Exhibit 10.32

SUBORDINATION AND INTERCREDITOR AGREEMENT
(LaSalle Bank National Association/Neopharm, Inc.)

        THIS SUBORDINATION AND INTERCREDITOR AGREEMENT dated as of October 7,
2003 (this "Agreement") is entered into among AKORN, INC., a Louisiana
corporation ("Akorn"), AKORN (NEW JERSEY), INC., an Illinois corporation ("Akorn
NJ"; together with Akorn, each a "Company" and collectively, the "Companies"),
LASALLE BANK NATIONAL ASSOCIATION, as Senior Agent (as hereinafter defined) for
Senior Lenders under the Credit Agreement (as hereinafter defined), and
NEOPHARM, INC., a Delaware corporation (the "Subordinated Lender"").

RECITALS

        A.    The Senior Agent, certain financial institutions (together with
the successors and assigns thereof, "Senior Lenders") and the Companies have
entered into a Credit Agreement, dated as of the date hereof (as from time to
time amended, modified, extended, renewed, refinanced, or restated, the "Credit
Agreement"), together with the other Loan Documents (as defined in the Credit
Agreement), whereby the Senior Lenders have made and shall make available to
each of the Companies certain loans and other financial accommodations therein
set forth. All of the Companies' obligations under the Senior Loan Documents (as
hereinafter defined) are secured by assignments of and security interests in
substantially all of the now or hereafter acquired assets of the Companies and
their Subsidiaries, all as more fully set forth in the Loan Documents.

        B.    Akorn has issued that certain Amended and Restated Promissory Note
dated October 7, 2003 in the principal amount of $3,250,000 (the "Subordinated
Note", together with all guarantees and other documents or instruments executed
in connection therewith (as from time to time modified, extended, renewed,
refinanced or restated to the extent permitted by the terms of this Agreement,
collectively the "Subordinated Documents")) in favor of the Subordinated Lender.

        C.    As a condition of the financing accommodations under the Loan
Documents, the parties hereto are required to enter into this Agreement to
establish the relative rights and priorities of the Senior Agent, the Senior
Lenders and the Subordinated Lender under the Senior Loan Documents and the
Subordinated Documents.

        D.    The Subordinated Lender will benefit from the financing
accommodations made by the Senior Lenders under the Credit Agreement and the
other Loan Documents. The Subordinated Lender and the Companies desire to enter
into this Agreement in order to induce the Senior Lenders to enter into the
Credit Agreement. The Subordinated Lender acknowledges that the Senior Lenders
would not enter into the Senior Loan Documents but for the execution of this
Agreement.

        In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:

        1.    Definitions.    Except as otherwise provided herein, all
capitalized terms used in this Agreement shall have the meanings ascribed to
such terms in the Credit Agreement, provided that the following terms shall have
the meanings set forth below:

        "Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. §
101 et. seq.) or any replacement or supplemental federal statute dealing with
the bankruptcy of debtors.

        "Company" and "Companies" shall have the meaning set forth in the
recitals hereof.

        "Company Property" means all assets, property and property rights, of
any kind or nature, tangible or intangible, now or hereafter existing, in which
either Company or any Obligor owns, asserts or maintains an interest.

        "Credit Agreement" shall have the meaning set forth in the recitals
hereof.

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        "Finally Paid" or "Final Payment," when used in connection with the
Senior Indebtedness, means the full and indefeasible payment in cash of all of
the Senior Indebtedness and the irrevocable termination of all Commitments of
all the Senior Lenders under the Senior Loan Documents.

        "Liens" means any mortgage, deed of trust, pledge, lien, security
interest, charge, set-off right or other encumbrance, whether now existing or
hereafter created, acquired or arising.

        "Obligor" means any guarantor or obligor of any Senior Indebtedness.

        "Proceeding" means any voluntary or involuntary proceeding commenced by
or against either Company or any Obligor under any provision of the Bankruptcy
Code, or under any other bankruptcy or insolvency law, including assignments for
the benefit of creditors, formal or informal moratoria, compositions, extensions
generally with its creditors, or proceedings seeking dissolution, receivership,
reorganization, arrangement, or other similar relief.

        "Senior Agent" means LaSalle Bank National Association, as
Administrative Agent for Senior Lenders, or any other Person appointed by the
holders of the Senior Indebtedness as administrative agent for purposes of the
Senior Loan Documents and this Agreement, together with the successors and
assigns of all of the foregoing.

        "Senior Indebtedness" means all obligations, liabilities and
indebtedness of every nature of either Company or any Obligor from time to time
owed to the Senior Agent or any Senior Lender under the Senior Loan Documents,
including the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest and all premium, fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and from time
to time hereafter owing, due or payable, whether before or after the filing of a
Proceeding, including any Hedging Obligations and Bank Product Obligations at
any time due and owing to any Senior Lender, together with (a) any amendments,
modifications, renewals, restatements or extensions thereof and (b) any interest
accruing thereon after the commencement of a Proceeding, without regard to
whether or not such interest is allowed in any Proceeding. Senior Indebtedness
shall be deemed to be outstanding until it is Finally Paid.

