Exhibit 10.17

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR SUCH SALE, TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

PROMISSORY NOTE

$3,250,000.00 December 20, 2001 Buffalo Grove, Illinois

FOR VALUE RECEIVED, AKORN, INC., a Louisiana corporation ("Borrower"), promises to pay to the order of NEOPHARM, INC., a Delaware corporation ("NeoPharm," together with any person or entity to whom all or any portion of this Note may be transferred being hereinafter referred to as "Lender"), at its principal offices located at 150 Field Drive, Suite 195, Lake Forest, Illinois 60045, or at such other place as Lender may direct, the principal sum of THREE MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($3,250,000.00), and to pay interest thereon in accordance with the terms hereof, on December 20, 2006 (the "Maturity Date").

This Promissory Note (this "Note") has been executed in connection with
(a) that certain Processing Agreement, of even date herewith (the "Processing Agreement"), between Lender and Borrower; and (b) that certain Subordination and Intercreditor Agreement, of even date herewith (the "Subordination Agreement"), between Borrower and John N. Kapoor, as Trustee under The John N. Kapoor Trust, dated September 20, 1989, (the trustee and the trust, together, "Kapoor"), to which reference is hereby made.

ARTICLE 1
INTEREST

1.1 Calculation of Interest Rate. Interest shall begin to accrue on the date hereof in accordance with the terms of this Section 1.1 and shall be compounded as of the first business day of each calendar quarter until all principal and accrued interest is paid. Commencing on the date hereof, interest shall accrue at a rate of 3.6% per annum. As of the first business day of each calendar quarter (each, a "Change Date"), commencing on January 1, 2002, Lender shall adjust the interest rate charged on all amounts of outstanding principal and interest accrued during the previous calendar quarter to a rate which is equal to the average return on all of

Lender's cash and readily tradable long- and short-term securities during such previous calendar quarter; thereafter, interest shall accrue on the unpaid outstanding principal and accrued interest at the most recently adjusted interest rate until the next Change Date. Lender shall furnish to Borrower a statement showing all such cash and securities and the return thereon for the prior calendar quarter in support of each adjustment to the interest rate. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 365 days, including the date the loan is made and excluding the date the loan or any portion thereof is paid or prepaid.

1.2 Default Rate. After an Event of Default, interest shall accrue and be payable at a rate equal to (a) the interest rate calculated in accordance with Section 1.1, plus (b) three percent (3%) (the "Default Rate").

ARTICLE 2
PAYMENTS

2.1 Required Repayment. Borrower shall pay all amounts of outstanding principal and accrued but unpaid interest hereunder on the Maturity Date. Borrower may prepay all outstanding principal and accrued but unpaid interest at any time without penalty or premium.

2.2 Manner of Payments. All payments made by Borrower hereunder shall be made to Lender at its principal offices located at 150 Field Drive, Suite 195, Lake Forest, Illinois 60045, Attn: Chief Financial Officer or at such other places as Lender may designate. All payments hereunder shall be made in immediately available funds, and shall be applied first to accrued interest and then to principal; however, if an Event of Default occurs, Lender may, in its sole discretion, and in such order as it may choose, apply any payment to interest, principal and/or lawful charges and expenses then accrued. All payments shall be made without deduction for or on account of any present or future taxes, duties or other charges levied or imposed on this Note or the proceeds thereof by any government or political subdivision thereof, except as required by law.

ARTICLE 3
OPERATIONS/LYOPHILIZATION RAMP-UP

3.1 Use of Proceeds. Borrower agrees that the proceeds from the loan evidenced by this Note shall be used solely (a) to achieve removal of all warning letter sanctions pursuant to Form 483 or current Good Manufacturing Practice regulations issued or imposed by the Food and Drug Administration ("FDA") with regard to Borrower's ability to handle and manufacture sterile pharmaceuticals and provide lyophilization services; (b) to obtain FDA validation for Borrower's operation of its facility located at 1222 West Grand Avenue, Decatur, Illinois (the "Facility") to offer and provide lyophilization services for the handling and manufacturing of sterile pharmaceuticals; (c) to obtain any other required license, consent, permit or approval from the FDA or any other governmental authority in the United States or its political subdivisions as shall be required to establish operations at the Facility to handle and manufacture sterile pharmaceuticals and provide lyophilization services; (d) to establish operations at the Facility to provide lyophilization services and to handle and manufacture sterile pharmaceuticals; and (e) to

make any capital expenditure necessary to provide lyophilization services (the items set forth in subsections (a), (b), (c), (d), and (e) collectively, the "Lyophilization Ramp-Up").

3.2 Additional Costs. Borrower shall be responsible for all costs whatsoever related to the Lyophilization Ramp-Up in excess of the proceeds hereunder and shall not require, request or demand additional amounts from Lender to fund the Lyophilization Ramp-Up other than the amounts loaned by Lender to Borrower or evidenced by this Note.

3.3 June 30, 2003. By June 30, 2003, Borrower shall (a) complete the Lyophilization Ramp-Up; (b) maintain the continued removal of all warning letter sanctions pursuant to Form 483 related to the Facility; and (c) be prepared to immediately begin development of the procedures for manufacture of Lender's products.

3.4 Change in Control. If Borrower experiences (a) a change in control of greater than fifty percent (50%) of Borrower's voting securities or (b) a change in control through a merger or the sale of all or substantially all of Borrower's assets, then Lender may declare all amounts of principal and interest under this Note immediately due and payable and/or terminate the Processing Agreement.

ARTICLE 4
REPRESENTATIONS

4.1 Organization and Qualification. Borrower is duly organized, validly existing and in good standing under the laws of the State of Louisiana, its state of incorporation. Borrower is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the failure to receive or retain such qualification would have a material adverse effect on the business, operations or financial condition of Borrower.

4.2 Corporate Authority and Authorization. Borrower has all requisite corporate, power, authority and legal right to execute and deliver and perform its obligations under this Note and all of Borrower's obligations described herein have been duly and validly authorized by all necessary corporate proceedings on the part of Borrower.

4.3 Execution and Binding Effect. This Note has been or shall be duly and validly executed and delivered by Borrower and this Note when executed and delivered shall constitute the legal, valid and binding obligations of Borrower enforceable in accordance with the terms hereof and thereof, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws affecting creditors' rights generally.

4.4 Absence of Conflicts. The execution and delivery of this Note, consummation of the transactions herein or Borrower's performance of or compliance with the terms and conditions hereof or in the Processing Agreement shall not (a) materially violate any applicable law or regulation; (b) conflict with or result in a material breach of or a default under the certificate of incorporation or bylaws of Borrower, or any agreement or instrument to which Borrower is a party or by which Borrower or its properties is bound; or (c) result in the creation or imposition of any lien upon any property (now owned or hereafter acquired) of Borrower except as otherwise contemplated by this Note.

4.5 No Event of Default; Compliance with Instruments Corporate Documents and Material Agreements. As of the date hereof Borrower is not in violation of any term of its certificate of incorporation and/or bylaws and Borrower is not in violation of any term of its material agreements or instruments including, without limitation, (a) that certain Amended and Restated Credit Agreement, dated September 15, 1999, as most recently amended by that certain Forbearance Agreement (the "Forbearance Agreement"), dated July 12, 2001 (the Amended and Restated Credit Agreement and the Forbearance Agreement, together, the "Northern Trust Credit Facility"), among Borrower, Borrower's wholly owned subsidiary, Akorn (New Jersey), Inc., an Illinois corporation and the Northern Trust Company ("Northern Trust"); (b) that certain Junior Mortgage, dated March 21, 2001 between Borrower and Northern Trust (the "Northern Mortgage"); (c) two Mortgage Notes (together, the "Primary Mortgage"), each dated April 27, 1997, by and between Borrower and Standard Mortgage Investors ("Standard Investors"); (d) that certain Master Equipment Lease Agreement No. 08197, dated December 9, 1999, as amended December 26, 2000 (the "Asset Lease"), by and between Borrower and National City Leasing Corporation ("National City");
(e) that certain Convertible Bridge Loan and Warrant Agreement, dated July 12, 2001, by and between Borrower and the John N. Kapoor Trust, dated September 20, 1989 (the "Kapoor Loans"), or (f) any other material agreement or instrument to which Borrower is a party or by which it or its properties is bound.

4.6 Litigation. There is no pending action, suit or threatened proceeding by or before any governmental authority against or affecting Borrower which if adversely decided would have a material adverse effect on its financial condition or on its ability to comply with its obligations herein, except those disclosed on Exhibit A attached hereto.

4.7 Rights to Property. Except for the security interests (a) granted by Borrower to Northern Trust under the terms of the Northern Credit Facility and the Northern Mortgage; (b) granted to Standard Investors under the terms of the Primary Mortgage; and (c) retained by National City under the terms of the Asset Lease, Borrower has good and marketable title to all personal and real property purported to be owned by it.

4.8 Taxes. All tax returns required to be filed by Borrower have been properly prepared, executed and filed, and all taxes, assessments, fees and other governmental charges levied upon Borrower or upon any of its properties, incomes, sales or franchises which are shown to be due and payable thereon have been paid, other than taxes or assessments the validity or amount of which Borrower is contesting in good faith. The reserves and provisions for taxes on the books of Borrower are adequate for all open years and for its current fiscal period.

4.9 Financial Accounting Practices. Borrower and each of its subsidiaries have made and kept books, records and accounts which, in reasonable detail, accurately and fairly reflect their respective dealings or transactions of or in relation to the plants, properties, business and affairs of the Borrower and of each subsidiary, and Borrower shall keep, and cause each of its subsidiaries to keep, proper books of account, in which full and correct entries shall be made of all dealings or transactions of or in relation to the plants, properties, business and affairs of the Borrower and of each subsidiary in accordance with generally accepted accounting principles applied on a consistent basis. The Borrower will at any and all times, upon the written request of the Lender and at the Lender's expense, permit the Lender by its representatives to inspect the plants and properties, books of account, records, reports and other papers of the Borrower and of

each subsidiary, and to take copies and extracts therefrom, and will afford and procure a reasonable opportunity to make any such inspection.

4.10 Accurate and Complete Disclosure. To the best of Borrower's knowledge, no representation made by Borrower under this Note and no statement made by Borrower in any financial statement, report filed with the Securities and Exchange Commission, certificate, exhibit or document furnished by Borrower to Lender pursuant to or in connection with this Note is false or misleading as of the date made in any material respect (including by omission of material information necessary to make such representation, warranty or statement not misleading). Lender has had adequate access to Borrower's management and opportunity to conduct it own due diligence examination of the plants and properties, books of account, records, reports and other papers of the Borrower and each of its subsidiaries.

4.11 Other Indebtedness. With the exception of (a) the Northern Credit Facility together with the Northern Mortgage; (b) the Primary Mortgage; (c) the Asset Lease; and (d) the Kapoor Loans, Borrower has no Indebtedness in excess of $100,000.

4.12 Capital Stock. All of the outstanding capital stock of Borrower has been duly authorized and validly issued, and is non-assessable.

4.13 Environmental Warranties. To the best of Borrower's knowledge, Borrower and each of its subsidiaries is in substantial compliance with all environmental laws, regulations, rules, ordinances, permits, orders, and other requirements applicable to it, the operations of each or the real or personal property owned, leased or operated by each, including without limitation, all such laws governing employment, the generation, use, storage, disposal or transportation of toxic or hazardous substances or wastes. Borrower has not received notice of, and is not aware of, any violations or alleged violations, or any liability or asserted liability, under any such environmental laws, with respect to Borrower, its subsidiaries, or their respective businesses or properties.

