Exhibit 10.5
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered
into as of August 17, 2009, by and among AKORN, INC., a Louisiana corporation
(the “Company”), THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989 (the “Kapoor
Trust”) and EJ Funds LP, a Delaware limited partnership (“EJ Funds” and together
with the Kapoor Trust and their respective Affiliates, the “Investors”).
Capitalized terms that are used but not otherwise defined herein shall have the
meanings ascribed to such terms in the Restated Credit Agreement (herein
defined).
WITNESSETH:
     WHEREAS, on January 7, 2009, the Company, Akorn (New Jersey), Inc., an
Illinois corporation (“Akorn NJ”), and General Electric Capital Corporation, a
Delaware corporation (“GE Capital”), as agent and a lender, entered into a
Credit Agreement (the “Credit Agreement”);
     WHEREAS, on March 31, 2009, GE Capital assigned the Credit Agreement to EJ
Funds pursuant to an Assignment Agreement, and EJ Funds became the sole agent
and lender under the Credit Agreement;
     WHEREAS, on April 13, 2009, the Company, Akorn NJ and EJ Funds entered into
a Modification, Warrant and Investor Rights Agreement (the “Modification
Agreement”) that, among other things, modified certain provisions of the Credit
Agreement, reduced the aggregate revolving loan commitment from $25,000,000 to
$5,650,000 and provided EJ Funds and its Affiliates with certain registration
rights as set forth in the Modification Agreement;
     WHEREAS, concurrently with the execution of this Agreement, the Company,
Akorn NJ and EJ Funds, as sole agent and lender under the Credit Agreement, as
amended by the Modification Agreement, agreed to enter into an Amended and
Restated Credit Agreement to, among other things, increase the aggregate
revolving loan commitment from $5,650,000 to $10,000,000, eliminate the letter
of credit subfacility and to temporarily suspend the financial covenants to the
extent reflected (as may be amended, restated, modified or otherwise
supplemented from time to time, the “Restated Credit Agreement”);
     WHEREAS, concurrently with the execution of this Agreement, the Kapoor
Trust, as subordinated lender, permitted the Company to extend the maturity of
the Company’s subordinated note for five years on substantially similar terms as
in effect prior to the maturity of the original subordinated note, which
indebtedness is evidenced by an Amended and Restated Subordinated Promissory
Note of even date herewith (the “Restated Subordinated Note”); and
     WHEREAS, in order to induce EJ Funds to enter into the Restated Credit
Agreement and to induce the Kapoor Trust to enter into the Restated Subordinated
Note, the Company desires to (i) issue the First Warrant (defined herein) to EJ
Funds, (ii) issue the Second Warrant (defined herein) to the Kapoor Trust and
(iii) enter into this Agreement to provide to the Investors and their respective
Affiliates certain registration rights on terms substantially similar to those
previously granted under the Modification Agreement (which agreement shall cease
to be in effect upon execution of the Restated Credit Agreement) and to clarify
that such registration rights extend to the shares of Common Stock (defined
herein) issuable upon exercise of the First Warrant and the Second Warrant.
     NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
     1. Warrants. In order to induce EJ Funds to enter into the Restated Credit
Agreement, the Company hereby issues to EJ Funds a warrant for the purchase of
up to One Million Six Hundred Fifty Thousand Eight Hundred Six (1,650,806)
shares of common stock, no par value per share, of the Company (“Common Stock”),
in the form attached hereto as Exhibit “A” (the “First Warrant”) and in order to
induce the Kapoor Trust to enter into the Restated Subordinated Note, the
Company hereby issues to the Kapoor Trust a warrant for the purchase of up to
Two Million Ninety-Nine Thousand Nine Hundred Thirty-Five (2,099,935) shares of
Common Stock in the form attached hereto as Exhibit “B” (the “Second Warrant”).

