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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AjYkJBpf0HT5EketMzUGY5OCGwOPeizZOlaSpb1gebTDq3oOAuOYbRKHiLNv30rx owmM1+5aihnmsLtfOo1aOA== 0000950137-09-003125.txt : 20090421 0000950137-09-003125.hdr.sgml : 20090421 20090421160937 ACCESSION NUMBER: 0000950137-09-003125 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20090415 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20090421 DATE AS OF CHANGE: 20090421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AKORN INC CENTRAL INDEX KEY: 0000003116 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 720717400 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32360 FILM NUMBER: 09761753 BUSINESS ADDRESS: STREET 1: 2500 MILLBROOK DRIVE CITY: BUFFALO GROVE STATE: IL ZIP: 60089 BUSINESS PHONE: 8472796100 MAIL ADDRESS: STREET 1: 2500 MILLBROOK DRIVE CITY: BUFFALO GROVE STATE: IL ZIP: 60089 8-K 1 c50612be8vk.htm 8-K e8vk

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report: April 15, 2009
(Date of earliest event reported)

Akorn, Inc.

(Exact name of registrant as specified in its charter)


Louisiana	001-32360	72-0717400
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1925 W. Field Court, Suite 300,
Lake Forest, Illinois 60045
(Address of principal executive offices, zip code)

(847) 279-6100
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

As previously reported, Akorn, Inc. (“Akorn”) and Massachusetts Biologic Laboratories of the University of Massachusetts (“MBL”) entered into a Letter Agreement dated March 27, 2009 (the “Letter Agreement”) to resolve a dispute involving Akorn’s failure to make timely payments for Td vaccine products under Akorn’s modified Exclusive Distribution Agreement dated March 22, 2007 (the “MBL Distribution Agreement”) with MBL. MBL is Akorn’s supplier of Td vaccine products. The Letter Agreement was previously disclosed in Akorn’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2009. The Letter Agreement amends the MBL Distribution Agreement, sets forth a new payment schedule, and requires Akorn or its designee to provide an irrevocable standby letter of credit (“L/C”) as security for the payment obligations owed to MBL. The Letter Agreement also contemplates that the parties would execute further documents to formalize the agreement reached in the Letter Agreement. On April 13, 2009, Akorn paid MBL $1,000,000 of the past due amount.

On April 15, 2009, Akorn and MBL entered into a Settlement Agreement (the “Settlement Agreement”) to elaborate on the Letter Agreement. The Settlement Agreement provides that Akorn will pay MBL the $4,750,000 remaining due for delivered Td vaccine products plus an additional $4,750,000 as consideration for amendments to the MBL Distribution Agreement (the “Settlement Payments”) payable according to a monthly payment schedule through June 30, 2010. The Settlement Agreement provides that MBL may only draw on the L/C if: (i) Akorn fails to make any Settlement Payment when due, (ii) any Settlement Payment made is set aside or otherwise required to be repaid by MBL, or (iii) Akorn becomes the debtor in a bankruptcy or other insolvency proceeding begun before October 6, 2010 and no replacement letter of credit has been issued prior to the expiration of the L/C.

Also on April 15, 2009, MBL and Akorn entered into an amendment to the MBL Distribution Agreement (the “Amendment”). The Amendment modifies the MBL Distribution Agreement to, among other things, eliminate Akorn’s future minimum purchase requirements under the MBL Distribution Agreement.

On April 15, 2009, Akorn and Akorn (New Jersey), Inc. (together with Akorn, the “Akorn Entities”), EJ Funds LP (“EJ”), and John N. Kapoor Trust dated 9/20/89 (the “Kapoor Trust”) entered into a Reimbursement and Warrant Agreement (the “Reimbursement Agreement”). Pursuant to the Reimbursement Agreement, the Kapoor Trust agreed to provide the L/C for the benefit of MBL. The Reimbursement Agreement also provides, among other things, that the Akorn Entities will reimburse the Kapoor Trust for any draws by MBL under the L/C through the mechanism of causing the amount of the draws to become term indebtedness of the Akorn Entities payable to the Kapoor Trust under the same terms as the revolving debt under the Credit Agreement dated January 7, 2009 (as amended, modified and supplemented from time to time, the “Credit Agreement”) among the Akorn Entities and EJ. All obligations of the Akorn Entities arising under the Reimbursement Agreement will be considered secured obligations under the Credit Agreement.

Also, pursuant to the Reimbursement Agreement, Akorn issued a warrant to the Kapoor Trust (the “Reimbursement Warrant”) to purchase 1,501,933 shares of Akorn common stock at an exercise price of $1.11 per share, subject to certain adjustments. The Reimbursement Warrant expires five

years from the date of issuance and is exercisable upon payment of the exercise price in cash or by means of a cashless exercise yielding a net share figure. In addition, the Reimbursement Agreement provides that Akorn must issue the Kapoor Trust additional warrants, at that same price of $1.11 per share, to purchase 200,258 shares of Akorn common stock per $1,000,000 drawn on the L/C. The shares of Akorn common stock issuable upon exercise of the Reimbursement Warrant and any additional warrants issued to the Kapoor Trust in connection with draws on the L/C, along with other shares of common stock held by the Kapoor Trust (collectively, the “Registrable Securities”), are subject to registration rights set forth in a Modification Agreement dated April 13, 2009, among the Akorn Entities and EJ (the “Modification Agreement”). The Modification Agreement was previously disclosed in Akorn’s Current Report on Form 8-K filed with the SEC on April 17, 2009.

Dr. John N. Kapoor, Akorn’s Chairman, largest shareholder and lender under the Credit Agreement and the Subordinated Promissory Note dated July 28, 2008 in the initial principal amount of $5,000,000 payable by Akorn to the Kapoor Trust, is the President of EJ Financial Enterprises, Inc., which is the general partner of EJ. Dr. Kapoor is also the beneficiary and sole trustee of the Kapoor Trust.

The descriptions of the Reimbursement Agreement, Reimbursement Warrant, Settlement Agreement and Amendment in this Current Report on Form 8-K are only summaries. They are qualified in their entirety by the full text of those documents, which are filed as exhibits hereto and are incorporated by reference herein.

The references to the Letter Agreement herein are qualified in their entirety by the full text of the Letter Agreement, which is incorporated herein by reference to Exhibit 10.72 to Akorn’s Annual Report on Form 10-K filed on March 30, 2009. The references to the MBL Distribution Agreement herein are qualified in their entirety by the full text of the MBL Distribution Agreement, which is incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed March 30, 2007. References to the Modification Agreement herein are qualified in their entirety by the full text of the Modification Agreement, which is incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on April 17, 2009. The references to the Credit Agreement herein are qualified in their entirety by Akorn’s previous disclosure in its Current Report on Form 8-K filed with the SEC on January 9, 2009, which is incorporated herein by reference, and the full text of the Credit Agreement, which is incorporated herein by reference to Exhibit 10.1 to that Current Report on Form 8-K.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The information disclosed under Item 1.01 of this Current Report on Form 8-K with respect to Akorn’s unregistered issuance of the warrants under the Reimbursement Agreement is incorporated into this Item 3.02 in its entirety. The issuance of the warrants is a private placement under Section 4(2) of the Securities Act of 1933, as amended (the “Act”) and Rule 506 of Regulation D under the Act, pursuant to the terms of

the Reimbursement Agreement. There were no commissions paid in connection with the issuance of the warrants.

Item 9.01 Financial Statements and Exhibits.

(d)

Exhibits.


4.1		Akorn, Inc. Common Stock Purchase Warrant, dated April 15, 2009, in favor of John N. Kapoor Trust dated 9/20/89.

10.1		Reimbursement and Warrant Agreement, dated April 15, 2009, among Akorn, Inc., Akorn (New Jersey), Inc., John N. Kapoor Trust dated 9/20/89, and EJ Funds LP.

10.2		Settlement Agreement, dated April 15, 2009, between Akorn, Inc. and Massachusetts Biologic Laboratories of the University of Massachusetts Medical School.^*

10.3		Fourth Amendment to Exclusive Distribution Agreement, dated April 15, 2009, between Akorn, Inc. and Massachusetts Biologic Laboratories of the University of Massachusetts Medical School.^*


^*		Confidential Treatment Requested for portions of this exhibit under 17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	Akorn, Inc.
	By:	/s/ Jeffrey A. Whitnell
		Jeffrey A. Whitnell
		Interim Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary

Date: April 21, 2009

EX-4.1 2 c50612bexv4w1.htm EX-4.1 exv4w1

Exhibit 4.1

THIS SECURITY AND THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS.

AKORN, INC.

COMMON STOCK PURCHASE WARRANT

To Purchase 1,501,933 Shares of Common Stock

THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, JOHN N KAPOOR TRUST DATED 9/20/89 (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after April 15, 2009 (the “Initial Exercise Date”) and on or prior to the close of business on the fifth (5th) anniversary following the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Akorn, Inc., a Louisiana corporation (the “Company”), up to One Million Five Hundred One Thousand Nine Hundred Thirty-Three (1,501,933) shares, subject to adjustment as set forth herein (the “Warrant Shares”) of Common Stock, no par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $1.11 per share, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Modification, Warrant and Investor Rights Agreement (the “Modification Agreement”), dated as of April 13, 2009, between the Company and EJ FUNDS LP.