        "Senior Loan Documents" means the Credit Agreement, the other Loan
Documents and all other agreements, documents and instruments executed from time
to time in connection therewith, in each case as from time to time renewed,
extended, amended, restated or modified by the parties thereto and all
agreements and instruments evidencing full or partial refundings of the
indebtedness thereunder.

        "Subordinated Indebtedness" means all obligations, liabilities and
indebtedness of every nature of either Company or any Obligor from time to time
owed to any Subordinated Lender under the Subordinated Documents, including the
principal amount of all debts, claims and indebtedness, accrued and unpaid
interest and all premium, fees, costs and expenses, whether primary, secondary,
direct, contingent, fixed or otherwise, heretofore, now and from time to time
hereafter owing, due or payable, whether before or after the filing of a
Proceeding (including any amounts payable by either Company or any Obligor in
connection with put, redemption, repurchase or repurchase rights under any
warrants or any Capital Securities of either Company or any Obligor held by any
Subordinated Lender), together with (a) any amendments, modifications, renewals,
restatements or extensions thereof by the parties thereto and (b) any interest
accruing thereon after the commencement of a Proceeding, without regard to
whether or not such interest is allowed in any Proceeding.

        "Subordinated Lender Remedies" means any action (a) to take from or for
the account of either Company, any Obligor, any other guarantor of the
Subordinated Indebtedness or any other Person, by set-off or in any other
manner, the whole or any part of any moneys which may now or hereafter be owing
by either Company (other than receipt of payments of Subordinated Indebtedness
to the extent permitted by this Agreement), any Obligor, any such guarantor or
any other Person with respect to the

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Subordinated Indebtedness, (b) to sue for payment of, or to initiate or
participate with others in any suit, action or proceeding (including any
Proceeding) against either Company, any Obligor, any such guarantor or any other
Person to (i) enforce payment of or to collect the whole or any part of the
Subordinated Indebtedness or (ii) commence judicial enforcement of any of the
rights and remedies under the Subordinated Documents or applicable law with
respect to the Subordinated Indebtedness, (c) to accelerate the Subordinated
Indebtedness, (d) to exercise any put, repurchase or similar option or to cause
either Company, any Obligor, any such guarantor or any other Person to honor any
redemption or mandatory prepayment obligation under any Subordinated Document or
(e) to take any action under the provisions of any state or federal law,
including the UCC, or under any contract or agreement, to enforce, foreclose
upon, take possession of or sell any Company Property or any property or assets
of any such guarantor or any other Person.

        "Subordinated Lender" shall have the meaning set forth in the recitals
hereof.

        "Subordinated Note" shall have the meaning set forth in the recitals
hereof.

        "UCC" means Article 9 of the Uniform Commercial Code, as in effect in
any relevant jurisdiction.

        2.    Subordination of Subordinated Indebtedness to Senior
Indebtedness.    Each Company covenants and agrees, and the Subordinated Lender
by its acceptance of the Subordinated Documents (whether upon original issue or
upon transfer or assignment) likewise covenants and agrees, notwithstanding
anything to the contrary contained in any of the Subordinated Documents, that
the payment of any and all of the Subordinated Indebtedness shall be subordinate
and subject in right and time of payment, to the extent and in the manner
hereinafter set forth, to the Final Payment of all Senior Indebtedness. Each
holder of Senior Indebtedness, whether now outstanding or hereafter created,
incurred, assumed or guaranteed, shall be deemed to have acquired Senior
Indebtedness in reliance upon the provisions contained in this Agreement.

        3.    Subordination of Liens.    

        (a)   The Subordinated Lender hereby covenants and agrees that any Liens
and rights of any kind the Subordinated Lender may now have and hereafter
acquire (or be deemed to now have or hereafter acquire) against either Company
or any Obligor and/or any Company Property, if any, shall be subordinate and
subject to the Liens and rights against either Company, Obligors and/or Company
Property of the Senior Lenders arising from or out of the Senior Indebtedness,
regardless of the order, time or manner in which any Liens attach to or are
perfected in any Company Property.

