exv10w5






Exhibit 10.5




SUBORDINATION AGREEMENT




          THIS SUBORDINATION AGREEMENT (this “Agreement”) is entered into as of January 7, 2009,
by and among THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989 (“Subordinated Creditor), AKORN,
INC., a Louisiana corporation (“Akorn”), AKORN (NEW JERSEY), INC., an Illinois corporation
(“Akorn New Jersey” and together with Akorn, the “Companies” and each a
“Company”), and GENERAL ELECTRIC CAPITAL CORPORATION, as Agent for the Senior Lenders party
to the Credit Agreement described below.




RECITALS




          A. The Companies, Agent and Senior Lenders (as hereinafter defined) have entered into a Credit
Agreement, dated as of January 7, 2009 (as the same has been and may be further amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”) pursuant to which,
among other things, the Senior Lenders have agreed, subject to the terms and conditions set forth
in the Credit Agreement, to make certain loans and financial accommodations to the Companies. All
of the Companies’ obligations to Agent and Senior Lenders under the Credit Agreement and the other
Senior Debt Documents (as hereinafter defined) are secured by liens on and security interests in
substantially all of the now existing and hereafter acquired real and personal property of the
Companies (the “Collateral”).




          B. Subordinated Creditor has extended credit to the Company as evidenced by a Subordinated
Promissory Note dated as of July 28, 2008, in the principal amount of $5,000,000.00 (as the same
has been and may be further amended, supplemented or otherwise modified from time to time, the
“Subordinated Note”).




          C. As one of the conditions precedent to the agreement of Agent and Senior Lenders to enter
into the Credit Agreement and other Senior Debt Documents, Agent and Senior Lenders have required
the execution and delivery of this Agreement by Subordinated Creditor and the Companies in order to
set forth the relative rights and priorities of Agent, Senior Lenders and Subordinated Creditor
under the Senior Debt Documents and the Subordinated Debt Documents (as hereinafter defined).




          NOW, THEREFORE, in order to induce Agent and Senior Lenders to consent to the incurrence of
the Debt evidenced by the Subordinated Note, and for other good and valuable consideration, the
receipt, and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as
follows:




     1. Definitions. The following terms shall have the following meanings in this
Agreement:



     “Agent” shall mean General Electric Capital Corporation, as Agent for the Senior Lenders, or
any other Person appointed by the holders of the Senior Debt as administrative agent for purposes
of the Senior Debt Documents and this Agreement.



 









 





     “Bankruptcy Code” shall mean Chapter 11 of Title 11 of the United States Code, as amended from
time to time and any successor statute and all rules and regulations promulgated thereunder.



     “Distribution” means, with respect to any indebtedness, obligation or security, (a) any
payment or distribution by any Person of cash, securities, or other property (other than payments
in kind (but not in cash) of interest on the Subordinated Debt in accordance with the terms of the
Subordinated Debt Documents and the issuance of the warrants or common stock of Akorn), by set-off
or otherwise, on account of such indebtedness, obligation or security, (b) any redemption, purchase
or other acquisition of such indebtedness, obligation or security by any Person or (c) the granting
of any lien or security interest to or for the benefit of the holders of such indebtedness,
obligation or security in or upon any property of any Person.



     “Enforcement Action” shall mean (a) to take from or for the account of either Company or any
guarantor of the Subordinated Debt, by set-off or in any other manner, the whole or any part of any
moneys which may now or hereafter be owing by the Company or any such guarantor with respect to the
Subordinated Debt, (b) to sue for payment of, or to initiate or participate with others in any
suit, action or proceeding against either Company or any such guarantor to (i) enforce payment of
or to collect the whole or any part of the Subordinated Debt or (ii) commence judicial enforcement
of any of the rights and remedies under the Subordinated Debt Documents or applicable law with
respect to the Subordinated Debt, (c) to accelerate the Subordinated Debt (but excluding any
acceleration occurring by operation of law in connection with bankruptcy proceedings), (d) to
exercise any put option or to cause either Company or any such guarantor to honor any redemption or
mandatory prepayment obligation under any Subordinated Debt Document or (e) to take any action
under the provisions of any state or federal law, including, without limitation, the Uniform
Commercial Code, or under any contract or agreement, to enforce, foreclose upon, take possession of
or sell any property or assets of the Company or any such guarantor.



