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                                                                    EXHIBIT 10.1

                  CONVERTIBLE BRIDGE LOAN AND WARRANT AGREEMENT

     This Convertible Bridge Loan and Warrant Agreement (this "Agreement") is
entered into as of July 12, 2001 (the "Effective Date"), by and among Akorn,
Inc., a Louisiana corporation (the "Company"), and The John N. Kapoor Trust
Dated September 20, 1989 (the "Lender").

     WHEREAS, the Lender is willing, pursuant to the terms and conditions of
this Agreement, to loan the Company, in two tranches, an aggregate amount of
Five Million Dollars ($5,000,000) (the "Loan Amount"), which loan (the "Loan")
shall be convertible into securities of the Company on the terms and subject to
the conditions set forth herein.

     NOW, THEREFORE, the parties hereby agree as follows:

1. DEFINITIONS. In addition to those terms defined in the body of this
Agreement, the following terms shall have the following respective meanings:

     "Common Stock" shall mean the Company's Common Stock, no par value per
share.

     "Closing" shall be on or before July 12, 2001, and shall be held at 9:00
a.m. at the offices of Vedder, Price, Kaufman & Kammholz, 222 N. LaSalle Street,
Suite 2600, Chicago, Illinois 60601.

     "Prime Rate" shall have the meaning ascribed thereto in the Senior Loan
Agreement.

     "Senior Loan Agreement" shall mean that certain Amended and Restated Credit
Agreement dated as of September 15, 1999, by and among the Company, Akorn (New
Jersey), Inc. and The Northern Trust Company, as amended and supplemented by (i)
a First Amendment thereto dated as of December 28, 1999, (ii) a Second Amendment
thereto dated as of February 15, 2001, (iii) a Third Amendment and Waiver
thereto dated as of April 16, 2001 (iv) a Waiver dated December 29, 2000, and
(v) a Forbearance Agreement dated the date hereof by and among the Company,
Akorn (New Jersey), Inc. and The Northern Trust Company.

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2. LOAN. Subject to the terms and conditions set forth in this Agreement, the
Lender will loan the Company the Loan Amount in two tranches as follows: (a)
Three Million Dollars ($3,000,000) (the "Tranche A Loan") on the Effective Date,
evidenced by a Convertible Promissory Note substantially in the form attached
hereto as Exhibit A (the "Tranche A"); and (b) Two Million Dollars ($2,000,000)
(the "Tranche B Loan") pursuant to the terms of Section 3A hereof, evidenced by
a Convertible Promissory Note substantially in the form attached hereto as
Exhibit A-1 (the "Tranche B Note" and, together, with the Tranche A Note, the
"Notes").

3. LOAN TERM; INTEREST; REPAYMENT; PREPAYMENT. Subject to the Subordination
Agreement (as defined herein), the term of each of the Tranche A Loan and the
Tranche B Loan will end on the date that is thirty-six (36) months after the
date of issuance (the "Issuance Date") of the Tranche A Note and the Tranche B
Note, respectively (the "Repayment Date"). Interest on the unpaid principal
balance of each of the Tranche A Loan and the Tranche B Loan (each unpaid
principal balance is referred to as the "Outstanding Balance") will accrue from
the Issuance Date of the Tranche A Note and the Tranche B Note, as applicable,
at the Prime Rate, calculated on the basis of a 360 day year and actual days
elapsed and such accrued interest shall be due and payable quarterly in arrears
beginning on the first day of the month immediately following the Issuance Date
of the Tranche A Note and the Tranche B Note, as applicable; provided, however,
that, notwithstanding the foregoing, no quarterly interest payments shall be
paid to the Lender under the Notes so long as the Subordination Agreement
remains in effect and such accrued interest shall (a) with respect to the
Tranche A Note, be paid in full on the earlier of the date of termination of the
Subordination Agreement or the Repayment Date of the Tranche A Note, and (b)
with respect to the Tranche B Note, be capitalized as provided in the Tranche B
Note. Subject to the terms of the Subordination Agreement, to the extent not
previously converted pursuant to Section 5, the Company will repay the
Outstanding Balance of each Note plus all interest accrued thereon on the
Repayment Date of each Note. Except as specifically permitted in each Note, the
portion of the Outstanding Balance on the Tranche A Loan and the Tranche B Loan
and all accrued interest payable to the Lender hereunder may not be prepaid
prior to the applicable Repayment Date without the consent of the Lender in its
sole and absolute discretion. Unless prohibited under applicable law, any
accrued


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interest that is not paid on the date on which it is due and payable under any
Note shall bear interest at the same rate at which interest is then accruing on
the principal amount of such Note.

     3A. CONDITIONS TO TRANCHE B LOAN. The obligation of the Lender to make the
Tranche B Loan is subject to the condition precedent that the Lender shall have
received on or before August 16, 2001, all of the following, each dated (unless
otherwise indicated) as of the date of the Tranche B Loan, in each case in form
and substance satisfactory to the Lender unless otherwise agreed to by the
Lender and the Company in writing:

          (a) Tranche B Note. The Tranche B Note in the form attached hereto as
     Exhibit A-1, properly executed on behalf of the Company.

          (b) Tranche B Warrant. The Tranche B Warrant in the form attached
     hereto as Exhibit B-1, properly executed on behalf of the Company.

          (c) Use of Proceeds. Evidence that the proceeds of the Tranche B Loan
     shall be used for the Company's general working capital purposes.

          (d) Officers' Certificate. A certificate of a senior executive officer
     of the Company certifying that (i) the representations and warranties
     contained in Section 6 are true and correct on and as of the date of the
     Tranche B Loan as though made on and as of such date, except to the extent
     that such representations and warranties relate solely to an earlier date,
     and (ii) no event has occurred and is continuing, or would result from the
     Tranche B Loan, which constitutes, or would, upon notice or lapse of time
     or both, constitute a default.

          (e) Resolutions. A certified copy of (i) the resolutions of the
     shareholders and Board of Directors of the Company evidencing approval of
     this Agreement, the Tranche B Loan, the Tranche B Note, the Tranche B
     Warrant and the other matters contemplated hereby, or (ii) the written
     exception of the National Association of Securities Dealers to the
     requirement for such shareholder approval.


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          (f) Other Agreements. Such other documents, agreements and
     certificates as the Lender may reasonably request.

4. WARRANT ISSUANCE. (a) At the Closing, the Company will issue to the Lender a
warrant to purchase one million (1,000,000) shares of Common Stock at an
exercise price of $2.85 per share, in accordance with and in substantially the
form attached hereto as Exhibit B (the "Tranche A Warrant"); and (b) on the
Tranche B Note Issuance Date, the Company will issue to the Lender a warrant to
purchase six hundred sixty-seven thousand (667,000) shares of Common Stock at an
exercise price of $2.25 per share, in accordance with and in substantially the
form attached hereto as Exhibit B-1 (the "Tranche B Warrant" and, together with
the Tranche A Warrant, the "Warrants").

5. CONVERSION; RESERVATION.

          (a) The Outstanding Balance on the Tranche A Loan shall be
     convertible, in whole or in part, into Common Stock at the option of the
     Lender at any time during the five (5) year period after the Tranche A Note
     Issuance Date (i.e., for a period including two (2) years after the Tranche
     A Repayment Date) at a conversion price of $2.28 per share of Common Stock.
     The Company shall have reserved such securities as the Lender becomes
     entitled to receive upon conversion of the Tranche A Note and upon the
     exercise of the Tranche A Warrant no later than the earlier to occur of (i)
     the conversion of the Outstanding Balance of the Tranche A Note, plus any
     accrued interest thereon, or (ii) the exercise of all or any portion of the
     Tranche A Warrant. If necessary, prior to the issuance by the Company of
     any equity securities (or any instrument exercisable for or convertible
     into equity securities) and whenever otherwise required, the Company will
     amend its Articles of Incorporation to ensure that there is a sufficient
     quantity of such equity securities into which the Outstanding Balance on
     the Tranche A Note, plus any accrued interest to date thereon, can be
     converted and for which the Tranche A Warrant may be exercised.


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          (b) The Outstanding Balance plus accrued interest, if any, on the
     Tranche B Loan shall be convertible, in whole or in part, into Common Stock
     at the option of the Lender at any time during the five (5) year period
     after the Tranche B Note Issuance Date (i.e., for a period including two
     (2) years after the Tranche B Repayment Date) at a conversion price of
     $1.80 per share of Common Stock. The Company shall have reserved such
     securities as the Lender becomes entitled to receive upon conversion of the
     Tranche B Note and upon the exercise of the Tranche B Warrant no later than
     the earlier to occur of (i) the conversion of the Outstanding Balance of
     the Tranche B Note, plus any accrued interest thereon, or (ii) the exercise
     of all or any portion of the Tranche B Warrant. If necessary, prior to the
     issuance by the Company of any equity securities (or any instrument
     exercisable for or convertible into equity securities) and whenever
     otherwise required, the Company will amend its Articles of Incorporation to
     ensure that there is a sufficient quantity of such equity securities into
     which the Outstanding Balance on the Tranche B Note, plus any accrued
     interest to date thereon, can be converted and for which the Tranche B
     Warrant may be exercised.

6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to the Lender that the statements in the following paragraphs of
this Section 6 are true and correct as of the Closing and shall be true and
correct on and as of the Tranche B Issuance Date, except as provided in the
disclosure schedule attached hereto as Exhibit D:

     6.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under, and by
virtue of, the laws of the State of Louisiana and has all requisite corporate
power and authority to own its properties and assets and to carry on its
business as now conducted and as presently proposed to be conducted. The Company
is qualified to do business as a foreign corporation in each jurisdiction where
failure to be so qualified would have a material adverse effect on its financial
condition, business, prospects or operations.


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     6.2 Capitalization. The authorized capital stock of the Company consists of
45,000,000 shares of capital stock, consisting of: (a) 40,000,000 shares of
Common Stock, and (b) 5,000,000 shares of preferred stock, par value $1.00 per
share (the "Preferred Stock"). Of the 40,000,000 authorized shares of Common
Stock, 19,310,644 shares are issued and outstanding on the date hereof. No
shares of the Preferred Stock are issued and outstanding on the date hereof. All
of the issued and outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable. No person or entity is
entitled to any preemptive or similar right with respect to the issuance of any
capital stock of the Company. All of the issued and outstanding shares of Common
Stock have been issued and sold by the Company in compliance with applicable
federal and state securities laws.

     6.3 Due Authorization; Consents. With the exception of shareholder approval
of the Tranche B Loan and the issuance by the Company of the Tranche B Note, all
corporate action has been taken on the part of the Company, its officers,
directors and shareholders necessary for (a) the authorization, execution and
delivery of, and the performance of all obligations of the Company under this
Agreement, (b) the authorization, execution and delivery of each Note and each
Warrant and (c) the authorization, issuance, reservation for issuance and
delivery of all equity securities issuable upon conversion of each Note and upon
the exercise of each Warrant. Each of this Agreement, the Notes and the Warrants
constitute a valid and binding obligation of the Company enforceable in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium, reorganization and similar laws affecting
creditors' rights generally and to general equitable principles. With the
exception of NASDAQ approval of the Tranche B Loan and the issuance by the
Company of the Tranche B Note, all consents, approvals and authorizations of,
and registrations, qualifications and filings with, any federal or state
governmental agency, authority or body, or any third party including, without
limitation, any and all approvals and consents from NASDAQ, required in
connection with the execution, delivery and performance of this Agreement, the
Notes and the Warrants and the consummation of the transactions contemplated
hereby and thereby have been obtained.

     6.4 Conflict with Other Instruments. Neither the execution and delivery by
the Company of this Agreement, the Notes, the Warrants or the other instruments,
documents and


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agreements contemplated or required hereby or thereby, nor the consummation of
the transactions herein or therein contemplated to be consummated by the
Company, nor compliance by the Company with the terms, conditions and provisions
hereof or thereof, shall conflict with or result in a breach of any of the
terms, conditions or provisions of the Articles of Incorporation or the By-laws
of the Company, or any law or any regulation, order, writ, injunction or decree
of any court or governmental instrumentality or any agreement or instrument to
which the Company is a party or by which it or any of its respective properties
is bound or constitute a default thereunder or result in the creation or
imposition of any lien or encumbrance thereon.

     6.5 Litigation; Compliance with Law. There is no action, suit, claim,
proceeding, arbitration, or investigation pending or, to the best of the
Company's knowledge, threatened against or affecting the Company, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and there is no basis for any of the foregoing. The Company is not in
default with respect to any order, writ, injunction or decree known to or served
upon the Company of any court or of any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. There is no action or suit by the Company pending,
threatened or contemplated against others. The Company has complied in all
material respects with all laws, rules, regulations and orders applicable to its
business, operations, properties, assets, products and services. The Company has
all necessary permits, licenses and other authorizations required to conduct its
business as currently conducted, and the Company has been operating its business
pursuant to and in compliance in all material respects with the terms of all
such permits, licenses and other authorizations. There is no existing law, rule,
regulation or order, and the Company after due inquiry is not aware of any
proposed law, rule, regulation or order, whether federal, state, county or
local, which would prohibit or restrict the Company from, or otherwise
materially adversely affect the Company in, conducting its business in any
jurisdiction in which it is now conducting business or in which it proposes to
conduct business.

     6.6 Proprietary Information of Third Parties. No third party has claimed
or, to the best of the Company's knowledge, has reason to claim that any person
employed by or affiliated


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with the Company has (a) violated or may be violating any of the terms or
conditions of his or her employment, noncompetition or nondisclosure agreement
with such third party, (b) disclosed or may be disclosing or utilized or may be
utilizing any trade secret or proprietary information or documentation of such
third party, or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. No third party has requested information from the Company which
suggests that such a claim might be contemplated. No person employed by or
affiliated with the Company has employed or proposes to employ any trade secret
or any information or documentation proprietary to any former employer, and no
person employed by or affiliated with the Company has violated any confidential
relationship which such person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Company, and
the Company has no reason to believe there will be any such employment or
violation. To the best of the Company's knowledge, neither the execution or
delivery of this Agreement nor the carrying on of the business of the Company by
any officer, director or key employee of the Company will conflict with or
result in a breach of the terms, conditions or provisions of or constitute a
default under any contract, covenant or instrument under which any such person
is obligated.

     6.7 Patents, Trademarks, Etc. The Company has delivered to the Lender a
complete and accurate list and brief description of all domestic and foreign
patents, patent rights, patent applications, trademarks, trademark applications,
service marks, service mark applications, trade names and copyrights, and all
applications for such which are in the process of being prepared, owned by or
registered in the name of the Company, or of which the Company is a licensor or
licensee or in which the Company has any right, and in each case a brief
description of the nature of such right. The Company owns or possesses, or
expects to be able to acquire on commercially reasonable terms, adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, service marks, service mark applications, trade names,
copyrights, manufacturing processes, formulae, trade secrets, customer lists and
know-how (collectively, "Intellectual Property") necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
claim is pending or, to the best of the Company's knowledge, threatened to the
effect that the operations of the Company infringe upon


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or conflict with the asserted rights of any other person under any Intellectual
Property, and there is no basis for any such claim (whether or not pending or
threatened). No claim is pending or threatened to the effect that any such
Intellectual Property owned or licensed by the Company, or which the Company
otherwise has the right to use, is invalid or unenforceable by the Company, and
there is no basis for any such claim (whether or not pending or threatened). All
technical information developed by and belonging to the Company which has not
been patented has been kept confidential. The Company has not granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the products or proposed products or to provide
the services or proposed services of the Company.

     6.8 Title to Properties. The Company has good, clear and marketable title
to the properties and assets acquired by it since the date of its incorporation
(other than properties and assets disposed of in the ordinary course of business
since the date of its incorporation), and all such properties and assets are
free and clear of mortgages, pledges, security interests, liens, charges,
claims, restrictions and other encumbrances (including without limitation,
easements and licenses), except for liens imposed as of the date hereof by
StanCorp Mortgage Investors, LLC, as agent for the Standard Insurance Company,
National City Leasing and The Northern Trust Company, and other liens and minor
imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company, including without limitation, the ability of the Company to secure
financing using such properties and assets as collateral.

     6.9 Taxes. The Company has filed all tax returns, federal, state, county
and local, required to be filed by it, and the Company has paid all taxes shown
to be due by such returns as well as all other taxes, assessments and
governmental charges which have become due or payable, including without
limitation all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors and third parties. The federal income tax returns
of the Company have never been audited by the Internal Revenue Service. No
deficiency assessment with respect to or proposed adjustment of the Company's
federal, state, county or local taxes is pending or, to the best of the
Company's knowledge, threatened. There is no tax lien (other than


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for current taxes not yet due and payable), whether imposed by any federal,
state, county or local taxing authority, outstanding against the assets,
properties or business of the Company. Neither the Company nor any of its
present or former stockholders has ever filed an election pursuant to Section
1362 of the Internal Revenue Code of 1986, as amended, that the Company be taxed
as an S corporation.

     6.10 Assumptions, Guaranties, Etc. of Indebtedness of Other Persons. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on any indebtedness of any other person (including, without
limitation, liability by way of agreement, contingent or otherwise, to purchase,
to provide funds for payment, to supply funds to or otherwise invest in the
debtor, or otherwise to assure the creditor against loss), except for guaranties
by endorsement of negotiable instruments for deposit or collection in the
ordinary course of business.

     6.11 No Material Change. Except as set forth in the Senior Loan Agreement
and in filings made by the Company with the Securities and Exchange Commission,
copies of which have previously been provided to the Lender, on or prior to the
date hereof, there has not occurred any event, change or other circumstance
that, upon notice or lapse of time or both, could reasonably be expected to have
a material adverse effect on the financial condition, prospects, business or
results of operations of the Company.

     6.12 Disclosure. This Agreement does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained herein not misleading, and none of the statements, documents,
certificates or other items prepared or supplied by the Company with respect to
the transactions contemplated hereby contains an untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained therein not misleading.

7. REPRESENTATIONS AND WARRANTIES OF THE LENDER. The Lender represents and
warrants to the Company as follows:


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     7.1 Economic Risk. The Lender acknowledges that it is sophisticated with
respect to the transactions contemplated by this Agreement and has the ability
to bear the economic risks of its investment pursuant to this Agreement.

     7.2 Purchase for Own Account. The Note and the Warrant and the securities
issuable upon exercise or conversion thereof will be acquired for the Lender's
own account, not as a nominee or agent, and not with a view to or in connection
with the sale or distribution of any part thereof which would violate the
Securities Act of 1933, as amended (the "Act").

     7.3 Accredited Investor. The Lender represents and warrants that: (a) the
Lender is an "accredited investor" as that term is defined in Regulation D
promulgated under the Act; (b) the Company has given the Lender the opportunity
to ask questions and receive answers concerning the Company, the Note and the
Warrant; (c) the Company has made available to the Lender the opportunity to
conduct such investigations and reviews as he has requested to conduct; (d) all
materials and information requested by the Lender in connection with this
Agreement have been provided to the Lender to its reasonable satisfaction; (e)
the Company did not offer the Note and the Warrant to the Lender by any form of
general solicitation or general advertising, including, but not limited to, any
advertisement, article, notice, or similar media or broadcast over television or
radio, or any seminar or meeting whose attendees were invited by any general
solicitation or general advertising; and (f) the Lender has not engaged a broker
or finder in connection with this Agreement or the transactions contemplated
hereby.

8. COVENANTS OF THE COMPANY. The Company covenants to the Lender as follows:

     8.1 Use of Proceeds. The Company will use the proceeds of the Loan solely
for working capital requirements and other general corporate purposes.

     8.2 Inspection Rights. The Lender and any person the Lender may designate
shall have the right to review all books and records, reports, accounts and
other financial documents of the Company and to copy the same and to make
excerpts therefrom, all at such reasonable times


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and as often as the Lender may reasonably request, upon prior notice to the
Company, so long as such review and copying does not unreasonably interfere with
the business of the Company.

     8.3 Registration Rights. All shares of the Company's securities issued or
issuable upon conversion of the Outstanding Balance of the Tranche A Loan and
the Tranche B Loan in accordance with Section 5, and upon exercise of the
Tranche A Warrant the Tranche B Warrant, shall have registration rights and
related obligations as set forth in the Registration Rights Agreement attached
hereto as Exhibit C (the "Rights Agreement"), and the Company shall have
delivered a copy of the Rights Agreement executed by all parties thereto as a
condition to the Closing, and the parties hereto shall each execute such
agreements, documents and instruments upon any conversion of the Outstanding
Balance of the Tranche A Loan and the Tranche B Loan as reasonably requested in
order to fulfill the purposes of this Section 8.3.

