Document:

exv10w1

 

Exhibit 10.1

CONSULTING AGREEMENT

     This CONSULTING AGREEMENT, dated as of November 15, 1990, is entered into
by and between EJ Financial Enterprises, Inc., a Delaware corporation (“EJ
Financial”), and Akorn, Inc., a Louisiana corporation (“Akorn”).

WITNESSETH:

     WHEREAS, Akorn has requested that EJ Financial provide to Akorn certain
consulting services described herein commencing on the date hereof; and

     WHEREAS, EJ Financial is willing to provide to Akorn such services on the
terms and conditions herein provided.

     NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

     1. Consulting Services. Akorn hereby retains EJ Financial as an
independent consultant to provide management consulting services relating to
strategic corporate objectives of Akorn (the “Consulting Services”), and EJ
Financial hereby agrees to provide Akorn with such Consulting Services, upon
the terms and subject to the conditions hereinafter set forth.

     2. Position and Duties. EJ Financial shall serve only as a consultant to
Akorn with respect to the Consulting Services. Nothing herein shall be deemed
to cause EJ Financial or any of its directors, officers or employees to be
considered an agent of Akorn. Akorn acknowledges that EJ Financial and its
directors, officers and employees may provide consulting services to other
entities, serve as members of certain other corporate boards of directors and
engage in other business activities.

     3. Term. The term of the consulting arrangement hereunder shall commence
on the date hereof and continue until December 31, 1993 (the “Term”), unless
earlier terminated pursuant to Section 6.

     4. Compensation. In consideration for the Consulting Services provided by
EJ Financial hereunder, Akorn shall pay to EJ Financial a fixed monthly
consulting fee equal to $4,167 per calendar month ($50,000 per year) payable in
arrears on the last business day of each month during the Term (collectively,
the “Monthly Payments”). In the case of any month in which this Agreement is
not in effect for the full month, such consulting fee shall be prorated based
on the number of days in the month with respect to which this Agreement is in
effect.

     5. Expenses. Akorn shall promptly reimburse EJ Financial for all
reasonable expenses incurred by EJ Financial or any of its directors, officers
or employees in the performance of its duties hereunder, including, but not
limited to, travel expenses between Chicago, Illinois and New Orleans,
Louisiana, and living expenses while away from home in the service of Akorn;
provided, that such expenses in excess of $200 shall have been approved in
writing by John Kapoor, Barry LeBlanc and Doyle Gaw prior to the incurrence
thereof. In

 

 

addition, EJ Financial shall comply with such requirements with respect to
expenses as Akorn may reasonably establish in writing from time to time in
respect of Akorn’s executive officers.

     6. Termination. This Consulting Agreement shall commence on the date
hereof and continue until all of the parties’ obligations hereunder have been
fulfilled, except that this Consulting Agreement (other than Sections 7 and 8)
shall terminate 30 days after the delivery by either party of a notice to the
effect that such party has determined to terminate this Consulting Agreement.
EJ Financial shall not be entitled to any compensation or severance pay or
other termination benefits upon any termination of this Consulting Agreement;
provided, however, that EJ Financial shall be entitled to receive any Monthly
Payments owed to it by Akorn with respect to any period prior to such
termination. Termination pursuant to this Section 6 shall be the sole remedy
of Akorn for a failure of EJ Financial to provide the Consulting Services as
described in Section 1 hereof.

     7. Confidential Information. EJ Financial recognizes and acknowledges
that certain assets of Akorn and its affiliates, including, without limitation,
information regarding customers, pricing policies, methods of operation,
proprietary computer programs, sales, products, profits, costs, markets, key
personnel, formulae, product applications, technical processes, trade secrets
and any reports prepared by EJ Financial or any of its directors, officers or
employees delivered to Akorn hereunder (hereinafter call “Confidential
Information”) are valuable, special, and unique assets of Akorn and its
affiliates. Neither EJ Financial nor any director, officer or employee thereof
shall, during or after the term of this Agreement, disclose any part of the
Confidential Information to any person, firm, corporation, association, or any
other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be directed in writing by the management of Akorn, unless and
until such Confidential Information becomes publicly available other than as a
consequence of the breach by EJ Financial or any director, officer or employee
thereof of their confidentiality obligations hereunder or unless and only to
the extent that such disclosure is required by applicable law.