1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 hereof, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

2. Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon any Exercise of the purchase rights represented by this Warrant will, upon such Exercise in accordance with the terms of this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company shall at all times reserve and keep available for issue upon the Exercise of

this Warrant such number of shares of its authorized but unissued Common Stock as will be sufficient to permit the Exercise in full of this Warrant.

3. Exercise of Warrant.

(a) Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) to the attention of the Chief Executive Officer or the Chief Financial Officer (the “Exercise”, and the date of such Exercise, the “Exercise Date”). After each Exercise and upon the occurrence of the Exercise Effectiveness Date (as hereinafter defined), the Holder shall immediately thereafter be entitled to receive a certificate for the number of Warrant Shares so purchased upon payment of the Exercise Price of the shares thereby purchased. Payment of the Exercise Price may be made at the option of the Holder by (i) by wire transfer or cashier’s check drawn on a United States bank of United States dollars or (ii) the surrender and cancellation of Warrant Shares issuable upon such Exercise of this Warrant (i.e. on a “cashless exercise” basis), in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:


				Y (A - B)

		X =		A

Where:

X = The net number of shares of Common Stock to be issued to the Holder pursuant to the election to exercise;

Y = The gross number of shares of Common Stock in respect of which the election to exercise is made;

A = The average of the market price of one share of the Common Stock for the ten (10) Trading Days immediately prior to the Exercise Date; and

B = The Exercise Price.

“Market Price” shall mean the closing sale price of the Company’s Common Stock as reported on the Nasdaq Global Market, or if not then traded on the Nasdaq Global Market, such closing sale or bid price as reported on any exchange over which the Company’s Common Stock may then be traded, or if not then traded over any exchange, then the market price of the Company’s Common Stock shall be the fair market value of the Company’s Common Stock as determined in good faith by the Board of Directors of the Company. Certificates for shares purchased hereunder shall be delivered to the Holder (at an address in the United States specified by the Holder) within five (5) Trading Days after the later of the Exercise Effectiveness Date and payment of the Exercise Price of the shares thereby purchased as aforesaid or the Company shall instruct its transfer agent to register the shares purchased hereunder in book entry form within five (5) Trading Days after the later of the Exercise Effectiveness Date and payment of the

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Exercise Price of the shares thereby purchased as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates (or book entry shares) shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the last to occur of the Exercise Effectiveness Date, payment of the Exercise Price, and delivery of the required documentation and all taxes required to be paid by the Holder, if any, pursuant to Section 5. For purposes of this Warrant, a “Trading Day” shall mean any day on which the national securities exchange or the national market system of FINRA are open for trading.

(b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c) The Holder understands that, until such time as the Registration Statement has been declared effective or the Warrant Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, (i) the Company shall be entitled to give its transfer agent stop transfer instructions respecting those Warrant Shares and (ii) the certificates representing any Warrants Shares issued upon Exercise of this Warrant will bear a restrictive legend in substantially the following form:

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.”

(d) Reporting and Waiting Requirements.

(i) To the extent necessary, each of and the Company and the Holder shall file, within fifteen (15) days after each Exercise Date, before the expiration of any relevant legal deadline, with (i) the FTC and the Antitrust Division of the DOJ, a Notification and Report Form required under the HSR Act with respect to the transactions contemplated pursuant to such Exercise and any supplemental information requested in connection therewith pursuant to the HSR Act, which forms shall specifically request early termination of the waiting period

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prescribed by the HSR Act and (ii) any other Governmental Authority, any other filings, reports, information and documentation required for the transactions contemplated hereby pursuant to any other antitrust law of any other jurisdiction. The parties shall furnish to each other’s counsel such necessary information and reasonable assistance as the other may reasonably request in connection with its preparation of any filing or submission that is necessary under the HSR Act and any antitrust law of any other jurisdiction. The requirements under this Section 3(d)(i) shall be satisfied with respect to any Exercise (without the need for further action by a party) upon the soonest to occur of: (a) the HSR Clearance Date has occurred (provided, however, that rights obtained by the Holder pursuant to the Warrant outside the United States shall become effective upon the HSR Clearance Date or, if any ex-U.S. governmental or regulatory approvals are required prior to such rights becoming effective, upon the later to occur of (1) the HSR Clearance Date and (2) the receipt of any such required approvals), or (b) determination by the parties that such filings are unnecessary (with respect to such Exercise, the “Exercise Effectiveness Date”). The determination of the soonest to occur of the foregoing shall be made without taking into account the need for ex-U.S. governmental or regulatory approvals required prior to such rights becoming effective and if, giving effect to the foregoing, subsection (a) is the soonest to occur, then the Exercise Effectiveness Date shall be the HSR Clearance Date.

(ii) The parties shall use their reasonable best efforts to promptly obtain any clearance required under the HSR Act and any other antitrust law for the consummation of the Exercise and the transactions contemplated thereby and shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC and the DOJ and other Governmental Authorities concerning such clearances and shall use reasonable best efforts to comply promptly with any such inquiry or request; provided, however, that (a) neither party shall be required to consent to the divestiture or other disposition of any of its or its affiliates’ assets or those of the other party, or to agree to any modification or amendment of this Warrant that, in the reasonable opinion of such party’s legal and/or financial counsel, would be adverse to such party, and (b) neither party shall have any obligation to contest, administratively or in court, any ruling, order or other action of any Governmental Authority or private party respecting the transactions contemplated by this Warrant or to comply with any other structure or conduct remedy or restriction or limit on operation; provided, further, however, that the parties shall both promptly respond to the DOJ or the FTC to a request for additional information as defined under the HSR Act.

(iii) The parties commit to instruct their respective counsel to cooperate with each other and use reasonable best efforts to facilitate and expedite the identification and resolution of any such issues and, consequently, the expiration of the applicable HSR Act waiting period and the waiting periods under any other antitrust law of any other jurisdiction, or the obtaining of clearances thereunder (as the case may be), at the earliest practicable dates. Such efforts and cooperation include, but are not limited to, the parties’ respective counsel undertaking (i) to keep each other appropriately informed of communications from and to personnel of the reviewing antitrust authority, and (ii) to confer with each other regarding appropriate contacts with and response to personnel of said antitrust authority.

(iv) Each Party shall be responsible for its own costs and expenses associated with any filing under the HSR Act or the Law of any other jurisdiction.

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(v) Certain Terms. As used in this Section 3(d), the below terms shall have the meanings so specified.

(1) “DOJ” shall mean the United States Department of Justice.

(2) “FTC” shall mean the United States Federal Trade Commission, or any successor entity thereto.

(3) “Governmental Authority” shall mean any administrative agency, commission or other governmental authority, body or instrumentality, federal, state, local, domestic or foreign governmental or regulatory authority.

(4) “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. Section 18(a)), and the rules and regulations promulgated thereunder.

(5) “HSR Clearance Date” shall mean the earlier of (i) the date on which the FTC shall notify the Company and the Holder of early termination of the applicable waiting period under the HSR Act or (ii) the day after the date on which the applicable waiting period under the HSR Act expires without any action by any government agency or challenged to the termination.

(e) If within five (5) Trading Days after the later of the Exercise Effectiveness Date and payment of the Exercise Price of the shares thereby purchased, the Company shall fail to issue and deliver a certificate to the Holder (at an address in the United States specified by the Holder) and register such Warrant Shares on the Company’s share register, or instruct its transfer agent to register in book entry form the number of Warrant Shares to which the Holder is entitled or credit the Holder’s balance account with the Depository Trust Company for the number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise hereunder, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of Warrant Shares issuable upon such Exercise that the Holder anticipated receiving from the Company, then the Company shall, within five (5) Trading Days after the Holder’s request promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in an amount equal to the excess (if any) of the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased over the product of (A) such number of shares of Common Stock, times (B) the closing sale price of the Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such Warrant Shares to the Holder without violating this Section 3(e).

4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the Exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such Exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the market price of one share of the Common Stock for the ten (10) Trading Days immediately prior to the Exercise Date of this Warrant.

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5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names (provided the Holder has complied with the restrictions on transfer set forth herein) as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely Exercise of this Warrant, pursuant to the terms hereof.

