Document:

exv10w58

 

EXHIBIT 10.58

November 15, 2004

Jeffrey A. Whitnell

5486 Ranier Drive

Lisle, IL 60532

Dear Jeffrey,

I am pleased to offer you the position of Senior Vice President, Finance and Chief Financial
Officer, effective November 15, 2004 and based at our headquarters in Buffalo Grove. Your salary
will be seven thousand three hundred seven dollars and sixty-nine cents ($7,307.69) bi-weekly and
you will continue to report to Arthur Przybyl, President and Chief Executive Officer.

You will continue to be eligible to participate in Akorn’s Performance Incentive Program, with a
potential annual bonus of thirty percent (30%), subject to plan details and Annual Board of
Directors approval. In addition, you will receive an additional grant of stock options to purchase
fifteen thousand (15,000) shares of Akorn, Inc., common stock, priced at closing price on the
effective date of your promotion. Stock options are subject to the terms of the plan and an
agreement, which each participant is required to sign.

Your benefits will, of course, remain unchanged. Your employment at Akorn will continue to be
“at-will”, which means that either you or the Company may terminate employment at any time.
Nothing in this letter should be interpreted as a contact of employment. All other provisions of
your original offer letter remain unchanged.

Jeffrey, the entire management team wishes you the best of luck in your new assignment. Should you
have any questions about this offer, or any matter related to your employment at Akorn, please do
not hesitate to contact me.

Please indicate your acceptance of this opportunity and your understanding of the provisions
outlined above by signing below and returning to my attention.

Respectfully,

/s/ Neill E. Shanahan

Neill E. Shanahan, Vice President

Human Resources

Cc: Karen Monson / Payroll

I acknowledge and understand the terms and conditions outlined above.

 

	 	 	 	 	 	 	 	 	 
	/s/ Jeffrey A. Whitnell
	 	 	 	 	 	November 15, 2004
	 
	Jeffrey A. Whitnell
	 	 	 	 	 	Dateexv10w59

 

EXHIBIT 10.59

AMENDED AND
RESTATED

AKORN, INC. 2003 STOCK
OPTION PLAN

(Amended and Restated Effective as of April 1, 2005)

 

Prepared by:

Luce, Forward, Hamilton & Scripps LLP

600 West Broadway, Suite 2600

San Diego, CA 92101

(619) 236-1414

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE 1 PURPOSE OF THE PLAN	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE 2 DEFINITIONS	 	 	1	 
	2.1

	 	Administrator
	 	 	1	 
	2.2

	 	Affiliate
	 	 	1	 
	2.3

	 	Applicable Laws
	 	 	1	 
	2.4

	 	Award
	 	 	1	 
	2.5

	 	Award Agreement
	 	 	1	 
	2.6

	 	Awarded Stock
	 	 	1	 
	2.7

	 	Beneficially Owned and Beneficial Ownership
	 	 	1	 
	2.8

	 	Board
	 	 	2	 
	2.9

	 	Change in Control
	 	 	2	 
	2.10

	 	Code
	 	 	2	 
	2.11

	 	Committee
	 	 	2	 
	2.12

	 	Common Stock
	 	 	2	 
	2.13

	 	Consultant
	 	 	2	 
	2.14

	 	Corporation
	 	 	3	 
	2.15

	 	Director
	 	 	3	 
	2.16

	 	Disability
	 	 	3	 
	2.17

	 	Effective Date
	 	 	3	 
	2.18

	 	Employee
	 	 	3	 
	2.19

	 	Exchange Act
	 	 	3	 
	2.20

	 	Exchange Program
	 	 	3	 
	2.21

	 	Fair Market Value
	 	 	3	 
	2.22

	 	Fiscal Year
	 	 	4	 
	2.23

	 	Incentive Stock Option
	 	 	4	 
	2.24

	 	Non-Qualified Stock Option
	 	 	4	 
	2.25

	 	Officer
	 	 	4	 
	2.26

	 	Option
	 	 	4	 
	2.27

	 	Other Stock Based Awards
	 	 	4	 
	2.28

	 	Outside Director
	 	 	4	 
	2.29

	 	Participant
	 	 	4	 
	2.30

	 	Performance Share
	 	 	4	 
	2.31

	 	Performance Unit
	 	 	4	 
	2.32

	 	Period of Restriction
	 	 	4	 
	2.33

	 	Plan
	 	 	4	 
	2.34

	 	Prior Plan
	 	 	5	 
	2.35

	 	Restricted Stock
	 	 	5	 
	2.36

	 	Restricted Stock Unit
	 	 	5	 
	2.37

	 	Rule 16b-3
	 	 	5	 
	2.38

	 	Section 16(b)
	 	 	5	 
	2.39

	 	Service Provider
	 	 	5	 
	2.40

	 	Share
	 	 	5	 
	2.41

	 	Stock Appreciation Right or SAR
	 	 	5	 

Amended and Restated Akorn , Inc. 2003 Stock Option Plan

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	2.42

	 	Unrestricted Stock
	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE 3 PLAN ADMINISTRATION	 	 	5	 
	3.1

	 	Procedure.
	 	 	5	 
	3.2

	 	Powers of the Administrator
	 	 	6	 
	3.3

	 	Effect of Administrator’s Decision
	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE 4 STOCK SUBJECT TO THE PLAN	 	 	7	 
	4.1

	 	Stock Subject to the Plan
	 	 	7	 
	4.2

	 	Lapsed Awards
	 	 	8	 
	4.3

	 	Adjustments for Changes in Capitalization and Similar Events
	 	 	8	 
	4.4

	 	Substitute Awards
	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE 5 PARTICIPATION	 	 	9	 
	5.1

	 	Eligibility
	 	 	9	 
	5.2

	 	Termination of Participation
	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE 6 STOCK OPTIONS	 	 	9	 
	6.1

	 	Option Grant
	 	 	9	 
	6.2

	 	Exercise Price
	 	 	10	 
	6.3

	 	Waiting Period and Exercise Dates
	 	 	10	 
	6.4

	 	Exercise of Option
	 	 	11	 
	6.5

	 	Form of Consideration
	 	 	12	 
	6.6

	 	Promissory Note
	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE 7 RESTRICTED STOCK	 	 	13	 
	7.1

	 	Grant of Restricted Stock
	 	 	13	 
	7.2

	 	Restricted Stock Agreement
	 	 	13	 
	7.3

	 	Transferability
	 	 	13	 
	7.4

	 	Other Restrictions
	 	 	13	 
	7.5

	 	Removal of Restrictions
	 	 	13	 
	7.6

	 	Voting Rights
	 	 	13	 
	7.7

	 	Dividends and Other Distributions
	 	 	13	 
	7.8

	 	Return of Restricted Stock to Corporation
	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE 8 UNRESTRICTED STOCK	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE 9 STOCK APPRECIATION RIGHTS	 	 	14	 
	9.1

