not  substantially
performed the Employee's duties, or

               (ii) the  willful  engaging  by  the  Employee  in
illegal  conduct  or  gross  misconduct  which  is materially and
demonstrably injurious to the Company or its affiliates.

For purposes of this provision, no act or failure  to act, on the
part of the Employee, shall be considered "willful"  unless it is
done,  or  omitted  to  be done, by the Employee in bad faith  or
without reasonable belief  that the Employee's action or omission
was in the best interests of  the Company or its affiliates.  Any
act, or failure to act, based upon  authority given pursuant to a
resolution duly adopted by the Board  or upon the instructions of
a  senior  officer of the Company or based  upon  the  advice  of
counsel for  the  Company or its affiliates shall be conclusively
presumed to be done,  or  omitted  to be done, by the Employee in
good  faith  and in the best interests  of  the  Company  or  its
affiliates.  The  cessation  of  employment of the Employee shall
not be deemed to be for Cause unless  and  until there shall have
been  delivered  to  the  Employee  a  copy of a resolution  duly
adopted by the affirmative vote of not less  than  three-quarters
of the entire membership of the Board at a meeting of  the  Board
called  and  held  for  such  purpose (after reasonable notice is
provided  to  the  Employee  and  the   Employee   is   given  an
opportunity,  together  with  counsel,  to  be  heard  before the
Board), finding that, in the good faith opinion of the Board, the
Employee has engaged in the conduct described in subparagraph (i)
or (ii) above, and specifying the particulars thereof in detail.
        
  (e)  Good  Reason.   After  a Change of Control,  "Good
Reason,"  as  used in this Agreement, shall  have  the  following
meaning and not the meaning given in Section 3.4:

               (i)  Any  failure of the Company or its affiliates
to provide the Employee with  the position, authority, duties and
responsibilities at least equivalent  in  all  material  respects
with  the  most significant of those held, exercised and assigned
at any time  during  the 120-day period immediately preceding the
Change of Control;

               (ii) The  assignment to the Employee of any duties
inconsistent in any respect  with  Employee's position (including
status, offices, titles and reporting  requirements),  authority,
duties or responsibilities as contemplated by Section 1.1, or any
other  action  that  results  in  a  diminution in such position,
authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent  action  not  taken in
bad  faith  that  is  remedied  within  10  days after receipt of
written notice thereof from the Employee to the Company;

               (iii) Any failure by the Company or its affiliates
to  comply  with any of the provisions of this  Agreement,  other
than  an isolated,  insubstantial  and  inadvertent  failure  not
occurring  in  bad  faith  that  is remedied within 10 days after
receipt  of  written notice thereof  from  the  Employee  to  the
Company;

               (iv) The  Company  or its affiliates requiring the
Employee to be based at any office  or  location  other  than  as
provided  in Section 3.4(a)(iii) hereof or requiring the Employee
to travel on  business  to  a  substantially  greater extent than
required immediately prior to the Change of Control;

               (v)  Any purported termination of  the  Employee's
employment   otherwise   than  as  expressly  permitted  by  this
Agreement; or

               (vi) Any failure by the Company to comply with and
satisfy Sections 6.1(c) and (d) of this Agreement.

For purposes of this Section  5,  any good faith determination of
"Good Reason" made by the Employee shall be conclusive.  Anything
in this Agreement to the contrary notwithstanding,  a termination
by   the  Employee  for  any  reason  during  the  30-day  period
immediately  following  the  first  anniversary  of the Change of
Control shall be deemed to be a termination for Good Reason.

          (f)    Beneficial  Ownership.   The  terms  "beneficial
ownership," "beneficial  owner," "beneficially owns," and similar
terms shall have the meanings  set  forth in Rule 13d-3 under the
Exchange Act.

     5.2   Employment Capacity and Term  after Change of Control.
(a) If a Change of Control occurs during the Employment Term, the
Employee's Employment Term (the "Modified Employment Term") shall
be extended until and terminate at the close  of  business on the
later  to  occur  of  the  second  anniversary  of the Change  of
Control; or the date one year after the date on which  either the
Company   or   the  Employee  has  notified  the  other  of  such
termination; and  provided, further, that Employee's status as an
employee is subject to earlier termination to the extent provided
in this Agreement.

          (b)  After  a Change of Control and during the Modified
Employment Term, (i) the  Employee's  position (including status,
offices,  titles and reporting requirements),  authority,  duties
and responsibilities  in and with respect to the Company shall be
at  least  equivalent  in  all  material  respects  to  the  most
significant of those held,  exercised  and  assigned  at any time
during  the  120-day  period immediately preceding the Change  of
Control and (ii) the Employee's service shall be performed at the
location where the Employee  was  employed  immediately preceding
the  Change  of Control or any office or location  less  than  50
miles from such location.

     5.3  Compensation   and   Benefits.    During  the  Modified
Employment  Term,  in addition to the compensation  and  benefits
described in Section  2,  the  Employee  shall be entitled to the
following compensation and benefits:

          (a)  Salary.   During  the  Modified  Employment  Term,
Employee's Base Salary shall be as provided for in Section 2.1.

          (b)  Benefit  Plans.   During the  Modified  Employment
Term, the Employee and his family,  if  any, shall be entitled to
participate in and receive applicable benefits under all such (i)
incentive, savings and retirement plans,  practices, policies and
programs,  (ii)  welfare benefit plans, practices,  policies  and
programs (including,  without  limitation, medical, prescription,
dental, disability, employee life,  group life, accidental health
and travel accident insurance plans and  programs) and (iii) paid
vacation  and other fringe benefits, plans,  practices,  policies
and programs  as are applicable generally to other peer employees
of the Company  and  its affiliated companies in effect generally
after  the  Change  of Control  or,  if  more  favorable  to  the
Employee, as in effect  for  the  Employee at any time during the
120-day period immediately preceding the Change of Control.

          (c)  Expenses.  During the  Modified  Employment  Term,
the  Employee  shall  be entitled to receive prompt reimbursement
for  all  reasonable  expenses   incurred   by  the  Employee  in
accordance  with  the  most  favorable  policies,  practices  and
procedures of the Company and its affiliated  companies in effect
generally after the Change of Control with respect  to other peer
employees of the Company and its affiliated companies or, if more
favorable to the Employee, as in effect for the Employee  at  any
time  during  the 120-day period immediately preceding the Change
of Control.

          (d)  Office  and  Support  Staff.   During the Modified
Employment Term, the Employee shall be entitled  to  an office or
offices  of  a  size and with furnishings and other appointments,
and to personal secretarial  and other assistance, at least equal
to the most favorable of the foregoing  provided  generally after
the Change of Control with respect to other peer employees of the
Company and its affiliated companies or, if more favorable to the
Employee,  as in effect for the Employee at any time  during  the
120-day period immediately preceding the Change of Control.

     5.4  Termination  of  Employment  after a Change of Control.
After  a  Change  of Control and during the  Modified  Employment
Term, the Employee's status as an employee shall terminate or may
be  terminated  as provided  in  Section  3  of  this  Agreement;
provided, however,  that after a Change of Control and during the
Modified Employment Term  the terms "Cause" and "Good Reason," as
used in Section 3 and elsewhere in this Agreement, shall have the
meanings given to them in this  Section  5  and  not the meanings
given to them in Section 3.

     5.5  Obligations  of  the Company upon Termination  after  a
Change of Control.  (a) If,  after  a Change of Control and prior
to  the  end  of  the  Modified  Employment   Term,  the  Company
terminates the Employee's employment other than  for Cause, death
or  Disability,  or the Employee terminates employment  for  Good
Reason, then

                (i) within 30 days of the Date of Termination the
Company shall pay  to  the Employee in a lump sum an amount equal
to the Employee's Base Salary  through  the  end  of the Modified
Employment Term had such termination not occurred; and

               (ii)  Employee  shall be entitled to the  benefits
provided in Section 4.3(b) and the  amounts, if any, contemplated
by Sections 4.6 and 4.7.

          (b)  If, after a Change of Control and prior to the end
of  the Modified Employment Term, the  Employee's  employment  is
terminated  (i) for death, (ii) for Disability or (iii) for Cause
(as defined in this Section 5), by the Employee for reasons other
than Good Reason  (as defined in this Section 5) or at the end of
the Modified Employment Term, then the Employee shall be entitled
to the benefits described  in Section 4.1, Section 4.2 or Section
4.4, as the case may be, and  shall  be  entitled to the benefits
described  in  Sections  4.6  and  4.7.  If the  Company  or  the
Employee gives notice of termination  of  the Modified Employment
Term  as  provided for in Section 5.2, the Company  may,  at  its
option, terminate Employee's status as an Employee, in which case
such termination  shall be deemed a termination without Cause for
purposes of all provisions of this Agreement.

          (c)  The  rights  and  obligations  of  the Company and
Employee  contained  in  Section 4.5 ("Resignation as  Director")
shall continue to apply after a Change of Control.

     5.6  Certain Additional  Payments.   If  after  a  Change of
Control Employee is subjected to an excise tax as a result of the
"excess  parachute  payment"  provisions  of section 4999 of  the
Internal Revenue Code of 1986, as amended,  whether  by virtue of
the benefits of this Agreement or by virtue of any other benefits
provided  to  Employee  in  connection  with  a Change of Control
pursuant to Company plans, policies or agreements  (including the
value of any options to acquire Common Stock of the  Company  the
exercisability  of  which is accelerated pursuant to the terms of
any  stock  option,  incentive  or  similar  plan  heretofore  or
hereafter adopted by the  Company),  the  Company  shall  pay  to
Employee  (whether  or  not  his  employment has terminated) such
amounts as are necessary to place Employee  in  the same position
after payment of federal income and excise taxes  and  state  and
local  income  taxes as he would have been if such provisions had
not been applicable to him.

Section 6. Miscellaneous

     6.1  Binding Effect.

          (a)  This  Agreement shall be binding upon and inure to
the benefit of the Company and any of its successors or assigns.

          (b)  This Agreement  is  personal  to  the Employee and
shall  not be assignable by the Employee without the  consent  of
the Company  (there  being  no  obligation  to give such consent)
other than such rights or benefits as are transferred  by will or
the laws of descent and distribution.

          (c)  The  Company  shall  require  any successor to  or
assignee  of  (whether  direct or indirect, by purchase,  merger,
consolidation or otherwise)  all  or  substantially  all  of  the
assets or businesses of the Company (i) to assume unconditionally
and  expressly this Agreement and (ii) to agree to perform all of
the obligations  under  this  Agreement in the same manner and to
the same extent as would have been required of the Company had no
assignment or succession occurred,  such  assumption  to  be  set
forth  in  a writing reasonably satisfactory to the Employee.  In
the  event  of  any  such  assignment  or  succession,  the  term
"Company" as  used  in  this  Agreement  shall refer also to such
successor or assign.

          (d)  The  Company  shall  require  all   entities  that
control,  or  that  after  the  Change  of  Control will control,
directly or indirectly, any such successor or  assignee  to agree
to  cause  to  be  performed  all  of  the obligations under this
Agreement in the same manner and to the same extent as would have
been  required  of  the Company had no assignment  or  succession
occurred, such agreement  to  be  set forth in writing reasonably
satisfactory to the Employee.

     6.2  Notices.  All notices hereunder  must be in writing and
shall be deemed to have given upon receipt of  delivery  by:  (a)
personal  delivery to the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally   recognized  overnight  courier  service  (against  a
receipt therefor) or (d) facsimile transmission with confirmation
of receipt.  All  such  notices  must  be addressed as follows or
such other address as to which any party hereto may have notified
the other in writing:

     If to the Company, to:

     Akorn, Inc.
     100 Akorn Drive
     Abita Springs, Louisiana  70420
     Attn:  President
     Facsimile transmission No. (504) 893-1257

     If to the Employee, to:

     Eric M. Wingerter
     104 Barnwood Street
     Pearl River, Louisiana  70452
     Facsimile transmission No. (504) 863-3315

     6.3  Governing Law.  This Agreement  shall  be construed and
enforced in accordance with and governed by the internal  laws of
the State of Louisiana.