7. Transfer, Division and Combination.

(a) Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be Exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a) hereof, as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e) Prior to, and as a condition of, any transfer of this Warrant, the Holder or transferee of this Warrant, as the case may be must (i) execute and deliver to the Company an investment letter in form and substance reasonably acceptable to the Company and (ii) qualify as an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

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8. No Rights as Stockholder until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the Exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond or letter of credit), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be Exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

11. Adjustments of Exercise Price and Number of Warrant Shares. The number and kind of securities purchasable upon the Exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon Exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

12. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case of (i) any capital reorganization or reclassification, (ii) any consolidation or merger to which the Company is a party other than a merger or consolidation in which the Company is the continuing corporation, (iii) any sale or conveyance to another entity of the property of the Company as an entirety or substantially as an entirety, or (iv) any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Company) (each, a “Fundamental Transaction”), the Holder of this

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Warrant shall have the right thereafter to receive on the Exercise of this Warrant the kind and amount of securities, cash or other property which the Holder would have owned or have been entitled to receive immediately after such Fundamental Transaction had this Warrant been exercised immediately prior to the effective date of such Fundamental Transaction and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in Section 11 hereof with respect to the rights and interests thereafter of the Holder of this Warrant to the end that the provisions set forth in Section 11 hereof shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the Exercise of this Warrant. The above provisions of this Section 12 shall similarly apply to successive Fundamental Transactions. The Company shall require the issuer of any shares of stock or other securities or property thereafter deliverable on the Exercise of this Warrant to be responsible for all of the agreements and obligations of the Company hereunder. Notice of any such Fundamental Transaction and of said provisions so proposed to be made, shall be mailed to the Holder of this Warrant not less than thirty (30) days prior to such event. A sale of all or substantially all of the assets of the Company for a consideration consisting primarily of securities shall be deemed a consolidation or merger for the foregoing purposes. Notwithstanding the foregoing, following a Fundamental Transaction in which all or substanitally all of the outstanding Common Stock of the Company is exchanged for, converted into, acquired for or constitutes the right to receive solely cash (a “Triggering Event”), at the written request of the Holder delivered before the twentieth (20^th) day after such Triggering Event, the Company (or the successor entity) shall purchase this Warrant from the Holder by paying to the Holder, within five days after such request, cash in an amount equal to the Black-Scholes Value (as defined below) of the remaining unexercised portion of this Warrant. “Black-Scholes Value” means the value of the unexercised portion of this Warrant calculated using the Black-Scholes Option Pricing Model determined as of the day immediately following the public announcement of the applicable Triggering Event and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of such request and (ii) an expected volatility equal to the one-hundred (100) day volatility obtained from the HVT function on Bloomberg.

13. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the Exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the Exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

14. Notice of Distribution. If the Board of Directors of the Company shall declare any dividend or other distribution with respect to its Common Stock other than a cash distribution out of earned surplus, the Company shall mail notice thereof to the Holder of this Warrant not less than twenty (20) days prior to the record date fixed for determining stockholders entitled to participate in such dividend or other distribution. Each such written notice shall be sufficiently given if addressed to the Holder at the last address of the Holder appearing on the books of the Company and delivered in accordance with Section 16(d) hereof.

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15. Registration Rights. The Common Stock issuable upon Exercise of this Warrant shall constitute Registrable Securities (as such term is defined in the Modification Agreement). The original Holder of this Warrant, and any valid transferees thereof pursuant to the Modification Agreement, shall be entitled to all of the benefits afforded to a holder of any Registrable Securities under the Modification Agreement and such holder, by its acceptance of this Warrant, agrees to be bound by and to comply with the terms and conditions of the Modification Agreement applicable to the holder as a holder of Registrable Securities.

16. Miscellaneous.

(a) Jurisdiction. This Warrant shall constitute a contract under the laws of the State of Louisiana.

(b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the Exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

(c) Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date.

(d) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of that certain Reimbursement and Warrant Agreement, dated as of April 15, 2009, between the Company and the Holder; provided, that upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(e) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to Exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder.

(h) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

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(i) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(j) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

* * *

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: April 15, 2009


AKORN, INC.
By:	/s/ Jeffrey A. Whitnell
	Name:	Jeffrey A. Whitnell
	Title:	CFO

[Signature Page to Common Stock Purchase Warrant]

NOTICE OF EXERCISE

To: Akorn, Inc.

1. The undersigned hereby elects to purchase Warrant Shares of Akorn, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price for such Warrant Shares in full, together with all applicable transfer taxes, if any. Payment shall take the form of lawful money of the United States.

2. The undersigned hereby elects to exercise the attached Warrant into Warrant Shares of Akorn, Inc. through “cashless exercise” in the manner specified in the Warrant. This exercise is made with respect to of the Warrant Shares covered by the Warrant.

3. Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Warrant Shares shall be delivered to the following:

4. Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.


	[PURCHASER]
	By:
		Name:
		Title:

		Dated:

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to exercise the Warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to whose address is

Dated: ______________, _______


		Holder’s Signature:

		Holder’s Address:


Signature Guaranteed:

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-10.1 3 c50612bexv10w1.htm EX-10.1 exv10w1

Exhibit 10.1

Execution Version

REIMBURSEMENT AND WARRANT AGREEMENT

THIS REIMBURSEMENT AND WARRANT AGREEMENT (this “Agreement”) is made and entered into as of April 15, 2009, by and among AKORN, INC., a Louisiana corporation (“Akorn”), AKORN (NEW JERSEY), INC., an Illinois corporation (“Akorn NJ”, and together with Akorn, collectively, the “Companies” and individually as a “Company”), JOHN N KAPOOR TRUST DATED 9/20/89 (the “Kapoor Trust”), and, solely for the purpose of consenting to Section 2 of this Agreement, EJ FUNDS LP, a Delaware limited partnership (“EJ Funds”).

WITNESSETH:

WHEREAS, Akorn and Massachusetts Biologic Laboratories of the University of Massachusetts (“MBL”) are parties to a certain Exclusive Distribution Agreement, dated as of March 22, 2007 (the “Distribution Agreement”);

WHEREAS, Akorn and MBL entered into a certain letter agreement, dated as of March 27, 2009 (the “Letter Agreement”), pursuant to which Akorn and MBL agreed to resolve various issues arising under the Distribution Agreement;

WHEREAS, under the terms of the Letter Agreement, Akorn or its designee is required to deliver to MBL, as security for the timely payment of amounts payable to MBL and to reimburse MBL in the event any such payment (or any potion thereof) is avoided, set aside, or otherwise required to be repaid by MBL, an irrevocable transferable standby letter of credit that is (i) in form and substance reasonably acceptable to MBL, (ii) in the amount of Ten Million Five Hundred Thousand Dollars ($10,500,000.00) and (iii) confirmed by a United States bank acceptable to MBL (the “L/C”);

WHEREAS, at the request of Akorn, simultaneous with the execution and delivery of this Agreement, the Kapoor Trust has requested that Bank of America issue the L/C in favor of MBL;

WHEREAS, draws under the L/C (each, a “Draw”, and collectively, the “Draws”) are to be used by MBL solely (i) in the event that Akorn fails to make timely payment to MBL of any amount Akorn is obligated to pay to MBL under the Letter Agreement and (ii) to reimburse MBL in the event any such payment (or any potion thereof) made by Akorn is avoided, set aside, or otherwise required to be repaid by MBL;

WHEREAS, the Companies have agreed to reimburse the Kapoor Trust for any Draws under the L/C;

WHEREAS, pursuant to that certain Assignment, dated as of March 31, 2009, between EJ Funds and General Electric Capital Corporation, the Companies and EJ Funds are parties to a certain Credit Agreement, dated as of January 7, 2009 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the lenders thereto have made certain financial accommodations available to the

Companies as described therein (unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement); and

WHEREAS, in order to induce the Kapoor Trust to request the issuance of the L/C in favor of MBL, the Companies have agreed to enter into this Agreement, to issue certain warrants to the Kapoor Trust and to modify and amend the definitions of “Obligations” under the Credit Agreement, and terms of similar import under the Collateral Documents, to include all obligations of the Companies arising under this Agreement, whether now existing and hereinafter arising.

NOW, THEREFORE, for and in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Reimbursement Agreement. If any Draws under the L/C shall be made, the full amount of each such Draw shall automatically and without need for further notice to or action by any party become term indebtedness of the Company payable to the Kapoor Trust with interest payable at the same rate (i.e., as of the date hereof, 10%, and subject to adjustment, if any change shall occur with respect to the rate of interest chargeable with respect to Loans, whether consensually or as a result of imposition of default rates of interest) and same times as the revolving debt under the Credit Agreement, and with principal due in full at the earlier of the Revolving Termination Date or such earlier date that any Loans are refinanced by the Borrowers or accelerated by the Lender.

2. Security. As security for the obligations of the Companies to reimburse the Kapoor Trust under Section 1 and for the express benefit of the Kapoor Trust, the Companies and EJ Funds (as Agent and sole Lender under the Credit Agreement) hereby agree that the definition of “Obligations” under the Credit Agreement, and terms of similar import under the Collateral Documents, are hereby modified and amended to include all obligations of the Companies arising under this Agreement, whether now existing and hereinafter arising, with the effect that, from and after the date hereof, EJ Funds, in its capacity as Agent, shall have a present security interest with respect to all such obligations for the benefit of the Kapoor Trust.

3. Warrants. As material inducement for the Kapoor Trust to request the issuance of the L/C in favor of MBL on behalf of Akorn, Akorn shall (i) simultaneous with the execution and delivery of this Agreement, issue to the Kapoor Trust a warrant (the “L/C Request Warrant”) exercisable for One Million Five Hundred One Thousand Nine Hundred Thirty-Three (1,501,933) shares of common stock, no par value per share, of Akorn (“Common Stock”) and (ii) on the date of each Draw, if any, under the L/C, issue to the Kapoor Trust an additional warrant (each such additional warrant, an “L/C Draw Warrant”), exercisable for an aggregate number of shares of Common Stock equal to the product of (i) a quotient (carried to the 9th decimal place) equal to (A) the amount of such Draw divided by (B) 1,000,000 times (ii) 200,258. The per share exercise price under the L/C Request Warrant and each L/C Draw Warrant, if any, shall be $1.11. The L/C Request Warrant and each L/C Draw Warrant, if any, shall be in the form attached hereto as Exhibit A. The Common Stock issuable upon the exercise

of the L/C Request Warrant and each L/C Draw Warrant, if any, shall be “Registrable Securities” for all purposes under Section 9 of that certain Modification, Warrant and Investor Rights Agreement, dated of even date hereof, by and among the Companies and EJ Funds (the “Modification Agreement”).

