JEFFREY A. WHITNELL EXECUTIVE BONUS AGREEMENT
EXHIBIT 99.2
XXXXXXX X. XXXXXXXX
EXECUTIVE BONUS AGREEMENT
EXECUTIVE BONUS AGREEMENT
THIS Xxxxxxx X. Xxxxxxxx Executive Bonus Agreement (the “Agreement”) is entered into between
Akorn, Inc., a Louisiana corporation (the “Corporation”) and Xxxxxxx Xxxxxxxx (the “Participant”),
effective December 27, 2005. 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 shall receive a one-time cash bonus equal to
the sum of parts 1.1 and 1.2, below:
1.1 a bonus up to $89,775 (45% of his annual compensation (“Base Comp”) for achieving
all of the following performance measurements in 2005, 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:
(a) $44,888 (22.5% of Base Comp) will be awarded for achieving an “Adjusted
EBITDA” of at least $9,500,000. “Adjusted EBITDA” means EBITDA, excluding from
EBITDA expense to the extent otherwise includable in that calculation, the charges
for the Strides-Arcolab joint venture and the charges (expected to be $436,562)
related to the grant of restricted stock on April 1, 2005.
(b) $13,466 (6.75% of Base Comp) will be awarded for either: (i) conducting a
successful capital raise that is approved by the Board of Directors of the
Corporation, or (ii) achieving cash flows from operations such that a capital raise
is unnecessary.
(c) $17,955 (9.0% of Base Comp) will be awarded for successfully renegotiating
the LaSalle credit agreement on more favorable terms to the Corporation (e.g.,
increasing the line of $5 million and reducing the interest rate from Prime based to
LIBOR based).
(d) $13,466 (6.75% of Base Comp) will be awarded for developing an omnibus
equity compensation plan that is approved by the shareholders of the Corporation.
1.2 A bonus up to $29,925 (15% of Base Comp) for over achievement of the Adjusted
EBITDA performance measures, in accordance with the sum of the following:
(a) If the Corporation’s Adjusted EBITDA is at least $10,450,000, Participant
will receive an additional $14,963 (7.5% of Base Comp).
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(b) If the Corporation’s Adjusted EBITDA is at least $11,400,000, Participant
will receive an additional $14,962 (for a total of $29,925, 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 (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 the Agreement.
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:
(a) 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;
(b) to interpret the Agreement;
(c) to decide all questions concerning the Agreement and the eligibility of any
person to participate in the Agreement;
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(d) to compute the amounts to be distributed under the Agreement, and to
determine the person or persons to whom such amounts will be distributed;
(e) to authorize payments under the Agreement;
(f) 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, and applicable regulations, or under other federal, state
or local law and regulations; and
(g) 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. 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. 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.
9. 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, understanding, inducements or conditions, express or implied, oral or written, relating
to the subject matter hereof, except as herein contained. 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.
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10. Assignment by the Corporation. The rights and obligations of the Corporation
hereunder are fully assignable at the sole discretion of the Corporation.
11. 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.
12. 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.
13. 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.
14. 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.
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 | |||
| Xxxxxxx X. Xxxxxxxx | |||||
Its:
|
President and CEO | ||||
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