     6.4  Withholding.  The Employee agrees that the Company  has
the  right to withhold, from the amounts payable pursuant to this
Agreement,  all  amounts required to be withheld under applicable
income and/or employment  tax  laws,  or  as  otherwise stated in
documents granting rights that are affected by this Agreement.

     6.5  Severability.  If any term or provision  of this Agree-
ment  or  the  application thereof to any person or circumstance,
shall at any time  or  to  any  extent  be  invalid,  illegal  or
unenforceable in any respect as written, Employee and the Company
intend for any court construing this Agreement to modify or limit
such provision temporally, spatially or otherwise so as to render
it  valid  and  enforceable to the fullest extent allowed by law.
Any such provision  that  is  not susceptible of such reformation
shall be ignored so as to not affect  any other term or provision
hereof, and the remainder of this Agreement,  or  the application
of such term or provision to persons or circumstances  other than
those  as  to which it is held invalid, illegal or unenforceable,
shall not be affected thereby and each term and provision of this
Agreement shall  be  valid  and  enforced  to  the fullest extent
permitted by law.

     6.6  Waiver  of  Breach.  The waiver by either  party  of  a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.

     6.7  Remedies Not  Exclusive.   No  remedy  specified herein
shall  be  deemed  to  be  such  party's  exclusive  remedy,  and
accordingly,  in  addition  to  all  of  the  rights and remedies
provided for in this Agreement, the parties shall  have all other
rights and remedies provided to them by applicable law,  rule  or
regulation.

     6.8  Company's Reservation of Rights.  Employee acknowledges
and  understands  that the Employee serves at the pleasure of the
Board and that the Company has the right at any time to terminate
Employee's status as  an employee of the Company, or to change or
diminish his status during  the  Employment  Term, subject to the
rights  of the Employee to claim the benefits conferred  by  this
Agreement.

     6.9  Survival.   Following  the  Date  of  Termination, each
party shall have the right to enforce all rights,  and  shall  be
bound  by  all  obligations,  of  such  party that are continuing
rights and obligations under this Agreement.

     6.10  Counterparts.  This Agreement may be executed in one or
more  counterparts,  each  of  which shall be  deemed  to  be  an
original but all of which together  shall  constitute one and the
same instrument.

     IN WITNESS WHEREOF, the Company and the Employee have caused
this Agreement to be executed as of the Agreement Date.

                              AKORN, INC.



                              By:   /s/ J. Ed Campbell, M.D.
                                        J. Ed Campbell, M.D.
                                  Compensation Committee Chairman

                              EMPLOYEE:
                                         /s/ Eric M. Wingerter
                                         Eric M. Wingerter



               EMPLOYMENT AGREEMENT--HAROLD O. KOCH

     This Employment Agreement ("Agreement") between Akorn, Inc.,
a  Louisiana corporation (the "Company"), and Harold O. Koch (the
"Employee")  is  dated  as  of  January  1,  1996 (the "Agreement
Date").

     WHEREAS, Employee currently is employed by the Company;

     WHEREAS,  the  Company  desires  to retain the  services  of
Employee  pursuant to the terms of this  Agreement  and  Employee
desires to continue in the service of the Company on such terms;

     NOW, THEREFORE,  for  and  in consideration of the continued
employment of Employee by the Company  and  the payment of wages,
salary  and other compensation to Employee by  the  Company,  the
parties hereto agree as follows:


Section 1.Employment Capacity and Term

     1.1  Capacity  and  Duties  of  Employee.   The  Employee is
employed  by  the  Company  to  render services on behalf of  the
Company as Senior Vice President.   In that capacity the Employee
shall  perform  such  duties as are assigned  to  the  individual
holding any such title  by  the  Company's  Bylaws and such other
duties,  consistent  with  the Employee's job title,  as  may  be
prescribed from time to time  by  the  Board  of Directors of the
Company (the "Board").

     1.2  Employment  Term.   The  term  of  this Agreement  (the
"Employment Term") shall commence on the Agreement Date and shall
continue until and terminate one year after either the Company or
the  Employee has notified the other of such termination  of  the
Employment  Term; and provided, further, that the Employment Term
is subject to extension as provided in Section 5.2 and Employee's
status as an  employee  is  subject to earlier termination to the
extent provided in this Agreement.

     1.3  Devotion to Responsibilities.   During  the  Employment
Term, the Employee shall devote all of his business time  to  the
business  of  the  Company  and  its  subsidiaries and affiliated
companies,  shall  use  his reasonable best  efforts  to  perform
faithfully and efficiently  his  duties under this Agreement, and
shall  not  engage  in  or be employed  by  any  other  business;
provided, however, that nothing  contained  herein shall prohibit
the  Employee  from  (a) serving  as  a member of  the  board  of
directors, board of trustees or the like  of  any  for-profit  or
non-profit  entity  that  does  not  compete with the Company, or
performing  services  of  any  type for any  civic  or  community
entity,  whether  or  not  the  Employee   receives  compensation
therefor,  (b) investing  his assets in such form  or  manner  as
shall require no more than  nominal  services  on the part of the
Employee in the operation of the business of or property in which
such  investment  is  made, or (c) serving in various  capacities
with, and attending meetings  of,  industry  or  trade groups and
associations,   as  long  as  the  Employee's  engaging  in   any
activities permitted  by virtue of clauses (a), (b) and (c) above
does not materially interfere with the ability of the Employee to
perform the services and  discharge the responsibilities required
of him under this Agreement.   Notwithstanding  clause (b) above,
during  the Employment Term, the Employee shall not  perform  any
services  for  and shall not beneficially own more than 2% of the
equity interests  of  a  business organization that competes with
the Company or its affiliates.   For  purposes of this paragraph,
"beneficially own" shall have the meaning  given  to that term in
Rule  13d-3  under  the  Securities  Exchange  Act  of 1934  (the
"Exchange Act").

Section 2.Compensation and Benefits

     During  the  Employment Term, the Company shall provide  the
Employee with the compensation and benefits described below:

     2.1  Salary.   A  salary  ("Base  Salary")  at  the  rate of
$125,000 per year; provided, however, that Employee's Base Salary
shall increase as of each anniversary of the Agreement Date  by a
factor  equal  to  the  increase  in  the  Consumer  Price  Index
maintained  by the United States Department of Labor.  Employee's
Base Salary shall be payable to the Employee at such intervals as
the salaries of other salaried employees of the Company are paid.
Any increase  in Employee's Base Salary shall take effect for the
payroll period  next following the date on which the condition to
such increase is met.

     2.2  Bonus.  Employee  shall  be  eligible  to  receive such
bonuses   and   supplementary   compensation  as  the  Board  may
determine.

     2.3  Benefits.  The Company  shall provide the Employee and,
if applicable, his family members,  with  the  following benefits
and perquisites:

          (a)  The   Company   will   continue  to  provide   for
Employee's use a new Oldsmobile Ninety-Eight  or other equivalent
new  automobile  of  his choice, such automobile to  be  replaced
every third year, and  to  provide  or reimburse Employee for all
gasoline, maintenance, repairs and insurance for such automobile.

          (b)  All  such (i) incentive,  savings  and  retirement
plans, practices, policies  and  programs,  (ii)  welfare benefit
plans,  practices,  policies  and  programs  (including,  without
limitation,  medical, prescription, dental, disability,  employee
life, group life,  accident  health and travel accident insurance
plans and programs) and (iii)  paid  vacation  and  other  fringe
benefits,   plans,   practices,  policies  and  programs  as  are
applicable generally to  other  peer employees of the Company and
its affiliated companies.

     2.4  Office and Support Staff.   Employee  shall be entitled
to  an  office  or  offices of the size and with furnishings  and
other  appointments,  and   to  personal  secretarial  and  other
assistance, at least equal to  the  those  provided to him on the
Agreement Date.

     2.5  Expenses.    The  Employee  shall  be  reimbursed   for
reasonable out-of-pocket  expenses  incurred from time to time on
behalf of the Company or any subsidiary in the performance of his
duties  under  this  Agreement,  upon the  presentation  of  such
supporting  invoices,  documents  and   forms   as   the  Company
reasonably requests.

Section 3.Termination of Employment

     3.1  Death.   The  Employee's  status  as an employee  shall
terminate immediately and automatically upon the Employee's death
during the Employment Term.

     3.2  Disability.  The Employee's status  as  an employee may
be terminated for "Disability" as follows:

          (a)  The   Employee's  status  as  an  employee   shall
terminate if the Employee has a disability that would entitle him
to  receive benefits under  the  Company's  long-term  disability
insurance  policy  in  effect  at  the  time either because he is
Totally Disabled or Partially Disabled, as such terms are defined
in the Company's policy in effect as of the  Agreement Date or as
similar  terms  are  defined in any successor policy.   Any  such
termination shall become  effective on the first day on which the
Employee is eligible to receive payments under such policy (or on
the first day that he would  be  so  eligible,  if he had applied
timely for such payments).

          (b)  If the Company has no long-term disability plan in
effect, the Employee's status as an employee shall  terminate  if
(i)  the  Employee  is  rendered incapable because of physical or
mental  illness  of satisfactorily  discharging  his  duties  and
responsibilities  under   this  Agreement  for  a  period  of  90
consecutive days and (ii) a  duly  qualified  physician chosen by
the  Company  and  acceptable  to  the  Employee  or  his   legal
representative so certifies in writing, the Board shall have  the
power to determine that the Employee has become disabled.  If the
Board  makes  such  a  determination,  the Company shall have the
continuing  right  and  option,  during  the   period  that  such
disability continues, and by notice given in the  manner provided
in  this  Agreement,  to terminate the status of Employee  as  an
employee.  Any such termination  shall  become  effective 30 days
after such notice of termination is given, unless within such 30-
day period, the Employee becomes capable of rendering services of
the character contemplated hereby (and a physician  chosen by the
Company   and   acceptable   to   the   Employee   or  his  legal
representative so certifies in writing) and the Employee  in fact
resumes such services.

          (c)  The  "Disability  Effective  Date"  shall mean the
date on which termination of employment becomes effective  due to
Disability.

     3.3  Cause.  The Company may terminate the Employee's status
as  an  employee  for  Cause.  As used herein, termination by the
Company of the Employee's status as an employee for "Cause" shall
mean termination as a result of (a) the Employee's breach of this
Agreement, or (b) the willful  engaging  by the Employee in gross
misconduct injurious to the Company, which  in either case is not
remedied within 10 days after the Company provides written notice
to the Employee of such breach or willful misconduct.
     3.4  Good Reason.  The Employee may terminate  his status as
an  employee  for  Good  Reason.  As used herein, the term  "Good
Reason" shall mean:

          (a)  The occurrence of any  of the following during the
Employment Term:

               (i)  the  assignment  by  the   Board  or  by  any
authorized   person   to   the   Employee   of   any  duties   or
responsibilities   that  are  inconsistent  with  the  Employee's
status, title and position as Senior Vice President;

               (ii)    any  removal  of the Employee from, or any
failure to reappoint or reelect the Employee  to, the position of
Senior Vice President of the Company, except in connection with a
termination of Employee's status as an employee  as  permitted by
this Agreement;

               (iii)  the Company's requiring the Employee  to be
based  anywhere other than at or within 50 miles of the Company's
headquarters  in  Abita  Springs,  Louisiana, except for required
travel in the ordinary course of the Company's business;

          (b)  any breach of this Agreement  by  the Company that
continues for a period of 10 days after written notice thereof is
given by the Employee to the Company;

          (c)  the   failure   by  the  Company  to  obtain   the
assumption  of  its  obligations  under  this  Agreement  by  any
successor or assignee as contemplated by Section 6.1(c); or

          (d)  any purported termination  by  the  Company of the
Employee's  status as an employee for Cause that is not  effected
pursuant to a  Notice  of Termination satisfying the requirements
of this Agreement.