9. DEFAULT. For purposes of this Agreement, the term "default" shall include any
of the following:

          (a) The failure by the Company to pay any amounts due hereunder or
     under the Tranche A Note or the Tranche B Note within three (3) days of the
     date any such payment is due; provided, however, that the Company's failure
     to make quarterly payments of accrued interest under the Tranche A Note or
     the Tranche B Note as a result of any prohibitions in the Subordination
     Agreement (as hereinafter defined) shall not constitute a Default hereunder
     and such accrued interest shall be capitalized as provided in the Tranche A
     Note and the Tranche B Note;

          (b) A breach by the Company of any other term or provision of this
     Agreement, any Note or any Warrant;

          (c) Any default or breach by the Company of or under (i) any agreement
     for borrowed money, including but not limited to the Senior Loan Agreement
     (except for any default under the Senior Loan Agreement existing as of the
     date hereof) and any other


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     loan agreements, or (ii) a material breach under any real property lease
     agreements or capital equipment lease agreements, by which the Company is
     bound or obligated;

          (d) Except for a certain mechanics lien recorded prior to the date
     hereof against certain Decatur, Illinois property of the Company and/or its
     subsidiaries by T.A. Brinkoetter & Sons, a default or breach shall occur
     under any other agreement, document or instrument to which the Company or
     any subsidiary thereof is a party and such default is not cured or waived
     within any applicable grace period and such default or breach (A) involves
     the failure to make any payment when due in respect of any indebtedness of
     the Company or any subsidiary of the Company in excess of $50,000 in the
     aggregate, or (B) causes such indebtedness or a portion thereof in excess
     of $100,000 in the aggregate to become due prior to its stated maturity or
     prior to its regularly scheduled date of payment, or (C) entitles any
     holder of such indebtedness or a trustee to cause indebtedness or a portion
     thereof in excess of $100,000 in the aggregate to become due prior to its
     stated maturity or prior to its regularly scheduled dates of payment,
     regardless of whether such right is exercised or waived by such holder or
     trustee;

          (e) the Company shall have failed to obtain all necessary shareholder
     and third party consents to the Tranche B Loan and the issuance by the
     Company of the Tranche B Note on or prior to August 22, 2001; or

          (f) The voluntary or involuntary filing of a petition in bankruptcy or
     under any similar insolvency law by the Company, the making of an
     assignment for the benefit of creditors by the Company, or if any voluntary
     or involuntary petition in bankruptcy or under any similar insolvency law
     is filed against the Company and such petition is not dismissed within
     sixty (60) days after the filing thereof.

     Subject to the terms of the Subordination Agreement, upon the occurrence of
a default, the Lender may, at its option and for so long as such default is
continuing, accelerate repayment of the portion of the Outstanding Balance under
the Tranche A Loan or the Tranche B Loan


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payable to the Lender under the Tranche A Note or the Tranche B Note, in which
case each such Outstanding Balance and all interest accrued thereon shall be due
and payable immediately.

10. MISCELLANEOUS.

     10.1 Governing Law. This Agreement shall be governed in all respects by and
construed in accordance with the laws of the State of Illinois without regard to
provisions regarding choice of laws.

     10.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any party hereto and the
closing of the transactions contemplated hereby.

     10.3 Indemnification. In consideration of the Lender's execution and
delivery of this Agreement and acquiring the Notes and the Warrants hereunder,
and in addition to all of the Company's other obligations under this Agreement
and in addition to all other rights and remedies available at law or in equity,
the Company shall defend, protect and indemnify the Lender and its affiliates,
agents, representatives, successors and assigns (including, without limitation,
those retained in connection with the transactions contemplated by this
Agreement) (collectively, the "Indemnified Parties"), and save and hold each of
them harmless against, and pay on behalf of or reimburse such party on demand as
and when incurred from and against any and all actions, causes of action, suits,
claims, losses, out-of-pocket costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such
Indemnified Party is a party to the action for which indemnification hereunder
is sought), including, without limitation, reasonable attorneys' fees and
disbursements, interest and penalties and all amounts paid in investigation,
defense or settlement of any of the foregoing and claims relating to any of the
foregoing (the "Indemnified Liabilities"), incurred by the Indemnified Parties
or any of them as a result of, arising out of, or relating to (a) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the Loan and the issuance of the Notes and/or
the Warrants, (b) the execution, delivery, performance or enforcement of this
Agreement and any other instrument, document or agreement executed


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pursuant hereto by any of the Indemnified Parties, to the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law,
or (c) the breach by the Company of any representation or warranty, or the
failure of the Company to perform any covenant, contained herein or in the Notes
or the Warrants.

     10.4 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and shall be binding upon,
the respective successors, assigns, executors and administrators of the parties
hereto. This Agreement and the rights and obligations herein may be assigned by
the Lender to an affiliate of the Lender, to members of the immediate family of
Dr. John N. Kapoor, or to trusts, partnerships or other beneficiaries of the
Lender. This Agreement and the rights and obligations herein may not be assigned
by the Company without the prior written consent of the Lender.

     10.5 Entire Agreement. This Agreement, the Notes and the Warrants and the
Exhibits and Schedules hereto and thereto (all of which are hereby expressly
incorporated herein by this reference) constitute the entire understanding and
agreement between the parties with regard to the Loan and the Warrants.

     10.6 Notices. Except as may be otherwise provided herein, all notices and
other communications required or permitted hereunder shall be in writing and
shall be conclusively deemed to have been duly given (a) when hand delivered to
the other party; (b) when received when sent by facsimile on a business day at
the address and number set forth below; (c) five (5) business days after deposit
in the U.S. mail with first class or certified mail (receipt requested) postage
prepaid and addressed to the other party as set forth below; or (d) the next
business day after deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-business-day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery service provider.


                                       15
<PAGE>   16

If to the Lender:                       With a copy to:

Dr. John Kapoor                         Douglas J. Lipke, Esq.
225 E. Deerpath Road                    Dana S. Armagno, Esq.
Suite 250                               Vedder, Price, Kaufman & Kammholz
Lake Forest, Illinois 60045             222 North LaSalle Street, Suite 2600
Telecopy:  (847) 295-8680               Chicago, Illinois  60601-1003
                                        Telecopy:  (312) 609-5005



If to the Company:                      with a copy to:

Akorn, Inc.                             Christopher R. Manning, Esq.
2500 Millbrook Drive                    Barbara Canning, Esq.
Buffalo Grove, Illinois 60089           Burke, Warren, MacKay & Serritella, P.C.
Attn:    President                      22nd Floor, IBM Plaza
Telecopy:  (847) 279-6123               330 N. Wabash Avenue
                                        Chicago, Illinois 60611
                                        Telecopy:  (312) 346-8242

     Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 10.6 by giving the other party written
notice of the new address in the manner set forth above.


                                       16
<PAGE>   17

     10.7 Amendments. Any term of this Agreement may be amended only with the
prior written consent of the Company and the Lender.

     10.8 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to a party, upon any breach or default of any party hereto
under this Agreement, shall impair any such right, power or remedy of such
party, nor shall it be construed to be a waiver of any such breach or default or
any subsequent breach or default. Any waiver, permit, consent or approval of any
kind or character related to this Agreement on the part of either party must be
in writing and shall be effective only to the extent specifically set forth in
such writing.

     10.9 Legal Fees. The Company agrees to reimburse the Lender for its
reasonable expenses (including legal expenses and disbursements) incurred in
connection with the execution of this Agreement. In the event of any action at
law, suit in equity or arbitration proceeding in relation to this Agreement or
any securities of the Company issued or to be issued, the prevailing party shall
be paid by the other party a reasonable sum for attorney's fees and expenses of
the prevailing party.

     10.10 Finder's Fee. Each party (a) represents and warrant to the other
parties hereto that it has retained no finder or broker in connection with the
transaction contemplated by this Agreement, and (b) hereby agrees to indemnify
and to hold harmless the other parties hereto from and against any liability for
any commission or compensation in the nature of a finder's fee of any broker or
other person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which the indemnifying party or any of its
employees or representatives are responsible.

     10.11 Title and Subtitles. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

     10.12 Counterparts. This Agreement may be executed in any number of
counterparts and by either party hereto on separate counterparts, each of which,
when so executed and


                                       17
<PAGE>   18

delivered, shall be an original, but all such counterparts shall together
constitute one and the same instrument. One or more counterparts of this
Agreement may be delivered by facsimile, with the intention that delivery by
such means shall have the same effect as delivery of an original counterpart
thereof.

     10.13 Severability. Should any provision of this Agreement be determined to
be illegal or unenforceable, such determination shall not affect the remaining
provisions of this Agreement.

     10.14 Subordination. The indebtedness evidenced by the Note shall be
subordinated to certain indebtedness of the Company pursuant to that certain
Subordination and Standby Agreement dated as of July 12, 2001 (the
"Subordination Agreement"), executed by the Lender in favor of The Northern
Trust Company and acknowledged by the Company and Akorn (New Jersey), Inc.

                            [SIGNATURE PAGE FOLLOWS]


                                       18
<PAGE>   19

         IN WITNESS WHEREOF, the parties have executed this Convertible Bridge
Loan and Warrant Agreement to be effective as of the date first above written.


COMPANY:                                      LENDER:

AKORN, INC.                                   THE JOHN N. KAPOOR TRUST DATED
                                              SEPTEMBER 20, 1989

By: /s/ Kevin M. Harris                       By: /s/ John N. Kapoor
    ------------------------------                ------------------------------
Name:   Kevin M. Harris                       Name:   John N. Kapoor
      ----------------------------                  ----------------------------
Its:    CFO                                   Its:    Trustee
     -----------------------------                 -----------------------------



                                       19
<PAGE>   20

                                    EXHIBIT A

THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS.

THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT
SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF JULY 12, 2001,
EXECUTED BY THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989, IN FAVOR OF THE
NORTHERN TRUST COMPANY AND ACKNOWLEDGED BY AKORN, INC. AND AKORN (NEW JERSEY),
INC., TO THE INDEBTEDNESS AND OTHER LIABILITIES OWED BY AKORN, INC. AND ITS
SUBSIDIARIES UNDER AND IN CONNECTION WITH THE AMENDED AND RESTATED CREDIT
AGREEMENT DATED AS OF SEPTEMBER 15, 1999 AMONG AKORN, INC., AKORN (NEW JERSEY),
INC. AND THE NORTHERN TRUST COMPANY, AS AMENDED FROM TIME TO TIME.

                           CONVERTIBLE PROMISSORY NOTE


$3,000,000.00                                                  Chicago, Illinois
                                                               Date of Issuance:
                                                                   July 12, 2001

     FOR VALUE RECEIVED, Akorn, Inc., a Louisiana corporation (the "Company"),
promises to pay to the order of The John N. Kapoor Trust Dated September 20,
1989, or its administrators, representatives, successors or assigns ("Holder"),
the principal sum of Three Million Dollars ($3,000,000), and to pay interest on
the outstanding principal balance of this


                                       20
<PAGE>   21

Convertible Promissory Note (this "Note") in accordance with Section 2 of this
Note. This Note is delivered in connection with that certain Convertible Bridge
Loan and Warrant Agreement of even date herewith (the "Loan Agreement") between
the Company and the Holder.

     1. Maturity. To the extent not previously converted in accordance with the
Loan Agreement, subject to the terms of the Subordination Agreement (as defined
below), the Company shall repay the outstanding principal balance of this Note
and interest accrued thereon in full on the date that is thirty-six (36) months
after the original date of issuance of this Note (the "Maturity Date"). All
payments received shall be applied first against costs of collection (if any),
then against accrued and unpaid interest on this Note, then against the
outstanding principal balance of this Note.

     2. Interest. Interest shall begin to accrue on the outstanding principal
balance of this Note commencing on the date hereof and continuing until
repayment of this Note in full at the Prime Rate calculated on the basis of a
360 day year and actual days elapsed and such accrued interest shall be payable
quarterly in arrears beginning October 1, 2001; provided, however, that upon the
occurrence of a Default (as defined herein) interest on the outstanding
principal balance of this Note will accrue from the date of such Default at a
rate per annum equal to three percent (3%) plus the interest rate then in
effect. Notwithstanding the foregoing, no quarterly interest payment shall be
paid to Holder so long as the Subordination Agreement (as defined below) remains
in effect, subject to the next sentence. Unless prohibited under applicable law,
any accrued interest that is not paid on the date on which it is due and payable
shall (a) bear interest at the same rate at which interest is then accruing on
the principal amount of this Note and (b) be paid in full on the earlier of the
date of termination of the Subordination Agreement or the Maturity Date.

     3. Prepayment; Acceleration. The outstanding principal balance and all
accrued interest payable to Holder hereunder may not be prepaid without the
consent of Holder in its sole and absolute discretion. All prepayments so
permitted shall be applied in the order provided in Section 1. The outstanding
principal balance of this Note is subject to acceleration as set forth in


                                       21
<PAGE>   22

Section 9 of the Loan Agreement. Following any such acceleration, Holder may
pursue any and all legal or equitable remedies that are available to it.

     4. Conversion. This Note shall be convertible into certain securities of
the Company in accordance with Section 5 of the Loan Agreement.

     5. Default. The Company will be deemed to be in default ("Default")
hereunder upon the occurrence and during the continuance of any "default"
described in Section 10 of the Loan Agreement, and Holder shall have all rights
and remedies available to it upon any such Default as described therein or in
this Note, subject to the terms of the Subordination Agreement. Notwithstanding
the foregoing, the Company's failure to make quarterly payments of accrued
interest as a result of any prohibitions in the Subordination Agreement (as
hereinafter defined) shall not constitute a Default hereunder and such accrued
interest shall be capitalized as provided in the last sentence of Section 2
hereof.

     6. Miscellaneous.

(a) The Company hereby waives presentment, demand, protest, notice of dishonor,
    diligence and all other notices, any release or discharge arising from any
    extension of time, discharge of a prior party, or other cause of release or
    discharge other than actual payment in full hereof.

(b) Holder shall not be deemed, by any act or omission, to have waived any of
    its rights or remedies hereunder unless such waiver is in writing and signed
    by Holder and then only to the extent specifically set forth in such
    writing. A waiver with reference to one event shall not be construed as
    continuing or as a bar to or waiver of any right or remedy as to a
    subsequent event. No delay or omission of Holder to exercise any right,
    whether before or after a Default hereunder, shall impair any such right or
    shall be construed to be a waiver of any right or Default, and the
    acceptance at any time by Holder of any past-due amount shall not be deemed
    to be a waiver of the right to require prompt payment when due of any other
    amounts then or thereafter due and payable.


                                       22
<PAGE>   23

(c) Time is of the essence hereof. Upon any Default hereunder, Holder may
    exercise all rights and remedies provided for herein or in the Loan
    Agreement and by law or equity, including, but not limited to, the right to
    immediate payment in full of this Note.

(d) The remedies of Holder as provided herein or in the Loan Agreement, or any
    one or more of them, in law or at equity, shall be cumulative and
    concurrent, and may be pursued singularly, successively or together at
    Holder's sole discretion, and may be exercised as often as occasion therefor
    shall occur.

(e) It is expressly agreed that if this Note is referred to any attorney or if
    suit is brought to collect or interpret this Note or any part hereof or to
    enforce or protect any rights conferred upon Holder by this Note or any
    other document evidencing or securing this Note, then the Company covenants
    and agrees to pay all reasonable costs, including attorneys' fees, incurred
    by Holder in connection therewith.

(f) If any provisions of this Note would require the Company to pay interest
    hereon at a rate exceeding the highest rate allowed by applicable law, the
    Company shall instead pay interest under this Note at the highest rate
    permitted by applicable law.

(g) This Note shall be governed by and construed in accordance with the laws of
    the State of Illinois without giving effect to any choice or conflict of law
    provision or law that would cause the application of the laws of any other
    jurisdiction other than the State of Illinois.

(h) Capitalized terms used but not defined herein shall have the meanings
    ascribed to such terms in the Loan Agreement.

(i) The indebtedness evidenced by this Note is subordinated to certain
    indebtedness of the Company pursuant to that certain Subordination and
    Standby Agreement dated as of July 12, 2001 (the "Subordination Agreement"),
    executed by Holder in favor of The Northern Trust Company and acknowledged
    by the Company and Akorn (New Jersey), Inc.


                                       23
<PAGE>   24

(j) This Note and the rights and obligations herein may be assigned by Holder to
    any affiliate of Holder, to members of the immediate family of Dr. John N.
    Kapoor, or to trusts, partnerships or other beneficiaries of Holder, subject
    to such assignee executing a subordination agreement substantially similar
    in form and substance to the Subordination Agreement.

     IN WITNESS WHEREOF, the Company has executed this Convertible Promissory
Note as of the date first above written.


                                             AKORN, INC.


                                             By:
                                                 -------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------


                                       24
<PAGE>   25

                                   EXHIBIT A-1

THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS.

THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT
SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF JULY 12, 2001,
EXECUTED BY THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989, IN FAVOR OF THE
NORTHERN TRUST COMPANY AND ACKNOWLEDGED BY AKORN, INC. AND AKORN (NEW JERSEY),
INC., TO THE INDEBTEDNESS AND OTHER LIABILITIES OWED BY AKORN, INC. AND ITS
SUBSIDIARIES UNDER AND IN CONNECTION WITH THE AMENDED AND RESTATED CREDIT
AGREEMENT DATED AS OF SEPTEMBER 15, 1999 AMONG AKORN, INC., AKORN (NEW JERSEY),
INC. AND THE NORTHERN TRUST COMPANY, AS AMENDED FROM TIME TO TIME.

                           CONVERTIBLE PROMISSORY NOTE


$2,000,000.00                                                  Chicago, Illinois
                                                               Date of Issuance:
                                                                   July 12, 2001

     FOR VALUE RECEIVED, Akorn, Inc., a Louisiana corporation (the "Company"),
promises to pay to the order of The John N. Kapoor Trust Dated September 20,
1989, or its administrators, representatives, successors or assigns ("Holder"),
the principal sum of Two Million Dollars ($2,000,000), and to pay interest on
the outstanding principal balance of this


                                       25
<PAGE>   26

Convertible Promissory Note (this "Note") in accordance with Section 2 of this
Note. This Note is delivered in connection with that certain Convertible Bridge
Loan and Warrant Agreement of even date herewith (the "Loan Agreement") between
the Company and the Holder.

     1. Maturity. To the extent not previously converted in accordance with the
Loan Agreement, subject to the terms of the Subordination Agreement (as defined
below), the Company shall repay the outstanding principal balance of this Note
and interest accrued thereon in full on the date that is thirty-six (36) months
after the original date of issuance of this Note (the "Maturity Date"). All
payments received shall be applied first against costs of collection (if any),
then against accrued and unpaid interest on this Note, then against the
outstanding principal balance of this Note.

     2. Interest. Interest shall begin to accrue on the outstanding principal
balance of this Note commencing on the date hereof and continuing until
repayment of this Note in full at the Prime Rate calculated on the basis of a
360 day year and actual days elapsed and such accrued interest shall be payable
quarterly in arrears beginning October 1, 2001; provided, however, that upon the
occurrence of a Default (as defined herein) interest on the outstanding
principal balance of this Note will accrue from the date of such Default at a
rate per annum equal to ten percent (10%) plus the interest rate then in effect.
Notwithstanding the foregoing, no quarterly interest payment shall be paid to
Holder so long as the Subordination Agreement (as defined below) remains in
effect and such accrued interest shall be capitalized until paid pursuant to the
next sentence. Unless prohibited under applicable law, any accrued interest that
is not paid on the date on which it is due and payable shall bear interest at
the same rate at which interest is then accruing on the principal amount of this
Note.

     3. Prepayment; Acceleration. The outstanding principal balance and all
accrued interest payable to Holder hereunder may not be prepaid without the
consent of Holder in its sole and absolute discretion. All prepayments so
permitted shall be applied in the order provided in Section 1. The outstanding
principal balance of this Note is subject to acceleration as set forth in
Section 9 of the Loan Agreement. Following any such acceleration, Holder may
pursue any and all legal or equitable remedies that are available to it.


                                       26
<PAGE>   27

     4. Conversion. This Note shall be convertible into certain securities of
the Company in accordance with Section 5 of the Loan Agreement.

     5. Default. The Company will be deemed to be in default ("Default")
hereunder upon the occurrence and during the continuance of any "default"
described in Section 10 of the Loan Agreement, and Holder shall have all rights
and remedies available to it upon any such Default as described therein or in
this Note, subject to the terms of the Subordination Agreement. Notwithstanding
the foregoing, the Company's failure to make quarterly payments of accrued
interest as a result of any prohibitions in the Subordination Agreement (as
hereinafter defined) shall not constitute a Default hereunder and such accrued
interest shall be capitalized as provided in the last sentence of Section 2
hereof.

     6. Miscellaneous.

(a) The Company hereby waives presentment, demand, protest, notice of dishonor,
    diligence and all other notices, any release or discharge arising from any
    extension of time, discharge of a prior party, or other cause of release or
    discharge other than actual payment in full hereof.