        (b)   If (x) either Company or any Obligor, as the case may be, desires
to make any payment or to sell any Company Property as to which the Senior
Lenders have provided their written consent or which is otherwise permitted
under the Senior Loan Documents or (y) the Senior Lenders release their Lien in
connection with any sale or disposition of any Company Property, the
Subordinated Lender shall be deemed to have consented to such disposition and
shall execute such releases with respect to such Company Property to be sold as
the Senior Agent or the Senior Lenders request to evidence the release of any
Lien against such property the Subordinated Lender may have or be deemed to
have. The Subordinated Lender hereby irrevocably appoints the holders of the
Senior Indebtedness, or the Senior Agent on their behalf, as the true and lawful
attorneys of the Subordinated Lender for the purpose of executing and filing any
such releases. The Subordinated Lender hereby waives any rights the Subordinated
Lender has or may have in the future to object to the appointment of a receiver
for all or any portion of the equity or the assets of either Company or any
Obligor or to require any Senior Lender to marshal the collateral and agrees
that each Senior Lender may proceed against the collateral in any order that it
deems appropriate in the exercise of its absolute discretion.

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        4.    Warranties and Representations of Companies and Subordinated
Lender.    

        (a)   Each Company and the Subordinated Lender hereby severally
represent and warrant to the Senior Lenders that each Senior Lender has been
furnished with a true and correct copy of all instruments and securities
evidencing or pertaining to the Subordinated Indebtedness.

        (b)   Each Company hereby represents and warrants to the Senior Lenders
that this Agreement has been duly executed and delivered by each Company and
constitutes a legal, valid and binding obligation of each Company enforceable in
accordance with its terms except to the extent that the enforceability thereof
may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect affecting generally the
enforcement of creditors' rights and remedies and general principles of equity.

        (c)   The Subordinated Lender represents and warrants to the Senior
Lenders: (i) that this Agreement has been duly executed and delivered by the
Subordinated Lender and constitutes a legal, valid and binding obligation of the
Subordinated Lender enforceable against the Subordinated Lender in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect affecting generally the enforcement of
creditors' rights and remedies and general principles of equity; (ii) that the
Subordinated Lender has not relied and shall not rely on any representation or
information of any nature made by or received from any Senior Lender relative to
either Company or any Obligor in deciding to execute this Agreement or to permit
it to continue in effect; and (iii) that the Subordinated Lender is the current
holder of the Subordinated Indebtedness.

        (d)   Notwithstanding anything contained in this Agreement to the
contrary, the Subordinated Lender hereby represents and warrants to the Senior
Agent and each Company that the Subordinated Lender has no security interest in
or Lien on any assets of either Company or any Obligor or any Company Property.

        5.    Negative Covenants.    Until all of the Senior Indebtedness has
been Finally Paid: (A) the Subordinated Lender shall not demand, accept or
acquire from either Company or any Obligor any security interest in or Lien on
any assets of either Company or any Obligor or any Company Property, nor any
collateral from either Company or any Obligor; (B) neither Company shall
discharge the Subordinated Indebtedness other than in accordance with the terms
of the Subordinated Documents; (C) the Subordinated Lender shall not demand or
accept from either Company, any Obligor or other Person any consideration which
would result in a discharge of the Subordinated Indebtedness; (D) the
Subordinated Lender shall not hereafter give any subordination in respect of the
Subordinated Indebtedness; and (E) neither Company shall hereafter issue any
instrument, security or other writing evidencing any part of the Subordinated
Indebtedness, and the Subordinated Lender shall not receive any such writing,
except upon the condition that such security shall bear the legend referred to
in Section 25 below and a true copy thereof shall be thereupon promptly
furnished to the Senior Agent.

        6.    Permitted Payments.    Notwithstanding the terms of the
Subordinated Documents, each Company hereby agrees that it shall not make (and
will not permit any other Obligor to make), and the Subordinated Lender hereby
agrees that it will not accept, any payment or distribution with respect to the
Subordinated Indebtedness including any payment or distribution received through
the exercise of any right of setoff, counterclaim or crossclaim, until the
Senior Indebtedness is Finally Paid; provided that the Companies may make to the
Subordinated Lender and the Subordinated Lender may accept payments in kind (but
not in cash) including, without limitation, services in connection with that
certain Processing Agreement, between Akorn and the Subordinated Lender, dated
as of December 20, 2001 (the "Processing Agreement"); provided further that
notwithstanding anything hereunder to the contrary, the Subordinated Lender
shall retain all of its rights as a purchaser of Akorn's goods and services
under the Processing Agreement, and nothing hereunder shall be construed as the
Subordinated

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Lender's relinquishment or waiver, or assignment to the Senior Agent or the
Senior Lenders of the Subordinated Lender's right to reject Akorn's noncorming
goods or services, if any, or to assert and contest claims against Akorn for
damages resulting therefrom.

        7.    Forbearance of Legal Remedies.    

        (a)   Until the Senior Indebtedness is Finally Paid, the Subordinated
Lender shall not, without the prior written consent of the Senior Agent,
exercise any Subordinated Lender Remedies.