     3.5  Voluntary Termination  by  the Company.  Subject to the
terms and conditions provided herein,  the  Company may terminate
the Employee's status as an employee during the  Employment  Term
for reasons other than death, Disability or Cause.

     3.6  Voluntary  Termination by the Employee.  Subject to the
terms and conditions provided  herein, the Employee may terminate
the Employee's status as an employee  during  the Employment Term
for reasons other than Good Reason.

     3.7  Notice of Termination.  Any termination  by the Company
for  Disability  or  Cause,  or by the Employee for Good  Reason,
shall be communicated by Notice of Termination to the other party
hereto given in accordance with  Section  6.2.   For  purposes of
this Agreement, a "Notice of Termination" means a written  notice
that  (a)  indicates  the  specific termination provision in this
Agreement relied upon, (b) to  the  extent applicable, sets forth
in  reasonable  detail  the  facts and circumstances  claimed  to
provide  a basis for termination  of  the  Employee's  employment
under the  provisions  so  indicated  and  (c)  if  the  Date  of
Termination  (as defined below) is other than the date of receipt
of such notice,  specifies the termination date (which date shall
be not more than 30  days  after the giving of such notice).  The
failure by the Employee or the Company to set forth in the Notice
of Termination any fact or circumstance  that  contributes  to  a
showing  of Good Reason, Disability or Cause shall not negate the
effect of  the  notice nor waive any right of the Employee or the
Company, respectively,  hereunder or preclude the Employee or the
Company, respectively, from  asserting  such fact or circumstance
in enforcing the Employee's or the Company's rights hereunder.

     3.8  Date of Termination.  "Date of  Termination"  means (a)
if Employee's employment is terminated by reason of his death  or
Disability, the Date of Termination shall be the date of death of
Employee  or  the  Disability Effective Date, as the case may be,
(b) if Employee's employment  is  terminated  by  the Company for
Cause,  or by Employee for Good Reason, the date of  delivery  of
the Notice  of  Termination  or any later date specified therein,
(which date shall not be more  than  30  days after the giving of
such notice) as the case may be, (c) if the Employee's employment
is terminated by the Company prior to the  end  of the Employment
Term for reasons other than death, Disability or  Cause, the Date
of  Termination  shall be the date on which the Company  notifies
the  Employee  of  such   termination,   (d) if   the  Employee's
employment is terminated by the Employee prior to the  end of the
Employment Term for reasons other than Good Reason, the  Date  of
Termination  shall be the date on which the Employee notifies the
Company of such  termination,  and  (e)  if  the  Employment Term
terminates upon notice by the Company or the Employee as provided
for in Section 1.2 or Section 5.2, the Date of Termination  shall
be the date on which the Employment Term ends.

Section 4.Obligations Upon Termination

     4.1  Death.    If   Employee's  status  as  an  employee  is
terminated by reason of Employee's  death,  this  Agreement shall
terminate   without  further  obligations  to  Employee's   legal
representatives  under  this Agreement, other than the obligation
to  make any payments due  pursuant  to  employee  benefit  plans
maintained by the Company or its subsidiaries.

     4.2  Disability.   If  Employee's  status  as an employee is
terminated  by  reason  of Employee's Disability, this  Agreement
shall terminate without further  obligation  to  Employee,  other
than the obligation to make any payments due pursuant to employee
benefit plans maintained by the Company or its subsidiaries.

     4.3  Termination  by  Company  for Reasons other than Death,
Disability or Cause; Termination by Employee for Good Reason.  If
the Company terminates the Employee's status as an employee prior
to the end of the Employment Term for  reasons  other than death,
Disability  or  Cause, or the Employee terminates his  employment
prior to the end of the Employment Term for Good Reason, then

          (a)  within  30  days  of  the  Date of Termination the
Company shall pay to the Employee in a lump  sum  an amount equal
to  the Employee's Base Salary through the end of the  Employment
Term  had the notice contemplated by Section 1.2 been given as of
the Date of Termination; and
          (b)  the  amount  of  any  performance-based  bonus  or
options  granted to the Employee shall be deemed to be the amount
to which the  Employee  would  have been entitled if the budgeted
goals or other performance goals  applicable thereto had been met
but not exceeded and, whether or not  the  performance goals have
been  met  as  of the Date of Termination, such  bonus  shall  be
payable within 30  days  of  the  Date  of  Termination  and such
options (if not already exercisable) shall become exercisable  as
of  the  Date  of  Termination  and  shall  expire on the date of
expiration  of the options as provided in the  applicable  option
agreement.

     4.4  Termination for Cause, Without Good Reason or at End of
Employment Term.   This Agreement shall terminate without further
obligation to the Employee  other than obligations imposed by law
and obligations imposed pursuant  to  any  employee  benefit plan
maintained  by  the  Company  or  its  subsidiaries  (a)  if  the
Employee's status as an Employee is terminated by the Company for
Cause  or  by  the Employee for reasons other than Good Reason or
(b), except as otherwise  provided  in Section 5.2, at the end of
the Employment Term.  If the Company or the Employee gives notice
of termination of the Employment Term  as provided for in Section
1.2, the Company may, at its option, terminate  Employee's status
as an employee, in which case such termination shall  be deemed a
termination  by  the  Company  without Cause for purposes of  all
provisions of this Agreement.

     4.5  Resignation as Director.   If Employee is a director of
the Company and his employment is terminated for any reason other
than  death,  the Employee shall, if requested  by  the  Company,
immediately resign  as  a  director  of  the  Company.   If  such
resignation is not received when so requested, the Employee shall
forfeit  any  right  to  receive  any  payments  pursuant to this
Agreement.

     4.6  Accrued   Obligations   and   Other   Benefits.    Upon
termination  of employment for any reason the Employee  shall  be
entitled to receive  promptly,  and  in  addition  to  any  other
benefits  specifically  provided,  (a) the Employee's Base Salary
through  the Date of Termination to the  extent  not  theretofore
paid, (b) any accrued vacation pay, to the extent not theretofore
paid, and  (c)  any other amounts or benefits required to be paid
or provided or which  the  Employee  is entitled to receive under
any plan, program, policy practice or agreement of the Company.

     4.7  Stock Options.  The foregoing  benefits are intended to
be  in  addition to the value of any options  to  acquire  Common
Stock  of   the  Company  the  exercisability  of  which  may  be
accelerated pursuant  to the terms of any stock option, incentive
or other similar plan heretofore  or  hereafter  adopted  by  the
Company.

Section 5.Change of Control

     5.1  Definitions.   For  purposes  of  this  Section  5, the
following terms shall have the meanings indicated below.

          (a)  Company.   In  the  event  of  any  assignment  or
succession  as described in Section 6.1(c), the term "Company" as
used in this  Agreement  shall  refer  also  to such successor or
assignee.

          (b)  Change of Control.  A Change of Control shall mean
the occurrence of any of the following events:

               (i)  the acquisition by any individual,  entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2)  of the
Exchange  Act)  of  beneficial  ownership of more than 30% of the
outstanding shares of the Company's  common  stock,  no par value
per  share  (the  "Common  Stock");  provided, however, that  for
purposes of this subsection (i), the following acquisitions shall
not constitute a Change of Control:

                    (A)  any acquisition of Common Stock directly
from the Company,

                    (B)  any acquisition  of  Common Stock by the
Company,

                    (C)  any acquisition of Common  Stock  by any
employee  benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company, or

                    (D)  any  acquisition  of Common Stock by any
corporation pursuant to a transaction that complies  with clauses
(A), (B) and (C) of subsection (b)(iii) of this Section 5.1; or

               (ii) individuals  who,  as of the Agreement  Date,
constitute the Board (the "Incumbent Board") cease for any reason
to  constitute  at  least  a  majority  of the  Board;  provided,
however,  that any individual becoming a director  subsequent  to
the Agreement  Date whose election, or nomination for election by
the Company's shareholders,  was approved by a vote of at least a
majority of the directors then  comprising  the  Incumbent  Board
shall  be considered a member of the Incumbent Board, unless such
individual's  initial  assumption of office occurs as a result of
an actual or threatened  election  contest  with  respect  to the
election  or  removal  of directors or other actual or threatened
solicitation of proxies  or  consents by or on behalf of a person
other than the Incumbent Board; or

               (iii) the consummation of a reorganization, merger
or  consolidation,  or  sale  or  other  disposition  of  all  or
substantially  all  of the assets of  the  Company  (a  "Business
Combination"), in any  such case, unless, following such Business
Combination,

                    (A)  all   or   substantially   all   of  the
individuals   and  entities  who  were  the  direct  or  indirect
beneficial owners  of  the Company's outstanding common stock and
voting securities entitled  to  vote generally in the election of
directors  immediately prior to such  Business  Combination  have
direct or indirect  beneficial  ownership,  respectively, of more
than 50% of the then outstanding shares of common stock, and more
than  50%  of the combined voting power of the  then  outstanding
voting securities  entitled  to vote generally in the election of
directors,  of  the  corporation  resulting  from  such  Business
Combination  (which, for  purposes  of  this  paragraph  (A)  and
paragraphs (B)  and  (C),  shall include a corporation which as a
result  of  such  transaction controls  the  Company  or  all  or
substantially all of  the  Company's  assets  either  directly or
through one or more subsidiaries), and

                    (B)  except to the extent that such ownership
existed  prior  to the Business Combination, no person (excluding
any corporation resulting  from  such Business Combination or any
employee benefit plan or related trust  of  the  Company  or such
corporation    resulting    from   such   Business   Combination)
beneficially owns, directly or  indirectly,  20%  or  more of the
then  outstanding  shares  of  common  stock  of  the corporation
resulting from such Business Combination or 20% or  more  of  the
combined  voting  power of the then outstanding voting securities
of such corporation, and

                    (C)  at  least  a  majority of the members of
the  board of directors of the corporation  resulting  from  such
Business  Combination  were  members of the board of directors of
the  Company  at the time of the  initial  action  of  the  Board
providing for such Business Combination; or

               (iv) approval  by  the shareholders of the Company
of a complete liquidation or dissolution of the Company.

          (c)  Affiliate.  The term  "affiliate"  or  "affiliated
companies" shall mean any company or other entity controlled  by,
controlling, or under common control with, the Company.

          (d)  Cause.   After  a  Change  of Control, "Cause," as
used in this Agreement, shall have the following  meaning and not
the meaning given in Section 3.3:

               (i)  the  willful  and  continued failure  of  the
Employee to perform substantially the Employee's duties hereunder
(other  than any such failure resulting from  incapacity  due  to
physical   or   mental  illness),  after  a  written  demand  for
substantial performance is delivered to the Employee by the Board
of the Company which  specifically identifies the manner in which
the  Board  believes that  the  Employee  has  not  substantially
performed the Employee's duties, or

               (ii) the  willful  engaging  by  the  Employee  in
illegal  conduct  or  gross  misconduct  which  is materially and
demonstrably injurious to the Company or its affiliates.

For purposes of this provision, no act or failure  to act, on the
part of the Employee, shall be considered "willful"  unless it is
done,  or  omitted  to  be done, by the Employee in bad faith  or
without reasonable belief  that the Employee's action or omission
was in the best interests of  the Company or its affiliates.  Any
act, or failure to act, based upon  authority given pursuant to a
resolution duly adopted by the Board  or upon the instructions of
a  senior  officer of the Company or based  upon  the  advice  of
counsel for  the  Company or its affiliates shall be conclusively
presumed to be done,  or  omitted  to be done, by the Employee in
good  faith  and in the best interests  of  the  Company  or  its
affiliates.  The  cessation  of  employment of the Employee shall
not be deemed to be for Cause unless  and  until there shall have
been  delivered  to  the  Employee  a  copy of a resolution  duly
adopted by the affirmative vote of not less  than  three-quarters
of the entire membership of the Board at a meeting of  the  Board
called  and  held  for  such  purpose (after reasonable notice is
provided  to  the  Employee  and  the   Employee   is   given  an
opportunity,  together  with  counsel,  to  be  heard  before the
Board), finding that, in the good faith opinion of the Board, the
Employee has engaged in the conduct described in subparagraph (i)
or (ii) above, and specifying the particulars thereof in detail.

