Document:

exv10w13

 

EXHIBIT 10.13

AMENDMENT TO BY-PRODUCTS MARKETING AGREEMENT

     AMENDMENT TO BY-PRODUCTS MARKETING AGREEMENT (“Amendment”), dated
July 6, 2004, by and among CONAGRA TRADE GROUP PTY LTD,
CONAGRA TRADE GROUP, INC. and AUSTRALIA MEAT HOLDINGS PTY LIMITED.

RECITALS:

     WHEREAS, the parties hereto are parties to that certain
By-Products Marketing
Agreement dated October 8, 2003 (the “Agreement”);

     WHEREAS, the parties desire to amend the Agreement to extend its
Term.

AGREEMENT:

     NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:

1. Term and Termination. Clause 2.1 of the Agreement is hereby amended
by replacing Clause 2.1 with the following:

     “2.1 Term

This Agreement commences on the Commencement Date and expires
on 31 May 2009 (the “Term”). However the Term shall
automatically extend for additional one (1) year periods
thereafter unless any party gives written notice to the other
parties at least ninety (90) days prior to the then scheduled
end of the Term that it desires the Term not be extended.”

2. Defined Terms. Capitalized terms used but not otherwise defined
herein shall have the respective meanings ascribed to such terms in the
Agreement, except that the definition of “Term” in clause 1.1 of the
Agreement is replaced with the following:

“Term means the term of this Agreement in clause 2 as extended from
time to time in accordance with clause 2.”

3. Effect on Agreement. Except as specifically amended hereby, all
terms, provisions and conditions of the Agreement shall remain in full
force and effect. To the extent the terms of the Agreement are
inconsistent with the terms set forth in this Amendment, this Amendment
shall control and the terms of the Agreement shall be deemed amended
mutatis mutandis to reflect this Amendment.

4. Amendments. This Amendment shall not be amended except in a writing
signed by all the parties hereto.

 

 

5. Counterparts. This Amendment may be executed and delivered
(including by facsimile transmission) in one or more counterparts. All
counterparts together will be taken to constitute one instrument.

6. Governing Law. This Amendment is governed by the laws of Queensland.

Executed in Omaha, Nebraska U.S.A.

Executed
by ConAgra Trade Group Pty Ltd:

	 	 	 
	/s/ GREGORY A. HECKMAN

	 	/s/ JAY D. BOLDING
	
 

	 	
 
	Director Signature

	 	Director/Secretary Signature
	 
	 	 
	Gregory A. Heckman

	 	Jay D. Bolding
	
 

	 	
 
	Print Name

	 	Print Name
	 
	 	 
	Executed in Omaha, Nebraska U.S.A.

	 	 
	 
	 	 
	Executed by ConAgra Trade Group, Inc.:

	 	 
	 
	 	 
	/s/ DEBRA L. KEITH

	 	/s/ JOHN F. GEHRING
	
 

	 	
 
	Director Signature

	 	Director/Secretary Signature
	 
	 	 
	Debra L. Keith

	 	John F. Gehring
	
 

	 	
 
	Print Name

	 	Print Name
	 
	 	 
	Executed in Ipswich, Queensland, Australia

	 	 
	 
	 	 
	Executed by Australia Meat Holdings Pty Limited:

	 	 
	 
	 	 
	/s/ PETER WHITE

	 	/s/ KEN FLANDERS
	
 

	 	
 
	Director Signature

	 	Secretary Signature
	 
	 	 
	Peter White

	 	Ken Flanders
	
 

	 	
 
	Print Name

	 	Print Name

 2exv4w1

 

EXHIBIT 4.1

WARRANT PURCHASE AND REGISTRATION AGREEMENT

DATED JUNE 18, 2003

BETWEEN AKORN, INC.

AND AEG PARTNERS LLC

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE I AUTHORIZATION AND CLOSING	 	 	1	 
	 
	 	1.1	 	Authorization of the Warrants	 	 	1	 
	 
	 	1.2	 	Issuance of the Warrants	 	 	2	 
	 
	 	1.3	 	The Closing	 	 	2	 
	ARTICLE II COVENANTS	 	 	2	 
	 
	 	2.1	 	Compliance with Agreements	 	 	2	 
	 
	 	2.2	 	Current Public Information	 	 	2	 
	 
	 	2.3	 	Reservation of Common Stock	 	 	3	 
	 
	 	2.4	 	Adjustment to Warrant	 	 	3	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	3	 
	 
	 	3.1	 	Organization, Corporate Power and Licenses	 	 	3	 
	 
	 	3.2	 	Capital Stock and Related Matters	 	 	3	 
	 
	 	3.3	 	Authorization; No Breach	 	 	4	 
	 
	 	3.4	 	SEC Documents; Absence of Undisclosed Liabilities	 	 	4	 
	 
	 	3.5	 	Absence of Certain Changes	 	 	5	 
	 
	 	3.6	 	Litigation, etc	 	 	6	 
	 
	 	3.7	 	Governmental Consent, etc	 	 	6	 
	 
	 	3.8	 	Compliance with Laws	 	 	6	 
	 
	 	3.9	 	FDA Compliance	 	 	6	 
	 
	 	3.10	 	Knowledge	 	 	8	 
	ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER	 	 	8	 
	 
	 	4.1	 	Future Disposition	 	 	8	 
	 
	 	4.2	 	Power and Authority	 	 	8	 
	 
	 	4.3	 	Purchaser's Investment Representations	 	 	8	 
	ARTICLE V TRANSFER RESTRICTIONS	 	 	9	 
	ARTICLE VI REGISTRATION	 	 	9	 
	 
	 	6.1	 	Demand Registrations	 	 	9	 
	 
	 	6.2	 	Piggyback Registrations	 	 	12	 
	 
	 	6.3	 	Holdback Agreements	 	 	13	 
	 
	 	6.4	 	Registration Procedures	 	 	14	 
	 
	 	6.5	 	Registration Expenses	 	 	15	 
	 
	 	6.6	 	Indemnification	 	 	16	 
	 
	 	6.7	 	Participation in Underwritten Registrations	 	 	18	 
	ARTICLE VII DEFINITIONS	 	 	18	 

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	ARTICLE VIII MISCELLANEOUS	 	 	20	 
	 
	 	8.1	 	Consent to Amendments	 	 	20	 
	 
	 	8.2	 	Survival of Representations and Warranties	 	 	20	 
	 
	 	8.3	 	Successors and Assigns	 	 	20	 
	 
	 	8.4	 	Severability	 	 	21	 
	 
	 	8.5	 	Counterparts	 	 	21	 
	 
	 	8.6	 	Descriptive Headings; Interpretation	 	 	21	 
	 
	 	8.7	 	Governing Law	 	 	21	 
	 
	 	8.8	 	Notices	 	 	21	 
	 
	 	8.9	 	No Strict Construction	 	 	22	 

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WARRANT PURCHASE AND REGISTRATION AGREEMENT

     THIS WARRANT PURCHASE AND REGISTRATION AGREEMENT (as amended, supplemented
or otherwise modified from time to time, this “Agreement”) is made as of June
18, 2003 by and between Akorn, Inc., a Louisiana corporation (the “Company”),
and AEG Partners LLC, an Illinois limited liability company (“AEG” or the
“Purchaser”). Except as otherwise indicated herein, capitalized terms used
herein are defined in Article VII hereof.

W I T N E S S E T H:

     WHEREAS, the Company entered into an Engagement Letter with AEG, dated as
of September 26, 2002 (the “Engagement Letter”), pursuant to which the Company
engaged AEG to act as the Company’s Chief Restructuring Officer and to assist
the Company in certain restructuring efforts;

     WHEREAS, the Engagement Letter provides for a success fee (the “Success
Fee”) to be paid to AEG in connection with its services to the Company;

     WHEREAS, AEG and the Company entered into a letter agreement, dated
November 21, 2002 (the “November 21 Letter Agreement”), to clarify certain
matters related to the Engagement Letter, including AEG’s re-engagement, and to
establish the terms of the Success Fee;

     WHEREAS, the November 21 Letter Agreement provides that the Success Fee
shall be comprised of a cash fee and a grant of warrants (the “Warrants”) to
purchase the Company’s common stock, par value $0.01 per share (the “Common
Stock”), pursuant to the terms of such Warrants;

     WHEREAS, pursuant to the November 21 Letter Agreement, the Company has
agreed, upon the terms and conditions set forth herein, to register for sale by
the Purchaser the shares of Common Stock received by the Purchaser upon
exercise of the Warrants; and

     WHEREAS, the Company and the Purchaser desire to set forth certain
agreements related to the Warrants and the Common Stock issuable upon exercise
thereof.

     NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

AUTHORIZATION AND CLOSING

     1.1 Authorization of the Warrants. The Company has authorized the
issuance to Purchaser of stock purchase warrants to acquire in the aggregate
initially up to 1,250,000 shares of the Company’s Common Stock.

 

 

     1.2 Issuance of the Warrants. At the Closing, as partial consideration
for AEG’s provision of services to the Company under the Engagement Letter, the
Company shall issue to Purchaser the warrant certificate attached as Exhibit A
hereto (the “Warrant Certificate”) representing Warrants to purchase in the
aggregate initially up to 1,250,000 shares of the Company’s Common Stock at the
Exercise Price (as defined in the Warrant Certificate). The number of shares
of Common Stock to be acquired and the Exercise Price thereof may be adjusted
from time to time as set forth in the Warrant Certificate.

     1.3 The Closing. The closing of this Agreement and the issuance of the
Warrant Certificate (the “Closing”) shall take place at the offices of Kirkland
& Ellis, 200 East Randolph Drive, Chicago, Illinois at 10:00 a.m. on the first
business day following such time as all three of the following conditions shall
have been satisfied (or waived by the Company) (the “Effective Date”):

     (i) the Pre-Negotiation Agreement, dated as of September 20, 2002 (the
“Pre-Negotiation Agreement”), by and among the Company, Akorn (New Jersey),
Inc., an Illinois corporation and the Northern Trust Company, an Illinois
corporation, shall have been terminated;

     (ii) the Company shall have entered into a new or restated multi-year
credit facility that refinances amounts owing under, or restates, the Credit
Agreement (as defined in the Pre-Negotiation Agreement); and

     (iii) AEG’s engagement pursuant to the Engagement Letter shall have been
terminated; provided that the condition in this clause (iii) 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
Pre-Negotiation Agreement has terminated.

At the Closing, the Company shall deliver to the Purchaser the Warrant
Certificate, registered in Purchaser’s or its nominee’s name. If the Closing
has not occurred, this Agreement shall terminate, and the Closing shall not
occur, upon the occurrence of a Forbearance Termination Date (as defined in the
Pre-Negotiation Agreement).

ARTICLE II

COVENANTS

     2.1 Compliance with Agreements. Each of the parties shall perform and
observe all of its obligations set forth herein and in the Warrant Certificate.

     2.2 Current Public Information. Except as otherwise may be agreed with
the Purchaser, at all times the Company shall file all reports required to be
filed by it under the Securities Act and the Securities
Exchange Act and the rules and regulations adopted by the SEC thereunder
and shall take such further action as any holder or holders of Restricted
Securities may reasonably request, all to the extent required to enable such
holders to sell Restricted Securities pursuant to (i) Rule 144 adopted by the
SEC under the Securities Act (as such rule may be amended from time to time) or
any similar rule or regulation hereafter adopted by the SEC or (ii) so long as
the Purchaser may exercise Demand Registration Rights under Article VI,

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a
registration statement on Form S-2 or S-3 or any similar registration form
hereafter adopted by the SEC. Upon request, the Company shall deliver to any
holder of Restricted Securities a written statement as to whether it has
complied with such requirements.

     2.3 Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock issuable upon the exercise of all outstanding
Warrants. All shares of Common Stock which are so issuable shall, when issued,
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges (other than any created by the holder thereof). The
Company shall take all such actions as may be necessary to ensure that all such
shares of Common Stock may be so issued without violation of any applicable law
or governmental regulation or any requirement of any domestic securities
exchange upon which shares of Common Stock may be listed (except for official
notice of issuance which shall be immediately transmitted by the Company upon
issuance).

     2.4 Adjustment to Warrant. If, at any time prior to the Closing and the
issuance of the Warrant, any of the events described in Sections 2A, 2B, 2C or
2D of the Warrant occurs, the Company shall modify the Warrant prior to the
issuance thereof in accordance with the provisions of such sections to reflect
such event as if it had occurred following the Closing and the issuance of the
Warrant.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     As a material inducement to the Purchaser to enter into this Agreement,
the Company hereby represents and warrants that:

     3.1 Organization, Corporate Power and Licenses. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of Louisiana and is qualified to do business in every jurisdiction in
which its ownership of property or the conduct of its business requires it to
be so qualified, except for those jurisdictions where the failure to so qualify
has not had and would not reasonably be expected to have a Material Adverse
Effect. Except as described in the FDA Compliance Schedule, the Company
possesses all requisite corporate power and authority and all material
licenses, permits and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently proposed
to be conducted and to carry out the
transactions contemplated by this Agreement. The Company is not in
violation of any provision of its Articles of Incorporation or By-Laws.

     3.2 Capital Stock and Related Matters.

     (a) The authorized capital stock of the Company consists of (a) 5,000,000
shares of preferred stock, none of which are outstanding (b) 40,000,000 shares
of Common Stock, of which 19,729,759 shares were issued and outstanding as of
May 12, 2003 and 1,250,000 shares shall be reserved as of the Closing for
issuance upon exercise of the Warrants.

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As of the Closing, neither the Company
nor any Subsidiary of the Company has outstanding any stock or securities
convertible into or exchangeable for any shares of its capital stock or
containing any profit participation features, nor does it have outstanding any
rights or options to subscribe for or to purchase its capital stock or any
stock or securities convertible into or exchangeable for its capital stock or
any stock appreciation rights or phantom stock plans, except for the Warrants
and except as set forth on the attached Capitalization Schedule. Neither the
Company nor any Subsidiary of the Company is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any warrants, options or other rights to acquire
its capital stock, except as set forth on the Capitalization Schedule. All of
the outstanding shares of the Company’s capital stock have been validly issued
and are fully paid and nonassessable.

     (b) There are no statutory or, to the best of the Company’s knowledge,
contractual stockholders’ preemptive rights or rights of refusal with respect
to the issuance of the Warrants hereunder or the issuance of the Common Stock
upon exercise of the Warrants. The Company has not violated any applicable
federal or state securities laws in connection with the offer, sale and
issuance of the Warrants hereunder and the issuance of the Common Stock upon
exercise of the Warrants does not require registration under the Securities Act
or any applicable state securities laws.

     3.3 Authorization; No Breach. The execution, delivery and performance of this
Agreement and the Warrant Certificate and all other agreements and instruments
contemplated hereby to which the Company is a party, have been duly authorized
by the Company. This Agreement and the Warrant Certificate, and all other
agreements and instruments contemplated hereby to which the Company is a party
each constitute a valid and binding obligation of the Company, enforceable in
accordance with its terms, except as may be limited by laws governing
creditors’ rights generally with respect to third parties. The execution and
delivery by the Company of this Agreement and the Warrant Certificate, and all
other agreements and instruments contemplated hereby to which the Company is a
party, the offering and issuance of the Warrants hereunder, the issuance of the
Common Stock upon exercise of the Warrants, and the fulfillment of and
compliance with the respective terms hereof and thereof by the Company, do not
and shall not (i) conflict with or result in a breach of the terms, conditions
or provisions of, (ii) constitute a default under, (iii) result in the creation
of any lien, security interest, charge or encumbrance upon the Company’s or any
of the
Company’s Subsidiary’s capital stock or assets pursuant to, (iv) give any third
party the right to modify, terminate or accelerate any obligation under, (v)
result in a violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any
court or administrative or governmental body or agency pursuant to, the charter
or bylaws of the Company or of any Subsidiary of the Company, or any law,
statute, rule or regulation to which the Company or any Subsidiary of the
Company is subject, or any agreement, instrument, order, judgment or decree to
which the Company or any Subsidiary of the Company is subject.

     3.4 SEC Documents; Absence of Undisclosed Liabilities. Except as set
forth on the attached Public Filings Schedule, the Company has filed all
required reports, schedules, forms, statements and other documents with the SEC
since December 31, 1999 (as such documents have been amended prior to the date
hereof, the “SEC Documents”), and the

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Company has not received any request from
the SEC to file any amendment or supplement to any of the reports described
above. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Securities
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and, to the Company’s
knowledge, none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in the SEC Documents have been
prepared in accordance with GAAP (except, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and, to the
Company’s knowledge, fairly present the consolidated financial position of the
Company and the consolidated Subsidiaries of the Company as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and the absence of footnotes). Except as set forth
in the SEC Documents and for liabilities incurred in the ordinary course of
business after the date of the most recently filed SEC Document, to the
Company’s knowledge, neither the Company nor any of the Company’s Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company and its consolidated Subsidiaries or in the notes
thereto.