ARTICLE 5
COVENANTS

Except as otherwise permitted under the Northern Trust Credit Facility or consented to in writing by Northern Trust, Borrower covenants and agrees that, without the prior written consent of Lender, from and after the date hereof until all amounts of principal and interest hereunder are repaid and discharged:

5.1 Indebtedness. Borrower shall not create, incur, assume or permit to exist any Indebtedness, after the date hereof except (a) deferred taxes; (b) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law; (c) existing Indebtedness, which includes (i) amounts outstanding under the Northern Credit Facility and any additional advances or borrowings under the Northern Credit Facility in accordance with the terms thereof, (ii) the Primary Mortgage, (iii) the Northern Mortgage and any additional advances or borrowings under the Northern Mortgage, in accordance with the terms thereof, (iv) the Asset Lease, (v) the Kapoor Loans, and (vi) the loans made by Lender evidenced by this Note, or the refinancing of any of the documents or

facilities set forth in subparagraphs (i) through (vi), the refinanced terms of which shall in any event be on terms no less favorable to Borrower or Lender than the terms of the Indebtedness being refinanced; (d) any financing secured by any real estate owned by Borrower; and (e) the unsecured financing by a seller of product lines to Borrower.

"Indebtedness" shall mean (a) any obligation for the repayment of borrowed money or, with respect to the purchase price of property, any payment which is deferred six (6) months or more after the date of acquisition, but excluding obligations to trade creditors incurred in the ordinary course of business that are not overdue by more than six (6) months unless being contested in good faith; (b) reimbursement and all other obligations with respect to letters of credit, bankers' acceptances and surety bonds, whether or not matured; (c) all obligations evidenced by notes, bonds, debentures or similar instruments; (d) any obligation for the payment of money created or arising under any conditional sale or other title retention agreement; (e) all capital leases; and (f) any agreement to guarantee the indebtedness of a subsidiary of Borrower or any other person or business entity.

5.2 Business. Borrower shall not make any changes in its business objectives, purposes or operations which could in any way adversely affect the repayment of this Note or Borrower's ability to comply with its obligations contained in the Processing Agreement.

5.3 Liens. Borrower shall not create, incur, assume or permit to exist any Lien on or with respect to any of its properties or assets whether now owned or hereafter acquired, except (a) presently existing or hereafter created Liens in favor of Lender; (b) Liens created after the date hereof by conditional sale or other title retention agreements (including, without limitation, capital leases) or in connection with purchase money Indebtedness with respect to properties acquired by Borrower in the ordinary course of business, involving the incurrence of an aggregate amount of purchase money Indebtedness and capital lease obligations of not more than $1,000,000 outstanding at any one time for all such Liens (provided that such Liens attach only to the assets subject to such purchase money Indebtedness and such Indebtedness is incurred within twenty
(20) days following such purchase and does not exceed 100% of the purchase price of the subject assets); (c) Liens in connection with any financing secured by any real estate owned by Borrower; and (d) Liens existing on the date hereof and described in Exhibit A hereto.

In addition, Borrower shall not become a party to any agreement, note, indenture or instrument, or take any other action, which would prohibit the creation of a Lien on any of its properties or other assets in favor of Lender, as collateral for payment and satisfaction of the outstanding principal and accrued interest under this Note, except operating leases, capital leases or intellectual property licenses which prohibit liens upon the assets that are subject thereto.

"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Uniform Commercial Code or comparable law of any jurisdiction).

5.4 Cancellation of Indebtedness. Borrower shall not cancel any claim or debt owing to it, except for reasonable consideration negotiated on an arm's-length basis and in the ordinary course of its business consistent with past practices.

ARTICLE 6
EVENTS OF DEFAULT: RIGHTS AND REMEDIES

6.1 Events of Default. The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an "Event of Default" hereunder: (a) Borrower shall fail to make any payment of principal of, or interest on, or any other amount owing in respect of this Note when due and payable; (b) Borrower shall fail to pay any costs or expenses payable or reimbursable by Borrower under this Note, and such failure shall have remained unremedied for a period of thirty (30) days or more; (c) Borrower shall fail or neglect to perform, keep or observe any of the provisions of this Note (and not constituting an Event of Default under any of the other subsections of this
Section 6.1) and such failure shall have remained unremedied for a period of thirty (30) days or more; (d) Borrower shall fail to perform, keep or observe any provision of the Processing Agreement after the grace period (if any) set forth therein or the Processing Agreement shall not be effective on or before June 30, 2003; (e) a default or breach that is not waived in writing shall occur under the Northern Credit Facility, The Northern Mortgage, the Primary Mortgage, the Asset Lease or the Kapoor Loans; (f) a default under any agreement, document or instrument, excluding those specified in subsection 6.1(e), to which Borrower is a party and such default is not cured or waived within any applicable grace period and such default or breach (i) involves the failure to make any payment when due in respect of any Indebtedness of Borrower or any subsidiary of Borrower in excess of $50,000 in the aggregate, or (ii) causes such Indebtedness or a portion thereof in excess of $100,000 in the aggregate to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or
(iii) entitles any holder of such Indebtedness to cause such Indebtedness or a portion thereof in excess of $100,000 in the aggregate to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, regardless of whether such right is exercised or waived by such holder or trustee; (g) The Forbearance Agreement expires, unless the same expires without Borrower being in breach or default thereof; (h) Kapoor breaches or repudiates or attempts to breach or repudiate, the Subordination Agreement or the Subordination Agreement is terminated by operation of its terms or operation of law; (i) any representation or warranty herein or in any written statement, report filed with the Securities and Exchange Commission, financial statement or certificate made or delivered to Lender by Borrower shall be untrue or incorrect in any material respect, as of the date when made or deemed made; (j) assets of Borrower or any subsidiary thereof with a fair market value of $100,000 or more shall be attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of Borrower or any subsidiary thereof and such condition shall continue for thirty (30) days or more; (k) a case or proceeding shall have been commenced against Borrower or any subsidiary thereof in a court having competent jurisdiction seeking a decree or order in respect of Borrower or any subsidiary thereof (i) under Title 11 of the United States Code, as now constituted or hereafter amended or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for Borrower or any subsidiary thereof or of any substantial part of the assets thereof, or (iii) ordering the winding-up or liquidation of the affairs of Borrower or any subsidiary thereof and

such case or proceeding shall remain undismissed or unstayed for forty-five (45) days or more or such court shall enter a decree or order granting the relief sought in such case or proceeding; (l) Borrower or any subsidiary thereof shall
(i) file a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, State or foreign bankruptcy or other similar law, (ii) consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of Borrower or any subsidiary thereof or of any substantial part of its respective assets, (iii) make an assignment for the benefit of creditors, or (iv) take any corporate action in furtherance of any such action; or (m) a final judgment or judgments for the payment of money in excess of $250,000 in the aggregate shall be rendered against Borrower or any subsidiary thereof and the same shall not (i) be fully covered by insurance, or (ii) within thirty (30) days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been paid or otherwise discharged prior to the expiration of any such stay.

6.2 Remedies. If any Event of Default shall have occurred and be continuing (a) all of the outstanding principal and accrued and unpaid interest under this Note shall be immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrower; (b) the rate of interest applicable to this Note shall be increased to the Default Rate; and (c) Borrower may exercise any rights and remedies provided to Lender under this Note and/or at law or equity.

6.3 Waivers by Borrower. Except as otherwise provided for in this Note or by applicable law, Borrower waives presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Lender on which Borrower may in any way be liable, and hereby ratifies and confirms whatever Lender may do in this regard. Borrower acknowledges that it has been advised by counsel of its choice with respect to this Note and the transactions evidenced by this Note.

ARTICLE 7
SUCCESSORS AND ASSIGNS

This Note shall be binding on and shall inure to the benefit of Borrower and Lender and their respective successors and assigns, except as otherwise provided herein. Borrower may not assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder without the prior express written consent of Lender. Any such purported assignment, transfer, hypothecation or other conveyance by Borrower without the prior express written consent of Lender shall be void. The terms and provisions of this Note are for the purpose of defining the relative rights and obligations of Borrower and Lender with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Note.

ARTICLE 8
SUBORDINATION

Anything in this Note to the contrary notwithstanding, the Indebtedness evidenced by this Note, both principal and interest, and the right to seek enforcement of any of the rights granted to Lender herein, shall be subordinate and junior to all obligations of Borrower incurred under the Northern Credit Facility, between Borrower and Northern Trust.

ARTICLE 9
NOTICES

All notices, requests, demands and payments of principal and interest given to or made under this Note shall, except as otherwise specified in this Note, be in writing and shall be effective upon the earlier of (a) receipt or
(b) the fifth (5th) day following the date such notice was mailed properly addressed, first class, registered or certified mail, return receipt requested, postage prepaid, to the other party at the following addresses (which may be changed at any time by notice under this Article 9):

If to NeoPharm, Inc.
150 Field Drive, Suite 195 Lake Forest, Illinois 60045 Facsimile No.: (847) 295-8854 Attn: James Hussey

With a copy to:

Ross & Hardies
150 North Michigan Avenue
Chicago, Illinois 60601-7567
Facsimile No.: (312) 750-8600
Attn: Scott Becker

If to Akorn, Inc.
Akorn, Inc. 2500 Millbrook Drive Buffalo Grove, IL 60089-4694 Facsimile No. (847) 279-6123 Attn: Antonio Pera

With a copy to:

Tressler, Soderstrom, Maloney & Priess
2100 Manchester Road, Suite 950
Wheaton, Illinois
Facsimile No.: (630) 668-3003
Attn: William A. Kindorf, III

ARTICLE 10
GOVERNING LAW & WAIVER OF JURY TRIAL

This Note and any document or instrument executed in connection herewith shall be governed by and construed in accordance with the internal law of the State of Illinois, and shall be deemed to have been executed in the State of Illinois. Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa, and the use of one gender shall also denote the other. Captions herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof; references herein to Articles or provisions without reference to the document in which they are contained are references to this Note. This Note shall bind Borrower, its trustees (including without limitation successor and replacement trustees), successors and assigns, and shall inure to the benefit of Lender, its successors and assigns, except that Borrower may not transfer or assign any of its rights or interest hereunder without the prior written consent of Lender.

BORROWER HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH SHALL BE SUBJECT TO LITIGATION IN COURTS HAVING SITUS WITHIN OR JURISDICTION OVER COOK COUNTY, ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN OR HAVING JURISDICTION OVER SUCH COUNTY, AND HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY, TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT BY LENDER IN ACCORDANCE WITH THIS PARAGRAPH, OR TO CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

ARTICLE 11
MISCELLANEOUS

11.1 Construction. Wherever possible, each provision of this Note shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Note is prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Note.

11.2 Amendments. This Note may not be and shall not be deemed or construed to have been modified, amended, rescinded, canceled, or waived in whole or in part, except by written instruments signed by Borrower and Lender.

11.3 No Waiver. Lender's failure at any time or times, to require strict performance by Borrower of any provision of this Note or Promissory Agreement shall not waive, affect or diminish any right of Lender thereafter to demand strict compliance and performance therewith. Any suspension or waiver of an Event of Default under this Note or Promissory Agreement shall

not suspend, waive or affect any other Event of Default under this Note or Promissory Agreement whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of Borrower contained in this Note or Promissory Agreement and no Event of Default by Borrower under this Note or Promissory Agreement shall be deemed to have been suspended or waived by Lender unless such waiver or suspension is by an instrument in writing signed by an officer of or other authorized employee of Lender and directed to Borrower specifying such suspension or waiver.

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the day and year first above written.

Acknowledged:

EXHIBIT A

1. LITIGATION.

1. Shareholder Class Action Lawsuit - Filed August 9, 2001

Class action lawsuit filed against the Company, Mr. Floyd Benjamin, former CEO, and Mr. John Kapoor, current chairman and interim CEO. Potential damages unknown at this time.