     “GE Loan Documents” shall mean the Credit Agreement and all other agreements, documents and
instruments executed from time to time in connection therewith, including without limitation any
agreements, documents and instruments evidencing “Obligations” as such term is defined in the
Credit Agreement, in each case, as the same may be amended, supplemented or otherwise modified from
time to time.



     “Person” means any natural person, corporation, general or limited partnership, limited
liability company, firm, trust, association, government, governmental agency or other entity,
whether acting in an individual, fiduciary or other capacity.



     “Proceeding” shall mean any voluntary or involuntary insolvency, bankruptcy, receivership,
custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors,
appointment of a custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of a Person.



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     “Refinancing Senior Debt Documents” shall mean any financing documentation which replaces the
GE Loan Documents and pursuant to which the Senior Debt under the GE Loan Documents are refinanced,
as such financing documentation may be amended, supplemented or otherwise modified from time to
time in compliance with this Agreement.



     “Senior Debt” shall mean all obligations, liabilities and indebtedness of every nature of the
Company from time to time owed to Agent or any Senior Lender under the Senior Debt Documents,
including, without limitation, the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest, all “Obligations” as such term is defined in the Credit Agreement and all
fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise,
heretofore, now and from time to time hereafter owing, due or payable, whether before or after the
filing of a Proceeding under the Bankruptcy Code together with (a) any amendments, modifications,
renewals or extensions thereof to the extent not prohibited by the terms of this Agreement and (b)
any interest accruing thereon after the commencement of a Proceeding, without regard to whether or
not such interest is an allowed claim. Senior Debt shall be considered to be outstanding whenever
any loan commitment under the Senior Debt Documents is outstanding.



     “Senior Debt Documents” shall mean the GE Loan Documents and, after any refinancing of the
Senior Debt under the GE Loan Documents, the Refinancing Senior Debt Documents.



     “Senior Default” shall mean any “Event of Default” under the Senior Debt Documents, or any
condition or event that, after notice or lapse of time or both, would constitute such an Event of
Default if that condition or event were not cured or removed within any applicable grace or cure
period set forth therein.



     “Senior Lenders” shall mean the holders of the Senior Debt.



     “Subordinated Debt” shall mean all of the obligations of the Companies to Subordinated
Creditor evidenced by or incurred pursuant to the Subordinated Debt Documents.



     “Subordinated Debt Documents” shall mean the Subordinated Note and all other documents,
agreements and instruments now existing or hereinafter entered into evidencing or pertaining to all
or any portion of the Subordinated Debt.



     “Subordinated Debt Default” shall mean a default in the payment of the Subordinated Debt or in
the performance of any term, covenant or condition contained in the Subordinated Debt Documents or
any other occurrence permitting Subordinated Creditor to accelerate the payment of all or any
portion of the Subordinated Debt.



     “Subordinated Debt Default Notice” shall mean a written notice from Subordinated Creditor or
either Company to Agent pursuant to which Agent is notified of the occurrence of a Subordinated
Debt Default, which notice incorporates a reasonably detailed description of such Subordinated Debt
Default and which notice expressly states that it is a “Subordinated Debt Default Notice”
hereunder.


     2. Subordination.



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          Section 2.1. Subordination of Subordinated Debt to Senior Debt. Each Company covenants
and agrees, and Subordinated Creditor by its acceptance of the Subordinated Debt Documents (whether
upon original issue or upon transfer or assignment) likewise covenants and agrees, notwithstanding
anything to the contrary contained in any of the Subordinated Debt Documents, that the payment of
any and all of the Subordinated Debt shall be subordinate and subject in right and time of payment,
to the extent and in the manner hereinafter set forth, to the prior indefeasible payment in full in
cash of all Senior Debt. Each holder of Senior Debt, whether such Senior Debt is now outstanding or
hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Debt in
reliance upon the provisions contained in this Agreement.