4. Representations and Warranties.

4.1 Representations and Warranties of each Company. Each Company hereby acknowledges, represents and warrants to the Kapoor Trust, as to itself and each other Company, as follows: (i) each Company has been fully advised by legal counsel of its rights and responsibilities under this Agreement and of the legal effect hereof; (ii) each Company has read and fully understands the contents of this Agreement, and has freely and voluntarily executed this Agreement; (iii) each Company is sophisticated and knowledgeable in financial matters, both generally and with respect to transactions of the type described in the Distribution Agreement, the Letter Agreement and this Agreement; (iv) each Company has received and has independently reviewed and evaluated, a copy of this Agreement and all other documents and instruments executed or delivered in connection therewith, and fully understand the transactions contemplated thereby; (v) each Company has made such independent review and evaluation, as well as all other decisions pertaining to the execution and delivery of this Agreement, without any reliance upon any oral or written representation, warranty, advice or analysis of any kind whatsoever from the Kapoor Trust, however obtained; (vi) each Company has determined, following such independent review and evaluation, that the benefits to them of the transactions contemplated by this Agreement are direct and substantial, and that it is in the best interest of such Company to execute and deliver this Agreement; (vii) the individuals signing this Agreement on behalf of each Company are duly authorized and fully empowered to do so; (viii) the consideration flowing to each Company under this Agreement is in all respects substantial and sufficient; (ix) this Agreement has been duly and validly executed and delivered by each Company and is the valid and legally binding obligation of such Company, enforceable in accordance with its terms; (x) each Company has the requisite corporate power and is authorized to execute and deliver this Agreement and to carry out and perform its obligations hereunder, including the issuance and delivery of the L/C Request Warrant, each L/C Draw Warrant, if any, and the reservation of the Common Stock issuable upon exercise of the L/C Request Warrant and each L/C Draw Warrant, if any; (xi) the L/C Request Warrant, each L/C Draw Warrant, if any, and the Common Stock issuable upon exercise of the L/C Request Warrant and each L/C Draw Warrant, if any, do not violate any preemptive rights or rights of first refusal, will be issued in compliance with all applicable federal and state securities laws, will be free of any liens or encumbrances, other than liens or encumbrances created by the Kapoor Trust, and will be fully paid and nonassessable upon issuance; (xii) this Agreement and the Modification Agreement do not conflict with and will not breach any agreement to which either Company is a party; and (xiii) the Kapoor Trust is authorized to discuss financial and other matters related to each Company with EJ Funds and with such Company’s independent certified public accountants.

4.2 Representations and Warranties of the Kapoor Trust. The Kapoor Trust hereby acknowledges, represents and warrants as follows: (i) all warrants acquired by it pursuant to this agreement and any shares of common stock issued upon the exercise of such warrants will be for the Kapoor Trust’s own account and without a view to resale or distribution; (ii) the

Kapoor Trust is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”); (iii) the Kapoor Trust understands that all warrants issuable to it pursuant to this Agreement and any shares of common stock issued upon the exercise of such warrants have not been registered under the Securities Act, or applicable state securities laws, and will be issued in reliance on exemptions for private offerings contained in the Securities Act and in reliance on exemptions from the registration requirements of certain state securities laws; and (iv) the Kapoor Trust understands that, because the warrants and any shares of common stock issued upon the exercise of such warrants have not been registered under the Securities Act or applicable state securities laws, such warrants and shares of common stock may not be re-offered or resold except through a valid and effective registration statement or pursuant to a valid exemption from the registration requirements under the Securities Act and applicable state securities laws.

5. Miscellaneous.

5.1 Notices. All communications, notices and consents provided for in this Agreement shall be in writing and shall be given in person or by courier or by means of telex, telecopy or other wire transmission (with request for assurance of receipt in a manner typical with respect to communications of that type), or mailed by registered or certified first class mail, return-receipt requested, addressed (a) if to the Kapoor Trust, to the Kapoor Trust, 225 East Deerpath Road, Suite 250, Lake Forest, IL 60045, Attention Rao Akella, Fascimile (847) 295-8680, or (b) if to a Company, to Akorn, Inc., 1925 W. Field Court, Suite 300, Lake Forest, IL 60045, Attention Jeffrey A. Whitnell, CFO, Fascimile (847) 279-6123, or to such other address as the person entitled thereto shall from time to time designate by notice in writing to the other party hereto. All such communications, notices and consents shall be deemed given when received (or when proffered to, if not accepted) the party to whom it is addressed.

5.2. Amendments, Supplements, Etc. Neither this Agreement nor any of the terms hereof may be amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against which enforcement of such amendment, supplement, waiver or modification shall be sought.

5.3. Headings. The division of this Agreement into sections, subsections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation hereof.

5.4 Successors and Assigns. The terms of this Agreement shall be binding upon the parties hereto and their respective successors and assigns. Neither of the Companies may assign its rights or obligations hereunder without the prior written consent of the Kapoor Trust.

5.5 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

5.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois applicable to contracts made and to be performed entirely within such state.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

IN WITNESS WHEREOF, the parties have hereunto set their hands and seals effective as of the date first above written.


AKORN, INC, a Louisiana corporation
By:	/s/ Jeffrey A. Whitnell
	Name:	Jeffrey A. Whitnell
	Title:	CFO

AKORN (NEW JERSEY), INC., an Illinois corporation
By:	/s/ Jeffrey A. Whitnell
	Name:	Jeffrey A. Whitnell
	Title:	CFO

JOHN N KAPOOR TRUST DATED 9/20/89
By:	/s/ John N. Kapoor
	Name:	John N. Kapoor
	Title:	Trustee

EJ FUNDS LP, solely for the purposes of consenting to Section 2 of this Agreement By: EJ Financial Enterprises, Inc., its General Partner
By:	/s/ John N. Kapoor
	Name:	John N. Kapoor
	Title:	President

[Signature Page to Reimbursement and Warrant Agreement]

EXHIBIT A

FORM OF WARRANT

Exhibit A to
Reimbursement and Warrant Agreement

AKORN, INC.

COMMON STOCK PURCHASE WARRANT

To Purchase [ ] Shares of Common Stock

THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, JOHN N KAPOOR TRUST DATED 9/20/89 (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after [date warrant is issued] (the “Initial Exercise Date”) and on or prior to the close of business on the fifth (5th) anniversary following the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Akorn, Inc., a Louisiana corporation (the “Company”), up to [ ] shares, subject to adjustment as set forth herein (the “Warrant Shares”) of Common Stock, no par value per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be $1.11 per share, subject to adjustment hereunder. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Modification, Warrant and Investor Rights Agreement (the “Modification Agreement”), dated as of April 13, 2009, between the Company and EJ FUNDS LP.

this Warrant such number of shares of its authorized but unissued Common Stock as will be sufficient to permit the Exercise in full of this Warrant.

3. Exercise of Warrant.


		Y (A - B)

X =		A

Where:

X = The net number of shares of Common Stock to be issued to the Holder pursuant to the election to exercise;

Y = The gross number of shares of Common Stock in respect of which the election to exercise is made;

A = The average of the market price of one share of the Common Stock for the ten (10) Trading Days immediately prior to the Exercise Date; and

B = The Exercise Price.

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(d) Reporting and Waiting Requirements.

-3-

(iv) Each Party shall be responsible for its own costs and expenses associated with any filing under the HSR Act or the Law of any other jurisdiction.

-4-

(v) Certain Terms. As used in this Section 3(d), the below terms shall have the meanings so specified.

(1) “DOJ” shall mean the United States Department of Justice.

(2) “FTC” shall mean the United States Federal Trade Commission, or any successor entity thereto.

(4) “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. Section 18(a)), and the rules and regulations promulgated thereunder.

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6. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely Exercise of this Warrant, pursuant to the terms hereof.

7. Transfer, Division and Combination.

(c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

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-7-

-8-

16. Miscellaneous.

(a) Jurisdiction. This Warrant shall constitute a contract under the laws of the State of Louisiana.

(h) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

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(j) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

* * *

-10-

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: [__], 2009


	AKORN, INC.
	By:
		Name:
		Title:

[Signature Page to Common Stock Purchase Warrant]

NOTICE OF EXERCISE

To: Akorn, Inc.

3. Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Warrant Shares shall be delivered to the following:

4. Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.


	[PURCHASER]
	By:
		Name:
		Title:

		Dated:

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to exercise the Warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to whose address is

Dated: ______________, _______


		Holder’s Signature:

		Holder’s Address:


Signature Guaranteed:

EX-10.2 4 c50612bexv10w2.htm EX-10.2 exv10w2

Exhibit 10.2

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

SETTLEMENT AGREEMENT

THIS SETTLEMENT AND AGREEMENT (the “Settlement Agreement”) is made effective as of April 15, 2009 (“Effective Date”), by and between AKORN, INC., a Louisiana corporation, having a principal place of business located at 2500 Millbrook Drive, Buffalo Grove, IL 60089 (“Akorn”), and Massachusetts Biologic Laboratories of the University of Massachusetts Medical School, having a principal place of business located at 460 Walk Hill Street, Boston, MA 02126 (“MBL”). Akorn and MBL are sometimes referred to herein individually as “Party,” or collectively, as the “Parties.”

