Document:

exv10w3

 

Exhibit 10.3

AMENDED AND RESTATED

1991 AKORN, INC.

STOCK OPTION PLAN

FOR DIRECTORS

     1. Purpose.

     The purpose of this 1991 Akorn, Inc Stock Option Plan for Directors (the
“Plan”) is to attract and retain the services of experienced and knowledgeable
directors of Akorn, Inc. (the “Corporation”) for the benefit of the Corporation
and its shareholders by means of stock options and to provide additional
incentive for such directors to continue to work for the best interests of the
Corporation and its shareholders.

     2. Shares Subject to the Plan.

     The total number of shares of common stock, no par value per share, of the
Corporation (the “Shares”) for which stock options may be granted under the
Plan (“Options”) shall not exceed 500,000 in the aggregate, subject to
adjustment in accordance with Section 10 hereof. In the event that an Option
granted hereunder expires or is terminated or cancelled unexercised as to any
Shares, Options to purchase such Shares may again be issued under the Plan.
Shares issued under the Plan upon the exercise of Stock Options may be
authorized and unissued Shares or issued Shares held as treasury shares.

     3. Administration of the Plan.

     The Incentive Compensation Committee of the Board of Directors of the
Corporation (the “Committee”) shall have the power to construe the Plan, to
determine all questions arising thereunder, to set more restrictive Option
provisions as provided in Section 4(b) of the Plan and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable.

     4. Eligibility: Grant of Options.

          (a) Until such time as the Plan is terminated, each director of the
Corporation shall be automatically granted an Option each year to acquire 5,000
Shares under the Plan on the day following the annual meeting of shareholders.
Each person who becomes a director of the Corporation between annual meetings
during the term of the Plan will be entitled to receive the
pro rata portion of an Option to acquire 5,000 Shares, based on the number
of full calendar months during that year that such person will serve as a
director.

          (b) In addition to the automatic grant of Options provided in Section 4(a)
above, the Compensation Committee may, in its sole discretion, grant an Option
of no more than 100,000 Shares to a person who becomes a director of the
Corporation at any time after the 1991 Annual Meeting of Shareholders, but no
member of the Compensation Committee shall be eligible to be granted an Option
under this Section 4(b) and any director who is granted an Option under this
Section 4(b) shall not be permitted to serve on the Compensation

 

 

Committee for
one year after grant of an Option under this Section 4(b). The Committee may
in its discretion set more restrictive Options terms than the Plan otherwise
provides with respect to Options granted under this Section 4(b), including,
but not limited to, more restrictive vesting requirements and Option
termination provisions and an exercise price in excess of the fair market value
of the Shares on the date of grant.

     5. Option Agreement.

     Each Option granted under the Plan shall be evidenced by an Option
agreement (the “Agreement”) duly executed on behalf of the Corporation and by
the director to whom such Option is granted. Such Agreements shall (i) comply
with and be subject to the terms and conditions of the Plan and (ii) provide
that the optionee agrees to continue to serve as a director of the Corporation
during the term for which he was elected. Any Agreement may contain such other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Committee. No purported grant of any Option shall be
effective until an Agreement shall have been duly executed on behalf of the
Corporation and the director to whom the Option is to be granted.

     6. Stock Option Exercise Price.

     Except as otherwise provided by the Committee in accordance with Section
4(b), the exercise price for a Stock Option granted under the Plan shall be the
fair market value of the Shares covered by the Stock Option at the time the
Stock Option is granted. For purposes hereof, if the common stock of the
Corporation is listed on any national exchange or any automated quotation
system which provides sale quotations, the fair market value shall be the
closing sale price quoted on such exchange or quotation system as reported in
the Wall Street Journal for the trading day next preceding the date of the
grant of the Option or if there are no trades on such date then on the
preceding date on which a trade did occur.

     7. Time and Manner of Exercise of Option.

          (a) Except as otherwise provided in Section 10(b) hereof or as otherwise
determined by the Committee under Section 4(b) hereof’, Options granted under
the Plan shall be exercisable in full six months after the date of grant of the Options
and shall remain exercisable during the period ending five years from the date
of grant.