          Section 2.2. Liquidation, Dissolution, Bankruptcy. In the event of any Proceeding
involving the Company:




          (a) All Senior Debt shall first be indefeasibly paid in full in cash and all commitments to
lend under the Senior Debt Documents shall be terminated before any Distribution, whether in cash,
securities or other property, shall be made to Subordinated Creditor on account of any Subordinated
Debt.




          (b) Any Distribution, whether in cash, securities or other property which would otherwise, but
for the terms hereof, be payable or deliverable in respect of the Subordinated Debt shall be paid
or delivered directly to Agent (to be held and/or applied by Agent in accordance with the terms of
the Senior Debt Documents) until all Senior Debt is indefeasibly paid in full in cash and all
commitments to lend under the Senior Debt Documents shall have been terminated. Subordinated
Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver,
trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise
deliver all such Distributions to Agent. Subordinated Creditor also irrevocably authorizes and
empowers Agent, in the name of Subordinated Creditor, to demand, sue for, collect and receive any
and all such Distributions.




          (c) Subordinated Creditor agrees not to initiate, prosecute, or participate in any claim,
action, or other proceeding challenging the enforceability, validity, perfection, or priority of
the Senior Debt or any liens and security interests securing the Senior Debt.




          (d) Subordinated Creditor agrees to execute, verify, deliver and file any proofs of claim in
respect of the Subordinated Debt requested by Agent in connection with any such Proceeding and
hereby irrevocably authorizes, empowers and appoints Agent its Agent and attorney-in-fact to (i)
execute, verify, deliver and file such proofs of claim upon the failure of Subordinated Creditor
promptly to do so prior to 30 days before the expiration of the time to file any such proof of
claim and (ii) vote such claim in any such Proceeding upon the failure of Subordinated Creditor to
do so prior to 15 days before the expiration of the time to vote any such claim; provided Agent
shall have no obligation to execute, verify, deliver, file and/or vote any such proof of claim. In
the event that Agent votes any claim in accordance with the authority granted hereby, Subordinated
Creditor shall not be entitled to change or withdraw such vote.




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          (e) The Senior Debt shall continue to be treated as Senior Debt and the provisions of this
Agreement shall continue to govern the relative rights and priorities of Senior Lenders and
Subordinated Creditor even if all or part of the Senior Debt or the security interests securing the
Senior Debt are subordinated, set aside, avoided, invalidated or disallowed in connection with any
such Proceeding, and this Agreement shall be reinstated if at any time any payment of any of the
Senior Debt is rescinded or must otherwise be returned by any holder of Senior Debt or any
representative of such holder.




          Section 2.3. Subordinated Debt Payment Restrictions. Notwithstanding the terms of the
Subordinated Debt Documents, each Company hereby agrees that it may not make, and Subordinated
Creditor hereby agrees that it will not accept, any Distribution with respect to the Subordinated
Debt until the Senior Debt is indefeasibly paid in full in cash and all commitments to lend under
the Senior Debt Documents have terminated, other than (i) reimbursement of all costs and expenses
incurred by the Subordinated Creditor in connection with the negotiation, execution and delivery of
the Subordinated Debt Documents and the consummation of the transactions contemplated thereby in an
aggregate amount not to exceed $2,500 and (ii) repayment of the Subordinated Debt in full so long
as (A) no Senior Default shall have occurred and be continuing, or would arise as a result of such
repayment and (B) such repayment occurs on or before July 28, 2009.