 

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     2. Registration Rights. In order to induce EJ Funds to enter into the
Restated Credit Agreement and to induce the Kapoor Trust to enter into the
Subordinated Promissory Note, the Company hereby further agree as follows:
          (a) Resale Registration Statement. The Company shall (subject to
Section 2(b)) use commercially reasonable efforts to:
               (i) cause to be filed with the U.S. Securities and Exchange
Commission (the “SEC”) as soon as reasonably practicable, but in no event later
than forty-five days (45) days after the date hereof (the “Resale Filing
Deadline”), a registration statement pursuant to Rule 415 under the Securities
Act (defined in Section 2(g)) (the “Resale Registration Statement”), which
Resale Registration Statement shall provide for resales and Transfers (defined
in Section 2(g)) of all Registrable Securities (defined in Section 2(g)) by the
Holders (defined in Section 2(g)) as permitted by such Rule 415;
               (ii) cause the Resale Registration Statement to be declared
effective by the SEC at the earliest practicable time, but in no event later
than the earlier to occur of (i) if the SEC notifies the Company that it does
not intend to review the Resale Registration Statement, ten (10) days after the
Company receives such notice from the SEC; or (ii) if the SEC notifies the
Company that it intends to review the Resale Registration Statement, one-hundred
fifty (150) days after Resale Filing Deadline (or if such day is not a Business
Day, the next succeeding Business Day, the “Resale Effective Deadline”);
               (iii) in connection with the foregoing, file all pre-effective
amendments to the Resale Registration Statement as may be necessary in order to
cause such Resale Registration Statement to become effective and, if applicable,
a post-effective amendment to the Resale Registration Statement pursuant to
Rule 430A under the Securities Act; and
               (iv) cause the Resale Registration Statement to remain
Continuously Effective (defined in Section 2(g)), supplemented and amended as
required by the provisions of Section 2(c) to the extent necessary to ensure
that it is available for resales and Transfers of Registrable Securities by the
Holders, and to ensure that it conforms with the requirements of this Agreement,
the Securities Act and the policies, rules and regulations of the SEC as
announced from time to time, for a period beginning on the Resale Effective
Deadline and continuing through the earliest to occur of (A) the date no shares
of Common Stock qualify as Registrable Securities, (B) the date on which all of
the Registrable Securities may be sold in a single transaction by the Holder to
the public pursuant to Rule 144 or any similar rule promulgated by the SEC
pursuant to the Securities Act permitting the resale of restricted securities
without the necessity of a registration statement under the Securities Act or
(C) the date upon which the Investors have Transferred all of the Registrable
Securities.
          (b) Postponement of Registration Statement. The Company shall be
entitled to (i) postpone the effectiveness of the Resale Registration Statement
filed pursuant to this Agreement and (ii) suspend the use of any Prospectus
(defined in Section 2(g) ) included in the Resale Registration Statement, in the
event (a) of the issuance by the SEC of any stop order suspending the
effectiveness of the Resale Registration Statement or the initiation of any
proceedings for that purpose; (b) upon the occurrence of an event set forth in
Section 2(c)(ii) or Sections 2(c)(v)(2)-(4); or (c) the Company’s chief
executive officer delivers to the Holders an executed certificate stating that
in the good faith judgment of the Board it would be materially detrimental to
the Company and its stockholders either for such Resale Registration Statement
to become effective or for Transfers to be made thereunder (including, without
limitation, due to the inadvisability of filing a required prospectus supplement
or post-effective amendment), because such action would materially interfere
with, or require premature disclosure of, any bona fide plan or proposal by the
Company to engage in any material financing, acquisition, disposition,
reorganization, merger or tender offer or other significant transaction.
Notwithstanding anything to the contrary, the Company shall not exercise its
rights under this Section 2(b) more than twice in any twelve (12) month period,
nor for a period of more than sixty (60) days.
          (c) Registration Procedures. In connection with the Company’s
obligations arising under this Agreement regarding the Resale Registration
Statement (and any other Prospectus required by this Agreement to permit the
resale and Transfer of Registrable Securities), the Company will (subject to
Section 2(b) and, where