2. NovaDaq Technologies - Filed April 4, 2001

The Company was notified by the International Court of Arbitration that NovaDaq filed a request for Arbitration in relation to an Existing agreement between NovaDaq and the company. Potential damages estimated at $4.4 million by NovaDaq.

TRANSACTION             SECURED PARTY          DEBTOR            JURISDICTION    FILE NO.        ACTION          DATE
EQUIPMENT LEASE NO.     THE CIT GROUP/         AKORN             LA and          52-E7167        Filed           11/29/94
OL-8248 WITH                 EQUIPMENT                            St. Tammany    52-E7167        Correction      3/16/95
AMPLICON, INC.;         FINANCING, INC.                          Parrish         52-E8067        Amendment       5/30/95
SECURED BY UCC          1620 W. Fountainhead                                     52-19775        Continuation    10/22/99
FINANCING STATEMENT     Pkwy.
COVERING EQUIPMENT      Tempe, AZ 85282




MORTGAGE LOAN NOS.      STANDARD MORTGAGE      AKORN             Macon Co., IL
98021903 AND 98021904   INVESTORS
DATED 4/27/97;
SECURED BY MORTGAGES
ON DECATUR REAL
PROPERTIES; PRINCIPAL
BALANCE AT 6/30/01
$2,318,214.90, FINAL
PAYMENT DUE JUNE 2008

TRANSACTION             SECURED PARTY          DEBTOR            JURISDICTION    FILE NO.        ACTION          DATE
Amended and Restated    The Northern Trust     Akorn             CA              9800560381      Filed           12/31/97
Credit Agreement        Company                                                                  Amendment       9/21/99
dated 9/15/99 as        50 South LaSalle                                         9800560407      Filed           12/31/97
amended by              Street                                                                   Amendment       9/21/99
Forbearance Agreement   Chicago, IL 60675                        IL              3780342         Filed           12/30/97
dated 7/12/01 for                                                                4097177         Amendment       9/21/99
$45,000,000 line of                                                              4203325         Partial         4/24/00
credit; secured by                                                                               Release
UCC financing                                  Taylor            IL              3780343         Filed           12/30/97
statements covering                            Pharmaceuticals                   4097192         Amendment       9/21/99
accounts, inventory                            (merged with
and equipment                                  Akorn)

                                               Akorn (New        IL              4096623         Filed           9/21/99
                                               Jersey)
                                                                 NJ              01930630        Filed           9/20/99

Equipment Lease Nos.    Associates Leasing,    Akorn             NJ              01885213        Filed           1/21/99
VJ3317 and W10811       Inc.
with Lincoln Service    8001 Ridgepoint Drive
& Equipment Co.;        Irving, TX 75063
secured by UCC
financing statement
covering equipment

Equipment Lease No.     Deerbart Financial     Akorn             IL              4022989         Filed           4/20/99
5387; secured by UCC    Services Co.
financing statement     2250 E. Devon Ave.,
covering equipment      Ste. 251
                        Des Plaines, IL 60018

Master Equipment        National City          Akorn             IL              4314294         Filed           1/03/01
Lease Agreement No.     Leasing Corp.
08197-0012, dated       P.O. Box 36040
December 9, 1999,       Louisville, KY 40233
as amended
December 26, 2000;
acquisition cost
$3,811,028.93 with
monthly payments
of $52,577.71
through 12/26/07;
secured by UCC
financing statement
covering equipment

Junior Mortgage dated   The Northern Trust     Akorn
3/21/01                 Company 50 South
                        LaSalle Street
                        Chicago, IL 60675

Exhibit 10.18

PROCESSING AGREEMENT

THIS PROCESSING AGREEMENT (the "Agreement") is made and entered into this 20th day of December, 2001, between Akorn, Inc., a Louisiana Corporation ("Akorn") and NeoPharm, Inc., a Delaware Corporation ("NeoPharm").

WHEREAS, NeoPharm is a pharmaceutical company which has developed certain chemotherapeutic agents (the "Products");

WHEREAS, Akorn owns and operates a lyophilization facility located at 1222 West Grand Avenue, Decatur, Illinois (the "Facility") and has the ability and capacity to process and finish pharmaceutical products; and

WHEREAS, NeoPharm desires to contract with Akorn to process and finish the Products at the Facility, and Akorn desires to provide such services, on the terms and conditions set forth herein

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth herein, the parties agree as follows:

ARTICLE I
PROCESSING ESTIMATE/DELIVERY OF PRODUCTS

Section 1.1. Processing Estimate. At least thirty (30) days prior to the Effective Date (as defined herein), and at least thirty (30) days prior to the commencement of each twelve (12) month period thereafter, NeoPharm shall deliver to Akorn its good faith estimate (the "Estimate") of the quantity of Products to be Processed (as defined herein) by Akorn hereunder for the upcoming twelve (12) month period. Such estimate shall be non-binding, and NeoPharm shall update the Estimate quarterly based upon its expected Processing needs. Akorn agrees to allocate to the Processing of NeoPharm's Products no less than fifteen percent (15%) of the Facility's Processing capacity during every twelve (12) month period during the Term of this Agreement; the actual allocation of the Facility's capacity to NeoPharm for such period shall be agreed upon by the parties and is referred to herein as the "Processing Maximum". Processing Capacity shall be measured in terms of hours usage of the Facility. NeoPharm shall have the right to audit Akorn's books and records to ascertain compliance with this Section 1.1.

Section 1.2. Purchase Orders. From time to time, NeoPharm shall provide Akorn with a purchase order (the "Purchase Order") which shall set forth the Product to be Processed and the quantity of Bulk Product to be Processed by Akorn (the "Batch"). Akorn shall provide NeoPharm with written acceptance of the Purchase Order, which acceptance shall set forth the date the Processing Run (as defined herein) for the Batch covered by such Purchase Order shall commence (the "Processing Run Commencement Date"). Akorn agrees that the Processing Run Commencement Date shall be no later than fourteen (14) days after Akorn's receipt of the

Purchase Order. Akorn shall use its best efforts to accommodate NeoPharm's request to amend a Purchase order to modify the size of a Batch to be Processed.

Section 1.3. Estimated Yield. Upon Akorn's acceptance of a Purchase Order, Akorn shall calculate the estimated Final Product to be manufactured (the "Estimated Yield") from the Batch that is the subject of the Purchase Order. The Estimated Yield factor to be applied to each Purchase Order shall be based upon the optimum yield determined from the first (3) Processing Runs of a particular Product. Such determination and each such Processing Run shall be performed and conducted in the presence of a NeoPharm representative. In the event NeoPharm disagrees with Akorn's Estimated Yield, the Parties shall in good faith agree upon a third party to review the data Akorn utilized to calculate the Estimated Yield. The findings of such third party shall be binding on both parties. In the event that the actual yield of any Batch is less than ninety-five percent (95%) of the Estimated Yield, NeoPharm shall be entitled to an investigation of the reason(s) for the reduced yield of the Batch, and NeoPharm shall be entitled to an equitable reduction (the "Yield Credit") in the Processing Fee (as defined herein).

Section 1.4. Delivery of Bulk Products. At least fifteen (15) business days prior to each Processing Run Commencement Date, NeoPharm shall deliver to Akorn sufficient amounts of Bulk Product for such Processing Run along with any applicable vial labeling materials. For purposes of this Agreement, Bulk Product shall mean formulated solutions of the Products. NeoPharm warrants that all Bulk Product provided hereunder shall meet all applicable specifications and shall have been produced in compliance with applicable federal, state and local laws and regulations, including, without limitation, the Good Manufacturing Practices Regulations ("GMPs") of the United States Food and Drug Administration ("FDA"), 21 C.F.R. part 211, in effect at the time of Processing. In connection with the delivery of Bulk Product, NeoPharm shall provide Akorn with written certification of the sterility of Bulk Product.

Section 1.5. Ownership/Risk of Loss. NeoPharm shall own all Bulk Product delivered by NeoPharm and all Finished Product (as defined herein) Processed by Akorn and, except in a case giving rise to Akorn's indemnification responsibilities hereunder, NeoPharm shall bear the risk of loss with respect to such materials.

ARTICLE II
PROCESSING OF BULK PRODUCTS

Section 2.1. Processing Obligations. Commencing with each Processing Run Commencement Date, Akorn shall Process the Bulk Product corresponding to the applicable Purchase Order in accordance with the terms of this Article II (each a "Processing Run"). For purposes of this Agreement, "Processing" shall mean filling into vials, lyophilizing, inspecting and packaging the Bulk Product in order to produce finished pharmaceutical dosage forms of the Products (the "Finished Product"). The parameters (the "Processing Parameters") under which Akorn shall Process the Bulk Product shall be mutually agreed upon by the Parties at least thirty (30) days prior to the Effective Date and shall be attached hereto as Schedule 2.1. Any amendments and/or additions to the Processing Parameters or the equipment, test methods,

specifications or any other requirement of this Agreement or with respect to the operation of the Facility, must be mutually agreed to by the parties in writing and shall be attached to Schedule 2.1. Notwithstanding the foregoing and in addition to any supplemental parameters agreed to by the parties with respect to a particular Processing Run, Akorn's Processing at a minimum shall consist of the following components:

(a) Preparation and retention of the master production and control records required by the FDA for each Product pursuant to 21 CFR 600.12 (the "Batch Records") as approved by Akorn and NeoPharm.

(b) Compliance with the applicable standards from the USP-NF guidelines.

(c) Furnishing vials, stoppers and seals for the Products and conducting the appropriate inspection, testing and release thereof.

(d) Preparation and sterilization of vials and stoppers in accordance with Akorn's Standard Procedures;

(e) Aseptically filling vials within tolerance limits set by NeoPharm and holding filled vials under specified conditions which shall be provided by NeoPharm until loaded in lyophilizer;

(f) Aseptically stopping and sealing lyophilized product vials.

(g) Performance of Quality Control Testing of finished dosage forms in accordance with NeoPharm's specifications.

(h) Inspection of the finished dosage form.

(i) Storage of quarantined vials at mutually agreed upon temperatures until instructed by NeoPharm to ship the Finished Product.

(j) Shipping of the Finished Product in accordance with NeoPharm's specifications.

Section 2.2. Addition of Other Products to the Agreement. NeoPharm may add additional pharmaceutical products to be Processed by Akorn. The parties shall mutually agree upon any Processing Parameters and the Processing Fee for such additional products.

Section 2.3. Representations and Warranties of Akorn. Akorn agrees that in performing the Processing services hereunder, it shall comply with applicable GMPs and that it shall use its best efforts to maintain the Facility in such a fashion as to be in compliance with all applicable federal, state and local rules and regulations. Akorn agrees that it shall maintain all licenses and permits required by any applicable federal, state or local agency, including but not limited to the FDA, in order to operate the Facility and provide the Processing services required hereunder. Without limiting the generality of the foregoing, Akorn agrees that it will cause its

employees and agents to follow all procedures developed and implemented in connection with the removal of the warning letter sanctions pursuant to Form 483 or current GMP regulations issued or imposed by the FDA with regard to the Facility. Akorn also agrees to store all manufacturing and laboratory records on the site where the Processing is performed and to keep such records readily available. Further, Akorn represents and warrants that it shall use its best efforts to insure that all filtration, filling and lyophilization of the Product by Akorn shall be done in an aseptic processing environment and in accordance with the Processing Parameters.

Section 2.4. Facilities Inspection. During the Term of this Agreement, NeoPharm shall have the right, at its expense, to audit the Facility for Akorn's compliance with GMPs and any other applicable laws. NeoPharm agrees to provide Akorn with reasonable prior notice of the date of such audit. In addition to the foregoing, NeoPharm shall have the right to designate an individual to be at the Facility to monitor each Processing Run. NeoPharm agrees that its employees or agents who inspect the Facility or who are on site at the Facility during a Processing Run will comply with Akorn's rules, regulations and GMPs.