     8. Indemnification. In the event that EJ Financial or any director,
officer or employee thereof becomes a party to or witness or other participant
in, or is threatened to be made a party to or witness or other participant in,
any threatened, pending or completed claim, action, suit or proceeding or
investigation, whether civil, criminal, administrative, investigative or
otherwise (the “Indemnification Claim”) by reason of or arising out of this
Consulting Agreement, Akorn shall indemnify, defend and hold harmless EJ
Financial or such director, officer or employee thereof to the fullest extent
permitted by law as soon as practicable but in any event no later than thirty
days after written demand is presented to Akorn, against any and all losses,
claims, damages, expenses, liabilities or judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such losses,
claims, damages, expenses, liabilities or judgments, fines, penalties and
amounts paid in settlement) of or arising from such Indemnification Claim. For
purposes of this Section 8, the terms “expenses” shall include attorney’s fees
and all other costs, expenses and obligations, in each case reasonably paid or
incurred in connection with investigating, defending, prosecuting, being a
witness in or participating in any Indemnification Claim. If so requested by
EJ Financial or any director, officer or employee thereof in writing, Akorn
shall advance (within two business days of such request) any and all such
expenses to EJ Financial or such director, officer or employee thereof.

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     Notwithstanding the foregoing, (i) with respect to any Indemnification
Claim brought or made by Akorn or an affiliate thereof, Akorn shall have no
obligation to indemnify EJ Financial or any director, officer or employee
thereof in the event that it is finally judicially determined that such
Indemnification Claims arose primarily out of the gross negligence or
intentional misconduct of EJ Financial or such director, officer or employee
thereof and (ii) with respect to any Indemnification Claim brought or made by
any person or entity other than Akorn or an affiliate thereof, Akorn shall have
no obligation to indemnify EJ Financial or any director, officer or employee
thereof in the event that it is finally judicially determined that such
Indemnification Claim arose primarily out of the intentional misconduct of EJ
Financial or such director, officer or employee thereof.

     In the event that Akorn has advance expenses to EJ Financial or any
director, officer or employee thereof and it is finally judicially determined,
in the case of any Indemnification Claim referred to in clause (i) of the
preceding paragraph, that such Indemnification /claim arose primarily out of
the gross negligence or intentional misconduct of EJ Financial or such
director, officer or employee thereof, or, in the case of any Indemnification
Claim referred to in clause (ii) of the preceding paragraph, that such
Indemnification Claim arose primarily out of the intentional misconduct of EJ
Financial or such director, office or employee thereof, EJ Financial hereby
undertakes promptly, but in no event later than thirty days following such
final judicial determination, to reimburse Akorn for any such expenses
advanced.

     9. General.

          (a) Notices. All notices and other communication hereunder shall be in
writing or by written telecommunication, and shall be deemed to have been duly
given when delivered by United States certified or registered mail, return
receipt requested, postage prepaid to the relevant address set forth below, or
to such other address as the recipient of such notice or communication shall
have specified to the other party hereto in accordance with this Section 9(a),
except that no notice of change of address shall be effective until receipt
thereof.

	 	 	 
	if to Akorn, to:

	 	 
	

	 	100 Akorn Drive
	

	 	Abita Springs, LA 70430
	

	 	Attn: Barry LeBlanc, President
	with a copy to:

	 	 
	 
	 	 
	

	 	Jones, Walker, Waechter,
	

	 	     Poitevent, Carrere & Denegre
	

	 	Place St. Charles
	

	 	201 S. Charles Avenue
	

	 	New Orleans, LA 70170
	

	 	Attn: Carl C. Hanemann, Esq.