	 	Grant of SARs
	 	 	14	 
	9.2

	 	Number of Shares
	 	 	14	 
	9.3

	 	Exercise Price and Other Terms
	 	 	14	 
	9.4

	 	SAR Agreement
	 	 	14	 
	9.5

	 	Expiration of SARs
	 	 	14	 
	9.6

	 	Payment of SAR Amount
	 	 	14	 
	9.7

	 	Buyout Provisions
	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE 10 PERFORMANCE UNITS AND PERFORMANCE SHARES	 	 	15	 
	10.1

	 	Grant of Performance Units/Shares
	 	 	15	 
	10.2

	 	Value of Performance Units/Shares
	 	 	15	 
	10.3

	 	Performance Objectives and Other Terms
	 	 	15	 

Amended and Restated Akorn, Inc. 2003 Stock Option Plan

ii

 

 

	 	 	 	 	 	 	 
	10.4

	 	Earning of Performance Units/Shares
	 	 	15	 
	10.5

	 	Form and Timing for Payment of Performance Units/Shares
	 	 	15	 
	10.6

	 	Cancellation of Performance Units/Shares
	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE 11 RESTRICTED STOCK UNITS	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE 12 OTHER STOCK BASED AWARDS	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE 13 DISSOLUTION OR LIQUIDATION; OR CHANGE IN CONTROL	 	 	16	 
	13.1

	 	Dissolution or Liquidation
	 	 	16	 
	13.2

	 	Change in Control
	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE 14 MISCELLANEOUS PROVISIONS	 	 	18	 
	14.1

	 	No Uniform Rights to Awards
	 	 	18	 
	14.2

	 	Share Certificates
	 	 	18	 
	14.3

	 	No Rights as a Service Provider
	 	 	18	 
	14.4

	 	No Rights as Shareholder
	 	 	18	 
	14.5

	 	No Trust or Fund Created
	 	 	18	 
	14.6

	 	No Fractional Shares
	 	 	19	 
	14.7

	 	Requirement of Consent and Notification of Election Under Code § 83(b) or
Similar Provision
	 	 	19	 
	14.8

	 	Requirement of Notification Upon Disqualifying Disposition Under Code §
421(b)
	 	 	19	 
	14.9

	 	Leaves of Absence
	 	 	19	 
	14.10

	 	Notices
	 	 	19	 
	14.11

	 	Non-Transferability of Awards
	 	 	19	 
	14.12

	 	Date of Grant
	 	 	20	 
	14.13

	 	Amendment and Termination of Plan
	 	 	20	 
	14.14

	 	Conditions Upon Issuance of Shares
	 	 	20	 
	14.15

	 	Severability
	 	 	20	 
	14.16

	 	Inability to Obtain Authority
	 	 	20	 
	14.17

	 	Shareholder Approval
	 	 	21	 
	14.18

	 	Governing Law
	 	 	21	 

Amended and Restated Akorn, Inc. 2003 Stock Option Plan

iii

 

 

AMENDED AND RESTATED

AKORN, INC. 2003 STOCK OPTION PLAN

ARTICLE 1

PURPOSE OF THE PLAN

     The purpose of this Amended and Restated Akorn, Inc. 2003 Stock Option Plan is to promote the
interests of Akorn, Inc. and its shareholders by: (i) attracting and retaining exceptional
Directors, Employees and Consultants (including prospective Directors, Employees and Consultants)
of the Corporation, and (ii) enabling such individuals to participate in the long-term growth and
financial success of the Corporation.

     Accordingly, the Plan provides for the granting of Incentive Stock Options, Non-Qualified
Stock Options, Restricted Stock Awards, Unrestricted Stock Awards, Restricted Stock Units, Stock
Appreciation Rights, Performance Unit Awards, Performance Share Awards, and Other Stock Based
Awards.

ARTICLE 2

DEFINITIONS

          2.1 “Administrator” means the Board, the Committee, or any Officer or Employee of the Corporation
to whom the Board or the Committee has delegated authority to administer the Plan.

          2.2 “Affiliate” means a “parent” or “subsidiary” corporation as defined in Code §§ 424(e) and (f),
or that the Board has designated as participating in the Plan.

          2.3 “Applicable Laws” means the requirements relating to the administration of equity-based awards
or equity compensation plans under U.S. federal and state laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted, and the applicable laws of any
foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

          2.4 “Award” means, individually or collectively, a grant under the Plan of Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock Awards, Unrestricted Stock Awards, Restricted Stock
Units, Stock Appreciation Rights, Performance Unit Awards, Performance Share Awards or Other Stock
Based Awards.

          2.5 “Award Agreement ” means the written or electronic agreement setting forth the terms and provisions applicable to
each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of
the Plan.

          2.6 “Awarded Stock” means the Common Stock subject to an Award.

          2.7 “Beneficially Owned” and “Beneficial Ownership” means as set forth in Rule 13d-3 of the
Exchange Act, provided that the exercise of voting rights by a nominee or proxy holder of the Board
in connection with a meeting or proposed action by shareholders of the Corporation shall not be
deemed to constitute such ownership and any ownership or voting power of the trustee under an
employee benefit plan of the Corporation shall not be deemed to constitute such ownership.

Amended and Restated Akorn, Inc. 2003 Stock Option Plan

1

 

          2.8 “Board” means the Board of Directors of the Corporation.

          2.9 “Change in Control” means, unless otherwise defined under Code § 409A and reflected in the
Award Agreement, the occurrence of any of the following events:

          (a) the shareholders of the Corporation approve a merger or consolidation of the
Corporation with any other entity such that after the transaction more than 50% of the
outstanding “Voting Securities” (defined as securities the holders of which are entitled to
vote for the election of Directors) of the surviving entity would be Beneficially Owned by
“Persons” (as such term is used in §§ 13(d) and 14(d) of the Exchange Act) who did not
Beneficially Own “Voting Securities” of the Corporation prior to the transaction;

          (b) Directors who were members of the Board immediately prior to a meeting of the
shareholders of the Corporation which meeting involves a contest for the election of at
least one directorship, do not constitute at least a majority of the Directors following
such meeting or election;

          (c) an acquisition, directly or indirectly, of more than 50% of the outstanding shares
of any class of “Voting Securities” of the Corporation by any “Person;”

          (d) the shareholders of the Corporation approve a sale of all or substantially all of
the assets of the Corporation or the liquidation of the Corporation; OR

          (e) there is a change, during any period of two consecutive years or less of a
majority of the Board as constituted as of the beginning of such period,
unless the election of each Director who is not a Director at the beginning of such
period was approved by a vote of at least two-thirds of the Directors then in office who
were Directors at the beginning of the period.

Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred in the
event the Corporation forms a holding company as a result of which the holders of the Corporation’s
“Voting Securities” immediately prior to the transaction, hold, in approximately the same relative
proportions as they held prior to the transaction, substantially all of the “Voting Securities” of
a holding company owning all of the Corporation’s “Voting Securities” after the completion of the
transaction.