RECITALS

WHEREAS, the Parties entered into that certain Exclusive Distribution Agreement, dated March 22, 2007, pursuant to which Akorn became the exclusive distributor in the United States and Puerto Rico of Tetanus-Diphtheria vaccine (the “Product”) manufactured by MBL (the “Exclusive Distribution Agreement”);

WHEREAS, by an Amendment with an effective date of July 3, 2008, an Amendment with an effective date of July 30, 2008, and an Amendment with an effective date of August 1, 2008 (the “Third Amendment”), MBL and Akorn amended the Exclusive Distribution Agreement for certain purposes (the “Pre-Settlement Modified Agreement”);

WHEREAS, since the effective date of the Third Amendment, a dispute arose between the Parties whereby MBL claimed that Akorn was and continued to be in breach of the Pre-Settlement Modified Agreement for failure to timely make payments and take delivery of the Product as required by the Pre-Settlement Modified Agreement (the “Dispute”);

WHEREAS, the Parties entered into a binding letter agreement (the “Letter Agreement”) on March 27, 2009 under which, among other points (i) Akorn acknowledged its outstanding past due payment obligations to MBL in the amount of $5,750,000 (the “Past Due Amount”) and its failure to take delivery of required doses of Product on March 11, 2009 (collectively, the “Specified Defaults”); and (ii) the Parties agreed to the resolution of the Dispute as set forth below;

WHEREAS, on April 13, 2009, Akorn paid to MBL $1,000,000 of the Past Due Amount (the “April $1 Million Payment”);

WHEREAS, pursuant to the Letter Agreement, the Parties resolved the Dispute subject to the terms and conditions set forth therein, including the following: (a) the amendments to the Pre-Settlement Modified Agreement immediately taking effect as of


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

the execution and delivery of the Letter Agreement including the conversion of the Pre-Settlement Modified Agreement into a non-exclusive agreement and the suspension of Akorn’s obligation to make any further minimum purchases of Product and to otherwise comply with the delivery schedule set out in the Pre-Settlement Modified Agreement through the LOC Delivery Date (as defined in the Letter Agreement); and (b) in exchange for such amendments and the other amendments contemplated therein, an obligation to pay MBL the sum of (Y) the Past Due Amount (less the April $1 Million Payment) and (Z) $4,750,000 (collectively, the “Settlement Payment”), which obligation shall be secured by a letter of credit in the amount of $10,500,000;

WHEREAS, but for the amendments to the Pre-Settlement Modified Agreement set forth in the Letter Agreement, the liability of Akorn thereunder would greatly exceed the Settlement Payment plus the April $1 Million Payment;

WHEREAS, as required under the Letter Agreement the Parties are entering into this Settlement Agreement as necessary to implement the settlement of the Dispute.

NOW, THEREFORE, in consideration of the mutual promises, terms, conditions, provisions and covenants described herein, which consideration is hereby acknowledged by the Parties, the Parties hereby agree as follows:

AGREEMENT

1. Recitals. The recitals set forth above are incorporated into this Settlement Agreement.

2. Settlement Payment Schedule. The Settlement Payment shall be paid by Akorn by wire transfer to MBL according to the following schedule (the “Settlement Payment Schedule”):


Payment Due Date	Amount of Payment
May 13, 2009	$	1,500,000.00
June 13, 2009	$	2,000,000.00
July 13, 2009	$	1,500,000.00
August 13, 2009	$	1,500,000.00
September 13, 2009	$	1,500,000.00
June 30, 2010	$	1,500,000.00


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

Each such amount shall be paid regardless of the termination of the Pre-Settlement Modified Agreement, as amended by the Letter Agreement and by the Amendment (as defined below), and as may be further amended and modified (the “Modified Agreement”). Notwithstanding anything to the contrary contained in this Settlement Agreement, the execution and delivery of this Settlement Agreement does not constitute a novation, payment or termination of the obligations of Akorn under the Pre-Settlement Modified Agreement, as amended by the Letter Agreement, giving rise to the Settlement Payment.

Wire transfer instructions for each such payment by Akorn are as follows:

Bank of America, N.A.
ABA Routing Number: [***...***]
Account Number: [***...***]
Checking Account
Bank Phone Number: 800-432-1000

3. Standby Irrevocable Letter of Credit. As security for, among other things, the timely payment by Akorn of the Settlement Payment in accordance with the Settlement Payment Schedule, Akorn or its designee shall deliver to MBL on or before the Effective Date the letter of credit described in the Letter Agreement (including draw, reduction and expiration terms, as may be extended or replaced from time to time, the “Letter of Credit”).

4. Draws under Letter of Credit. MBL agrees that it only shall be permitted to draw on the Letter of Credit upon the occurrence of any of the following:

(i) if any required payment in respect of the Settlement Payment is not timely paid according to the Settlement Payment Schedule and such payment has not, at the time of the draw under the Letter of Credit, been paid to MBL by Akorn by wire transfer;

(ii) if any payment by Akorn to MBL of the Settlement Payment or any portion thereof, or the payment by Akorn to MBL of the $1 Million Payment (as defined in the Letter Agreement) or any portion thereof, or the payment by Akorn to MBL of the April $1 Million Payment or any portion thereof, is avoided, set aside, recovered or otherwise required to be repaid by MBL; and/or

(iii) if (A) Akorn is the debtor in a bankruptcy or other insolvency proceeding (whether voluntary or involuntary) (an “Insolvency Proceeding”) and such proceeding commenced on or before October 5, 2010 and (B) no Replacement Letter of Credit has been issued to and received by MBL on or before the fifth business day prior to the expiration date of the Letter of Credit or a Replacement Letter of Credit, if applicable.


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

(iv) As used herein, “Replacement Letter of Credit” means either an amendment extending the expiration of the Letter of Credit (or a previous Replacement Letter of Credit, if applicable) or a letter of credit issued for the benefit of MBL by a United States commercial bank reasonably acceptable to MBL in an amount not less than the sum of all payments made by Akorn to MBL pursuant to this Settlement Agreement during the 95 day period preceding the commencement of an Insolvency Proceeding, which amendment or letter of credit, as applicable, is in form and substance reasonably satisfactory to MBL.

5. Amendment to Pre-Settlement Modified Agreement. As required by the Letter Agreement, the Parties agree to simultaneously herewith execute and deliver the amendment to the Pre-Settlement Modified Agreement, as amended by the Letter Agreement, in the form attached hereto as Exhibit A (the “Amendment”).

6. Waiver of Specified Defaults. Upon the execution and delivery of this Settlement Agreement by Akorn, and MBL’s receipt of the Letter of Credit, the Specified Defaults automatically shall be waived.

7. Release.

7.1 AKORN (IN ITS OWN RIGHT AND ON BEHALF OF ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS), RELEASES, ACQUITS, AND FOREVER DISCHARGES MBL AND ITS DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS (COLLECTIVELY, THE “MBL RELEASED PARTIES”), TO THE FULLEST EXTENT PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND OMISSIONS OF THE MBL RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, AND EXECUTIONS OF ANY NATURE, TYPE, OR DESCRIPTION WHICH AKORN HAS AGAINST THE MBL RELEASED PARTIES AND WHICH AROSE PRIOR TO THE EFFECTIVE DATE, IN CONNECTION WITH OR RELATED TO THE PRE-SETTLEMENT MODIFIED AGREEMENT, AS AMENDED BY THE LETTER AGREEMENT, AT LAW OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED (COLLECTIVELY, THE “MBL RELEASED CLAIMS”), PROVIDED, HOWEVER, IN NO EVENT SHALL THE MBL RELEASED CLAIMS INCLUDE MBL’S OBLIGATIONS UNDER THIS SETTLEMENT AGREEMENT AND/OR THE MODIFIED AGREEMENT ON AND AFTER THE EFFECTIVE DATE.

7.2 UPON MBL’S RECEIPT OF THE LETTER OF CREDIT, MBL (IN ITS OWN RIGHT AND ON BEHALF OF ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS),


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

RELEASES, ACQUITS, AND FOREVER DISCHARGES AKORN AND ITS DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS (COLLECTIVELY, THE “AKORN RELEASED PARTIES”), TO THE FULLEST EXTENT PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND OMISSIONS OF THE AKORN RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, AND EXECUTIONS OF ANY NATURE, TYPE, OR DESCRIPTION WHICH MBL HAS AGAINST THE AKORN RELEASED PARTIES AND WHICH AROSE PRIOR TO THE EFFECTIVE DATE, IN CONNECTION WITH OR RELATED TO THE PRE-SETTLEMENT MODIFIED AGREEMENT, INCLUDING, BUT NOT LIMITED TO THE SPECIFIED DEFAULTS, AT LAW OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED (COLLECTIVELY, THE “AKORN RELEASED CLAIMS”), PROVIDED, HOWEVER, IN NO EVENT SHALL THE AKORN RELEASED CLAIMS INCLUDE THE OBLIGATIONS OF AKORN UNDER THIS SETTLEMENT AGREEMENT AND/OR THE MODIFIED AGREEMENT ON AND AFTER THE EFFECTIVE DATE.