(b) Holder shall not be deemed, by any act or omission, to have waived any of
    its rights or remedies hereunder unless such waiver is in writing and signed
    by Holder and then only to the extent specifically set forth in such
    writing. A waiver with reference to one event shall not be construed as
    continuing or as a bar to or waiver of any right or remedy as to a
    subsequent event. No delay or omission of Holder to exercise any right,
    whether before or after a Default hereunder, shall impair any such right or
    shall be construed to be a waiver of any right or Default, and the
    acceptance at any time by Holder of any past-due amount shall not be deemed
    to be a waiver of the right to require prompt payment when due of any other
    amounts then or thereafter due and payable.

(c) Time is of the essence hereof. Upon any Default hereunder, Holder may
    exercise all rights and remedies provided for herein or in the Loan
    Agreement and by law or equity, including, but not limited to, the right to
    immediate payment in full of this Note.


                                       27
<PAGE>   28

(d) The remedies of Holder as provided herein or in the Loan Agreement, or any
    one or more of them, in law or at equity, shall be cumulative and
    concurrent, and may be pursued singularly, successively or together at
    Holder's sole discretion, and may be exercised as often as occasion therefor
    shall occur.

(e) It is expressly agreed that if this Note is referred to any attorney or if
    suit is brought to collect or interpret this Note or any part hereof or to
    enforce or protect any rights conferred upon Holder by this Note or any
    other document evidencing or securing this Note, then the Company covenants
    and agrees to pay all reasonable costs, including attorneys' fees, incurred
    by Holder in connection therewith.

(f) If any provisions of this Note would require the Company to pay interest
    hereon at a rate exceeding the highest rate allowed by applicable law, the
    Company shall instead pay interest under this Note at the highest rate
    permitted by applicable law.

(g) This Note shall be governed by and construed in accordance with the laws of
    the State of Illinois without giving effect to any choice or conflict of law
    provision or law that would cause the application of the laws of any other
    jurisdiction other than the State of Illinois.

(h) Capitalized terms used but not defined herein shall have the meanings
    ascribed to such terms in the Loan Agreement.

(i) The indebtedness evidenced by this Note is subordinated to certain
    indebtedness of the Company pursuant to that certain Subordination and
    Standby Agreement dated as of July 12, 2001 (the "Subordination Agreement"),
    executed by Holder in favor of The Northern Trust Company and acknowledged
    by the Company and Akorn (New Jersey), Inc.

(j) This Note and the rights and obligations herein may be assigned by Holder to
    any affiliate of Holder, to members of the immediate family of Dr. John N.
    Kapoor, or to trusts, partnerships or other beneficiaries of Holder, subject
    to such assignee executing a subordination agreement substantially similar
    in form and substance to the Subordination Agreement.


                                       28
<PAGE>   29

     IN WITNESS WHEREOF, the Company has executed this Convertible Promissory
Note as of the date first above written.


                                             AKORN, INC.


                                             By:
                                                 -------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------


                                       29
<PAGE>   30

                                    EXHIBIT B

                                    TRANCHE A



                          COMMON STOCK PURCHASE WARRANT



                                     between



                      AKORN, INC., a Louisiana Corporation



                                       and



                THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989



                              Dated: July 12, 2001


                                       30
<PAGE>   31

                  THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ACQUIRED FOR
         INVESTMENT ONLY PURSUANT TO AN INVESTMENT REPRESENTATION ON THE PART OF
         THE HOLDER THEREOF. THEY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
         ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT BE
         SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED IN THE
         ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, AN OPINION OF COUNSEL,
         SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, OR
         A NO ACTION LETTER OR INTERPRETIVE OPINION OF THE STAFF OF THE
         SECURITIES AND EXCHANGE COMMISSION THAT SUCH REGISTRATION IS NOT
         REQUIRED.



                                   TRANCHE A

                         COMMON STOCK PURCHASE WARRANT

                              Dated July 12, 2001

                            Void After July 12, 2006


AKORN, INC. (the "Company), a Louisiana corporation, hereby certifies that, for
value received, THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989 (the "Trust"),
or its registered assigns (sometimes hereinafter collectively referred to as the
"Warrantholder" or the "Warrantholders"), is entitled, subject to the terms and
conditions set forth in this warrant (said warrant and any warrants issued in
exchange herefor or replacements thereof being hereinafter collectively referred
to as the "Warrants"), to purchase from the Company, one million (1,000,000)
fully paid and nonassessable shares of Common Stock of the Company, without par
value (the "Common Stock"), which term is further defined in Paragraph 4(i)
hereof), at any time or from time to time until 5:00 p.m. central time on
July 12, 2006 at the exercise price set forth in Paragraph 2 hereof (the
"Exercise Price"), the number of such shares of Common Stock and the Exercise
Price being subject to adjustment as provided herein.

     The Warrants evidenced by this Common Stock Purchase Warrant are being
issued by the Company to the Warrantholder as additional consideration with
respect to a certain Convertible Bridge Loan and Warrant Agreement ("Loan
Agreement") that certain Convertible Tranche A Promissory Note in the aggregate
principal amount of $3,000,000 ("Tranche A Note") and that certain Convertible
Tranche B Promissory Note in the aggregate principal amount of $2,000,000
("Tranche B Note") entered into between the Company, as borrower, and the Trust,
as lender, each dated as of July 12, 2001, wherein the Trust is making a
subordinated loan to the Company in the aggregate principal amount of $5,000,000
(collectively the "Subordinated Loan").


                                       31
<PAGE>   32

     1. Exercise of Warrant. The rights represented by this Warrant may be
exercised by the Warrantholders, in whole or in part (but not as to a fractional
share of Common Stock), by the presentation and surrender of this Warrant with
written notice of the Warrantholder's election to purchase, substantially in the
form of Exhibit A hereto, at the office of the Company, 2500 Milbrook Drive,
Buffalo Grove, Illinois 60089 marked to the attention of the Company's Chief
Financial Officer, or at such other address as the Company may designate by
notice in writing to the Warrantholders at the address of each Warrantholder
appearing on the books of the Company and upon payment to the Company of the
Exercise Price for such shares of Common Stock. Such payment shall be made by
check payable to the order of the Company. The Warrantholders may, at their
option, in lieu of paying the Exercise Price by check, instruct the Company to
deduct from the Warrant Shares that would otherwise be issued that number of
Warrant Shares having an aggregate Fair Value (as that term is defined in
Paragraph 4.b hereof) equal to the aggregate Exercise Price. The Company agrees
that the shares so purchased (the "Warrant Shares") shall be deemed to have been
issued to the Warrantholders who are the record owners of such Warrant Shares as
of the close of business on the date on which this Warrant shall have been
surrendered together with the aforementioned written notice of election to
purchase, and payment for such Warrant Shares shall have been made as aforesaid.
Certificates for the Warrant Shares so purchased shall be delivered to the
Warrantholder within a reasonable time, not exceeding seven days, after the
rights represented by this Warrant shall have been so exercised, and, unless
this Warrant has expired, a new Warrant representing the number of shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be issued to the Warrantholder within such time.

     2. Exercise Price. Subject to adjustment as provided herein, the Exercise
Price for the purchase of the Warrant Shares shall be $2.85 per share.

     3. Warrantholders Not Deemed Stockholders. Subject to the provisions of the
Company's Articles of Incorporation and By-laws, copies of which have been
delivered to the Warrantholders, the Warrantholders shall not be entitled to
vote or receive dividends or be deemed the holders of Common Stock, nor shall
anything contained herein be construed to confer upon the Warrantholders, as
holders of Warrants, any of the rights of a stockholder of the Company or any
right to vote upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of par value
or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or to receive notice of meetings, or to receive dividends, except as
otherwise provided herein, until this Warrant shall have been exercised and the
Warrant Shares receivable upon the exercise hereof shall have become deliverable
as provided in Paragraph 1 above.

     4. Adjustment of Number of Shares. Exercise Price and Nature of Securities
Issuable Upon Exercise of Warrants.

          a. Exercise Price: Adjustment of Number of Shares. The Exercise Price
set forth in Paragraph 2 hereof shall be subject to adjustment from time to time
as hereinafter provided. Upon each adjustment of the Exercise Price, the
Warrantholders shall thereafter be entitled to purchase, at the Exercise Price,
resulting from such adjustment a number of shares obtained by multiplying the
Exercise Price by the number of shares purchasable pursuant thereto immediately


                                       32
<PAGE>   33

prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.

          b. Adjustment of Exercise Price Upon Issuance of Common Stock. Except
for shares of Common Stock of the Company issuable pursuant to warrants and
options outstanding as of the date hereof or issuable pursuant to presently
existing benefit plans of the Company, including, without limitation, the Akorn,
Inc. Employee Stock Purchase Plan, as amended (the "Purchase Plan"), the Amended
and Restated Akorn, Inc. 1988 Incentive Compensation Program, as heretofore
amended and which is proposed for further amendment and approval by Company
shareholders at their 2001 annual meeting (the "Incentive Plan"), and the 1991
Stock Option Plan for Directors (the "Directors Plan"), if and whenever after
the date hereof the Company shall issue or sell Additional Shares of Common
Stock (as defined below) without consideration or for a consideration per share
equal to the greater of (i) the Exercise Price and (ii) the Fair Value (as
defined below) per share (except upon exercise of this Warrant), successively
upon each such issuance or sale, the Exercise Price immediately prior to such
issuance or sale of such shares shall be reduced to the lowest price determined
by multiplying each such Exercise Price by a fraction, (x) the numerator of
which is (A) the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the Fair Value per share
of Common Stock immediately prior to such issue or sale plus (2) the aggregate
consideration, if any, received by the Company upon such issue or sale, divided
by (B) the total number of shares of Common Stock outstanding immediately after
such issue or sale, and (y) the denominator of which shall be the Fair Value per
share of Common Stock immediately prior to such issue or sale.

     No adjustment of the Exercise Price, however, shall be made in an amount
less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the new subsequent
adjustment which, together with any adjustments so carried forward, shall amount
to $.01 per share or more.

     For purposes of this Paragraph 4(b), the date as of which the Fair Value
per share of Common Stock shall be computed shall be the day preceding the
earlier of the date on which the Company shall (i) enter into a firm contract
for the issuance of such shares or (ii) issue such shares.

     The provisions of this Paragraph 4(b) shall not apply to any Additional
Shares of Common Stock that are distributed to holders of Common Stock pursuant
to a stock split for which an adjustment is provided for under Paragraph 4(f).

     As used in this Warrant, the following terms shall have the following
meanings:

     "Additional Shares of Common Stock" shall mean all shares of Common Stock
issued or issuable by the Company after the date of this Warrant, other than
shares of Common Stock issuable pursuant to warrants and options existing on the
date hereof or pursuant to options issuable pursuant to employee and director
benefit plans of the Company existing on the date hereof including, without
limitation, the Purchase Plan, the Incentive Plan and the Directors Plan or any
shares of Common Stock that may be issued upon the conversion of the
subordinated debt


                                       33
<PAGE>   34

evidenced by the Loan Agreement and Note, including, but not limited to, that
certain Tranche B Note and Tranche B Common Stock Purchase Warrant, both dated
as of July 12, 2001.

     "Fair Value" shall mean the price per share of Common Stock of the Company
at any date determined as follows: (i) if the shares of Common Stock are traded
in the over-the-counter market and not on any national securities exchange and
not in the NASDAQ National Market System, the average of the mean between the
bid and asked prices per share, as reported by the automated quotation system of
the National Association of Securities Dealers ("NASD"), or an equivalent
generally accepted reporting service, for the twenty (20) consecutive trading
days immediately preceding the date for which the determination of current or
closing market price is to be made, (ii) if the shares of Common Stock are
traded on a national securities exchange or in the NASDAQ National Market
System, the average daily per share closing price on the principal national
securities exchange on which they are so listed or in the NASDAQ National Market
System, as the case may be, for the twenty (20) consecutive trading days
immediately preceding the date for which the determination of current or closing
market price is to be made or (iii) if the Common Stock is not then listed on
any national securities exchange or quoted in the over-the-counter market, the
higher of (a) the book value thereof as determined by any firm of independent
public accountants of recognized standing selected by the Board of Directors of
the Company as of the last day of any month ending within 60 days preceding the
date as of which the determination is to be made or (b) the fair value thereof
determined in good faith by the Board of Directors of the Company and the
Warrantholders as of a date which is within 20 days of the date as of which the
determination is to be made. The closing price referred to in clause (ii) above
shall be the last reported sales price or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices, in
either case on the national securities exchange on which the shares of Common
Stock are then listed or in the NASDAQ National Market System.

          c. Further Provisions for Adjustment of Exercise Price Upon Issuance
of Additional Shares of Common Stock and Convertible Securities. For purposes of
Paragraph 4(b), the following provisions shall also be applicable.

               (i) In case at any time on or after the date hereof, the Company
shall declare any dividend or any other distribution upon any stock of the
Company of any class, payable in Additional Shares of Common Stock or by the
issuance of any evidence of indebtedness (other than the Subordinated Loan),
shares of stock or other securities which are at any time directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock (all such
indebtedness and securities being hereinafter referred to as "Convertible
Securities"), such declaration or distribution shall be deemed to be an issue or
sale (as of the record date) of such Additional Shares of Common Stock without
consideration and shall thereby cause an adjustment in the Exercise Price as
required by Paragraph 4(b).

               (ii) (A) In case at any time on or after the issuance of this
Warrant, the Company shall in any manner issue or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder are
immediately exercisable, there shall be determined the price per share for which
Additional Shares of Common Stock are issuable upon the conversion or exchange
thereof, such determination to be made by dividing (a) the total amount received
or receivable by the Company as consideration for the issue or sale of such
Convertible Securities,


                                       34
<PAGE>   35

plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof by (b) the maximum
aggregate number of Additional Shares of Common Stock issuable upon conversation
or exchange of all such Convertible Securities for such minimum aggregate amount
of additional consideration; and such issue or sale shall be deemed to be an
issue or sale for cash (as of the date of issue or sale of such Convertible
Securities) of such maximum number of Additional Shares of Common Stock at the
price per share so determined, and shall thereby cause an adjustment in the
Exercise Price, if such an adjustment is required by paragraph 4(b) hereof.

                    (B) If such Convertible Securities shall by their terms
provide for an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Company, or in the rate of
exchange upon the conversion or exchange thereof, the adjusted Exercise Price
shall, upon any such increase becoming effective, be increased to such Exercise
Price as would have been in effect had the adjustments made upon the issuance of
such Convertible Securities been made upon the basis of (a) the issuance of the
number of shares of Common Stock theretofore actually delivered upon the
exercise of such Convertible Securities, (b) the issuance of all Common Stock,
all Convertible Securities and all rights and options to purchase Common Stock
issued after the issuance of such Convertible Securities, and (c) the original
issuance at the time of such change of any such Convertible Securities then
still outstanding; provided, however, that any such increase shall not exceed,
in the aggregate, the amount of the original reduction of the Exercise Price
attributable to the Convertible Securities.

                    (C) If any rights of conversion or exchange evidenced by
such Convertible Securities shall expire without have been exercised, of if any
such Convertible Securities are exercised for a consideration greater than or
for a number of Additional Shares less than those used for purposes of
determining the adjustments to the Exercise Price provided in Paragraph
4(c)(ii)(A), the adjusted Exercise Price shall forthwith be readjusted to such
Exercise Price as would have been in effect had an adjustment with respect to
such Convertible Securities been made on the basis that the only Additional
Shares of Common Stock issued or sold were those issued upon the conversion or
exchange of such Convertible Securities, and that they were issued or sold for
the consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of such
Convertible Securities.

                    (iii) (A) In case at any time on or after the issuance of
this Warrant the Company shall in any manner grant or issue any rights or
options to subscribe for, purchase or otherwise acquire Additional Shares of
Common Stock, whether or not such rights or options are immediately exercisable,
there shall be determined the price per share for which Additional Shares of
Common Stock are issuable upon the exercise of such rights or options, such
determination to be made by dividing (a) the total amount, if any, received or
receivable by the Company as consideration for the granting of such rights or
options, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of such rights or options if the
maximum number of Additional Shares of Common Stock were issued pursuant to such
rights or options for such minimum aggregate amount of additional consideration,
by (b) the maximum number of Additional Shares of Common Stock of the Company
issuable upon the exercise of all such rights or options for such minimum
aggregate


                                       35
<PAGE>   36

amount of additional consideration; and the granting of such rights or options
shall be deemed to be an issue or sale for cash (as of the date of the granting
of such rights or options) of such maximum number of Additional Shares of Common
Stock at the price per share so determined, and shall thereby cause an
adjustment in the Exercise Price, if such an adjustment is required by Paragraph
4(b) hereof.

                    (B) If such rights or options shall by their terms provide
for an increase or increases, with passage of time, in the amount of additional
consideration payable to the Company upon the exercise thereof, the adjusted
Exercise Price shall, upon any such increases becoming effective, be increased
to such Exercise Price as would have been in effect had the adjustments made
upon the issuance of such rights or options been made upon the basis of (a) the
issuance of the number of shares of Common Stock theretofore actually delivered
upon the exercise of such rights or options, (b) the issuance of all Common
Stock, all rights and options and all Convertible Securities issued after the
issuance of such rights and options, and (c) the original issuance at the time
of such change or any such rights or options then still outstanding; provided,
however, that any such increase or increases in the Exercise Price shall not
exceed, in the aggregate, the amount of the original reduction of the Exercise
Price attributable to the grant of such rights or options.

                    (C) If any such rights or options shall expire without
having been exercised, or if any such rights or options are exercised for a
consideration greater than or for a number of Additional Shares less than those
used for purposes of determining the adjustments to the Exercise Price provided
in Paragraph 4(c)(iii)(A), the adjusted Exercise Price shall forthwith be
readjusted to such Exercise Price as would have been in effect had an adjustment
with respect to such rights or options been made on the basis that the only
Additional Shares of Common Stock so issued or sold were those issued or sold
upon the exercise of such rights or options and that they were issued or sold
for the consideration actually received by the Company upon such exercise, plus
the consideration, if any, actually received by the Company for the granting of
such rights or options.

               (iv) (A) In case at any time on or after the issuance of this
Warrant the Company shall grant any rights or options to subscribe for, purchase
or otherwise acquire Convertible Securities, there shall be determined the price
per share for which Additional Shares of Common Stock are issuable upon the
exchange or conversion of such Convertible Securities if such rights or options
were exercised, such determination to be made by dividing (a) the total amount,
if any, received or receivable by the Company as consideration for the issuance
of such rights or options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of such rights
or options if the maximum number of Convertible Securities were issued pursuant
to such rights or options for such minimum aggregate amount of additional
consideration, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exchange or conversion of such Convertible
Securities if the maximum number of Additional Shares of Common Stock were
issued pursuant to such Convertible Securities for such minimum aggregate amount
of additional consideration, by (b) the maximum aggregate number of Additional
Shares of Common Stock issuable upon the exchange or conversion of the
Convertible Securities for such minimum aggregate amount of additional
consideration, and the issue or sale of such rights or options shall be deemed
to be an issue or sale for cash (as of the date of the granting of such rights
or options)


                                       36
<PAGE>   37

of such maximum number of Additional Shares of Common Stock at the price per
share so determined, and thereby shall cause an adjustment in the Exercise
Price, if such an adjustment is required by Paragraph 4(b).

                    (B) If such rights or options to subscribe for or otherwise
acquire Convertible Securities shall by their terms provide for an increase or
increases, with the passage of time, in the amount of additional consideration
payable to the Company upon the exercise, exchange or conversion thereof, the
adjusted Exercise Price shall, forthwith upon any such increase becoming
effective, be increased to such Exercise Price as would have been in effect had
the adjustments made upon the issuances of such rights or options been made upon
the basis of (a) the issuance of the number of shares of Common Stock
theretofore actually delivered upon the exchange or conversion of such
Convertible Securities (b) the issuances of all Common Stock and all rights,
options and Convertible Securities issued after the issuance of such rights and
options and (c) the original issuances at the time of such change of any such
rights, options and Convertible Securities issued upon exercise of such rights
or options which are then still outstanding; provided, however, that any such
increase shall not exceed, in the aggregate, the amount of the original
reduction of the Exercise Price attributable to the grant of such rights or
options.

                    (C) If any such rights, options or rights of conversion or
exchange of such Convertible Securities shall expire without having been
exercised, exchanged or converted, or if any such rights, options or rights of
conversion or exchange are exercised for a consideration greater than or for a
number of Additional Shares less than those used for purposes of determining the
adjustment to the Exercise Price provided in Paragraph 4(c)(iv)(A), the adjusted
Exercise Price shall forthwith be readjusted to such Exercise Price as would
have been in effect had an adjustment been made with respect to such rights,
options or rights of conversion or exchange of such Convertible Securities on
the basis that the only Additional Shares of Common Stock so issued or sold were
those issued or sold upon the exercise of such rights or options and exchange or
conversion of such Convertible Securities, plus the consideration, if any,
actually received by the Company for the granting of such rights, options or
Convertible Securities.