          2.10 “Code” means the Internal Revenue Code of 1986, as amended, and the Treasury regulations
promulgated thereunder. Any reference to a section of the Code herein will be a reference to any
successor or amended section of the Code.

          2.11 “Committee” means a committee of Directors or other individuals satisfying Applicable Laws and
appointed by the Board in accordance with Article 3 of the Plan. If the Committee is comprised of
two Directors, both Directors shall be “non-employee directors” as that term is defined in Rule
16b-3.

          2.12 “Common Stock” means the Common Stock of the Corporation, or in the case of Awards not based
on Shares, the cash equivalent thereof.

          2.13 “Consultant” means any person, including an advisor, engaged by the Corporation or an
Affiliate to render services to such entity.

Amended and Restated Akorn, Inc. 2003 Stock Option Plan

2

 

          2.14 “Corporation” means Akorn, Inc., a Louisiana corporation.

          2.15 “Director” means a member of the Board.

          2.16 “Disability” means, unless otherwise defined under Code § 409A and reflected in the Award
Agreement, total and permanent disability as defined in Code § 22(e)(3), provided that in the case
of Awards other than Incentive Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

          2.17 “Effective Date” means, as amended and restated, as of April 1, 2005, provided that the Plan
as amended and restated is approved by the shareholders of the Corporation on or within 12 months
of such date. The Plan was originally made effective as of November 6, 2003.

          2.18 “Employee” means any person, including Officers and Directors, employed by the Corporation or
an Affiliate. Neither service as a Director nor payment of a director’s fee by the Corporation
will be sufficient to constitute “employment” by the Corporation.

          2.19 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          2.20 “Exchange Program” means a program under which (i) outstanding Awards are surrendered or
cancelled in exchange for Awards of the same type (which may have lower exercise prices and
different terms), Awards of a different type, and/or cash; or (ii) the exercise price of an
outstanding Award is reduced. The terms and conditions of any Exchange Program will be determined
by the Administrator in its sole discretion.

          2.21 “Fair Market Value” means, as of any date and unless the Administrator determines otherwise,
the value of Common Stock determined as follows:

          (a) If the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the American Stock Exchange, the NASDAQ
National Market or the NASDAQ SmallCap Market of the NASDAQ Stock Market, its Fair Market
Value will be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the day of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems reliable;

          (b) If the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common Stock will be
the mean between the high bid and low asked prices for the Common Stock for the day of
determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or

          (c) In the absence of an established market for the Common Stock, the Fair Market
Value will be determined in good faith by the Administrator.

Notwithstanding the preceding, for federal, state, and local income tax reporting purposes and for
such other purposes as the Administrator deems appropriate, the Fair Market Value shall be
determined by the Administrator in accordance with uniform and nondiscriminatory standards adopted
by it from time to time.

Amended and Restated Akorn, Inc. 2003 Stock Option Plan

3

 

          2.22 “Fiscal Year” means the fiscal year of the Corporation.

          2.23 “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Code § 422 and the Treasury regulations promulgated thereunder.

          2.24 “Non-Qualified Stock Option” means an Option that by its terms does not qualify or is not
intended to qualify as an Incentive Stock Option.

          2.25 “Officer” means a person who is an officer of the Corporation within the meaning of § 16 of
the Exchange Act and the rules and regulations promulgated thereunder.

          2.26 “Option” means an Incentive Stock Option or a Non-Qualified Stock Option or both, as the
context requires.

          2.27 “Other Stock Based Awards” means any other awards not specifically described in the Plan that
are valued in whole or in part by reference to, or are otherwise based on, Shares and are created
by the Administrator pursuant to Article 12.

          2.28 “Outside Director” means a Director who either: (i) is not a current Employee of the
Corporation or an “affiliated corporation” (within the meaning of the Treasury regulations
promulgated under Code § 162(m)), is not a former employee of the Corporation or an “affiliated
corporation” receiving compensation for prior services (other than benefits under a tax qualified
retirement plan), was not an officer of the Corporation or an “affiliated corporation” at any time,
and is not currently receiving direct or indirect remuneration (within the meaning of the Treasury
regulations promulgated under Code § 162(m)) from the Corporation or an “affiliated corporation”
for services in any capacity other than as a Director; or (ii) is otherwise considered an “outside
director” for purposes of Code § 162(m).

          2.29 “Participant” means the holder of an outstanding Award granted under the Plan.

          2.30 “Performance Share” means, pursuant to Article 10, an Award granted to a Service Provider
under which, upon the satisfaction of predetermined individual or Corporation performance goals
and/or objectives, shares of Common Stock are paid to the Participant.

          2.31 “Performance Unit” means, pursuant to Article 10, an Award granted to a Service Provider under
which, upon the satisfaction of predetermined individual or Corporation performance goals and/or
objectives, a cash payment shall be paid to the Participant based on the number of “units” awarded
to the Participant. For this purpose, the term “unit” means bookkeeping units, each of which
represents such monetary amount as shall be designated by the Administrator in each Award
Agreement.

          2.32 “Period of Restriction” means the period during which the transfer of Shares of Restricted
Stock are subject to restrictions. Such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events as determined by the
Administrator.

          2.33 “Plan” means this Amended and Restated Akorn, Inc. 2003 Stock Option Plan, as amended from
time to time. The Plan is an amendment and restatement of the Prior Plan. Any

Amended and Restated Akorn, Inc. 2003 Stock Option Plan

4

 

option awards previously made under the Prior Plan shall continue in full force and effect under the terms of the
Prior Plan and shall not be changed nor modified by any terms of this Plan.

          2.34 “Prior Plan” means the Akorn, Inc. 2003 Stock Option Plan.

          2.35 “Restricted Stock” means shares of Common Stock issued pursuant to a Restricted Stock Award
under the Plan or issued pursuant to the early exercise of an Option.

          2.36 “Restricted Stock Unit” means an Award that the Administrator permits to be paid in
installments or on a deferred basis, and that represents an unfunded and unsecured promise to
deliver Shares, cash, other securities, other Awards or other property in accordance with the terms of the
applicable Award Agreement.

          2.37 “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect
when discretion is being exercised with respect to the Plan.

          2.38 “Section 16(b)” means Section 16(b) of the Exchange Act.

          2.39 “Service Provider” means an Employee, Director or Consultant.

          2.40 “Share” means a share of the Common Stock, as adjusted in accordance with Section 4.3 and
Article 13 of the Plan.

          2.41 “Stock Appreciation Right” or “SAR” means an Award that is designated as a SAR, and represents
an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other
property equal in value to the excess, if any, of the Fair Market Value per Share over the exercise
price per Share of the SAR, subject to the terms of the applicable Award Agreement.

          2.42 “Unrestricted Stock” means as defined in Article 8 of the Plan.

ARTICLE 3

PLAN ADMINISTRATION

          3.1 Procedure.

          (a) Board’s Delegation. The Board may delegate administration of the Plan to a
Committee(s). If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers possessed by the Board, subject,
however, to such resolutions, not inconsistent with the provisions of this Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan. Different Committees with respect
to different groups of Service Providers may administer the Plan.