        (b)   Notwithstanding anything contained herein to the contrary or any
rights or remedies available to the Subordinated Lender under any of the
Subordinated Documents, applicable law or otherwise, prior to the time that the
Senior Indebtedness has been Finally Paid, any payments, distributions or other
proceeds obtained by any Subordinated Lender from the exercise of any
Subordinated Lender Remedies shall in any event be held in trust by it for the
benefit of the Senior Agent and the Senior Lenders and promptly paid or
delivered to the Senior Agent for the benefit of the Senior Lenders in the form
received.

        8.    Dissolution, Liquidation, Reorganization or Bankruptcy.    (a) In
the event of any Proceeding involving either Company or any Obligor:

          (i)  all Senior Indebtedness shall be Finally Paid before the
Subordinated Lender shall be entitled to receive any payment on account of any
Subordinated Indebtedness; and

         (ii)  any payment or distribution of assets of such Person of any kind
or character, whether in cash, property or securities, to which the Subordinated
Lender would be entitled except for these provisions, shall be paid by the
liquidating trustee or agent or other Person making such payment or distribution
directly to the Senior Agent, to the extent necessary to make Final Payment of
all Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution or provision therefor to the holders of such Senior
Indebtedness. The Subordinated Lender irrevocably authorizes, empowers and
directs any debtor, debtor-in-possession, receiver, trustee or agent or other
person having authority, to pay or otherwise deliver all such payments or
distributions to Senior Agent.

        (b)   Until the Senior Indebtedness has been Finally Paid, if a
Proceeding shall occur and be continuing, the Subordinated Lender shall file all
claims it may have against either Company or any Obligor, and shall direct the
debtor in possession or trustee in bankruptcy, as appropriate, to pay over to
the Senior Agent all amounts due to the Subordinated Lender on account of the
Subordinated Indebtedness until the Senior Indebtedness has been Finally Paid.
If the Subordinated Lender fail to file such claims or to vote such claims prior
to 30 days before the expiration of time to do so, the Senior Agent may (but
shall have no obligation to) file and/or vote such claims in the Subordinated
Lender's name on behalf of the Senior Lenders. If the Senior Agent votes any
such claim in accordance with the authority granted hereof, the Subordinated
Lender shall not be entitled to withdraw or change such vote.

        (c)   The Subordinated Lender agrees, in connection with any such
Proceeding, that while it shall retain the right to vote and otherwise act in
any such proceeding (including the right to vote to accept or reject any plan of
partial or complete liquidation, reorganization, arrangement, composition or
extension), it will not take any action or vote in any way so as to (i) contest
the validity of the Liens securing the Senior Indebtedness, (ii) contest the
enforceability of any of the Senior Loan Documents, (iii) contest the Senior
Lenders' priority position over the Subordinated Lender created by this
Agreement or (iv) take any position or action which would have directly or
indirectly any of the following effects: (A) extension of the final maturity of
and/or forgiveness, reduction or cram-down of the Senior Indebtedness or
deferral of any required payment in respect of Senior Indebtedness, (B) opposing
or objecting to initiatives or claims by the Senior Lenders for adequate
protection or relief from the automatic stay, use of cash collateral or
super-priority

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expense of administration for failure of adequate protection, (C) challenging in
any respect treatment of the Senior Indebtedness as a first priority perfected
fully secured claim, (D) blocking current payment of any obligation in respect
of Senior Indebtedness, (E) assenting to or supporting any requested extension
of the exclusivity period for the submission by Company of any plan of
reorganization or liquidation under the Bankruptcy Code unless such extension is
assented to or supported by the Senior Lenders; and (F) opposing or objecting to
any sale or lease of any Company Property that has been consented to by the
holders of Senior Indebtedness. In the event of any violation of any provisions
of this section by any Subordinated Lender, the Senior Lenders may in the name
of the Subordinated Lender, or in their own name thereafter amend, modify or
rescind any such prior act taken or vote issued, in violation of this Agreement.

        (d)   Until the Senior Indebtedness has been Finally Paid, if a
Proceeding shall occur and be continuing, the Subordinated Lender hereby
(i) expressly consent to any Senior Lender's providing post-petition financing
to either Company or any Obligor or the granting by either Company or any
Obligor to any Senior Lender of senior liens and priorities in connection
therewith and/or the use of cash collateral and (ii) agree that adequate notice
of such financing or cash collateral usage to the Subordinated Lender shall have
been provided if the Subordinated Lender received notice in accordance with
Section 16 hereof 2 Business Days prior to the entry of any order approving such
financing or cash collateral usage.