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	if to EJ Financial, to:

	 	 
	

	 	225 East Deerpath Drive
	

	 	Suite 250
	

	 	Lake Forest, IL 60045
	

	 	Attn: John N. Kapoor, President
	 
	 	 
	with a copy to:

	 	 
	

	 	Sidley & Austin
	

	 	One First National Plaza
	

	 	Chicago, IL 60603
	

	 	Attn: Thomas A. Cole, Esq.

     (b) Severability. If any provision of this Consulting Agreement is or
becomes invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired and such remaining provisions shall
remain in full force and effect.

     (c) Waivers. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege. No waiver by any party hereto at any time of any
breach by any other party hereto of, or compliance with, any condition or
provision of this Consulting Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.

     (d) Counterparts. This Consulting Agreement may be executed in two
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     (e) Entire Agreement. This Consulting Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and no agreements or
representations, oral or otherwise, express or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Consulting Agreement.

     (f) Amendment. No provisions of this Consulting Agreement may be
modified, waived or discharged unless such waiver, amendment, modification or
discharge is agreed to in writing signed by each of the parties hereto.

     (g) Governing Law. The interpretation, validity and performance of this
Consulting Agreement shall be construed and governed in accordance with the
laws of the State of Louisiana, regardless of the law that might be applied
under applicable principles of conflicts of laws.

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     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Consulting Agreement to be duly executed as of the date
and year first above written.

	 	 	 	 	 
	 	AKORN, INC.

 	 
	 	By:  	/s/ Doyle S. Gaw
 	 
	 	 	Doyle S. Gaw 	 
	 	 	Chairman 	 
	 
	 	EJ FINANCIAL ENTERPRISES, INC.

 	 
	 	By:  	/s/ John N. Kapoor
 	 
	 	 	John N. Kapoor 	 
	 	 	President 	 
	 

5exv10w2

 

Exhibit 10.2

AMENDED AND RESTATED

AKORN, INC.

1988 INCENTIVE COMPENSATION PROGRAM

     1. Purpose. The purpose of this 1998 Incentive Compensation Program (the
“Program”) of Akorn, Inc. (the “Company”) is to advance the interests of the
Company by furnishing economic incentives in the form of stock options
(“Option”) designed to attract, retain and motivate key employees.

     2. Administration.

          2.1 Composition. The Program shall be administered by a committee
consisting of two or more members of the Board (the “Committee”) who are
disinterested persons in accordance with Rule 16b-3 under the Securities
Exchange Act of 1934.

          2.2 Authority. the Committee shall have plenary authority to award
Options under the Program, to interpret the Program, to establish any
rules or regulations relating to the Program which it determines to be
appropriate, and to make any other determination which it believes
necessary or advisable for the proper administration of the Program. Its
decisions in matters relating to the Program shall be final and
conclusive on the company and participants.

     3. Eligible Employees. Key employees and consultants of the company (including
officers who also serve as directors of the Company) and its subsidiaries shall
become eligible to receive Options under the Plan when designated by the
Committee. Employees may be designated individually or by groups by
categories, as the Committee deems appropriate. With respect to participants
no subject to Section 16 of the 1934 Act, the Committee may delegate to
appropriate personnel of the company its authority to designate participants
and to determine the number of Options to be received by those participants.

     4. Shares Subject to the Program.

          4.1 Number of Shares. Subject to adjustment as provided in Section 6.5, the number of shares
of common stock, no par value, of the Company (“Common Stock”), which may
be issued under the Program shall not exceed 4,500,000 shares of Common
Stock.

          4.2 Cancellation. In the event that an Option granted hereunder expires
or is terminated or cancelled unexercised as to any shares of Common
Stock, such shares may again be issued under the Program pursuant to
Options. The Committee may also determine to cancel, and agree to the
cancellation of, Options in order to make a particular participant
eligible for the grant of an Option at a lower price than the Option to
be cancelled.

 

 

          4.3 Type of Common Stock. Common Stock issued under the Program in
connection with Options may be authorized and unissued shares or
issued shares held as treasury shares.

     5. Options. An Option is a right to purchase shares of Common Stock from the
Company. Each Option granted by the Committee under this Program shall be
subject to the following terms and conditions.