          (b) Code § 162(m). To the extent that the Administrator determines it to be desirable
and necessary to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Code § 162(m), the Plan will be
administered by a Committee of two or more Outside Directors.

Amended and Restated Akorn, Inc. 2003 Stock Option Plan

5

 

          (c) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.

          (d) Other Administration. Other than as provided above, the Plan will be administered
by: (i) the Board, or (ii) a Committee, which committee will be constituted to satisfy
Applicable Laws.

          (e) Delegation of Authority for Day-to-Day Administration. Except to the extent
prohibited by Applicable Law, the Administrator may delegate to one or more individuals the
day-to-day administration of the Plan and any of the functions assigned to it in this Plan.
Such delegation may be revoked at any time.

          3.2 Powers of the Administrator. Subject to the provisions of the Plan, and in the case of
a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator will have the authority, in its discretion:

          (a) To determine the Fair Market Value.

          (b) To select the Service Providers to whom Awards may be granted hereunder.

          (c) To determine the number of Shares to be covered by each Award granted hereunder.

          (d) To approve forms of agreement for use under the Plan.

          (e) To determine the terms and conditions, not inconsistent with the terms of the
Plan, of any Award granted hereunder. Such terms and conditions include, but are not
limited to, the exercise price, the time or times when Awards may be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of forfeiture or
repurchase restrictions, and any restriction or limitation regarding any Award or the
Shares relating thereto, based in each case on such factors as the Administrator will
determine in its sole discretion.

          (f) To reduce the exercise price of any Award to the then current Fair Market Value if
the Fair Market Value of the Common Stock covered by such Award shall have declined since
the date the Award was granted.

          (g) To institute an Exchange Program.

          (h) To construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan, and to establish, amend and revoke rules and regulations for its administration.

          (i) To prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the purpose of
satisfying applicable foreign laws and/or qualifying for preferred tax treatment under
applicable foreign tax laws.

Amended and Restated Akorn ,
Inc. 2003 Stock Option Plan

6

 

          (j) To modify or amend each Award (subject to Section 14.13(c) of the Plan), including
the discretionary authority to extend the post-termination exercise period of Awards longer
than is otherwise provided for in the Plan.

          (k) To allow Participants to satisfy withholding tax obligations by electing to have
the Corporation withhold from the Shares or cash to be issued upon exercise or vesting of
an Award that number of Shares or cash having a Fair Market Value equal to the minimum
amount required to be withheld. The Fair Market Value of any Shares to be withheld will be
determined on the date that the amount of tax to be withheld is to be determined. All
elections by a Participant to have Shares or cash withheld for this purpose will be made in
such form and under such conditions as the Administrator may deem necessary or advisable.

          (l) To authorize any person to execute on behalf of the Corporation any instrument
required to affect the grant of an Award previously granted by the Administrator.

          (m) To allow a Participant to defer the receipt of the payment of cash or the delivery
of Shares that would otherwise be due to such Participant under an Award.

          (n) To determine whether Awards will be settled in Shares, cash or in any combination
thereof.

          (o) To create Other Stock Based Awards for issuance under the Plan.

          (p) To establish a program whereby Service Providers designated by the Administrator
can reduce compensation otherwise payable in cash in exchange for Awards under the Plan.

          (q) To impose such restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resales by a Participant or other subsequent
transfers by the Participant of any Shares issued as a result of or under an Award,
including without limitation, (i) restrictions under an insider trading policy, and (ii)
restrictions as to the use of a specified brokerage firm for such resales or other
transfers. AND

          (r) To make all other determinations deemed necessary or advisable for administering
the Plan.

          3.3 Effect of Administrator’s Decision. The Administrator’s decisions, determinations and
interpretations will be final and binding on all Participants and any other holders of Awards.

ARTICLE 4

STOCK SUBJECT TO THE PLAN

          4.1 Stock Subject to the Plan. Subject to the provisions of this Article 4 and Article 13
of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 5,000,000,
of which the maximum number of Shares that may be delivered pursuant to Incentive Stock Options
granted under the Plan shall be 300,000. The Shares may be authorized

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and unissued, or reacquired
Common Stock. Shares shall not be deemed to have been issued pursuant to the Plan with respect to
any portion of an Award that is paid in cash. Upon payment in Shares pursuant to the exercise of
an Award, the number of Shares available for issuance under the Plan shall be reduced only by the
number of Shares actually issued in such payment. If a Participant pays the exercise price (or
purchase price, if applicable) of an Award through the tender of Shares, or if Shares are tendered
or withheld to satisfy any Corporation withholding obligations, the number of Shares so tendered or
withheld shall again be available for issuance pursuant to future Awards under the Plan.

          4.2 Lapsed Awards. If any outstanding Award expires or is terminated or canceled without
having been exercised or settled in full, or if Shares acquired pursuant to an Award subject to
forfeiture or repurchase are forfeited or repurchased by the Corporation, the Shares allocable to
the terminated portion of such Award or such forfeited or repurchased Shares shall again be
available for grant under the Plan.

          4.3 Adjustments for Changes in Capitalization and Similar Events. In the event the
Administrator determines that any dividend or other distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of
Shares or other securities of the Corporation, issuance of warrants or other rights to purchase
Shares or other securities of the Corporation, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Administrator in its discretion to
be appropriate or desirable, then the Administrator shall:

          (a) in such manner as it may deem equitable or desirable, adjust any or all of (i) the
number of Shares or other securities of the Corporation (or number and kind of other
securities or property) with respect to which Awards may be granted, including (1) the
aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan,
as provided in Section 4.1 of the Plan, and (2) the maximum number of Shares or other
securities of the Corporation (or number and kind of other securities or property) with respect to which Awards may be
granted to any Participant in any fiscal year of the Corporation, and (ii) the terms of any
outstanding Award, including (1) the number of Shares or other securities of the
Corporation (or number and kind of other securities or property) subject to outstanding
Awards or to which outstanding Awards relate, and (2) the exercise price with respect to
any Award; OR

          (b) if deemed appropriate or desirable, make provision for a cash payment to the
holder of an outstanding Award in consideration for the cancellation of such Award,
including, in the case of an outstanding Option or SAR, a cash payment to the holder of
such Option or SAR in consideration for the cancellation of such Option or SAR in an amount
equal to the excess, if any, of the Fair Market Value (as of a date specified by the
Administrator) of the Shares subject to such Option or SAR over the aggregate exercise
price of such Option or SAR (it being understood that, in such event, any Option or SAR
having a per Share exercise price equal to, or in excess of, the Fair Market Value of a
Share subject to such Option or SAR may be cancelled and terminated without any payment or
consideration therefore).