Section 2.5. Akorn Obligation to Meet Requirements. Akorn agrees to fulfill, in each twelve (12) month period during the Term of this Agreement (as defined herein), all Purchase Orders placed by NeoPharm up to one hundred percent (100%) of NeoPharm's most recently updated Estimate. Akorn shall use reasonable efforts to supply any quantity ordered by NeoPharm of Product in excess of the Estimate subject to Akorn's production scheduling capabilities and commitments to other customers.

Section 2.6. Subcontracting. Akorn shall not pass to a third party any work entrusted to it under this Agreement without first obtaining NeoPharm's written approval of such arrangements, which approval shall not be unreasonably withheld.

Section 2.7. Quality Assurance Department. Akorn agrees that at all times during the term of this Agreement, it shall maintain a quality assurance department (the "Quality Assurance Department") for purposes of monitoring the quality of Akorn's Processing hereunder and for purposes of approving each Batch Processed hereunder. Akorn agrees that upon NeoPharm's request, it shall provide NeoPharm with copies of the policies, procedures and findings of the Quality Assurance Department.

ARTICLE III
SHIPMENT AND STORAGE

Section 3.1. Storage. Akorn shall store and handle the Bulk Product and Finished Product as required by the Processing Parameters. Akorn shall take such actions as are reasonably necessary to protect the Bulk Product and Finished Product from damage and deterioration. Vials of Finished Product will be stored at the recommended controlled temperature until shipped as instructed by NeoPharm.

Section 3.2. Release of Finished Product. Upon Akorn's Quality Assurance Department's written release of a Batch of Finished Product, Akorn shall promptly ship the Finished Product to NeoPharm or, at NeoPharm's discretion, warehouse Finished Product, in accordance with FDA and GMP warehousing procedures, for a maximum of thirty (30) days at no cost, and thereafter at charges to be mutually agreed upon, to the extent warehousing space is available. Akorn shall provide NeoPharm with properly completed Batch Records, prepared in conformance with the Processing Parameters, within five (5) days following Akorn's written release of such Batch but, in no event more than four
(4) weeks from the date the Processing Run is completed (i.e., the date the filling or lyophilization is completed).

Section 3.3. Transfer of Finished Product to NeoPharm. Finished Product shall be shipped to NeoPharm in accordance with NeoPharm's written instructions. Unless otherwise agreed to in writing by the Parties, there shall be only one shipment per Batch of Finished Product. NeoPharm shall be responsible for all costs associated with the shipment of Finished Product

Section 3.4. Rejection. NeoPharm may reject any Batch of Finished Product failing to meet any of the Processing Parameters by providing Akorn with written notice of such rejection (the "Rejection") within sixty (60) days following NeoPharm's receipt of the applicable Batch Records and written notice from Akorn stating that Akorn's Quality Assurance Department has approved the Batch. Any rejection by NeoPharm pursuant to this Section 3.4 shall be accompanied by a report of analysis, including a product sample from the Batch analyzed. NeoPharm's failure to reject a Batch of Finished Product in the manner set forth above shall constitute acceptance thereof except to the extent that any defect in the Batch was not discovered by NeoPharm after exercising due diligence and using customary testing procedures accepted in the industry and provided that NeoPharm notifies Akorn of any such defect within a reasonable time after NeoPharm discovers or should have discovered the defect and before any substantial change in the condition of the Batch which is not caused by such defect. In the event Akorn accepts NeoPharm's Rejection, NeoPharm shall be entitled to a credit against the Processing Fee (the "Rejection Credit") equal to the Processing Fee for such Batch and the cost, not to exceed $25,000, of NeoPharm's Bulk Product. In the event the Parties can not agree upon whether the Rejection was justified, the Parties shall mutually agree upon a third party to test samples of such Batch and to review records and test data and other relevant information developed by both parties relating thereto to ascertain whether the Batch was manufactured in accordance with the Processing Parameters. The findings of such third party shall be binding on both parties. If the third party determines that the Batch was manufactured in accordance with the Processing Parameters, NeoPharm shall be deemed to have accepted the affected Batch. If the third party determines that the Batch was not manufactured in accordance with the Processing Parameters, NeoPharm shall be entitled to the Rejection Credit. The Parties shall share the costs of any such third party testing. In the event a Batch was properly Rejected, Akorn agrees that NeoPharm shall be entitled to a replacement Processing Run, regardless of whether such replacement Processing Run will cause NeoPharm to exceed the Processing Maximum.

ARTICLE IV
PRICE OF MANUFACTURE

Section 4.1. Price. In consideration of the Processing provided by Akorn hereunder, NeoPharm agrees to pay Akorn a processing fee (the "Processing Fee"), as modified by the Yield Credit or the Rejection Credit, if applicable. The Processing Fee shall be mutually agreed upon by the Parties at least thirty (30) days prior to the Effective Date based upon the Processing Parameters for each Product, after a trial run if necessary, and shall be attached hereto as Schedule 4.1.

Section 4.2. Most Favored Pricing. Akorn agrees that the Processing Fee charged to NeoPharm hereunder shall be no higher than the lowest fee charged by Akorn to any customers with similar processing requirements for Processing at the Facility, regardless of any discounts afforded to such other customers. NeoPharm shall have the right to audit Akorn's books and records to ascertain compliance with this Section 4.2.

ARTICLE V
TERM AND TERMINATION

Section 5.1. Term. This Agreement shall have an initial term (the "Initial Term") commencing on the date the warning letter sanctions imposed by the FDA pursuant to Form 483 or current GMP regulations on Akorn and/or the Facility have been removed (the "Effective Date") and ending on the later of (i) the fifth (5th) anniversary of the Effective Date, or (ii) two (2) years after the date on which Akorn pays all amounts of principal and accrued interest under that certain Promissory Note (the "Note"), dated December 20, 2001, issued by Akorn to NeoPharm in exchange for a loan in principal amount of Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) plus interest. This Agreement will automatically extend for two additional, five-year terms (each, an "Additional Term") beyond the Initial Term, provided, however, that either NeoPharm or Akorn may terminate this Agreement at the end of the Initial Term or an Additional Term, as the case may be, by sending a termination notice ninety
(90) days prior to the end of such Initial Term or Additional Term. Notwithstanding the foregoing, in the event the warning letter sanctions pursuant to Form 483 or current GMP regulations have not been removed by June 30, 2003 or in the event the Akorn has not received validation from the FDA with respect to Processing NeoPharm's Products by such date, NeoPharm may terminate this Agreement upon written notice to Akorn.

Section 5.2. Voluntary Termination. NeoPharm or Akorn may terminate this Agreement for any reason, provided that the terminating party first serves written notice of such termination on the other party no later than one hundred eighty (180) days prior to the date of such termination. Notwithstanding the foregoing, Akorn shall not have the right to voluntarily terminate this Agreement until the Note has been paid in full and for two (2) years thereafter.

Section 5.3. Termination for Material Breach. Either party may terminate this Agreement in the event of a material breach by the other, provided that the party asserting such

breach first serves written notice of the alleged breach on the offending party and such alleged breach is not cured within thirty (30) days of the offending party's receipt of such notice.

Section 5.4. Termination for Rejected Finished Products. NeoPharm may terminate this Agreement upon written notice to Akorn in the event NeoPharm property rejects three (3) consecutive Batches of Finished Product or six (6) Batches of Finished Product within a two (2) month period.

Section 5.5. Termination for Insolvency. In the event that either party shall admit in writing that it can not pay its debts, or shall suspend its business, or shall file a voluntary petition or any answer admitting the jurisdiction of the court and the material allegations of, or shall consent to, an involuntary petition pursuant to or purporting to be pursuant to any reorganization or insolvency law of any jurisdiction, or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of a receiver or trustee of all or a substantial part of its property (such party, upon the occurrence of any such event, a "Bankrupt Party"), then, to the extent permitted by the law, the other party hereto may thereafter immediately terminate this Agreement by giving notice of termination to the Bankrupt Party.

Section 5.6. Effect of Expiration or Termination. Upon termination or expiration of this Agreement, neither party shall have any further obligations to the other party except for those obligations which accrued prior to the date of termination or those obligations which are intended to survive the termination or expiration of this Agreement.

Section 5.7. Akorn Obligations Upon Expiration or Termination. Upon the expiration of this Agreement or its earlier termination, Akorn shall, at the request of NeoPharm and at NeoPharm's expense, return or dispose of all Bulk Product or Finished Product to NeoPharm or to a third party pursuant to the instructions of NeoPharm.

ARTICLE VI
INDEMNIFICATION

Section 6.1. Akorn Indemnity. Akorn agrees to indemnify, protect and defend NeoPharm and hold NeoPharm harmless from and against any claims, damages, liability, harm, loss, costs, penalties, lawsuits, threats of lawsuit, recalls or other governmental action, including reasonable attorneys' fees, brought or claimed by any third party which (i) arise as the result of Akorn's breach of this Agreement or of any warranty or representation made to NeoPharm under this Agreement; or (ii) which result from any claim made against NeoPharm in connection with Akorn's manufacture of defective Finished Product for NeoPharm. Upon the filing of any such legal claim or lawsuit against NeoPharm, NeoPharm shall promptly notify Akorn, in writing, of any such claim and Akorn shall, at its expense, with attorneys reasonably acceptable to NeoPharm, handle, defend and control such claim or lawsuit. Failure to notify Akorn promptly of the commencement of any such action, if prejudicial to the ability to defend such action, shall

relieve Akorn of any liability to NeoPharm under this Section 6.1. NeoPharm shall have the right to participate in the defense of such action at its expense with counsel of its choosing.

Section 6.2. NeoPharm Indemnity. NeoPharm agrees to indemnify, protect and defend Akorn and hold Akorn harmless from and against any claims, damages, liabilities, harm, loss, costs, penalties, lawsuits, threats of lawsuit, recalls or other governmental action, including reasonable attorneys' fees, brought or claimed by any third party, which (i) arise out of NeoPharm's breach of this Agreement or of any warranty or representation to Akorn under this Agreement; or
(ii) result from the negligent acts or willful malfeasance on the part of NeoPharm or employees or agents, in connection with NeoPharm's sale, marketing or distribution of Product manufactured by Akorn or other activities or actions in connection with the Finished Product. Upon the filing of any such legal claim or lawsuit against Akorn, Akorn shall promptly notify NeoPharm, in writing, of any such claim and NeoPharm shall, at its expense, with attorneys reasonably acceptable to Akorn, handle, defend and control such claim or lawsuit. Failure to notify NeoPharm promptly of the commencement of any such action, if prejudicial to the ability to defend such action, shall relieve NeoPharm of any liability to Akorn under this Section 6.2. Akorn shall have the right to participate in the defense of such action at its expense with counsel of its choosing.

ARTICLE VII
RIGHT OF FIRST REFUSAL

Section 7.1. Grant of Rights. Akorn agrees that in the event it receives a bona fide third party offer (an "Offer") to acquire the Facility from an unrelated third party (exclusive of an offer to acquire a controlling interest in the outstanding shares of stock or substantially all of the assets of Akorn), it shall provide NeoPharm with written notice of the terms and conditions of such Offer.

Section 7.2. Right of First Refusal. Upon its receipt of the notice contemplated by Section 7.1, NeoPharm shall have the right to acquire the Facility on the same terms and conditions as are set forth in the Offer (or their cash equivalent in the event the Offer contains consideration other than cash). In order to exercise the foregoing right, NeoPharm must provide Akorn written notice of its exercise within thirty (30) days of its receipt of the written notice from Akorn.