        (e)   If any Subordinated Lender has or at any time acquires any
security interest or Lien for the Subordinated Indebtedness, the Subordinated
Lender agrees not to (i) initiate any proceeding involving the marshalling of
any Company Property (whether in a Proceeding or otherwise) or (ii) assert any
right it may have to "adequate protection" of its interest, if any, in such
security in any Proceeding and agrees that it will not seek to have the
automatic stay lifted with respect to such security, in each case without the
prior written consent of the Senior Agent. The Subordinated Lender waives any
claim or defense the Subordinated Lender may now or hereafter have arising out
of the election by any Senior Lender in any Proceeding instituted under Chapter
11 of the Bankruptcy Code of any use of cash collateral, any borrowing or any
grant of a security interest under Sections 363 and/or 364 of the Bankruptcy
Code by either Company or any Obligor, as debtor-in-possession. The Subordinated
Lender agrees that it will not object to or oppose a sale or other disposition
of any property securing all or any part of the Senior Indebtedness free and
clear of any security interests or other Liens or other claims of the
Subordinated Lender under Section 363 of the Bankruptcy Code if the Senior Agent
has consented to such sale or disposition. The Subordinated Lender further
agrees that it will not seek to participate on any creditors committee in
respect of the Subordinated Indebtedness without the Senior Agent's prior
written consent. To the extent that any Senior Lender receives payments on, or
proceeds of collateral for, the Senior Indebtedness which are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law, or equitable cause, then as
between such Senior Lender and the Subordinated Lender hereunder, to the extent
of such payment or proceeds received, the Senior Indebtedness, or part thereof,
intended to be satisfied shall be revived and continue in full force and effect
as if such payments or proceeds had not been received by such Senior Lender.

        9.    Obligation of Company Unconditional.    Nothing contained herein
or in the Senior Loan Documents is intended to or shall impair, as between
either Company and the Subordinated Lender only, the obligation of the
Companies, which is absolute and unconditional, to pay to the Subordinated
Lender the Subordinated Indebtedness as and when the same shall become due and
payable in accordance with their terms, or to affect the relative rights of the
Subordinated Lender and creditors of the Companies other than the Senior
Lenders.

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        10.    Subordination Rights Not Impaired by Acts or Omissions of either
Company or Holders of Senior Indebtedness.    

        (a)   No right of any present or future holders of any Senior
Indebtedness to enforce the subordination provisions as provided herein shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of either Company; by any act or failure to act by any such holder; by
any act or failure to act by any other holder of the Senior Indebtedness; or by
any noncompliance by either Company with the terms hereof, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
The Subordinated Lender shall not be released, nor shall the Subordinated
Lender's obligation hereunder be in anyway diminished, by any of the following:
(i) the exercise or the failure to exercise by any Senior Lender of any rights
or remedies conferred on it or them under the Senior Loan Documents, hereunder
or existing at law or otherwise, or against any Company Property; (ii) the
commencement of an action at law or the recovery of a judgment at law against
either Company or any Obligor for the performance of the Senior Indebtedness and
the enforcement thereof through levy or execution or otherwise; (iii) the taking
or institution or any other action or proceeding against either Company or any
Obligor; (iv) any delay in taking, pursuing, or exercising any of the foregoing
actions, rights, powers, or remedies (even though requested by Subordinated
Lender) by any Senior Lender or anyone acting for any Senior Lender; (v) any
lack of validity or enforceability of any Senior Loan Document; (vi) the release
or non-perfection of any collateral securing the Senior Indebtedness; or
(vii) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, either Company or any Obligor in respect of the
Senior Indebtedness or Subordinated Lender in respect of this Agreement.

        (b)   Without limiting the generality of the foregoing, and anything
else contained herein to the contrary notwithstanding, any Senior Lender, from
time to time, without prior notice to or the consent of the Subordinated Lender,
may take all or any of the following actions without in any manner affecting or
impairing the obligation or liability of the Subordinated Lender hereunder:
(i) obtain a Lien in any property to secure any of the Senior Indebtedness;
(ii) obtain the primary and secondary liability of any party or parties with
respect to any of the Senior Indebtedness; (iii) renew, extend, or otherwise
change the time for payment of the Senior Indebtedness or any installment
thereof for any period, or change the interest rates and fees with respect to
the Senior Indebtedness; (iv) renew, reaffirm, extend, release or otherwise
change any liability of any nature of any person or entity, including any
Obligor, with respect to the Senior Indebtedness; (v) exchange, enforce, waive,
release, and apply any Company Property and direct the order or manner of sale
thereof as such Senior Lender may in its discretion determine; (vi) enforce its
rights hereunder, whether or not such Senior Lender shall proceed against any
other Person; (vii) exercise its rights to consent to any action or non-action
of either Company or any Obligor which may violate the covenants and agreements
contained in the Senior Loan Documents, with or without consideration, on such
terms and conditions as may be acceptable to it; or (viii) exercise any of its
rights conferred by the Senior Loan Documents or by law.