               (v) In any case where an adjustment has been made in the Exercise
Price upon the issuance of Convertible Securities or any rights or options to
purchase Convertible Securities or Additional Shares of Common Stock pursuant to
this Paragraph 4(c), no further adjustment shall be made at the time of the
conversion of any such Convertible Securities or at the time of the exercise of
any such rights or options. Where no such adjustment has been made at the time
of issuance, an adjustment shall be made at the time of the conversion of any
such Convertible Securities or at the time of the exercise of any such rights or
options if such an adjustment is required by Paragraph 4(b).

               (vi) In case at any time on or after the issuance of this Warrant
any shares of Common Stock or Convertible Securities or any rights or options to
acquire Additional Shares of Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the value of the amount of
the consideration other than cash payable to the Company, shall be determined in
good faith by the Company's Board of Directors and shall be deemed to be the
Fair Value of such consideration. Whether or not the


                                       37
<PAGE>   38

consideration so received is cash, the amount thereof shall be determined after
deducting therefrom any expenses incurred or any underwriting commissions or
concessions or discounts paid or allowed by the Company in connection therewith.

               (vii) In case at any time the Company shall fix a record date of
the holders of its Common Stock for the purpose of entitling them (a) to receive
a dividend or other distribution payable in Common Stock, Convertible Securities
or rights or options to purchase either thereof, or (b) to subscribe for or
purchase Common Stock, Convertible Securities or rights or options to purchase
either thereof, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed, pursuant to this Paragraph
4(c), to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.

               (viii) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of this paragraph 4(c).

          d. Reorganization, Reclassification, Consolidation, Merger or Sale. If
any capital reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities, cash or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions shall be made
whereby the Warrantholders shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant, upon exercise of this Warrant and in lieu of the Warrant Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities, cash or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of Common Stock equal to the number of Warrant Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights and interests of the Warrantholder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and the number of Warrant Shares purchasable and receivable upon exercise of
this Warrant) shall thereafter be applicable, as nearly as may be, in relation
to any shares of stock or securities thereafter deliverable upon the exercise
hereof. The Company shall not effect any consolidation, merger or sale of all or
substantially all of the assets of the Company unless prior to or simultaneous
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation, merger or purchase of such assets
shall assume, by written instrument executed and mailed or delivered to the
Warrantholders, the obligation to deliver to such Warrantholders such cash (or
cash equivalent), shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Warrantholders may be entitled to receive and
containing the express assumption of such successor corporation of the due and
punctual performance and observance of each provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.


                                       38
<PAGE>   39

                    In case any Additional Shares of Common Stock or Convertible
Securities or any rights or options to purchase any Additional Shares of Common
Stock or Convertible Securities shall be issued in connection with any merger of
another corporation into the Company, the amount of consideration therefor shall
be deemed to be the Fair Value of such portion of the assets of such merged
corporation as the Board of Directors of the Company shall in good faith
determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities or rights or options, as the case may be, and the
Exercise Price shall be adjusted in accordance with this Paragraph 4(d).

               e. Company to Prevent Dilution. In case at any time or from time
to time conditions arise by reason of action taken by the Company, other than
action contemplated by this Warrant, which are not adequately covered by the
provisions of this Paragraph 4, and which might materially and adversely affect
the exercise rights of the Warrantholders under any provision of this Warrant,
unless the adjustment necessary shall be agreed upon by the Company and the
Warrantholders, the Board of Directors of the Company shall appoint a firm of
independent certified public accountants of recognized standing, reasonably
acceptable to the Warrantholders, who at the Company's expense shall give their
opinion upon the adjustment, if any, on a basis consistent with the standards
established in the other provisions of this Paragraph 4, necessary with respect
to the Exercise Price and the number of Warrant Shares purchasable upon exercise
of the Warrants, so as to preserve, without dilution, the exercise rights of the
Warrantholders. Upon receipt of such opinion, the Board of Directors shall
forthwith make the adjustments described therein.

                    Nothing contained in this Paragraph 4(e) shall require the
Exercise Price to be adjusted in the event that the Company shall declare any
quarterly cash dividend or distribution upon any stock of the Company of any
class which does not exceed 150% of the amount of any quarterly cash dividend
paid with respect to the same quarter in the immediately preceding fiscal year
of the Company.

               f. Stock Splits and Reverse Stock Splits. In case at any time the
Company shall subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in case at any time the Company
shall combine its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced.

               g. Dissolution, Liquidation and Wind-Up. In case the Company
shall, at any time prior to the expiration of this Warrant and prior to the
exercise thereof, dissolve, liquidate or wind up its affairs, the Warrantholders
shall be entitled, upon the exercise of this Warrant, to receive, in lieu of the
Warrant Shares which such Warrantholders would have been entitled to receive,
the same kind and amount of assets as would have been issued, distributed or
paid to such Warrantholders upon any such dissolution, liquidation or winding up
with respect to such Warrant Shares, had such Warrantholders been the holders of
record of the Warrant Shares receivable upon the exercise of this Warrant on the
record date for the


                                       39
<PAGE>   40

determination of those persons entitled to receive any such liquidating
distribution. After any such dissolution, liquidation or winding up which shall
result in any cash distribution in excess of the Exercise Price provided for by
this Warrant, the Warrantholders may, at each such Warrantholder's option,
exercise the same without making payment of the Exercise Price, and in such case
the Company shall, upon the distribution to said Warrantholders, consider that
said Exercise Price has been paid in full to it and in making settlement to said
Warrantholders, shall deduct from the amount payable to such Warrantholders an
amount equal to such Exercise Price.

               h. Accountants' Certificate. In each case of an adjustment in the
number of Warrant Shares or other stock, securities or property receivable upon
the exercise of this Warrant, the Company at its expense shall compute, and upon
the Warrantholder's request shall at its expense, cause independent public
accountants of recognized standing selected by the Company and reasonably
acceptable to the Warrantholders to certify such computation, such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment and showing in detail the facts upon which such adjustment
is based, including a statement of (a) the consideration received or to be
received by the Company for any Additional Shares of Common Stock, rights,
options or Convertible Securities issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock of each class outstanding or
deemed to be outstanding, (c) the adjusted Exercise Price and (d) the number of
Warrant Shares issuable upon exercise of this Warrant. The Company will
forthwith mail a copy of each such certificate to each Warrantholder.

               i. Definition of Common Stock. As used herein, the term "Common
Stock" shall mean and include the Company's authorized common stock of any class
or classes and shall also include any capital stock of any class of the Company
hereafter authorized which shall not be limited to a fixed sum or percentage of
par value in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company, and shall include any
common stock of any class or classes resulting from any reclassification or
reclassifications thereof.

          5. Special Agreements of the Company.

               a. Reservation of Shares. The Company covenants and agrees that
all Warrant Shares will, upon issuance, be validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder, and from
all taxes, liens and charges with respect to the issue thereof (other than taxes
in respect to any transfer occurring contemporaneously with such issue) and that
it will obtain, at its sole expense, all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
The Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise of the rights represented by this Warrant.

               b. Avoidance of Certain Actions. The Company will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, issue or sale of securities or
otherwise, avoid or take any action which


                                       40
<PAGE>   41

would have the effect of avoiding the observance or performance of any of the
terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in carrying out all of the provisions of this Warrant
and in taking all of such action as may be necessary or appropriate in order to
protect the rights of the Warrantholders against dilution or other impairment of
their rights hereunder.

               c. Communication to Shareholders. Any notice, document or other
communication given or made by the Company to holders of Common Stock as such
shall at the same time be provided to the Warrantholders.

               d. Compliance with Law. The Company shall comply with all
applicable laws, rules and regulations of the United States and of all states,
municipalities and agencies and of any other jurisdiction applicable to the
Company and shall do all things necessary to preserve, renew and keep in full
force and effect and in good standing its corporate existence and authority
necessary to continue its business.

          6. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon exercise hereof, the Company
shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the Fair Value of one share of Common Stock, determined as
provided in Paragraph 4(b) hereof.

          7. Notices of Stock Dividends, Subscriptions, Reclassification,
Consolidations, Mergers, etc. If at any time: (i) the Company shall declare a
cash dividend that exceeds 150% of the amount of any quarterly cash dividend
paid with respect to the same quarter in the immediately preceding fiscal year
of the Company or a dividend on Common Stock payable otherwise than in cash; or
(ii) the Company shall authorize the granting to the holders of Common Stock of
rights to subscribe for or purchase any shares of capital stock of any class or
of any other rights; or (iii) there shall be any capital reorganization, or
reclassification, or redemption of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or substantially all
of its assets to, another corporation or firm; or (iv) there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then the Company shall give to the Warrantholders at the addresses of such
Warrantholders as shown on the books of the Company, at least ten days prior to
the applicable record date hereinafter specified, a written notice summarizing
such action or event and stating the record date for any such dividend or rights
(or, if a record date is not to be selected, the date as of which the holders of
Common Stock of record entitled to such dividend or rights are to be
determined), the date on which any such reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected the
holders of Common Stock of record shall be entitled to effect any exchange of
their shares of Common Stock for cash (or cash equivalent) securities or other
property deliverable upon any such reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding up.

          8. Registered Holder; Transfer of Warrants or Warrant Shares;
Investment Representation.


                                       41
<PAGE>   42

               a. Maintenance of Registration Books; Ownership of this Warrant.
The Company shall keep at its principal office in the City of Buffalo Grove,
Illinois, a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration, transfer and exchange
of this Warrant. The Company shall not at any time, except upon the dissolution,
liquidation or winding-up of the Company, close such register so as to result in
preventing or delaying the exercise or transfer of this Warrant.

                    The Company may deem and treat the person in whose name this
Warrant is registered as the holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration or transfer as provided in this
Paragraph 8.

               b. Exchange and Replacement. This Warrant is exchangeable upon
surrender hereof by the registered holder to the Company at its principal office
for new Warrants of like tenor and date representing in the aggregate the right
to purchase the number of Warrant Shares purchasable hereunder, each of such new
Warrants to represent the right to purchase such number of Warrant Shares as
shall be designated by said registered holder at the time of surrender. Subject
to compliance with the provisions of Paragraphs 8 and 9, this Warrant and all
rights hereunder are transferable in whole or in part upon the books of the
Company by the registered holder hereof in person or by duly authorized
attorney, and a new Warrant shall be made and delivered by the Company, of the
same tenor and date as this Warrant but registered in the name of the
transferee, upon surrender of this Warrant, duly endorsed, to said office of the
Company. Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, upon delivery to
the Company by the Warrantholder of an indemnification agreement satisfactory to
the Company, and upon surrender and cancellation of this Warrant, if mutilated,
the Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant, without requiring the posting of any bond or the giving of any other
security. The Company upon the surrender thereof in connection with any
exchange, transfer or replacement shall promptly cancel this Warrant. The
Company shall pay all expenses, taxes and other charges payable in connection
with the preparation, execution and delivery of Warrants pursuant to this
Paragraph 8.

               c. Warrants and Warrant Shares Not Registered. The holder of this
Warrant, by accepting this Warrant, represents and acknowledges that this
Warrant and the Warrant Shares are not being registered under the Securities Act
of 1933, as amended (the "Securities Act") on the grounds that the issuance of
this Warrant and the offering and sale of such Warrant Shares are exempt from
registration under Section 4(2) of the Securities Act as not involving any
public offering.

                    Notwithstanding any provisions contained in this Warrant to
the contrary, this Warrant and the Warrant Shares shall not be transferable
except upon the conditions specified in Paragraphs 8 and 9, which conditions are
intended, among other things, to insure compliance with the provisions of the
Securities Act in respect of the transfer of this Warrant or of such Warrant
Shares.


                                       42
<PAGE>   43

               d. Investment Representations. The Trust represents and warrants
to the Company that this Warrant is being acquired by it for its own account for
investment purposes only and (subject to the disposition of its property being
at all times within its control) not with a view to resale, distribution or
other disposition thereof; any Warrant Shares which may be issued to the Trust,
or its nominee, upon exercise of this Warrant will be acquired by it for its own
account for investment purposes only and (subject to the disposition of its
property being at all times within its control) not with a view to resale,
distribution or other disposition thereof; the Trust is able to bear the
economic risk of investment in this Warrant and can afford to sustain a total
loss on such investment, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
proposed investment; and the Trust understands that there is no public market
for this Warrant and that there may never be a public market for this Warrant
and, therefore, the Trust may have to bear the risk of its investment in this
Warrant for an indefinite period of time.

         9. Legends:  Restrictions on Transfer.

               a. Warrant Legend. Each Warrant shall be stamped or otherwise
imprinted with the legend set forth on the first page of this Warrant.

               b. Warrant Shares Legend. Each stock certificate representing
Warrant Shares shall be stamped or otherwise imprinted with the following
legend:

          THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
          BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
          TRANSFER THEREOF IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE TRANCHE
          A COMMON STOCK PURCHASE WARRANT OF THE COMPANY, DATED AS OF JULY 12,
          2001, ORIGINALLY ISSUED BY AKORN, INC. (THE "COMPANY") TO THE JOHN N.
          KAPOOR TRUST DATED SEPTEMBER 20, 1989. A COPY OF THE FORM OF SUCH
          WARRANT IS ON FILE WITH THE COMPANY'S SECRETARY AT THE COMPANY'S
          PRINCIPAL EXECUTIVE OFFICE AND WILL BE FURNISHED WITHOUT CHARGE TO THE
          HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST TO THE SECRETARY AT
          SUCH OFFICE.

               c. Notice of Proposed Transfer. Prior to any proposed transfer of
this Warrant or any Warrant Shares, the Warrantholder or the holder of Warrant
Shares, as the case may be, shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Securities Act
or qualification under any applicable state securities law (which opinion as to
state securities laws shall be at the expense of the company), whereupon such
Warrantholder or holder of Warrant Shares shall be entitled to transfer such
securities in accordance with the terms of its notice. Each Warrant and each
certificate for Warrant Shares transferred as above provided shall bear,
respectively, the legends set forth in Paragraphs 9(a) and 9(b), except that
such Warrant or certificate shall not bear such legend if (i) such transfer is
in accordance with the provisions of Rule 144 (or any


                                       43
<PAGE>   44

other rule permitting public sale without registration under the Securities Act)
or (ii) the opinion of counsel referred to above is to the further effect that
the transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. In addition, new securities shall be
issued without such legends if such legends may be properly removed under the
terms of Rule 144(k) promulgated under the Securities Act.

               d. Further Limitations on Transfer. The Warrantholder shall not
transfer this Warrant to any person except to (i) members of his immediate
family or (ii) trusts, partnerships and other beneficiaries or owners of an
entity that is a Warrantholder.

          10. Miscellaneous Provisions.

               a. Governing Law. This Warrant shall be deemed to have been made
in the State of Illinois and the validity of this Warrant, the construction,
interpretation, and enforcement thereof, and the rights of the parties thereto
shall be determined under, governed by, and construed in accordance with the
internal laws of the State of Illinois, without regard to principles of
conflicts of law.

               b. Notices. All notices hereunder shall be in writing and shall
be deemed to have been given three days after being mailed by certified mail,
addressed to the address below stated of the party to which notice is given, or
to such changed address a such party may have fixed by notice:


      To the Company:       Akorn, Inc.
                            2500 Millbrook Drive
                            Buffalo Grove, Illinois 60089
                            Attn:  Office of the Chief Financial Officer

      With a copy to:       Christopher R. Manning, Esq.
                            Burke, Warren, McKay & Serritella, P.C.
                            330 North Wabash Avenue, Suite 2200
                            Chicago, Illinois 60611-3607

      To the
      Warrantholders of
      holders of
      Warrant Shares:       At the addresses of such
                            holders as they appear on
                            the records of the Company

      With a copy to:       Dana S. Armagno, Esq.
                            Vedder, Price, Kaufman & Kammholz
                            222 North LaSalle Street
                            Chicago, Illinois 60601


                                       44
<PAGE>   45

         provided, however, that any notice of change of address shall be
effective only upon receipt.

               c. Assignment. This Warrant shall be binding upon and inure to
the benefit of the Company, the Warrantholders and the holders of Warrant Shares
and the permitted successors, assigns and transferees of the Company, the
Warrantholders and the holders of Warrant Shares.

               d. Attorneys' Fees. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Warrant, or because of
an alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Warrant, the successful or prevailing party or parties
shall be entitled to recover such reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled, as may be ordered in connection with such
proceeding.

               e. Entire Agreement; Amendments and Waivers. This Warrant sets
forth the entire understanding of the parties with respect to the transactions
contemplated hereby. The failure of any party to seek redress for the violation
or to insist upon the strict performance of any term of this Warrant shall not
constitute a waiver of such term and such party shall be entitled to enforce
such term without regard to such forbearance. A written instrument executed by
the Company and all Warrantholders may only amend this Warrant.

               f. Severability. If any term of this Warrant as applied to any
person or to any circumstances is prohibited, void, invalid or unenforceable in
any jurisdiction, such term shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or invalidity without in any way affecting any
other term of this Warrant or affecting the validity or enforceability of this
Warrant or of such provision in any other jurisdiction.

               g. Headings. The headings in this Warrant are inserted only for
convenience of reference and shall not be used in the construction of any of its
terms.

               h. Non-waiver: Cumulative Remedies. No course of dealing or any
delay or failure to exercise any right hereunder on the part of any
Warrantholder or any holders of Warrant Shares shall operate as a waiver of such
right or otherwise prejudice the rights, powers or remedies of such
Warrantholder or such holders of Warrant Shares. The rights and remedies
provided in this Warrant are cumulative and are in addition to all rights and
remedies which each Warrantholder and each holder of Warrant Shares may have in
law or in equity or by statute or otherwise.

               i. Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
include the plural, and the part include the whole; the term "including" is not
limiting, and the term "or" has the inclusive meaning represented by the phrase
"and/or." The words "hereof," "Herein," "hereby," "hereunder," and other similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement.

          IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officers on the 12th day of July, 2001.


                                       45
<PAGE>   46

                                            Company:

                                            AKORN, INC.


                                            By:
                                                --------------------------------
                                            Title:
                                                   -----------------------------



                                       46
<PAGE>   47

                                    EXHIBIT A

                             NOTICE OF EXERCISE FORM

                    (To be executed only upon partial or full
                         exercise of the within Warrant)

     The undersigned registered holder of the within Warrant irrevocably
exercises the within Warrant for and purchases ______ shares of Common Stock of
Akorn, Inc. and herewith makes payment therefor in the amount of $_____________,
all at the price and on the terms and conditions specified in the within
Warrant, and requests that a certificate (or ____________ certificates in
denominations of ________ shares) for the shares of common Stock of Akorn, Inc.
hereby purchased be issued in the name of and delivered to (choose one) (a) the
undersigned or (b) ______________, whose address is ____________________ and, as
provided in the within Warrant, that a new Warrant of like tenor for the number
of shares of Common Stock of Akorn, Inc. not being purchased hereunder be issued
in the name of and delivered to (choose one) (a) the undersigned or (b)
_____________________, whose address is ____________________.

Dated: _______________, 20____.


                                            By:
                                                --------------------------------
                                                (Signature of Registered Holder)


                                                Signature Guaranteed:


                                       47
<PAGE>   48

                                   EXHIBIT B-1

                                    TRANCHE B



                          COMMON STOCK PURCHASE WARRANT



                                     between



                      AKORN, INC., a Louisiana Corporation



                                       and



                THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989



                              Dated: July 12, 2001


                                       48
<PAGE>   49

          THE SECURITIES EVIDENCED BY THIS CERTIFICATE WERE ACQUIRED FOR
     INVESTMENT ONLY PURSUANT TO AN INVESTMENT REPRESENTATION ON THE PART OF THE
     HOLDER THEREOF. THEY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
     1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED,
     HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
     EFFECTIVE REGISTRATION STATEMENT, AN OPINION OF COUNSEL, SATISFACTORY TO
     THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, OR A NO ACTION LETTER
     OR INTERPRETIVE OPINION OF THE STAFF OF THE SECURITIES AND EXCHANGE
     COMMISSION THAT SUCH REGISTRATION IS NOT REQUIRED.



                                    TRANCHE B

                          COMMON STOCK PURCHASE WARRANT

                               Dated July 12, 2001

                            Void After July 12, 2006


AKORN, INC. (the "Company), a Louisiana corporation, hereby certifies that, for
value received, THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989 (the "Trust"),
or its registered assigns (sometimes hereinafter collectively referred to as the
"Warrantholder" or the "Warrantholders"), is entitled, subject to the terms and
conditions set forth in this warrant (said warrant and any warrants issued in
exchange herefor or replacements thereof being hereinafter collectively referred
to as the "Warrants"), to purchase from the Company, six hundred sixty seven
thousand (667,000) fully paid and nonassessable shares of Common Stock of the
Company, without par value (the "Common Stock"), which term is further defined
in Paragraph 4(i) hereof), at any time or from time to time until 5:00 p.m.
central time on July 12, 2006 at the exercise price set forth in Paragraph 2
hereof (the "Exercise Price"), the number of such shares of Common Stock and the
Exercise Price being subject to adjustment as provided herein.