ARTICLE VIII
CONFIDENTIALITY

Section 8.1. Confidential Information. Each party (the "Receiving Party") shall maintain in confidence all information heretofore or hereafter disclosed by the other party (the "Disclosing Party") which such party knows or has reason to know is a trade secret, and other proprietary information owned by or licensed to the other party, including, but not limited to,

information relating to the Product (including without limitation, information developed in preclinical and clinical studies) and licenses, patents, patent applications, technology or processes and business plans of the other party, including, without limitation, information designated as confidential in writing from one party to the other (all of the foregoing hereinafter referred to as "Confidential Information") and shall not use such Confidential Information except as permitted by this Agreement or disclose the same to anyone other than those of its officers, directors or employees as are necessary in connection with such party's activities as contemplated by this Agreement. Each party shall use the same efforts as such party would use to protect its own information and to ensure that its officers, directors and employees do not disclose or make any unauthorized use of such Confidential Information. Each party shall notify the other promptly upon discovery of any unauthorized use or disclosure of the other party's Confidential Information.

Section 8.2. Limitations on Confidentiality. The obligation of confidentiality contained in this Article VIII shall not apply to the extent that: i) the Receiving Party is required to disclose Confidential Information by applicable law, regulation or order of a governmental agency or a court of competent jurisdiction; ii) the Receiving Party can demonstrate that the disclosed Confidential Information was, at the time of disclosure, already in the public domain other than as a result of actions or failure to act of the Receiving Party, its officers, directors or employees, in violation hereof; iii) the disclosed Confidential Information was rightfully known by the Receiving Party (as shown by its written records) prior to the date of disclosure to the Receiving Party in connection with this Agreement; or iv) the disclosed Confidential Information was received by the Receiving Party on an unrestricted basis from a source which is not under a duty of confidentiality to the other Party.

Section 8.3. Disclosure Required by Law. In the event that the Receiving Party shall be required to make disclosure pursuant to the provisions of Section
8.2 (i) as a result of the issuance of a court order or other government process, the Receiving Party shall promptly, but in no event more than forty-eight (48) hours after learning of such court order or other government process, notify, by personal delivery or facsimile, all pursuant to Section 9.4 hereof, the Disclosing Party and, at the Disclosing Party's expense, the Receiving Party shall: a) take all reasonably necessary steps requested by the Disclosing Party to defend against the enforcement of such court order or other government process, and b) permit the Disclosing Party to intervene and participate with counsel of its choice in any proceeding relating to the enforcement thereof.

Section 8.4. Equitable Remedies for Breach of Confidentiality. The parties acknowledge that their failure to comply with the provisions of Section 8.1 may cause irreparable harm and damage to the name and reputation of the other party for which no adequate remedy may be available at law. Accordingly, the parties agree that upon a breach by a party of such provisions, the non-breaching party may, at its option, enforce the obligations of the breaching party under those provisions by seeking equitable remedies in a court of competent jurisdiction.

ARTICLE IX

MISCELLANEOUS

Section 9.1. Force Majeure. Neither of the parties to this Agreement shall be liable to the other party for any loss, injury, delay, damage or other casualty suffered or incurred by such other party due to strikes, lockouts, accidents, fire, delays in manufacture, transportation or delivery of material, embargoes, inability to ship, explosions, floods, war, governmental action or any other cause similar thereto which is beyond the reasonable control of such other party and any failure or delay by a party in the performance of any of its obligations under this Agreement shall not be considered a breach of this Agreement due to, but only so long as there exists, one or more of the foregoing causes; provided, however, that if Akorn cannot complete a Processing Run within ninety (90) days of the stated completion date due to any such cause, NeoPharm may cancel the order without liability to Akorn.

Section 9.2. Status of the Parties. This Agreement shall not be construed to create between the parties hereto or their respective successors or permitted assignees the relationship of principal and agent, joint venturers, copartners or any other similar relationship, the existence of which is hereby expressly denied by each party. Neither party shall be liable to any third party in any way for engagement, obligation, contract, representation or transaction or for any negligent act or omission to act of the other except as expressly provided.

Section 9.3. Governing Law. The provisions of this Agreement shall be governed in all respects by the laws of the State of Illinois.

Section 9.4. Notice. All notices, proposals, submissions, offers, approvals, agreements, elections, consents, acceptances, waivers, reports, plans, requests, instructions and other communications required or permitted to be made or given hereunder (all of the foregoing hereinafter collectively referred to as "Communications") shall be in writing and shall be deemed to have been duly made or given when: a) delivered personally with receipt acknowledged;
b) sent by registered or certified mail or equivalent, return receipt requested;
c) sent by facsimile, cable or telex (which shall promptly be confirmed by a writing sent by registered or certified mail or equivalent, return receipt requested); or d) sent by recognized overnight courier for delivery within twenty-four (24) hours, in each case addressed or sent to the parties at the following addresses and facsimile numbers or to such other or additional address or facsimile as any party shall hereafter specify by Communication to the other parties:

To Akorn:         Akorn, Inc.
                  2500 Millbrook Drive
                  Buffalo Grove, Illinois 60089-4694
                  Facsimile No. (847) 279-6123
                  Attn:  Antonio Pera

With a Copy to:   Tressler, Soderstrom, Maloney & Priess
                  2100 Manchester Road, Suite 950

                  Wheaton, Illinois 60187
                  Facsimile No.: (630) 668-3003
                  Attn:  William A. Kindorf, III

To NeoPharm:      Neopharm, Inc.
                  150 Field Drive, Illinois 60045
                  Facsimile No.: (847) 295-8854
                  Attn:  James Hussey

With a Copy to:   Ross & Hardies
                  150 North Michigan Avenue
                  Chicago, Illinois 60601-7567
                  Facsimile No.: (312) 750-8600
                  Attn:  Scott Becker

Notice of change of address shall be deemed given when actually received, all other Communications shall be deemed to have been given, received and dated on the earlier of: (i) when actually received or on the date when delivered personally; (ii) one (1) day after being sent by facsimile, cable, telex (each promptly confirmed by a writing as aforesaid) or overnight courier; or (iii) four (4) business days after mailing (except that in the case of any communication given to a person with an address outside the United States, then ten (10) business days after mailing).

Section 9.5. Legal Construction. In case any one or more of the provisions contained in this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute for such invalid and unenforceable provision in light of the tenor of this Agreement, and, upon so agreeing, shall incorporate such substitute provision in this Agreement.

Section 9.6. Entire Agreement, Modifications, Consents, Waivers. This Agreement, together with the Schedules hereto, contains the entire agreement of the parties with respect to the subject matter hereof. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought. Each party hereto may, by an instrument in writing, waive compliance by the other party hereto with any term or provision of this Agreement to be performed or complied with by such other party. The waiver by either party hereto of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach. Neither anything in this Agreement nor the execution or performance hereof shall be deemed to prejudice in any way, and each party hereto expressly reserves, any and all rights, remedies and claims which each party may now or hereafter have against or with respect to the other party or any of such other party's Affiliates, relating to any matter which is not expressly covered by this Agreement.

Section 9.7. Section Headings; Construction. The section headings and titles contained herein are each for reference only and shall not be deemed to affect the meaning or interpretation of this agreement. The words "hereby", "herein", "herein above", "hereinafter", "hereof" and "hereunder", when used anywhere in this Agreement, refer to this Agreement as a whole and not merely to a subdivision in which such words appear, unless the context otherwise requires. The singular shall include the plural, the conjunctive shall include the disjunctive and the masculine gender shall include the feminine and neuter, and vice versa, unless the context otherwise requires.

Section 9.8. Execution Counterparts. This Agreement may be executed in any number of counterparts and each such duplicate counterpart shall constitute an original, any one of which may be introduced in evidence or used for any other purpose without the production of its duplicate counterpart. Moreover, notwithstanding that any of the parties did not execute the same counterpart, each counterpart shall be deemed for all purposes to be an original, and all such counterparts shall constitute one and the same instrument, binding on all of the parties hereto.

Section 9.9. Binding Effect, Assignment. Neither party may directly or indirectly assign, delegate, encumber or in any other manner transfer any of its rights, remedies, obligations, liabilities or interests in or arising under this Agreement, without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed. Any attempted assignment, delegation, encumbrance or other transfer in violation of this Agreement shall be void and of no effect and shall be a material breach hereof. In the event Akorn sells the Facility to a third party, Akorn agrees that it shall cause such third party to agree in writing to assume Akorn's responsibilities hereunder.

* * * * * * * *

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first written above.

AKORN, INC.                                 NEOPHARM, INC.

By:_________________________                By:______________________________

Its:________________________                Its:_____________________________

Schedule 2.1 Processing Parameters

Schedule 4.1 Processing Fee

Exhibit 10.19

20095718.3
12-07-01

SUBORDINATION, STANDBY AND INTERCREDITOR AGREEMENT

WHEREAS, AKORN, INC., a Louisiana corporation (hereinafter, together with its successors and assigns, called "Akorn"), and AKORN (NEW JERSEY), INC., an Illinois corporation ("Akorn NJ"; together with Akorn, the "Borrowers" and each individually a "Borrower") may from time to time hereafter become indebted to the undersigned NEOPHARM, INC., a Delaware corporation (the "Junior Lender"), including, without limitation, indebtedness under the Promissory Note referred to below, and the Borrowers have requested, and may from time to time hereafter request, THE NORTHERN TRUST COMPANY, an Illinois banking corporation (hereinafter, together with its successors and assigns, called the "Bank"), 50 South LaSalle Street, Chicago, Illinois 60675, to make or agree to make loans, advances or other financial accommodations to the Borrowers pursuant to the terms of the Credit Agreement (as hereinafter defined); and

WHEREAS, the Borrowers and the Bank are party to that certain Amended and Restated Credit Agreement dated as of September 15, 1999 (as amended, restated or supplemented from time to time, the "Credit Agreement"; capitalized terms not otherwise defined herein shall have the same meanings herein as in the Credit Agreement); and

WHEREAS, Akorn intends to incur an indebtedness to the Junior Lender in the principal amount of $3,250,000 pursuant to a Promissory Note (the "Subordinated Note"), in the form attached hereto as Schedule A; and

WHEREAS, the Junior Lender is a customer of Akorn and as such will benefit from the continued making of loans, advances and other financial accommodations from the Bank to the Borrowers;

NOW, THEREFORE, to induce the Bank, from time to time, at its option, to make or agree to make loans, advances or other financial accommodations (including, without limitation, renewals or extensions of, or forbearances with respect to, any loans or advances heretofore or hereafter made) to Borrowers, and for other valuable consideration, receipt whereof is hereby acknowledged, the Junior Lender agrees as follows:

1. All obligations of each of the Borrowers, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent or now or hereafter existing, or due or to become due, are hereinafter called "Liabilities". All Liabilities to the Bank (other than any arising solely by reason of any pledge or assignment made to the Bank pursuant to paragraph 2(c) hereof) are hereinafter called "Senior Liabilities"; and all Liabilities to the Junior Lender, including under the Subordinated Note (including any that may be pledged or assigned to the Bank pursuant to paragraph 2(c) hereof), other than trade payables arising in the usual and ordinary course of business between the Borrowers and the Junior Lender, are hereinafter called "Junior Liabilities"; it being expressly understood and agreed that

the term "Senior Liabilities", as used herein, shall include, without limitation, any and all interest accruing on any of the Senior Liabilities after the commencement of any proceedings referred to in paragraph 4 hereof, notwithstanding any provision or rule of law which might restrict the rights of the Bank, as against the Borrowers or anyone else, to collect such interest.