          (e)  Good  Reason.   After  a Change of Control,  "Good
Reason,"  as  used in this Agreement, shall  have  the  following
meaning and not the meaning given in Section 3.4:

               (i)  Any  failure of the Company or its affiliates
to provide the Employee with  the position, authority, duties and
responsibilities at least equivalent  in  all  material  respects
with  the  most significant of those held, exercised and assigned
at any time  during  the 120-day period immediately preceding the
Change of Control;

               (ii) The  assignment to the Employee of any duties
inconsistent in any respect  with  Employee's position (including
status, offices, titles and reporting  requirements),  authority,
duties or responsibilities as contemplated by Section 1.1, or any
other  action  that  results  in  a  diminution in such position,
authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent  action  not  taken in
bad  faith  that  is  remedied  within  10  days after receipt of
written notice thereof from the Employee to the Company;

               (iii) Any failure by the Company or its affiliates
to  comply  with any of the provisions of this  Agreement,  other
than  an isolated,  insubstantial  and  inadvertent  failure  not
occurring  in  bad  faith  that  is remedied within 10 days after
receipt  of  written notice thereof  from  the  Employee  to  the
Company;

               (iv) The  Company  or its affiliates requiring the
Employee to be based at any office  or  location  other  than  as
provided  in Section 3.4(a)(iii) hereof or requiring the Employee
to travel on  business  to  a  substantially  greater extent than
required immediately prior to the Change of Control;

               (v)  Any purported termination of  the  Employee's
employment   otherwise   than  as  expressly  permitted  by  this
Agreement; or

               (vi) Any failure by the Company to comply with and
satisfy Sections 6.1(c) and (d) of this Agreement.

For purposes of this Section  5,  any good faith determination of
"Good Reason" made by the Employee shall be conclusive.  Anything
in this Agreement to the contrary notwithstanding,  a termination
by   the  Employee  for  any  reason  during  the  30-day  period
immediately  following  the  first  anniversary  of the Change of
Control shall be deemed to be a termination for Good Reason.
          (f)    Beneficial  Ownership.   The  terms  "beneficial
ownership," "beneficial  owner," "beneficially owns," and similar
terms shall have the meanings  set  forth in Rule 13d-3 under the
Exchange Act.

     5.2   Employment Capacity and Term  after Change of Control.
(a) If a Change of Control occurs during the Employment Term, the
Employee's Employment Term (the "Modified Employment Term") shall
be extended until and terminate at the close  of  business on the
later  to  occur  of  the  second  anniversary  of the Change  of
Control; or the date one year after the date on which  either the
Company   or   the  Employee  has  notified  the  other  of  such
termination; and  provided, further, that Employee's status as an
employee is subject to earlier termination to the extent provided
in this Agreement.

          (b)  After  a Change of Control and during the Modified
Employment Term, (i) the  Employee's  position (including status,
offices,  titles and reporting requirements),  authority,  duties
and responsibilities  in and with respect to the Company shall be
at  least  equivalent  in  all  material  respects  to  the  most
significant of those held,  exercised  and  assigned  at any time
during  the  120-day  period immediately preceding the Change  of
Control and (ii) the Employee's service shall be performed at the
location where the Employee  was  employed  immediately preceding
the  Change  of Control or any office or location  less  than  50
miles from such location.

     5.3  Compensation   and   Benefits.    During  the  Modified
Employment  Term,  in addition to the compensation  and  benefits
described in Section  2,  the  Employee  shall be entitled to the
following compensation and benefits:

          (a)  Salary.   During  the  Modified  Employment  Term,
Employee's Base Salary shall be as provided for in Section 2.1.

          (b)  Benefit  Plans.   During the  Modified  Employment
Term, the Employee and his family,  if  any, shall be entitled to
participate in and receive applicable benefits under all such (i)
incentive, savings and retirement plans,  practices, policies and
programs,  (ii)  welfare benefit plans, practices,  policies  and
programs (including,  without  limitation, medical, prescription,
dental, disability, employee life,  group life, accidental health
and travel accident insurance plans and  programs) and (iii) paid
vacation  and other fringe benefits, plans,  practices,  policies
and programs  as are applicable generally to other peer employees
of the Company  and  its affiliated companies in effect generally
after  the  Change  of Control  or,  if  more  favorable  to  the
Employee, as in effect  for  the  Employee at any time during the
120-day period immediately preceding the Change of Control.

          (c)  Expenses.  During the  Modified  Employment  Term,
the  Employee  shall  be entitled to receive prompt reimbursement
for  all  reasonable  expenses   incurred   by  the  Employee  in
accordance  with  the  most  favorable  policies,  practices  and
procedures of the Company and its affiliated  companies in effect
generally after the Change of Control with respect  to other peer
employees of the Company and its affiliated companies or, if more
favorable to the Employee, as in effect for the Employee  at  any
time  during  the 120-day period immediately preceding the Change
of Control.

          (d)  Office  and  Support  Staff.   During the Modified
Employment Term, the Employee shall be entitled  to  an office or
offices  of  a  size and with furnishings and other appointments,
and to personal secretarial  and other assistance, at least equal
to the most favorable of the foregoing  provided  generally after
the Change of Control with respect to other peer employees of the
Company and its affiliated companies or, if more favorable to the
Employee,  as in effect for the Employee at any time  during  the
120-day period immediately preceding the Change of Control.

     5.4  Termination  of  Employment  after a Change of Control.
After  a  Change  of Control and during the  Modified  Employment
Term, the Employee's status as an employee shall terminate or may
be  terminated  as provided  in  Section  3  of  this  Agreement;
provided, however,  that after a Change of Control and during the
Modified Employment Term  the terms "Cause" and "Good Reason," as
used in Section 3 and elsewhere in this Agreement, shall have the
meanings given to them in this  Section  5  and  not the meanings
given to them in Section 3.

     5.5  Obligations  of  the Company upon Termination  after  a
Change of Control.  (a) If,  after  a Change of Control and prior
to  the  end  of  the  Modified  Employment   Term,  the  Company
terminates the Employee's employment other than  for Cause, death
or  Disability,  or the Employee terminates employment  for  Good
Reason, then

                (i) within 30 days of the Date of Termination the
Company shall pay  to  the Employee in a lump sum an amount equal
to the Employee's Base Salary  through  the  end  of the Modified
Employment Term had such termination not occurred; and

               (ii)  Employee  shall be entitled to the  benefits
provided in Section 4.3(b) and the  amounts, if any, contemplated
by Sections 4.6 and 4.7.

          (b)  If, after a Change of Control and prior to the end
of  the Modified Employment Term, the  Employee's  employment  is
terminated  (i) for death, (ii) for Disability or (iii) for Cause
(as defined in this Section 5), by the Employee for reasons other
than Good Reason  (as defined in this Section 5) or at the end of
the Modified Employment Term, then the Employee shall be entitled
to the benefits described  in Section 4.1, Section 4.2 or Section
4.4, as the case may be, and  shall  be  entitled to the benefits
described  in  Sections  4.6  and  4.7.  If the  Company  or  the
Employee gives notice of termination  of  the Modified Employment
Term  as  provided for in Section 5.2, the Company  may,  at  its
option, terminate Employee's status as an Employee, in which case
such termination  shall be deemed a termination without Cause for
purposes of all provisions of this Agreement.

          (c)  The  rights  and  obligations  of  the Company and
Employee  contained  in  Section 4.5 ("Resignation as  Director")
shall continue to apply after a Change of Control.

     5.6  Certain Additional  Payments.   If  after  a  Change of
Control Employee is subjected to an excise tax as a result of the
"excess  parachute  payment"  provisions  of section 4999 of  the
Internal Revenue Code of 1986, as amended,  whether  by virtue of
the benefits of this Agreement or by virtue of any other benefits
provided  to  Employee  in  connection  with  a Change of Control
pursuant to Company plans, policies or agreements  (including the
value of any options to acquire Common Stock of the  Company  the
exercisability  of  which is accelerated pursuant to the terms of
any  stock  option,  incentive  or  similar  plan  heretofore  or
hereafter adopted by the  Company),  the  Company  shall  pay  to
Employee  (whether  or  not  his  employment has terminated) such
amounts as are necessary to place Employee  in  the same position
after payment of federal income and excise taxes  and  state  and
local  income  taxes as he would have been if such provisions had
not been applicable to him.

Section 6.Miscellaneous

     6.1  Binding Effect.

          (a)  This  Agreement shall be binding upon and inure to
the benefit of the Company and any of its successors or assigns.

          (b)  This Agreement  is  personal  to  the Employee and
shall  not be assignable by the Employee without the  consent  of
the Company  (there  being  no  obligation  to give such consent)
other than such rights or benefits as are transferred  by will or
the laws of descent and distribution.

          (c)  The  Company  shall  require  any successor to  or
assignee  of  (whether  direct or indirect, by purchase,  merger,
consolidation or otherwise)  all  or  substantially  all  of  the
assets or businesses of the Company (i) to assume unconditionally
and  expressly this Agreement and (ii) to agree to perform all of
the obligations  under  this  Agreement in the same manner and to
the same extent as would have been required of the Company had no
assignment or succession occurred,  such  assumption  to  be  set
forth  in  a writing reasonably satisfactory to the Employee.  In
the  event  of  any  such  assignment  or  succession,  the  term
"Company" as  used  in  this  Agreement  shall refer also to such
successor or assign.

          (d)  The  Company  shall  require  all   entities  that
control,  or  that  after  the  Change  of  Control will control,
directly or indirectly, any such successor or  assignee  to agree
to  cause  to  be  performed  all  of  the obligations under this
Agreement in the same manner and to the same extent as would have
been  required  of  the Company had no assignment  or  succession
occurred, such agreement  to  be  set forth in writing reasonably
satisfactory to the Employee.

     6.2  Notices.  All notices hereunder  must be in writing and
shall be deemed to have given upon receipt of  delivery  by:  (a)
personal  delivery to the designated individual, (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a
nationally   recognized  overnight  courier  service  (against  a
receipt therefor) or (d) facsimile transmission with confirmation
of receipt.  All  such  notices  must  be addressed as follows or
such other address as to which any party hereto may have notified
the other in writing:

     If to the Company, to:

     Akorn, Inc.
     100 Akorn Drive
     Abita Springs, Louisiana  70420
     Attn:  President
     Facsimile:  (504) 893-1257

     If to the Employee, to:

     Harold O. Koch
     106 Riverdale
     Covington, Louisiana  70433
     Facsimile:  (504) __________

     6.3  Governing Law.  This Agreement  shall  be construed and
enforced in accordance with and governed by the internal  laws of
the State of Louisiana.

     6.4  Withholding.  The Employee agrees that the Company  has
the  right to withhold, from the amounts payable pursuant to this
Agreement,  all  amounts required to be withheld under applicable
income and/or employment  tax  laws,  or  as  otherwise stated in
documents granting rights that are affected by this Agreement.

     6.5  Severability.  If any term or provision  of this Agree-
ment  or  the  application thereof to any person or circumstance,
shall at any time  or  to  any  extent  be  invalid,  illegal  or
unenforceable in any respect as written, Employee and the Company
intend for any court construing this Agreement to modify or limit
such provision temporally, spatially or otherwise so as to render
it  valid  and  enforceable to the fullest extent allowed by law.
Any such provision  that  is  not susceptible of such reformation
shall be ignored so as to not affect  any other term or provision
hereof, and the remainder of this Agreement,  or  the application
of such term or provision to persons or circumstances  other than
those  as  to which it is held invalid, illegal or unenforceable,
shall not be affected thereby and each term and provision of this
Agreement shall  be  valid  and  enforced  to  the fullest extent
permitted by law.