8. Representations and Warranties (Akorn). To induce MBL to enter into this Settlement Agreement, Akorn represents and warrant to MBL as follows:

(i) Authority. The execution, delivery and performance of this Settlement Agreement and the Amendment hereby have been duly authorized by all requisite action on the part of Akorn and do not and will not violate the articles of incorporation or bylaws, partnership agreement, or other governance document or agreement of Akorn, any other material agreement to which Akorn is a party, or any law, rule or regulation, or any order of any court, governmental authority or arbitrator by which Akorn or any of its respective properties is bound.

9. Representation and Warranty (MBL). To induce Akorn to enter into this Settlement Agreement, MBL represents and warrant to Akorn as follows:

(i) Authority. The execution, delivery and performance of this Settlement Agreement and the Amendment have been duly authorized by all requisite action on the part of MBL and do not and will not violate the governance document or agreement of MBL, any other material agreement to which MBL is a party, or any law, rule or regulation, or any order of any court, governmental authority or arbitrator by which MBL or any of its respective properties is bound.

10. Information. For the remaining duration of the Modified Agreement, Akorn will deliver to MBL by the fifth business day of each month (i) a monthly cash forecast for the Product to be sold pursuant to the Modified Agreement, and (ii) monthly


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

inventory and sales information for Product. Additionally Akorn will deliver to MBL quarterly financial results as and when filed with the United States Securities and Exchange Commission.

11. No Implied Waivers. No failure or delay on the part of MBL in exercising, and no course of dealing with respect to, any right, power or privilege under this Settlement Agreements, the Modified Agreement, the Letter of Credit or any other document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Settlement Agreement, the Modified Agreement, the Letter of Credit or any other document preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

12. ENTIRE AGREEMENT; AMENDMENT, ETC. THIS SETTLEMENT AGREEMENT, THE MODIFIED AGREEMENT, AND THE LETTER OF CREDIT HEREBY EMBODY THE FINAL, ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO REGARDING MBL’S FORBEARANCE WITH RESPECT TO ITS RIGHTS AND REMEDIES ARISING AS A RESULT OF THE SPECIFIED DEFAULTS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES. The provisions of this Agreement may be amended or waived only by an instrument in writing signed by Akorn and MBL. Nothing in this Settlement Agreement, expressed or implied, shall be construed to confer upon any person or entity (other than the Parties and their respective successors and assigns) any legal or equitable right, remedy or claim under or by reason of this Settlement Agreement, except that the John N. Kapoor Trust DTD 9/20/89 shall be an intended beneficiary of Section 4.

13. Confidentiality. The Parties understand and agree that the terms and conditions of this Settlement Agreement are and shall at all times remain confidential, unless this Settlement Agreement or its contents become Public Information. Neither Party shall disclose this Settlement Agreement or its contents, except that a Party may disclose this Settlement Agreement or its contents: (i) to a Party’s attorneys, accountants and other advisors; (ii) to any other person or entity, if the failure to make such disclosure would constitute a breach of, or default under, an agreement between a Party and such other person or entity; (iii) if required or reasonably necessary in connection with any Legal Proceeding; or (iv) pursuant to any applicable laws, ordinances, judgments, decrees, injunctions, writs, rules, regulations, orders, interpretations, licenses, permits and orders of any court of competent jurisdiction, arbitration or Governmental Authority in any relevant jurisdiction to the extent that such


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

Party may reasonably consider necessary to protect its interests. For purposes hereof, the following terms shall have the following meanings:

(i) “Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

(ii) “Legal Proceeding” means any action, suit, audit, investigation or proceeding of any nature, in law or in equity, pending or threatened, by or before any court, tribunal, arbitrator or other Governmental Authority.

(iii) “Public Information” means information that is or becomes public knowledge other than as a direct or indirect result of any breach of this Agreement.

14. Notices. All notices to be given under this Settlement Agreement shall be in writing and shall be delivered personally, by facsimile machine with a copy mailed by certified mail, or by certified mail postage prepaid, to the following addresses:


	If to Akorn:		Akorn, Inc. 150 S. Wyckles Road Decatur, IL 62522 Facsimile No.: (847) 279-6123 Attention: John N. Kapoor, P.H.d.


	If to MBL:		Massachusetts Biologic Laboratories University of Massachusetts Medical School 460 Walk Hill Street Boston, MA 02126 Facsimile No.: (617) 474-3240 Attention: Donna M. Ambrosino, M.D.

Notices shall be effective upon receipt if personally delivered; on the first business day following the date of facsimile transmission; or on the third business day following the date of mailing. A Party may change the address for notices by notifying the other Party of such change in accordance with this Section.

15. Litigation. The Parties agree to bear their own costs, attorneys’ fees and all other expenses associated with the Dispute between the Parties described herein. In


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

the event any litigation or contested proceeding arises between or among the Parties relating to this Settlement Agreement, the prevailing Party shall be entitled to recover as costs, in addition to all costs provided by law, all actual costs and expenses incurred, including attorneys’ fees.

16. Choice of Law and Venue: Jury Trial Waiver.

(i) THE VALIDITY OF THIS SETTLEMENT AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF COMMONWEALTH OF MASSACHUSETTS.

(ii) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE MODIFIED AGREEMENT MAY BE TRIED AND LITIGATED IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SUFFOLK, COMMONWEALTH OF MASSACHUSETTS. AKORN WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 16(ii).

(iii) AKORN HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SETTLEMENT AGREEMENT, THE MODIFIED AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. AKORN REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

17. Independent Judgment. The Parties agree and pledge that in making this Settlement Agreement, they rely on their own respective judgment, belief and knowledge, and not on any representations or statements made by any other Party, or any other Party’s officers, agents, representatives, or counsel, except as specifically set forth herein. The Parties acknowledge that they have had the opportunity to consult with counsel of their choosing concerning the terms and conditions of this Settlement Agreement, and that the execution thereof is the free act and deed of each Party.


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

18. Construction of Settlement Agreement. The language of all parts of this Settlement Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either Party. Neither Party shall be deemed to be the drafting party of this Settlement Agreement for purposes of construction and interpretation.

19. Successors and Assigns. This Settlement Agreement shall be binding upon and inure to the benefit of the Parties and each of their respective legal representatives, successors and assigns.

20. Severability. If any provision of this Settlement Agreement, or any part thereof, is declared by a court of competent jurisdiction to be invalid, void or unenforceable, each and every other provision of this Settlement Agreement, or any part thereof, shall nevertheless continue in full force and effect.

21. Execution in Counterparts. This Settlement Agreement may be executed in several counterparts that together shall be originals and constitute one and the same instrument.

[Signature page follows]


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

IN WITNESS WHEREOF, the Parties have entered into this Settlement Agreement as of the date first above written.


AKORN, INC.
By:	/s/ Jeffrey A. Whitnell
	Name:	Jeffrey A. Whitnell
	Title:	CFO

MASSACHUSETTS BIOLOGIC LABORATORIES OF THE UNIVERSITY OF MASSACHUSETTS MEDICAL SCHOOL
By:	/s/ Donna M. Ambrosino
	Donna M. Ambrosino, M.D.
	Title:	Director

[Signature Page to Settlement Agreement]


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

EXHIBIT A

[See Attached]


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2


		MassBiologics University of Massachusetts Medical School 460 Walk Hill Street, Boston, MA 02126 Telephone: 617-474-3000 Facsimile: 617-474-3240

March 27, 2009

Via Email And FedEx

John N. Kapoor, Ph.D., Chairman
Akorn, Inc.
1925 West Field Court, Suite 300
Lake Forest, IL 60045
jkapoor@ejfinancial.com


Re:		Distribution Agreement — Revised Proposal

Dear John:

I write with respect to resolving various issues arising under the Exclusive Distribution Agreement, dated as of March 22, 2007, between Akorn, Inc. (“Akorn”) and the Massachusetts Biologic Laboratories of the University of Massachusetts (“MBL”) (as amended, our “Distribution Agreement”). MBL makes Akorn the following offer to resolve the parties’ outstanding issues, and to amend the Distribution Agreement accordingly (the “Offer”):

1. Amount Owed. Giving effect to Akorn’s payment of $1,000,000 on March 13, 2009 (the “$1 Million Payment"), Akorn currently owes MBL $5,750,000 million for Td vaccine shipments delivered and accepted (the “Amount Owed”). Payment of the Amount Owed is past due.

2. Failure to Pick-Up. Akorn acknowledges its failure to take delivery of the shipment of [***...***] doses of Td vaccine scheduled for Akorn’s pick-up on March 11, 2009, as required under the Distribution Agreement.

3. Total Amount Owed. In exchange for the Distribution Agreement amendments set out in Section 6 (Distribution Provisions), Akorn hereby agrees to pay to MBL the additional amount of $4,750,000 (such amount together with the Amount Owed, the “Total Amount”). The Total Amount, therefore, equals $10,500,000.00.