2. The Junior Lender will, from time to time, (a) promptly notify the Bank of the creation of any Junior Liabilities, and of the issuance of any promissory note or other instrument to evidence any Junior Liabilities, (b) upon request by the Bank, cause any Junior Liabilities which are not evidenced by a promissory note or other instrument of either of the Borrowers to be so evidenced, and (c) if an event of default on any of the Senior Liabilities has occurred and is continuing beyond any applicable grace period, and if there is no written forbearance agreement in effect between Akorn and the Bank relating to such event of default, upon request by the Bank, and as collateral security for all Senior Liabilities, indorse without recourse, deliver and pledge to the Bank any or all promissory notes or other instruments evidencing Junior Liabilities, and otherwise assign to the Bank any or all Junior Liabilities and any or all security therefor and guaranties thereof, all in a manner satisfactory to the Bank.

3. Except as the Bank may hereafter otherwise expressly consent in writing, which consent may be given or withheld by the Bank in its sole and absolute discretion, the payment of all Junior Liabilities shall be postponed and subordinated to the payment in full of all Senior Liabilities, and no payments or other distributions whatsoever in respect of any Junior Liabilities shall be made by either of the Borrowers, or accepted by the Junior Lender, nor shall any property or assets of either of the Borrowers be applied by them, or accepted by the Junior Lender, to or for the purchase or other acquisition or retirement of any Junior Liabilities.

4. In the event of any dissolution, winding up, liquidation, readjustment, reorganization or other similar proceedings relating to any Borrower or its creditors, as such, or to their property (whether voluntary or involuntary, partial or complete, and whether in bankruptcy, insolvency or receivership, or upon an assignment for the benefit of creditors, or any other marshalling of the assets and liabilities of any Borrower, or any sale of all or substantially all of the assets of any Borrower, or otherwise), the Senior Liabilities shall first be paid in full before the Junior Lender shall be entitled to receive and to retain any payment or distribution in respect of the Junior Liabilities, and, in order to implement the foregoing, (a) all payments and distributions of any kind or character in respect of the Junior Liabilities to which the Junior Lender would be entitled if the Junior Liabilities were not subordinated, or subordinated and pledged or assigned, pursuant to this Agreement shall be made directly to the Bank, (b) the Junior Lender shall promptly file a claim or claims, in the form required in such proceedings, for the full outstanding amount of the Junior Liabilities, and shall cause said claim or claims to be approved and all payments and other distributions in respect thereof to be made directly to the Bank, and (c) the Junior Lender hereby irrevocably agrees that the Bank may, at its sole discretion, in the name of the Junior Lender or otherwise, demand, sue for, collect, receive and receipt for any and all such payments

or distributions, and file, prove, and vote or consent in any such proceedings with respect to, any and all claims of the Junior Lender relating to the Junior Liabilities.

5. In the event that the Junior Lender receives any payment or other distribution of any kind or character from any Borrower or from any other source whatsoever in respect of any of the Junior Liabilities, other than as expressly permitted by the terms of this Agreement, such payment or other distribution shall be received in trust for the Bank and promptly turned over by the Junior Lender to the Bank. The Junior Lender will mark its books and records, and cause the applicable Borrower to mark its books and records, so as to clearly indicate that the Junior Liabilities are subordinated in accordance with the terms of this Agreement, and will cause to be clearly inserted in any promissory note or other instrument which at any time evidences any of the Junior Liabilities a statement to the effect that the payment thereof is subordinated in accordance with the terms of this Agreement. The Junior Lender will execute such further documents or instruments and take such further action as the Bank may reasonably from time to time request to carry out the intent of this Agreement.

6. All payments and distributions received by the Bank in respect of the Junior Liabilities, to the extent received in or converted into cash, may be applied by the Bank first to the payment of any and all expenses (including attorneys fees and legal expenses) paid or incurred by the Bank in enforcing this Agreement or in endeavoring to collect or realize upon any of the Junior Liabilities or any security therefor, and any balance thereof shall, solely as between the Junior Lender and the Bank, be applied by the Bank, in such order of application as the Bank may from time to time select, toward the payment of the Senior Liabilities remaining unpaid; but, as between any Borrower and its respective creditors, no such payments or distributions of any kind or character shall be deemed to be payments or distributions in respect of the Senior Liabilities; and, notwithstanding any such payments or distributions received by the Bank in respect of the Junior Liabilities and so applied by the Bank toward the payment of the Senior Liabilities, the Junior Lender shall be subrogated to the then existing rights of the Bank, if any, in respect of the Senior Liabilities only at such time as this Agreement shall have been discontinued and the Bank shall have received payment of the full amount of the Senior Liabilities, as provided for in paragraph 11 hereof.

7. Notwithstanding anything to the contrary contained in the Subordinated Note, until such time as this Agreement shall have been discontinued and the Bank shall have received payment of the full amount of the Senior Liabilities, as provided for in paragraph 11 hereof, no action or inaction by either of the Borrowers shall be deemed to be in violation of the provisions contained in Article 5 of the Subordinate Note if such action or inaction either (i) is not in violation of any of the provisions of the Credit Agreement, or (ii) has been consented to in writing by the Bank.

8. The Junior Lender hereby waives: (a) notice of acceptance by the Bank of this Agreement; (b) notice of the existence or creation or non-payment of all or any of the Senior Liabilities; and (c) all

diligence in collection or protection of or realization upon the Senior Liabilities or any thereof or any security therefor.

9. The Junior Lender will not without the prior written consent of the Bank: (a) cancel, waive, forgive, transfer or assign, or attempt to enforce or collect, or subordinate to any Liabilities other than the Senior Liabilities, any Junior Liabilities or any rights in respect thereof; (b) take any collateral security for any Junior Liabilities; or (c) commence, or join with any other creditor in commencing, any bankruptcy, reorganization or insolvency proceedings with respect to any Borrower.

10. This Agreement shall in all respects be a continuing agreement and shall remain in full force and effect (notwithstanding, without limitation, the dissolution of the Junior Lender or that at any time or from time to time all Senior Liabilities may have been paid in full), subject to discontinuance only upon receipt by the Bank of payment in full of all Senior Liabilities and termination of any and all commitments by the Bank to extend credit to either of the Borrowers.

11. The Bank may, from time to time, whether before or after any discontinuance of this Agreement, at its sole discretion and without notice to the Junior Lender, take any or all of the following actions: (a) retain or obtain a security interest in any property to secure any of the Senior Liabilities, (b) retain or obtain the primary or secondary obligation of any other obligor or obligors with respect to any of the Senior Liabilities, (c) extend or renew or forbear for one or more periods (whether or not longer than the original period), alter or exchange any of the Senior Liabilities, or release or compromise any obligation of any nature of any obligor with respect to any of the Senior Liabilities, and (d) release its security interest in, or surrender, release or permit any substitution or exchange for, all or any part of any property securing any of the Senior Liabilities, or extend or renew or forbear for one or more periods (whether or not longer than the original period) or release, compromise, alter or exchange any obligations of any nature of any obligor with respect to any such property.

12. The Bank may, from time to time, whether before or after any discontinuance of this Agreement, without notice to the Junior Lender, assign or transfer any or all of the Senior Liabilities or any interest therein; and, notwithstanding any such assignment or transfer or any subsequent assignment or transfer thereof, such Senior Liabilities shall be and remain Senior Liabilities for the purposes of this Agreement, and every immediate and successive assignee or transferee of any of the Senior Liabilities or of any interest therein shall, to the extent of the interest of such assignee or transferee in the Senior Liabilities, be entitled to the benefits of this Agreement to the same extent as if such assignee or transferee were the Bank; provided, however, that, unless the Bank shall otherwise consent in writing, the Bank shall have an unimpaired right, prior and superior to that of any such assignee or transferee, to enforce this Agreement, for the benefit of the Bank, as to those of the Senior Liabilities which the Bank has not assigned or transferred.

13. The Bank shall not be prejudiced in its rights under this Agreement by any act or failure to act of any Borrower or the Junior Lender, or any noncompliance of any Borrower or the Junior Lender with any agreement or obligation, regardless of any knowledge thereof which the Bank may have or with which the Bank may be charged; and no action of the Bank permitted hereunder shall in any way affect or impair the rights of the Bank and the obligations of the Junior Lender under this Agreement.

14. No delay on the part of the Bank in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Bank of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy; nor shall any modification or waiver of any of the provisions of this Agreement be binding upon the Bank except as expressly set forth in a writing duly signed and delivered on behalf of the Bank. For the purposes of this Agreement, Senior Liabilities shall include all obligations of each of the Borrowers to the Bank, notwithstanding any right or power of either Borrower or anyone else to assert any claim or defense as to the invalidity or unenforceability of any such obligation, and no such claim or defense shall affect or impair the agreements and obligations of the Junior Lender hereunder.

15. This Agreement shall be binding upon the Junior Lender and upon the heirs, legal representatives, successors and assigns of the Junior Lender; and, to the extent that either Borrower or the Junior Lender is either a partnership or a corporation, all references herein to such Borrower and to the Junior Lender, respectively, shall be deemed to include any successor or successors, whether immediate or remote, to such partnership or corporation. If more than one party shall execute this Agreement, the term "undersigned" as used herein shall mean all parties executing this Agreement and each of them, and all such parties shall be jointly and severally obligated hereunder.

16. This Agreement shall be construed in accordance with and governed by the laws of the State of Illinois. Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

17. THE JUNIOR LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE JUNIOR LENDER HEREBY ABSOLUTELY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS HAVING SITUS IN COOK COUNTY, ILLINOIS OR THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS IN CONNECTION WITH ANY SUITS, ACTIONS OR PROCEEDINGS BROUGHT AGAINST THE JUNIOR LENDER BY THE BANK ARISING OUT OF OR RELATING TO

THIS AGREEMENT, AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE JUNIOR LENDER HEREBY WAIVES AND AGREES NOT TO ASSERT IN SUCH SUIT, ACTION OR PROCEEDING, IN EACH CASE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE JUNIOR LENDER IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT; (B) THE JUNIOR LENDER IS IMMUNE FROM SUIT OR ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO IT OR ITS PROPERTY; (C) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM; (D) THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER; OR (E) THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY ANY SUCH COURT. NOTHING CONTAINED HEREIN SHALL AFFECT ANY RIGHT THAT THE BANK MAY HAVE TO BRING ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE JUNIOR LENDER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

[SIGNATURE PAGE(S) AND EXHIBIT(S),
IF ANY, FOLLOW THIS PAGE]

IN WITNESS WHEREOF, this Agreement has been made and delivered at Chicago, Illinois as of the_________day of December, 2001.

NEOPHARM, INC.

By_______________________________________
Name:
Title:

ACCEPTED December_____, 2001

THE NORTHERN TRUST COMPANY

By_________________________________
Title:

ACKNOWLEDGMENT OF SUBORDINATION

The Borrowers each hereby acknowledge receipt of a copy of the foregoing Subordination, Standby and Intercreditor Agreement, waive notice of acceptance thereof by the Bank, and agree to be bound by the terms and provisions thereof, to make no payments or distributions contrary to the terms and provisions thereof, and to do every other act and thing necessary or appropriate to carry out such terms and provisions. In the event of any violation of any of the terms and provisions of the foregoing Subordination and Standby Agreement, then, at the election of the Bank, any and all obligations of each of the Borrowers to the Bank shall forthwith become due and payable and any and all agreements of the Bank to make loans, advances or other financial accommodations to the Borrowers, or to forbear from exercising remedies, shall forthwith terminate, notwithstanding any provisions thereof to the contrary.

Dated as of December______, 2001       AKORN, INC.

                                       By_______________________________________
                                         Name:

Title:

Dated as of December______, 2001       AKORN (NEW JERSEY), INC.

                                       By_______________________________________
                                         Name:

Title:

SCHEDULE A

PROMISSORY NOTE

Exhibit 10.20

SUBORDINATION AND INTERCREDITOR AGREEMENT

THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "Agreement") is made and entered into as of this 20th day of December, 2001, by John N. Kapoor, as Trustee under THE JOHN N. KAPOOR TRUST, dated September 20, 1989 (the "Junior Party") and NEOPHARM, INC., a Delaware corporation (the "Lender").