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applicable, subject to the Resale Registration Statement having been declared
effective) use commercially reasonable efforts to:
               (i) effect such registration to permit the sale of the
Registrable Securities being sold in accordance with the intended method or
methods of distribution selected by the Holders of the Registrable Securities
and permitted by Rule 415, and keep the Resale Registration Statement
Continuously Effective for all periods required by this Agreement;
               (ii) upon the occurrence of any event that would cause the Resale
Registration Statement or any Prospectus filed in connection therewith (i) to
contain a material misstatement or omission or (ii) not to be effective and
usable for resale and Transfer of Registrable Securities during any period
required by this Agreement, the Company shall file promptly an appropriate
amendment to the Resale Registration Statement or a prospectus supplement, in
the case of clause (i), correcting any such misstatement or omission, and, in
the case of either clause (i) or (ii), if a post-effective amendment is
utilized, cause such amendment to be declared effective and the Resale
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter;
               (iii) prepare and file with the SEC such amendments and
post-effective amendments to the Resale Registration Statement as may be
necessary to keep the Resale Registration Statement effective for the applicable
period set forth in Section 2(a);
               (iv) cause the Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Securities Act in a timely manner; and comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by the Resale Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the
sellers thereof set forth in the Resale Registration Statement or supplement to
the Prospectus;
               (v) advise the Holders promptly and, if requested by such
Persons, to confirm such advice in writing, (1) when the Prospectus or any
prospectus supplement or post-effective amendment has been filed, and, with
respect to the Resale Registration Statement or any post-effective amendment
thereto, when the same has become effective; (2) of any request by the SEC for
amendments to the Resale Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto; (3) of the
issuance by the SEC of any stop order suspending the effectiveness of the Resale
Registration Statement under the Securities Act or of the suspension by any
state securities commission of the qualification of the Registrable Securities
for offering or sale in any jurisdiction, or the initiation of any proceeding
for any of the preceding purposes; (4) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in the
Resale Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Resale Registration
Statement or the Prospectus in order to make the statements therein not
misleading. If at any time the SEC shall issue any stop order suspending the
effectiveness of the Resale Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Registrable Securities
under state securities or blue sky laws, the Company shall obtain the withdrawal
or lifting of such order as soon as practicable. The Investors acknowledges that
trading the Company’s securities while in possession of material non-public
information is not permitted under federal and state securities laws;
               (vi) furnish without charge to each of the Holders, and each of
the underwriter(s) if any, before filing with the SEC, copies of the Resale
Registration Statement or any Prospectus included therein or any amendments or
supplements to the Resale Registration Statement or Prospectus (including all
documents incorporated by reference after the initial filing of the Resale
Registration Statement but excluding documents filed pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act and any exhibits to such filings), which
documents will be subject to the review and comment of such Holders and
underwriter(s) in connection with such sale, if any, for a period of at least
three (3) Business Days, and the Company will not file the Resale Registration
Statement or Prospectus or any amendment or supplement to the Resale
Registration Statement or Prospectus (including all such documents incorporated
by reference but excluding documents filed pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act and any exhibits to such filings) to which a Holder
covered by such