          (b) To the extent that the right to exercise an Option has accrued and is
in effect, the Option may be exercised in full at one time or in part from time
to time, by giving written notice, signed by the person or persons exercising
the Option to the Corporation, stating the number of Shares with respect to
which the Option is being exercised, and accompanied by payment in full for
such Shares, which payment may be (i) in cash, by certified or uncertified
check, (ii) in whole or in part in Shares owned by the person or persons
exercising the Option for a period of six months, valued at Fair Market Value
on the trading date next preceding the date of exercise or if there are no
trades on such date then on the preceding date on which a trade did occur, or
(iii) by delivering a properly executed exercise notice together with
irrevocable instructions to a broker approved by the Corporation (with a copy
to the Corporation) to promptly deliver to the Corporation the amount of sale
or loan proceeds to pay the exercise price.

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The date of exercise shall be the
date on which the Corporation receives written notice of exercise. Upon
exercise of an Option and payment of the exercise price, delivery of a
certificate for paid-up non-assessable Shares shall be made to the person
exercising the Option.

     8. Terms of Options.

          (a) Each Option shall expire five years from the date of grant thereof,
but shall be subject to earlier termination as provided in Section 10(b) hereof
or as determined by the Committee in connection with the grant of an Option
under Section 4(b) hereof.

          (b) In the event of the death of an optionee, unless otherwise determined
by the Committee with respect to an Option granted under Section 4(b) hereof,
the Option granted to such optionee may be exercised during its term to the
full number of Shares covered thereby, by the estate of such optionee, or by
any person or persons who acquired the right to exercise such Option by bequest
or inheritance or by reason of the death of such optionee.

     9. Options Not Transferable.

     The right of any optionee to exercise an Option granted to him under the
Plan shall not be assignable or transferable by such optionee otherwise than by
will or the laws of descent and distribution, and any such Option shall be
exercisable during the lifetime of such optionee only by him or by his guardian
or legal representative. Any Option granted under the Plan shall be null and
void and without effect upon the bankruptcy of the optionee, or upon any
attempted assignment or transfer, except as herein provided, including without
limitation, any purported assignment, whether voluntary or by operation of law,
pledge, hypothecation or other disposition, attachment, trustee process or
similar process, whether legal or equitable, upon such Option.

     10. Adjustments Upon Changes in Capitalization or Control.

          (a) In the event that the outstanding Shares are changed into or exchanged
for a different number or kind of shares or other securities of the Corporation
or of another corporation by recapitalization, reclassification, stock
split-up, combination of shares or dividends payable in capital stock,
appropriate adjustment shall be made in the total number of Shares issuable
under the Plan, the number of Shares issuable upon Options to be granted under
the terms hereof and the number and kind of shares as to which outstanding
Options, or portions thereof then unexercised shall be exercisable, to the end
that the proportionate interest of the optionee shall be maintained as before
the occurrence of such event; such adjustment in outstanding Options shall be
made without changes in the total price applicable to the unexercised portion
of such Options but with a corresponding adjustment in the exercise price for
each Option.

          (b) If there is proposed a dissolution or liquidation of the Corporation,
or a reorganization, merger or consolidation of the Corporation with one or
more corporations in which the Corporation is not the surviving corporation, or
a transfer of substantially all the property or more than two-thirds of the
then outstanding shares of the Corporation to another Corporation, the Board
shall cause written notice of the proposed transaction to be given to every
optionee under the Plan not less than 40 days prior to the anticipated
effective date of the

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          proposed transaction, and every Option granted under the
Plan shall be immediately exercisable by such optionee prior to a date
specified in such notice, which date shall be not more than 10 days prior to
the anticipated effective date of the proposed transaction. The optionee shall
have the right to exercise the Option to purchase any or all shares of Common
Stock then subject to the Option. The optionee shall notify the Corporation,
in writing, that he intends to exercise his Option and the optionee may
condition such exercise upon, and provide that such exercise shall become
effective at the time immediately prior to the consummation of the proposed
transaction. If the proposed transaction is consummated, each Option, to the
extent not previously exercised prior to the date specified in the foregoing
notice, shall terminate on the effective date of such consummation. If the
proposed transaction is not consummated and the optionee has so provided, the
Option shall remain unexercised.

     11. Restriction on Issue of Shares.

          (a) Notwithstanding the provisions of Section 7, the Corporation may delay
the issuance of Shares covered by the exercise of any Option and the delivery
of a certificate for such Shares until one of the following conditions shall be
satisfied:

               (i) the Shares with respect to which an Option has been exercised
are at the time of the issuance of such Shares effectively registered
under applicable federal securities acts now in force or hereafter
amended; or

               (ii) counsel for the Corporation shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such
Shares are exempt
from registration under applicable federal securities acts now in
force or hereafter amended.