          Section 2.4. Subordinated Debt Standstill Provisions. Until the Senior Debt is
indefeasibly paid in full in cash and all commitments to lend under the Senior Debt Documents shall
be terminated, Subordinated Creditor shall not, without the prior written consent of Agent, take
any Enforcement Action with respect to the Subordinated Debt. Notwithstanding the foregoing,
Subordinated Creditor may file proofs of claim against either Company in any Proceeding involving
such Company. Any Distributions or other proceeds of any Enforcement Action obtained by
Subordinated Creditor in violation of the foregoing prohibition shall in any event be held in trust
by it for the benefit of Agent and Senior Lenders and promptly paid or delivered to Agent for the
benefit of Senior Lenders in the form received until all Senior Debt is indefeasibly paid in full
in cash and all commitments to lend under the Senior Debt Documents shall have been terminated.




          Section 2.5. Incorrect Payments. If any Distribution on account of the Subordinated
Debt not permitted to be made by either Company or accepted by Subordinated Creditor under this
Agreement is made and received by Subordinated Creditor, such Distribution shall not be commingled
with any of the assets of Subordinated Creditor, shall be held in trust by Subordinated Creditor
for the benefit of Agent and Senior Lenders and shall be promptly paid over to Agent for
application (in accordance with the Senior Debt Documents ) to the payment of the Senior Debt then
remaining unpaid, until all of the Senior Debt is paid in full.




          Section 2.6. Sale, Transfer or other Disposition of Subordinated Debt.




          (a) Subordinated Creditor shall not sell, assign, pledge, dispose of or otherwise transfer all
or any portion of the Subordinated Debt or any Subordinated Debt




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Document unless (i) the transferee or pledgee thereof signs a subordination agreement on the
same terms hereof or other acknowledgement of the terms of this Agreement, in each case in form and
substance satisfactory to the Agent and (ii) such transferee or pledgee is acceptable to the Agent.




          (b) Notwithstanding the foregoing, the subordination effected hereby shall survive any sale,
assignment, pledge, disposition or other transfer of all or any portion of the Subordinated Debt in
violation of the foregoing prohibition, and the terms of this Agreement shall be binding upon the
successors and assigns of Subordinated Creditor, as provided in Section 9 hereof.




          Section 2.7. Legends. Until the termination of this Agreement in accordance with
Section 15 hereof, Subordinated Creditor will cause to be clearly, conspicuously and prominently
inserted on the face of the Subordinated Note and any other Subordinated Debt Document, as well as
any renewals or replacements thereof, the following legend:





     “This instrument and the rights and obligations evidenced hereby are
subordinate in the manner and to the extent set forth in that certain
Subordination Agreement (the “Subordination Agreement”) dated as of January 7,
2009, among John N. Kapoor Trust dated September 20, 1989, Akorn, Inc. (“Akorn”),
Akorn (New Jersey), Inc., (“Akorn New Jersey” and together with Akorn, the
“Companies”, and each a “Company”) and General Electric Capital Corporation
(“Agent”), to the indebtedness (including interest) owed by the Companies
pursuant to that certain Credit Agreement dated as of January 7, 2009, among the
Companies, Agent and the lenders from time to time party thereto, as such Credit
Agreement has been and hereafter may be amended, supplemented or otherwise
modified from time to time and to indebtedness refinancing the indebtedness under
that agreement as contemplated by the Subordination Agreement; and each holder of
this instrument, by its acceptance hereof, irrevocably agrees to be bound by the
provisions of the Subordination Agreement.”



     3. Modifications



          Section 3.1. Modifications to Senior Debt Documents. Senior Lenders may at any time
and from time to time without the consent of or notice to Subordinated Creditor, without incurring
liability to Subordinated Creditor and without impairing or releasing the obligations of
Subordinated Creditor under this Agreement, change the amount of principal, interest, fees or any
other amounts payable relating to the Senior Debt, change the manner or place of payment or extend
the time of payment of or renew or alter any of the terms of the Senior Debt, or otherwise amend in
any manner any agreement, note, guaranty or other instrument evidencing or securing or otherwise
relating to the Senior Debt.