4. Pay-Off. Akorn shall pay the remaining Total Amount by wire transfer in accordance with the payment schedule attached as Exhibit A (“Payment Schedule”). Wire transfer instructions are as follows:


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

BANK OF AMERICA, N.A.
ABA Routing [***...***]
Account [***...***]
Checking Account
Bank Phone # (800) 432-1000

5. Standby Irrevocable Letter of Credit. As security for the timely payment by Akorn of the Total Amount in accordance with the Payment Schedule, and to reimburse MBL in the event any such payment (or any portion thereof) and/or the $1 Million Payment (or any portion thereof) is avoided, set aside, or otherwise required to be repaid by MBL (whether pursuant to or in connection with a bankruptcy or similar proceeding involving Akorn or otherwise), Akorn or its designee shall provide to MBL on or before April 13, 2009 (the “LOC Delivery Date”) an irrevocable transferable standby letter of credit that meets the following three criteria: the letter of credit shall be (i) in form and substance reasonably satisfactory to MBL (provided that MBL shall not make unreasonable modifications to the bank’s form letter of credit); (ii) in the amount of $10,500,000.00, and (iii) confirmed by a United States bank acceptable to MBL (the “Letter of Credit”). Provided (x) on or before April 6, 2009, Akorn delivers to the issuing bank all documents and materials (other than funding), needed by the bank to issue a Letter of Credit meeting the requirements of the previous sentence, (y) Akorn does not request changes to this Letter of Credit after April 6, 2009 (unless the request is objectively based on clear and convincing justification), and (z) the Letter of Credit is funded by Akorn as of April 13, 2009, then the LOC Delivery Date shall be extended on a day for day basis for each day of negotiations between MBL and the issuing bank over the form and substance of the Letter of Credit which continue subsequent to April 13, 2009. MBL will be able to draw on such Letter of Credit but, in each case, only in the amount not so paid or so avoided, set aside, or repaid, at such time (a) that any required payment in respect of the Total Amount is not timely paid according to the Payment Schedule, or (b) that any such payment (or any portion thereof) is avoided, is set aside, recovered or is otherwise required to be repaid by MBL, or (c) that the $1 Million Payment (or any portion thereof) is avoided, set aside, recovered or is otherwise required to be repaid by MBL. Provided that no bankruptcy, receivership or other similar proceeding is filed by or against Akorn within the 95 day period immediately subsequent to each payment of the Total Amount in accordance with the Payment Schedule, then the amount of the Letter of Credit shall be reduced by the amount of such payment, and such reduction shall take place 95 days after each associated payment. The Letter of Credit shall not expire until 95 days after the sooner to occur of payment in full in immediately available funds of the Total Amount or June 30, 2010, provided, however in the event that prior to the expiration of such 95 day period, a bankruptcy, receivership or other similar proceeding is filed by or against Akorn, the Letter of Credit shall not expire until all applicable time limitation periods (including under Section 546 of the Bankruptcy Code) relating to the avoidance, setting aside, recovery or repayment of any payments made by Akorn to MBL in respect of the Total Amount or the $1 Million Payment shall have expired and no action, litigation or other proceeding in respect thereof shall have been commenced against MBL or, if any such action, litigation or other proceeding shall have been so commenced, the same shall have been resolved by a final order of a court of competent jurisdiction and 5 days from the entry of such order shall have passed.


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

6. Distribution Provisions

6.1 Provisions Taking Immediate Effect. The following amendments to the Distribution Agreement shall become effective as of Akorn’s acceptance of this Offer:

6.1.1 Non-Exclusive Distribution. Akorn will no longer act as MBL’s exclusive distributor under the Distribution Agreement and the Distribution Agreement will be amended to become non-exclusive. Specifically, Akorn will be one of MBL’s, but not the sole, FDA authorized distributors.

6.1.2 Pricing; Reduced Pricing. Pricing to Akorn for Td Vaccine shall be as set out in the Distribution Agreement; provided, however, that if MBL offers more favorable per dose pricing to MBL’s other distributors (“Reduced Per Dose Pricing”), then (i) MBL shall notify Akorn, and (ii) during the period of such Reduced Per Dose Pricing, MBL shall offer the same Reduced Per Dose Pricing to Akorn on orders that Akorn places and takes delivery on, during such period. These Reduced Per Dose Pricing provisions shall not apply to any Td Vaccine sold by MBL under contracts arising from CDC Solicitation Number 2009-N-11074 Vaccine for Children, and MBL’s pricing under such contracts shall not be effected by MBL’s relationship with Akorn. MBL and others will be entitled to sell to others MBL’s Td Vaccines product labeled with Akorn’s NDC currently in MBL’s possession.

6.1.3 Suspension of Minimum Purchase Obligations. Akorn’s obligation to make any further minimum purchases of Td vaccine products and to otherwise comply with the delivery schedule set out in the Distribution Agreement is hereby suspended through the LOC Delivery Date.

6.2 Provisions Taking Effect upon Delivery of LOC. On the strict condition that, in compliance with the terms of this Offer, MBL receives the Letter of Credit on or before the LOC Delivery Date (the “Required Condition”), the following amendments to the Distribution Agreement will go into effect as of the LOC Delivery Date:

6.2.1 Removal of Minimum Purchase Obligation. Upon fulfillment of the Required Condition (and under no other circumstances), the Distribution Agreement shall be amended such that Akorn will not be obligated to make any minimum purchases of Td vaccine products and will purchase on an as needed basis with the quantity to be mutually agreed.

6.2.2 Resale on Termination; Termination without Cause. Upon fulfillment of the Required Condition (and under no other circumstances), the Distribution Agreement will also be amended to include a revised termination provision eliminating the prohibition on the resale of product in the event of a termination for cause and giving either party the right to terminate the agreement for any reason without penalty on 90 days written notice; provided, however, that such right to terminate without cause shall not affect Akorn’s obligations under sections 1, 3, and 4, above, or MBL’s rights hereunder (including under Section 5, above) or under the Letter of Credit or the Documents. Until termination thereof, Akorn would remain subject to all other provisions of the Distribution Agreement (except as such provisions are expressly amended in accordance with this proposal).


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

7. Payment Terms. For all future orders under the Distribution Agreement, payment terms will be that Akorn shall pay for the order in full in cash upon placing the order with MBL.

8. Amended Cure Period. Akorn agrees that the cure period set out in Section 11(a) of the Distribution Agreement is hereby amended such that, notwithstanding anything to the contrary contained in the Distribution Agreement, (a) Akorn’s ability and right to cure defaults or other breaches of the Distribution Agreement in existence as of the date of this Offer shall expire as of the LOC Delivery Date, and (b) the Distribution Agreement automatically shall terminate if, as of the expiration of the LOC Delivery Date, Akorn has failed to fulfill the Required Condition.

9. Information. For the remaining duration of the Distribution Agreement, Akorn will deliver to MBL by the fifth business day of each month (i) a monthly cash forecast for the MBL Td Vaccine product to be sold pursuant to the Distribution Agreement (as amended by this letter agreement); and (ii) monthly inventory and sales information for the MBL Td Vaccine product. Additionally Akorn will deliver to MBL quarterly financial results as and when filed with the SEC.

10. Documents. Documents necessary to implement, or being delivered in connection with, this Offer (including a forbearance agreement) (collectively, the “Documents”), shall conform in all respects to the terms of this Offer, and shall otherwise be in form and substance mutually reasonably acceptable to Akorn and MBL, provided. Akorn shall deliver draft Documents to MBL as soon as practicable and the parties will work together in good faith to execute the Documents on or before the LOC Delivery Date.

11. Forbearance. So long as Akorn complies with the terms hereof, the amended Distribution Agreement, and the Documents, MBL will forebear from declaring a breach or otherwise acting to terminate the Distribution Agreement, as amended hereby and in connection herewith.

12. Binding Effect. All terms material to the parties’ resolution of the current issues under the Distribution Agreement are contained in this Offer and, once accepted by Akorn, these terms shall be legally binding and fully enforceable.

If this Offer meets with your approval, please accept this Offer by signing below, and then return to me one fully executed copy of this Offer no later than 10:00 p.m., EDT March 27, 2009, after which date this Offer will expire.


Very truly yours, Massachusetts Biologic Laboratories of the University of Massachusetts Medical School
By:	/s/ Donna M. Ambrosino, M.D.
	Name:	Donna M. Ambrosino, M.D.
	Title:	Director


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

Agreed and Accepted by

The undersigned hereby agrees to and accepts the Offer, as of March 27, 2009.


Akorn Inc.
By:	/s/ John N. Kapoor, P.h.D.
	Name:	John N. Kapoor, P.h.D.
	Title:	Chairman, Duly Authorized


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

EXHIBIT A
Payment Schedule


Payment Date	Amount of Payment		Remaining Balance
Balance Due, March 18, 2009			$	10,500,000.00
April 13, 2009	$	1,000,000.00	$	9,500,000.00
May 13, 2009	$	1,500,000.00	$	8,000,000.00
June 13, 2009	$	2,000,000.00	$	6,000,000.00
July 13, 2009	$	1,500,000.00	$	4,500,000.00
August 13, 2009	$	1,500,000.00	$	3,000,000.00
September 13, 2009	$	1,500,000.00	$	1,500,000.00
June 30, 2010	$	1,500,000.00	$	0.00


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

EX-10.3 5 c50612bexv10w3.htm EX-10.3 exv10w3

Exhibit 10.3

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

FOURTH AMENDMENT TO
EXCLUSIVE DISTRIBUTION AGREEMENT
BETWEEN
AKORN, INC. AND
MASSACHUSETTS BIOLOGICAL LABORATORIES

THIS FOURTH AMENDMENT (the “Fourth Amendment”) is entered into as of April 15, 2009, (the “Amendment Effective Date”), by and between Massachusetts Biologic Laboratories of the University of Massachusetts Medical School (“MBL” or “Seller”) and Akorn, Inc. (“Akorn” or “Buyer”) (each a “Party” and together the “Parties”).

