Document:

exv4w2

 

Exhibit 4.2

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

Akorn, Inc.

WARRANT

			
	Warrant No. [ ]
	 	Dated: March                    , 2006

     Akorn, Inc., a Louisiana corporation (the “Company”), hereby certifies that, for value
received, [Name of Holder] or its registered assigns (the “Holder”), is entitled to purchase from
the Company up to a total of [                    1 shares of common stock, no par value per share
(the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the
“Warrant Shares”) at an exercise price equal to $5.40 per share (as adjusted from time to time as
provided in Section 9, the “Exercise Price”), at any time and from 180 days from the date hereof
and through and including the date that is five years from the date of issuance hereof (the
“Expiration Date”), and subject to the following terms and conditions. This Warrant (this
“Warrant”) is one of a series of similar warrants issued pursuant to that certain Securities
Purchase Agreement, dated as of the date hereof, by and among the Company and the Purchasers
identified therein (the “Purchase Agreement”). All such warrants are referred to herein,
collectively, as the “Warrants.”

     1. Definitions. In addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the meanings given to such terms in
the Purchase Agreement.

     2. Registration of Warrant. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record
Holder hereof from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.

     3. Registration of Transfers. Subject to the restrictions on transfer set forth on
the first page hereof and in Section 16(a) below, the Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of
Assignment attached hereto duly completed and signed, to the Transfer Agent or to the Company at
its address specified herein. Upon any such registration or transfer, a new warrant to purchase

 

			
	1	 	35% warrant coverage

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Common Stock, in substantially the form of this Warrant (any such new warrant, a “New
Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee
and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a
holder of a Warrant.

     4. Exercise and Duration of Warrants.

          (a) This Warrant shall be exercisable by the registered Holder at any time and from time to
time on or after the date that is 180 days from the date hereof to and including the Expiration
Date. At 6:30 P.M., New York City time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value; provided that, if the average of
the Closing Prices for the five Trading Days immediately prior to (but not including) the
Expiration Date exceeds the Exercise Price on the Expiration Date, provided further that, if on the
Expiration date, there is no effective Registration Statement covering the resale of the Warrant
Shares, then this Warrant shall be deemed to have been exercised in full (to the extent not
previously exercised) on a “cashless exercise” basis at 6:30 P.M. New York City time on the
Expiration Date. Notwithstanding anything to the contrary herein, the Expiration Date shall be
extended for each day following the Effective Date that the Registration Statement is not
effective.

          (b) A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in
the form attached hereto (the “Exercise Notice”), appropriately completed and duly signed, and (ii)
payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being
exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice
only if a “cashless exercise” may occur at such time pursuant to Section 10 below), and the date
such items are delivered to the Company (as determined in accordance with the notice provisions
hereof) is an “Exercise Date.” The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have
the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares.

     5. Delivery of Warrant Shares.

          (a) Upon exercise of this Warrant, the Company shall promptly (but in no event later than
three Trading Days after the Exercise Date) issue or cause to be issued and cause to be delivered
to or upon the written order of the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise, which certificate shall bear
restrictive legends as required under the Purchase Agreement. The Holder shall be deemed to have
become holder of record of such Warrant Shares as of the Exercise Date. In lieu of delivering
physical certificates for the Warrant Shares issuable upon any exercise of this Warrant, provided
the Company’s Transfer Agent is participating in the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer (“FAST”) program, and that any legend upon the certificates for the
Warrant Shares shall have been removed pursuant to the Purchase Agreement, upon request of the
Holder, the Company shall use commercially reasonable efforts

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to cause its transfer agent to electronically transmit such Warrant Shares by crediting the
account of the Holder’s broker with DTC through its Deposit Withdrawal Agent Commission system
(provided that the same time limitations herein as for stock certificates shall apply).

          (b) This Warrant is exercisable, either in its entirety or, from time to time, for a portion
of the number of Warrant Shares. Upon surrender of this Warrant following one or more partial
exercises, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares.