     The Warrants evidenced by this Common Stock Purchase Warrant are being
issued by the Company to the Warrantholder as additional consideration with
respect to a certain Convertible Bridge Loan and Warrant Agreement ("Loan
Agreement"), that certain Convertible Tranche A Promissory Note in the aggregate
principal amount of $3,000,000 ("Tranche A Note") and that certain Convertible
Tranche B Promissory Note in the aggregate principal amount of $2,000,000
("Tranche B Note") entered into between the Company, as borrower, and the Trust,
as lender, each dated as of July 12, 2001, wherein the Trust is making a
subordinated loan to the Company in the aggregate principal amount of $5,000,000
(collectively the "Subordinated Loan").


                                       49
<PAGE>   50

     1. Exercise of Warrant. The rights represented by this Warrant may be
exercised by the Warrantholders, in whole or in part (but not as to a fractional
share of Common Stock), by the presentation and surrender of this Warrant with
written notice of the Warrantholder's election to purchase, substantially in the
form of Exhibit A hereto, at the office of the Company, 2500 Milbrook Drive,
Buffalo Grove, Illinois 60089 marked to the attention of the Company's Chief
Financial Officer, or at such other address as the Company may designate by
notice in writing to the Warrantholders at the address of each Warrantholder
appearing on the books of the Company and upon payment to the Company of the
Exercise Price for such shares of Common Stock. Such payment shall be made by
check payable to the order of the Company. The Warrantholders may, at their
option, in lieu of paying the Exercise Price by check, instruct the Company to
deduct from the Warrant Shares that would otherwise be issued that number of
Warrant Shares having an aggregate Fair Value (as that term is defined in
Paragraph 4.b hereof) equal to the aggregate Exercise Price. The Company agrees
that the shares so purchased (the "Warrant Shares") shall be deemed to have been
issued to the Warrantholders who are the record owners of such Warrant Shares as
of the close of business on the date on which this Warrant shall have been
surrendered together with the aforementioned written notice of election to
purchase, and payment for such Warrant Shares shall have been made as aforesaid.
Certificates for the Warrant Shares so purchased shall be delivered to the
Warrantholder within a reasonable time, not exceeding seven days, after the
rights represented by this Warrant shall have been so exercised, and, unless
this Warrant has expired, a new Warrant representing the number of shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be issued to the Warrantholder within such time.

     2. Exercise Price. Subject to adjustment as provided herein, the Exercise
Price for the purchase of the Warrant Shares shall be $2.25 per share.

     3. Warrantholders Not Deemed Stockholders. Subject to the provisions of the
Company's Articles of Incorporation and By-laws, copies of which have been
delivered to the Warrantholders, the Warrantholders shall not be entitled to
vote or receive dividends or be deemed the holders of Common Stock, nor shall
anything contained herein be construed to confer upon the Warrantholders, as
holders of Warrants, any of the rights of a stockholder of the Company or any
right to vote upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue of stock, reclassification of stock, change of par value
or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or to receive notice of meetings, or to receive dividends, except as
otherwise provided herein, until this Warrant shall have been exercised and the
Warrant Shares receivable upon the exercise hereof shall have become deliverable
as provided in Paragraph 1 above.

     4. Adjustment of Number of Shares. Exercise Price and Nature of Securities
Issuable Upon Exercise of Warrants.

          a. Exercise Price: Adjustment of Number of Shares. The Exercise Price
set forth in Paragraph 2 hereof shall be subject to adjustment from time to time
as hereinafter provided. Upon each adjustment of the Exercise Price, the
Warrantholders shall thereafter be entitled to purchase, at the Exercise Price,
resulting from such adjustment a number of shares obtained by multiplying the
Exercise Price by the number of shares purchasable pursuant thereto immediately


                                       50
<PAGE>   51

prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.

          b. Adjustment of Exercise Price Upon Issuance of Common Stock. Except
for shares of Common Stock of the Company issuable pursuant to warrants and
options outstanding as of the date hereof or issuable pursuant to presently
existing benefit plans of the Company, including, without limitation, the Akorn,
Inc. Employee Stock Purchase Plan, as amended (the "Purchase Plan"), the Amended
and Restated Akorn, Inc. 1988 Incentive Compensation Program, as heretofore
amended and which is proposed for further amendment and approval by Company
shareholders at their 2001 annual meeting (the "Incentive Plan"), and the 1991
Stock Option Plan for Directors (the "Directors Plan"), if and whenever after
the date hereof the Company shall issue or sell Additional Shares of Common
Stock (as defined below) without consideration or for a consideration per share
equal to the greater of (i) the Exercise Price and (ii) the Fair Value (as
defined below) per share (except upon exercise of this Warrant), successively
upon each such issuance or sale, the Exercise Price immediately prior to such
issuance or sale of such shares shall be reduced to the lowest price determined
by multiplying each such Exercise Price by a fraction, (x) the numerator of
which is (A) the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the Fair Value per share
of Common Stock immediately prior to such issue or sale plus (2) the aggregate
consideration, if any, received by the Company upon such issue or sale, divided
by (B) the total number of shares of Common Stock outstanding immediately after
such issue or sale, and (y) the denominator of which shall be the Fair Value per
share of Common Stock immediately prior to such issue or sale.

     No adjustment of the Exercise Price, however, shall be made in an amount
less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the new subsequent
adjustment which, together with any adjustments so carried forward, shall amount
to $.01 per share or more.

     For purposes of this Paragraph 4(b), the date as of which the Fair Value
per share of Common Stock shall be computed shall be the day preceding the
earlier of the date on which the Company shall (i) enter into a firm contract
for the issuance of such shares or (ii) issue such shares.

     The provisions of this Paragraph 4(b) shall not apply to any Additional
Shares of Common Stock that are distributed to holders of Common Stock pursuant
to a stock split for which an adjustment is provided for under Paragraph 4(f).

     As used in this Warrant, the following terms shall have the following
meanings:

     "Additional Shares of Common Stock" shall mean all shares of Common Stock
issued or issuable by the Company after the date of this Warrant, other than
shares of Common Stock issuable pursuant to warrants and options existing on the
date hereof or pursuant to options issuable pursuant to employee and director
benefit plans of the Company existing on the date hereof including, without
limitation, the Purchase Plan, the Incentive Plan and the Directors Plan or any
shares of Common Stock that may be issued upon the conversion of the
subordinated debt


                                       51
<PAGE>   52

evidenced by the Loan Agreement and Note, including, but not limited to, that
certain Tranche A Note and Tranche A Common Stock Purchase Warrant, both dated
as of July 12, 2001.

     "Fair Value" shall mean the price per share of Common Stock of the Company
at any date determined as follows: (i) if the shares of Common Stock are traded
in the over-the-counter market and not on any national securities exchange and
not in the NASDAQ National Market System, the average of the mean between the
bid and asked prices per share, as reported by the automated quotation system of
the National Association of Securities Dealers ("NASD"), or an equivalent
generally accepted reporting service, for the twenty (20) consecutive trading
days immediately preceding the date for which the determination of current or
closing market price is to be made, (ii) if the shares of Common Stock are
traded on a national securities exchange or in the NASDAQ National Market
System, the average daily per share closing price on the principal national
securities exchange on which they are so listed or in the NASDAQ National Market
System, as the case may be, for the twenty (20) consecutive trading days
immediately preceding the date for which the determination of current or closing
market price is to be made or (iii) if the Common Stock is not then listed on
any national securities exchange or quoted in the over-the-counter market, the
higher of (a) the book value thereof as determined by any firm of independent
public accountants of recognized standing selected by the Board of Directors of
the Company as of the last day of any month ending within 60 days preceding the
date as of which the determination is to be made or (b) the fair value thereof
determined in good faith by the Board of Directors of the Company and the
Warrantholders as of a date which is within 20 days of the date as of which the
determination is to be made. The closing price referred to in clause (ii) above
shall be the last reported sales price or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices, in
either case on the national securities exchange on which the shares of Common
Stock are then listed or in the NASDAQ National Market System.

          c. Further Provisions for Adjustment of Exercise Price Upon Issuance
of Additional Shares of Common Stock and Convertible Securities. For purposes of
Paragraph 4(b), the following provisions shall also be applicable.

               (i) In case at any time on or after the date hereof, the Company
shall declare any dividend or any other distribution upon any stock of the
Company of any class, payable in Additional Shares of Common Stock or by the
issuance of any evidence of indebtedness (other than the Subordinated Loan),
shares of stock or other securities which are at any time directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock (all such
indebtedness and securities being hereinafter referred to as "Convertible
Securities"), such declaration or distribution shall be deemed to be an issue or
sale (as of the record date) of such Additional Shares of Common Stock without
consideration and shall thereby cause an adjustment in the Exercise Price as
required by Paragraph 4(b).

               (ii) (A) In case at any time on or after the issuance of this
Warrant, the Company shall in any manner issue or sell any Convertible
Securities, whether or not the rights to exchange or convert thereunder are
immediately exercisable, there shall be determined the price per share for which
Additional Shares of Common Stock are issuable upon the conversion or exchange
thereof, such determination to be made by dividing (a) the total amount received
or receivable by the Company as consideration for the issue or sale of such
Convertible Securities,


                                       52
<PAGE>   53

plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof by (b) the maximum
aggregate number of Additional Shares of Common Stock issuable upon conversation
or exchange of all such Convertible Securities for such minimum aggregate amount
of additional consideration; and such issue or sale shall be deemed to be an
issue or sale for cash (as of the date of issue or sale of such Convertible
Securities) of such maximum number of Additional Shares of Common Stock at the
price per share so determined, and shall thereby cause an adjustment in the
Exercise Price, if such an adjustment is required by paragraph 4(b) hereof.

                    (B) If such Convertible Securities shall by their terms
provide for an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Company, or in the rate of
exchange upon the conversion or exchange thereof, the adjusted Exercise Price
shall, upon any such increase becoming effective, be increased to such Exercise
Price as would have been in effect had the adjustments made upon the issuance of
such Convertible Securities been made upon the basis of (a) the issuance of the
number of shares of Common Stock theretofore actually delivered upon the
exercise of such Convertible Securities, (b) the issuance of all Common Stock,
all Convertible Securities and all rights and options to purchase Common Stock
issued after the issuance of such Convertible Securities, and (c) the original
issuance at the time of such change of any such Convertible Securities then
still outstanding; provided, however, that any such increase shall not exceed,
in the aggregate, the amount of the original reduction of the Exercise Price
attributable to the Convertible Securities.

                    (C) If any rights of conversion or exchange evidenced by
such Convertible Securities shall expire without have been exercised, of if any
such Convertible Securities are exercised for a consideration greater than or
for a number of Additional Shares less than those used for purposes of
determining the adjustments to the Exercise Price provided in Paragraph
4(c)(ii)(A), the adjusted Exercise Price shall forthwith be readjusted to such
Exercise Price as would have been in effect had an adjustment with respect to
such Convertible Securities been made on the basis that the only Additional
Shares of Common Stock issued or sold were those issued upon the conversion or
exchange of such Convertible Securities, and that they were issued or sold for
the consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of such
Convertible Securities.

                    (iii) (A) In case at any time on or after the issuance of
this Warrant the Company shall in any manner grant or issue any rights or
options to subscribe for, purchase or otherwise acquire Additional Shares of
Common Stock, whether or not such rights or options are immediately exercisable,
there shall be determined the price per share for which Additional Shares of
Common Stock are issuable upon the exercise of such rights or options, such
determination to be made by dividing (a) the total amount, if any, received or
receivable by the Company as consideration for the granting of such rights or
options, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of such rights or options if the
maximum number of Additional Shares of Common Stock were issued pursuant to such
rights or options for such minimum aggregate


                                       53
<PAGE>   54

amount of additional consideration, by (b) the maximum number of Additional
Shares of Common Stock of the Company issuable upon the exercise of all such
rights or options for such minimum aggregate amount of additional consideration;
and the granting of such rights or options shall be deemed to be an issue or
sale for cash (as of the date of the granting of such rights or options) of such
maximum number of Additional Shares of Common Stock at the price per share so
determined, and shall thereby cause an adjustment in the Exercise Price, if such
an adjustment is required by Paragraph 4(b) hereof.

                         (B) If such rights or options shall by their terms
provide for an increase or increases, with passage of time, in the amount of
additional consideration payable to the Company upon the exercise thereof, the
adjusted Exercise Price shall, upon any such increases becoming effective, be
increased to such Exercise Price as would have been in effect had the
adjustments made upon the issuance of such rights or options been made upon the
basis of (a) the issuance of the number of shares of Common Stock theretofore
actually delivered upon the exercise of such rights or options, (b) the issuance
of all Common Stock, all rights and options and all Convertible Securities
issued after the issuance of such rights and options, and (c) the original
issuance at the time of such change or any such rights or options then still
outstanding; provided, however, that any such increase or increases in the
Exercise Price shall not exceed, in the aggregate, the amount of the original
reduction of the Exercise Price attributable to the grant of such rights or
options.

                         (C) If any such rights or options shall expire without
having been exercised, or if any such rights or options are exercised for a
consideration greater than or for a number of Additional Shares less than those
used for purposes of determining the adjustments to the Exercise Price provided
in Paragraph 4(c)(iii)(A), the adjusted Exercise Price shall forthwith be
readjusted to such Exercise Price as would have been in effect had an adjustment
with respect to such rights or options been made on the basis that the only
Additional Shares of Common Stock so issued or sold were those issued or sold
upon the exercise of such rights or options and that they were issued or sold
for the consideration actually received by the Company upon such exercise, plus
the consideration, if any, actually received by the Company for the granting of
such rights or options.

                    (iv) (A) In case at any time on or after the issuance of
this Warrant the Company shall grant any rights or options to subscribe for,
purchase or otherwise acquire Convertible Securities, there shall be determined
the price per share for which Additional Shares of Common Stock are issuable
upon the exchange or conversion of such Convertible Securities if such rights or
options were exercised, such determination to be made by dividing (a) the total
amount, if any, received or receivable by the Company as consideration for the
issuance of such rights or options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
such rights or options if the maximum number of Convertible Securities were
issued pursuant to such rights or options for such minimum aggregate amount of
additional consideration, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exchange or conversion of
such Convertible Securities if the maximum number of Additional Shares of Common
Stock were issued pursuant to such Convertible Securities for such minimum
aggregate amount of additional consideration, by (b) the maximum aggregate
number of Additional Shares of Common Stock issuable upon the exchange or
conversion of the Convertible Securities for such minimum aggregate amount of
additional consideration, and the issue or sale of such rights or options shall
be deemed to be an issue or sale for cash (as of the date of the granting of
such rights or options)


                                       54
<PAGE>   55

of such maximum number of Additional Shares of Common Stock at the price per
share so determined, and thereby shall cause an adjustment in the Exercise
Price, if such an adjustment is required by Paragraph 4(b).

                         (B) If such rights or options to subscribe for or
otherwise acquire Convertible Securities shall by their terms provide for an
increase or increases, with the passage of time, in the amount of additional
consideration payable to the Company upon the exercise, exchange or conversion
thereof, the adjusted Exercise Price shall, forthwith upon any such increase
becoming effective, be increased to such Exercise Price as would have been in
effect had the adjustments made upon the issuances of such rights or options
been made upon the basis of (a) the issuance of the number of shares of Common
Stock theretofore actually delivered upon the exchange or conversion of such
Convertible Securities (b) the issuances of all Common Stock and all rights,
options and Convertible Securities issued after the issuance of such rights and
options and (c) the original issuances at the time of such change of any such
rights, options and Convertible Securities issued upon exercise of such rights
or options which are then still outstanding; provided, however, that any such
increase shall not exceed, in the aggregate, the amount of the original
reduction of the Exercise Price attributable to the grant of such rights or
options.

                         (C) If any such rights, options or rights of conversion
or exchange of such Convertible Securities shall expire without having been
exercised, exchanged or converted, or if any such rights, options or rights of
conversion or exchange are exercised for a consideration greater than or for a
number of Additional Shares less than those used for purposes of determining the
adjustment to the Exercise Price provided in Paragraph 4(c)(iv)(A), the adjusted
Exercise Price shall forthwith be readjusted to such Exercise Price as would
have been in effect had an adjustment been made with respect to such rights,
options or rights of conversion or exchange of such Convertible Securities on
the basis that the only Additional Shares of Common Stock so issued or sold were
those issued or sold upon the exercise of such rights or options and exchange or
conversion of such Convertible Securities, plus the consideration, if any,
actually received by the Company for the granting of such rights, options or
Convertible Securities.

                    (v) In any case where an adjustment has been made in the
Exercise Price upon the issuance of Convertible Securities or any rights or
options to purchase Convertible Securities or Additional Shares of Common Stock
pursuant to this Paragraph 4(c), no further adjustment shall be made at the time
of the conversion of any such Convertible Securities or at the time of the
exercise of any such rights or options. Where no such adjustment has been made
at the time of issuance, an adjustment shall be made at the time of the
conversion of any such Convertible Securities or at the time of the exercise of
any such rights or options if such an adjustment is required by Paragraph 4(b).

                    (vi) In case at any time on or after the issuance of this
Warrant any shares of Common Stock or Convertible Securities or any rights or
options to acquire Additional Shares of Common Stock or Convertible Securities
shall be issued or sold for a consideration other than cash, the value of the
amount of the consideration other than cash payable to the Company, shall be
determined in good faith by the Company's Board of Directors and shall be deemed
to be the Fair Value of such consideration. Whether or not the


                                       55
<PAGE>   56

consideration so received is cash, the amount thereof shall be determined after
deducting therefrom any expenses incurred or any underwriting commissions or
concessions or discounts paid or allowed by the Company in connection therewith.

                    (vii) In case at any time the Company shall fix a record
date of the holders of its Common Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in Common Stock, Convertible
Securities or rights or options to purchase either thereof, or (b) to subscribe
for or purchase Common Stock, Convertible Securities or rights or options to
purchase either thereof, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed, pursuant to this
Paragraph 4(c), to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.

                    (viii) The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock for the purposes of this paragraph 4(c).

               d. Reorganization, Reclassification, Consolidation, Merger or
Sale. If any capital reorganization or reclassification of the capital stock of
the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, cash or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
shall be made whereby the Warrantholders shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions specified
in this Warrant, upon exercise of this Warrant and in lieu of the Warrant Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities, cash or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of Common Stock equal to the number of Warrant Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights and interests of the Warrantholder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and the number of Warrant Shares purchasable and receivable upon exercise of
this Warrant) shall thereafter be applicable, as nearly as may be, in relation
to any shares of stock or securities thereafter deliverable upon the exercise
hereof. The Company shall not effect any consolidation, merger or sale of all or
substantially all of the assets of the Company unless prior to or simultaneous
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation, merger or purchase of such assets
shall assume, by written instrument executed and mailed or delivered to the
Warrantholders, the obligation to deliver to such Warrantholders such cash (or
cash equivalent), shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Warrantholders may be entitled to receive and
containing the express assumption of such successor corporation of the due and
punctual performance and observance of each provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.


                                       56
<PAGE>   57

                    In case any Additional Shares of Common Stock or Convertible
Securities or any rights or options to purchase any Additional Shares of Common
Stock or Convertible Securities shall be issued in connection with any merger of
another corporation into the Company, the amount of consideration therefor shall
be deemed to be the Fair Value of such portion of the assets of such merged
corporation as the Board of Directors of the Company shall in good faith
determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities or rights or options, as the case may be, and the
Exercise Price shall be adjusted in accordance with this Paragraph 4(d).

               e. Company to Prevent Dilution. In case at any time or from time
to time conditions arise by reason of action taken by the Company, other than
action contemplated by this Warrant, which are not adequately covered by the
provisions of this Paragraph 4, and which might materially and adversely affect
the exercise rights of the Warrantholders under any provision of this Warrant,
unless the adjustment necessary shall be agreed upon by the Company and the
Warrantholders, the Board of Directors of the Company shall appoint a firm of
independent certified public accountants of recognized standing, reasonably
acceptable to the Warrantholders, who at the Company's expense shall give their
opinion upon the adjustment, if any, on a basis consistent with the standards
established in the other provisions of this Paragraph 4, necessary with respect
to the Exercise Price and the number of Warrant Shares purchasable upon exercise
of the Warrants, so as to preserve, without dilution, the exercise rights of the
Warrantholders. Upon receipt of such opinion, the Board of Directors shall
forthwith make the adjustments described therein.