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          Section 3.2. Modifications to Subordinated Debt Documents. Until the Senior Debt has
been indefeasibly paid in full in cash and all lending commitments under the Senior Debt Documents
have terminated, and notwithstanding anything to the contrary contained in the Subordinated Debt
Documents, Subordinated Creditor shall not, without the prior written consent of Agent, agree to
any amendment, modification or supplement to the Subordinated Debt Documents, other than the
extension of the maturity of the Subordinated Debt to a date no earlier than July [ ], 2013.




     4. Representations and Warranties. Subordinated Creditor hereby represents and
warrants to Agent and Senior Lenders that as of the date hereof: (a) true and accurate copies of
the relevant portions of Subordinated Creditor’s trust documents have been provided to Agent; (b)
Subordinated Creditor has the power and authority to enter into, execute, deliver and carry out the
terms of this Agreement, all of which have been duly authorized by all proper and necessary action;
(c) the execution of this Agreement by Subordinated Creditor will not violate or conflict with any
agreement binding upon Subordinated Creditor or any law, regulation or order or require any consent
or approval which has not been obtained; (d) this Agreement is the legal, valid and binding
obligation of Subordinated Creditor, enforceable against Subordinated Creditor in accordance with
its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
and by equitable principles; (e) Subordinated Creditor is the sole owner, beneficially and of
record, of the Subordinated Debt Documents and the Subordinated Debt; and (f) the Subordinated Debt
is, and at all times prior to the termination of this Agreement shall remain, an unsecured
obligation of the Companies.



     5. Subrogation. Subject to the indefeasible payment in full in cash of all Senior Debt
and the termination of all lending commitments under the Senior Debt Documents, Subordinated
Creditor shall be subrogated to the rights of Agent and Senior Lenders to receive Distributions
with respect to the Senior Debt until the Subordinated Debt is paid in full. Subordinated Creditor
agrees that in the event that all or any part of a payment made with respect to the Senior Debt is
recovered from the holders of the Senior Debt in a Proceeding or otherwise, any Distribution
received by Subordinated Creditor with respect to the Subordinated Debt at any time after the date
of the payment that is so recovered, whether pursuant to the right of subrogation provided for in
this Agreement or otherwise, shall be deemed to have been received by Subordinated Creditor in
trust as property of the holders of the Senior Debt and Subordinated Creditor shall forthwith
deliver the same to the Agent for the benefit of the Senior Lenders for application to the Senior
Debt until the Senior Debt is paid in full. A Distribution made pursuant to this Agreement to Agent
or Senior Lenders which otherwise would have been made to Subordinated Creditor is not, as between
the Company and Subordinated Creditor, a payment by the Company to or on account of the Senior
Debt.



     6. Modification. Any modification or waiver of any provision of this Agreement, or any
consent to any departure by any party from the terms hereof, shall not be effective in any event
unless the same is in writing and signed by Agent and Subordinated Creditor, and then such
modification, waiver or consent shall be effective only in the specific instance and for the
specific purpose given. Any notice to or demand on any party hereto in any event not specifically



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required hereunder shall not entitle the party receiving such notice or demand to any other or
further notice or demand in the same, similar or other circumstances unless specifically required
hereunder.




     7. Further Assurances. Each party to this Agreement promptly will execute and deliver
such further instruments and agreements and do such further acts and things as may be reasonably
requested in writing by any other party hereto that may be necessary or desirable in order to
effect fully the purposes of this Agreement.



     8. Notices. Unless otherwise specifically provided herein, any notice delivered under
this Agreement shall be in writing, addressed to the party to be notified and sent to the address
or facsimile number indicated on the signature pages to this Agreement and may be personally
served, telecopied or sent by overnight courier service or certified or registered United States
mail and shall be deemed to have been given (a) if delivered in person, when delivered; (b) if
delivered by telecopy, on the date of transmission if transmitted on a business day before 5:00
p.m. (New York time) or, if not, on the next succeeding business day; (c) if delivered by overnight
courier, one business day after delivery to such courier properly addressed; or (d) if by United
States mail, four business days after deposit in the United States mail, postage prepaid and
properly addressed.



