EXECUTIVE BONUS AGREEMENT FOR JEFFREY A. WHITNELL
Exhibit 10.3
* Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2
17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2
This Executive Bonus Agreement (the “Agreement”) is entered into between Akorn, Inc., a
Louisiana corporation (the “Corporation”), and Xxxxxxx X. Xxxxxxxx (the “Participant”), effective
April 27, 2006. The purpose of the Agreement is to reward the service, performance, productivity
and loyalty of the Participant by providing the Participant with a prospective bonus to be paid in
accordance with the terms of this Agreement.
IN CONSIDERATION of the mutual promises made and other good and valuable consideration,
receipt of which is hereby acknowledged, the Corporation and the Participant agree as follows:
1. Amount of Payment. The Participant is eligible to receive a one-time cash bonus equal
to the sum of Sections 1.1 and 1.2, below:
1.1 Bonus. A bonus up to $112,500 (45% of the Participant’s annual base compensation
rate (“Base Comp”)) for achieving all of the following performance measurements in 2006, or, if one
or more but not all of these performance measurements are achieved, Participant is eligible to
receive a portion of that amount in accordance with the sum of the following:
1.1.1 Financial Results.
(a) Earnings Per Share. $18,750 (7.5% of Base Comp) will be awarded for achieving earnings
per share of at least $0.01.
(b) EBIDTA. $18,750 (7.5% of Base Comp) will be awarded for achieving an “EBITDA” of at least
[...***...]. “EBITDA” means earning before interest, taxes, depreciation and amortization.
(c) Net Revenue. $18,750 (7.5% of Base Comp) will be awarded for achieving net revenue of at
least [...***...].
1.1.2 Capital Raise. $18,750 (7.5% of Base Comp) will be awarded for conducting a
successful capital raise that is approved by the Board of Directors of the Corporation (the
“Board”).
1.1.3 SOX Compliance/BDO Report. $18,750 (7.5% of Base Comp) will be awarded for
achieving compliance with the requirements of Section 404 of the Xxxxxxxx-Xxxxx Act of 2002 (as
applicable based upon the criteria of the United States Securities Exchange Commission).
1.1.4 Manufacturing Variance. $18,750 (7.5% of Base Comp) will be awarded for
achieving budgeted manufacturing facility variance of zero on a combined basis between
* CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities & Exchange Commission.
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* Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2
17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2
both of the Corporation’s manufacturing facilities (allowing for an overage at one facility to
be offset by an underage at the other facility).
1.2 Over Achievement Bonus. If, and only if, all of the performance measurements (and
the entire bonus) set forth in Section 1.1 above have been achieved in full, a bonus of up to
$37,500 (15% of Base Comp) for over achievement of the EBITDA performance measures in accordance
with the sum of the following:
1.2.1 If the Corporation’s EBITDA is at least [...***...], Participant shall receive an additional
$18,750 (7.5% of Base Comp); and
1.2.2 If the Corporation’s EBITDA is at least [...***...], Participant will receive an additional
$18,750 (for a total of $37,500, or 15% of Base Comp).
2. Calculating the Bonus. All bonus calculations shall be made by the Chief Financial
Officer of the Corporation, subject to the review and approval of the Compensation Committee of the
Board (the “Committee”). The calculation and payment of bonuses under this Agreement shall be made
within 30 days from the Corporation’s receipt of its audited financial statements. All bonuses
under this Agreement shall be payable in cash or in other consideration as determined in the sole
discretion of the Committee.
3. No Agreement to Employ. Nothing in this Agreement shall affect any right with respect
to continuance of the Participant’s employment by the Corporation or any of its affiliates. The
right of the Corporation or any of its affiliates to terminate at will the Participant’s employment
at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically
reserved.
4. Unfunded and Unsecured Obligation. The amount payable to the Participant hereunder is
merely an unfunded and unsecured promise to pay money pursuant to this Agreement. The Corporation
is not required to segregate funds for this purpose and all amounts payable hereunder are subject
to the rights of all secured and unsecured creditors of the Corporation. The Participant shall not
have any security interest in any asset of the Corporation as a result of this Agreement, and the
Participant shall be merely an unsecured creditor of the Corporation with respect to amounts
payable hereunder.
5. Tax Consequences. The Participant acknowledges that he has considered the advisability
of consulting with his or her own tax advisors as to the specific tax consequences of participating
in the Agreement, including the applicable federal, state, local and foreign tax consequences, and
that the Corporation has no responsibility for the tax consequences related to the Participant’s
participation in the Agreement other than the Corporation’s duty to satisfy its withholding
obligations.
6. Administrator. The Committee, or such other committee or persons as the Committee may
designate from time to time, is designated as the “Administrator” with authority to control and
manage the operation and administration of this Agreement.
* CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities & Exchange Commission.
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6.1 Powers of the Administrator. The Administrator shall have full discretionary
power to administer the Agreement in all of its details. For this purpose the Administrator’s
discretionary power shall include, but shall not be limited to, the following authority:
6.1.1 to make and enforce such rules and regulations as it deems necessary or proper for the
efficient administration of the Agreement or required to comply with applicable law;
6.1.2 to interpret the Agreement;
6.1.3 to decide all questions concerning the Agreement and the eligibility of any person to
participate in the Agreement;
6.1.4 to compute the amounts to be distributed under the Agreement, and to determine the
person or persons to whom such amounts will be distributed;
6.1.5 to authorize payments under the Agreement;
6.1.6 to keep such records and submit such filings, elections, applications, returns or other
documents or forms as may be required under the Internal Revenue Code of 1986, as amended (the
“Code”), and applicable regulations, or under other federal, state or local law and regulations;
and
6.1.7 to allocate and delegate its ministerial duties and responsibilities and to appoint such
agents, counsel, accountants and consultant as may be required or desired to assist in
administering the Agreement.
6.2 Effect of Interpretation or Determination. Any interpretation of the Agreement or
other determination with respect to the Agreement by the Administrator shall be final and
conclusive on all persons in the absence of clear and convincing evidence that the Administrator
acted arbitrarily and capriciously.
6.3 Reliance on Information or Advice. In administering the Agreement, the
Administrator shall be entitled, to the extent permitted by law, to rely conclusively on all
tables, valuations, certificates, opinions and reports which are furnished by any accountant,
counsel or other expert who is employed or engaged by the Corporation or by the Administrator on
the Corporation’s behalf.
6.4 Limitation on Rights and Authority of Participants. The Participant expressly
acknowledges that nothing contained herein shall be construed to: (i) grant the Participant any
ownership interest or other rights as a shareholder of the Corporation or any other entity; (ii)
create a partnership; or (iii) give the Participant any right or authority with respect to the
property except as expressly provided herein.
7. Amendment. The Committee reserves the power at any time or times to amend the
provisions of the Agreement to any extent and in any manner that it may deem advisable.
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However, the Committee shall not have the power to amend the Agreement retroactively in such a
manner as would reduce the accrued vested benefit of the Participant, except as otherwise permitted
or required by law.
8. Savings Clause. The parties intend for this Agreement to comply in form and in operation
with Section 409A of the Code. Notwithstanding any other provision of this Agreement, the
Committee shall be permitted to amend or eliminate any provision or term of this Agreement to the
extent that such provision or term violates or conflicts with the requirements of Section 409A or
the compliance by the Corporation or Participant with such provision or term will result in a
violation of Section 409A.
9. Limitation of Rights. The establishment of the Agreement, any amendments thereof, the
creation of any fund or account or the payment of any benefits shall not be construed as giving to
the Participant or other person any legal or equitable right against the Corporation or the
Administrator, except as provided herein, and in no event shall the terms of employment or service
of any Participant be modified or in any way be affected hereby.
10. Entire Agreement. The Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subject matter hereof, and supersedes all prior
agreements, understandings, inducements or conditions, express or implied, oral or written,
relating to the subject matter hereof. The express terms of the Agreement control and supersede
any course of performance and/or usage of trade inconsistent with any of the terms hereof.
11. Assignment by the Corporation. The rights and obligations of the Corporation hereunder
are fully assignable at the sole discretion of the Corporation.
12. Severability. The provisions of the Agreement are severable. Except as otherwise
provided herein, in the event that one or more of the provisions contained in the Agreement or in
any other agreement referred to herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not effect the
remaining provisions of the Agreement. Further a court of competent jurisdiction shall have the
authority to rewrite, interpret or construe the terms of the Agreement so as to render them
enforceable to the maximum extent allowed by law, consistent with the intent of the parties as
evidenced hereby.
13. Attorney Fees. If any legal action is necessary to enforce the terms of the Agreement,
the prevailing party shall be entitled to recover, in addition to other amounts to which the
prevailing party may be entitled, actual attorneys’ fees and costs.
14. Counterparts. The Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original as against any party whose signature appears thereon, and
all of which shall together constitute one and the same instrument.
15. Governing Law. The Agreement shall be construed, administered and enforced according
to the laws of the State of Illinois, without regard to its conflicts of laws rules.
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IN WITNESS HEREOF, the parties have executed this Agreement as of the date set forth above.
| AKORN, INC.: Corporation |
PARTICIPANT: | |||||
By:
|
/s/ Xxxxxx X. Xxxxxxx | /s/ Xxxxxxx X. Xxxxxxxx | ||||
Its:
|
Chief Executive Officer | Xxxxxxx X. Xxxxxxxx | ||||
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