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., an
Illinois 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 period beginning June 1, 1996 and
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. The terms of any options granted under this Section 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, 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 this
Section 5 as may be necessary or appropriate to correctly reflect
the jurisdictions which, at the time of such modification, should
be covered by this Section 5.
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: ___________________________
Eric M. Wingerter,
Secretary and Treasurer
AKORN, INC.
By: ___________________________
Barry D. LeBlanc, President
EMPLOYEE:
__________________________
Floyd Benjamin
EMPLOYMENT AGREEMENT--TOM YANKOFF
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., an
Illinois corporation (the "Company"), and, on the other, Tom
Yankoff (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 Vice President of Sales and Marketing. 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 $130,000 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 period beginning June 1, 1996 and
ending June 30, 1997, 10% of the amount by which the Company's
pre-tax earnings during such fiscal year exceed $1,487,735, (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 (iii) if the Company's 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 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. The terms of any options granted under this Section 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.
2.4 Severance Benefits. If Employee's status as an Employee
hereunder is terminated by Employee after the first anniversary
of this Agreement and prior to the third anniversary of this
Agreement, the Company shall (i) pay to Employee a severance
benefit equal to 1.15 times the amount of salary that Employee
would have earned under Section 2.1 had Employee's status as an
employee hereunder continued until the earlier to occur of (A)
one year from the Date of Termination or (B) the third
anniversary of this Agreement and (ii) continue Employee as a
participant in the Company's health, life and disability
insurance programs until the earlier to occur of (A) one year
from the Date of Termination or (B) the third anniversary of this
Agreement.
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.
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, 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 this
Section 5 as may be necessary or appropriate to correctly reflect
the jurisdictions which, at the time of such modification, should
be covered by this Section 5.
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:
Tom Yankoff
31181 Casa Grande
San Juan Capistrano, CA 92675
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 the Employee or, if the Company
and the Employee shall fail or be unable to so agree within ten
business days after the written request therefor by the Company
or the Employee to the other, 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: _________________________
Eric M. Wingerter,
Secretary and Treasurer
AKORN, INC.
By: __________________________
Barry D. LeBlanc, President
EMPLOYEE:
__________________________
Tom Yankoff
EMPLOYMENT AGREEMENT--DAVID GENCARELLA
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., an
Illinois corporation (the "Company"), and, on the other, David
Gencarella (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 Director of Business Development. 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 $110,000 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 period beginning June 1, 1996 and
ending June 30, 1997, 10% of the amount by which the Company's
pre-tax earnings during such fiscal year exceed $1,487,735; (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 (iii) if the Company's 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 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. The terms of options issued under this Section 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.
2.4 Severance Benefits. If Employee's status as an
Employee hereunder is terminated by Employee after the first
anniversary of this Agreement and prior to the third anniversary
of this Agreement, the Company shall (i) pay to Employee a
severance benefit equal to 1.15 times the amount of salary that
Employee would have earned under Section 2.1 had Employee's
status as an employee hereunder continued until the earlier to
occur of (A) one year from the Date of Termination or (B) the
third anniversary of this Agreement and (ii) continue Employee as
a participant in the Company's health, life and disability
insurance programs until the earlier to occur of (A) one year
from the Date of Termination or (B) the third anniversary of this
Agreement.
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.
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, 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 this
Section 5 as may be necessary or appropriate to correctly reflect
the jurisdictions which, at the time of such modification, should
be covered by this Section 5.
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:
David Gencarella
P. O. Box 4308
San Clemente, CA 92674
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 the Employee or, if the Company
and the Employee shall fail or be unable to so agree within ten
business days after the written request therefor by the Company
or the Employee to the other, 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.
6.13 Indemnification. The Corporation shall indemnify and
hold Employee harmless against judgments, fines, damages, amounts
paid in settlement and reasonable attorney's fee and costs
incurred by the Employee, in connection with the defense of or as
a result of any action or proceeding (or appeal of any action or
proceeding or any investigation which might result in any such
action or proceeding) in which the Employee is made or is
threatened to be made party by reason of actions taken by him
after the Effective Time that are within the scope of his
expressly authorized duties as a director, officer or employee of
the Corporation or any of its subsidiaries or affiliates. The
Corporation will pay the reasonable costs and expenses in
defending any such action or proceeding as such costs and
expenses are incurred. No indemnification shall be payable
hereunder with respect to negligent action or inaction or
intentional misdeeds of Employee and Employee shall reimburse the
Corporation for any amounts paid hereunder as a result 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: _______________________
Eric M. Wingerter,
Secretary and Treasurer
AKORN, INC.
By: ___________________________
Barry D. LeBlanc, President
EMPLOYEE:
__________________________
David Gencarella