     9. Successors and Assigns. This Agreement shall inure to the benefit of, and shall be
binding upon, the respective successors and assigns of Agent, Senior Lenders, Subordinated Creditor
and the Companies. To the extent permitted under the Senior Debt Documents, Senior Lenders may,
from time to time, without notice to Subordinated Creditor, assign or transfer any or all of the
Senior Debt or any interest therein to any Person and, notwithstanding any such assignment or
transfer, or any subsequent assignment or transfer, the Senior Debt shall, subject to the terms
hereof, be and remain Senior Debt for purposes of this Agreement, and every permitted assignee or
transferee of any of the Senior Debt or of any interest therein shall, to the extent of the
interest of such permitted assignee or transferee in the Senior Debt, be entitled to rely upon and
be the third party beneficiary of the subordination provided under this Agreement and shall be
entitled to enforce the terms and provisions hereof to the same extent as if such assignee or
transferee were initially a party hereto.



     10. Relative Rights. This Agreement shall define the relative rights of Agent, Senior
Lenders and Subordinated Creditor. Nothing in this Agreement shall (a) impair, as among the
Companies, Agent and Senior Lenders and as between the Companies and Subordinated Creditor, the
obligation of the Companies with respect to the payment of the Senior Debt and the Subordinated
Debt in accordance with their respective terms or (b) affect the relative rights of Agent, Senior
Lenders or Subordinated Creditor with respect to any other creditors of the Company.



     11. Conflict. In the event of any conflict between any term, covenant or condition of
this Agreement and any term, covenant or condition of any of the Subordinated Debt Documents, the
provisions of this Agreement shall control and govern.



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     12. Headings. The paragraph headings used in this Agreement are for convenience only
and shall not affect the interpretation of any of the provisions hereof.



     13. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.



     14. Severability. In the event that any provision of this Agreement is deemed to be
invalid, illegal or unenforceable by reason of the operation of any law or by reason of the
interpretation placed thereon by any court or governmental authority, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby, and the affected provision shall be modified to the minimum extent permitted by
law so as most fully to achieve the intention of this Agreement.



     15. Continuation of Subordination; Termination of Agreement. This Agreement shall
remain in full force and effect until the indefeasible payment in full in cash of the Senior Debt
and the termination of all lending commitments under the Senior Debt Documents after which this
Agreement shall terminate without further action on the part of the parties hereto.



     16. Applicable Law. This Agreement shall be governed by and shall be construed and
enforced in accordance with the internal laws of the State of New York, without regard to conflicts
of law principles.



     17. CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE
STATE OF NEW YORK IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE THE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION. EACH OF SUBORDINATED CREDITOR AND THE COMPANIES HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION
AS SET FORTH ABOVE. EACH OF SUBORDINATED CREDITOR AND THE COMPANIES FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF ILLINOIS. EACH OF SUBORDINATED CREDITOR AND THE COMPANIES HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE, AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.



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     18. WAIVER OF JURY TRIAL. EACH OF SUBORDINATED CREDITOR, THE COMPANIES, AND AGENT
HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE SUBORDINATED DEBT DOCUMENTS OR ANY OF THE SENIOR DEBT
DOCUMENTS. EACH OF SUBORDINATED CREDITOR, THE COMPANIES, AND AGENT ACKNOWLEDGES THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP THAT EACH HAS RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE SENIOR DEBT DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON
THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF SUBORDINATED CREDITOR, THE COMPANIES AND AGENT
WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.



[signature pages follow]




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          IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement under seal as of the
date first above written.