     3.5 Absence of Certain Changes. Except as disclosed in the SEC Documents
filed and publicly available prior to the date of this Agreement (the “Filed
SEC Documents”), since the date of the most recent audited financial statements
included in the Filed SEC Documents, the Company has conducted its business
only in the ordinary course, and there has not been:

     (a) Any change, effect or development which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect, other than those
described in the Litigation Schedule, the Compliance Schedule and the FDA
Compliance Schedule;

     (b) Any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company’s capital stock;

     (c) Any split, combination or reclassification of any of the Company’s
capital stock or any issuance or the authorization of any issuance of any other
securities in exchange or in substitution for shares of the Company’s capital
stock;

     (d) Any change in accounting methods, principles or practices by the
Company or any Subsidiary, except required by GAAP.

     3.6 Litigation, etc. Except as set forth on the attached Litigation
Schedule, there are no actions, suits, proceedings, orders, investigations or
claims pending against or affecting the Company or any Subsidiary (or to the
Company’s knowledge, pending or threatened against or

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affecting any of the
officers, directors or employees of the Company and its Subsidiaries with
respect to their businesses or proposed business activities) at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality (including, without limitation, any actions, suit,
proceedings or investigations with respect to the transactions contemplated by
this Agreement); neither the Company nor any Subsidiary is subject to any
governmental investigations or inquiries (including, without limitation,
inquiries as to the qualification to hold or receive any license or permit).
Neither the Company nor any Subsidiary is subject to any judgment, order or
decree of any court or other governmental agency.

     3.7 Governmental Consent, etc. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements or instruments contemplated
hereby, or the consummation by the Company of any other transactions
contemplated hereby or thereby, except as expressly contemplated herein or in
the exhibits hereto.

     3.8 Compliance with Laws. Except as set forth on the attached Compliance
Schedule, neither the Company nor any Subsidiary has violated any law or any
governmental regulation or requirement, which violation has had or would
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any Subsidiary has received notice of any such violation.

     3.9 FDA Compliance. Except as set forth on the attached FDA Compliance Schedule, and
without limiting in any way the generality of Section 3.8 above, to the
Company’s knowledge:

     (a) The Company (including for purposes of this Section 3.10, its
Subsidiaries, licensees, and any other persons or companies owning or holding
the FDA approvals for the Company’s Products) is not in receipt of notice of,
and is not subject to, any adverse inspection, finding of deficiency, finding
of non-compliance, compelled or voluntary recall, investigation, penalty, fine,
sanction, assessment, audit, request for corrective or remedial action, or
other compliance or enforcement action, in each case relating to the products
made, developed, licensed, under development, leased, sold, used or serviced by
the Company (“Products”) or to the Company’s facilities in which the Products
are manufactured, used or handled, by the United States Food and Drug
Administration (“FDA”) or by any other federal, state, local or foreign
authority having or asserting responsibility for the regulation of medical
device products (“other authorities”);

     (b) The Company has obtained all necessary approvals, registrations and
authorizations from, has made all necessary and appropriate applications and
other submissions to, and has prepared and maintained all records, studies and
other documentation needed to satisfy and demonstrate compliance with the
requirements of, the FDA and other authorities for its current and past
business activities relating to the Products, including but not limited to any
necessary Pre-Market Notifications (“510(k)s”), Pre-Market Approvals (“PMAs”),
investigational

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device exemptions (“IDEs”), line extension letters relating
individual Products to existing 510(k)s, requirements for custom medical
devices, studies of safety and efficacy, claims relating to benefits or
performance, design and engineering specifications and modifications, device
history records, certificates of export, and Medical Device Reports (“MDRs”).

     (c) Neither the Company nor any person acting on its behalf has made any
material false statement in, or material omission from the applications,
approvals, notifications, reports, and other submissions to the FDA and other
authorities or in or from other records and documentation prepared or
maintained to comply with the requirements of the FDA or other authorities
relating to the Products, including but not limited to any 510(k)s, PMAs, IDEs,
line extension letters, documentation of safety and efficacy, studies or
documentation of equivalency, documentation of eligibility for treatment as a
pre-1976 device, documentation of eligibility for treatment as a custom medical
device, certificates of export, and MDRs;

     (d) No third party (excluding the Purchaser), consultant, counsel,
contractor, investigator, or researcher retained by the Company or otherwise
acting on behalf of the Company has made any material false statement in, or
material omission from, any report, study or other documentation prepared in
conjunction with the applications, approvals, notifications, reports or records
submitted to or prepared for the FDA or other authorities relating to the
Products, nor has any such third party, consultant, counsel, contractor,
investigator or researcher failed to comply with any testing requirements or
study protocols in connection with work performed on behalf of the Company or
work otherwise relied upon by the Company in submissions and documentation for
the FDA or other authorities;

     (e) Neither the Company nor any third party or agent for the Company has
made or offered any payment, gratuity or other thing of value that is
prohibited by any law or regulation to personnel of the FDA or other
authorities in connection with the approval or regulatory status of the
Products or the facilities in which the Products are manufactured, used or
handled;

     (f) The Company is in compliance in all material respects with all
applicable regulations and requirements of the FDA and other authorities
relating to every Product, including but not limited to any applicable Good
Manufacturing Practices, requirements for product approval, requirements for
demonstrating and maintaining the safety and efficacy of the Products, export
requirements, certificates of export, requirements for investigating customer
complaints and inquiries, labeling requirements and protocols, shipping
requirements, record-keeping and reporting requirements, monitoring
requirements, packaging or repackaging requirements, laboratory controls,
sterility requirements, inventory controls, and storage and warehousing
procedures; and

     (g) There are no facts which would indicate that the FDA or other
authorities have or will prohibit or materially restrict the marketing, sale,
manufacture, license or use in the United States of any Product or the
operation or use of any facility in which the Products are made. In addition,
the Company has not received any notification, written or verbal, which remains
unresolved as of the date of this Agreement, from the FDA, FDA personnel or
other authorities, or any other information indicating that any Product is
unsafe or ineffective for its

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intended use, and the Company knows of no product
or process which the FDA has prohibited from being marketed or used in the
United States which in function, composition or operation is substantially
similar to any Product.

     3.10 Knowledge. As used in this Article III, the term “to the Company’s
knowledge” shall mean the actual knowledge or awareness of senior management of
the Company.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER

     As a material inducement to the Company to enter into this Agreement and
issue the Warrants, the Purchaser represents, warrants and covenants that:

     4.1 Future Disposition. The Purchaser will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any
of the Warrants or Registrable Shares, except in compliance with the provisions
hereof and the Securities Act, the Securities Exchange Act and the rules and
regulations promulgated thereunder.

     4.2 Power and Authority. All action on the part of the Purchaser necessary for the
authorization, execution, delivery and performance by the Purchaser of this
Agreement, the Warrant Certificate and the agreements referred to herein and
therein, and the consummation of the transactions contemplated hereby and
thereby, has been taken. This Agreement and such other agreements each
constitute a valid and binding obligation of the Purchaser, enforceable in
accordance with its terms, except as may be limited by the equitable remedies
of specific performance, other equitable remedies or laws governing creditors’
rights generally. The consummation of the transactions contemplated by this
Agreement, the Warrant Certificate and such other agreements is permitted under
the governing documents of the Purchaser and any laws, regulations or other
restrictions applicable to investments made by the Purchaser.

     4.3 Purchaser’s Investment Representations. Purchaser hereby represents
that it is acquiring the Restricted Securities purchased hereunder or acquired
pursuant to the Warrant Certificate for its own account with the present
intention of holding such securities for purposes of investment, and that it
has no intention of selling such securities in a public distribution in
violation of the federal securities laws or any applicable state securities
laws; provided that nothing contained herein will prevent Purchaser and
subsequent holders of Restricted Securities from transferring such securities
in compliance with the provisions of Article V hereof. Each certificate for
Restricted Securities will be imprinted with a legend in substantially the
following form:

“The securities represented by this certificate were originally
issued on                     , and have not been registered under the
Securities Act of 1933, as amended. The transfer of the
securities represented by this certificate is subject to the
conditions specified in the Warrant Purchase and Registration
Agreement, dated as of June 18, 2003 between the issuer (the
“Company”) and certain investors, and the Company reserves the
right to refuse the transfer of such

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securities until such
conditions have been fulfilled with respect to such transfer. A
copy of such conditions will be furnished by the Company to the
holder hereof upon written request and without charge.”

ARTICLE V

TRANSFER RESTRICTIONS

     5.1 Restricted Securities are transferable only pursuant to (a) public
offerings registered under the Securities Act, (b) Rule 144 of the SEC (or any
similar rule then in force) if such rule is available and (c) subject to the
conditions specified in subparagraph (ii) below, any other legally available
means of transfer.