          (c) In addition to any other rights available to a Holder, if the Company fails to deliver to
the Holder a certificate representing Warrant Shares by the third Trading Day after the date on
which delivery of such certificate is required by this Warrant, and if after such third Trading Day
the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Shares that the Holder anticipated receiving
from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the Holder’s
request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation
to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash
to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A)
such number of shares of Common Stock, times (B) the Closing Price on the date of the event giving
rise to the Company’s obligation to deliver such certificate.

          (d) The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of law by the Holder
or any other Person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of Warrant Shares;
provided, however, that that the Company shall be under no obligation to issue and deliver Warrant
Shares to any transferee of Holder if the transferee is an individual or entity to whom the Warrant
or Warrant Shares could not be sold under applicable securities laws or an exemption therefrom.
Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

     6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue
or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect
of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which may

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be payable in respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.

     7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable bond or indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and procedures and pay such
other reasonable third-party costs as the Company may prescribe.

     8. Reservation of Warrant Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable
and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (after giving effect to the adjustments
and restrictions of Section 9, if any). The Company covenants that all Warrant Shares so issuable
and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.
The Company will take all such action as may be necessary to assure that such shares of Common
Stock may be issued as provided herein without violation of any applicable law or regulation, or of
any requirements of any securities exchange or automated quotation system upon which the Common
Stock may be listed.

     9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this Section
9.

          (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding
shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of
Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be the number of
shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution, and any adjustment
pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.

          (b) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any
security (other than a distribution of Common Stock covered by the preceding paragraph),

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(iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset
(in each case, “Distributed Property”), then in each such case the Holder shall be entitled upon
exercise of this Warrant for the purchase of any or all of the Warrant Shares, to receive the
amount of Distributed Property which would have been payable to the Holder had such Holder been the
holder of such Warrant Shares on the record date for the determination of stockholders entitled to
such Distributed Property. The Company will at all times set aside in escrow and keep available
for distribution to such holder upon exercise of this Warrant a portion of the Distributed Property
to satisfy the distribution to which such Holder is entitled pursuant to the preceding sentence.

          (c) Fundamental Transactions. If, at any time while this Warrant is outstanding, (i)
the Company effects any merger or consolidation of the Company with or into another Person, (ii)
the Company effects any sale of all or substantially all of its assets in one or a series of
related transactions, (iii) any tender offer or exchange offer approved by the Company’s Board of
Directors (whether by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other securities, cash or
property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property (other than as a result of a subdivision or combination of
shares of Common Stock covered by Section 9(a) above) (in any such case, a “Fundamental
Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon
exercise in full of this Warrant (the “Alternate Consideration”). The aggregate Exercise Price for
this Warrant will not be affected by any such Fundamental Transaction, but the Company shall
apportion such aggregate Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.
At the Holder’s request, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and
evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise
Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or surviving entity to
comply with the provisions of this paragraph (c) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. If any Fundamental Transaction constitutes or results in (a) a “going
private” transaction as defined in Rule 13e-3 under the Exchange Act, or (b) an acquisition
primarily for cash, or (c) an acquisition, merger or sale with or into a Person not traded on an
Eligible Market, then the Company (or any such successor or surviving entity) will redeem this
Warrant from the Holder for a purchase price, payable in cash on the closing date of such “going
private” transaction, equal to the Black Scholes value of the remaining unexercised portion of this
Warrant on the closing date of such “going private” transaction.

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          (d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to paragraph (a) of this Section, the number of Warrant Shares that may be purchased
upon exercise of this Warrant shall be increased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the increased number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect immediately prior to such adjustment.

          (e) Calculations. All calculations under this Section 9 shall be made to the nearest
cent or the nearest 1/100th of a share, as applicable. 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.

          (f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will promptly compute such adjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment, including a
statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing the transactions
giving rise to such adjustments and showing in detail the facts upon which such adjustment is
based. Upon written request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s Transfer Agent.