Any such adjustments shall be made by the Administrator in its absolute discretion, and the
decision of the Administrator shall be final, binding and conclusive. Any Shares issuable as a

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result of any such adjustment shall be rounded to the next lower whole Share; no fractional Shares
shall be issued. At all times the conversion of any convertible securities of the Corporation
shall not be treated as a “transaction not involving the receipt of consideration by the
Corporation.”

          4.4 Substitute Awards. Awards may, in the discretion of the Administrator, be granted
under the Plan in assumption of, or in substitution for, outstanding awards previously granted by
the Corporation and any Affiliate or a company acquired by the Corporation or with which the
Corporation combines (“Substitute Awards”). The number of Shares underlying any Substitute Awards
shall be counted against the aggregate number of Shares available for Awards under the Plan;
provided, however, that Substitute Awards issued in connection with the assumption of, or in
substitution for, outstanding awards previously granted by an entity that is acquired by the
Corporation or its Affiliate through a merger or acquisition shall not be counted against the
aggregate number of Shares available for Awards under the Plan; provided further, however, that
Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding
stock options intended to qualify for special tax treatment under Code §§ 421 and 422 that were
previously granted by an entity that is acquired by the Corporation or an Affiliate through a
merger or acquisition shall be counted against the aggregate number of Shares available for
Incentive Stock Options under the Plan.

ARTICLE 5

PARTICIPATION

          5.1 Eligibility. Any Director, Employee or Consultant (including any prospective Director,
Employee or Consultant) of the Corporation and any Affiliate shall be eligible to be designated a
Participant in the Plan for purposes of receiving Awards. However, Incentive Stock Options may be
granted only to Employees.

          5.2 Termination of Participation. If a Participant is no longer a Service Provider due to
a termination for “Cause,” then all Awards granted to the Participant shall expire upon the earlier
of: (i) the date of the occurrence giving rise to such termination, or (ii) the natural expiration
of the Award according to its underlying terms. Thereafter, the Participant shall have no rights
with respect to any Awards under the Plan.

          (a) Defining “Cause.” For purposes of the Plan, “Cause” shall mean a Participant’s
personal dishonesty; misconduct; breach of fiduciary duty; incompetence; intentional
failure to perform stated obligations; willful violation of any law, rule, regulation or
final cease and desist order; or any material breach of any provision of this Plan, Award
Agreement, or any employment agreement.

ARTICLE 6

STOCK OPTIONS

          6.1 Option Grant. Subject to the provisions of the Plan, the Administrator shall have sole
and plenary authority to determine the Participants to whom Options shall be granted, the number of
Shares to be covered by each Option, whether the Option will be an Incentive Stock Option or a
Non-Qualified Stock Option and the conditions and limitations applicable to the vesting and
exercise of the Option. However, no Participant shall be granted more than 500,000 Options in any
calendar year. In the case of Incentive Stock Options, the terms and conditions of

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such grants
shall be subject to and comply with such rules as may be prescribed by Code § 422 and any
regulations related thereto, as may be amended from time to time. All Options granted under the
Plan shall be Non-Qualified Stock Options unless the applicable Award Agreement expressly states
that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an
Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not
qualify as an Incentive Stock Option, then, to the extent of such non-qualification, such Option
(or portion thereof) shall be regarded as a Non-Qualified Stock Option appropriately granted under
the Plan, provided that such Option (or portion thereof) otherwise complies with the Plan’s
requirements relating to Non-Qualified Stock Options.

          (a) Term of Option. The term of each Option will be stated in the Award Agreement. In
the case of an Incentive Stock Option, the term will be 10
years from the date of grant or such shorter term as may be provided in the Award
Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who,
at the time the Incentive Stock Option is granted, owns stock representing more than 10% of
the total combined voting power of all classes of stock of the Corporation or any
Affiliate, the term of the Incentive Stock Option will be five years from the date of grant
or such shorter term as may be provided in the Award Agreement.

          (b) $100,000 Limitation for Incentive Stock Options. Each Option will be designated
in the Award Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option.
However, notwithstanding such designation, to the extent the aggregate Fair Market Value
of the Shares with respect to which Incentive Stock Options are exercisable for the first
time by the Participant during any calendar year (under all plans of the Corporation and
any Affiliate) exceeds $100,000, such Options will be treated as Non-Qualified Stock
Options. For purposes of this Section 6.1(b), Incentive Stock Options will be taken into
account in the order in which they were granted. The Fair Market Value of the Shares will
be determined as of the time the Option with respect to such Shares is granted.

          6.2 Exercise Price. Except as otherwise established by the Administrator at the time an
Option is granted and set forth in the applicable Award Agreement, the exercise price of each Share
covered by an Option shall be not less than 100% of the Fair Market Value of such Share (determined
as of the date the Option is granted); provided, however, that in the case of an Incentive Stock
Option granted to an Employee who, at the time of the grant of such Option, owns stock representing
more than 10% of the voting power of all classes of stock of the Corporation and any Affiliate, the
per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date
of the grant. Options are intended to qualify as “qualified performance-based compensation” under
Code § 162(m).

          Notwithstanding the foregoing, Options may be granted with an exercise price of less than 100%
of the Fair Market Value per Share on the date of grant if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the provisions of Code §
424(a) (involving a corporate reorganization).

          6.3 Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator
will fix the period within which the Option may be exercised and will determine any conditions that
must be satisfied before the Option may be exercised.

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6.4 Exercise of Option.

          (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder
will be exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set
forth in the Award Agreement. An Option may not be exercised for a fraction of a
Share.

          An Option will be deemed exercised when the Corporation receives: (i) written or
electronic notice of exercise (in accordance with the Award Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with respect to which
the Option is exercised. Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Award Agreement and the Plan.
Shares issued upon exercise of an Option will be issued in the name of the Participant or,
if requested by the Participant, in the name of the Participant and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books of the
Corporation or of a duly authorized transfer agent of the Corporation), no right to vote or
receive dividends or any other rights as a shareholder will exist with respect to the
Awarded Stock, notwithstanding the exercise of the Option. The Corporation will issue (or
cause to be issued) such Shares promptly after the Option is exercised. No adjustment will
be made for a dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Articles 4 and 13 of the Plan or the applicable
Award Agreement.

     Exercising an Option in any manner will decrease the number of Shares thereafter available for
sale under the Option, by the number of Shares as to which the Option is exercised.

     (b) Termination of Relationship as Service Provider. If a Participant ceases to be a
Service Provider, other than upon the Participant’s death or Disability, the Participant
may exercise his or her Option within such period of time as is specified in the Award
Agreement to the extent that the Option is vested on the date of termination (but in no
event later than the expiration of the term of such Option as set forth in the Award
Agreement). In the absence of a specified time in the Award Agreement, the Option will
remain exercisable for three months following the Participant’s termination.

     (c) Disability of Participant. If a Participant ceases to be a Service Provider as a
result of the Participant’s Disability, the Participant may exercise his or her Option
within such period of time as is specified in the Award Agreement to the extent the Option
is vested on the date of termination (but in no event later than the expiration of the term
of such Option as set forth in the Award Agreement). In the absence of a specified time in
the Award Agreement, the Option will remain exercisable for 12 months following the
Participant’s termination.