     5.2 In connection with the transfer of any Restricted Securities (other
than a transfer described in clause (a) or (b) of Section 5.1 above), the
holder thereof will deliver written notice to the Company describing in
reasonable detail the transfer or proposed transfer, together with an opinion
of Kirkland & Ellis or other counsel which (to the Company’s reasonable
satisfaction) is knowledgeable in securities law matters to the effect that
such transfer of Restricted Securities may be effected without registration of
such Restricted Securities under
the Securities Act. In addition, if the holder of the Restricted
Securities delivers to the Company an opinion of Kirkland & Ellis or such other
counsel that no subsequent transfer of such Restricted Securities will require
registration under the Securities Act, the Company will promptly upon such
contemplated transfer deliver new certificates for such Restricted Securities
which do not bear the Securities Act legend set forth in Section 4.3. If the
Company is not required to deliver new certificates for such Restricted
Securities not bearing such legend, the holder thereof will not transfer the
same until the prospective transferee has confirmed to the Company in writing
its agreement to be bound by the conditions contained in this paragraph and
Sections 4.3 and 4.1.

ARTICLE VI

REGISTRATION

     6.1 Required Registration.

     (a) Filing of Registration Statement. Subject to the provisions set forth
in Section 6.5 below, upon written notice from Purchaser to the Company at any
time after the Date of Issuance (as defined in the Warrant Certificate), the
Company shall file with the Securities and Exchange Commission a registration
statement under the Securities Act on Form S-1 or, if available, Form S-2 or
S-3 pursuant to Rule 415 under the Securities Act (the “Required Registration”)
within 90 days after receipt of such notice from Purchaser; provided, that the
Company shall not be required to file the Required Registration at any time
that the Purchaser has initiated its Company-paid Long-Form Registration and
such Registration remains effective. The Company shall use its best efforts to
cause the Required Registration to be declared effective under the Securities
Act as soon as practical after filing, and once effective, the Company shall
cause such Required Registration to remain effective for a period ending on the
earlier of (i) the second anniversary of the Date of Issuance, (ii) the date on
which all Registrable Shares have

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been sold pursuant to the Required
Registration and (iii) the date as of which there are no longer any Registrable
Shares in existence.

     (b) Holdback Agreement. If Purchaser notifies the Company in writing that
it intends to effect the sale of Registrable Shares pursuant to Section 6.1(a)
above (a “Sale”), the Company shall not effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for its equity securities, during the 90-day period beginning on
the date such notice of a Sale is received by the Company.

     (c) Limitations on Additional Securities. Except for piggyback rights
granted pursuant to the Registration Rights Agreement dated as of July 12,
2002, between the Company and The John N. Kapoor Trust Dated September 20, 1989
(the “Kapoor Agreement”), in no event shall the Company include any securities
under the Required Registration which are not Registrable Shares without the
prior written consent of the Purchaser, and any such securities
permitted to be sold under the Required Registration shall only be sold in
connection with a Sale. If the Required Registration is an underwritten
offering and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Shares and securities requested to be
included in such registration pursuant to the Kapoor Agreement and, if
permitted hereunder, other securities requested to be included in such Sale
exceeds the number of Registrable Shares and other securities, if any, which
can be sold in such offering without adversely affecting the marketability of
the offering, the Company shall include in such Sale prior to the inclusion of
any securities which are not Registrable Shares or securities requested to be
included in such registration pursuant to the Kapoor Agreement the number of
Registrable Shares requested to be included which in the opinion of such
underwriters can be sold without adversely affecting the marketability of the
offering.

     (d) Selection of Underwriter. The Purchaser shall have the right to
retain and select an investment banker(s) and manager(s) to administer the
Required Registration, subject to the Company’s approval which shall not be
unreasonably withheld.

     (e) Required Registration Expenses. As further provided in Section 6.6
below, all reasonable Registration Expenses incurred in connection with the
Required Registration (whether incurred by the Company or Purchaser) shall be
borne by Purchaser; provided, that Purchaser shall only be required to pay its
pro rata share of Registration Expenses (based upon the number of Registrable
Shares and other securities included in such registration).

     6.2 Demand Registrations

     (a) Requests for Registration. At any time after the Closing, the
Purchaser may request registration under the Securities Act of all or any
portion of its Registrable Shares on Form S-1 or any similar long-form
registration (“Long-Form Registrations”), or on Form S-2 or S-3 or any similar
short-form registration (“Short-Form Registrations”), if available. All
registrations requested pursuant to this Section 6.2(a) are referred to herein
as “Demand Registrations.” Each request for a Demand Registration shall
specify the approximate number of Registrable Shares requested to be registered
(provided that, for a Long-Form Registration, at least 50% of the Registrable
Securities must be included), the anticipated per share price range

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for such
offering and the intended method of distribution. The Company shall include in
such registration (and in all related registrations and qualifications under
state blue sky laws or in compliance with other registration requirements and
in any related underwriting) all Registrable Shares with respect to which the
Company has received written requests for inclusion therein.

     (b) Long-Form Registrations. The Purchaser shall be entitled to request
one (1) Long-Form Registration in which the Company shall pay all Registration
Expenses (“Company-paid Long-Form Registration”); provided, that the Purchaser
shall not be entitled to initiate the Company-paid Long-Form Registration at
any time that the Required Registration remains effective. A registration
shall not count as the Company-paid Long-Form Registration until it has become
effective, and no Long-Form Registration shall count as the Company-paid
Long-Form Registration unless the Purchaser is able to register and sell at
least 75% of the Registrable Shares requested to be included in such
registration; provided that in any event the Company shall pay all Registration
Expenses in connection with any registration initiated as a Company-paid
Long-Form Registration whether or not it has become effective and whether or
not such registration has counted as the permitted Company-paid Long-Form
Registration.

     (c) Short-Form Registrations. In addition to the Long-Form Registration
provided pursuant to Section 6.1(b), the Purchaser shall be entitled to request
two (2) Short-Form Registrations annually in which the Company shall pay all
Registration Expenses. Demand Registrations shall be Short-Form Registrations
whenever the Company is permitted to use any applicable short form. The
Company shall use its reasonable best efforts to make Short-Form Registrations
on Form S-3 available for the sale of Registrable Shares.

     (d) Priority on Demand Registrations. Except for piggyback rights granted
pursuant to the Kapoor Agreement which rights shall be subject to the priority
set forth in this Section 6.1(d), the Company shall not include in any Demand
Registration any securities which are not Registrable Shares without the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld. If a Demand Registration is an underwritten offering and the
managing underwriters advise the Company in writing that in their opinion the
number of Registrable Shares and securities requested to be included in such
registration pursuant to the Kapoor Agreement and, if permitted hereunder,
other securities requested to be included in such offering exceeds the number
of Registrable Shares or securities requested to be included in such
registration pursuant to the Kapoor Agreement and other securities, if any,
which can be sold therein without adversely affecting the marketability of the
offering, the Company shall include in such registration (i) first, the
Registrable Shares requested to be included in such registration and the
securities requested to be included in such registration pursuant to the Kapoor
Agreement, pro rata among the holders on the basis of the number of shares that
each holder has requested to be included in such registration and (ii) second,
other securities requested to be included in such registration or that the
Company proposes to sell.

     (e) Restrictions on Demand Registrations. The Company shall not be obligated
to effect any Demand Registration within 180 days after the effective date of a
previous Demand Registration or a previous registration in which the Purchaser
was given piggyback rights pursuant to Section 6.2 and in which there was no
reduction in the number of Registrable Shares requested to be included. The
Company may postpone for up to 90 days the filing or the

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effectiveness of a
registration statement for a Demand Registration that has not yet been filed or
declared effective or cause sales of Registrable Securities by the Purchaser to
cease during such 90-day period if the Company’s board of directors determines
in its reasonable good faith judgment that such Demand Registration would
(because of the existence of any acquisition or corporate reorganization or
other transaction,
financing activity or other development involving the Company) be materially
detrimental to the Company; provided that in such event, the Purchaser shall be
entitled to withdraw such request and, if such request is withdrawn, such
Demand Registration shall not count as one of the permitted Demand
Registrations hereunder and the Company shall pay all Registration Expenses in
connection with such registration. The Company may delay a Demand Registration
hereunder only once in any twelve-month period.

     (f) Selection of Underwriters. The Purchaser shall have the right to
select the investment banker(s) and manager(s) to administer the offering
initiated as a Demand Registration, subject to the Company’s approval which
shall not be unreasonably withheld or delayed.

     6.3 Piggyback Registrations.

     (a) Right to Piggyback. Whenever the Company proposes to register any of
its securities under the Securities Act (other than pursuant to a Demand
Registration or a registration on Form S-4 or Form S-8 or any successor or
similar forms) and the registration form to be used may be used for the
registration of Registrable Shares (a “Piggyback Registration”), whether or not
for sale for its own account, the Company shall give prompt written notice to
the Purchaser of its intention to effect such a registration and, subject to
the terms of Sections 6.3(c) and 6.3(d) hereof, shall include in such
registration (and in all related registrations or qualifications under blue sky
laws or in compliance with other registration requirements and in any related
underwriting) all Registrable Shares with respect to which the Company has
received written requests for inclusion therein within fifteen (15) days after
the receipt of the Company’s notice.