     6.6  Waiver  of  Breach.  The waiver by either  party  of  a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.

     6.7  Remedies Not  Exclusive.   No  remedy  specified herein
shall  be  deemed  to  be  such  party's  exclusive  remedy,  and
accordingly,  in  addition  to  all  of  the  rights and remedies
provided for in this Agreement, the parties shall  have all other
rights and remedies provided to them by applicable law,  rule  or
regulation.

     6.8  Company's Reservation of Rights.  Employee acknowledges
and  understands  that the Employee serves at the pleasure of the
Board and that the Company has the right at any time to terminate
Employee's status as  an employee of the Company, or to change or
diminish his status during  the  Employment  Term, subject to the
rights  of the Employee to claim the benefits conferred  by  this
Agreement.

     6.9  Survival.   Following  the  Date  of  Termination, each
party shall have the right to enforce all rights,  and  shall  be
bound  by  all  obligations,  of  such  party that are continuing
rights and obligations under this Agreement.

     6.10 Counterparts.  This Agreement may be executed in one or
more  counterparts,  each  of  which shall be  deemed  to  be  an
original but all of which together  shall  constitute one and the
same instrument.

     IN WITNESS WHEREOF, the Company and the Employee have caused
this Agreement to be executed as of the Agreement Date.

                              AKORN, INC.


                              By:  /s/ George S. Ellis, M.D. 
                                       George S. Ellis, M.D.
                                   Compensation Committee Chairman

                              EMPLOYEE:
                                        /s/ Harold O. Koch
                                           Harold O. Koch


                EMPLOYMENT AGREEMENT--TIM J. TONEY

     This   Employment   Agreement  ("Agreement")  between  Akorn
Manufacturing, Inc., an Illinois corporation (the "Company"), and
Tim J. Toney (the "Employee") is dated as of January 1, 1996 (the
"Agreement Date").

     WHEREAS, Employee currently is employed by the Company;

     WHEREAS, the Company  desires  to  retain  the  services  of
Employee  pursuant  to  the  terms of this Agreement and Employee
desires to continue in the service of the Company on such terms;

     NOW, THEREFORE, for and in  consideration  of  the continued
employment of Employee by the Company and the payment  of  wages,
salary  and  other  compensation  to Employee by the Company, the
parties hereto agree as follows:


Section 1. Employment Capacity and Term

     1.1 Capacity and Duties of  Employee.   The  Employee is
employed  by  the  Company  to  render services on behalf of  the
Company  as  Vice President Manufacturing  Operations.   In  that
capacity the Employee  shall  perform such duties as are assigned
to the individual holding any such  title by the Company's Bylaws
and such other duties, consistent with  the Employee's job title,
as may be prescribed from time to time by  the Board of Directors
of the Company (the "Board").

     1.2  Employment Term.  The term of this  Agreement  (the
"Employment Term") shall commence on the Agreement Date and shall
continue until and terminate one year after either the Company or
the Employee has  notified  the  other of such termination of the
Employment Term; and provided, further,  that the Employment Term
is subject to extension as provided in Section 5.2 and Employee's
status as an employee is subject to earlier  termination  to  the
extent provided in this Agreement.

     1.3 Devotion to Responsibilities.  During the Employment
Term,  the  Employee shall devote all of his business time to the
business of the  Company  and  its  subsidiaries  and  affiliated
companies,  shall  use  his  reasonable  best  efforts to perform
faithfully and efficiently his duties under this  Agreement,  and
shall  not  engage  in  or  be  employed  by  any other business;
provided, however, that nothing contained herein  shall  prohibit
the  Employee  from  (a) serving  as  a  member  of  the board of
directors,  board  of  trustees or the like of any for-profit  or
non-profit entity that does  not  compete  with  the  Company, or
performing  services  of  any  type  for  any  civic or community
entity,   whether  or  not  the  Employee  receives  compensation
therefor, (b) investing  his  assets  in  such  form or manner as
shall require no more than nominal services on the  part  of  the
Employee in the operation of the business of or property in which
such  investment  is  made,  or (c) serving in various capacities
with, and attending meetings of,  industry  or  trade  groups and
associations,   as   long  as  the  Employee's  engaging  in  any
activities permitted by  virtue of clauses (a), (b) and (c) above
does not materially interfere with the ability of the Employee to
perform the services and discharge  the responsibilities required
of him under this Agreement.  Notwithstanding  clause  (b) above,
during  the  Employment Term, the Employee shall not perform  any
services for and  shall  not beneficially own more than 2% of the
equity interests of a business  organization  that  competes with
the  Company or its affiliates.  For purposes of this  paragraph,
"beneficially  own"  shall have the meaning given to that term in
Rule  13d-3  under  the Securities  Exchange  Act  of  1934  (the
"Exchange Act").

Section 2. Compensation and Benefits

     During the Employment  Term,  the  Company shall provide the
Employee with the compensation and benefits described below:

     2.1 Salary.  A salary ("Base Salary")  at  the  rate  of
$120,000 per year; provided, however, that Employee's Base Salary
shall  increase as of each anniversary of the Agreement Date by a
factor  equal  to  the  increase  in  the  Consumer  Price  Index
maintained  by the United States Department of Labor.  Employee's
Base Salary shall be payable to the Employee at such intervals as
the salaries of other salaried employees of the Company are paid.
Any increase  in Employee's Base Salary shall take effect for the
payroll period  next following the date on which the condition to
such increase is met.

     2.2 Bonus.  Employee  shall  be eligible to receive such
bonuses  and  supplementary  compensation   as   the   Board  may
determine.

     2.3  Benefits.   The  Company shall provide the Employee
and,  if  applicable,  his  family members,  with  all  such  (i)
incentive, savings and retirement  plans, practices, policies and
programs,  (ii) welfare benefit plans,  practices,  policies  and
programs (including,  without  limitation, medical, prescription,
dental, disability, employee life,  group  life,  accident health
and travel accident insurance plans and programs) and  (iii) paid
vacation  and  other  fringe benefits, plans, practices, policies
and programs as are applicable  generally to other peer employees
of the Company.

     2.4  Office  and  Support  Staff.    Employee  shall  be
entitled to an office or offices of the size and with furnishings
and  other  appointments, and to personal secretarial  and  other
assistance, at  least  equal  to the those provided to him on the
Agreement Date.

     2.5  Expenses.  The Employee  shall  be  reimbursed  for
reasonable out-of-pocket  expenses  incurred from time to time on
behalf of the Company or any affiliate  in the performance of his
duties  under  this  Agreement,  upon  the presentation  of  such
supporting  invoices,  documents  and  forms   as   the   Company
reasonably requests.

Section 3. Termination of Employment

     3.1  Death.   The Employee's status as an employee shall
terminate immediately and automatically upon the Employee's death
during the Employment Term.

     3.2 Disability.   The  Employee's  status as an employee
may be terminated for "Disability" as follows:

          (a)  The   Employee's  status  as  an  employee   shall
terminate if the Employee has a disability that would entitle him
to  receive benefits under  the  Company's  long-term  disability
insurance  policy  in  effect  at  the  time either because he is
Totally Disabled or Partially Disabled, as such terms are defined
in the Company's policy in effect as of the  Agreement Date or as
similar  terms  are  defined in any successor policy.   Any  such
termination shall become  effective on the first day on which the
Employee is eligible to receive payments under such policy (or on
the first day that he would  be  so  eligible,  if he had applied
timely for such payments).

          (b)  If the Company has no long-term disability plan in
effect, the Employee's status as an employee shall  terminate  if
(i)  the  Employee  is  rendered incapable because of physical or
mental  illness  of satisfactorily  discharging  his  duties  and
responsibilities  under   this  Agreement  for  a  period  of  90
consecutive days and (ii) a  duly  qualified  physician chosen by
the  Company  and  acceptable  to  the  Employee  or  his   legal
representative so certifies in writing, the Board shall have  the
power to determine that the Employee has become disabled.  If the
Board  makes  such  a  determination,  the Company shall have the
continuing  right  and  option,  during  the   period  that  such
disability continues, and by notice given in the  manner provided
in  this  Agreement,  to terminate the status of Employee  as  an
employee.  Any such termination  shall  become  effective 30 days
after such notice of termination is given, unless within such 30-
day period, the Employee becomes capable of rendering services of
the character contemplated hereby (and a physician  chosen by the
Company   and   acceptable   to   the   Employee   or  his  legal
representative so certifies in writing) and the Employee  in fact
resumes such services.

          (c)  The  "Disability  Effective  Date"  shall mean the
date on which termination of employment becomes effective  due to
Disability.

     3.3  Cause.   The  Company  may terminate the Employee's
status as an employee for Cause.  As used  herein, termination by
the Company of the Employee's status as an employee  for  "Cause"
shall  mean  termination as a result of (a) the Employee's breach
of this Agreement, or (b) the willful engaging by the Employee in
gross misconduct  injurious  to the Company, which in either case
is not remedied within 10 days after the Company provides written
notice to the Employee of such breach or willful misconduct.

     3.4 Good Reason.  The  Employee may terminate his status
as an employee for Good Reason. As  used  herein,  the term "Good
Reason" shall mean:

          (a)  The occurrence of any of the following  during the
Employment Term:

               (i)  the   assignment  by  the  Board  or  by  any
authorized   person   to   the  Employee   of   any   duties   or
responsibilities  that  are  inconsistent   with  the  Employee's
status,  title  and  position  as  Vice  President  Manufacturing
Operations;

               (ii) any  removal  of the Employee  from,  or  any
failure to reappoint or reelect the  Employee to, the position of
Vice President Manufacturing Operations of the Company, except in
connection with a termination of Employee's status as an employee
as permitted by this Agreement;

               (iii)  the Company's requiring  the Employee to be
based anywhere other than at or within 50 miles  of the Company's
principal offices in Decatur, Illinois except for required travel
in the ordinary course of the Company's business;

          (b)  any breach of this Agreement by the  Company  that
continues for a period of 10 days after written notice thereof is
given by the Employee to the Company;

          (c)  the   failure   by   the  Company  to  obtain  the
assumption  of  its  obligations  under  this  Agreement  by  any
successor or assignee as contemplated by Section 6.1(c); or

          (d)  any purported termination by  the  Company  of the
Employee's  status  as an employee for Cause that is not effected
pursuant to a Notice  of  Termination satisfying the requirements
of this Agreement.

     3.5 Voluntary Termination  by  the  Company.  Subject to
the  terms  and  conditions  provided  herein,  the  Company  may
terminate  the  Employee's  status  as  an  employee  during  the
Employment  Term  for  reasons  other  than death, Disability  or
Cause.

     3.6 Voluntary Termination by the  Employee.   Subject to
the  terms  and  conditions  provided  herein,  the  Employee may
terminate  the  Employee's  status  as  an  employee  during  the
Employment Term for reasons other than Good Reason.

     3.7  Notice  of  Termination.   Any  termination by  the
Company  for  Disability  or Cause, or by the Employee  for  Good
Reason, shall be communicated  by  Notice  of  Termination to the
other  party  hereto given in accordance with Section  6.2.   For
purposes of this  Agreement,  a  "Notice  of Termination" means a
written  notice  that  (a)  indicates  the  specific  termination
provision  in  this  Agreement  relied upon, (b)  to  the  extent
applicable,  sets  forth  in  reasonable  detail  the  facts  and
circumstances claimed to provide  a  basis for termination of the
Employee's employment under the provisions  so  indicated and (c)
if the Date of Termination (as defined below) is  other  than the
date  of  receipt of such notice, specifies the termination  date
(which date  shall  be  not more than 30 days after the giving of
such notice).  The failure  by the Employee or the Company to set
forth in the Notice of Termination  any fact or circumstance that
contributes  to  a showing of Good Reason,  Disability  or  Cause
shall not negate the  effect of the notice nor waive any right of
the Employee or the Company,  respectively, hereunder or preclude
the Employee or the Company, respectively,  from  asserting  such
fact or circumstance in enforcing the Employee's or the Company's
rights hereunder.