          (g) Notice of Corporate Events. If the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common Stock, including
without limitation any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any Subsidiary (other than warrants, options, restricted stock or other
stock awards granted to officers, employees or directors of the Company), (ii) authorizes or
approves, enters into any agreement contemplating or solicits stockholder approval for any
Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of
the affairs of the Company, then the Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction, at least ten calendar days prior to the
applicable record or effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will take all steps
reasonably necessary in order to insure that the Holder is given the practical opportunity to
exercise this Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any defect therein shall
not affect the validity of the corporate action required to be described in such notice.

     10. Payment of Exercise Price. The Holder shall pay the Exercise Price by: (i)
delivery of immediately available funds, or (ii) notifying the Company in an Exercise Notice of its
election to utilize cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:

	 	 	 
	 

	 	X = Y [(A-B)/A]
	 
	 	 
	 

	where: 	X = the number of Warrant Shares to be issued to the Holder.

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	 	Y = the number of Warrant Shares with respect to which this Warrant
is being exercised.
	 
	 

	 	
A = the average of the Closing Prices for the five Trading Days
immediately prior to (but not including) the Exercise Date.
	 
	 

	 	
B = the Exercise Price.

     For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to
have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to
have commenced, on the date this Warrant was originally issued pursuant to the Purchase Agreement.

     11. Limitation on Exercise.

          (a) Notwithstanding anything to the contrary contained herein, the number of shares of Common
Stock that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect
hereof) shall be limited to the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by such Holder and
its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% (the
“Maximum Percentage”) of the total number of issued and outstanding shares of Common Stock
(including for such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. Each delivery of an Exercise Notice
hereunder will constitute a representation by the Holder that it has evaluated the limitation set
forth in this paragraph and determined that issuance of the full number of Warrant Shares requested
in such Exercise Notice is permitted under this paragraph. The Company’s obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section shall be suspended
(and shall not terminate or expire notwithstanding any contrary provisions hereof) until such time,
if any, as such shares of Common Stock may be issued in compliance with such limitation, but in no
event later than the Expiration Date. By written notice to the Company, the Holder may waive the
provisions of this Section or increase or decrease the Maximum Percentage to any other percentage
specified in such notice, but (i) any such waiver or increase will not be effective until the 61st
day after such notice is delivered to the Company, and (ii) any such waiver or increase or decrease
will apply only to the Holder and not to any other holder of Warrants.

     12. Fractional Shares. The Company shall not be required to issue or cause to be
issued fractional Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant
Share would, except for the provisions of this Section, be issuable upon exercise of this Warrant,
the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

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     13. Notices. Any and all notices or other communications or deliveries hereunder
(including without limitation any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in the Purchase Agreement prior to 6:30
p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
specified in the Purchase Agreement on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices or communications shall be as
set forth in the Purchase Agreement.

     14. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon
30 days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its corporate trust or
stockholders services business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
last address as shown on the Warrant Register.

     15. No Voting Rights. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company until the Warrant shall have been exercised
and the Warrant Shares purchasable upon the exercise hereof shall have become deliverable, as
provided herein.

     16. Miscellaneous.

          (a) Subject to the restrictions on transfer set forth on the first page hereof and in this
Section 16(a), this Warrant may be assigned by the Holder; provided, however, that that the Holder
may not transfer this Warrant to any transferee if such transferee is an individual or entity to
whom the Warrant and/or Warrant Shares could not be sold under applicable securities laws or an
exemption therefrom. This Warrant may not be assigned by the Company except to a successor in the
event of a Fundamental Transaction. This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the Company and the
Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant
may be amended only in writing signed by the Company and the Holder and their successors and
assigns.

          (b) The Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment. Without limiting the generality of the

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foregoing, the Company (i) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, (ii) will take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its
stockholder books or records in any manner which interferes with the timely exercise of this
Warrant.

          (c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW
YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO
ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY
ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO
A TRIAL BY JURY.

          (d) The headings herein are for convenience only, do not constitute a part of this Warrant and
shall not be deemed to limit or affect any of the provisions hereof.