          5.1 Price. The Option price per share shall be determined by the
Committee but shall not be less than 50% of the fair market value on the
date of grant of the Option. “Fair Market Value” shall be determined as
follows: if the Common Stock is listed on any national exchange or any
automatic quotation system which provides sales quotations, the fair
market value shall be the closing price quoted on such exchange or
quotation system as reported in the Wall Street Journal for the
applicable date (i.e. date of grant, exercise or tax withholding) or if
there are no trades on such date, then on the preceding date on which a
trade did occur, subject to adjustment under Section 6.5.

          5.2 Number. The number of shares of Common stock subject to the option
shall be determined by the Committee, subject to adjustment as provided
in Section 6.5.

          5.3 Duration and Time for Exercise. Subject to earlier termination as
provided in Section 6.5, the term of each Option shall be determined by
the Committee but shall not exceed ten years and one day from the date of
grant. Each Option shall become exercisable at such time or times during
its term as shall be determined by the Committee at the time of grant.
The Committee may accelerate the date on which an Option becomes
exercisable.

          5.4 Repurchase. Upon approval of the Committee, the Company may repurchase a
previously granted Option from a participant by mutual agreement before
such Option has been exercised by payment to the participant of the
amount per share by which (i) the Fair Market Value (as defined in
Section 5.1) of the Common Stock subject to the Option on the date of
repurchase exceeds (ii) the Option price.

          5.5 Manner of Exercise. An Option may be exercised in whole or in part,
by giving written notice to the Company, specifying the number of shares
of Common Stock to be purchased and accompanied by the full purchase
price for such shares. The Option price shall be payable in United
States dollars upon exercise of the Option and may be paid by (i) cash;
(ii) uncertified or certified check; (iii) bank draft;
(iv) delivery of shares of Common Stock held for a period of six months in payment of all
or any part of the Option price, which shares shall be valued for this
purpose at the Fair Market Value on the date such Option is exercised;
(v) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker approved by the Company (with a copy
to the Company) to promptly deliver to the Company the amount of sale or
loan proceeds to pay the exercise price; (vi) or in such other manner as
may be authorized from time to time by the Committee. In the case of
delivery to an uncertified check or bank draft upon exercise of an
Option, no shares shall be issued until the check or draft has been paid
in

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full. Prior to the issuance of shares of Common Stock upon the
exercise of an Option, a participant shall have no rights as a
shareholder.

     6. General.

          6.1 Effective Date. The Program will become effective upon its approval
by the affirmative vote of the holders of a majority of the voting power
present or represented at a meeting of the shareholders. Unless approved
within one year after the date of the Program’s adoption by the Board of
Directors, the Program shall not be effective for any purpose. Prior to
the approval of the Program by the Company’s shareholders, the Board may
award Options, but if such approval is not received in the specified
period, then such awards shall be of no effect.

          6.2 Duration. The Program shall remain in effect until all options
granted under the Program have either been satisfied by the issuance
of shares of Common Stock or been terminated under the terms of the Program.
No Option may be granted under the Program after the fifteenth
anniversary of the date the Program is approved by the Company’s
shareholders.

          6.3 Non-transferability of Options. No Option may be transferred, pledged or assigned by the holder
thereof, (except, in the event of the holder’s death, by will or the laws
of descent and distribution) and the Company shall not be required to
recognize any attempted assignment of such rights by any participant.
During a participant’s lifetime, an Option may be exercised only by him
or by his guardian or legal representative.

          6.4 Additional Condition. Anything in this Program to the contrary
notwithstanding, (a) the Company may, if it shall determine it necessary
or desirable for any reason, at the time of award of an Option or the
issuance of any shares of Common Stock pursuant to an Option, require the
recipient of the Option , as a condition to the receipt thereof or to the
receipt of shares of common Stock issued upon exercise thereof, to
deliver to the Company a written representation of present intention to
acquire the Option or the shares of Common Stock issued pursuant thereto
for his own account for investment and not for distribution; and (b) if
at any time the company further determines, in its sole discretion, that
the listing, registration or qualification (or any updating of any such
document) of any Option of the shares of Common Stock issuable pursuant
thereto is necessary on any securities exchange or under any federal or
state securities or blue sky law, or that the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of,
or in connection with the grant of any Option or the issuance of shares
of Common Stock upon exercise thereof, such Options shall not be granted
or such shares of Common Stock shall not be issued, as the case may be,
in whole or in part, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.