     3.8 Date  of  Termination.  "Date of Termination" means
(a) if Employee's employment is terminated by reason of his death
or Disability, the Date of Termination shall be the date of death
of Employee or the Disability Effective Date, as the case may be,
(b) if Employee's employment  is  terminated  by  the Company for
Cause,  or by Employee for Good Reason, the date of  delivery  of
the Notice  of  Termination  or any later date specified therein,
(which date shall not be more  than  30  days after the giving of
such notice) as the case may be, (c) if the Employee's employment
is terminated by the Company prior to the  end  of the Employment
Term for reasons other than death, Disability or  Cause, the Date
of  Termination  shall be the date on which the Company  notifies
the  Employee  of  such   termination,   (d) if   the  Employee's
employment is terminated by the Employee prior to the  end of the
Employment Term for reasons other than Good Reason, the  Date  of
Termination  shall be the date on which the Employee notifies the
Company of such  termination,  and  (e)  if  the  Employment Term
terminates upon notice by the Company or the Employee as provided
for in Section 1.2 or Section 5.2, the Date of Termination  shall
be the date on which the Employment Term ends.

Section 4. Obligations Upon Termination

     4.1  Death.   If  Employee's  status  as  an employee is
terminated  by  reason of Employee's death, this Agreement  shall
terminate  without   further   obligations  to  Employee's  legal
representatives under this Agreement,  other  than the obligation
to  make  any  payments  due  pursuant to employee benefit  plans
maintained by the Company or its affiliates.

     4.2 Disability.  If Employee's  status as an employee is
terminated  by  reason of Employee's Disability,  this  Agreement
shall terminate without  further  obligation  to  Employee, other
than the obligation to make any payments due pursuant to employee
benefit plans maintained by the Company or its affiliates.

     4.3 Termination by Company for Reasons other than Death,
Disability or Cause; Termination by Employee for Good Reason.  If
the Company terminates the Employee's status as an employee prior
to the end of the Employment Term for reasons other  than  death,
Disability  or  Cause,  or the Employee terminates his employment
prior to the end of the Employment Term for Good Reason, then

          (a)  within 30  days  of  the  Date  of Termination the
Company shall pay to the Employee in a lump sum  an  amount equal
to  the  Employee's Base Salary through the end of the Employment
Term had the  notice contemplated by Section 1.2 been given as of
the Date of Termination; and

          (b)  the  amount  of  any  performance-based  bonus  or
options  granted to the Employee shall be deemed to be the amount
to which the  Employee  would  have been entitled if the budgeted
goals or other performance goals  applicable thereto had been met
but not exceeded and, whether or not  the  performance goals have
been  met  as  of the Date of Termination, such  bonus  shall  be
payable within 30  days  of  the  Date  of  Termination  and such
options (if not already exercisable) shall become exercisable  as
of  the  Date  of  Termination  and  shall  expire on the date of
expiration  of the options as provided in the  applicable  option
agreement.

     4.4 Termination for Cause, Without Good Reason or at End
of Employment  Term.   This  Agreement  shall  terminate  without
further obligation to the Employee other than obligations imposed
by  law  and obligations imposed pursuant to any employee benefit
plan maintained  by  the  Company  or  its  affiliates (a) if the
Employee's status as an Employee is terminated by the Company for
Cause or by the Employee for reasons other than  Good  Reason  or
(b),  except  as otherwise provided in Section 5.2, at the end of
the Employment Term.  If the Company or the Employee gives notice
of termination  of the Employment Term as provided for in Section
1.2, the Company  may, at its option, terminate Employee's status
as an employee, in  which case such termination shall be deemed a
termination by the Company  without  Cause  for  purposes  of all
provisions of this Agreement.

     4.5  Resignation as Director.  If Employee is a director
of the Company  and  his  employment is terminated for any reason
other  than  death,  the Employee  shall,  if  requested  by  the
Company, immediately resign  as  a  director  of the Company.  If
such resignation is not received when so requested,  the Employee
shall forfeit any right to receive any payments pursuant  to this
Agreement.

     4.6 Accrued  Obligations  and  Other  Benefits.   Upon
termination of employment  for  any  reason the Employee shall be
entitled  to  receive  promptly,  and in addition  to  any  other
benefits specifically provided, (a)  the  Employee's  Base Salary
through  the  Date  of  Termination to the extent not theretofore
paid, (b) any accrued vacation pay, to the extent not theretofore
paid, and (c) any other amounts  or  benefits required to be paid
or provided or which the Employee is entitled  to  receive  under
any plan, program, policy practice or agreement of the Company.

     4.7 Stock Options.  The foregoing benefits are intended
to be in addition  to  the value of any options to acquire common
stock of Akorn the exercisability  of  which  may  be accelerated
pursuant  to  the terms of any stock option, incentive  or  other
similar plan heretofore or hereafter adopted by Akorn.

Section 5. Change of Control

     5.1 Definitions.   For  purposes  of this Section 5, the
following terms shall have the meanings indicated below.

          (a)  Company.   In  the  event  of  any  assignment  or
succession as described in Section 6.1(c), the  term "Company" as
used  in  this  Agreement  shall refer also to such successor  or
assignee.  As used in Section  5.1(b)  the  term  "Company" shall
refer to Akorn and shall not refer to Akorn Manufacturing,  Inc.,
except as otherwise indicated.

          (b)  Change  of  Control.   A "Change of Control" shall
mean the occurrence of any of the following events:

               (i)  the acquisition by  any individual, entity or
"person" (within the meaning of Section 13(d)(3)  or  14(d)(2) of
the Exchange Act) of beneficial ownership of more than 30% of the
outstanding  shares  of the Company's common stock, no par  value
per  share (the "Common  Stock");  provided,  however,  that  for
purposes of this subsection (i), the following acquisitions shall
not constitute a Change of Control:

                    (A)  any acquisition of Common Stock directly
from the Company,

                    (B)  any  acquisition  of Common Stock by the
Company,

                    (C)  any acquisition of  Common  Stock by any
employee benefit plan (or related trust) sponsored or  maintained
by the Company or any corporation controlled by the Company, or

                    (D)  any acquisition of Common Stock  by  any
corporation  pursuant to a transaction that complies with clauses
(A), (B) and (C) of subsection (b)(iii) of this Section 5.1; or

               (ii) individuals  who,  as  of the Agreement Date,
constitute the Board (the "Incumbent Board") cease for any reason
to  constitute  at  least  a  majority  of  the Board;  provided,
however,  that any individual becoming a director  subsequent  to
the Agreement  Date whose election, or nomination for election by
the Company's shareholders,  was approved by a vote of at least a
majority of the directors then  comprising  the  Incumbent  Board
shall  be considered a member of the Incumbent Board, unless such
individual's  initial  assumption of office occurs as a result of
an actual or threatened  election  contest  with  respect  to the
election  or  removal  of directors or other actual or threatened
solicitation of proxies  or  consents by or on behalf of a person
other than the Incumbent Board; or

               (iii)    the  consummation  of  a  reorganization,
merger or consolidation, or sale  or  other disposition of all or
substantially  all  of  the assets of the  Company  (a  "Business
Combination"), in any such  case, unless, following such Business
Combination,

                    (A)  all   or   substantially   all   of  the
individuals   and  entities  who  were  the  direct  or  indirect
beneficial owners  of  the Company's outstanding common stock and
voting securities entitled  to  vote generally in the election of
directors  immediately prior to such  Business  Combination  have
direct or indirect  beneficial  ownership,  respectively, of more
than 50% of the then outstanding shares of common stock, and more
than  50%  of the combined voting power of the  then  outstanding
voting securities  entitled  to vote generally in the election of
directors,  of  the  corporation  resulting  from  such  Business
Combination  (which, for  purposes  of  this  paragraph  (A)  and
paragraphs (B)  and  (C),  shall include a corporation which as a
result  of  such  transaction controls  the  Company  or  all  or
substantially all of  the  Company's  assets  either  directly or
through one or more subsidiaries), and

                    (B)  except to the extent that such ownership
existed  prior  to the Business Combination, no person (excluding
any corporation resulting  from  such Business Combination or any
employee benefit plan or related trust  of  the  Company  or such
corporation    resulting    from   such   Business   Combination)
beneficially owns, directly or  indirectly,  20%  or  more of the
then  outstanding  shares  of  common  stock  of  the corporation
resulting from such Business Combination or 20% or  more  of  the
combined  voting  power of the then outstanding voting securities
of such corporation, and

                    (C)  at  least  a  majority of the members of
the  board of directors of the corporation  resulting  from  such
Business  Combination  were  members of the board of directors of
the  Company  at the time of the  initial  action  of  the  Board
providing for such Business Combination;

               (iv)   approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company or;

               (v)  the  consummation of a reorganization, merger
or  consolidation,  sale  or   other   disposition   of   all  or
substantially  all  of  the  assets,  or  sale, transfer or other
distribution of more than 50% of the shares  of  common  stock of
Akorn Manufacturing, Inc. or of the voting securities entitled to
vote  in  the  election  of  directors thereof, in any such case,
unless, following such transaction,  at  least  a majority of the
members of the Board of Directors of Akorn Manufacturing, Inc. or
other corporation resulting from such transaction were members of
the  Board of Directors of Akorn Manufacturing, Inc.  or  of  the
Company  at  the  time  of  the  initial  action  of the Board of
Directors   of  Akorn  Manufacturing,  Inc.  or  of  the  Company
providing for such transaction.

          (c)  Affiliate.   The  term  "affiliate" or "affiliated
companies" shall mean any company or other  entity controlled by,
controlling, or under common control with, the Company.

          (d)  Cause.   After  a Change of Control,  "Cause,"  as
used in this Agreement, shall have  the following meaning and not
the meaning given in Section 3.3:

               (i)  the  willful  and continued  failure  of  the
Employee to perform substantially the Employee's duties hereunder
(other than any such failure resulting  from  incapacity  due  to
physical   or   mental  illness),  after  a  written  demand  for
substantial performance is delivered to the Employee by the Board
of the Company which  specifically identifies the manner in which
the  Board  believes that  the  Employee  has  not  substantially
performed the Employee's duties, or

               (ii) the  willful  engaging  by  the  Employee  in
illegal  conduct  or  gross  misconduct  which  is materially and
demonstrably injurious to the Company or its affiliates.

For purposes of this provision, no act or failure  to act, on the
part of the Employee, shall be considered "willful"  unless it is
done,  or  omitted  to  be done, by the Employee in bad faith  or
without reasonable belief  that the Employee's action or omission
was in the best interests of  the Company or its affiliates.  Any
act, or failure to act, based upon  authority given pursuant to a
resolution duly adopted by the Board  or upon the instructions of
a  senior  officer of the Company or based  upon  the  advice  of
counsel for  the  Company or its affiliates shall be conclusively
presumed to be done,  or  omitted  to be done, by the Employee in
good  faith  and in the best interests  of  the  Company  or  its
affiliates.  The  cessation  of  employment of the Employee shall
not be deemed to be for Cause unless  and  until there shall have
been  delivered  to  the  Employee  a  copy of a resolution  duly
adopted by the affirmative vote of not less  than  three-quarters
of the entire membership of the Board at a meeting of  the  Board
called  and  held  for  such  purpose (after reasonable notice is
provided  to  the  Employee  and  the   Employee   is   given  an
opportunity,  together  with  counsel,  to  be  heard  before the
Board), finding that, in the good faith opinion of the Board, the
Employee has engaged in the conduct described in subparagraph (i)
or (ii) above, and specifying the particulars thereof in detail.