          (e) In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt
in good faith to agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision
in this Warrant.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.

AKORN, INC.

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	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

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FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common Stock under the
foregoing Warrant)

			
	To:	 	Akorn, Inc.

The
undersigned is the Holder of Warrant No.                      (the “Warrant”) issued by Akorn, Inc., a
Louisiana corporation (the “Company”). Capitalized terms used herein and not otherwise defined
have the respective meanings set forth in the Warrant.

     1. The
Warrant is currently exercisable to purchase a total of                      Warrant Shares.

     2. The
undersigned Holder hereby exercises its right to purchase                      Warrant
Shares pursuant to the Warrant.

     3. The Holder intends that payment of the Exercise Price shall be made as (check one):

	 	 	 	 	 	 	 
	 

	 	___
	 	“Cash Exercise” under Section 10
	 	 
	 
	 	 	 	 	 	 
	 

	 	___
	 	“Cashless Exercise” under Section 10
	 	 

     4. If
the holder has elected a Cash Exercise, the holder shall pay the sum of $                     to
the Company in accordance with the terms of the Warrant.

     5. Pursuant
to this exercise, the Company shall deliver to the holder                      Warrant
Shares in accordance with the terms of the Warrant.

     6. Following this exercise, the Warrant shall be exercisable to purchase a total of
                    
Warrant Shares.

	 	 	 	 	 	 	 
	Dated:
____________,
____________ 
	 	Name of Holder:
	 
	 	 	 	 	 	 
	 

	 	(Print) 	 	 	 	 
	 

	 	 	 

	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 

	 	 
	 	 	(Signature must conform in all respects to name of holder as
specified on the face of the Warrant)	 	 

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FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                        
the right represented by the within Warrant to purchase
                    
shares of Common Stock of Akorn, Inc. to which the within Warrant relates and appoints
                    
attorney to transfer said right on the books of Akorn, Inc. with full power of
substitution in the premises.

	 	 	 	 	 
	Dated:
____________,
____________ 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 

(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
	 	 
	 
	 	 	 	 
	 

	 	 

Address of transferee
	 	 
	 	 	 
 
	In the presence of:
	 	 
 	 	 
	 
	 	 	 	 
	 

	 	 
 	 	 

12exv10w1

 

Exhibit 10.1

Execution Copy

AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT

     THIS AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT (this “Amendment”) is executed
and delivered as of this 1st day of March, 2006 among LASALLE BANK NATIONAL ASSOCIATION, as
administrative agent (the “Administrative Agent”), the financial institutions party hereto
(the “Lenders”), AKORN, INC., a Louisiana corporation (“Akorn”) and AKORN (NEW
JERSEY), INC., an Illinois corporation (“Akorn New Jersey”).

WITNESSETH :

     A. The Administrative Agent, Akorn, Akorn New Jersey and the Lenders entered into a Credit
Agreement dated as of October 7, 2003 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”). Capitalized terms used but not defined herein
shall have the meanings attributed to them in the Credit Agreement.

     B. Akorn intends to (i) enter into that certain Securities Purchase Agreement dated as of
March 1, 2006 (the “Purchase Agreement”, a copy of which is attached hereto as Exhibit
A) with the investors named therein pursuant to which Akorn will issue Capital Securities in
Akorn and (ii) issue the Capital Securities (including warrants (the “Warrants”), the form
of which is attached hereto as Exhibit B) as contemplated thereunder (the foregoing
referred to herein in as the “Transaction”).

     C. The Companies have requested that the Administrative Agent and the Required Lenders consent
to the action to be taken by the Companies in connection with the Transaction with respect to the
Credit Agreement, subject to the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto
hereby agree as follows:

     1. Amendment. Upon the Effective Date (as defined below), the Credit Agreement shall
be amended as follows:

          (a) EBITDA. The definition of “EBITDA” set forth in Section 1.1 of the Credit
Agreement is hereby amended by inserting the clause “plus, solely for determining
EBITDA for the Computation Periods ending December 31, 2005 and March 31, 2006, research and
development expenditures during such Computation Periods in an amount not to exceed
$3,000,000” immediately following the phrase “the Decatur Add Back and the Refinancing
Expense Add Back”.