R E C I T A L S:

A. The Lender and Akorn, Inc., a Louisiana corporation (the "Borrower"), have entered into that certain Processing Agreement, of even date herewith (the "Processing Agreement"), and, in connection therewith, Borrower executed and delivered that certain Promissory Note, of even date herewith (the "Promissory Note"), evidencing a loan made by Lender to Borrower, as of the date hereof, in aggregate principal amount of THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS (US$3,250,000.00), plus accrued but unpaid interest (the "Lender Debt").

B. On July 13, 2001, the Borrower and the Junior Party entered into that certain Convertible Bridge Loan and Warrant Agreement (the "Junior Agreement"), pursuant to which the Junior Party made certain loans to Borrower in aggregate principal amount of FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00), plus accrued interest thereon (the aforementioned loans, accrued interest thereon and any other loans made by the Junior Party to the Borrower (excluding any consulting fee, chairman's fee and expense reimbursement, whether or not deferred, owed by Borrower to the Junior Party or any entity controlled by the Junior Party), presently outstanding or made in the future, to be collectively referred to as the "Junior Debt"). In connection with the consummation of the Junior Agreement, the Junior Party entered into a Subordination Agreement, of even date therewith, whereby the Junior Party agreed to subordinate the Junior Debt to all outstanding debt owed by Borrower to The Northern Trust Company ("Northern Trust"), Borrower's senior lender, under the terms of an Amended and Restated Credit Agreement, as most recently amended by that certain Forbearance Agreement, dated July 13, 2001, by and among Northern Trust, the Borrower and the Borrower's wholly-owned subsidiary, Akorn (New Jersey), Inc, an Illinois corporation.

C. Lender was unwilling to enter into the Processing Agreement or provide Borrower with the Lender Debt unless the Junior Party entered into this Subordination and Intercreditor Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows:

1. Recitals. The Recitals of this Agreement are incorporated herein and made a part hereof by this reference thereto.

2. Junior Debt Subordinate to Lender Debt. The Junior Debt is hereby, and shall continue to be, subject and subordinate in lien and in payment to the lien and payment of the Lender Debt and any other document evidencing, securing or guaranteeing the Lender Debt without regard to the application of such proceeds together with all interest, late fees, default interest, future principal advances and all other sums due under the Promissory Note. The

foregoing shall apply notwithstanding the actual date and time of execution, delivery, recordation, filing or perfection of the Lender Debt or the Junior Debt, or the lien or priority of payment thereof.

Until all Lender Debt shall have been paid in full, the Junior Party shall not, directly or indirectly, demand or accept from the Borrower nor cancel or otherwise discharge all or any part of the Junior Debt, and the Junior Party shall not otherwise take or permit any action prejudicial to or inconsistent with the Lender's priority position over the Junior Party created by this Agreement. Excluded from the provisions of this paragraph 2 are the conversion rights under the Junior Debt of principal and interest to an equity interest in Borrower.

3. Allocation of Collateral During Bankruptcy, Etc. In the event of (a) any proceeding under the Bankruptcy Code or other applicable federal or state insolvency law relative to the Borrower, or (b) any liquidation, dissolution or other winding up of the Borrower, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or any other marshaling of assets and liabilities of the Borrower, then and in any such event, the Lender shall be entitled to receive payment in full in cash of all amounts due or to become due on or in respect of the Lender Debt, and to that end the Lender shall be entitled to receive as collateral therefor, any payment or distribution of any kind or character, whether in cash, property or securities which may be payable or deliverable to the Junior Party in such proceeding, dissolution, liquidation or other winding up or event until the Lender Debt is fully repaid and discharged.

In the event that, notwithstanding the foregoing provisions of this
Section 3, the Junior Party shall have received any cash or assets of any kind from Borrower as payment for the Junior Debt or to secure, guarantee or discharge all or any part of the Junior Debt before all Lender Debt is paid in full, then and in such event such cash or assets shall be delivered forthwith to the Lender or, if required by law, the trustee in bankruptcy, receiver, custodian, assignee, agent or other person making payment or distribution of assets of the Borrower as collateral for the Lender Debt remaining unpaid, to the extent necessary to pay all the Lender Debt in full, after giving effect to any concurrent payment or distribution to or for the Lender.

4. Certain Matters Relating to Bankruptcy. The Junior Party hereby waives any objection it may have to the use of cash collateral or the financing of the Borrower pursuant to either Section 363 or Section 364, including, without limitation, Section 364(d), of the Bankruptcy Code. Notice of a proposed financing or use of cash collateral shall be deemed given upon the sending of such notice by telegraph, telecopy or hand delivery to the Junior Party at address indicated on the signature page attached hereto. All allocations of payments between the Lender and the Junior Party, subject to any court order, continue to be made after the filing of a petition under the Bankruptcy Code on the same basis that the payments were to be allocated prior to the date of such filing. To the extent that the Lender receives payments on the Lender Debt which are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law, or equitable cause, then, to the extent of such payment or proceeds received, the Lender Debt, or part thereof, intended to be satisfied shall be reinstated and continue in full force and effect as if such payments or proceeds had not been received by the Lender.

5. Continuing Nature of Subordination. This Agreement shall be effective and may not be terminated or otherwise revoked by the Junior Party until the Lender Debt shall have been fully repaid and discharged and all financing arrangements between the Borrower and the Lender under the Promissory Note as amended from time to time, have been terminated. If the Junior Party shall have any right under applicable law to terminate or revoke this Agreement which right cannot be waived, such termination or revocation shall not be effective until written notice of such termination or revocation, signed by the Junior Party, is delivered to the Lender pursuant to the provisions of Section 10, provided, however, that no such notice of termination or revocation shall affect or impair any of the agreements and obligations of the Junior Party hereunder with respect to any and all Lender Debt existing prior to the time of receipt of such notice by the Lender, any and all Lender Debt created or acquired thereafter pursuant to any previous commitments made by the Lender under the Promissory Note, any and all extensions or renewals of any of the foregoing, any and all interest accruing on any of the foregoing, and any and all expenses paid or incurred by the Lender in endeavoring to collect or realize upon any of the foregoing; and all of the agreements and obligations of the Junior Party under this Agreement shall, notwithstanding any such notice of termination or revocation, remain fully in effect until such Lender Debt (including any extensions or renewals thereof and all such interest and expenses) shall have been paid in full.

The Junior Party agrees that the Lender shall be entitled to manage and supervise the Lender's loans to the Borrower in accordance with applicable law, the terms of the Promissory Note and the Lender's usual practices, modified from time to time as the Lender deems appropriate under the circumstances, without regard to the existence of any rights that the Junior Party may now or hereafter have and that the Lender shall have no liability to the Junior Party for, and Junior Party hereby waives any claim which the Junior Party may now or hereafter have against, the Lender arising out of any and all actions which the Lender, in good faith, takes or omits to take with respect to the Promissory Note or any other agreement related thereto or to the collection of the Lender Debt.

6. Information Concerning Financial Condition of the Borrower. The Junior Party hereby assumes responsibility for keeping itself informed of the financial condition of Borrower and of all other circumstances bearing upon the risk of nonpayment of the Lender Debt that diligent inquiry would reveal, and the Junior Party hereby agrees that the Lender shall have no duty to advise the Junior Party of information known to the Lender regarding such condition or any such circumstances except as set forth below.

7. Assignment; Refinancing. The Junior Agreement and the rights and obligations therein may be sold, assigned or transferred by the Junior Party to an entity controlled by the Junior Party, to members of the immediate family of the Junior Party, or to trusts, partnerships, S-corporations or other beneficiaries of the Junior Party. In the event of such transfer, the assignee shall become subject to the terms of this Agreement. Except for such transfers described above, the Junior Party shall not sell, assign or otherwise transfer any interest in the Junior Agreement without the prior written consent of the Lender, which consent shall not be unreasonably withheld.

8. Covenants and Assurances. The Junior Party shall (a) provide the Lender with a copy of any and all notices of default, event of default or acceleration which the Junior Party gives Borrower under or in connection with the Junior Agreement or Junior Debt, which notices to the Lender shall be given at the same time as the Junior Party gives such notices to the

Borrower, and (b) upon the request of Lender, execute and deliver to the Lender such other documents and assurances and do or cause to be done all such other acts and things as may be reasonably required by the Lender in order to give effect to this Agreement.

The Lender shall provide the Junior Party with a copy of any and all notices of default, events of default or acceleration which the Lender gives Borrower under or in connection with the Lender Debt, which notices to the Junior Party shall be given at the same time Lender gives such notices to the Borrower.

9. Waivers, Etc. No delay on the part of the Lender in its respective exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Lender of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy; nor shall any modification or waiver of any of the provisions of this Agreement be binding upon the Lender or Junior Party except as expressly set forth in a writing duly signed and delivered on behalf of the Lender.

10. Notices. Any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent by manual delivery, facsimile transmission, overnight courier or United States mail certified mail, return receipt requested (postage prepaid) addressed to such party at the address specified on the signature page hereof, or at such other address as such party shall have specified to the other party hereto in writing. All periods of notice shall be measured from the date of delivery thereof if manually delivered, from the date of sending thereof if sent by facsimile transmission, from the first business day after the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed; provided, however, that any notice to the Lender shall be deemed to have been given only when received by the Lender.

11. Governing Law and Construction. The validity, construction and enforceability of this Agreement shall be governed by the internal laws of the State of Illinois, without giving effect to conflict of laws principles thereof.

12. Consent to Jurisdiction. AT THE OPTION OF THE LENDER, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR ILLINOIS STATE COURT SITTING IN COOK COUNTY, ILLINOIS; AND THE BORROWER AND JUNIOR PARTY EACH CONSENT TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER OR JUNIOR PARTY COMMENCE ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

13. Waiver of Jury Trial. BORROWER AND JUNIOR PARTY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY

OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

14. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of Borrower, the Junior Party and the Lender.

15. Multiple Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed, or caused this agreement to be executed by the respective officers thereunto duly authorized, as of the day and year first above written.

Dated September 20, 1989

By:         _______________________________
Its:        _______________________________

Address:    _______________________________
            _______________________________
Fax No.:    _______________________________
Attn:       John Kapoor

NEOPHARM, INC., a Delaware corporation

By:   _____________________________________
Its:  President and Chief Executive Officer

Address:    150 Field Drive, Suite 195
            Lake Forest, Illinois  60045
            Attn:  President and Chief Executive
                   Officer
Fax No.:    (847) 295-8854

Address:    Akorn, Inc.
            2500 Millbrook Drive
            Buffalo Grove, IL 60089-4694
            Facsimile No. (847) 279-6123
            Attn:  Ben Pothast

Exhibit 10.21

December 10, 2001

To: Akorn, Inc.
Akorn (New Jersey), Inc.

Re: Proposed Loan from NeoPharm, Inc.

Gentlemen:

Reference is made to (i) the Forbearance Agreement dated as of July 12, 2001 (the "Forbearance Agreement"), by and among Akorn, Inc., a Louisiana corporation, Akorn (New Jersey), Inc., an Illinois corporation, and The Northern Trust Company, an Illinois banking corporation, and (ii) the "Credit Agreement" (as defined in the Forbearance Agreement). All capitalized terms used and not otherwise defined herein shall have the same meanings as in the Credit Agreement.

You have advised us that the Borrowers propose to (i) obtain a loan from NeoPharm, Inc., a Delaware corporation ("NeoPharm"), in the principal amount of $3,250,000 (the "NeoPharm Loan"), pursuant to a Promissory Note in the form attached hereto as Exhibit A (the "NeoPharm Note"), and (ii) expend the proceeds of the NeoPharm Loan for the purpose of undertaking and completing the "Lyophilization Ramp-Up" (as defined in the NeoPharm Note). The NeoPharm Loan would be obtained, and the NeoPharm Note would be executed and delivered, in connection with a Processing Agreement between Akorn and NeoPharm in the form attached hereto as Exhibit B.