     (b) Piggyback Expenses. If the Company proposes to sell any of its
securities in a Piggyback Registration, the Registration Expenses of the
Purchaser in connection with such Piggyback Registration shall be paid by the
Company. In all other Piggyback Registrations, the Purchaser shall pay its
share of the Registration Expenses of such registration as provided in Section
6.6 hereof.

     (c) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
securities requested to be included in such registration pursuant to the Kapoor
Agreement, (iii) third, Registrable Shares requested to be included in such
registration, and (iv) fourth, other securities requested to be included in
such registration.

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     (d) Priority on Secondary Registrations. If a Piggyback Registration is
an underwritten secondary registration on behalf of holders of the Company’s
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company shall
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration, (ii) second, the
securities requested to be included in such registration pursuant to the Kapoor
Agreement (to the extent not included pursuant to clause (i) above), (iii)
third, the Registrable Shares requested to be included in such registration,
and (iv) fourth, other securities requested to be included in such registration
or that the Company proposes to sell.

     (e) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Shares pursuant to Sections
6.1, 6.2 or this 6.3, and if such previous registration has not been withdrawn
or abandoned, the Company shall not file or cause to be effected any other
registration of any of its equity securities or securities convertible into or
exchangeable or exercisable for its equity securities under the Securities Act
(except on Form S-4 or Form S-8 or any successor form), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of at least 90 days has elapsed from the effective date of such previous
registration without the prior written consent of the Purchaser, which consent
shall not be unreasonably withheld.

     6.4 Holdback Agreements.

     (a) The Purchaser shall not effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the 90-day period beginning on
the effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten registration),
unless the underwriters managing the registered public offering otherwise
agree.

     (b) The Company shall not effect any public sale or distribution of its
equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
90-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-4 or Form S-8
or any successor form), unless the underwriters managing the registered public
offering otherwise agree.

     6.5 Registration Procedures. Whenever the Purchaser has requested that
any Registrable Shares be registered pursuant to this Agreement, the Company
shall use its best efforts to effect the registration and
the sale of such Registrable Shares in accordance with the intended method
of disposition thereof, and pursuant thereto the Company shall as expeditiously
as possible:

     (a) prepare and file with the Securities and Exchange Commission a
registration statement, and all amendments and supplements thereto and related
prospectuses as

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may be necessary to comply with applicable securities laws,
with respect to such Registrable Shares and use its best efforts to cause such
registration statement to become effective (provided that a reasonable period
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to the counsel selected by the
Purchaser copies of all such documents proposed to be filed, which documents
shall be subject to the review and comment of such counsel);

     (b) notify the Purchaser of the effectiveness of each registration
statement filed hereunder and prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 180 days and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;

     (c) furnish to Purchaser such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as Purchaser may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by Purchaser;

     (d) use its best efforts to register or qualify such Registrable Shares
under such other securities or blue sky laws of such jurisdictions as Purchaser
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable Purchaser to consummate the
disposition in such jurisdictions of the Registrable Shares owned by Purchaser
(provided that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);

     (e) notify Purchaser, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the request of
Purchaser, the Company shall prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus shall not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein not misleading;

     (f) use its reasonable best efforts to cause all such Registrable Shares
to be listed on each securities exchange on which similar securities issued by
the Company are then
listed and, if not so listed, to be listed on a national securities
exchange or over-the-counter market such as the NASD automated quotation system
and, if listed on the NASD automated quotation system, use its reasonable best
efforts to secure designation of all such Registrable Shares covered by such
registration statement as a NASDAQ “national market system security” within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing
that,

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to secure NASDAQ authorization for such Registrable Shares and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register as such with respect to such Registrable Shares with the
NASD;

     (g) provide a transfer agent and registrar for all such Registrable Shares
not later than the effective date of such registration statement;

     (h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the Purchaser
or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares (including effecting a
stock split or a combination of shares);

     (i) make available for inspection by Purchaser, any underwriter
participating in any disposition pursuant to such registration statement and
any attorney, accountant or other agent retained by any Purchaser or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company’s officers, directors,
employees and independent accountants to supply all information reasonably
requested by Purchaser or any such underwriter, attorney, accountant or agent
in connection with such registration statement;

     (j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months beginning with the first day of the Company’s
first full calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder; and

     (k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its reasonable best efforts promptly to
obtain the withdrawal of such order.

     6.6 Registration Expenses.

     (a) All expenses incident to the Company’s performance of or compliance
with this Agreement, including without limitation all registration,
qualification and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, messenger and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of
counsel for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other Persons retained
by the Company (all such expenses being herein called “Registration Expenses”),
shall be borne as provided in this Agreement, except that the Company shall, in
any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each

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securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated
quotation system.

     (b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the Purchaser for the reasonable fees
and disbursements of one counsel.

     (c) To the extent Registration Expenses are not required to be paid by the
Company, the Purchaser shall pay those Registration Expenses allocable to the
registration of Purchaser’s securities so included, and any Registration
Expenses not so allocable shall be borne by all sellers of securities included
in such registration in proportion to the aggregate selling price of the
securities to be so registered.

     6.7 Indemnification.

     (a) The Company agrees to indemnify, to the extent permitted by law, each
holder of Registrable Shares, its officers, directors, members and each Person
who controls such holder (within the meaning of the Securities Act) against all
losses, claims, actions, damages, liabilities and expenses caused by (i) any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading or (ii) any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and to pay to each holder of
Registrable Shares, its officers, directors, members and each Person who
controls such holder (within the meaning of the Securities Act), as incurred,
any legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action, except insofar as the same are contained in any information
furnished in writing to the Company by such holder expressly for use therein or
by such holder’s failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company shall indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of
Registrable Shares.

     (b) In connection with any registration statement in which a holder of
Registrable Shares is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company,
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary

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to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided that the obligation to indemnify
shall be individual, not joint and several, for each holder and shall be
limited to the net amount of proceeds received by such holder from the sale of
Registrable Shares pursuant to such registration statement.

     (c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give prompt notice shall
not impair any Person’s right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided the indemnified
party may participate in such defense at such party’s own expense. If such
defense is assumed, the indemnifying party shall not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party
who is not entitled to, or elects not to, assume the defense of a claim shall
not be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim. In such instance, the
conflicting indemnified parties shall have a right to retain one separate
counsel, chosen by the holders of a majority of the Registrable Shares included
in the registration, at the expense of the indemnifying party. No indemnifying
party, in the defense of such claim or litigation, shall, except with the
consent of each indemnified party, consent to the entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.

     (d) The indemnification provided for under this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. The Company
also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company’s
indemnification is unavailable for any reason.

     6.8 Participation in Underwritten Registrations.

     (a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person’s securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements; provided that no holder of Registrable Shares included in any
underwritten registration shall be required to make any representations or
warranties to the Company or the underwriters (other than representations and
warranties regarding such holder

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and such holder’s intended method of
distribution) or to undertake any indemnification obligations to the Company or
the underwriters with respect thereto, except as otherwise provided in Section
6.7 hereof.

     (b) Each Person that is participating in any registration hereunder agrees
that, upon receipt of notice from the Company of the happening of any event of
the kind described in Section 6.5(e), such Person shall forthwith discontinue
the disposition of its Registrable Securities pursuant to the registration
statement until such Person’s receipt of the copies of a supplemented or
amended prospectus as contemplated by Section 6.5(e). In the event the Company
shall give any such notice, the applicable time period referred to in Section
6.5(b) during which a registration statement is to remain effective shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to this Section 6.8(b) to and including the
date when each seller of a Registrable Security covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 6.5(e).

ARTICLE VII

DEFINITIONS

     For the purposes of this Agreement, the following terms have the meanings
set forth below:

     “Affiliate” of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person, where
“control” means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, contract or otherwise.

     “Effective Date” shall have the meaning set forth in Section 1.3 hereof.

     “GAAP” means generally accepted accounting principles in the United
States, consistently applied.

     “Material Adverse Effect” shall mean any change, development or effect
that has been, or would reasonably be expected to be, materially adverse to the
business, financial condition, operating results, assets or operations of the
Company and its Subsidiaries, taken as a whole, whether or not covered by
insurance.