          (e)  Good  Reason.   After  a Change of Control,  "Good
Reason,"  as  used in this Agreement, shall  have  the  following
meaning and not the meaning given in Section 3.4:

               (i)  Any  failure of the Company or its affiliates
to provide the Employee with  the position, authority, duties and
responsibilities at least equivalent  in  all  material  respects
with  the  most significant of those held, exercised and assigned
at any time  during  the 120-day period immediately preceding the
Change of Control;

               (ii) The  assignment to the Employee of any duties
inconsistent in any respect  with  Employee's position (including
status, offices, titles and reporting  requirements),  authority,
duties or responsibilities as contemplated by Section 1.1, or any
other  action  that  results  in  a  diminution in such position,
authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent  action  not  taken in
bad  faith  that  is  remedied  within  10  days after receipt of
written notice thereof from the Employee to the Company;

               (iii)    Any  failure  by  the  Company   or   its
affiliates  to  comply  with   any  of  the  provisions  of  this
Agreement, other than an isolated,  insubstantial and inadvertent
failure not occurring in bad faith that  is  remedied  within  10
days after receipt of written notice thereof from the Employee to
the Company;

               (iv)   The Company or its affiliates requiring the
Employee to be based at  any  office  or  location  other than as
provided in Section 3.4(a)(iii) hereof or requiring the  Employee
to  travel  on  business  to  a substantially greater extent than
required immediately prior to the Change of Control;

               (v)   Any purported  termination of the Employee's
employment  otherwise  than  as  expressly   permitted   by  this
Agreement; or

               (vi) Any failure by the Company to comply with and
satisfy Sections 6.1(c) and (d) of this Agreement.

For  purposes of this Section 5, any good faith determination  of
"Good Reason" made by the Employee shall be conclusive.  Anything
in this  Agreement to the contrary notwithstanding, a termination
by  the  Employee   for  any  reason  during  the  30-day  period
immediately following  the  first  anniversary  of  the Change of
Control shall be deemed to be a termination for Good Reason.

          (f)    Beneficial  Ownership.   The  terms  "beneficial
ownership," "beneficial  owner," "beneficially owns," and similar
terms shall have the meanings  set  forth in Rule 13d-3 under the
Exchange Act.

     5.2 Employment  Capacity  and  Term  after  Change  of
Control.  (a) If a Change of Control occurs during the Employment
Term,  the Employee's Employment Term (the  "Modified  Employment
Term") shall  be  extended  until  and  terminate at the close of
business on the later to occur of the second  anniversary  of the
Change  of  Control  or the date one year after the date on which
either the Company or the Employee has notified the other of such
termination; and provided,  further, that Employee's status as an
employee is subject to earlier termination to the extent provided
in this Agreement.

          (b)  After a Change  of Control and during the Modified
Employment Term, (i) the Employee's  position  (including status,
offices,  titles  and reporting requirements), authority,  duties
and responsibilities  in and with respect to the Company shall be
at  least  equivalent  in  all  material  respects  to  the  most
significant of those held,  exercised  and  assigned  at any time
during  the  120-day  period immediately preceding the Change  of
Control and (ii) the Employee's service shall be performed at the
location where the Employee  was  employed  immediately preceding
the  Change  of Control or any office or location  less  than  50
miles from such location.

     5.3 Compensation  and  Benefits.   During  the  Modified
Employment  Term,  in  addition  to the compensation and benefits
described in Section 2, the Employee  shall  be  entitled  to the
following compensation and benefits:

          (a)  Salary.   During  the  Modified  Employment  Term,
Employee's Base Salary shall be as provided for in Section 2.1.

          (b)  Benefit  Plans.   During  the  Modified Employment
Term, the Employee and his family, if any, shall  be  entitled to
participate in and receive applicable benefits under all such (i)
incentive, savings and retirement plans, practices, policies  and
programs,  (ii)  welfare  benefit  plans, practices, policies and
programs (including, without limitation,  medical,  prescription,
dental, disability, employee life, group life, accidental  health
and travel accident insurance plans and programs) and (iii)  paid
vacation  and  other  fringe benefits, plans, practices, policies
and programs as are applicable  generally to other peer employees
of the Company and its affiliated  companies  in effect generally
after  the  Change  of  Control  or,  if  more favorable  to  the
Employee, as in effect for the Employee at  any  time  during the
120-day period immediately preceding the Change of Control.

          (c)  Expenses.   During  the Modified Employment  Term,
the  Employee shall be entitled to receive  prompt  reimbursement
for  all   reasonable   expenses  incurred  by  the  Employee  in
accordance  with  the  most  favorable  policies,  practices  and
procedures of the Company  and its affiliated companies in effect
generally after the Change of  Control with respect to other peer
employees of the Company and its affiliated companies or, if more
favorable to the Employee, as in  effect  for the Employee at any
time during the 120-day period immediately  preceding  the Change
of Control.

          (d)  Office  and  Support  Staff.   During the Modified
Employment Term, the Employee shall be entitled  to  an office or
offices  of  a  size and with furnishings and other appointments,
and to personal secretarial  and other assistance, at least equal
to the most favorable of the foregoing  provided  generally after
the Change of Control with respect to other peer employees of the
Company and its affiliated companies or, if more favorable to the
Employee,  as in effect for the Employee at any time  during  the
120-day period immediately preceding the Change of Control.

     5.4 Termination of Employment after a Change of Control.
After a Change  of  Control  and  during  the Modified Employment
Term, the Employee's status as an employee shall terminate or may
be  terminated  as  provided  in  Section  3  of this  Agreement;
provided, however, that after a Change of Control  and during the
Modified Employment Term the terms "Cause" and "Good  Reason," as
used in Section 3 and elsewhere in this Agreement, shall have the
meanings  given  to  them  in this Section 5 and not the meanings
given to them in Section 3.

     5.5 Obligations of  the Company upon Termination after a
Change of Control.  (a) If, after  a  Change of Control and prior
to  the  end  of   the  Modified  Employment  Term,  the  Company
terminates the Employee's employment  other than for Cause, death
or  Disability, or the Employee terminates  employment  for  Good
Reason, then

                (i) within 30 days of the Date of Termination the
Company  shall  pay to the Employee in a lump sum an amount equal
to the Employee's  Base  Salary  through  the end of the Modified
Employment Term had such termination not occurred; and

               (ii) Employee shall be entitled  to  the  benefits
provided  in Section 4.3(b) and the amounts, if any, contemplated
by Sections 4.6 and 4.7.

          (b)  If, after a Change of Control and prior to the end
of the Modified  Employment  Term,  the  Employee's employment is
terminated (i) for death, (ii) for Disability  or (iii) for Cause
(as defined in this Section 5), by the Employee for reasons other
than Good Reason (as defined in this Section 5)  or at the end of
the Modified Employment Term, then the Employee shall be entitled
to the benefits described in Section 4.1, Section  4.2 or Section
4.4,  as  the case may be, and shall be entitled to the  benefits
described in  Sections  4.6  and  4.7.   If  the  Company  or the
Employee  gives  notice of termination of the Modified Employment
Term as provided for  in  Section  5.2,  the  Company may, at its
option, terminate Employee's status as an Employee, in which case
such termination shall be deemed a termination  without Cause for
purposes of all provisions of this Agreement.

          (c)  The  rights  and  obligations of the  Company  and
Employee  contained in Section 4.5  ("Resignation  as  Director")
shall continue to apply after a Change of Control.

     5.6  Certain  Additional Payments.  If after a Change of
Control Employee is subjected to an excise tax as a result of the
"excess parachute payment"  provisions  of  section  4999  of the
Internal  Revenue Code of 1986, as amended, whether by virtue  of
the benefits of this Agreement or by virtue of any other benefits
provided to  Employee  in  connection  with  a  Change of Control
pursuant to Company plans, policies or agreements  (including the
value of any options to acquire Common Stock of the  Company  the
exercisability  of  which is accelerated pursuant to the terms of
any  stock  option,  incentive  or  similar  plan  heretofore  or
hereafter adopted by the  Company),  the  Company  shall  pay  to
Employee  (whether  or  not  his  employment has terminated) such
amounts as are necessary to place Employee  in  the same position
after payment of federal income and excise taxes  and  state  and
local  income  taxes as he would have been if such provisions had
not been applicable to him.

Section 6. Miscellaneous

     6.1 Binding Effect.

          (a)  This  Agreement shall be binding upon and inure to
the benefit of the Company and any of its successors or assigns.

          (b)  This Agreement  is  personal  to  the Employee and
shall  not be assignable by the Employee without the  consent  of
the Company  (there  being  no  obligation  to give such consent)
other than such rights or benefits as are transferred  by will or
the laws of descent and distribution.

          (c)  The  Company  shall  require  any successor to  or
assignee  of  (whether  direct or indirect, by purchase,  merger,
consolidation or otherwise)  all  or  substantially  all  of  the
assets or businesses of the Company (i) to assume unconditionally
and  expressly this Agreement and (ii) to agree to perform all of
the obligations  under  this  Agreement in the same manner and to
the same extent as would have been required of the Company had no
assignment or succession occurred,  such  assumption  to  be  set
forth  in  a writing reasonably satisfactory to the Employee.  In
the  event  of  any  such  assignment  or  succession,  the  term
"Company" as  used  in  this  Agreement  shall refer also to such
successor or assign.

          (d)  The  Company  shall  require  all   entities  that
control,  or  that  after  the  Change  of  Control will control,
directly or indirectly, any such successor or  assignee  to agree
to  cause  to  be  performed  all  of  the obligations under this
Agreement in the same manner and to the same extent as would have
been  required  of  the Company had no assignment  or  succession
occurred, such agreement  to  be  set forth in writing reasonably
satisfactory to the Employee.

     6.2 Notices.  All notices  hereunder  must be in writing
and  shall be deemed to have given upon receipt of  delivery  by:
(a) personal delivery to the designated individual, (b) certified
or registered  mail,  postage  prepaid, return receipt requested,
(c) a nationally recognized overnight  courier service (against a
receipt therefor) or (d) facsimile transmission with confirmation
of  receipt.  All such notices must be addressed  as  follows  or
such other address as to which any party hereto may have notified
the other in writing:

     If to the Company, to:

     Akorn Manufacturing, Inc.
     100 Akorn Drive
     Abita Springs, Louisiana  70420
     Attn:  President
     Facsimile transmission No. (504) 893-1257

     If to the Employee, to:
     Tim J. Toney
     2850 Virt Road
     Decatur, Illinois  62521
     Facsimile transmission No. __________

     6.3 Governing  Law.   This Agreement shall be construed
and enforced in accordance with and governed by the internal laws
of the State of Louisiana.

     6.4 Withholding.  The Employee  agrees  that the Company
has the right to withhold, from the amounts payable  pursuant  to
this  Agreement,  all  amounts  required  to  be  withheld  under
applicable  income  and/or  employment  tax laws, or as otherwise
stated in documents granting rights that  are  affected  by  this
Agreement.

     6.5 Severability.   If  any  term  or provision of this
Agreement   or   the   application  thereof  to  any  person   or
circumstance, shall at any  time  or  to  any  extent be invalid,
illegal or unenforceable in any respect as written,  Employee and
the  Company  intend  for any court construing this Agreement  to
modify or limit such provision temporally, spatially or otherwise
so as to render it valid  and  enforceable  to the fullest extent
allowed  by law.  Any such provision that is not  susceptible  of
such reformation  shall  be ignored so as to not affect any other
term or provision hereof, and the remainder of this Agreement, or
the  application  of  such  term   or  provision  to  persons  or
circumstances other than those as to  which  it  is held invalid,
illegal or unenforceable, shall not be affected thereby  and each
term  and provision of this Agreement shall be valid and enforced
to the fullest extent permitted by law.