          (b) Interest Expense. The definition of “Interest Expense” set forth in
Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read
as follows:

“‘Interest Expense’ means for any period the consolidated interest
expense of the Companies and their Subsidiaries for such period (including
all imputed interest on Capital Leases); provided that for purposes
of

 

 

determining Interest Expense for the Computation Periods ending December 31,
2005 and March 31, 2006, Interest Expense shall be reduced by the amount of
cash interest paid in connection with the repayment and termination of the
NeoPharm Subordinated Debt on May 16, 2005 (such reduction not to exceed
$315,000).”

     2. Waiver and Consent. Subject to the terms and conditions herein, the Required
Lenders hereby (a) consent to Akorn’s the issuance of the Capital Securities, including the
Warrants and the Capital Securities issuable upon exercise of the Warrants, in accordance with the
Purchase Agreement and (b) waive any Event of Default which, if not for the execution of this
Amendment, would arise under Sections 13.1.1, 13.1.5(a) or 13.1.5(b) of the Credit Agreement
resulting solely from (A) the failure or inability to reduce the Revolving Commitment Amount in
violation of Section 6.1.2 of the Credit Agreement and (B) the Company’s issuance of Capital
Securities, the Warrants and the Capital Securities issuable upon exercise of the Warrants in
violation of Sections 11.5(b) and 11.10 of the Credit Agreement; provided, that the
foregoing clauses (a) and (b) are expressly conditioned upon the satisfaction of the conditions to
effectiveness set forth in Section 4 hereof, including, without limitation, receipt by the
Administrative Agent of the Loan Payment Amount (if any) referenced in clause (b) of Section 4
hereof.

     3. Representations and Warranties. To induce the Administrative Agent and the Lenders
to execute this Amendment, each Company jointly and severally represents and warrants to the
Administrative Agent and the Lenders as follows:

          (a) Each Company is in good standing under the laws of its jurisdiction of formation
and in each jurisdiction where, because of the nature of its activities or properties, such
qualification is required, except for such jurisdictions where the failure to so qualify
would not have a Material Adverse Effect.

          (b) Each Company is duly authorized to execute and deliver this Amendment and is duly
authorized to perform its obligations hereunder.

          (c) The execution, delivery and performance by the Companies of this Amendment do not
and will not (i) require any consent or approval of any governmental agency or authority
(other than any consent or approval which has been obtained and is in full force and
effect), (ii) conflict with (A) any provision of law, (B) the charter, by-laws or other
organizational documents of any Company or (C) any agreement, indenture, instrument or other
document, or any judgment, order or decree, which is binding upon any Company or any of its
properties or (iii) require, or result in, the creation or imposition of any Lien on any
asset of any Company.

          (d) This Amendment is the legal, valid and binding obligation of each Company,
enforceable against such Company in accordance with its terms, subject to bankruptcy,
insolvency and similar laws affecting enforceability of creditors’ rights generally and to
general principals of equity.

 -2-

 

          (e) The representations and warranties in the Loan Documents (including but not limited
to Section 9 of the Credit Agreement) are true and correct in all material respects with the
same effect as though made on and as of the date of this Amendment (except to the extent
stated to relate to a specific earlier date, in which case such representations and
warranties were true and correct as of such earlier date).

          (f) Except as specifically waived in this Amendment, no Event of Default or Unmatured
Event of Default has occurred and is continuing.