	 	 	 	 	 	 	 
	 	 	AGENT:	 	 
	 
	 	 	 	 	 	 
	Address for Notices:	 	GENERAL ELECTRIC CAPITAL
CORPORATION, 
as Agent and Lender
	General Electric Capital Corporation
	 	 	 	 	 	 
	500 West Monroe
	 	By:	 	/s/ Dennis Cloud	 	 
	 

	 	 	 	 	 	 
	Chicago, IL 60661-3671
	 	Name:	 	Dennis Cloud	 	 
	Attn: Akorn Account Manager
	 	Title:	 	Duly Authorized Signatory	 	 
	Facsimile: (866) 388-3572

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	With a copy to:

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	General Electric Capital Corporation
	 	 	 	 	 	 
	2 Bethesda Metro Center Suite 600
	 	 	 	 	 	 
	Bethesda, MD 20814
	 	 	 	 	 	 
	Attn: Maryanne Courtney, Internal Counsel
	 	 	 	 	 	 
	Facsimile: (866) 358-1754
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	And
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	King & Spalding
	 	 	 	 	 	 
	1180 Peachtree St NE
	 	 	 	 	 	 
	Atlanta, GA 30309
	 	 	 	 	 	 
	Attn: Carolyn Alford, Esq.
	 	 	 	 	 	 
	Facsimile: (404) 572-5128
	 	 	 	 	 	 






[SIGNATURE PAGE — SUBORDINATION AGREEMENT]




 









 








	 	 	 	 	 	 	 
	 	 	SUBORDINATED CREDITOR:  
	 
	 	 	 	 	 	 
	Address for Notices:	 	THE JOHN N. KAPOOR TRUST 
dated 9/20/89
	The John N. Kapoor Trust
	 	 	 	 	 	 
	c/o Dr. John N. Kapoor
	 	By:	 	/s/ John N. Kapoor	 	 
	 

	 	 	 	 	 	 
	225 E. Deerpath Road

	 	Name:
	 	Dr. John N. Kapoor	 	 
	Suite 250

	 	Title:
	 	Trustee	 	 
	Lake Forest, Illinois 60045

	 	 	 	 	 	 
	Attention: Dr. John N. Kapoor
	 	 	 	 	 	 
	Telecopy: (847) 295-8680
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	With a copy to:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	McDermott Will & Emery LLP
	 	 	 	 	 	 
	227 West Monroe Street
	 	 	 	 	 	 
	Chicago, Illinois 60606
	 	 	 	 	 	 
	Attention: Thomas Murphy
	 	 	 	 	 	 
	Telecopy: (312) 984-7700
	 	 	 	 	 	 






[SIGNATURE PAGE — SUBORDINATION AGREEMENT]





 









 








	 	 	 	 	 	 	 
	 	 	COMPANIES:	 	 
	 
	 	 	 	 	 	 
	Address for Notices:	 	AKORN, INC.	 	 
	 
	 	 	 	 	 	 
	1925 West Field Court
	 	By:	 	/s/ Jeffrey A. Whitnell	 	 
	 

	 	 	 	 	 	 
	Suite 300

	 	Name:	 	Jeffrey A. Whitnell	 	 
	 

	 	 	 	 	 	 
	Lake Forest, Illinois 60045

	 	Title:	 	CFO	 	 
	 

	 	 	 	 	 	 
	Attention: Jeffrey Whitnell

	 		 	 	 	 
	 

	 	 	 	 	 	 
	Facsimile: (847) 353-4936
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address for Notices:	 	AKORN (NEW JERSEY), INC.	 	 
	 
	 	 	 	 	 	 
	72 Veronica Avenue
	 	By:	 	/s/ Jeffrey A. Whitnell	 	 
	 

	 	 	 	 	 	 
	Somerset, New Jersey 08873

	 	Name:	 	Jeffrey A. Whitnell	 	 
	 

	 	 	 	 	 	 
	Attention: Jeffrey Whitnell

	 	Title:	 	CFO	 	 
	 

	 	 	 	 	 	 
	Facsimile: (847) 353-4936

	 		 	 	 	 
	 

	 	 	 	 	 	 





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