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registration statement or the underwriter(s), if any, shall reasonably object in
writing within three (3) Business Days after the receipt thereof (such objection
to be deemed timely made upon confirmation of telecopy or e-mail transmission
within such period), unless the Company receives advice from legal counsel that
the delay required by such review period would be detrimental to the Company.
For purposes of this Section 2(c)(vi), the objection of a Holder or underwriter,
if any, shall be deemed to be reasonable if the Resale Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission;
               (vii) make available any document that is incorporated by
reference into the Resale Registration Statement or Prospectus, provide copies
of such document to the Holders, and to the underwriter(s), if any, and make the
Company’s representatives available for discussion of such document and other
customary due diligence matters;
               (viii) make available at reasonable times for inspection by the
Holders or underwriter(s), if any, participating in any disposition pursuant to
the Resale Registration Statement and any attorney or accountant retained by the
Holders or underwriter(s), if any, all financial and other records, pertinent
corporate documents and properties of the Company and cause the Company’s
officers, directors and employees to supply all information reasonably requested
by the Holders, underwriter(s), if any, or their attorneys or accountants in
connection with the Resale Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness and to participate in meetings with investors to the extent
requested by the underwriter(s), if any, and make members of the Company’s
senior management available at reasonable times and places to participate in
“road-shows” and investor calls as the underwriter(s), if any, may request;
               (ix) if requested by a Holder or the underwriter(s), if any, to
promptly incorporate in the Resale Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as the Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information relating to
the “Plan of Distribution” of the Registrable Securities, information with
respect to the Registrable Securities being sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities to be
sold in such offering; and make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable after the Company
is notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment;
               (x) furnish to each Holder and each of the underwriter(s), if
any, upon request, without charge, at least one copy of the Resale Registration
Statement, as first filed with the SEC, and of each amendment thereto, including
financial statements and schedules, all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by reference);
               (xi) deliver to each Holder and each of the underwriter(s), if
any, upon request, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto as such
Holder reasonably may request;
               (xii) enter into such customary agreements (including a customary
underwriting agreement), and make such customary representations and warranties,
and take all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Registrable Securities pursuant to the Resale
Registration Statement contemplated by this Agreement, all to such extent as may
be reasonably requested by any Holder or underwriter(s), if any, in connection
with any resale or Transfer pursuant to the Resale Registration Statement; and
if and only if the registration is an Underwritten Registration (defined in
Section 2(g)), the Company shall:
                    (1) furnish to each Holder, and each underwriter, in such
substance and scope as they may reasonably request and as are customarily made
by issuers to underwriters in primary underwritten offerings, upon the initial
effective date of the Resale Registration Statement:
                         (A) a certificate, dated the date of the date of
effectiveness of the Resale Registration Statement signed by (i) the Chief
Executive Officer or President and (ii) the principal financial or accounting
officer of the Company confirming, as of the date thereof, such matters
(including, without limitation representations and warranties) as the Holders
and underwriters may reasonably request;

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                         (B) an opinion, dated the date of effectiveness of the
Resale Registration Statement, of outside counsel for the Company, covering such
matters as the Holders and the underwriter(s) may reasonably request, and in any
event including a statement to the effect that such counsel have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the underwriter(s), and counsel to the
underwriter(s) at which the contents of the Resale Registration Statement and
the related Prospectus and related matters were discussed and, on the basis of
the foregoing, no facts have come to such counsel’s attention that would lead
such counsel to believe that (i) the Resale Registration Statement, at the time
of the Resale Registration Statement or any post effective amendment thereto
became effective, or (ii) that the Prospectus contained in the Resale
Registration Statement as of its date, contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and
                         (C) a customary comfort letter, dated the date of
effectiveness of the Resale Registration Statement, from the Company’s
independent accountants, in the customary form and covering matters of the type
customarily requested to be covered in comfort letters by underwriters in
connection with primary underwritten offerings, and covering or affirming the
matters set forth in any comfort letters delivered pursuant to the Resale
Registration Statement;
                    (2) set forth in full the indemnification provisions and
procedures of Section 2(f) with respect to all parties to be indemnified
pursuant to said Section; and
                    (3) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
Section 2(c)(xii)(1)(A) and with any customary conditions contained in the
underwriting agreement entered into by the Company pursuant to this
Section 2(c)(xii) .
If at any time the representations and warranties of the Company contemplated in
Section 2(c)(xii)(1)(A) cease to be true and correct, the Company shall so
advise the Holders and the underwriter(s), promptly and, if requested by such
Persons, shall confirm such advice in writing;
               (xiii) prior to any public offering of Registrable Securities,
cooperate with the Holders, the underwriter(s), if any, and their respective
counsel in connection with the registration and qualification of the Registrable
Securities under the state securities or blue sky laws of such jurisdictions as
the Holders or underwriter(s), if any, may reasonably request and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Resale Registration
Statement; provided, however, that the Company shall not be required to register
or qualify as a foreign corporation where it is not then so qualified or to take
any action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the Resale
Registration Statement, in any jurisdiction where it is not then so subject and
provided, further, that if the Common Stock is not then a “covered security” as
defined in Section 18 of the Securities Act, then the Company shall not be
required to register and qualify the Registrable Securities under the state
securities or blue sky laws in more than ten (10) states;
               (xiv) cooperate with the Holders and the underwriter(s), if any,
to facilitate the timely preparation and delivery of certificates representing
the Registrable Securities to be sold and not bearing any restrictive legends
(subject to the limitations set forth in Section 2(d)); and enable such
Registrable Securities to be in such denominations and registered in such names
as the Holders or the underwriter(s), if any, may request at least three
(3) Business Days prior to any sale of Registrable Securities made by such
Holders or underwriter(s), if any; provided, the Holders provide the Company
with the necessary information to prepare such certificates at least four
(4) Business Days prior to the applicable sale of Registrable Securities;
               (xv) if any fact or event contemplated by Section 2(c)(v)(4)
shall exist or have occurred, prepare a supplement or post-effective amendment
to the Resale Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading;