                    Nothing contained in this Paragraph 4(e) shall require the
Exercise Price to be adjusted in the event that the Company shall declare any
quarterly cash dividend or distribution upon any stock of the Company of any
class which does not exceed 150% of the amount of any quarterly cash dividend
paid with respect to the same quarter in the immediately preceding fiscal year
of the Company.

               f. Stock Splits and Reverse Stock Splits. In case at any time the
Company shall subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in case at any time the Company
shall combine its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced.

               g. Dissolution, Liquidation and Wind-Up. In case the Company
shall, at any time prior to the expiration of this Warrant and prior to the
exercise thereof, dissolve, liquidate or wind up its affairs, the Warrantholders
shall be entitled, upon the exercise of this Warrant, to receive, in lieu of the
Warrant Shares which such Warrantholders would have been entitled to receive,
the same kind and amount of assets as would have been issued, distributed or
paid to such Warrantholders upon any such dissolution, liquidation or winding up
with respect to such Warrant Shares, had such Warrantholders been the holders of
record of the Warrant Shares receivable upon the exercise of this Warrant on the
record date for the


                                       57
<PAGE>   58

determination of those persons entitled to receive any such liquidating
distribution. After any such dissolution, liquidation or winding up which shall
result in any cash distribution in excess of the Exercise Price provided for by
this Warrant, the Warrantholders may, at each such Warrantholder's option,
exercise the same without making payment of the Exercise Price, and in such case
the Company shall, upon the distribution to said Warrantholders, consider that
said Exercise Price has been paid in full to it and in making settlement to said
Warrantholders, shall deduct from the amount payable to such Warrantholders an
amount equal to such Exercise Price.

               h. Accountants' Certificate. In each case of an adjustment in the
number of Warrant Shares or other stock, securities or property receivable upon
the exercise of this Warrant, the Company at its expense shall compute, and upon
the Warrantholder's request shall at its expense, cause independent public
accountants of recognized standing selected by the Company and reasonably
acceptable to the Warrantholders to certify such computation, such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment and showing in detail the facts upon which such adjustment
is based, including a statement of (a) the consideration received or to be
received by the Company for any Additional Shares of Common Stock, rights,
options or Convertible Securities issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock of each class outstanding or
deemed to be outstanding, (c) the adjusted Exercise Price and (d) the number of
Warrant Shares issuable upon exercise of this Warrant. The Company will
forthwith mail a copy of each such certificate to each Warrantholder.

               i. Definition of Common Stock. As used herein, the term "Common
Stock" shall mean and include the Company's authorized common stock of any class
or classes and shall also include any capital stock of any class of the Company
hereafter authorized which shall not be limited to a fixed sum or percentage of
par value in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company, and shall include any
common stock of any class or classes resulting from any reclassification or
reclassifications thereof.

          5. Special Agreements of the Company.

               a. Reservation of Shares. The Company covenants and agrees that
all Warrant Shares will, upon issuance, be validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder, and from
all taxes, liens and charges with respect to the issue thereof (other than taxes
in respect to any transfer occurring contemporaneously with such issue) and that
it will obtain, at its sole expense, all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
The Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise of the rights represented by this Warrant.

               b. Avoidance of Certain Actions. The Company will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, issue or sale of securities or
otherwise, avoid or take any action which


                                       58
<PAGE>   59

would have the effect of avoiding the observance or performance of any of the
terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in carrying out all of the provisions of this Warrant
and in taking all of such action as may be necessary or appropriate in order to
protect the rights of the Warrantholders against dilution or other impairment of
their rights hereunder.

               c. Communication to Shareholders. Any notice, document or other
communication given or made by the Company to holders of Common Stock as such
shall at the same time be provided to the Warrantholders.

               d. Compliance with Law. The Company shall comply with all
applicable laws, rules and regulations of the United States and of all states,
municipalities and agencies and of any other jurisdiction applicable to the
Company and shall do all things necessary to preserve, renew and keep in full
force and effect and in good standing its corporate existence and authority
necessary to continue its business.

          6. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon exercise hereof, the Company
shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the Fair Value of one share of Common Stock, determined as
provided in Paragraph 4(b) hereof.

          7. Notices of Stock Dividends, Subscriptions, Reclassification,
Consolidations, Mergers, etc. If at any time: (i) the Company shall declare a
cash dividend that exceeds 150% of the amount of any quarterly cash dividend
paid with respect to the same quarter in the immediately preceding fiscal year
of the Company or a dividend on Common Stock payable otherwise than in cash; or
(ii) the Company shall authorize the granting to the holders of Common Stock of
rights to subscribe for or purchase any shares of capital stock of any class or
of any other rights; or (iii) there shall be any capital reorganization, or
reclassification, or redemption of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or substantially all
of its assets to, another corporation or firm; or (iv) there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then the Company shall give to the Warrantholders at the addresses of such
Warrantholders as shown on the books of the Company, at least ten days prior to
the applicable record date hereinafter specified, a written notice summarizing
such action or event and stating the record date for any such dividend or rights
(or, if a record date is not to be selected, the date as of which the holders of
Common Stock of record entitled to such dividend or rights are to be
determined), the date on which any such reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected the
holders of Common Stock of record shall be entitled to effect any exchange of
their shares of Common Stock for cash (or cash equivalent) securities or other
property deliverable upon any such reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, liquidation or winding up.

          8. Registered Holder; Transfer of Warrants or Warrant Shares;
Investment Representation.


                                       59
<PAGE>   60

               a. Maintenance of Registration Books; Ownership of this Warrant.
The Company shall keep at its principal office in the City of Buffalo Grove,
Illinois, a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration, transfer and exchange
of this Warrant. The Company shall not at any time, except upon the dissolution,
liquidation or winding-up of the Company, close such register so as to result in
preventing or delaying the exercise or transfer of this Warrant.

                    The Company may deem and treat the person in whose name this
Warrant is registered as the holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration or transfer as provided in this
Paragraph 8.

               b. Exchange and Replacement. This Warrant is exchangeable upon
surrender hereof by the registered holder to the Company at its principal office
for new Warrants of like tenor and date representing in the aggregate the right
to purchase the number of Warrant Shares purchasable hereunder, each of such new
Warrants to represent the right to purchase such number of Warrant Shares as
shall be designated by said registered holder at the time of surrender. Subject
to compliance with the provisions of Paragraphs 8 and 9, this Warrant and all
rights hereunder are transferable in whole or in part upon the books of the
Company by the registered holder hereof in person or by duly authorized
attorney, and a new Warrant shall be made and delivered by the Company, of the
same tenor and date as this Warrant but registered in the name of the
transferee, upon surrender of this Warrant, duly endorsed, to said office of the
Company. Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, upon delivery to
the Company by the Warrantholder of an indemnification agreement satisfactory to
the Company, and upon surrender and cancellation of this Warrant, if mutilated,
the Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant, without requiring the posting of any bond or the giving of any other
security. The Company upon the surrender thereof in connection with any
exchange, transfer or replacement shall promptly cancel this Warrant. The
Company shall pay all expenses, taxes and other charges payable in connection
with the preparation, execution and delivery of Warrants pursuant to this
Paragraph 8.

               c. Warrants and Warrant Shares Not Registered. The holder of this
Warrant, by accepting this Warrant, represents and acknowledges that this
Warrant and the Warrant Shares are not being registered under the Securities Act
of 1933, as amended (the "Securities Act") on the grounds that the issuance of
this Warrant and the offering and sale of such Warrant Shares are exempt from
registration under Section 4(2) of the Securities Act as not involving any
public offering.

                    Notwithstanding any provisions contained in this Warrant to
the contrary, this Warrant and the Warrant Shares shall not be transferable
except upon the conditions specified in Paragraphs 8 and 9, which conditions are
intended, among other things, to insure compliance with the provisions of the
Securities Act in respect of the transfer of this Warrant or of such Warrant
Shares.


                                       60
<PAGE>   61

               d. Investment Representations. The Trust represents and warrants
to the Company that this Warrant is being acquired by it for its own account for
investment purposes only and (subject to the disposition of its property being
at all times within its control) not with a view to resale, distribution or
other disposition thereof; any Warrant Shares which may be issued to the Trust,
or its nominee, upon exercise of this Warrant will be acquired by it for its own
account for investment purposes only and (subject to the disposition of its
property being at all times within its control) not with a view to resale,
distribution or other disposition thereof; the Trust is able to bear the
economic risk of investment in this Warrant and can afford to sustain a total
loss on such investment, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
proposed investment; and the Trust understands that there is no public market
for this Warrant and that there may never be a public market for this Warrant
and, therefore, the Trust may have to bear the risk of its investment in this
Warrant for an indefinite period of time.

          9. Legends: Restrictions on Transfer.

               a. Warrant Legend. Each Warrant shall be stamped or otherwise
imprinted with the legend set forth on the first page of this Warrant.

               b. Warrant Shares Legend. Each stock certificate representing
Warrant Shares shall be stamped or otherwise imprinted with the following
legend:

          THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
          BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
          TRANSFER THEREOF IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE TRANCHE
          B COMMON STOCK PURCHASE WARRANT OF THE COMPANY, DATED AS OF JULY 12,
          2001, ORIGINALLY ISSUED BY AKORN, INC. (THE "COMPANY") TO THE JOHN N.
          KAPOOR TRUST DATED SEPTEMBER 20, 1989. A COPY OF THE FORM OF SUCH
          WARRANT IS ON FILE WITH THE COMPANY'S SECRETARY AT THE COMPANY'S
          PRINCIPAL EXECUTIVE OFFICE AND WILL BE FURNISHED WITHOUT CHARGE TO THE
          HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST TO THE SECRETARY AT
          SUCH OFFICE.

               c. Notice of Proposed Transfer. Prior to any proposed transfer of
this Warrant or any Warrant Shares, the Warrantholder or the holder of Warrant
Shares, as the case may be, shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Securities Act
or qualification under any applicable state securities law (which opinion as to
state securities laws shall be at the expense of the company), whereupon such
Warrantholder or holder of Warrant Shares shall be entitled to transfer such
securities in accordance with the terms of its notice. Each Warrant and each
certificate for Warrant Shares transferred as above provided shall bear,
respectively, the legends set forth in Paragraphs 9(a) and 9(b), except that
such Warrant or certificate shall not bear such legend if (i) such transfer is
in accordance with the provisions of Rule 144 (or any


                                       61
<PAGE>   62

other rule permitting public sale without registration under the Securities Act)
or (ii) the opinion of counsel referred to above is to the further effect that
the transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. In addition, new securities shall be
issued without such legends if such legends may be properly removed under the
terms of Rule 144(k) promulgated under the Securities Act.

               d. Further Limitations on Transfer. The Warrantholder shall not
transfer this Warrant to any person except to (i) members of his immediate
family or (ii) trusts, partnerships and other beneficiaries or owners of an
entity that is a Warrantholder.

          10. Miscellaneous Provisions.

               a. Governing Law. This Warrant shall be deemed to have been made
in the State of Illinois and the validity of this Warrant, the construction,
interpretation, and enforcement thereof, and the rights of the parties thereto
shall be determined under, governed by, and construed in accordance with the
internal laws of the State of Illinois, without regard to principles of
conflicts of law.

               b. Notices. All notices hereunder shall be in writing and shall
be deemed to have been given three days after being mailed by certified mail,
addressed to the address below stated of the party to which notice is given, or
to such changed address a such party may have fixed by notice:


     To the Company:      Akorn, Inc.
                          2500 Millbrook Drive
                          Buffalo Grove, Illinois 60089
                          Attn:  Office of the Chief Financial Officer

     With a copy to:      Christopher R. Manning, Esq.
                          Burke, Warren, McKay & Serritella, P.C.
                          330 North Wabash Avenue, Suite 2200
                          Chicago, Illinois 60611-3607

     To the
     Warrantholders of
     holders of
     Warrant Shares:      At the addresses of such
                          holders as they appear on
                          the records of the Company

     With a copy to:      Dana S. Armagno, Esq.
                          Vedder, Price, Kaufman & Kammholz
                          222 North LaSalle Street
                          Chicago, Illinois 60601


                                       62
<PAGE>   63

         provided, however, that any notice of change of address shall be
effective only upon receipt.

               c. Assignment. This Warrant shall be binding upon and inure to
the benefit of the Company, the Warrantholders and the holders of Warrant Shares
and the permitted successors, assigns and transferees of the Company, the
Warrantholders and the holders of Warrant Shares.

               d. Attorneys' Fees. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Warrant, or because of
an alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Warrant, the successful or prevailing party or parties
shall be entitled to recover such reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled, as may be ordered in connection with such
proceeding.

               e. Entire Agreement; Amendments and Waivers. This Warrant sets
forth the entire understanding of the parties with respect to the transactions
contemplated hereby. The failure of any party to seek redress for the violation
or to insist upon the strict performance of any term of this Warrant shall not
constitute a waiver of such term and such party shall be entitled to enforce
such term without regard to such forbearance. A written instrument executed by
the Company and all Warrantholders may only amend this Warrant.

               f. Severability. If any term of this Warrant as applied to any
person or to any circumstances is prohibited, void, invalid or unenforceable in
any jurisdiction, such term shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or invalidity without in any way affecting any
other term of this Warrant or affecting the validity or enforceability of this
Warrant or of such provision in any other jurisdiction.

               g. Headings. The headings in this Warrant are inserted only for
convenience of reference and shall not be used in the construction of any of its
terms.

               h. Non-waiver: Cumulative Remedies. No course of dealing or any
delay or failure to exercise any right hereunder on the part of any
Warrantholder or any holders of Warrant Shares shall operate as a waiver of such
right or otherwise prejudice the rights, powers or remedies of such
Warrantholder or such holders of Warrant Shares. The rights and remedies
provided in this Warrant are cumulative and are in addition to all rights and
remedies which each Warrantholder and each holder of Warrant Shares may have in
law or in equity or by statute or otherwise.

               i. Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
include the plural, and the part include the whole; the term "including" is not
limiting, and the term "or" has the inclusive meaning represented by the phrase
"and/or." The words "hereof," "Herein," "hereby," "hereunder," and other similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement.

          IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officers on the 12th day of July, 2001.


                                              Company:

                                              AKORN, INC.


                                       By:
                                              ----------------------------------
                                       Title:
                                              ----------------------------------

                                       63
<PAGE>   64


                                    EXHIBIT A

                             NOTICE OF EXERCISE FORM

                    (To be executed only upon partial or full
                         exercise of the within Warrant)

     The undersigned registered holder of the within Warrant irrevocably
exercises the within Warrant for and purchases ______ shares of Common Stock of
Akorn, Inc. and herewith makes payment therefor in the amount of $_____________,
all at the price and on the terms and conditions specified in the within
Warrant, and requests that a certificate (or ____________ certificates in
denominations of ________ shares) for the shares of common Stock of Akorn, Inc.
hereby purchased be issued in the name of and delivered to (choose one) (a) the
undersigned or (b) ______________, whose address is ____________________ and, as
provided in the within Warrant, that a new Warrant of like tenor for the number
of shares of Common Stock of Akorn, Inc. not being purchased hereunder be issued
in the name of and delivered to (choose one) (a) the undersigned or (b)
_____________________, whose address is ____________________.

Dated: _______________, 20____.



                                            By:
                                                --------------------------------
                                                (Signature of Registered Holder)


                                       64
<PAGE>   65

                                    EXHIBIT C
                          REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
July 12, 2001, by and among Akorn, Inc., a Louisiana corporation (the "Company")
and The John N. Kapoor Trust Dated September 20, 1989 (the "Investor").

          Pursuant to a Convertible Bridge Loan and Warrant Purchase Agreement
of even date herewith (the "Loan Agreement"), by and among the Company and the
Investor, the Investor will loan the Company the aggregate principal amount of
$5,000,000, in two tranches, which amount is convertible into Common Stock, and
receive Warrants to purchase Common Stock. In order to induce the Investor to
enter into the Loan Agreement and acquire the Notes and the Warrants, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
Closing under the Loan Agreement. Unless otherwise provided in this Agreement,
capitalized terms used herein shall have the meanings set forth in paragraph 9
hereof.

          The parties hereto agree as follows:

          1. Demand Registrations.

(a)  Requests for Registration. At any time following the ninetieth (90th) day
     after the date of the Closing under the Loan Agreement, the holders of at
     least fifty-one percent (51%) of the Registrable Securities may request
     registration under the Securities Act of all or part of their Registrable
     Securities ("Demand Registration") on Form S-1 or any similar long-form
     registration ("Long-Form Registration") or, if available, the holders of at
     least fifty-one percent (51%) of the Registrable Securities may request a
     Demand Registration on Form S-2 or S-3 or any similar short-form
     registration ("Short-Form Registration"). Each request for a Demand
     Registration shall specify the approximate number of Registrable Securities
     requested to be registered which must, for a Long-Form Registration,
     include at least fifty-percent (50%) of the Registrable Securities. Within
     ten (10) days after receipt of any request for a Demand Registration, the
     Company will give written notice of such requested registration to all
     other holders of Registrable Securities and, subject to paragraph 1(d)
     below, will include in such registration all Registrable Securities with
     respect to which the Company has received written requests for inclusion
     therein within fifteen (15) days after the receipt of the Company's notice.

(b)  Long-Form Registrations. The holders of the Registrable Securities will be
     entitled to request one (1) Long-Form Registration; provided that a
     registration will not count as the permitted Long-Form Registration unless
     the holders of Registrable Securities are able to register and sell
     seventy-five percent (75%) of the Registrable Securities requested to be
     included in such registration; and provided further that in any event the
     Company will pay all Registration Expenses in connection with any
     registration initiated as a Long-Form Registration whether or not it
     becomes effective.


                                       65
<PAGE>   66

(c)  Short-Form Registrations. In addition to the Long-Form Registration
     provided pursuant to paragraph 1(b), the holders of the Registrable
     Securities will be entitled to request two (2) Short-Form Registrations
     annually in which the Company will pay all Registration Expenses. Demand
     Registrations will be Short-Form Registrations whenever the Company is
     permitted to use any applicable short form.

(d)  Priority on Demand Registrations. The Company will not include in any
     Demand Registration any securities which are not Registrable Securities
     without the prior written consent of the holders of a majority of the
     Registrable Securities included in such registration, which consent will
     not be unreasonably withheld. If a Demand Registration is an underwritten
     offering and the managing underwriters advise the Company in writing (with
     a copy to each holder of Registrable Securities requesting registration)
     that in their opinion the number of Registrable Securities and, if
     permitted hereunder, other securities requested to be included in such
     offering exceeds the number of Registrable Securities and other securities,
     if any, which can be sold therein without adversely affecting the
     marketability of the offering, the Company will include in such
     registration, prior to the inclusion of any securities which are not
     Registrable Securities, the number of Registrable Securities requested to
     be included which in the opinion of such underwriters can be sold without
     adversely affecting the marketability of the offering, pro rata among the
     respective holders of Registrable Securities on the basis of the number of
     shares of Registrable Securities that each holder of Registrable Securities
     has requested to be included in such registration. Any Persons other than
     holders of Registrable Securities who participate in Demand Registrations
     which are not at the Company's expense must pay their share of the
     Registration Expenses as provided in paragraph 5 hereof.

(e)  Selection of Underwriters. The holders of a majority of the Registrable
     Securities will have the right to select the investment banker(s) and
     managing underwriter(s) to administer an offering initiated as a Demand
     Registration, subject to the Company's approval which shall not be
     unreasonably withheld.

(f)  Restrictions on Long-Form Registrations. The Company shall not be obligated
     to effect any Long-Form Registration within one hundred eighty (180) days
     after the effective date of any previous registration of securities by the
     Company or a previous registration in which the holders of Registrable
     Securities were given piggyback rights pursuant to paragraph 2 and in which
     there was no reduction in the number of Registrable Securities to be
     included.

(g)  Other Registration Rights. The Company will not grant to any Person (as
     defined in the Loan Agreement) the right to request the Company to register
     any equity securities of the Company, or any securities convertible or
     exchangeable into or exercisable for such securities, which would be
     superior to or otherwise interfere with the Investor's registration rights
     hereunder without the prior written approval of the holders of at least
     fifty-one percent (51%) of the Registrable Securities, which consent shall
     not be unreasonably withheld. Except for registration rights provided to
     Dr. John N. Kapoor, trusts established by or on his behalf, or his spouse
     or immediate family members, the Company represents and warrants to the
     Investor that no Person has the right to register any equity securities of
     the


                                       66
<PAGE>   67

     Company which are superior to or would otherwise interfere with the
     Investor's registration rights hereunder.

          2. Piggyback Registrations.

(a)  Right to Piggyback. Whenever the Company proposes to register any of its
     securities under the Securities Act (other than pursuant to a Demand
     Registration or a registration on Form S-4 or Form S-8 or any successor or
     similar forms ) and the registration form to be used may be used for the
     registration of Registrable Securities (a "Piggyback Registration"),
     whether or not for sale for its own account, the Company will give prompt
     written notice to all holders of Registrable Securities of its intention to
     effect such a registration and, subject to paragraphs 2(c) and 2(d), will
     include in such registration all Registrable Securities with respect to
     which the Company has received written requests for inclusion therein
     within fifteen (15) days after the receipt of the Company's notice.

(b)  Piggyback Expenses. The Registration Expenses of the holders of Registrable
     Securities will be paid by the Company in all Piggyback Registrations,
     whether or not consummated.