     “Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

     “Registrable Shares” means, irrespective of which Person actually holds
such securities, (i) the shares of Common Stock issued upon exercise of the
Warrants and (ii) any Common Stock issued or issuable with respect to the
securities referred to in clause (i) above by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Agreement,

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any
Person who holds Warrants shall be deemed to be the holder of the Registrable
Shares obtainable upon exercise of the Warrants in connection with the transfer
thereof or otherwise regardless of any restriction or limitation on the
exercise of the Warrants, such Registrable Shares shall be deemed to be in
existence, and such Person shall be entitled to exercise the rights of a holder
of Registrable Shares hereunder. As to any particular Registrable Shares, such
securities shall cease to be Registrable Shares when they have been distributed
to the public pursuant to a offering registered under the Securities Act or
sold to the public through a broker, dealer or market maker in compliance with
Rule 144 under the Securities Act (or any similar rule then in force). For
purposes of this Agreement, a Person shall be deemed to be a holder of
Registrable Shares whenever such Person has the right to acquire such
Registrable Shares (upon conversion or exercise in connection with a transfer
of securities or otherwise, but disregarding any restrictions or limitations
upon the exercise of such right), whether or not such acquisition has actually
been effected.

     “Restricted Securities” means (i) the Warrants issued hereunder, (ii) the
Common Stock issued upon exercise of the Warrants and (iii) any securities
issued with respect to the securities referred to in clauses (i) or (ii) above
by way of a stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization. As
to any particular Restricted Securities, such securities shall cease to be
Restricted Securities when they have (a) been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them, (b) been distributed to the public through a broker, dealer or
market maker pursuant to Rule 144 (or any similar provision then in force)
under the Securities Act or become eligible for sale pursuant to Rule 144(k)
(or any similar provision then in force) under the Securities Act or (c) been
otherwise transferred and new certificates for them not bearing the Securities
Act legend set forth in Section 4.3 have been delivered by the Company in
accordance with Section 5.2. Whenever any particular securities cease to be
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing a Securities
Act legend of the character set forth in Section 4.3.

     “Securities Act” means the Securities Act of 1933, as amended, or any
similar federal law then in force.

     “SEC” means the Securities and Exchange Commission and any governmental
body or agency succeeding to the functions thereof.

     “Securities Exchange Act” means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.

     “Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at

-19-

 

the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.

ARTICLE VIII

MISCELLANEOUS

     8.1 Consent to Amendments. No supplement, modification, waiver or
termination of this Agreement (including without limitation any amendment or
modification of any defined term used herein which is defined in any other
agreement or instrument referred to herein) shall be binding unless agreed to
in writing by the Company and the Purchaser.

     8.2 Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; provided that,
notwithstanding anything to the contrary contained herein, any matter of which
Purchaser has actual knowledge, or any breach of a representation or warranty
or a threat of such breach of which Purchaser has actual knowledge, shall not
constitute a breach of any representation or warranty of the Company herein.

     8.3 Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for Purchaser’s benefit as a holder of
the Warrants or Registrable
Shares, including the registration rights in Article VI hereof, are also
for the benefit of, and enforceable by, any subsequent holder of such Warrants
or such Registrable Shares.

     8.4 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.

     8.5 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.

     8.6 Descriptive Headings; Interpretation. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a
substantive part of this

-20-

 

Agreement. The use of the word “including” in this
Agreement shall be by way of example rather than by limitation.

     8.7 Governing Law. The corporation laws of the State of Louisiana shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other aspects of this Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without giving
effect to any choice-of-law or conflict-of-law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than Illinois.

     8.8 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to Purchaser and the Company at the addresses
indicated below:

If to the Purchaser, to:

AEG Partners, LLC

1849 Green Bay Road

Suite 270

Highland Park, Illinois 60035

Attn: Lawrence M. Adelman

with a copy to:

Kirkland & Ellis

200 East Randolph Drive

Chicago, Illinois 60601

Attn: R. Scott Falk, Esq.

If to the Company, to:

Akorn, Inc.

2500 Millbrook Drive

Buffalo Grove, Illinois 60089

Attn: Chief Executive Officer

with a copy to:

Sidley Austin Brown & Wood

10 South Dearborn Street

Chicago, Illinois 60603

Attn: John R. Box, Esq.

-21-

 

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

     8.9 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.

* * * * *

-22-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.

	 	 	 	 	 
	 
	 	AKORN, INC.
	 
	 	 	 	 
	

	 	By	 	/s/ Arthur S. Przybyl
	

	 	 	 	
 
	

	 	Name	 	 Arthur S. Przybyl
	

	 	 	 	
 
	

	 	Title	 	President and CEO
	

	 	 	 	
 
	 
	 	 	 	 
	 
	 	AEG PARTNERS LLC
	 
	 	 	 	 
	

	 	By	 	/s/ L.M. Adelman
	

	 	 	 	
 
	

	 	Name	 	L.M. Adelman
	

	 	 	 	
 
	

	 	Title	 	Managing Director
	

	 	 	 	
 

 

 

LIST OF EXHIBITS

	 	 	 
	Exhibit A

	 	Warrant Certificate

 

 

LIST OF DISCLOSURE SCHEDULES

Capitalization Schedule

Public Filings Schedule

Litigation Schedule

Compliance Schedule

FDA Compliance Schedule

 

 

Exhibit A

Warrant Certificate

This Warrant was originally issued on                     ,
and such issuance was not registered under the
Securities Act of 1933, as amended. The transfer of
this Warrant and the securities obtainable upon
exercise thereof is subject to the conditions on
transfer specified in the Warrant Purchase and
Registration Agreement, dated as of June 18, 2003 (as
amended and modified from time to time), between the
issuer hereof (the “Company”) and the initial holder
hereof, and the Company reserves the right to refuse
the transfer of such security until such conditions
have been fulfilled with respect to such transfer.
Upon written request, a copy of such conditions shall
be furnished by the Company to the holder hereof
without charge.

AKORN, INC.

STOCK PURCHASE WARRANT

	 	 	 
	Date of Issuance:                                         

	 	Certificate No. D-l

     THIS CERTIFIES THAT, for value received, AEG Partners LLC, an Illinois
limited liability company, or its registered assigns (the “Registered Holder”)
is entitled to subscribe for and purchase on or before                                          from
Akorn, Inc., a Louisiana corporation (the “Company”), an aggregate of 1,250,000
fully paid and nonassessable shares of the Company’s Common Stock at a price
per share of $0.75 (as adjusted from time to time hereunder, the “Exercise
Price”). This Warrant is issued by the Company pursuant to the Warrant Purchase
and Registration Agreement, dated as of June 18, 2003 (the “Purchase
Agreement”), by and between the Company and AEG Partners LLC. Certain
capitalized terms used herein are defined in Section 5 hereof. The amount of
securities obtainable pursuant to the rights granted hereunder and the purchase
price for such securities are subject to adjustment pursuant to the provisions
contained in this Warrant.

     This Warrant is subject to the following provisions:

     Section 1. Exercise of Warrant.

     1A. Exercise Period. The Registered Holder may exercise, in whole or in
part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time after the Date of
Issuance to and including the fourth anniversary thereof (the “Exercise
Period”). The “Date of Issuance” shall be the Effective Date under the Purchase
Agreement.

 

 

     1B. Exercise Procedure.

               (i) This Warrant shall be deemed to have been exercised when there shall
have been delivered to the office of the Company, 2500 Milbrook Drive, Buffalo
Grove, Illinois 60089, marked to the attention of the Company’s chief financial
officer, the following items (the “Exercise Time”):

               (a) a completed Exercise Agreement, as described in paragraph 1C
below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the “Purchaser”);

               (b) this Warrant;

               (c) if this Warrant is not registered in the name of the Purchaser,
an Assignment or Assignments in the form set forth in Exhibit II hereto
evidencing the assignment of this Warrant to the Purchaser, in which case
the Registered Holder shall have complied with the provisions set forth
in Section 8 hereof; and

               (d) either (1) a check payable to the Company in an amount equal to
the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the “Aggregate Exercise Price”) or
(2) a written notice to the Company that the Purchaser is exercising the
Warrant (or a portion thereof) by authorizing the Company to withhold
from issuance a number of shares of Common Stock issuable upon such
exercise of the Warrant which when multiplied by the Market Price of the
Common Stock is equal to the Aggregate Exercise Price (and such withheld
shares shall no longer be issuable under this Warrant).

               (ii) Certificates for shares of Common Stock purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within seven
business days after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such seven-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.

               (iii) The Common Stock issuable upon the exercise of this Warrant shall be
deemed to have been issued to the Purchaser at the Exercise Time, and the
Purchaser shall be deemed for all purposes to have become the record holder of
such Common Stock at the Exercise Time.

