Document:

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                                                                 EXHIBIT (10.40)

                                (AEG LETTERHEAD)

November 21, 2002

Board of Directors
Akorn, Inc.
2500 Milibrook Drive
Buffalo Grove, Illinois 60089

Dear Members of the Board:

         Following discussions with two independent directors of Akorn, Inc.
(the "Company") and outside counsel to the Company and AEG Partners LLC ("AEG"),
AEG hereby rescinds its resignation letter dated November 18, 2002. By your
countersignature below, the Company and AEG agree that AEG will be re-engaged as
Chief Restructuring Officer, effective as of the date hereof, on the same terms
and conditions as are set forth in the Engagement Letter, dated September 26,
2002, between AEG and the Company (the "Engagement Letter"), except as modified
in this letter agreement.

         Notwithstanding anything in the Engagement Letter or any other prior
agreement to the contrary, the Company and AEG agree as follows:

         1. The Company shall immediately take all necessary corporate action to
establish a Corporate Governance Committee of the Board of Directors of the
Company. The Corporate Governance Committee shall initially be comprised of
Jerry N. Ellis and Daniel E. Bruhl, M.D. Any changes to the composition of the
Committee during the period of AEG's engagement shall be subject to AEG's
approval. AEG shall interface with the Corporate Governance Committee during the
conduct of its engagement, and the Committee shall have been delegated all
authority otherwise vested in the full Board of Directors with respect to
restructuring matters and corporate compliance matters, including without
limitation regulatory affairs, quality assurance and quality control.

         2. The Company's outside securities counsel shall be engaged to review
an audiotape of the Company's November 15, 2002 teleconference with securities
analysts for the purpose of determining whether any statements were made by
officers of the Company that require correction.

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         3. The Success Fee (as defined in and contemplated by Section IV.C. of
the Engagement Letter) shall have the terms set forth on Annex A attached
hereto.

Very truly yours,

AEG PARTNERS, LLC

By: /s/ LAWRENCE M. ADELMAN
   --------------------------------
Name: Lawrence M. Adelman
Its: Managing Director
ACCEPTED AND AGREED TO:

AKORN, INC.

By: /s/ BEN J. POTHAST
    --------------------------------
Name:   Ben J. Pothast
      ------------------------------
Its:   CFO
     -------------------------------

                                        2

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                                     ANNEX A

                              TERMS OF SUCCESS FEE

The Success Fee will be comprised of two components, a percentage-based cash fee
and a grant of warrants, as follows:

Part A -- Cash Fee

         o        Fee will be equal to 1.5% of the aggregate amount of the
                  Company's indebtedness for borrowed money, including all then
                  existing principal and accrued interest, that is refinanced or
                  restructured pursuant to a new or restated credit facility
                  maturing on or after January 1, 2004

         o        Fee will be payable in cash at any closing of a refinancing or
                  restructuring

Part B -- Warrants

         o        Immediately upon the execution of the letter agreement to
                  which this Annex A is attached, AEG, the Company and their
                  respective counsel shall begin negotiating and drafting the
                  terms of a Warrant Purchase Agreement between AEG and the
                  Company. The parties will use their best good faith efforts to
                  complete the negotiations as soon as possible.

         o        Pursuant to the Warrant Purchase Agreement, the Company shall
                  issue to AEG 1,250,000 warrants to purchase the common stock
                  of the Company at an exercise price of $1.00 per warrant
                  share.

         o        Pursuant to the Warrant Purchase Agreement, the warrants shall
                  be issued on the date on which each of the following
                  conditions shall have been met or waived by the Company: (i)
                  the Pre-Negotiation Agreement, dated as of September 20, 2002,
                  by and among the Company, Akorn (New Jersey), Inc. and The
                  Northern Trust Company shall have been terminated, (ii) AEG's
                  engagement pursuant to the Engagement Letter shall have been
                  terminated (it being understood that the condition set forth
                  in this clause (ii) shall be deemed to have been waived by the
                  Company in the event that the Company has requested or agreed
                  that AEG's engagement shall continue beyond the date on which
                  the condition set forth in clause (i) above is satisfied) and
                  (iii) the Company shall have executed a new or restated
                  multi-year credit facility.

         o        The warrants shall contain customary registration rights and
                  anti-dilution protections.

         o        All unexercised warrants shall expire on the fourth
                  anniversary of the date of grant.

In the event that the restructuring of the Company's existing indebtedness is
not successfully completed prior to the termination of the Engagement Letter,
the Company and AEG agree to renegotiate in good faith the incentives and fees
applicable to AEG.

                                        3<PAGE>
                                                                 EXHIBIT (10.41)

January 22, 2003

Arthur Przybyl
2301 E. Ancient Mesa Lane
Tucson, AZ 85718

Dear Art,

Art, on behalf of the Board of Directors, I am pleased to offer you the position
of Interim Chief Executive Officer (CEO) based in our corporate offices in
Buffalo Grove, IL. Your new salary shall be ten thousand dollars ($10,000)
bi-weekly and you will report to Larry Adelman, Chief Restructuring Officer, AEG
Partners, Inc. and to the Governance Committee of the Board. Your new salary
shall be effective January 20, 2003

You will be eligible to participate in Akorn's Performance Incentive Program. As
CEO your potential annual bonus is fifty percent (50%) subject to plan details
and annual Board of Directors approval of payout.