(c)  Priority on Primary Registrations. If a Piggyback Registration is an
     underwritten primary registration on behalf of the Company, and the
     managing underwriters advise the Company in writing (with a copy to each
     holder of Registrable Securities requesting registration of Registrable
     Securities) that in their opinion the number of securities requested to be
     included in such registration exceeds the number which can be sold in such
     offering without adversely affecting the marketability of such offering,
     the Company will include in such registration, (i) first, the securities
     the Company proposes to sell, and (ii) second, the Registrable Securities
     requested to be included in such registration, pro rata among the holders
     thereof on the basis of the number of shares that each holder has requested
     to be included in such registration.

(d)  Priority on Secondary Registrations. If a Piggyback Registration is an
     underwritten secondary registration on behalf of the Company or on behalf
     of holders of the Company's securities other than holders of Registrable
     Securities, and the managing underwriters advise the Company in writing
     (with a copy to each holder of Registrable Securities requesting
     registration of Registrable Securities) that in their opinion the number of
     securities requested to be included in such registration exceeds the number
     which can be sold in such offering without adversely affecting the
     marketability of the offering, the Company will include in such
     registration (i) first, the securities requested to be included therein by
     the holders requesting such registration and the Registrable Securities
     requested to be included in such registration, pro rata among the holders
     on the basis of the number of shares that each holder has requested to be
     included in such registration, and (ii) second, other securities requested
     to be included in such registration, pro rata among the holders of such
     securities.

(e)  General Priority Rule. Notwithstanding anything contained in this Agreement
     to the contrary, no holder of shares of any class of capital stock of the
     Company shall be entitled to have their shares included in any Piggyback
     Registration if such inclusion


                                       67
<PAGE>   68

     shall reduce the number of shares includable by holders of Registrable
     Securities in such registration, except with the prior written consent of
     the holders of at least fifty-one percent (51%) of the Registrable
     Securities, which consent will not be unreasonably withheld.

(f)  Other Registrations. If the Company has previously filed an underwritten
     registration statement with respect to Registrable Securities pursuant to
     paragraph 1 or pursuant to this paragraph 2, and if such previous
     registration has not been withdrawn or abandoned, the Company will not file
     or cause to be effected any other registration of any of its equity
     securities or securities convertible or exchangeable into or exercisable
     for its equity securities under the Securities Act (except on Form S-4 or
     Form S-8 or any successor form), whether on its own behalf or at the
     request of any holder or holders of such securities, until a period of at
     least three (3) months has elapsed from the effective date of such previous
     registration without the prior written consent of the holders of at least
     fifty-one percent (51%) of the Registrable Securities, which consent will
     not be unreasonably withheld.

          3. Holdback Agreements.

(a)  Each holder of Registrable Securities agrees not to effect any public sale
     or distribution of equity securities of the Company, or any securities,
     options or rights convertible into or exchangeable or exercisable for such
     securities, during the seven (7) days prior to and the 90-day period
     beginning on the effective date of any underwritten Demand Registration or
     any underwritten Piggyback Registration (except as part of such
     underwritten registration), unless the underwriters managing the Public
     Offering otherwise agree.

(b)  The Company agrees (i) not to effect any public sale or distribution of its
     equity securities, or any securities convertible into or exchangeable or
     exercisable for such securities, during the seven (7) days prior to and
     during the 120-day period beginning on the effective date of any
     underwritten Demand Registration or any underwritten Piggyback Registration
     (except as part of such underwritten registration or pursuant to
     registrations on Form S-4 or Form S-8 or any successor form), unless the
     underwriters managing the registered Public Offering otherwise agree, and
     (ii) to use its reasonable best efforts to cause each holder of at least
     five percent (5%) (on a fully diluted basis) of its Common Stock, or any
     securities convertible into or exchangeable or exercisable for Common
     Stock, purchased from the Company at any time after the date of this
     Agreement (other than in a registered Public Offering) to agree not to
     effect any public sale or distribution (including sales pursuant to Rule
     144 under the Securities Act) of any such securities during such period
     (except as part of such underwritten registration, if otherwise permitted),
     unless the underwriters managing the Public Offering otherwise agree.

(c)  Material Development Condition. With respect to any registration statement
     filed or to be filed pursuant to a Demand Registration or a Piggyback
     Registration, if the Company determines that, in its good faith judgment,
     it would (because of the existence of any acquisition or corporate
     reorganization or other transaction, financing activity or other
     development involving the Company) be materially detrimental (a "Material
     Development Condition") to the Company for such a registration statement to
     be filed, to become effective or to be maintained effective or for sales of
     Registrable Securities to continue pursuant to the registration statement,
     the Company shall be entitled, upon the


                                       68
<PAGE>   69

     giving of a written notice that a Material Development Condition has
     occurred (a "Delay Notice") from an officer of the Company to any holder
     included or to be included in such registration statement, (i) to cause
     sales of Registrable Securities by such Holder pursuant to such
     registration statement to cease, (ii) to cause such registration statement
     to be withdrawn and the effectiveness of such registration statement
     terminated, or (iii) in the event no such registration statement has yet
     been filed or declared effective, to delay filing or effectiveness of any
     such registration statement until, in the good faith judgment of the
     Company, such Material Development Condition no longer exists (notice of
     which the Company shall promptly deliver to any holder of Registrable
     Securities with respect to which any such registration statement has been
     filed). Notwithstanding the foregoing provisions of this paragraph: (1) the
     Company agrees to make all necessary disclosure of the existence or
     occurrence of the circumstances giving rise to a Material Development
     Condition as promptly as is practicable and to use its best efforts to
     minimize the duration of such cessation or delay, which period shall in no
     event exceed one hundred (100) consecutive days from the sending of its
     Delay Notice to a Holder or Holders with respect to such Material
     Development Condition; (2) in the event a registration statement is filed
     and subsequently withdrawn by reason of any existing or anticipated
     Material Development Condition as hereinbefore provided, the Company shall
     cause a new registration statement covering the same Registrable Securities
     as those covered by the original registration statement to be filed with
     the SEC as soon as practicable after such Material Development Condition
     expires or, if sooner, not later than the expiration of such one hundred
     (100) day period expires, and to use its best efforts to cause such new
     registration statement to be declared effective as soon as practicable, and
     the Registration Period for such new registration statement shall be the
     greater of thirty (30) days or the number of days that remained in such
     Registration Period with respect to the withdrawn registration statement at
     the time it was withdrawn; (3) any such registration subject to a Delay
     Notice shall not count as a Demand Registration hereunder for purposes of
     the limitation on Demand Registrations in paragraphs 1(b) and 1(c) above;
     (4) in the event the Company elects not to withdraw or terminate the
     effectiveness of any such registration statement but to cause a holder or
     holders to refrain from selling Registrable Securities for any period
     during the Registration Period, the Registration Period with respect to
     such holders and such Registrable Securities shall be extended by the
     number of days during the Registration Period that such holders are
     required to refrain from selling Registrable Securities; and (5) the
     Company may only send or impose one (1) Delay Notice during any period of
     twelve (12) consecutive months.

          4. Registration Procedures.

(a)  Whenever the holders of Registrable Securities have requested that any
     Registrable Securities be registered pursuant to this Agreement, the
     Company will use its best efforts to effect the registration and the sale
     of such Registrable Securities in accordance with the intended method of
     disposition thereof, and pursuant thereto the Company will as expeditiously
     as possible:

(i)  prepare and file with the Securities and Exchange Commission a registration
     statement with respect to such Registrable Securities and thereafter use
     its best efforts and take all necessary action to cause such registration
     statement to become effective within thirty (30) days of filing or as soon
     thereafter (provided that before filing a registration


                                       69
<PAGE>   70

      statement or prospectus or any amendments or supplements thereto, the
      Company will furnish to the counsel selected by the holders of a majority
      of the Registrable Securities covered by such registration statement
      copies of all such documents proposed to be filed, which documents will be
      subject to the review and approval of such counsel) and the Company will
      not file any registration statement or amendment thereto or any prospectus
      or any supplement thereto, including documents incorporated by reference,
      to which the holders of a majority of Registrable Securities covered by
      such registration statement shall reasonably object;

(ii)  prepare and file with the Securities and Exchange Commission such
      amendments and supplements to such registration statement and the
      prospectus used in connection therewith as may be necessary to keep such
      registration statement effective for a period of either (A) not less than
      six months (subject to extension pursuant to paragraph 7(b) below) or, if
      such registration statement relates to an underwritten offering, such
      longer period as in the opinion of counsel for the underwriters a
      prospectus is required by law to be delivered in connection with sales of
      Registrable Securities by an underwriter or dealer or (B) such shorter
      period as will terminate when all of the securities covered by such
      registration statement have been disposed of in accordance with the
      intended methods of disposition by the seller or sellers thereof set forth
      in such registration statement (but in any event not before the expiration
      of any longer period required under the Securities Act), and to comply
      with the provisions of the Securities Act with respect to the disposition
      of all securities covered by such registration statement until such time
      as all of such securities have been disposed of in accordance with the
      intended methods of disposition by the seller or sellers thereof set forth
      in the registration statement;

(iii) furnish to each seller of Registrable Securities such number of copies of
      such registration statement, each amendment and supplement thereto, the
      prospectus included in such registration statement (including each
      preliminary prospectus) and such other documents as such seller may
      reasonably request in order to facilitate the disposition of the
      Registrable Securities owned by such seller;

(iv)  use its best efforts to register or qualify such Registrable Securities
      under such other securities or blue sky laws of such jurisdictions as any
      seller reasonably requests and do any and all other acts and things which
      may be reasonably necessary or advisable to enable such seller of
      Registrable Securities to consummate the disposition in such jurisdictions
      of the Registrable Securities owned by such seller (provided, that the
      Company will not be required to (A) qualify generally to do business in
      any jurisdiction where it would not otherwise be required to qualify but
      for this subparagraph, (B) subject itself to taxation in any such
      jurisdiction, or (C) consent to general service of process in any such
      jurisdiction);

(v)   notify each seller of such Registrable Securities, at any time when a
      prospectus relating thereto is required to be delivered under the
      Securities Act, upon discovery that, or upon the discovery of the
      happening of any event as a result of which, the prospectus included in
      such registration statement contains an untrue statement of a material
      fact or omits any fact necessary to make the statements therein not
      misleading in the light of the circumstances under which they were made,
      and, at the request of any such seller, the


                                       70
<PAGE>   71

       Company will prepare and furnish to such seller a reasonable number of
       copies of a supplement or amendment to such prospectus so that, as
       thereafter delivered to the purchasers of such Registrable Securities,
       such prospectus will not contain an untrue statement of a material fact
       or omit to state any fact necessary to make the statements therein not
       misleading in the light of the circumstances under which they were made;

(vi)   cause all such Registrable Securities to be listed on each securities
       exchange on which similar securities issued by the Company are then
       listed and, if not so listed, to be listed on a national securities
       exchange or over-the-counter market such as the NASD automated quotation
       system and, if listed on the NASD automated quotation system, use all
       reasonable efforts to secure designation of all such Registrable
       Securities covered by such registration statement as a NASDAQ "national
       market system security" within the meaning of Rule 11Aa2-1 of the
       Securities and Exchange Commission or, failing that, to secure NASDAQ
       authorization for such Registrable Securities and, without limiting the
       generality of the foregoing, to arrange for at least two market makers to
       register as such with respect to such Registrable Securities with the
       NASD;

(vii)  provide a transfer agent and registrar for all such Registrable
       Securities not later than the effective date of such registration
       statement;

(viii) enter into such customary agreements (including underwriting agreements
       in customary form which include an indemnification by the Company of any
       underwriters in customary form) and take all such other actions as the
       holders of a majority of the Registrable Securities being sold or the
       underwriters, if any, reasonably request in order to expedite or
       facilitate the disposition of such Registrable Securities (including,
       without limitation, effecting a stock split or a combination of shares);

(ix)   make available for inspection by any seller of Registrable Securities,
       any underwriter participating in any disposition pursuant to such
       registration statement any attorney, accountant or other agent retained
       by any such seller or underwriter, all financial and other records,
       pertinent corporate documents and properties of the Company, and use all
       reasonable efforts to cause the Company's officers, directors, employees
       and independent accountants to supply all information reasonably
       requested by any such seller, underwriter, attorney, accountant or agent
       in connection with such registration statement;

(x)    otherwise use all reasonable efforts to comply with all applicable rules
       and regulations of the Securities and Exchange Commission, and make
       available to its security holders, as soon as reasonably practicable, an
       earnings statement covering the period of at least twelve (12) months
       beginning with the first day of the Company's first full calendar quarter
       after the effective date of the registration statement, which earnings
       statement shall satisfy the provisions of Section 11(a) of the Securities
       Act and Rule 158 thereunder;

(xi)   permit any holder of Registrable Securities which holder, in its sole and
       exclusive judgment, might be deemed to be an underwriter or a controlling
       person of the Company, to participate in the preparation of such
       registration or comparable statement and to require the insertion therein
       of material, furnished to the Company in writing, which in


                                       71
<PAGE>   72

       the reasonable judgment of such holder and its counsel should be
       included; provided such holder shall provide the Company with customary
       indemnification regarding any such written material provided by the
       holder;

(xii)  in the event of the issuance of any stop order suspending the
       effectiveness of a registration statement, or of any order suspending or
       preventing the use of any related prospectus or suspending the
       qualification of any Common Stock included in such registration statement
       for sale in any jurisdiction, the Company will use its reasonable best
       efforts promptly to obtain the withdrawal of such order;

(xiii) obtain a comfort letter, dated the effective date of such registration
       statement (and, if such registration includes an underwritten Public
       Offering, dated the date of the closing under the underwriting
       agreement), signed by the Company's independent public accountants in
       customary form and covering such matters of the type customarily covered
       by comfort letters as the holders of a majority of the Registrable
       Securities being sold reasonably request; and

(xiv)  provide a legal opinion of the Company's counsel addressed to each holder
       of Registrable Securities included in such registration, dated the
       effective date of such registration statement (and, if such registration
       includes an underwritten Public Offering, dated the date of the closing
       under the underwriting agreement), with respect to the registration
       statement, each amendment and supplement thereto, the prospectus included
       therein (including the preliminary prospectus) and such other documents
       relating thereto in customary form and covering such matters of the type
       customarily covered by legal opinions of such nature, including a comment
       of such counsel stating that nothing has come to their attention which
       leads them to believe that the registration statement or prospectus
       contains an untrue statement of a material fact or omits to state a fact
       necessary to make such statements not misleading.

          5. Registration Expenses.

(a)    All expenses incident to the Company's performance of or compliance with
       this Agreement, including, without limitation, all registration and
       filing fees, fees and expenses of compliance with securities or blue sky
       laws, printing expenses, messenger and delivery expenses, and fees and
       disbursements of counsel for the Company and all independent certified
       public accountants, underwriters (excluding underwriting discounts and
       commissions) and other Persons retained by the Company (all such expenses
       being herein called "Registration Expenses"), will be borne by the
       Company.

(b)    In connection with each Demand Registration and each Piggyback
       Registration, the Company will reimburse the holders of Registrable
       Securities covered by such registration for the reasonable fees and
       disbursements of one (1) counsel chosen by the holders of a majority of
       the Registrable Securities.

(c)    To the extent Registration Expenses are not required to be paid by the
       Company, each holder of securities included in any registration hereunder
       will pay those Registration Expenses allocable to the registration of
       such holder's securities so included,


                                       72
<PAGE>   73

     and any Registration Expenses not so allocable will be borne by all sellers
     of securities included in such registration in proportion to the aggregate
     selling price of the securities to be so registered.

          6. Indemnification.

(a)  The Company agrees to indemnify and hold harmless, to the extent permitted
     by law, each holder of Registrable Securities, its executors, personal
     representatives, successors, assigns, officers and directors and each
     Person who controls such holder (within the meaning of the Securities Act)
     against any and all losses, claims, damages, liabilities, joint or several,
     to which such holder or any such director or officer or controlling person
     may become subject under the Securities Act or otherwise, insofar as such
     losses, claims, damages or liabilities (or actions or proceedings, whether
     commenced or threatened, in respect thereof) arise out of or are based upon
     (i) any untrue or alleged untrue statement of material fact contained in
     any registration statement, prospectus or preliminary prospectus or any
     amendment thereof or supplement thereto, or (ii) any omission or alleged
     omission of a material fact required to be stated therein or necessary to
     make the statements therein not misleading, and the Company will reimburse
     such holder and each such director, officer and controlling person for any
     legal or any other expenses incurred by them in connection with
     investigating or defending any such loss, claim, liability, action or
     proceeding; provided, however, that the Company shall not be liable in any
     such case to the extent that any such loss, claim, damage, liability (or
     action or proceeding in respect thereof) or expense arises out of or is
     directly based upon an untrue statement or alleged untrue statement, or
     omission or alleged omission, made in such registration statement, any such
     prospectus or preliminary prospectus or any amendment or supplement
     thereto, in reliance upon, and in conformity with, written information
     prepared and furnished to the Company by such holder expressly for use
     therein or by such holder's failure to deliver a copy of the prospectus or
     any amendments or supplements thereto after the Company has furnished such
     holder with a sufficient number of copies of the same. In connection with
     an underwritten offering, the Company will indemnify such underwriters,
     their officers and directors and each Person who controls such underwriters
     (within the meaning of the Securities Act) to the same extent as provided
     above with respect to the indemnification of the holders of Registrable
     Securities.

(b)  In connection with any registration statement in which a holder of
     Registrable Securities is participating, each such holder will furnish to
     the Company in writing such information and affidavits as the Company
     reasonably requests for use in connection with any such registration
     statement or prospectus and, to the extent permitted by law, will indemnify
     and hold harmless the Company, its directors and officers and each other
     Person who controls the Company (within the meaning of the Securities Act)
     against any losses, claims, damages or liabilities, to which the Company or
     any such director or officer or controlling person may become subject under
     the Securities Act or otherwise, to the extent that such losses, claims,
     damages or liabilities (or actions or proceedings, whether commenced or
     threatened, in respect thereof) result from (i) any untrue or alleged
     untrue statement of material fact contained in the registration statement,
     prospectus or preliminary prospectus or any amendment thereof or supplement
     thereto, or (ii) any omission or alleged omission of a material fact
     required to be stated therein or necessary to make the statements therein
     not misleading, but only to the extent that such untrue statement or
     omission is made


                                       73
<PAGE>   74

     in such registration statement, any such prospectus or preliminary
     prospectus or any amendment or supplement thereto, or in any application,
     in reliance upon and in conformity with written information prepared and
     furnished to the Company by such holder expressly for use therein, and such
     holder will reimburse the Company and each such director, officer and
     controlling Person for any legal or any other expenses incurred by them in
     connection with investigating or defending any such loss, claim, liability,
     action or proceeding; provided, however, that the obligation to indemnify
     will be individual to each holder and will be limited to the net amount of
     proceeds received by such holder from the sale of Registrable Securities
     pursuant to such registration statement.

(c)  Any Person entitled to indemnification hereunder will (i) give prompt
     written notice to the indemnifying party of any claim with respect to which
     it seeks indemnification and (ii) unless in such indemnified party's
     reasonable judgment a conflict of interest between such indemnified and
     indemnifying parties may exist with respect to such claim, permit such
     indemnifying party to assume the defense of such claim with counsel
     reasonably satisfactory to the indemnified party; provided the indemnified
     party may participate in such defense at such party's expense. If such
     defense is assumed, the indemnifying party will not be subject to any
     liability for any settlement made by the indemnified party without its
     consent (but such consent will not be unreasonably withheld). An
     indemnifying party who is not entitled to, or elects not to, assume the
     defense of a claim will not be obligated to pay the fees and expenses of
     more than one counsel for all parties indemnified by such indemnifying
     party with respect to such claim, unless in the reasonable judgment of any
     indemnified party a conflict of interest may exist between such indemnified
     party and any other of such indemnified parties with respect to such claim.

(d)  The indemnification provided for under this Agreement will remain in full
     force and effect regardless of any investigation made by or on behalf of
     the indemnified party or any officer, director or controlling Person of
     such indemnified party and will survive the transfer of securities. The
     Company also agrees to make such provisions, as are reasonably requested by
     any indemnified party, for contribution to such party in the event the
     Company's indemnification is unavailable for any reason.

          7. Participation in Underwritten Registrations.

(a)  No Person may participate in any registration hereunder which is
     underwritten unless such Person (i) agrees to sell such Person's securities
     on the basis provided in any underwriting arrangements approved by the
     Person or Persons entitled hereunder to approve such arrangements
     (including, without limitation, pursuant to the terms of any over-allotment
     or "green shoe" option requested by the managing underwriter(s)), except
     that no holder of Registrable Securities will be required to sell more than
     the number of Registrable Securities that such holder has requested the
     Company to include in any registration, and (ii) completes and executes all
     questionnaires, powers of attorney, indemnities, underwriting agreements
     and other documents reasonably required under the terms of such
     underwriting arrangements; provided that no holder of Registrable
     Securities included in any underwritten registration shall be required to
     make any representations or warranties to the Company or the underwriters
     other than representations and warranties regarding such holder and such
     holder's intended method of distribution.