               (iv) The issuance of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Registered Holder or the
Purchaser for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of shares of
Common Stock. Each share of Common Stock issuable upon exercise of this Warrant
shall, upon payment of the Exercise Price therefor, be

 

 

fully paid and nonassessable and free from all liens and charges (other
than any created by the Registered Holder) with respect to the issuance thereof
or otherwise.

               (v) The Company shall not close its books against the transfer of this
Warrant or of any share of Common Stock issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to ensure that the par value per share of the unissued Common Stock
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price then in effect.

               (vi) The Company shall use reasonable efforts to assist and cooperate with
any Registered Holder or Purchaser required to make any governmental filings or
obtain any governmental approvals prior to or in connection with any exercise
of this Warrant (including, without limitation, making any filings required to
be made by the Company).

               (vii) Notwithstanding any other provision hereof, if an exercise of any
portion of this Warrant is to be made in connection with a registered public
offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of the holder hereof and upon delivery of the
items required by Section 1 B(i), be conditioned upon the consummation of the
public offering or sale of the Company in which case such exercise shall not be
deemed to be effective until, and the Effective Time shall be deemed to occur
upon, the consummation of such transaction.

               (viii) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
(other than any created by the Registered Holder). The Company shall take all
such actions as may be necessary to ensure that all such shares of Common Stock
may be so issued without violation by the Company of any applicable law or
governmental regulation or any requirement of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon each such
issuance).

     1C. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement shall be substantially in the form set forth in Exhibit I hereto,
except that if the shares of Common Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the shares
of Common Stock are to be issued, and if the number of shares of Common Stock
to be issued does not include all the shares of Common Stock purchasable
hereunder, it shall also state the name of the Person to whom a new Warrant for
the unexercised portion of the rights hereunder is to be delivered. Such
Exercise Agreement shall be dated the actual date of execution thereof.

 

 

     1D. Fractional Shares. If a fractional share of Common Stock would, but
for the provisions of Section lA, be issuable upon exercise of the rights
represented by this Warrant, the Company shall, within seven business days
after the date of the Exercise Time, deliver to the Purchaser a check payable
to the Purchaser in lieu of such fractional share in an amount equal to the
difference between the Market Price of such fractional share as of the date of
the Exercise Time and the Exercise Price of such fractional share.

     Section 2. Adjustment of Exercise Price and Number of Shares. In order to
prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.

     2A. Reclassification. If the Company, at any time or from time to time
while this Warrant is outstanding and unexpired, shall reclassify or otherwise
change the securities issuable upon exercise of this Warrant (other than as a
result of a subdivision or combination, stock dividend, or reorganization,
merger, consolidation or sale of assets, each as provided for below), the
Company shall, as a condition precedent to such transaction, execute a new
Warrant providing that the Registered Holder shall have the right to exercise
such new Warrant and upon such exercise to receive, in lieu of each share of
Common Stock theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock or other securities, money or property receivable
upon such reclassification or change which such Registered Holder would have
received for one share of Common Stock had such Registered Holder exercised
this Warrant in full immediately prior to such reclassification or change. Such
new Warrant shall provide for adjustments which shall be as nearly equivalent
as practicable to the adjustments provided for in this Section 2A. The
provisions of this Section 2A shall similarly apply to successive
reclassifications or changes.

     2B. Subdivisions or Combination of Warrant Shares. If the Company at any
time or from time to time while this Warrant is outstanding and unexpired shall
subdivide or combine its Common Stock, the Exercise Price shall be adjusted to
that price determined by multiplying the Exercise Price in effect immediately
prior to such subdivision or combination by a fraction, (i) the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to such subdivision or combination and (ii) the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately after such subdivision or combination.

     2C. Reorganizations. Mergers. Consolidations or Sale of Assets. If at any
time or from time to time while this Warrant is outstanding and unexpired there
shall be a capital reorganization of the Company’s Common Stock (other than a
combination, subdivision, reclassification or change of shares provided for
elsewhere in this Warrant) or merger or consolidation of the Company with or
into another entity, or the sale of all or substantially all of the Company’s
assets to another corporation then, as a part of such reorganization, merger,
consolidation or sale, lawful provision shall be made so that the Registered
Holder shall thereafter be entitled to receive upon exercise of this Warrant,
during the Exercise Period and upon payment of the Exercise Price then in
effect, the number and type of shares of stock, other

 

 

securities or property to which a holder of the Common Stock issuable upon
exercise of this Warrant would have been entitled in such reorganization,
merger, consolidation or sale if this Warrant had been exercised immediately
before that reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Warrant with respect to the rights and interests of the Registered Holder
after such reorganization, merger, consolidation or sale so that the provisions
of this Warrant (including adjustment of the Exercise Price and the number of
shares purchasable upon exercise) shall be applicable in relation to any shares
or other property deliverable after such event upon exercise of this Warrant.
This provision shall apply to any successive reorganization, merger,
consolidation or sale.

     2D. Stock Dividends. If the Company at any time and from time to time
while this Warrant is outstanding and unexpired shall pay a dividend with
respect to its Common Stock payable in, or make any other distribution without
consideration of, shares of Common Stock (except any distribution specifically
provided for above), then the Exercise Price shall be adjusted, from and after
the record date fixed for the determination of stockholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction, (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such distribution or dividend,
and (ii) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such dividend or distribution.

     2E. Other Dividends. If the Company at any time and from time to time
while this Warrant is outstanding and unexpired shall pay a dividend other than
a regular cash dividend with respect to its Common Stock other than in the form
of Common Stock, then the Exercise Price shall be adjusted, from and after the
record date fixed for the determination of holders of Common Stock entitled to
receive such dividend or distribution, to that price determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, (i) the numerator of which shall be the Market Price of a share of
Common Stock as of such record date less the amount of the dividend or
distribution applicable to one share of Common Stock and (ii) the denominator
of which shall be the Market Price of one share of Common Stock as of such
record date; provided, however, if the amount of a dividend that would
otherwise require adjustment pursuant to this Section 2E is equal to or greater
than such Market Price, then, in lieu of the foregoing adjustment, adequate
provision shall be made so that the Registered Holder shall receive a pro rata
share of such dividend based upon the maximum number of shares of Common Stock
issuable to such Registered Holder under this Warrant at such time.

     2F. Adjustment of Exercise Price Upon Issuance of Common Stock. If the
Company at any time and from time to time while this Warrant is outstanding and
unexpired issues or sells, or in accordance with paragraph 2F(i) is deemed to
have issued or sold, any share of Common Stock, other than any share of Common
Stock issued or issuable (1) pursuant to Options or Convertible Securities
outstanding as of the Date of Issuance or (2) to employees of the Company
pursuant to an incentive plan authorized by the board of directors of the
Company, for a consideration per share less than the Exercise Price in effect
immediately prior to such time, then immediately upon such issue or sale the
Exercise Price shall be reduced to an amount equal to the quotient determined
by dividing (x) the sum of (1) the product derived by multiplying the

 

 

Exercise Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock outstanding immediately prior to such issue or
sale, plus (2) the consideration, if any, received by the Company upon such
issue or sale, by (y) the number of shares of Common Stock outstanding
immediately after such issue or sale.

               (i) For purposes of determining the adjusted Exercise Price under
paragraph 2F, the following shall be applicable:

               (a) Issuance of Rights or Options. If the Company in any manner
grants or sells any Options, then the share or shares of Common Stock
issuable upon exercise of such Option shall be deemed to have been issued
and sold by the Company at such time for the lowest price per share for
which any one share of Common Stock is issuable with respect to such
Option. For purposes of this paragraph, the “lowest price per share for
which any one share of Common Stock is issuable” shall be equal to the
sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock
upon the granting or sale of the Option, upon exercise of the Option and
upon conversion or exchange of any Convertible Security issuable upon
exercise of such Option. No further adjustment of the Exercise Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Security upon the exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Security.

               (b) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Security , then the share or shares of
Common Stock issuable upon conversion or exchange of such Convertible
Security shall be deemed to have been issued and sold by the Company at
such time for the lowest price per share for which any one share of
Common Stock is issuable with respect to such Convertible Security. For
the purposes of this paragraph, the “lowest price per share for which any
one share of Common Stock is issuable” shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the issuance
of the Convertible Security and upon the conversion or exchange of such
Convertible Security. No further adjustment of the Exercise Price shall
be made upon the actual issue of such Common Stock upon conversion or
exchange of any Convertible Security, and if any such issue or sale of
such Convertible Security is made upon exercise of any Options for which
adjustments of the Exercise Price had been or are to be made pursuant to
other provisions of this Section 2, no further adjustment of the Exercise
Price shall be made by reason of such issue or sale.