In addition, you will receive a new grant of stock options to purchase fifty
thousand (50,000) shares of Akorn, Inc. common stock priced at today's closing
price. Stock options are subject to the terms of the stock option plan and an
agreement, which each participant is required to sign.

You will continue to receive a car allowance of eight hundred thirty three
dollars and thirty three cents ($833.33) per month.

As we committed in our original offer letter, Akorn will pay costs associated
with your relocation to the Buffalo Grove area in accordance with the terms and
conditions of our Relocation Policy, a copy of which has been given to you. You
will note that, in accordance with the policy, Akorn will pay you four (4) weeks
salary to cover any unforeseen, additional costs. Should you voluntarily leave
the company within one (1) year following your relocation, you agree to return a
pro-rated amount of all relocation expenditures paid to you and to vendors on
your behalf. Pro-ration shall be calculated using calendar days.

You will continue to be eligible for benefits, which include medical, dental,
vision, Smart-Choice, Akorn's (401k) Retirement Savings Program, our Employee
Stock Purchase program, flexible spending account, an Employee Assistance
Program, life and disability insurance and Paid Time Off (PTO).

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Your employment at Akorn continues to be "at-will," which means that either you
or the company may terminate your employment at any time. Nothing in this letter
shall be interpreted as a contract of employment.

Akorn does commit, however, that in the event you are terminated without cause,
you will be entitled to one (1) year severance, not including car allowance,
paid biweekly at the base salary in effect at the time of your termination.
"Without cause" is held to mean that the reason for termination in not due to
significant performance failure on your part, gross negligence, theft or misuse
of company assets, willful violation of company policy or relevant legal statue
or conduct detrimental to the company.

Art, the entire Akorn team is very pleased that you will undertake this key role
and we look forward to working closely with you. Should you have any questions
about this offer or any related matter, please do not hesitate to contact me.

May I request that you sign and date below in acknowledgment of the contents of
this letter and return to Neill Shanahan, Vice-President Human Resources. I have
enclosed a second original for your records.

Respectfully,

Dan Bruhl, Director, Chairman of the
Compensation Committee and Member,
Governance Committee of the Board of Directors

CC: Jerry Ellis, Director
    Larry Adelman, AEG
    Neill Shanahan, VPHR<PAGE>
                                                                 EXHIBIT (10.42)

                           INDEMNIFICATION AGREEMENT

     THIS AGREEMENT is made this 15th day of May, 2003 between Akorn, Inc., a
Louisiana corporation (the "Company"), and Arthur S. Przybyl ("Indemnitee").

Recitals.

     A.  Indemnitee is an executive officer of the Company and in such capacity
is performing valuable services for the Company.

     B.  The Bylaws of the Company provide for the indemnification of its
officers and directors as permitted by the General Corporation Law of the State
of Louisiana (the "State Law"). Such Bylaws and the State Law specifically
provide that they are not exclusive, and thereby contemplate that contracts may
be entered into between the Company and members of its Board of Directors and
its executive officers with respect to indemnification of such directors and
officers.

     To induce Indemnitee to continue to serve as an executive officer of the
Company, the parties hererto hereby agree as follows:

     1.  Intentionally Omitted.

     2.  Additional Indemnity. Subject to Section 3 below, the Company further
agrees to hold harmless and indemnify the Indemnitee against any and all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action brought in the
right of the Company) to which Indemnitee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Indemnitee executes, submits to or files with the U.S. Securities and Exchange
Commission any certifications pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 or Rule 13(a)-14 promulgated under the Securities Exchange Act of 1934.

     3.  Limitations on Additional Indemnity. No indemnity pursuant to Section 2
of this Agreement shall be paid by the Company (a) to the extent Indemnitee is
indemnified pursuant to any policy of directors and officers liability insurance
purchased and maintained by the Company or (b) on account of Indemnitee's
conduct which is finally adjudged by a Court having jurisdiction in the matter
to have been knowingly fraudulent, deliberately dishonest, willful or
intentional misconduct; or (c) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification is
unlawful. In no event shall the additional indemnity provided herein apply to
any certifications executed, submitted to or filed with the U.S. Securities and
Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 or
Rule 13(a)-14 promulgated under the Securities Exchange Act of 1934 covering
periodic reports for any period throughout which the Chief Financial Officer of
the Company reports on financial and accounting matters directly to Indemnitee
(each, an "Excluded Period").