     (d) Death of Participant. If a Participant dies while a Service Provider, the Option
may be exercised following the Participant’s death within such period of time as is
specified in the Award Agreement to the extent that the Option is vested on the date of
death (but in no event may the option be exercised
later than the expiration of the term of such Option as set forth in the Award
Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been
designated prior to Participant’s death in a form acceptable to the Administrator. If no
such beneficiary has been designated by the

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Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the
Option is transferred pursuant to the Participant’s will or in accordance with the laws of
descent and distribution. In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for 12 months following Participant’s death.

          (e) Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares an Option previously granted based on such terms and conditions
as the Administrator shall establish and communicate to the Participant at the time that
such offer is made.

          (f) Reversion to Plan. Unless otherwise provided by the Administrator, if on the date
of termination, Disability or death as provided in Sections 6.4(b), (c), and (d) of the
Plan, Participant is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option will immediately revert to the Plan following the
Participant’s termination, Disability or death. If the Option is not so exercised within
the time specified herein, the Option will terminate, and the Shares covered by such Option
will revert to the Plan.

          6.5 Form of Consideration. The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator will determine the acceptable form of consideration at
the time of grant. To the extent permitted by Applicable Laws, consideration may consist entirely
of:

(a) cash;

(b) check;

(c) promissory note (subject to Section 6.6);

(d) other Shares which meet the conditions established by the Administrator to avoid
adverse accounting consequences (as determined by the Administrator);

(e) consideration received by the Corporation under a cashless exercise program
implemented by the Corporation in connection with the Plan;

(f) a reduction in the amount of any Corporation liability to the Participant,
including any liability attributable to the Participant’s participation in any
Corporation-sponsored deferred compensation program or arrangement;

(g) any combination of the foregoing methods of payment; or

(h) such other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.

          6.6 Promissory Note. Where applicable and subject to the requirements of Applicable Law,
payment of all or part of the purchase price of an Award may be made by delivery of a full recourse
promissory note (“Promissory Note”). The Promissory Note shall be executed by the Participant,
made payable to the Corporation and bear interest at such rate as the

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Administrator shall determine, but in no case less than the minimum rate which will not cause under the Code: (i)
imputed interest, (ii) original issue discount, or (iii) any other similar result. Unless
otherwise determined by the Administrator, interest on the Promissory Note shall be payable in
quarterly installments on March 31, June 30, September 30, and December 31 of each calendar year.
A Promissory Note shall contain such other terms and conditions as may be determined by the
Administrator; provided, however, that the full principal amount of the Promissory Note and all
unpaid interest accrued thereon shall be due not later than five years from the date of exercise.
The Corporation may obtain from the Participant a security interest in all Awards issued to the
Participant under the Plan for the purpose of securing payment under the Promissory Note and may
retain possession of, where applicable, the Share certificates in order to perfect its security
interest.

ARTICLE 7

RESTRICTED STOCK

          7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service
Providers in such amounts as the Administrator, in its sole discretion, will determine.

          7.2 Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an
Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such
other terms and conditions as the Administrator will determine in its sole discretion. Unless the
Administrator determines otherwise, Shares of Restricted Stock will be held by the Corporation as
escrow agent until the restrictions on such Shares have lapsed.

          7.3 Transferability. Except as provided in this Article 7, Shares of Restricted Stock may
not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the end of
the applicable Period of Restriction.

          7.4 Other Restrictions The Administrator, in its sole discretion, may impose such other restrictions on Shares of
Restricted Stock as it may deem advisable or appropriate.

          7.5 Removal of Restrictions. Except as otherwise provided in this Article 7, Shares of
Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from
escrow as soon as practicable after the last day of the Period of Restriction. The Administrator,
in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

          7.6 Voting Rights. During the Period of Restriction, Service Providers holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise.

          7.7 Dividends and Other Distributions. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock will be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided in the Award Agreement.
If any such dividends or distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect
to which they were paid.

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          7.8 Return of Restricted Stock to Corporation. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the
Corporation and again will become available for grant under the Plan.

ARTICLE 8

UNRESTRICTED STOCK

     Pursuant to the terms of the applicable Award Agreement, a Service Provider may be awarded (or
sold at a discount) shares of Common Stock that are not subject to a Period of Restriction, in
consideration for past services rendered thereby to the Corporation and any Affiliate or for other
valid consideration.

ARTICLE 9

STOCK APPRECIATION RIGHTS

          9.1 Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be granted
to Service Providers at any time and from time to time as will be determined by the Administrator,
in its sole discretion.

          9.2 Number of Shares. The Administrator will have sole discretion to determine the number
of SARs granted to any Service Provider.

          9.3 Exercise Price and Other Terms. The Administrator, subject to the provisions of the
Plan, will have sole discretion to determine the terms and conditions of SARs granted under the
Plan.

          9.4 SAR Agreement. Each SAR grant will be evidenced by an Award Agreement that will
specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms
and conditions as the Administrator, in its sole discretion, will determine.

          9.5 Expiration of SARs. A SAR granted under the Plan will expire upon the date determined
by the Administrator, in its sole discretion, and as set forth in the Award Agreement.
Notwithstanding the foregoing, the rules of Sections 6.4(b), (c) and (d) will also apply to SARs.

          9.6 Payment of SAR Amount. Upon exercise of a SAR, a Participant will be entitled to
receive payment from the Corporation an amount determined by multiplying: (i) the difference
between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the
Administrator, the payment upon SAR exercise may be in cash, in Shares of equivalent value, other
securities, other Awards, other property or a combination of any of the foregoing.

          9.7 Buyout Provisions. The Administrator may at any time offer to buy out for a payment in
cash or Shares a SAR previously granted based on such terms and conditions as the Administrator
shall establish and communicate to the Participant at the time that such offer is made.

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Inc. 2003 Stock Option Plan

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ARTICLE 10

PERFORMANCE UNITS AND PERFORMANCE SHARES

          10.1 Grant of Performance Units/Shares. Subject to the terms and conditions of the Plan,
Performance Units and Performance Shares may be granted to Service Providers at any time and from
time to time, as will be determined by the Administrator, in its sole discretion. The
Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted
to each Participant.

          10.2 Value of Performance Units/Shares. Each Performance Unit will have an initial value
that is established by the Administrator on or before the date of grant. Each Performance Share
will have an initial value equal to the Fair Market Value of a Share on the date of grant.

          10.3 Performance Objectives and Other Terms. The Administrator will set performance
objectives in its discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Units/Shares that will be paid out to the Service Providers.
The time period during which the performance objectives must be met will be called the “Performance
Period.” Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will
specify the “Performance Period,” and such other terms and conditions as the Administrator, in its
sole discretion, will determine. The Administrator may set performance objectives based upon the
achievement of Corporation-wide, divisional, or individual goals, applicable federal or state
securities laws, or any other basis determined by the Administrator in its discretion.