        11.    Waivers.    Each Company and the Subordinated Lender each hereby
waive, to the fullest extent permitted by law, any defense based on the adequacy
of a remedy at law which might be asserted as a bar to the remedy of specific
performance of this Agreement in any action brought therefor by the Senior
Lenders. To the fullest extent permitted by law and except as to any notices
specified in this Agreement, notices regarding the intended sale or disposition
of any portion of the collateral held by the Senior Lenders, or any notice which
may not be waived in accordance with the UCC, each Company and the Subordinated
Lender each hereby further waive: (a) presentment, demand, protest and notice of
protest in connection with all negotiable instruments evidencing all or any
portion of the Senior Indebtedness or the Subordinated Indebtedness to which the
Companies or the Subordinated Lender may be a party and (b) prior notice of and
consent to any loans made or

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extensions granted. The Subordinated Lender consents to any release, renewal,
extension, compromise or postponement of the time of payment of the Senior
Indebtedness, to any substitution, exchange or release of collateral therefor,
and to the addition or release of any person primarily or secondarily liable
thereon.

        12.    No Estoppel.    Neither the failure nor any delay on the part of
any Senior Lender to exercise any right, remedy, power or privilege hereunder
shall operate as a waiver thereof or give rise to an estoppel, nor be construed
as an agreement to modify the terms of this Agreement, nor shall any single or
partial exercise of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver by a party hereunder shall be
effective unless it is in writing and signed by the party making such waiver,
and then only to the extent specifically stated in such writing.

        13.    Incorrect Payments; Specific Performance.    If either Company or
any Obligor shall make or the Subordinated Lender shall collect any payment on
account of the principal of, premium or interest on or any other amounts due
under the Subordinated Indebtedness in contravention of this Agreement, such
payments shall be held in trust by the Subordinated Lender and not commingled
with any assets of any Subordinated Lender and shall be paid over and delivered
to the Senior Agent, for the benefit of the Senior Lenders, promptly upon
receipt thereof. At any time any Subordinated Lender fails to comply with any
provision of this Agreement, the Senior Lenders may demand specific performance
of this Agreement, whether or not either Company has complied with this
Agreement, and may exercise any other remedy available at law or equity.

        14.    Amendment of the Subordinated Documents and Senior Loan
Documents.    The Subordinated Lender agrees that it will not, without the prior
written consent of the Senior Agent, agree to any amendment, modification,
waiver or supplement to the Subordinated Documents. The Senior Indebtedness may
at any time be amended, extended, modified, restated or waived without
limitation, without notice to, or the consent of, the Subordinated Lender.

        15.    Inconsistent or Conflicting Provisions; Construction.    If a
provision of the Senior Loan Documents or the Subordinated Documents is
inconsistent or conflicts with the provisions of this Agreement, the provisions
of this Agreement shall govern and prevail. The term "including" is not limiting
and means "including without limitation." In the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and the
word "through" means "to and including."

        16.    Notices.    Any notice, consent or other communication provided
for in this Agreement shall be in writing and shall be delivered personally
(effective upon delivery), via facsimile (effective upon confirmation of
transmission), via overnight courier (effective the next Business Day after
dispatch if instructed to deliver on next business day) or via U.S. Mail
(effective 3 days after mailing, postage prepaid, first class) to each party at
its address(es) and/or facsimile number(s) set forth on Annex I hereto, or to
such other address as either party shall specify to the other in writing from
time to time. The Subordinated Lender shall provide the Senior Agent with
written notice promptly upon the occurrence of an event of default under the
Subordinated Documents.

        17.    Entire Agreement.    This Agreement constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, whether express or implied, oral or
written. Neither this Agreement nor any portion or provision hereof may be
changed, waived or amended orally or in any manner other than by an agreement in
writing signed by the Senior Agent and the Subordinated Lender; provided that
any such change, waiver or amendment shall be binding upon each Company by their
written consent thereto. This Agreement shall constitute a Loan Document and the
recitals hereto shall constitute part of this Agreement.

8

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        18.    Additional Documentation.    Each Company and the Subordinated
Lender shall execute and deliver to the Senior Agent such further instruments
and shall take such further action as the Senior Agent may at any time or times
reasonably request in order to carry out the provisions and intent of this
Agreement.

        19.    Expenses.    The Companies, joint and severally, agree to pay the
Senior Agent and the Senior Lenders on demand all expenses of every kind,
including Attorney Costs, that the Senior Agent or the Senior Lenders incur in
enforcing any of their rights against either Company and/or the Subordinated
Lender under this Agreement.

        20.    Successors and Assigns.    

        (a)   This Agreement shall inure to the benefit of each Senior Lender,
the Subordinated Lender, and their respective successors and assigns, and shall
be binding upon each Company and its successors and assigns, and each Senior
Lender, the Subordinated Lender and their respective transferees, successors and
assigns, including any subsequent holders of the Subordinated Note. Any Senior
Lender, without prior notice or consent of any kind, may sell, assign or
transfer any Senior Indebtedness, and in such event each and every immediate and
successive assignee or transferee thereof may be given the right by such Person
to enforce this Agreement in full against each Company and the Subordinated
Lender, by suit or otherwise, for its own benefit.

