Document:

EX-10.1

Exhibit 10.1

EXECUTION COPY

SUBORDINATED PROMISSORY NOTE

THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND
TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT (THE
“SUBORDINATION AGREEMENT”) DATED AS OF JULY 28, 2008, AMONG THE 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 LASALLE BANK NATIONAL ASSOCIATION
(“ADMINISTRATIVE AGENT”), TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY THE COMPANIES PURSUANT
TO THAT CERTAIN CREDIT AGREEMENT DATED AS OF OCTOBER 7, 2003 AMONG THE COMPANIES, ADMINISTRATIVE
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.

THIS SUBORDINATED PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE
OFFERED, SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND SUCH STATE SECURITIES LAWS, OR AN EXEMPTION FROM REGISTRATION
THEREUNDER.

	 	 	 
	US $5,000,000.00

	 	July 28, 2008

     FOR VALUE RECEIVED, AKORN, INC., a Louisiana corporation (“Akorn”) and AKORN (NEW JERSEY),
INC., an Illinois corporation (“Akorn New Jersey”) and collectively with Akorn, the “Makers” and
each a “Maker”), hereby promise jointly and severally to pay to the order of THE JOHN N. KAPOOR
TRUST DATED SEPTEMBER 20, 1989, or its permitted successors or assigns (“Payee”), the aggregate
principal sum of FIVE MILLION DOLLARS ($5,000,000) on the terms and conditions set forth below, and
to pay to Payee interest on the unpaid principal balance hereof at the rate and on the terms and
conditions set forth herein.

     1. Payment of Principal. The principal amount of this Subordinated Promissory Note
(the “Note”), together with all unpaid interest accrued hereon, shall be due and payable on the one
year anniversary of the date hereof (the “Maturity Date”).

     2. Payment of Interest. The unpaid principal balance due hereunder shall bear
interest at a fixed annual rate (based on a 360-day year) of fifteen percent (15%) (the “Interest
Rate”) and such interest shall accrue quarterly in arrears (each, whether at the Interest Rate or
Default Interest Rate (as defined below), an “Interest Payment”) on the 28th day of each
January,

 

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April, July and October (each, an “Interest Payment Date”) commencing on October 28, 2008;
provided that upon the occurrence of a Default, the outstanding principal balance hereunder shall
accrue at a fixed annual rate (based on a 360-day year) of twenty percent (20%) (the “Default
Interest Rate”). All accrued interest (including default interest) under this Note shall be paid
in kind, and the amount of each Interest Payment shall be added to the outstanding principal
balance of this Note on such Interest Payment Date and, thereafter, for all purposes under this
Note, references to the “principal amount” of this Note shall include the amount of any Interest
Payment that has been added to the outstanding principal balance of this Note.

     3. Subordination. Pursuant to the terms of the Subordination and Intercreditor
Agreement dated as of the date hereof (as amended, restated, modified or replaced from time to
time, the “Subordination Agreement”) among Makers, Payee and the senior lenders to Makers, this
Note and the indebtedness evidenced hereby shall at all times be and remain subordinated to any
indebtedness owed to such senior lenders (any such indebtedness being collectively referred to
herein as the “Senior Indebtedness”).

     4. Prepayment. Makers may, at their option at any time and from time to time
hereafter, to the extent not prohibited by the Subordination Agreement, prepay, in whole or in
part, without premium or penalty, the outstanding principal amount of this Note, together with
accrued but unpaid interest on such principal amount to the date of prepayment.

     5. Defaults. Makers shall be deemed in default hereunder upon the occurrence of any
of the following (a “Default”):

     (a) The failure of Makers to make the payment due hereunder on the Maturity Date;

     (b) Either Maker becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or either Maker applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or other custodian for such Maker or any
property thereof, or makes a general assignment for the benefit of creditors; or, in the absence of
such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for
either Maker or for a substantial part of the property of either Maker and is not discharged within
60 days; or any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced in respect
of either Maker, and if such case or proceeding is not commenced by such Maker, it is consented to
or acquiesced in by such Maker, or remains for 60 days undismissed; or either Maker takes any
action to authorize, or in furtherance of, any of the foregoing; or

     (c) An “Event of Default” under and as defined in the senior credit agreement of Makers has
occurred and is continuing and the lenders of any Senior Indebtedness thereunder have accelerated
the maturity of such Senior Indebtedness.

     6. Consequence of Default. Upon the occurrence of a Default, the entire then unpaid
principal balance hereof and all interest then accrued and unpaid thereon and all other sums
payable hereunder shall, at the option of Payee, become immediately due and payable.
Notwithstanding the foregoing, if there shall occur a Default under Section 6(a) or
(b) above, the entire then unpaid principal balance hereof and all interest then accrued
and unpaid thereon and

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all other sums payable hereunder, shall become immediately due and payable
without any action on the part of Payee.

     7. Miscellaneous.

     (a) Principal and interest due hereunder shall be payable in lawful money of the United States
of America. All payments shall be applied first to accrued and unpaid interest and thereafter to
principal.