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               (xvi) cooperate and assist in any filings required to be made
with FINRA (defined in Section 2(g)) and in the performance of any due diligence
investigation by any underwriter (including any “qualified independent
underwriter”) that is required to be retained in accordance with the rules and
regulations of FINRA;
               (xvii) otherwise comply with all applicable rules and regulations
of the SEC, and make generally available to its security holders, as soon as
practicable, a consolidated earnings statement meeting the requirements of
Rule 158 (which need not be audited) for the twelve-month period (i) commencing
at the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts Underwritten Offering or
(ii) if not sold to underwriters in such an offering, beginning with the first
month of the Company’s first fiscal quarter commencing after the effective date
of the Resale Registration Statement;
               (xviii) cause all securities covered by the Resale Registration
Statement to be listed on each securities exchange or automated quotation system
on which the Common Stock issued by the Company is then listed if requested by
any Holder or the underwriter(s), if any; and
               (xix) provide promptly to each Holder upon request each document
filed with the SEC pursuant to the requirements of Section 13 and Section 15 of
the Exchange Act.
          (d) Holder Obligations. Each Holder agrees to, and in addition it
shall be a condition precedent to the obligation of the Company to take any
action pursuant to this Section 2 with respect to the Registrable Securities of
the Holders, that each Holder shall:
               (i) Promptly furnish to the Company such information regarding
the Holder, the number of the Registrable Securities owned by it, the number of
Registrable Securities to be registered and the intended method of disposition
of such securities as shall be required to effect the registration of the
Registrable Securities of the Holders, and cooperate fully with the Company in
preparing the Resale Registration Statement and any related Prospectus;
               (ii) If the Company has delivered a Prospectus to the Holder and
after having done so the Prospectus is amended or supplemented to comply with
the requirements of the Securities Act, at the written request of the Company,
the Holder shall immediately cease making offers or Registrable Securities and,
upon receipt of the amended or supplemented Prospectus from the Company, the
Holder shall use only such amended or supplemented Prospectus in making offers
of the Registrable Securities;
               (iii) During such time as the Holder may be engaged in a
distribution of Registrable Securities, the Holder shall comply with
Regulation M promulgated under the Exchange Act and pursuant thereto it shall,
among other things, (i) not engage in any stabilization activity in connection
with the securities of the Company in contravention of such regulation or (ii)
distribute Registrable Securities under the Resale Registration Statement other
than in the manner described in the Resale Registration Statement;
               (iv) If the Company has delivered to the Holder written notice in
accordance with Section 2(b), then the Holder shall immediately cease making
offers or Transfers of Registrable Securities until the Company shall have given
the Holder written notice that the Holder may once again commence making offers
or Transfers of Registrable Securities under the current (or amended or
supplemented) Prospectus; and
               (v) Dispose of the Registrable Securities only (a) pursuant to an
effective registration statement under, and in compliance with the requirements
of, the Securities Act or (b) pursuant to an available exemption from the
registration requirements of the Securities Act, and in compliance with any
applicable state securities laws, including providing the Company an opinion of
counsel selected by the Holder, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration under the Securities Act.
          (e) Registration Expenses:

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               (i) Company Expenses. Subject to Section 2(e)(ii), all expenses
incident to the Company’s performance of or compliance with this Section 2,
including all registration and filing fees, fees of any transfer agent and
registrar, fees and expenses of compliance with securities or blue sky laws,
printing expenses, fees and disbursements of counsel for the Company and its
independent certified public accountants, the Company’s internal expenses and
the expenses and fees for listing the securities to be registered on each
securities exchange or quotation system on which similar securities issued by
the Company are then listed or quoted (all such expenses being herein called
“Registration Expenses”) shall be borne by the Company.
               (ii) Holder Expenses. In connection with the registration
contemplated hereunder, the Company shall reimburse the Holders included in a
registration for the reasonable fees and disbursements of one counsel. The
Holders, and not the Company, shall be responsible for all fees and expenses of
underwriters (including discounts and commissions attributable to the
Registrable Securities included in such registration).
          (f) Indemnification; Contribution. If any Registrable Securities are
included in a registration statement under this Agreement:
               (i) To the extent permitted by applicable law, the Company shall
indemnify and hold harmless each Holder, and the partners, members, officers,
directors, employees, and stockholders of each such Holder; legal counsel and
accountants for each such Holder; any underwriter (as defined in the Securities
Act) for each such Holder; and each Person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any and all losses, claims, damages, liabilities and expenses (joint or
several), including reasonable attorney’s fees and disbursements and reasonable
expenses of investigation (collectively, “Losses”), incurred by such Person
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing Persons may otherwise become subject under the
Securities Act, the Exchange Act or other federal or state laws, but only
insofar as such Losses arise out of or are based upon any of the following
statements or omissions (collectively, a “Violation”):
                    (1) any untrue statement or alleged untrue statement of a
material fact contained in the registration statement, including any preliminary
Prospectus or final Prospectus contained therein, or any amendments or
supplements thereto; or
                    (2) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the indemnification required by this
Section 2(f)(i) shall not apply to amounts paid in settlement of any such Loss
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such Loss to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of a Holder or any
underwriter expressly for use in connection with such registration; and
provided, further, that any indemnification required by this Section 2(f)(i)
shall not apply to the extent that any such Loss is based on or arises out of an
untrue statement or alleged untrue statement of a material fact, or an omission
or alleged omission to state a material fact, included in or omitted from any
preliminary prospectus if the final prospectus shall correct such untrue
statement or alleged untrue statement, or such omission or alleged omission, and
a copy of the final prospectus has not been sent or given by the Holder or any
underwriter to the Person alleging damage at or prior to the confirmation of
sale to such Person; and provided, further, that this indemnity shall not apply
to the extent that any such Loss is based on an offer or Transfer of Registrable
Securities during any period which the Company has notified the Holder that such
offers and Transfers must cease under the Agreement, including under Section
2(b), Section 2(c)(ii) or Section 2(c)(v) .
               (ii) To the extent permitted by applicable law, the Holders
(severally and not jointly) shall indemnify and hold harmless the Company, each
of the directors of the Company, each of the officers of the Company who shall
have signed the Resale Registration Statement, each Person, if any, who controls
the Company within the meaning of the Securities Act, and each officer,
director, partner, and employee of such controlling Person, against any and all
Losses incurred by such Person pursuant to any actual or threatened action,
suit, proceeding or investigation, or to which any of the foregoing Persons may
otherwise become subject under the Securities Act, the Exchange Act or other
federal or state laws, but only insofar as such Losses arise out of or are based
upon any Violation, in each case to the extent that such Violation arises out of
or is based upon information