        (b)   The Subordinated Lender shall not sell, assign, pledge, dispose of
or otherwise transfer all or any portion of the Subordinated Indebtedness or any
Subordinated Document without the prior written consent of the Senior Agent.

        (c)   Notwithstanding the failure of any transferee to execute or
deliver an agreement substantially identical to this Agreement, the
subordination effected hereby shall survive any sale, assignment, pledge,
disposition or other transfer of all or any portion of the Subordinated
Indebtedness, and the terms of this Agreement shall be binding upon the
successors and assigns of each Subordinated Indebtedness, as provided in this
Section 20.

        21.    Covenant Not to Challenge.    This Agreement has been negotiated
by the parties with the expectation and in reliance upon the assumption that the
instruments and documents evidencing the Senior Indebtedness are valid and
enforceable. In determining whether to enter into this Agreement, the
Subordinated Lender has assumed such validity and enforceability, and has agreed
to the provisions contained herein, without relying upon any reservation of a
right to challenge or call into question such validity or enforceability. As
between any Senior Lender and any Subordinated Lender, the Subordinated Lender
hereby covenants and agrees, to the fullest extent permitted by law, that it
shall not initiate in any proceeding a challenge to the validity or
enforceability of the documents and instruments evidencing the Senior
Indebtedness or the validity, perfection or priority of any Lien of the Senior
Agent or the Senior Lenders securing the Senior Indebtedness, nor shall the
Subordinated Lender instigate other parties to raise any such challenges, nor
shall the Subordinated Lender participate in or otherwise assert any such
challenges which are raised by other parties.

        22.    Subrogation.    Subject to the Final Payment of all Senior
Indebtedness and the provisions of Section 24 hereof, the Subordinated Lender
shall be subrogated to the rights of the Senior Lenders to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness to the extent that distributions otherwise payable to the
Subordinated Lender have been applied to the Senior Indebtedness, until all
amounts payable under the Subordinated Indebtedness shall have been paid in
full. For purposes of such subrogation, no payments or distributions to the
Senior Lenders of any cash, property or securities to which the Subordinated
Lender would be entitled except for the provisions of this Agreement, and no
payment pursuant to the provisions of this Agreement to the Senior Lenders by
the Subordinated Lender shall, as among the Companies and their creditors other
than the Senior Lenders, be deemed to be a payment or distribution by either

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Company to or on account of the Senior Indebtedness. If either Company fails to
make any payment on account of the Subordinated Indebtedness by reason of any
provision contained herein, such failure shall, notwithstanding such provision
contained herein, constitute a default with respect to the Subordinated
Indebtedness if and to the extent such failure would otherwise constitute such a
default in accordance with the terms of the Subordinated Indebtedness.

        23.    Termination of Agreement.    This Agreement shall continue and
shall be irrevocable until the date all of the Senior Indebtedness has been
Finally Paid or otherwise discharged and released in an express writing to such
effect by the Senior Lenders.

        24.    Reinstatement.    The obligations of the Subordinated Lender
under the Agreement shall continue to be effective, or be reinstated, as the
case may be, if at any time any payment in respect of any Senior Indebtedness is
rescinded or must otherwise be restored or returned by any Senior Lender by
reason of any bankruptcy, reorganization, arrangement, composition or similar
proceeding or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, either Company, any Obligor
or any substantial part of its property, or otherwise, all as though such
payment had not been made.

        25.    Legends.    Until the termination of this Agreement, the
Subordinated Lender will cause to be clearly, conspicuously and prominently
inserted on the face of the Subordinated Note and any other Subordinated
Document, as well as any renewals or replacements thereof, the following legend:

"THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 7,
2003 AMONG NEOPHARM, INC., A DELAWARE CORPORATION, AKORN, INC., A LOUISIANA
CORPORATION ("AKORN"), AND AKORN (NEW JERSEY), INC., AN ILLINOIS CORPORATION
("AKORN NJ"; TOGETHER WITH AKORN, EACH A "COMPANY" AND COLLECTIVELY THE
"COMPANIES") AND LASALLE BANK NATIONAL ASSOCIATION (TOGETHER WITH ITS SUCCESSORS
AND ASSIGNS, THE "SENIOR AGENT"), TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED
BY THE COMPANIES PURSUANT TO THAT CERTAIN CREDIT AGREEMENT DATED AS OF OCTOBER
7, 2003 AMONG THE COMPANIES, THE SENIOR AGENT AND THE LENDERS FROM TIME TO TIME
PARTY THERETO, AND THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT)
AS SUCH CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS MAY BE AMENDED, RESTATED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME AS CONTEMPLATED BY THE
SUBORDINATION AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE
HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT."