     (b) If any payment due on this Note shall become due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day. “Business Day” means any day on which
banks are generally open for commercial banking business in Chicago, Illinois

     (c) No delay or omission on the part of Payee in the exercise of any right or remedy hereunder
shall operate as a waiver thereof.

     (d) If a Default shall occur under this Note, Makers shall pay on demand, subject to the terms
of the Subordination Agreement, all reasonable costs and expenses of collection of Payee, including
reasonable attorneys’ fees.

     (e) No amendment, modification, termination or waiver of any provision of this Note shall be
effective unless the same shall be in writing and signed by Makers and Payee.

     (f) All notices hereunder shall be in writing (including facsimile transmission) and shall be
sent to the applicable party at its address shown below or at such other address as such party may,
by written notice received by the other parties, have designated as its address for such purpose.
Notices sent by facsimile transmission shall be deemed to have been given when sent; notices sent
by mail shall be deemed to have been given three Business Days after the date when sent by
registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight
courier service shall be deemed to have been given when received.

Notices shall be addressed as follows:

If to Payee:

The John N. Kapoor Trust

c/o Dr. John N. Kapoor

225 E. Deerpath Road

Suite 250

Lake Forest, Illinois 60045

Telecopy: (847) 295-8680

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With a copy to:

McDermott Will & Emery LLP

227 West Monroe Street

Chicago, Illinois 60606

Attention: Thomas Murphy

Telecopy: (312) 984-7700

If to a Maker:

2500 Millbrook Drive

Buffalo Grove, Illinois 60089

Attention: Chief Financial Officer

Telecopy: (847) 279-6123

With a copy to:

Luce, Forward, Hamilton & Scripps LLP

11988 El Camino Real, Suite 200

San Diego, California 92130

Attention: Kurt Kicklighter

Telecopy: (619) 446-8242

     (g) This Note may not be assigned (by operation of law or otherwise) by any Maker without the
prior written consent of the Payee.

     (h) Makers shall be entitled to deduct and withhold from the amounts payable pursuant to this
Note such amounts as it is required to deduct and withhold with respect to the making of such
payment under any tax law. To the extent that amounts are so withheld or paid over to or deposited
with the relevant taxing authority by Makers, such amounts shall be treated for all purposes of
this Note as having been paid to Payee in respect of which such deduction and withholding was made
by Maker.

     (i) If interest payable under this Note is in excess of the maximum permitted by law, the
interest chargeable hereunder shall be reduced to the maximum amount permitted by law and any
excess over the maximum amount permitted by law shall be credited to the principal balance of this
Note and applied to the same and not to the payment of interest.

     (j) This Note is to be governed by, and construed and enforced in accordance with, the laws of
the State of Illinois, without regard to conflict of laws principles that would require the
application of the laws of any other jurisdiction.

[signature page follows]

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

	 	 	 	 	 
	 	AKORN, INC.

 	 
	 	By:  	/s/ Arthur Przybyl
 	 
	 	Title: President and CEO 	 
	 	 	 	 
	 
	 	AKORN (NEW JERSEY), INC.

 	 
	 	By:  	/s/ Arthur Przybyl
 	 
	 	Title: President and CEO 	 
	 	 	 	 
	 

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CHI: 2118073.6EX-10.2

Exhibit 10.2

EXECUTION COPY

SUBORDINATION AND INTERCREDITOR AGREEMENT

     THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”) is entered into as of July
28, 2008, 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 LASALLE
BANK NATIONAL ASSOCIATION, as Administrative Agent for all Senior Lenders party to the Senior
Credit Agreement described below.

R E C I T A L S

     A. The Companies, Administrative Agent and Senior Lenders (as hereinafter defined) have
entered into a Credit Agreement, dated as of October 7, 2003 (as the same has been and may be
further amended, supplemented or otherwise modified from time to time, the “Senior Credit
Agreement”) pursuant to which, among other things, Senior Lenders have agreed, subject to the terms
and conditions set forth in the Senior Credit Agreement, to make certain loans and financial
accommodations to the Companies. All of the Companies’ obligations to Administrative Agent and
Senior Lenders under the Senior 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 is extending credit to the Company as evidenced by a Subordinated
Promissory Note of even date herewith in the principal amount of $5,000,000.00 (the “Subordinated
Note”).

     C. As one of the conditions precedent to the agreement of Administrative Agent and Senior
Lenders to consent to the incurrence of the Debt evidenced by the Subordination Note,
Administrative 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 Administrative 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 Administrative Agent and Senior Lenders to consent to the
incurrence of the Debt evidenced by the Subordination 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:

 

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     “Administrative Agent” shall mean LaSalle Bank National Association, as
Administrative 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
capital 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.

     “LaSalle Loan Documents” shall mean the Senior 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 Senior Credit Agreement, in each case, as the
same may be amended, supplemented or otherwise modified from time to time.

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     “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.

