exv10w5



 





Exhibit 10.5




STRIDES CAPITAL CONTRIBUTION AGREEMENT




	 	 	 	 
	Buffalo Grove, Illinois

	 	$	1,250,000.00
	September 22, 2004
	 	 	 







     For value received, STRIDES ARCOLAB LIMITED, a company organized under the
laws of India (“Strides”), promises to pay to the order of AKORN-STRIDES, LLC,
a Delaware limited liability company (“A-S”), at 2500 Millbrook Drive, Buffalo
Grove, Illinois 60089-4694, or at such other place as the holder of this
Agreement (“Holder”) may from time to time designate in writing, in lawful
money of the United States, the principal sum of One Million Two Hundred Fifty
Thousand Dollars ($1,250,000.00), or so much thereof as may be advanced, with
interest and due and payable all as set forth below.



     This Strides Capital Contribution Agreement (the “Agreement”) is made
pursuant to that certain “Limited Liability Company Agreement for
Akorn-Strides, LLC, a Delaware Limited Liability Company,” dated September 22,
2004 (the “LLC Agreement”), and is one of the two “Strides Capital Contribution
Agreements” referred to therein. Terms used with capital letters in this
Agreement and not otherwise defined herein shall have the meanings set forth in
the LLC Agreement. This Agreement evidences Strides’ obligation to repay
advances to be made by A-S to Strides as provided in Section 3.1(B)(ii) of the
LLC Agreement.



ARTICLE 1. INTEREST AND PAYMENTS




     1.1 Interest. This Agreement shall bear no interest.



     1.2 Payments. Until this Agreement paid in full:



          1.2.1 Immediately on the date of Strides’ acceptance of a Purchase Order,
as defined under that certain “OEM Agreement” dated September 22, 2004 (the
“OEM Agreement”), an amount equal to thirty five percent (35%) of the invoice
amount for such Purchase Order (“Agreement Repayment Amount”) shall become due
and payable under this Agreement. Strides shall immediately, in each case, (i)
apply thirty five percent (35%) of the amount due by A-S under such invoice
under the OEM Agreement in satisfaction of the Agreement Repayment Amount; and
(ii) credit the applicable invoice by an amount equal to the Agreement
Repayment Amount.



          1.2.2 Immediately upon each occurrence of Strides becoming entitled to any
amount as a return of Capital Contribution, an equal amount shall become due
and payable under this Agreement.



     1.3 Prepayments. Strides may prepay all or any part of the principal balance at any time
without charge or premium.



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ARTICLE 2. ADDITIONAL TERMS AND CONDITIONS




     2.1 Application of Payments. All payments received, irrespective of how
they may be designated by Strides, shall be applied in this order: first, to
amounts other than interest and principal, if any, owing under this Agreement,
second, to principal; except that, after the occurrence and during the
continuation of any Event of Default, all amounts received shall be applied in
such order as Holder, in its sole discretion, may elect. Strides waives the
application of any statute or rule of law that would otherwise direct, or
permit Strides to direct, the order of application of payments made by Strides
or amounts otherwise received by Holder.



     2.2 No Waiver By Acceptance of Overdue or Partial Payments. If Holder
accepts payment of any overdue amount, or partial payment of an amount due and
the remainder of such amount is unpaid, such acceptance shall in no event: (a)
constitute a cure or waiver of Strides’ default with respect to such overdue or
unpaid amount; (b) prevent Holder from exercising any of its rights and
remedies with respect to Strides’ default; or (c) constitute a waiver of
Holder’s right to require full and timely payment of amounts becoming due
thereafter or to exercise any of Holder’s rights and remedies for any failure
to so pay.



     2.3 Default. Each of the following events (“Events of Default”)
constitutes a default under this Agreement:



          2.3.1 a default in the payment when due of any amount hereunder;



          2.3.2 Strides (a) voluntarily suspends the transaction of business; (b)
becomes insolvent or unable to pay its debts as they mature; (c) makes an
assignment for the benefit of creditors; (d) becomes the subject of a
bankruptcy, reorganization or similar debtor-relief proceeding unless, in the
case of an involuntary petition filed against Strides, the petition is
dismissed within sixty (60) days; (e) becomes, or any of its property becomes,
the subject of appointment of a receiver, trustee, or conservator, unless, in
the case of such appointment without Strides’ consent, the appointment is
vacated within sixty (60) days; (f) has any of its property become subject to
any attachment, execution, sequestration or other judicial seizure not
discharged within sixty (60) days; (g) fails to pay or discharge any judgment
against it, singly or in the aggregate, in excess of $15,000.00, or to appeal
such judgment(s) and obtain a stay thereof within ten (10) days of entry; or
(h) is dissolved or terminated; and



          2.3.3 a termination of the OEM Agreement.