          6.5 Adjustment upon Changes in Capitalization or Control.

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               (a) In the event of any recapitalization, stock dividend,
stock split, combination of shares or other change in the Common
Stock, the number of shares of Common Stock then subject to the
Program, shall be adjusted in proportion to the change in
outstanding shares of Common Stock. In the event of any such
adjustments, the purchase price of any Option and the shares of
Common Stock issuable pursuant to any Option shall be adjusted as
and to the extent appropriate, in the reasonable discretion of the
committee, to provide participants with the same relative rights
before and after such adjustment.

               (b) If there is proposed a dissolution or liquidation of the
company, or a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company is not
the surviving corporation, or a transfer of substantially all the
property or more than two-thirds of the then outstanding shares of
the Company to another corporation, the Committee shall cause
written notice of the proposed transaction to be given to every
participant in the Program not less than 40 days prior to the
anticipated effective date of the proposed transaction, and every
Incentive Option granted under the Program shall be
accelerated and become immediately exercisable in full by such
participant prior to a date specified in such notice, which date
shall not be more than 10 days prior to the anticipated effective
date of the proposed transaction. The participant shall notify the
Company, in writing, that he intends to exercise his Options, in
whole or in part, and the participant may condition such exercise
upon, and provide that such exercise shall become effective at the
time immediately prior to, the consummation of the proposed
transaction. If the proposed transaction is consummated, each
Option, to the extent not previously exercised prior to the date
specified in the foregoing notice, shall terminate on the effective
date of such consummation. If the proposed transaction is not
consummated and the participant has so provided, the Options shall
remain unexercised.

          6.6 Option Agreements. The terms of each Option shall be stated in an
agreement, the form of which has been approved by the Committee.

          6.7 Withholding.

               (a) The Company shall have the right to withhold from any shares issuable under the Program or to collect as a condition of
issuance, any taxes required by law to be withheld. At any time
when a participant is required to pay to the Company an amount
required to be withheld under applicable income tax laws upon the
exercise of an Option, the Participant may satisfy this obligation
in whole or in part by electing (the “Election”) to have the
Company withhold from the distribution shares of Common Stock
having a value equal to the amount required to be withheld. The
value of the shares to be withheld shall be based on the Fair
Market Value of the Common Stock on the date that the amount of tax
to be withheld shall be determined (“Tax Date”).

               (b) Each Election must be made prior to the Tax Date. The
Committee may disapprove of any Election, may suspend or terminate
the right to

4

 

make Elections, or may provide with respect to any
Option that the right to make Elections shall not apply to such
Option. An Election is irrevocable.

          (c) If a participant is an officer of the Company within the
meaning of Section 16 of the 1934 Act, then an Election is subject
to the following restrictions:

                    (1) No Election shall be effective for a Tax Date which
occurs within six months of the grant of the award.

                    (2) The Election either (i) must be made six months
prior to the Tax Date, (ii) must be made during a period
beginning on the third business day following the date of
release for publication of the Company’s quarterly or annual
summary statements of earnings and
ending on the twelfth business day following such date
(a “Window Period”) or (iii) may be made in advance but must
take effect during a Window Period.

          6.8 No Continued Employment. No participant under the Program shall have
any right, because of his or her participation, to continue in the employ
of the company for any period of time or to any right to continue his or
her present or any other rate of compensation.

          6.9 Amendment of the Program. The Board may amend or discontinue the
Program at any time; provided, however, that no such amendment or
discontinuance shall change or impair, without the consent of the
recipient, an Option previously granted; and further provided that if any
such amendment requires shareholder approval to meet the requirements of
Rule 16b-3 under the Securities Exchange Act of 1934 or any successor
rule, such amendment shall be subject to the approval of the shareholders
of the Company.

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