     “Refinancing Senior Debt Documents” shall mean any financing documentation
which replaces the LaSalle Loan Documents and pursuant to which the Senior Debt under the
LaSalle 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 Administrative 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 Senior 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 Document is outstanding.

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

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     “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 Administrative Agent pursuant to which
Administrative 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.

     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.

     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

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Subordinated Debt shall be paid or delivered directly to Administrative Agent (to be held
and/or applied by Administrative 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 Administrative Agent. Subordinated
Creditor also irrevocably authorizes and empowers Administrative 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 Administrative Agent in connection
with any such Proceeding and hereby irrevocably authorizes, empowers and appoints
Administrative Agent its Administrative 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
Administrative Agent shall have no obligation to execute, verify, deliver, file and/or vote
any such proof of claim. In the event that Administrative Agent votes any claim in
accordance with the authority granted hereby, Subordinated Creditor shall not be entitled to
change or withdraw such vote.

     (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.

     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 reimbursement of all costs and expenses
incurred by the Subordinated Creditor in connection with the negotiation,

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execution and delivery of the Subordinated Debt Documents and the consummation of the transactions contemplated thereby in an
aggregate amount not to exceed $10,000.

     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 Administrative
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 Administrative Agent and Senior Lenders and promptly paid or delivered to
Administrative 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.

     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 Administrative Agent and Senior Lenders and shall be promptly paid over to
Administrative 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.

     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 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 Administrative Agent and (ii) such transferee or pledgee
is acceptable to the Administrative 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.

     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:

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     “This instrument and the rights and obligations evidenced hereby are
subordinate in the manner and to the extent set forth in that certain Subordination
and Intercreditor Agreement (the “Subordination Agreement”) dated as of July 28,
2008, 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 LaSalle Bank National
Association (“Administrative Agent”), to the indebtedness (including interest) owed
by the Companies pursuant to that certain Credit Agreement dated as of October 7,
2003 among the Companies, Administrative 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.

     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.

     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 Administrative
Agent, agree to any amendment, modification or supplement to the Subordinated Debt Documents.

4. Representations and Warranties. Subordinated Creditor hereby represents and warrants to
Administrative 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
Administrative 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

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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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 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 respective party as set forth below 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;

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(b) if delivered by telecopy, on the date of transmission if transmitted on a business
day before 4:00 p.m. (Chicago 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.

     Notices shall be addressed as follows:

If to Subordinated Creditor:

The John N. Kapoor Trust

c/o Dr. John N. Kapoor

225 E. Deerpath Road

Suite 250

Lake Forest, Illinois 60045

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

If to Akorn or Akorn New Jersey:

2500 Millbrook Drive

Buffalo Grove, Illinois 60089

Attention: Chief Financial Officer

Telecopy: (847) 279-6123

With a copy to:

Luce, Forward, Hamilton & Scripps LLP

11988 El Camino Real, Suite 200

San Diego, California 92130

Attention: Kurt Kicklighter

Telecopy: (619) 446-8242

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If to Administrative Agent or Senior Lenders:

LaSalle Bank National Association

135 South LaSalle Street

Chicago, Illinois 60603

Attention: Patrick O’Toole

Telecopy: (312) 904-0522

With a copy to:

Winston & Strawn LLP

35 West Wacker Drive

Chicago, Illinois 60661

Attention: J. Eric Guth

Telecopy: (312) 558-5700

or in any case, to such other address as the party addressed shall have previously designated by
written notice to the serving party, given in accordance with this Section 8.

9. Successors and Assigns. This Agreement shall inure to the benefit of, and shall be
binding upon, the respective successors and assigns of Administrative 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 Administrative
Agent, Senior Lenders and Subordinated Creditor. Nothing in this Agreement shall (a) impair, as
among the Companies, Administrative 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 Administrative 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 Illinois, 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 ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS;
PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE ADMINISTRATIVE
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 ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS 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

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CHI : 2117543.7

 

BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE, AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

18. WAIVER OF JURY TRIAL. EACH OF SUBORDINATED CREDITOR, THE COMPANIES, AND ADMINISTRATIVE
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 ADMINISTRATIVE 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 ADMINISTRATIVE 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.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date
first above written.

	 	 	 	 	 	 	 
	 	 	THE JOHN N. KAPOOR TRUST dated 9/20/89	 	 
	 
	 	 	 	 	 	 
	 

	 	/s/
	 	John N. Kapoor
	 	 
	 

	 	 	 	 	 	 
	 

	 	By:
	 	John N. Kapoor	 	 
	 

	 	Its:
	 	Trustee	 	 
	 
	 	 	 	 	 	 
	 	 	AKORN, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Przybyl
	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	President and CEO	 	 
	 
	 	 	 	 	 	 
	 	 	AKORN (NEW JERSEY), INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Arthur Przybyl	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	President and CEO	 	 
	 
	 	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Patrick J. O’Toole	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:
	 	Senior Vice President	 	 

13

CHI : 2117543.7

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