                                       74
<PAGE>   75

(b)  Each Person that is participating in any registration hereunder agrees
     that, upon receipt of any notice from the Company of the happening of any
     event of the kind described in paragraph 4(a)(v) above, such Person will
     forthwith discontinue the disposition of its Registrable Securities
     pursuant to the registration statement until such Person's receipt of the
     copies of a supplemented or amended prospectus as contemplated by such
     paragraph 4(a)(v). In the event the Company shall give any such notice, the
     applicable time period mentioned in paragraph 4(a)(ii) during which a
     Registration Statement is to remain effective shall be extended by the
     number of days during the period from and including the date of the giving
     of such notice pursuant to this paragraph 7(b) to and including the date
     when each seller of a Registrable Security covered by such registration
     statement shall have received the copies of the supplemented or amended
     prospectus contemplated by paragraph 4(a)(v).

          8. Current Public Information. The Company will file all reports
required to be filed by it under the Securities Act and the Securities Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission thereunder, and will take such further action as any holder or
holders of Registrable Securities may reasonably request, all to the extent
required to enable such holders to sell Registrable Securities pursuant to Rule
144 or any similar rule or regulation hereafter adopted by the Securities and
Exchange Commission.

          9. Definitions.

         "Common Stock" shall mean the common stock, no par value, of the
Company, and any capital stock of any class of the Company hereafter authorized
that is not limited to a fixed sum or percentage of par or stated value in
respect of the rights of the holders thereof to participate in dividends in the
distribution of assets upon any liquidation, dissolution or winding up of the
Company.

          "Common Stock Equivalents" means (without duplication with any other
Common Stock or Common Stock Equivalents) rights, warrants, convertible
securities or indebtedness, exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock and securities convertible or exchangeable into Common
Stock, whether at the time of issuance or upon the passage of time or the
occurrence of some future event.

          "Public Offering" means a public offering and sale of Common Stock
pursuant to an effective registration statement under the Securities Act.

          "Registrable Securities" means (i) any Common Stock or Common Stock
Equivalents issued upon the conversion of the Tranche A Loan and/or the Tranche
B Loan or the exercise of the Warrants and (ii) any Common Stock issued or
issuable directly or indirectly with respect to the securities referred to in
clause (i) by way of stock dividend, stock conversion or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular shares constituting Registrable
Securities, such shares will cease to be Registrable Securities when they have
been (x) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, or (y) sold to the
public through a broker, dealer or market maker pursuant to Rule 144 (or any


                                       75
<PAGE>   76

similar provision then in force) under the Securities Act. For purpose of this
Agreement, a Person will be deemed to be the holder of Registrable Securities
whenever such person has the right to acquire directly or indirectly such
Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.

          "Registration Period" means the earlier to occur of (i) the expiration
of one hundred eighty (180) days following the effectiveness of a registration
statement and (ii) the date on which all Registrable Securities covered by such
registration statement have been sold and the distribution contemplated thereby
has been completed.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.

          10. Miscellaneous.

(a)  No Inconsistent Agreements. The Company will not hereafter enter into any
     agreement with respect to its securities which is inconsistent with or
     violates the rights granted to the holders of Registrable Securities in
     this Agreement.

(b)  Adjustments Affecting Registrable Securities. The Company will not take any
     action, or permit any change to occur, with respect to its securities which
     would adversely affect the ability of the holders of Registrable Securities
     to include such Registrable Securities in a registration undertaken
     pursuant to this Agreement or which would adversely affect the
     marketability of such Registrable Securities in any such registration
     (including, without limitation, effecting a stock split or a combination of
     shares).

(c)  Remedies. The parties hereto agree and acknowledge that money damages may
     not be an adequate remedy for any breach of the provisions of this
     Agreement and that any party hereto shall have the right to injunctive
     relief, in addition to all of its other rights and remedies at law or in
     equity, to enforce the provisions of this Agreement.

(d)  Amendments and Waivers. Except as otherwise provided herein, the provisions
     of this Agreement may be amended or waived only upon the prior written
     consent of the Company and the holders of sixty-six and two-thirds percent
     (66 2/3%) of the Registrable Securities.

(e)  Successors and Assigns; Permitted Transfers. This Agreement shall be
     binding upon and inure to the benefit of and be enforceable by the parties
     hereto and their respective successors and assigns; provided, however, it
     is understood and agreed that the Investor may assign its rights hereunder
     only to Permitted Transferees (as defined below). Notwithstanding the
     provisions of this Agreement to the contrary, it is understood and agreed
     that any holder of Registrable Securities may at any time and from time to
     time without restriction transfer or recertificate all or a part of such
     holder's Registrable Securities (i) to a nominee identified in writing to
     the


                                       76
<PAGE>   77

     Company as being the nominee of or for such holder, and any nominee of or
     for a beneficial owner of Registrable Securities identified in writing to
     the Company as being the nominee of or for such beneficial owner may from
     time to time transfer or recertificate all or a part of the Registrable
     Securities registered in the name of such nominee but held as nominee on
     behalf of such beneficial owner, to such beneficial owner, (ii) to an
     affiliate of such holder, (iii) to an estate planning trust or other
     vehicle established by or for the benefit of such holder, or (iv) to the
     immediate family of Dr. John N. Kapoor. The transfers or recertifications
     described in this Section are sometimes referred to herein collectively as
     "Permitted Transfers" and the recipient of Registrable Securities in a
     Permitted Transfer is sometimes referred to herein as a "Permitted
     Transferee".

(f)  Severability. Whenever possible, each provision of this Agreement shall be
     interpreted in such manner as to be effective and valid under applicable
     law, but if any provision of this Agreement is held to be prohibited by or
     invalid under applicable law, such provision shall be ineffective only to
     the extent of such prohibition or invalidity, without invalidating the
     remainder of this Agreement.

(g)  Counterparts. This Agreement may be executed in two or more counterparts,
     any one of which need not contain the signatures of more than one party,
     but all such counterparts taken together will constitute one and the same
     Agreement. One or more counterparts of this Agreement may be delivered by
     facsimile, with the intention that delivery by such means shall have the
     same effect as delivery of an original counterpart thereof.

(h)  Descriptive Headings. The descriptive headings of this Agreement are
     inserted for convenience only and do not constitute a part of this
     Agreement.

(i)  Governing Law. All issues concerning this Agreement shall be governed by
     and construed in accordance with the laws of the State of Illinois, without
     giving effect to any choice of law or conflict of law provision of rule
     (whether of the State of Illinois or any other jurisdiction) that would
     cause the application of the law of any jurisdiction other than the State
     of Illinois.

(j)  Notices. Any and all notices or other communications required or permitted
     to be delivered hereunder shall be deemed properly delivered if (a)
     delivered personally, (b) mailed by first class, registered or certified
     mail, return receipt requested, postage prepaid, (c) sent by next-day or
     overnight mail or delivery or (d) sent by telecopy or telegram, to the
     parties as set forth below:


               If to the Investor:

                    Dr. John N. Kapoor
                    c/o EJ Financial, Inc.
                    225 E. Deerpath Road, Suite 250
                    Lake Forest, Illinois 60045
                    Telecopy:  (847) 295-8680


                                       77
<PAGE>   78

               With a copy to:

                    Douglas J. Lipke, Esq.
                    Dana S. Armagno, Esq.
                    Vedder, Price, Kaufman & Kammholz
                    222 North LaSalle Street, Suite 2600
                    Chicago, Illinois  60601-1003
                    Telecopy:  (312) 609-5005

               If to the Company:

                    2500 Millbrook Drive
                    Buffalo Grove, Illinois  60089
                    Attention: Chief Financial Officer
                    Telecopy:  (847) 279-6123

               With a copy to:

                    Christopher R. Manning, Esq.
                    Barbara Canning, Esq.
                    Burke, Warren, MacKay & Serritella, P.C.
                    22nd Floor, IBM Plaza
                    330 North Wabash Avenue
                    Chicago, Illinois 60611
                    Telecopy:  (312) 346-8242


Either party may change the name and address of the designee to whom notice
shall be sent by giving written notice of such change to the other party.

(k)  Termination of Registration Rights. Notwithstanding anything contrary in
     this Agreement, the Company will not be required to file any registration
     statements under paragraphs 1 or 2 if a period of three (3) years has
     elapsed subsequent to the effective date of any registration statement
     filed pursuant to a Public Offering.

                            [SIGNATURE PAGE FOLLOWS]


                                       78
<PAGE>   79

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                                       AKORN, INC.


                                       By:
                                          --------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------



                                       THE JOHN N. KAPOOR TRUST DATED
                                       SEPTEMBER 20, 1989

                                       By:
                                          --------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------


                                       79
<PAGE>   80

                                    EXHIBIT D



                               DISCLOSURE SCHEDULE


EXECUTIVE OFFICES

AKORN, INC.

Executive Offices:                           2500 Millbrook Drive
                                             Buffalo Grove, Illinois 60089-4694
                                             847-279-6151

Principal Place of Business:                 Same

AKORN NEW JERSEY, INC.

Executive Offices:                           Same as for Akorn

Principal Place of Business:                 72-6 Veronica Avenue
                                             Somerset, New Jersey 08873
                                             732-846-8066


                                       80
<PAGE>   81

VENTURES; SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK

SUBSIDIARIES
         Akorn, Inc.              Akorn New Jersey, Inc.

                                  Walnut Pharmaceuticals, Inc. (inactive)
                                  Compass Vision, Inc. (inactive)
                                  Spectrum Scientific Pharmaceuticals, Inc.
                                  (inactive)

         Akorn New Jersey, Inc.   None

JOINT VENTURES OR PARTNERSHIPS
         Akorn, Inc.              None

         Akorn New Jersey, Inc.   None

AFFILIATES
         Akorn, Inc.              Akorn New Jersey, Inc.

         Akorn New Jersey, Inc.   None

CAPITAL STRUCTURE
         Akorn, Inc.              Preferred stock, 5 millions shares authorized,
                                  None outstanding
                                  Common stock, 40 million shares authorized,
                                  19,310,644 shares issued and outstanding
                                  Employee stock purchase plan
                                  341,177 shares available for issuance
                                  2,854,490 shares available for issuance


                                       81
<PAGE>   82

ERISA PLANS

Akorn, Inc. and Akorn New Jersey, Inc.

   1988 Incentive Compensation Program (stock option plan)
   Akorn, Inc. and Subsidiaries 401(k) Plan
   Akorn, Inc. and Subsidiaries Employee Stock Purchase Plan
   Akorn, Inc. and Subsidiaries Health Care Benefit Program (Medical, Dental,
   Vision)
   Akorn, Inc. and Subsidiaries Life Insurance Program
   Akron, Inc. and Subsidiaries Long-Term Disability Program



                                       82
<PAGE>   83

INTELLECTUAL PROPERTY AND TRADE NAMES

Akorn, Inc. and Akorn New Jersey, Inc. conduct business under the names Akorn
Ophthalmics and Akorn, Inc.


Akorn, Inc.                          See Exhibit D-1 attached hereto.
                                     Exclusive, royalty-free license to make and
                                     have Made Piroxicam (patents held by
                                     Pfizer) Anywhere in the world for use and
                                     sale in prescription ophthalmic
                                     applications to be sold by prescription

                                     License Agreement with Johns Hopkins for
                                     methods and instrumentation related to two
                                     (2) patents for treating macular
                                     degeneration

Akorn New Jersey, Inc.               See Exhibit D-1 attached hereto


                                       83
<PAGE>   84
                                  EXHIBIT D-1






















                                       84
<PAGE>   85

                    TRADEMARK REGISTRATION AND APPLICATIONS

--------------------------------------------------------------------------------
                       APPLN./REG.    FILING/REG.
TRADEMARK                  NO.          DATE           STATUS          OWNER
--------------------------------------------------------------------------------
ROSE BENGAL            2,204,781       11/24/98      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
IC-GREEN               2,189,196        9/15/98      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
AK-CON-A               1,917,586        9/12/95      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
Carrot Design          1,923,256        10/3/95      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
OCUSURG                1,863,042       11/15/94      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
AK-FLUOR               1,464,246       11/10/87      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
AK-TROL                1,464,245       11/10/87      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
GENT-AK                1,464,244       11/10/87      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
AK-TAINE               1,464,243       11/10/87      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
FLUORACAINE            1,464,242       11/10/87      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
AK-SPORE               1,464,241       11/10/87      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
TROPICACYL             1,464,240       11/10/87      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
AK-DEX                 1,464,239       11/10/87      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
AK-SULF                1,299,256        10/9/84      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
AK-CIDE                1,299,255        10/9/84      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
INNOVAR                  780,892        12/1/64      Renewed         Akorn, Inc.
--------------------------------------------------------------------------------
AK-TATE                1,299,254        10/9/84      Registered      Akorn, Inc.
--------------------------------------------------------------------------------
FLURESS (Stylized)       789,323        5/11/65      Renewed         Akorn, Inc.
--------------------------------------------------------------------------------
T TAYLOR              75/572,570       10/16/98      Pending         Akorn, Inc.
PHARMA-
CEUTICALS AN
AKORN COMPANY
and Design
--------------------------------------------------------------------------------
SUBLIMAZE                757,205        9/24/63      Renewed         Akorn, Inc.
--------------------------------------------------------------------------------
INAPSINE                 783,911        1/26/65      Renewed         Akorn, Inc.
--------------------------------------------------------------------------------
AUROLATE               1,910,697         8/8/95      Registered      Akorn, Inc.
--------------------------------------------------------------------------------

<PAGE>   86

HAZARDOUS MATERIALS

Contamination of owned or leased properties or material environmental
liabilities:

Akorn, Inc.                          None

Akorn New Jersey, Inc.               None


                                       86
<PAGE>   87

INSURANCE POLICIES

Akorn, Inc. and Subsidiaries
Policy periods run to January 29, 2002 for Workers Compensation and to January
29, 2002 for all other policies. Premiums for the current policy periods have
been paid in full.

Commercial General Liability        Federal Insurance Company
                                    Policy No. 3532-00-86
                                    General aggregate $2,000,000
                                    Each occurrence $1,000,000

Excess Liability                    Federal Insurance Company
                                    Policy No. 7977-17-96
                                    General aggregate $10,000,000
                                    Each occurrence $10,000,000

Commercial Package                  Federal Insurance Company
                                    Policy No. 3532-00-86
                                    Property limits $68,676,272
                                    Business interruption limits $9,903,480
                                    Retention $5,000 per occurrence

Commercial Automobile               Federal Insurance Company
                                    Policy No. 7326-17-69
                                    Combined single limits $1,000,000
                                    Deductible $250 comprehensive $500 collision

Workers Compensation                Northern Insurance Company of New York
                                    Policy No. TC298456271
                                    Limits each accident $1,000,000

Directors and Officers Liability    Federal Insurance Company
                                    Policy No. 8153-14-68
                                    General aggregate $5,000,000
                                    Retention $150,000

Product/Clinical Trial Liability    Medmarc Casualty Insurance Company
                                    Policy No. 01IL380003
                                    General Aggregate $10,000,000
                                    Each occurrence $10,000,000
                                    Retention 50,000/claim; 250,000 aggregate

Executive Protection                Federal Insurance Company
                                    Policy No. 8153-14-29
                                    Limit 1,000,000
                                    Retention 10,000


                                       87
<PAGE>   88

DEPOSIT AND DISBURSEMENT ACCOUNTS

Akorn, Inc.                         The Northern Trust Company
                                    50 South LaSalle Street
                                    Chicago, Illinois 60675
                                    312-630-6000
                                    Akorn Operating Account No. 86746
                                    Controlled disbursement (A/P) 30286746
                                    Payroll Disbursements 30386746
                                    Akorn lockbox 30186746 and 30486746
                                    Blocked Account 1525034

Akorn, Inc.                         Health Insurance 30786746
                                    Flexible Spending 31286746
                                    401(k) 31386746

                                    American National Bank
                                    120 S. LaSalle Street, Chicago, IL
                                    Akorn Merchant Account #5300107421

Akorn New Jersey, Inc.              The Northern Trust Company
                                    50 South LaSalle Street
                                    Chicago, Illinois 60675
                                    312-630-6000
                                    Controlled Disbursements 30986746
                                    Payroll 31186746


                                       88
<PAGE>   89

EXISTING INDEBTEDNESS

The Borrower has the following outstanding indebtedness:

Akorn, Inc.

                                     Mortgage loans numbers 98021904 and
                                     98021903 to Standard Mortgage Investors,
                                     secured by Decatur real properties;
                                     principal balance at June 30, 2001
                                     $2,318,214.90, final payment due June 2008.


Akorn New Jersey, Inc.               None

Both Entities - The Northern Trust Company Amended and Restated Credit
Agreement, as amended, in the aggregate original principal amount of $45,000,000


                                       89
<PAGE>   90

TRANSACTIONS WITH AFFILIATES

Employee loans and affiliates transactions are as follows:

Akorn, Inc.                          Consulting agreement with E.J. Financial
                                     Enterprises, Inc.

Akorn New Jersey, Inc.               None


                                       90
<PAGE>   91

EXISTING LIENS

The Borrower has the following existing liens:

Akorn, Inc.                          a.) Operating lease 8197-001 National City
                                     Lease Corporation, financing production
                                     equipment. Total acquisition cost of
                                     $3,811,028.93. Monthly rent payments of
                                     $52,577.71 through December 26, 2007.

                                     b.) See Indebtedness and Litigation and
                                     Existing Liens

Akorn New Jersey, Inc.               None


                                       91
<PAGE>   92

AUTHORIZED SIGNATURE


Akorn, Inc.                          Antonio R. Pera, President and Chief
                                     Operating Officer
                                     John N. Kapoor, Chief Executive Officer
                                     Kevin M. Harris, Vice President, Chief
                                     Executive Officer, Secretary & Treasurer

Akorn New Jersey, Inc.               Antonio R. Pera, President
                                     Kevin M. Harris, Vice President, Secretary
                                     & Treasurer



                                       92
<PAGE>   93

LABOR MATTERS

EMPLOYMENT AGREEMENTS


Akorn, Inc.                          Tony Pera, President, COO Executed May 11,
                                     2001 Terms of Employment

Akorn, Inc., New Jersey              None

CONSULTING AGREEMENTS


Akorn, Inc.                          E.J. Financial Enterprises, Inc.
                                     (affiliate)

Akorn, Inc., New Jersey              None

MANAGEMENT AGREEMENTS


Akorn, Inc.                          None

Akorn, Inc., New Jersey              None

COLLECTIVE BARGAINING AGREEMENTS


Akorn, Inc.                          None

Akorn, Inc., New Jersey              None

ORGANIZING ACTIVITY PENDING OR THREATENED


Akorn, Inc.                          None

Akorn, Inc., New Jersey              None

NLRB REPRESENTATION PROCEEDINGS PENDING OR THREATENED


Akorn, Inc.                          None

Akorn, Inc., New Jersey              None

EMPLOYMENT RELATED COMPLAINTS OR CHARGES PENDING OR THREATENED

Akorn, Inc.                          E. Green Human Rights Age Discrimination
                                     Case No. 1998SA0338



                                       93
<PAGE>   94

                                     This matter has no material dollar exposure

                                     Sandra Mickle, City of Decatur Human
                                     Relations Commission, Race Discrimination
                                     Charge No. 01-0118 This matter has no
                                     material dollar exposure

                                     Jeannie Benedict. Threatened Age
                                     Discrimination Charge
                                     This matter has no material dollar exposure

                                     Joseph Federowicz. Threatened Age
                                     Discrimination Charge
                                     This matter has no material dollar exposure

Akorn, Inc., New Jersey              None
Akorn, Inc., New Jersey              None


                                       94
<PAGE>   95

                    LITIGATION AND ADMINISTRATIVE PROCEEDINGS


NovaDAQ Technologies, Inc. Arbitration (Canada) - Related to joint development
agreement with NovaDAQ wherein NovaDAQ was to provide the device and Akorn the
diagnostic agent; the dispute arose over the party responsible for payment of
studies required by the FDA.

Consumer Cause, Inc. Notification of intent to sue pursuant to California
Proposition 65 (California) - Related to the preservatives contained in
FDA-approved product with trace of mercury; Consumer Cause, Inc. claims
environmental hazard

APEX Communications, Inc. v. Akorn Ophthalmics, Inc., et al, Docket No.
BER-L-506-00, Superior Court of New Jersey - Related to contract dispute wherein
APEX was retained to market an Akorn product and the contract was later
terminated; Akorn is disputing the right of APEX to get paid; This matter went
to arbitration and Akorn has rejected the arbitration decision; Scheduled for
trial late summer or fall of 2001.

FDA 483 Warning Letter

Mechanics Lien Claim of T.A. Brinkoetter & Sons on the parcel commonly known as
1222 West Grand and 1365 North University, Decatur, Illinois


                                       95