RECITALS

WHEREAS, MBL as a manufacturer and Akorn as a distributor entered into an Exclusive Distribution Agreement for Tetanus-Diphtheria vaccine (“Product”) on March 22, 2007 (the “Exclusive Distribution Agreement”);

WHEREAS, by an Amendment with an effective date of July 3, 2008, an Amendment with an effective date of July 30, 2008, and an Amendment with an effect date of August 1, 2008 (the “Third Amendment”), MBL and Akorn modified their Exclusive Distribution Agreement for certain purposes (the “Modified Agreement”);

WHEREAS, since the effective date of the Third Amendment, a dispute arose between the Parties whereby MBL claimed that Akorn was and continued to be in breach of the Modified Agreement for failure to timely make payments and take deliveries of the Product as required by the Modified Agreement (the “Dispute”);

WHEREAS, the Parties entered into a binding letter agreement (the “Letter Agreement”) on March 27, 2009 (the “Letter Agreement Effective Date”) under which, among other points (i) Akorn acknowledged its outstanding past due payment obligations to MBL, and its failure to take delivery of required doses of Product; and (ii) the Parties agreed to the resolution of the Dispute;

WHEREAS, the Letter Agreement contemplates that the Parties will execute further documents to formalize the agreement they reached and embodied in the Letter Agreement;

WHEREAS, Parties have accordingly prepared a settlement agreement signed concurrently herewith (the “Settlement Agreement”) that, among other provisions, calls for the delivery of a letter of credit (the “Specified Letter of Credit”), as set out in Section 3 of the Settlement Agreement; and

WHEREAS, as provided in the Letter Agreement, the Parties similarly have prepared amendments to the Modified Agreement as set out below.

NOW, THEREFORE, the Parties agree to amend the Modified Agreement as follows:


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

AMENDMENT

1. Consideration. The Parties agree that the consideration for this Fourth Amendment consists of the mutual benefits arising from the modifications set out below and the rights and obligations contained in the Settlement Agreement executed concurrently herewith.

2. Amendments Taking Immediate Effect. The following amendments to the Modified Agreement shall take effect immediately as of the Letter Agreement Effective Date set forth above:

	2.1		Amendment to Title. The title of the Modified Agreement is amended as of the Letter Agreement Effective Date to reflect that the Modified Agreement is a NON-EXCLUSIVE DISTRIBUTION AGREEMENT.

	2.2		Amendment to Section 1(a). Section 1(a) is amended as of the Letter Agreement Effective Date to reflect that Seller appoints Buyer as a non-exclusive distributor, rather than the exclusive distributor, of the Td Vaccine.

	2.3		Amendment to Section 1(b). Section 1(b) is amended as of the Letter Agreement Effective Date to reflect that Buyer shall distribute the Td Vaccine on a non-exclusive basis, rather than exclusive, within the United States and Puerto Rico.

	2.4		Amendment to Section 3. The following subsection is added as of the Letter Agreement Effective Date as section 3(c) to the Modified Agreement:

			If Seller offers more favorable per dose pricing than $[...] dose for single dose vials to Seller’s other distributors (“Reduced Per Dose Pricing”), then (i) Seller shall notify Buyer, and (ii) during the period of such Reduced Per Dose Pricing, Seller shall offer the same Reduced Per Dose Pricing to Buyer on orders Buyer places and takes delivery of during such period.

			This Reduced Per Dose Pricing provision shall not apply to any Td Vaccine sold by Seller under contracts arising from CDC Solicitation 2009-N-11074 Vaccine for Children and Seller’s pricing under such contracts shall not be affected by Seller’s relationship with Buyer.

			Notwithstanding anything contained herein to the contrary, Seller and any other party is entitled to sell Td Vaccine labeled with Buyer’s National Drug Code (“NDC”), which is currently in Seller’s possession.

	2.5		Amendment to Sections 2(a)(4) and 2(a)(5). Sections 2(a)(4) and 2(a)(5) are amended as of the Letter Agreement Effective Date such that (i) Buyer’s obligation to make any further minimum purchases after the Letter Agreement Effective Date, and (ii) Buyer’s obligation after the Letter Agreement Effective Date to otherwise comply with the Td Vaccine delivery schedule set forth in Sections 2(a)(4) and 2(a)(5), are hereby suspended through the Amendment Effective Date. Such suspension includes suspension of Buyer’s obligations


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

			concerning the delivery of [...] doses scheduled for March 11, 2009 and the delivery of [...] doses scheduled for April 2009.

	2.6		Amendment to Section 2(d). Section 2(d) is amended as of the Letter Agreement Effective Date such that for all orders placed on or after the Letter Agreement Effective Date, Buyer shall pay in full and in cash upon placing the order with Seller.

	2.7		Additional Provision. The following provision is added as Section 14 to the Modified Agreement as of the Letter Agreement Effective Date:

	14.		Information. For the remaining duration of the Modified Agreement, Buyer will deliver to Seller, by the fifth business day of each month: (i) a monthly cash forecast for the Td Vaccine expected to be sold under this Modified Agreement for that month; and (ii) monthly actual inventory and sales information for the Td Vaccine for the prior calendar month.

			Additionally, Buyer will deliver to Seller quarterly financial reports as, and when, filed with the Securities and Exchange Commission.

3. Amendments Taking Effect On the Amendment Effective Date. The following amendments to the Modified Agreement shall take effect on the Amendment Effective Date:

	3.1		Amendment to Section 2(a). The minimum purchase requirements set forth in Section 2(a) and all of its subsections shall no longer apply to purchases of the Td Vaccine by the Buyer, and, accordingly, Sections 2(a)(4) and 2(a)(5) shall be deleted in their entirety. Buyer may, subject to mutual agreement by both Parties, purchase Td Vaccine on an as needed basis in quantities as mutually agreed by the Parties.

	3.2		Amendment to Section 11. Section 11 shall be deleted in its entirety and replaced with the following:

11.

Termination.

	(a)		Either Party shall be entitled to terminate this Modified Agreement for any reason, without penalty, upon ninety (90) days prior written notice to the other Party.

	(b)		Either Party shall be entitled to terminate this Modified Agreement for cause, upon written notice to the other party, if the other party (i) fails to perform any of its material obligations in this Agreement and the failure continues for thirty (30) days after written notice by the other party; or (ii) becomes insolvent, files a voluntary petition under any law relating to bankruptcy or insolvency, or becomes unable to pay its debts when due.


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

(c)

It is agreed and understood that a termination with or without cause shall not, under any circumstances, affect Buyer’s obligations, or Seller’s rights, under the Settlement Agreement or the Specified Letter of Credit.

3.3

Additional Provision. The following provision is added as Section 15 of the Modified Agreement:

15.

Survival. The Parties’ rights and obligations under the Settlement Agreement shall survive any termination or expiration of this Agreement, and no termination of expiration of this Agreement shall modify any of the Parties’ rights and obligations under the Settlement Agreement.

4. Confidentiality. The Parties understand and agree that the terms and conditions of this Fourth Amendment are and shall at all times remain confidential, unless this Fourth Amendment or its contents become Public Information. Neither Party shall disclose this Fourth Amendment or its contents, except that a Party may disclose this Fourth Amendment or its contents: (i) to a Party’s attorneys for purposes of enforcement; (ii) to any other person or entity, if the failure to make such disclosure would constitute a breach of, or default under, an agreement between a Party and such other person or entity; (iii) if required or reasonably necessary in connection with any Legal Proceeding; or (iv) pursuant to any applicable laws, ordinances, judgments, decrees, injunctions, writs, rules, regulations, orders, interpretations, licenses, permits and orders of any court of competent jurisdiction, arbitration or Governmental Authority in any relevant jurisdiction to the extent that such Party may reasonably consider necessary to protect its interests.

5. Effect of Settlement Agreement. The Parties agree that, in the event of any conflict between the terms of this Fourth Amendment and the Settlement Agreement executed concurrently herewith, the terms of the Settlement Agreement shall control.

6. Effect of Amendment. Nothing in this Fourth Amendment is intended to modify, alter, reduce or change the rights or obligations of Akorn and MBL in the Modified Agreement except as expressly stated in this Fourth Amendment. In the event there is any conflict between the terms of this Fourth Amendment and the terms of the Modified Agreement, the terms of this Fourth Amendment shall control.

7. Continued Effectiveness. Unless specifically modified or amended by the terms of this Fourth Amendment, all the terms, conditions, liabilities and obligations of the Modified Agreement shall be and remain applicable, in effect, valid, and enforceable between the parties and applicable to this Fourth Amendment; all in accordance with the terms of the Modified Agreement.

8. Additional Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such terms in the Modified Agreement, if any.


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

9. Execution in Counterparts. This Fourth Amendment may be executed in one or more counterparts, each of which when so executed will be deemed to be an original, and all such counterparts together will constitute but one and the same instrument.

[Signature page follows]


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

*Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

IN WITNESS WHEREOF, the Parties have caused this Fourth Amendment to be executed by their duly authorized representatives.


AKORN INC.
By:	/s/ Jeffrey A. Whitnell
	Name:	Jeffrey A. Whitnell
	Title:	CFO

MASSACHUSETTS BIOLOGIC LABORATORIES OF THE UNIVERSITY OF MASSACHUSETTS MEDICAL SCHOOL
By:	/s/ Donna M. Ambrosino
	Donna M. Ambrosino, M.D.
	Title:	Director


*		CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.

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