     6.6  Waiver  of Breach.  The waiver by either party of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach thereof.

     6.7 Remedies Not  Exclusive.  No remedy specified herein
shall  be  deemed  to  be  such  party's  exclusive  remedy,  and
accordingly,  in  addition  to all of  the  rights  and  remedies
provided for in this Agreement,  the parties shall have all other
rights and remedies provided to them  by  applicable law, rule or
regulation.

     6.8 Company's   Reservation   of   Rights.    Employee
acknowledges  and  understands that the Employee  serves  at  the
pleasure of the Board  and  that the Company has the right at any
time  to  terminate Employee's  status  as  an  employee  of  the
Company,  or   to  change  or  diminish  his  status  during  the
Employment Term,  subject  to the rights of the Employee to claim
the benefits conferred by this Agreement.

     6.9 Survival.  Following  the  Date of Termination, each
party shall have the right to enforce all  rights,  and  shall be
bound  by  all  obligations,  of  such  party that are continuing
rights and obligations under this Agreement.

     6.10 Counterparts.  This Agreement  may  be  executed in
one or more counterparts, each of which shall be deemed  to be an
original  but all of which together shall constitute one and  the
same instrument.

     IN WITNESS WHEREOF, the Company and the Employee have caused
this Agreement to be executed as of the Agreement Date.

                              AKORN MANUFACTURING, INC.



                              By:   /s/ Eric M. Wingerter
                                         Eric M. Wingerter
                                             Secretary

                              EMPLOYEE: /s/ Tim J. Toney
                                           Tim J. Toney


                                                                 EXHIBIT 11.1
                     COMPUTATION OF NET INCOME PER SHARE

                    (In Thousands, Except Per Share Data)


                                                 Year Ended June 30,

                                             1996         1995       1994
                                          ____________________________________

Earnings
  Income applicable to common stock       $    788    $   2,506    $  2,415
                                          ====================================
Shares
  Weighted average number of shares 
    outstanding                             16,383       16,236      16,185
  Additional shares assuming conversion 
    of options and warrants up to 20% 
    of shares outstanding                      405          563         526
                                          ____________________________________ 

  Pro forma shares                          16,788       16,799      16,711
                                          ====================================
Net income per share                      $    .05      $   .15     $   .14
                                          ====================================

                                                                  Exhibit 21.1


                         SUBSIDIARIES OF AKORN, INC.



            Name                                State of Incorporation

1.   Taylor Pharmaceuticals, Inc.                   Illinois

2.   Spectrum Scientific Pharmaceuticals, Inc.      Louisiana

3.   Walnut Pharmaceuticals, Inc.                   Louisiana

4.   Compass Vision, Inc.                           Louisiana




                                                                  Exhibit 23.1






INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement Nos.
33-44785, 33-24970 and 33-70686 of Akorn, Inc. on Form S-8 of our report dated
September 11, 1996 (which expresses an unqualified opinion and includes an
explanatory paragraph relating to the Company's change in its method of
accounting for income taxes in 1994 and the Company's change in its method of
accounting for certain investments in debt and equity securities in 1995),
appearing in this Annual Report on Form 10-K of Akorn, Inc. for the year ended
June 30, 1996.





Deloitte & Touche llp
New Orleans, Louisiana
September 11, 1996


                                                     EXHIBIT 24.1



                        POWER OF ATTORNEY

                    (Form 10-K, FYE 6/30/96)

     KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
director  of  Akorn,  Inc. (the "Company") does hereby constitute
and appoint John N. Kapoor,  Ph.D.  and  Eric  M.  Wingerter, and
anyone of them acting in the absence of the others,  his true and
lawful   attorney-in-fact   and   agent,   with   full  power  of
substitution,  for him and in his name, place and stead,  in  any
and all capacities,  to  sign the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, to sign any and all
amendments  thereto, and to  file  the  same  with  all  exhibits
thereto, and  other  documents  in connection therewith, with the
Securities and Exchange Commission,  granting unto said attorney-
in-fact and agent full power and authority to do and perform each
and every act and thing requisite and  necessary  to  be done, as
fully  to  all  intents and purposes as he might or could  do  in
person, hereby ratifying  and  confirming all that said attorney-
in-fact and agent or his substitutes  may lawfully do or cause to
be done by virtue hereof.

     This instrument is executed by the  undersigned  on the date
indicated below.


                              /s/ Floyd Benjamin
                              Floyd Benjamin


                                   September 19, 1996
                                        (DATE)

                                                     EXHIBIT 24.2



                        POWER OF ATTORNEY

                    (Form 10-K, FYE 6/30/96)

     KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
director  of  Akorn,  Inc. (the "Company") does hereby constitute
and appoint John N. Kapoor,  Ph.D.  and  Eric  M.  Wingerter, and
anyone of them acting in the absence of the others,  his true and
lawful   attorney-in-fact   and   agent,   with   full  power  of
substitution,  for him and in his name, place and stead,  in  any
and all capacities,  to  sign the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, to sign any and all
amendments  thereto, and to  file  the  same  with  all  exhibits
thereto, and  other  documents  in connection therewith, with the
Securities and Exchange Commission,  granting unto said attorney-
in-fact and agent full power and authority to do and perform each
and every act and thing requisite and  necessary  to  be done, as
fully  to  all  intents and purposes as he might or could  do  in
person, hereby ratifying  and  confirming all that said attorney-
in-fact and agent or his substitutes  may lawfully do or cause to
be done by virtue hereof.

     This instrument is executed by the  undersigned  on the date
indicated below.


                              /s/ Daniel E. Bruhl, M.D.
                              Daniel E. Bruhl, M.D.


                                          September 25, 1996
                                              (DATE)


                                                     EXHIBIT 24.3



                        POWER OF ATTORNEY

                    (Form 10-K, FYE 6/30/96)

     KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
director  of  Akorn,  Inc. (the "Company") does hereby constitute
and appoint John N. Kapoor,  Ph.D.  and  Eric  M.  Wingerter, and
anyone of them acting in the absence of the others,  his true and
lawful   attorney-in-fact   and   agent,   with   full  power  of
substitution,  for him and in his name, place and stead,  in  any
and all capacities,  to  sign the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, to sign any and all
amendments  thereto, and to  file  the  same  with  all  exhibits
thereto, and  other  documents  in connection therewith, with the
Securities and Exchange Commission,  granting unto said attorney-
in-fact and agent full power and authority to do and perform each
and every act and thing requisite and  necessary  to  be done, as
fully  to  all  intents and purposes as he might or could  do  in
person, hereby ratifying  and  confirming all that said attorney-
in-fact and agent or his substitutes  may lawfully do or cause to
be done by virtue hereof.

     This instrument is executed by the  undersigned  on the date
indicated below.


                              /s/ J. Ed Campbell, M.D.
                              J. Ed Campbell, M.D.


                                       September 19, 1996
                                              (DATE)

                                                     EXHIBIT 24.4



                        POWER OF ATTORNEY

                    (Form 10-K, FYE 6/30/96)

     KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
director  of  Akorn,  Inc. (the "Company") does hereby constitute
and appoint John N. Kapoor,  Ph.D.  and  Eric  M.  Wingerter, and
anyone of them acting in the absence of the others,  his true and
lawful   attorney-in-fact   and   agent,   with   full  power  of
substitution,  for him and in his name, place and stead,  in  any
and all capacities,  to  sign the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, to sign any and all
amendments  thereto, and to  file  the  same  with  all  exhibits
thereto, and  other  documents  in connection therewith, with the
Securities and Exchange Commission,  granting unto said attorney-
in-fact and agent full power and authority to do and perform each
and every act and thing requisite and  necessary  to  be done, as
fully  to  all  intents and purposes as he might or could  do  in
person, hereby ratifying  and  confirming all that said attorney-
in-fact and agent or his substitutes  may lawfully do or cause to
be done by virtue hereof.

     This instrument is executed by the  undersigned  on the date
indicated below.


                              /s/ George S. Ellis, M.D.
                              George S. Ellis, M.D.


                                         September 19, 1996
                                              (DATE)



                                                     EXHIBIT 24.5



                        POWER OF ATTORNEY

                    (Form 10-K, FYE 6/30/96)

     KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
director  of  Akorn,  Inc. (the "Company") does hereby constitute
and appoint John N. Kapoor,  Ph.D.  and  Eric  M.  Wingerter, and
anyone of them acting in the absence of the others,  his true and
lawful   attorney-in-fact   and   agent,   with   full  power  of
substitution,  for him and in his name, place and stead,  in  any
and all capacities,  to  sign the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, to sign any and all
amendments  thereto, and to  file  the  same  with  all  exhibits
thereto, and  other  documents  in connection therewith, with the
Securities and Exchange Commission,  granting unto said attorney-
in-fact and agent full power and authority to do and perform each
and every act and thing requisite and  necessary  to  be done, as
fully  to  all  intents and purposes as he might or could  do  in
person, hereby ratifying  and  confirming all that said attorney-
in-fact and agent or his substitutes  may lawfully do or cause to
be done by virtue hereof.

     This instrument is executed by the  undersigned  on the date
indicated below.


                              /s/ Doyle S. Gaw
                              Doyle S. Gaw


                                          September 19, 1996
                                              (DATE)

                                                     EXHIBIT 24.6



                        POWER OF ATTORNEY

                    (Form 10-K, FYE 6/30/96)

     KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
director  of  Akorn,  Inc. (the "Company") does hereby constitute
and appoint John N. Kapoor,  Ph.D.  and  Eric  M.  Wingerter, and
anyone of them acting in the absence of the others,  his true and
lawful   attorney-in-fact   and   agent,   with   full  power  of
substitution,  for him and in his name, place and stead,  in  any
and all capacities,  to  sign the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, to sign any and all
amendments  thereto, and to  file  the  same  with  all  exhibits
thereto, and  other  documents  in connection therewith, with the
Securities and Exchange Commission,  granting unto said attorney-
in-fact and agent full power and authority to do and perform each
and every act and thing requisite and  necessary  to  be done, as
fully  to  all  intents and purposes as he might or could  do  in
person, hereby ratifying  and  confirming all that said attorney-
in-fact and agent or his substitutes  may lawfully do or cause to
be done by virtue hereof.

     This instrument is executed by the  undersigned  on the date
indicated below.


                              /s/ David H. Turner, M.D.
                              David H. Turner, MD


                                         September 19, 1996
                                              (DATE)



                                                     EXHIBIT 24.7



                        POWER OF ATTORNEY

                    (Form 10-K, FYE 6/30/96)

     KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
director  of  Akorn,  Inc. (the "Company") does hereby constitute
and appoint John N. Kapoor,  Ph.D.  and  Eric  M.  Wingerter, and
anyone of them acting in the absence of the others,  his true and
lawful   attorney-in-fact   and   agent,   with   full  power  of
substitution,  for him and in his name, place and stead,  in  any
and all capacities,  to  sign the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, to sign any and all
amendments  thereto, and to  file  the  same  with  all  exhibits
thereto, and  other  documents  in connection therewith, with the
Securities and Exchange Commission,  granting unto said attorney-
in-fact and agent full power and authority to do and perform each
and every act and thing requisite and  necessary  to  be done, as
fully  to  all  intents and purposes as he might or could  do  in
person, hereby ratifying  and  confirming all that said attorney-
in-fact and agent or his substitutes  may lawfully do or cause to
be done by virtue hereof.

     This instrument is executed by the  undersigned  on the date
indicated below.


                              /s/ Lawrence A. Yannuzzi, M.D.
                              Lawrence A. Yannuzzi, M.D.


                                         September 23, 1996
                                              (DATE)

 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR JUN-30-1996 JUN-30-1996 891,149 902,120 5,255,545 (339,429) 8,859,573 17,251,421 19,295,103 (7,771,402) 29,816,794 9,600,948 3,543,982 0 0 14,174,475 2,126,534 29,816,794 33,924,792 33,924,792 21,972,301 21,972,301 10,739,710 124,000 440,935 976,582 188,504 788,078 0 0 0 788,078 .05 0