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furnished in writing by or on behalf of a Holder expressly for use in connection
with such registration, or upon the Holder’s failure to properly and timely
deliver an “official” Prospectus, or upon the Holder’s use of a written or oral
prospectus other than the “official” Prospectus; provided, however, that any
indemnification required by this Section 2(f)(ii) shall not apply to amounts
paid in settlement of any such Loss if such settlement is effected without the
consent of the Holders (which consent shall not be unreasonably withheld) and in
no event shall the amount of any indemnity obligation under this
Section 2(f)(ii) exceed the gross proceeds from the applicable offering received
by the Holders.
               (iii) Promptly after receipt by an indemnified party under this
Section 2(f) of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing for which such indemnified party
may make a claim under this Section 2(f), such indemnified party shall deliver
to the indemnifying party a written notice thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party; provided, however, that an indemnified party shall have the
right to retain its own counsel, with the fees and disbursements and expenses
(in each case, to the extent reasonable) to be paid by the indemnifying party,
if representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 2(f) to the extent, but only to the extent, of such prejudice but shall
not relieve the indemnifying party of any liability that it may have to any
indemnified party otherwise than pursuant to this Section 2(f). Any such
indemnified party shall have the right to employ separate counsel in any such
action, claim or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be the expenses of such indemnified
party unless (i) the indemnifying party has agreed to pay such fees and expenses
or (ii) the indemnifying party shall have failed to promptly assume the defense
of such action, claim or proceeding or (iii) the named parties to any such
action, claim or proceeding (including any impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it that are different from or in addition to those available to the
indemnifying party and that the assertion of such defenses would create a
conflict of interest such that counsel employed by the indemnifying party could
not faithfully represent the indemnified party (in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties, unless
in the reasonable judgment of such indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such action, claim or proceeding, in which event the
indemnifying party shall be obligated to pay the reasonable fees and expenses of
such additional counsel or counsels).
               (iv) If the indemnification required by this Section 2(f) from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any Losses referred to in this Section 2(f) :
                    (1) the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions that resulted in such Losses,
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any Violation has been committed by, or relates
to information supplied by, such indemnifying party or indemnified parties, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such Violation. The amount paid or payable by a party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in Section 2(f)(i), 2(f)(ii) and 2(f)(iii), any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding;