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     4.  Contribution.  If for any reason the indemnification provided for in
this Agreement is unavailable to the Indemnitee or is insufficient to hold
Indemnitee harmless as contemplated by this Agreement, then the Company shall
contribute to the amount paid or payable by the Company to any Indemnitee as a
result of such loss, claims, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the Company
and the Indemnitee, but also the relative fault of the past or present
employees, officers, directors and agents and contractors of the Company and the
Indemnitee, as well as any other relevant equitable considerations. Absent a
final decision by a Court having jurisdiction in the matter to the contrary, the
applicable contributions shall be 99% by the Company and 1% by the Indemnitee.

     5.  Continuation of Indemnity.  All agreements and obligations of the
Company contained herein shall continue during the period Indemnitee is a
director, officer, employee or agent of the Company and shall continue
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit, proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that
Indemnitee executed, submitted to, or filed a certification with the U.S.
Securities and Exchange Commission pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 or Rule 13(a)-14 promulgated under the Securities Exchange Act of
1934 other than for an Excluded Period.

     6.  Notification and Defense of Claim.  Promptly after receipt by
Indemnitee of notice of the commencement of any action, suit or proceeding,
Indemnitee shall, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company of the commencement thereof;
but the omission so to notify the Company will not relieve it from any liability
which it may have to Indemnitee otherwise than under this Agreement. With
respect to any such action, suit or proceeding as to which Indemnitee notifies
the Company of the commencement thereof:

         (a)  The Company shall be entitled to participate therein at its own
     expense;

         (b)  Except as otherwise provided below, to the extent that it may
     wish, the Company jointly with any other indemnifying party similarly
     notified will be entitled to assume the defense thereof, with counsel
     reasonably acceptable to Indemnitee. After notice from the Company to
     Indemnitee of its election so to assume the defense thereof, the Company
     will not be liable to Indemnitee under this Agreement for any legal or
     other expense subsequently incurred by Indemnitee in connection with the
     defense thereof other than reasonable costs of investigation or as
     otherwise provided below. Indemnitee shall have the right to employ
     counsel of his own choice in such action, suit or proceeding, provided that
     the fees and expenses of any such counsel incurred after notice from the
     Company of its assumption of the defense thereof shall be the sole
     obligation of Indemnitee unless (i) the employment of such counsel by
     Indemnitee has been authorized by the Company, (ii) Indemnitee shall have
     reasonably concluded that there may be a conflict of interest between the
     Company and Indemnitee in the conduct of the defense of such action, or
     (iii) the Company shall not have employed counsel to assume the defense of
     such action, in each of which cases the fees and expenses of such counsel
     shall be at the expense of the Company. The Company shall not be entitled
     to assume the defense
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     of any action, suit or proceeding brought by or on behalf of the Company or
     as to which Indemnitee shall have made the conclusion provided for in (ii)
     above; and

          (c)  The Company shall not be liable to indemnify Indemnitee under
     this Agreement for any amounts paid in settlement of any action or claim
     effected without its written consent. The Company shall not settle any
     action or claim in any manner which would impose any penalty or limitation
     on Indemnitee without Indemnitee's written consent. Neither the Company nor
     Indemnitee will unreasonably withhold, delay or condition their consent to
     any proposed settlement.

     7.  Advancement and Repayment of Expenses. Expenses incurred by Indemnitee
in defending any action, suit or proceeding referred to in Section 2 of this
Agreement shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the Indemnitee to repay such amount if it shall ultimately be determined in a
final decision by a Court having jurisdiction in the matter that the Indemnitee
is not entitled to indemnification by the Company for such expenses. Indemnitee
agrees to reimburse the Company in accordance with any such undertaking.

     8.  Enforcement.

         (a)  The Company expressly confirms and agrees that it has entered into
     this Agreement and assumed the obligations imposed on the Company hereby in
     order to induce Indemnitee to continue as an officer of the Company, and
     acknowledges that Indemnitee is relying upon this Agreement in continuing
     in such capacity.

         (b)  In the event Indemnitee is required to bring any action to enforce
     rights or to collect monies due under this Agreement and is successful in
     such action, the Company shall reimburse Indemnitee for all of Indemnitee's
     reasonable fees and expenses in bringing and pursuing such action
     (including attorneys' fees at any stage including on appeal).

     9.  Severability. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others. If any provisions hereof
shall be held to be invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof.

     10.  Governing Law; Binding Effect; Amendment.

          (a)  This Agreement shall be interpreted and enforced in accordance
     with the laws of the State of Louisiana.

          (b)  This Agreement shall be binding upon Indemnitee and upon the
     Company and its successors and assigns including any purchaser of all or
     substantially all of the assets of the Company, and shall inure to the
     benefit of Indemnitee, his heirs, personal representatives and assigns and
     to the benefit of the Company and its successors and assigns including any
     purchaser of all or substantially all of the assets of the Company.

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     (c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.

AKORN, INC.                         INDEMNITEE:

By: /s/ Bernard J. Pothast          /s/ Arthur S. Przybyl
   ---------------------------      ------------------------------
      Bernard J. Pothast               Arthur S. Przybyl
      Chief Financial Officer

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