        Each Company's books shall be marked to evidence the subordination of
all of the Subordinated Indebtedness to the holders of Senior Indebtedness, in
accordance with the terms of this Agreement. Each Senior Lender is authorized to
examine such books from time to time in accordance with the terms of the Credit
Agreement and to make any notations required by this Agreement.

        26.    Governing Law.    THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES. EACH COMPANY AND THE SUBORDINATED LENDER HEREBY
AGREE THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY EACH COMPANY OR THE
SUBORDINATED LENDER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT
SHALL BE LITIGATED IN A

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COOK COUNTY, ILLINOIS COURT OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS OR, IF ANY SENIOR LENDER INITIATES SUCH ACTION, IN ADDITION
TO THE FOREGOING COURTS, ANY COURT IN WHICH SUCH SENIOR LENDER SHALL INITIATE
SUCH ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION. EACH COMPANY AND THE
SUBORDINATED LENDER EACH HEREBY EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY ANY SENIOR LENDER AND
HEREBY WAIVE ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM OR AN IMPROPER
FORUM BASED UPON LACK OF VENUE. THE EXCLUSIVE CHOICE OF FORUM AS SET FORTH IN
THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY ANY SENIOR
LENDER, OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING, BY ANY SENIOR
LENDER, OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION,
AND EACH COMPANY AND THE SUBORDINATED LENDER HEREBY WAIVE THE RIGHT TO
COLLATERALLY ATTACK SUCH JUDGMENT OR ACTION.

        27.    Jury Trial.    THE SENIOR AGENT, THE SUBORDINATED LENDER AND EACH
COMPANY WAIVE TRIAL BY JURY IN ANY DISPUTE ARISING FROM, UNDER OR IN CONNECTION
WITH THIS AGREEMENT.

        28.    Severability.    The provisions of this Agreement are independent
of and separable from each other. If any provision hereof shall for any reason
be held invalid or unenforceable, it is the intent of the parties that such
invalidity or unenforceability shall not affect the validity or enforceability
of any other provision hereof, and that this Agreement shall be construed as if
such invalid or unenforceable provision had never been contained herein.

        29.    Counterparts.    This Agreement may be executed in any number of
separate counterparts, all of which, when taken together, shall constitute one
and the same instrument, notwithstanding the fact that all parties did not sign
the same counterpart. Receipt of an executed signature page to this Agreement by
facsimile or other electronic transmission shall constitute effective delivery
thereof.

        30.    Sections.    The section headings used in this Agreement are for
convenience only and shall not affect the interpretation of any of the
provisions hereof.

        31.    Defines Rights of Creditors.    The provisions of this Agreement
are solely for the purpose of defining the relative rights of the Senior Lenders
and the Subordinated Lender and shall not be deemed to create any rights or
priorities in favor of any other Person, including each Company.

[signature pages follow]

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        The parties hereto have executed this Agreement as of the date first
above written.

COMPANIES:   AKORN, INC.
 
 
 
 
 
 
 
By:
 
/s/  BERNARD J. POTHAST      

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    Name:   Bernhard J. Pothast

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    Title:   CFO

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AKORN (NEW JERSEY), INC.
 
 
 
 
 
 
 
By:
 
/s/  BERNARD J. POTHAST      

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    Name:   Bernhard J. Pothast

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    Title:   CFO

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SENIOR AGENT:
 
LASALLE BANK NATIONAL ASSOCIATION
 
 
 
 
 
 
 
 
 
 
 
 
By:
 
/s/  PATRICK J. O'TOOLE      

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    Name:   Patrick J. O'Toole

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    Title:   VP

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SUBORDINATED LENDER:
 
NEOPHARM, INC.
 
 
 
 
 
 
 
By:
 
/s/  JAMES M. HUSSEY      

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    Name:   James M. Hussey

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    Title:   President and CEO

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ANNEX I

NOTICE ADDRESSES

       

COMPANIES:

c/o Akorn, Inc.
2500 Milbrook Drive
Buffalo Grove, Illinois 60089
Attention:                                       
                                   
Facsimile:                                       
                                   

SENIOR AGENT:

LaSalle Bank National Association
135 South LaSalle Street
Chicago, Illinois 60603
Attention:    Patrick O'Toole
Facsimile:                                       
                                   

SUBORDINATED LENDER:

Neopharm, Inc.
150 Field Drive, Suite 195
Lake Forest, Illinois 60045
Facsimile No.: (847) 295-8854
Attn: James Hussey, Chief Executive Officer

With a copy to:

McGuireWoods Ross & Hardies
150 North Michigan Avenue
Chicago, Illinois 60601-7567
Facsimile No.: (312) 750-8600
Attn: Scott Becker

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