     2.4 Acceleration Upon Default. Upon the occurrence of an Event of
Default, Holder may, at its election, declare the entire balance of principal
and accrued interest immediately due and payable. A delay by Holder in
exercising any right of acceleration after an Event of Default shall not
constitute a waiver of the Event of Default or of the right of acceleration or
any other right or remedy for such Event of Default. The failure by Holder to
exercise any right of acceleration as a result of an Event of Default shall not
constitute a waiver of the right of acceleration or any other right or remedy
with respect to any other Event of Default, whenever occurring.



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     2.5 Enforcement Fees and Costs. Strides shall immediately reimburse
Holder for all fees and costs, including reasonable attorneys’ fees and
experts’ fees and costs, incurred by Holder for: (a) enforcement of this
Agreement or any of its terms, or the exercise of any rights or remedies
hereunder and/or at law, in equity or otherwise, whether or not any action or
proceeding is filed; (b) representation of Holder in any bankruptcy,
insolvency, reorganization or other debtor-relief or similar proceeding of or
relating to Strides, to any person liable (by way of guaranty, assumption,
endorsement or otherwise) upon any of the obligations of this Agreement, or to
any property now or hereafter securing this Agreement; or (c) representation of
Holder in any action or proceeding relating to such property, whether commenced
by Holder or any other person, including foreclosure, receivership, lien or
stop-notice enforcement, bankruptcy, eminent domain and probate actions or
proceedings.



     2.6 Waivers By Maker and Other Parties. The makers, endorsers, guarantors
and sureties of this Agreement hereby waive diligence, demand, presentment,
notice of non-payment, notice of dishonor, protest and notice of protest, agree
that the time for performance of any obligation under this Agreement may be
extended from time to time without notice, consent to the release without
notice of any party liable hereon or herefor, consent to the addition without
notice of parties liable hereon or herefor, and consent to the acceptance
without notice of further security for this Agreement, including other types of
security, all without in any way affecting their liability, and waive the right
to plead any and all statutes of limitations as a defense to this Agreement,
any guaranty hereof or any agreement to pay the obligations hereof, to the full
extent permitted by law.



     2.7 Full Payment. All amounts payable under this Agreement shall be paid
in full without setoff, deduction or counterclaim. All amounts payable under
this Agreement shall be free and clear of and without any deduction or
withholding for or on account of any taxes, levies, duties, charges, fees,
restrictions or conditions of any nature now or hereafter imposed by any
federal, state, country or local government or any political subdivision or
taxing authority thereof or therein. Strides shall indemnify Holder against
any such taxes, levies, imposts, duties, charges and fees (other than taxes on
the income of Holder imposed by any taxing authority) which may be assessed
against Holder or claimed or demanded from Holder in respect of any amount
payable by Strides hereunder, and against any costs, charges, expenses or
liability arising out of or in respect of such assessment, claim or demand, to
the full extent permitted by law.



     2.8 Time of the Essence.



     Time is of the essence with respect to the payment and performance of the
obligations of this Agreement.



     2.9 No Oral Waivers or Modifications. No provision of this Agreement may
be waived or modified orally, but only in a writing signed by Holder.



     2.10 Governing Law. This Agreement shall be governed by and construed
under the internal laws of the State of New York, without regard to conflict of
law provisions.



     2.11 Severability. Every provision of this Agreement is intended to be
several. If any provision of this Agreement is determined by a court of
competent jurisdiction to be illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall not affect the other
provisions hereof, which shall remain binding and enforceable.



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     2.12 Limitation Upon Interest. All agreements between Strides and Holder,
now existing or hereafter arising, are hereby expressly limited so that in no
event whatsoever shall the amount paid or agreed to be paid to Holder hereof
for the use, forbearance or detention of money to be advanced hereunder or
otherwise, or for the performance or payment of any covenant or obligation
contained herein, exceed the maximum amount permissible under applicable law.
If from any circumstance whatsoever fulfillment of any provision hereof exceeds
the limit of validity prescribed by law, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if from any such
circumstance Holder hereof shall ever receive as interest under this Agreement
or otherwise an amount that would exceed the highest lawful rate, such amount
that would be excessive interest shall be applied to the reduction of the
principal amount owing hereunder (without charge for prepayment) and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance
of principal, such excess shall be refunded to Strides.



     2.13 Headings. Headings herein are used for convenience of reference only
and do not define or limit the scope of provisions of this Agreement.



     2.14 Successors and Assigns. This Agreement binds Strides and its
successors, assigns, heirs, administrators and executors, and inures to the
benefit of Holder and its successors, assigns, participants, heirs,
administrators and executors.



	 	 	 	 	 
	STRIDES:	 	STRIDES ARCOLAB LIMITED, a company
	 	 	organized under the laws of India
	 
	 	 	 	 
	

	 	By:
	 	/s/ Arun Kumar
	

	 	 	 	

	

	 	 	 	Arun Kumar, CEO








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