               (c) Change in Option Price or Conversion Rate. If the purchase price
provided for in any Options, the additional consideration, if any,
payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time,
the Exercise Price in effect at the time of such change shall be adjusted
immediately to the Exercise Price which would have been in effect at such
time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time

 

 

initially granted, issued or sold and the number of shares of Common
Stock issuable hereunder shall be correspondingly adjusted. For purposes
of this paragraph 2F, if the terms of any Option or Convertible Security
which was outstanding as of the date of issuance of this Warrant are
changed in the manner described in the immediately preceding sentence,
then such Option or Convertible Security and the Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to
have been issued as of the date of such change; provided that no such
change shall at any time cause the Exercise Price hereunder to be
increased.

               (d) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities without the
exercise of such Option or right, the Exercise Price then in effect shall
be adjusted immediately to the Exercise Price which would have been in
effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination, never been issued. For purposes of this
paragraph 2F, the expiration or termination of any Option or Convertible
Security which was outstanding as of the date of issuance of this Warrant
shall not cause the Exercise Price hereunder to be adjusted unless, and
only to the extent that, a change in the terms of such Option or
Convertible Security caused it to be deemed to have been issued after the
date of issuance of this Warrant.

               (e) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall
be deemed to be the net amount received by the Company (net of discounts,
commissions and related expenses) therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than cash received
by the Company shall be the fair value of such consideration, provided
that where such consideration consists of securities, in which case the
amount of consideration received by the Company shall be the Market Price
thereof as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor shall be
deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common
Stock, Options or Convertible Securities, as the case may be. The fair
value of any consideration other than cash or securities shall be
determined in good faith jointly by the Company and the Registered
Holder. If such parties are unable to reach agreement within a reasonable
period of time, such fair value shall be determined by an appraiser
jointly selected by the Company and the Registered Holder. The
determination of such appraiser shall be final and binding on the Company
and the Registered Holder, and the fees and expenses of such appraiser
shall be paid by the Company.

               (f) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by

 

 

the parties thereto, the Options shall be deemed to have been issued
without consideration.

     2G. Adjustment of Number of Shares. Upon each adjustment in the Exercise
Price (other than pursuant to Section 2E), the number of shares of stock
purchasable hereunder shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of shares purchasable immediately
prior to such adjustment in the Exercise Price by a fraction, (i) the numerator
of which shall be the Exercise Price immediately prior to such adjustment and
(ii) the denominator of which shall be the Exercise Price immediately after
such adjustment.

     Section 3. Notices. Whenever the number of shares of Common Stock
purchasable hereunder or the Exercise Price thereof shall be adjusted pursuant
to Section 2 hereof, the Company shall provide written notice in accordance
with Section 11 hereof, to the Registered Holder setting forth in reasonable
detail the event requiring adjustment, the amount of the adjustment, the method
by which such adjustment was calculated, and the number of shares of Common
Stock which may be purchased and the Exercise Price therefor after giving
effect to such adjustment.

     Section 4. Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.

     Section 5. Definitions. The following terms have meanings set forth below:

     “Convertible Securities” means any stock or securities (directly or
indirectly) convertible into or exchangeable for Common Stock.

     “Current Market Price” means, as of any date, (i) if at that time, the
principal market for such security is a national securities exchange or the
NASDAQ System, the mean between the lowest and highest reported sale prices of
such security on the immediately preceding business day on the principal
exchange or market on which such security is then listed or admitted to trading
or (ii) if, at that time, the sale prices are not available or the principal
market for the security is not a national securities exchange and such security
is not quoted on the NASDAQ System, the average between the highest bid and
lowest asked prices for such security on the immediately preceding business day
as reported on the NASDAQ OTC Bulletin Board Service or by the National
Quotation Bureau, Incorporated or any similar successor organization.

     “Market Price” means as to any security the average of the closing prices
of such security’s sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any
day such security is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,

 

 

Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which “Market
Price” is being determined and the 20 consecutive business days prior to such
day; provided that if such security is listed on any domestic securities
exchange the term “business days” as used in this sentence means business days
on which such exchange is open for trading. If at any time such security is not
listed on any domestic securities exchange or quoted in the NASDAQ System or
the domestic over-the-counter market, the “Market Price” shall be the fair
value thereof determined in good faith jointly by the Company and the
Registered Holders of Warrants representing a majority of the Common Stock
purchasable upon exercise of all the Warrants then outstanding; provided that
if such parties are unable to reach agreement within a reasonable period of
time, such fair value shall be determined by an appraiser jointly selected by
the Company and the Registered Holders of Warrants representing a majority of
the Common Stock purchasable upon exercise of all the Warrants then
outstanding. The determination of such appraiser shall be final and binding on
the Company and the Registered Holders of the Warrants, and the fees and
expenses of such appraiser shall be paid by the Company.

     “Options” means any rights or options to subscribe for or purchase Common
Stock or Convertible Securities, other than any right or option otherwise
exempted with the approval of the Registered Holder.

     “Person” means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.

     Other capitalized terms used in this Warrant but not defined herein shall
have the meanings set forth in the Purchase Agreement.

     Section 6. No Voting Rights: Limitations of Liability. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company until the Warrant shall have been exercised and the
Common Stock purchasable upon the exercise hereof shall have become
deliverable, as provided herein. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Common Stock, and no
enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such holder for the Exercise Price of Common
Stock acquirable by exercise hereof or as a stockholder of the Company.

     Section 7. Restrictive Legend. The shares issuable upon exercise of this
Warrant (unless registered under the Securities Act of 1933) shall be stamped
or imprinted with a legend in substantially the following form:

“The securities represented by this certificate were
originally issued on                     , and have not been
registered under the Securities Act of 1933, as
amended. The transfer of the securities represented by
this certificate is subject to the conditions
specified in the Warrant Purchase and Registration
Agreement, dated as of June 18, 2003, between the
issuer (the “Company”) and certain

 

 

investors, and the Company reserves the right to
refuse the transfer of such securities until such
conditions have been fulfilled with respect to such
transfer. A copy of such conditions will be furnished
by the Company to the holder hereof upon written
request and without charge.”

     Section 8. Warrant Transferable. Subject to the transfer conditions
referred to in the legend endorsed hereon, this Warrant and all rights
hereunder are transferable, in whole or in part, without charge to the
Registered Holder, upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
Company; provided that any transfer in part shall be of Warrants in minimum
denominations to purchase 100,000 shares of the Company’s Common Stock, subject
to adjustment as provided in Section 2.

     Section 9. Warrant Exchangeable for Different Denominations. This Warrant
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. The date the Company initially issues
this Warrant shall be deemed to be the “Date of Issuance” hereof regardless of
the number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
“Warrants.”

     Section 10. Replacement. Upon receipt of evidence reasonably satisfactory
to the Company (it being acknowledged by the Company that an affidavit of the
Registered Holder is deemed to be reasonably satisfactory) of the ownership and
the loss, theft, destruction or mutilation of this Warrant, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company, or, in the case of any such mutilation upon
surrender of such Warrant, the Company shall (at its expense, except for the
cost of any lost security indemnity bond required, which shall be paid by the
Registered Holder) execute and deliver in lieu of such Warrant a new Warrant of
like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated Warrant and dated the date of such lost, stolen,
destroyed or mutilated Warrant.

     Section 11. Notices. Except as otherwise expressly provided herein, all
notices referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered or deposited in the
U.S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant at such holder’s address as it appears in
the records of the Company (unless otherwise indicated by any such holder).

     Section 12. Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended and the Company may take any action
herein

 

 

prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holder.

     Section 13. Descriptive Headings: Governing Law. The descriptive headings
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporation
laws of the State of Louisiana shall govern all issues concerning the relative
rights of the Company and its Stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal law of the State of Illinois, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Illinois or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Illinois.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.

	 	 	 	 	 
	 
	 	AKORN, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Its:	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	[Corporate Seal]
	 	 	 	 
	 
	 	 	 	 
	Attest:
	 	 	 	 
	 
	 	 	 	 
	

	 	 
	 	 
	Title:
	 	 	 	 
	

	 	 
	 	 

 

 

EXHIBIT I

EXERCISE AGREEMENT

	 	 	 
	To:

	 	Dated:

     The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-     ), hereby agrees to subscribe for the purchase
of                     shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant and
requests that certificates for the shares of Common Stock hereby purchased be
issued in the name and delivered to                      whose address is                     .

      

		
	Signature  	

		
	Address  	

 

 

EXHIBIT II

ASSIGNMENT

     FOR VALUE RECEIVED,                                          hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-     ) with respect to the number of shares of the Common
Stock covered thereby set forth below, unto:

	 	 	 	 	 
	Name of Assignee
	 	Address
	 	No. of Shares

	 
	 	 
	 	 

      

		
	Signature  	

		
	Witness

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