          10.4 Earning of Performance Units/Shares. After the applicable “Performance Period” has
ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of
Performance Units/Shares earned by the Participant over the “Performance Period,” to be determined
as a function of the extent to which the corresponding performance objectives have been achieved.
After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce
or waive any performance objectives for such Performance Unit/Share.

          10.5 Form and Timing for Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares will be made as soon after the expiration of the applicable Performance
Period at the time determined by the Administrator. The Administrator, in its sole discretion, may
pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair
Market Value equal to the value of the earned Performance Units/Shares at the close of the
applicable Performance Period) or in a combination thereof.

          10.6 Cancellation of Performance Units/Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Corporation,
and again will be available for grant under the Plan.

ARTICLE 11

RESTRICTED STOCK UNITS

     Restricted Stock Units are Awards consisting of Restricted Stock, Performance Shares and/or
Performance Units that the Administrator, in its sole discretion permits to be paid out in
installments or on a deferred basis, in accordance with rules and procedures established by the
Administrator and in conformance with Code § 409A.

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Inc. 2003 Stock Option Plan

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ARTICLE 12

OTHER STOCK BASED AWARDS

     Other Stock Based Awards may be granted either alone, in addition to, or in tandem with, other
Awards granted under the Plan and/or cash awards made outside of the Plan. The Administrator shall
have authority to determine the Service Providers to whom and the time or times at which Other
Stock Based Awards shall be made, the amount of such Other Stock Based Awards, and all other
conditions of the Other Stock Based Awards including any dividend and/or voting rights.

ARTICLE 13

DISSOLUTION OR LIQUIDATION; OR CHANGE IN CONTROL

13.1 Dissolution or Liquidation. In the event of the proposed dissolution or liquidation
of the Corporation, the Administrator will notify each Participant as soon as practicable prior to
the effective date of such proposed transaction. The Administrator in its discretion may provide
for a Participant to have the right to exercise his or her Award, to the extent applicable, until
10 days prior to such transaction as to all of the Awarded Stock covered thereby, including Shares
as to which the Award would not otherwise be exercisable. In addition, the Administrator may
provide that any Corporation repurchase option or forfeiture rights applicable to any Award shall
lapse 100%, and that any Award vesting shall accelerate 100%, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the extent it has not been
previously exercised or vested, an Award will terminate immediately prior to the consummation of
such proposed action.

13.2 Change in Control.

     (a) Options and SARs. In the event of a Change in Control, each outstanding Option
and SAR shall be assumed or an equivalent option or SAR substituted by the successor
corporation or Affiliate of the successor corporation. With respect to Options and SARs
granted to an Outside Director that are assumed or substituted for, if immediately prior to
or after the Change in Control the Participant’s status as a Director or a director of the
successor corporation, as applicable, is terminated other than upon a voluntary resignation
by the Participant, then the Participant shall fully vest in and have the right to exercise
such Options and SARs as to all of the Awarded Stock, including Shares as to which it would
not otherwise be vested or exercisable. Unless otherwise determined by the Administrator,
in the event that the successor corporation
refuses to assume or substitute for the Option or SAR, the Participant shall fully
vest in and have the right to exercise the Option or SAR as to all of the Awarded Stock,
including Shares as to which it would not otherwise be vested or exercisable. If an Option
or SAR is not assumed or substituted in the event of a Change in Control, the Administrator
shall notify the Participant in writing or electronically that the Option or SAR shall be
exercisable for a period of up to 15 days from the date of such notice, and the Option or
SAR shall terminate upon the expiration of such period. For the purposes of this paragraph,
the Option or SAR shall be considered assumed if, following the Change in Control, the
option or stock appreciation right confers the right to purchase or receive, for each Share
of Awarded Stock subject to the Option or SAR immediately prior to the Change in Control,
the consideration (whether stock, cash, or other securities or property) received in the
Change in Control by holders of Common Stock for each Share held on the

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effective date of the transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in Control is not solely common
stock of the successor corporation or its Affiliate, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received upon the
exercise of the Option or SAR, for each Share of Awarded Stock subject to the Option or
SAR, to be solely common stock of the successor corporation or its Affiliate equal in fair
market value to the per share consideration received by holders of Common Stock in the
Change in Control. Notwithstanding anything herein to the contrary, an Award that vests, is
earned or paid-out upon the satisfaction of one or more performance goals will not be
considered assumed if the Corporation or its successor modifies any of such performance
goals without the Participant’s consent; provided, however, a modification to such
performance goals only to reflect the successor corporation’s post-Change in Control
corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

          (b) Restricted Stock, Unrestricted Stock, Performance Shares, Performance Units,
Restricted Stock Units, and Other Stock Based Awards. In the event of a Change in Control,
each outstanding Restricted Stock, Unrestricted Stock, Performance Share, Performance Unit,
Other Stock Based Award and Restricted Stock Unit awards shall be assumed or an equivalent
Restricted Stock, Unrestricted Stock, Performance Share, Performance Unit, Other Stock
Based Award and Restricted Stock Unit award substituted by the successor corporation or an
Affiliate of the successor corporation. With respect to Awards granted to an Outside
Director that are assumed or substituted for, if immediately prior to or after the Change
in Control the Participant’s status as a Director or a director of the successor
corporation, as applicable, is terminated other than upon a voluntary resignation by the
Participant, then the Participant shall fully vest in such Awards, including Shares as to
which it would not otherwise be vested. Unless determined otherwise by the Administrator,
in the event that the successor corporation refuses to assume or substitute for the
Restricted Stock, Unrestricted Stock, Performance Share, Performance Unit, Other Stock
Based Award or Restricted Stock Unit award, the Participant shall fully vest in the
Restricted Stock, Unrestricted Stock,
Performance Share, Performance Unit, Other Stock Based Award or Restricted Stock Unit
including as to Shares which would not otherwise be vested. For the purposes of this
paragraph, a Restricted Stock, Unrestricted Stock, Performance Share, Performance Unit,
Other Stock Based Award and Restricted Stock Unit award shall be considered assumed if
following the Change in Control, the award confers the right to purchase or receive, for
each Share subject to the Award immediately prior to the Change in Control, the
consideration (whether stock, cash, or other securities or property) received in the Change
in Control by holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in Control is not solely common
stock of the successor corporation or its Affiliate, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received, for
each Share and each unit/right to acquire a Share subject to the Award, to be solely common
stock of the successor corporation or its Affiliate equal in fair market value to the per
share consideration received by holders of Common Stock in the Change in Control.
Notwithstanding anything herein to the contrary, an Award that vests, is earned or paid-

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out upon the satisfaction of one or more performance goals will not be considered assumed if
the Corporation or its successor modifies any of such performance goals without the
Participant’s consent; provided, however, a modification to such performance goals only to
reflect the successor corporation’s post-Change in Control corporate structure will not be
deemed to invalidate an otherwise valid Award assumption.