          (b) It is intended that all exercises of Options shall be effective.
Accordingly, the Corporation shall use its best efforts to being about
compliance with the above conditions within a reasonable time.

     12. Withholding.

     The Corporation shall have the right to withhold from any stock issuance
under the Plan or to collect as a condition of issuance, any taxes required by
law to be withheld.

     13. Approval of Stockholders.

     The Plan shall be subject to approval by the vote of stockholders holding
at least a majority of the voting stock of the Corporation voting in person or
by proxy at a duly held stockholders’ meeting within twelve months after the
adoption of the Plan by the Board.

     14. Expenses of the Plan.

     All costs and expenses of the adoption and administration of the Plan
shall be borne by the Corporation, and none of such expenses shall be charged
to any optionee.

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     15. Termination and Amendment of the Plan.

     Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years from the date upon which the Plan shall be duly approved by the
shareholders. The Board may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable; provided, however,
that except as provided in Section 10 the Board may not, without the approval
of the shareholders of the Corporation, materially increase the benefits under
the Plan, increase the maximum aggregate number of shares for which Options may
be granted under the Plan, or permit the granting of Options to anyone other
than as provided in Section 4 hereof and provided further that Section 4 of the
Plan may not be amended more than once every six months other than to comply
with changes in the Internal Revenue Code or the rules thereunder. Termination
or any modification or amendment of the Plan shall not, without the consent of
an optionee, affect his rights under an Option previously granted to him.

5exv10w14

 

Exhibit 10.14

ALLONGE TO REVOLVING NOTE

     THIS ALLONGE TO CONVERTIBLE PROMISSORY NOTE (the “Allonge”) is made and
entered into as of the 20th day of December, 2001, by and between Akorn, Inc.,
a Louisiana corporation (the “Company”), and The John N. Kapoor Trust Dated
September 20, 1989, or its administrators, representatives, successors or
assigns (“Holder”).

WITNESSETH:

     WHEREAS, the Company made in favor of Holder that certain Convertible
Promissory Note dated as of July 21, 2001 (the “Tranche B Note”), in the
original principal amount of TWO MILLION and 00/100 Dollars ($2,000,000); a
copy of which is attached as Exhibit A hereto and incorporated herein by this
reference; and

     WHEREAS, in order to extend the maturity date of the Tranche B Note, the
parties have agreed to execute this Allonge.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the undersigned agree as follows:

     1. The parties hereby acknowledge and agree to extend the stated maturity
date of the Tranche B Note from thirty-six (36) months after the original
issuance date of the Tranche B Note (i.e., July 12, 2004) to December 20, 2006
[the same maturity date as the new lenders].

     2. The Company hereby agrees to use its best efforts to comply with the
National Association of Securities Dealers Rule 4350(i)(1)(A) as to shareholder
approval of the issuance of shares of the Company’s common stock in accordance
with the Loan Agreement upon conversion of the interest on the Tranche B Note
accrued between the initial Repayment Date (as such term was defined in the
Convertible Bridge Loan and Warrant Agreement dated as of July 12, 2001 (the
“Loan Agreement”) (prior to any amendment thereto), between the Company and the
Holder) and the Repayment Date (as such term is defined in the Loan Agreement,
as amended).

     3. Except as amended or revised by this Allonge, the terms of the Tranche
B Note remain in full force and effect as of the date hereof. In the event the
terms of the Tranche B Note should conflict with this Allonge, the terms of
this Allonge shall control.

     4. This Allonge shall be governed by and construed in accordance with the
laws of the State of Illinois, without regard to any choice or conflict of law
provisions.

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

[SIGNATURE PAGE FOLLOWS]

 

 

     IN WITNESS WHEREOF, this Allonge to Tranche B Note has been executed and
delivered as of the date first above written.

	 	 	 
	COMPANY

	 	HOLDER:
	 
	 	 
	AKORN, INC.

	 	THE JOHN N. KAPOOR TRUST DATED SEPTEMBER 20, 1989
	 
	 	 
	By: /s/ Ben J. Pothast

	 	By: /s/ John N. Kapoor
	 
	 	 
	Name: Ben J. Pothast

	 	Name:
	 
	 	 
	Its: CFO

	 	Its:

 

 

EXHIBIT A

CONVERTIBLE PROMISSORY NOTE

See Attached.

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