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                    (2) the parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2(f)(iv) were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in Section 2(f)(iv)(1). No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(e) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
               (v) The obligations of the Company and the Holders under this
Section 2(f) shall survive the completion of any offering of Registrable
Securities pursuant to the registration statement under this Agreement, and
otherwise.
          (g) Definitions. The following terms used in this Section 2 shall have
the following meanings:
     “Continuously Effective” with respect to the Resale Registration Statement
means that such registration statement shall not cease to be effective and
available for Transfers of Registrable Securities.
     “FINRA” means the Financial Industry Regulatory Authority (f/k/a the
National Association of Securities Dealers) and any successor entity.
     “Holder” means with respect to any Registrable Securities, EJ Funds or the
Kapoor Trust, as applicable, unless and until EJ Funds or the Kapoor Trust, as
applicable, Transfers such Registrable Securities to new Holders in accordance
with Section 3(e).
     “Prospectus” means any prospectus included in the Resale Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
     “Registrable Securities” means (a) any Common Stock now held by any
Investor or any of their respective affiliates or issuable or issued upon any
conversion or exercise of any other securities (including the First Warrant, the
Second Warrant and any other warrants) held by any Investors or its affiliates
and (b) any Common Stock issued or issuable with respect to any of the
securities referred to in clause (a) by way of an event triggering any
adjustment in the number of shares of Common Stock into which such securities
convert or are exercisable. Except for purposes of Section 2(a)(iv)(C),
Registrable Securities shall be deemed to be outstanding and in existence,
whenever such Person has the right to acquire such Registrable Securities upon
exercise or conversion of such securities, whether or not such exercise or
conversion has actually been effected, and such Person shall be entitled to
exercise the rights of a Holder of such Registrable Securities hereunder. As to
any particular Registrable Securities, such securities shall cease to be
Registrable Securities when they (x) have been registered and Transferred
pursuant to the Securities Act or (y) have been Transferred pursuant to Rule 144
or any similar rule promulgated by the SEC pursuant to the Securities Act
permitting the resale of restricted securities without the necessity of a
registration statement under the Securities Act.
     Securities Act” means the Securities Act of 1933, as amended, and the rules
and regulations of the SEC thereunder, all as the same shall be in effect at
that time.
     “Transfer” means and includes the act of selling, giving, transferring,
creating a trust (voting or otherwise), assigning or otherwise disposing of
(other than pledging, hypothecating or otherwise transferring as security) (and
correlative words shall have correlative meanings); provided, however, that any
transfer or other disposition upon foreclosure or other exercise of remedies of
a secured creditor after an event of default under or with respect to a pledge,
hypothecation or other transfer as security shall constitute a “Transfer”;
provided, further, however, no “Transfer” shall be deemed to have occurred if EJ
Funds or the Kapoor Trust, as the case may be, continues to be an affiliate of
the Holder of the Registrable Securities after giving effect to such transfer or
other distribution.
     “Underwritten Registration” means a registration in which securities of the
Company are sold to an underwriter for reoffering to the public.
     3. Miscellaneous.

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          (a) Entire Agreement. This Agreement reflects the entire understanding
of the parties with respect to the subject matter of registration rights herein
contained and supersedes any prior agreements, whether written or oral, in
regard thereto.
          (b) Governing Law. This Agreement shall be governed by, and shall be
construed in accordance with, the laws of the State of New York and all
applicable laws of the United States of America.
          (c) WAIVER OF RIGHT TO JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES
TRIAL BY JURY AND CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS
IS DEEMED APPROPRIATE A JUDGE OF A COURT OF COMPETENT JURISDICTION.
          (d) Counterparts; Facsimile. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all of which,
taken together, shall constitute but one and the same agreement among the
parties. This Agreement may be executed and transmitted by facsimile and with
confirmation of transmission shall have the same binding effect as though such
executed Agreement was delivered as an original.
          (e) Assignment; Binding Nature. The Investors may assign their rights
under this Agreement, including, without limitation, the rights of any Holder to
cause the Company to register Registrable Securities pursuant to this Agreement,
without the Company’ consent. The Company may not assign its rights under this
Agreement without the prior written consent of the Investors, which shall not be
unreasonably withheld, conditioned or delayed. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
          (f) Captions. The captions to the Sections and paragraphs of the
Agreement are for the convenience of the parties only, and are not a part of
this Agreement.
          (g) Time of the Essence. Time is of the essence under this Agreement.
          (h) Remedies. Any party having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages are not an adequate remedy for any breach of the
provisions of this Agreement and that any party may apply for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
effective as of the date first above written.

            AKORN, INC,
a Louisiana corporation
      By:           Name:           Title:           THE JOHN N. KAPOOR TRUST
DATED SEPTEMBER 20, 1989
      By:           Name:   John N. Kapoor        Title:   Trustee        EJ
FUNDS LP       By:   EJ Financial Enterprises, Inc.       Its: General Partner 
            By:           John N. Kapoor        President     

[Signature Page to Registration Rights Agreement]

 

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EXHIBIT A
FORM OF FIRST WARRANT
See Attached.

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EXHIBIT A
FORM OF SECOND WARRANT
See Attached.

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