ARTICLE 14

MISCELLANEOUS PROVISIONS

      14.1 No Uniform Rights to Awards. The Corporation has no obligation to uniformly treat
Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the
Administrator’s determinations and interpretations with respect thereto need not be the same with
respect to each Participant and may be made selectively among Participants, whether or not such
Participants are similarly situated.

      14.2 Share Certificates. All certificates for Shares or other securities of the
Corporation or Affiliate delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions as the Administrator may deem
advisable under the Plan, the applicable Award Agreement or the rules, regulations and other
requirements of the SEC, the NYSE or any other stock exchange or quotation system upon which such
Shares or other securities are then listed or reported and any applicable Federal or state laws,
and the Administrator may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

      14.3 No Rights as a Service Provider. Neither the Plan nor any Award shall confer upon a
Participant any right with respect to continuing his or her relationship as a Service Provider, nor
shall they interfere in any way with the right of the Participant or the right of the Corporation
or its Affiliate to terminate such relationship at any time, with or without cause.

      14.4 No Rights as Shareholder. No Participant or holder or beneficiary of any Award shall
have any rights as a shareholder with respect to any Shares to be distributed under the Plan until
he or she has become the holder of such Shares. In connection with each grant of Restricted Stock,
except as provided in the applicable Award Agreement, the Participant shall not be entitled to the
rights of a shareholder in respect of such Restricted Shares. Except as otherwise provided in
Section 4.3 or the applicable Award Agreement, no adjustments shall be made for dividends or
distributions on (whether ordinary or extraordinary, and whether in cash, Shares, other securities
or other property), or other events relating to, Shares subject to an Award for which the record
date is prior to the date such Shares are delivered.

      14.5 No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation
or Affiliate, on one hand, and a Participant or any other person, on the other. To the extent that
any person acquires a right to receive payments from the Corporation or Affiliate pursuant to an
Award, such right shall be no greater than the right of any unsecured general creditor of the
Corporation or Affiliate.

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          14.6 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to
the Plan or any Award, and the Administrator shall determine whether cash, other securities or
other property shall be paid or transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be cancelled, terminated or otherwise eliminated.

          14.7 Requirement of Consent and Notification of Election Under Code § 83(b) or Similar
Provision. No election under Code § 83(b) (to include in gross income in the year of transfer
the amounts specified in Code § 83(b)) or under a similar provision of law may be made unless
expressly permitted by the terms of the applicable Award Agreement or by action of the
Administrator in writing prior to the making of such election. If an Award recipient, in
connection with the acquisition of Shares under the Plan or otherwise, is expressly permitted under
the terms of the applicable Award Agreement or by such Administrator action to make such an
election and the Participant makes the election, the Participant shall notify the Administrator of
such election within 10 days of filing notice of the election with the IRS or other governmental
authority, in addition to any filing and notification required pursuant to regulations issued under Code § 83(b) or other applicable
provision.

          14.8 Requirement of Notification Upon Disqualifying Disposition Under Code § 421(b). If
any Participant shall make any disposition of Shares delivered pursuant to the exercise of an
Incentive Stock Option under the circumstances described in Code § 421(b) (relating to certain
disqualifying dispositions) or any successor provision of the Code, such Participant shall notify
the Corporation of such disposition within 10 days of such disposition.

          14.9 Leaves of Absence. Unless the Administrator provides otherwise, vesting of Awards
granted hereunder will be suspended during any unpaid leave of absence and will resume on the date
the Participant returns to work on a regular schedule as determined by the Corporation; provided,
however, that no vesting credit will be awarded for the time vesting has been suspended during such
leave of absence. A Service Provider will not cease to be an Employee in the case of (i) any leave
of absence approved by the Corporation or (ii) transfers between locations of the Corporation or
between the Corporation or its Affiliate. For purposes of Incentive Stock Options, no such leave
may exceed 3 months, unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the Corporation is not
so guaranteed, then 6 months from the first day of such leave any Incentive Stock Option held by
the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax
purposes as a Non-Qualified Stock Option.

          14.10 Notices. Any written notice to the Corporation required by any provisions of the
Plan shall be addressed to the Secretary of the Corporation and shall be effective when received.

          14.11 Non-Transferability of Awards. Other than pursuant to a domestic relations order
(within the meaning of Rule 16a-12 promulgated under the Exchange Act) and unless determined
otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of descent or
distribution, and may be exercised, during the lifetime of the Participant, only by the
Participant. If the Administrator makes an Award transferable, such Award will contain such
additional terms and conditions as the Administrator deems appropriate.

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          14.12 Date of Grant. The date of grant of an Award will be, for all purposes, the date on
which the Administrator makes the determination granting such Award, or such other later date as is
determined by the Administrator. Notice of the determination will be provided to each Participant
within a reasonable time after the date of such grant.

          14.13 Amendment and Termination of Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan. Unless sooner terminated, this Plan shall terminate on November 6,
2013, the date that is 10 years from the date the Plan was originally adopted by the Board
or approved by the shareholders of the Corporation, whichever was earlier.

          (b) Shareholder Approval. The Corporation will obtain shareholder approval of any
Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

          (c) Effect of Amendment or Termination. Subject to Section 14.15 of the Plan, no
amendment, alteration, suspension or termination of the Plan will impair the rights of any
Participant, unless mutually agreed upon between the Participant and the Administrator,
which agreement must be in writing and signed by the Participant and the Corporation.
Termination of the Plan will not affect the Administrator’s ability to exercise the powers
granted to it hereunder with respect to Awards granted under the Plan prior to the date of
such termination.

          14.14 Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares will comply
with Applicable Laws and will be further subject to the approval of counsel for the
Corporation with respect to such compliance.

          (b) Investment Representations. As a condition to the exercise or receipt of an
Award, the Corporation may require the person exercising or receiving such Award to
represent and warrant at the time of any such exercise or receipt that the Shares are being
purchased only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Corporation, such a representation is
required.

          14.15 Severability. Notwithstanding any contrary provision of the Plan or an Award to the
contrary, if any one or more of the provisions (or any part thereof) of this Plan or the Awards
shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so
as to make it valid, legal and enforceable, and the validity, legality and enforceability of the
remaining provisions (or any part thereof) of the Plan or Award, as applicable, shall not in any
way be affected or impaired thereby.

          14.16 Inability to Obtain Authority. The inability of the Corporation to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Corporation’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, will relieve the Corporation of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority will not have been
obtained.

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          14.17 Shareholder Approval. The Plan will be subject to approval by the shareholders of
the Corporation within 12 months after the date the Plan is adopted. Such shareholder approval will
be obtained in the manner and to the degree required under Applicable Laws, and is effective as of
the Effective Date.

          14.18 Governing Law. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of Illinois, without giving effect to the conflict of laws provisions thereof.

Adopted by the Board of Directors: April 1, 2005

Approved by the Shareholders:                                        , 2005

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