     4. Conditions to Effectiveness. The effectiveness of this Amendment is expressly
conditioned upon delivering to the Administrative Agent all of the following in form and substance
acceptable to the Administrative Agent: (a) this Amendment executed by each Company, the
Administrative Agent and the Required Lenders; (b) receipt by the Administrative Agent in
accordance with Section 6.2.2(a)(ii) of the Credit Agreement of an irrevocable payment in an amount
sufficient to reduce the outstanding Revolving Loans to zero (such payment referred to as the
“Loan Payment Amount”); (c) an executed copy of the Purchase Agreement certified by the
secretary of Akorn as true, accurate and complete; and (d) a certificate of the Secretary or
Assistant Secretary of each Company evidencing that all corporate proceedings required to authorize
the execution and delivery of this Amendment and all other documents relating hereto on behalf of
each Company have been duly taken and setting forth the names, offices and specimen signatures of
the officers of each Company who are authorized to execute this Amendment and such other documents
on behalf of each Company. The date on which such events have occurred is the “Effective Date”.

     5. Affirmation. Except as specifically provided in this Amendment, the execution,
delivery and effectiveness of this Amendment shall not operate as a waiver or forbearance of any
Unmatured Event of Default or Event of Default or any right, power or remedy of the Administrative
Agent or any Lender under the Credit Agreement or any of the other Loan Documents, or constitute a
consent, waiver or modification with respect to any provision of the Credit Agreement or any of the
other Loan Documents, and the Company hereby fully ratifies and affirms each Loan Document to which
it is a party. Reference in any of this Amendment, the Credit Agreement or any other Loan Document
to the Credit Agreement shall be a reference to the Credit Agreement as modified hereby and as
further amended, modified, restated, supplemented or extended from time to time. This Amendment
shall constitute a Loan Document for purposes of the Credit Agreement and the other Loan Documents.
In addition, each of the Companies hereby reaffirms and acknowledges that, notwithstanding
anything contained in the Purchase Agreement or any other document executed in connection with the
Transaction, each is prohibited from making any redemptions, purchases, re-purchases or any other
form of payment with respect to their Capital Securities except as specifically permitted by
Section 11.4 of the Credit Agreement. For the avoidance of doubt, the Companies hereby
acknowledges that any warrants for its Capital Securities, including the Warrants, constitute
Capital Securities under the Credit Agreement.

     6. Warrants. The Companies hereby agree to deliver executed copies of the Warrants to
the Administrative Agent within 30 days of the Effective Date.

 -3-

 

     7. Counterparts. This Amendment may be executed in two or more counterparts, each of
which shall constitute an original, but all of which when taken together shall constitute one
instrument. Delivery of an executed counterpart of this Amendment by facsimile shall be effective
as delivery of an original counterpart.

     8. Headings. The headings and captions of this Amendment are for the purposes of
reference only and shall not affect the construction of, or be taken into consideration in
interpreting, this Amendment.

     9. Further Assurances. Each Company agrees to execute and deliver, or cause to be
executed and delivered, in form and substance satisfactory to the Administrative Agent and the
Lenders, such further documents, instruments, amendments and financing statements and to take such
further action, as may be necessary from time to time to perfect and maintain the liens and
security interests created by the Loan Documents.

     10. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ILLINOIS CHOICE OF LAW DOCTRINE.

     11. Acknowledgment. Each Company hereby waives, discharges and forever releases the
Administrative Agent and each of the Lenders, and each of said Person’s employees, officers,
directors, attorneys, stockholders and successors and assigns, from and of any and all claims,
causes of action, allegations or assertions that either Company has or may have had at any time
through (and including) the date of this Amendment, against any or all of the foregoing, regardless
of whether any such claims, causes of action, allegations or assertions are known to either Company
or whether any such claims, causes of action, allegations or assertions arose as a result of the
Administrative Agent’s or any Lender’s actions or omissions in connection with the Credit
Agreement, including any amendments or modifications thereto, or otherwise.

[signature pages follow]

 -4-

 

     IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	AKORN, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey A. Whitnell
 

	 	 
	 

	 	Title:
	 	CFO
 

	 	 
	 
	 	 	 	 	 	 
	 	 	AKORN (NEW JERSEY), INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey A. Whitnell
 

	 	 
	 

	 	Title:
	 	CFO
 

	 	 
	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent and Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Patrick J. O’Toole	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	First Vice President

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