The act of Akorn in obtaining and becoming obligated for the NeoPharm Loan, Akorn's execution and delivery of the NeoPharm Note, and Akorn's expenditures for the Lyophilization Ramp-Up will or may constitute a violation of one or more provisions of the Credit Agreement, and will or may cause one or more of the Forbearance Conditions (as defined in the Forbearance Agreement) to fail to be satisfied. You have requested that the Lender waive any such violation of the provisions of the Credit Agreement and any such failure of one or more of such Forbearance Conditions to be satisfied (the "Waiver").

The Lender hereby grants the Waiver, but only on and subject to the following conditions:

(i) The NeoPharm Loan will be on the terms and conditions set forth in the NeoPharm Note.

(ii) Contemporaneously with the execution and delivery of this letter NeoPharm and the Borrowers enter into a Subordination, Standby and Intercreditor Agreement with the Lender in the form attached hereto as Exhibit C (the "NeoPharm Subordination Agreement").

(iii) The Waiver shall be in effect only so long as the NeoPharm Subordination Agreement is in effect and there is no failure on the part of NeoPharm or either of the Borrowers to be in compliance with all of the terms and conditions of the NeoPharm Subordination Agreement.

(iv) The Waiver shall apply only to the specific matters referred to in this letter and shall not extend or relate to any other related or unrelated matters, and neither the granting of the Waiver nor anything contained in this letter shall be construed to obligate the Lender to grant any other waivers to the Borrowers.

(iv) The Borrowers hereby (A) confirm and reaffirm all of their obligations under the "Documents" (as defined in the Forbearance Agreement) and under the Forbearance Agreement; (B) acknowledge and agree that the Lender, by granting the Waiver, does not waive any existing or future default or event of default under any of the Documents or the Forbearance Agreement, or any rights or remedies under any of the Documents or the Forbearance Agreement, except as expressly provided herein; (C) acknowledge and agree that the Lender has not heretofore waived any default or event of default under any of the Documents, or any rights or remedies under any of the Documents, except as provided in the Forbearance Agreement; and (D) acknowledge that they do not have any defense, set-off or counterclaim to the payment or performance of any of their obligations under the Documents or other Forbearance Agreement.

(v) The Borrowers shall expend the proceeds of the NeoPharm Loan solely to pay or reimburse costs incurred in connection with the Lyophilization Ramp-Up, and the Borrowers shall not expend any funds in excess of the proceeds of the NeoPharm Loan on the Lyophilization Ramp-Up.

(vi) The Borrowers shall provide the Bank with reports no less often than once during each of the periods ending on the 15th day and the last day of each calendar month, commencing with the month of December, 2001, as to the progress of Lyophilization Ramp-Up, including, without limitation, information concerning the budget and time schedule and changes to the budget and time schedule for the Lyophilization Ramp-Up, contracts and commitments entered into, and payments made and scheduled to be made. To the extent that the Lyophilization Ramp-Up involves payment for labor, materials or property the furnishing of which could give rise to mechanics lien claims against the premises commonly known as 1222 West Grand, Decatur, Illinois, the Borrower shall make such payment only in exchange for waivers and releases of such mechanics lien claims, and at the time of making each such payment, the Borrowers shall furnish to the Bank a date down endorsement to Chicago Title Insurance Company Policy No. 120090185 insuring the Bank's mortgage on such property, covering the date of such payment and raising no exception for mechanics lien claims.

If the foregoing terms are acceptable to you, please so indicate by signing below.

Very truly yours,

THE NORTHERN TRUST COMPANY

/s/ Olga Georgiov

Olga Georgiov
Vice President

Exhibit 10.22

SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (the "Agreement") is entered into as of January 4, 2002, by and between AKORN, INC. a Louisiana corporation with its principal offices at 2500 Millbrook Drive, Buffalo Grove, Illinois 60089 ("AKORN") and NOVADAQ TECHNOLOGIES, INC., a Canadian corporation with its principal place of business at 924 The East Mall, Suite 100, Toronto, Canada M9B 6K1 ("NOVADAQ"). AKORN and NOVADAQ may each be referred to herein individually as a "Party" and collectively as the "Parties."

In consideration of the mutual premises, covenants and conditions contained in this Agreement, the Parties agree as follows:

1. DEFINITIONS

As used in this Agreement, the following terms shall have the following respective meanings:

"ACCEPTABLE PRODUCT" shall have the meaning set forth in Section 5.1 hereof.

"AFFILIATE" shall mean, in the case of either Party, any corporation, joint venture, or other business entity, which directly or indirectly controls, is controlled by, or is under common control with that Party. "Control", as used in this definition, shall mean having the power to direct, or cause the direction of, the management and policies of an entity, whether through ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, for purposes of this Agreement, the term "Affiliate" shall not include subsidiaries in which a Party or its Affiliates owns a majority of the ordinary voting power to elect a majority of the board of directors but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect.

"AKORN KNOW-HOW" shall mean all proprietary technical and clinical information, data and know-how relating to the manufacture of the Product, whether or not patentable, owned or controlled, as of the Effective Date or acquired during the term of this Agreement, by AKORN or its Affiliates. AKORN Know-How shall include, without limitation, all processes, formulas, discoveries and inventions whether relating to biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical safety or quality control data. The term "AKORN Know-How", however, shall not include (i) any know-how, processes, information and data which is, as of the Effective Date or later becomes, generally available to the public or (ii) any general manufacturing know-how not specific to the Product.

"CALENDAR QUARTER" shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31, for so long as this Agreement is in effect.

"CERTIFICATE OF ANALYSIS" shall mean the certificate for each batch of Product delivered hereunder in the form contemplated by Section 3.1 of this Agreement.

"cGMP" shall mean current good manufacturing practices of the FDA, including compliance with the FD&C Act, 21 C.F.R. parts 210 and 211 and all applicable FDA rules, regulations, policies and guidelines in effect at a given time.

"COMMERCIALLY REASONABLE EFFORTS" shall mean efforts and resources normally used by a Party for a compound or product owned by it or to which it has rights, which is of similar market potential at a similar stage in its product life, taking into account the competitiveness of the marketplace, the proprietary position of the compound or product, the regulatory structure involved, the profitability of the applicable products, and other relevant factors.

"DOLLARS" AND "$" shall mean lawful money of the United States unless otherwise indicated.

"EFFECTIVE DATE" shall mean January 4, 2002.

"FDA" shall mean the United States Food and Drug Administration, and any successor thereto.

"FD&C ACT" shall mean the United States Federal Food, Drug and Cosmetic Act, as amended.

"HPB" shall mean the Health Protection Branch of Health Canada or any successor or replacement entities thereof.

"GOVERNMENTAL BODY" shall mean (i) any domestic or foreign national, federal, provincial, state, municipal or other government or body, (ii) any international or multilateral body, (iii) any subdivision, ministry, department, secretariat, bureau, agency, commission, board, instrumentality or authority of any of the foregoing governments or bodies, (iv) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing governments or bodies, or (v) any domestic, foreign, international, multilateral, or multinational judicial, quasi-judicial, arbitration or administrative court, grand jury, tribunal, commission, board or panel or other regulatory or governmental authority.

"ICG" shall mean indocyanine green complying with the specifications of U.S. Pharmacopoeia 24 and FDA approved NDA.

"INDICATIONS" means NOVADAQ's use of ICG-C for angiography of arteries, carotid arteries, intracranial vasculature, AV fistulas and the peripheral vasculature, for the diagnosis and treatment of age-related macular degeneration utilizing U.S. Patents #5,279,298 and #5,394,199 and all corresponding foreign patents that are licensed by NOVADAQ from Johns Hopkins University, or any other patents and technologies derived from the foregoing patents, outside of the United States ("AMD"), and for such other applications as may be mutually agreed to by the Parties.

"MATERIAL BREACH" means, in the case of AKORN, a breach of subsections
3(i), 3(ii), 3(iii) or 3(iv) of the Settlement and Mutual Release or any failure by AKORN to supply, either directly or through Third Parties, ICG-C in accordance with the terms and conditions of this Agreement, including the specifications, where such failure shall continue for three months and shall not be the result of a Material Breach of this Agreement by NOVADAQ, or an event of force majeure as described in Section 12.1. In

the case of NOVADAQ, "Material Breach" means the failure to make payment or a series of payments of a minimum value of $50,000 or more, subject to the terms of paragraph 12.9 hereof;

"PERMITTED MANUFACTURERS" shall have the meaning set forth in Section 2.2 hereof.

"PRODUCT" or "ICG-C" shall mean a human pharmaceutical product, of which ICG is the sole active ingredient, and which conforms to the Specifications and which is used in accordance with, or for the purposes of, the Regulatory Approvals.

"REGULATORY APPROVALS" shall mean all (i) authorizations by the appropriate Regulatory Authorities which are required for the marketing, promotion, pricing and sale of the Product in the Territory, and (ii) new drug applications ("NDAs") for the use of the Product in the Territory, as applicable, for the Indications.

"REGULATORY AUTHORITY" shall mean any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in the Territory involved in the granting of Regulatory Approval for the Product, including, without limitation, the FDA and the HPB.

"SETTLEMENT AND MUTUAL RELEASE" shall mean the Settlement and Mutual Release between AKORN and NOVADAQ dated January 4, 2002.

"SPECIFICATIONS" shall mean the specifications for or concerning the manufacturing, testing, packaging and shipping of the Product as set forth in the Schedule A hereto, or as may be agreed upon by the Parties in writing from time to time.

"STORAGE PROTOCOL" shall mean that procedure and protocol prepared by AKORN for the storage of Product, as such procedures and protocols shall be amended from time to time.

"TERM" shall have the meaning set forth in Section 10.1 hereof.

"TERRITORY" shall mean the world, except in the case of NOVADAQ's Use for the treatment of AMD, "Territory" shall mean the world excluding the United States of America.

"THIRD PARTY(IES)" shall mean any person(s) or party(ies) other than AKORN, NOVADAQ or their respective Affiliates.

2. SUPPLY OF PRODUCT

2.1 OBLIGATION TO SUPPLY. Subject to the provisions of this Agreement, after the Effective Date and during the Term of this Agreement, AKORN shall manufacture, or contract with Third Parties to have manufactured, exclusively for and supply to NOVADAQ, Product for use by NOVADAQ, its Affiliates or its permitted sub-licensees in the Territory, and NOVADAQ shall exclusively purchase from AKORN its entire requirements of Product for use in the Territory, in each case for the Indications now or hereafter subject to this Agreement. Prior to the Effective Date, AKORN shall supply NOVADAQ's requirements for ICG-C for all clinical and pre-clinical trials on the same terms as provided herein. All Product supplied under this Agreement is to be supplied in finished form, as specified in NOVADAQ's purchase orders placed with AKORN pursuant to

Section 2.4 below. AKORN acknowledges NOVADAQ's ownership of all rights in and to the Product and agrees not to sell or supply Product to any Third Party without the express written consent of NOVADAQ.

2.2 SUBCONTRACTING. For Product intended by NOVADAQ for sale in the U.S., AKORN may subcontract or assign any part of its manufacturing and supply obligations hereunder to any facility approved by FDA for the manufacture of the Product, provided, however, that AKORN shall notify NOVADAQ prior to transferring any manufacturing and supply obligations to a subcontractor or assignee other than SP Pharmaceutical, Inc. 4272 Ballon Park Road, Albuquerque, NM 87107 or Sigma-Aldrich Fine Chemicals 3050 Spruce St., St. Louis, MO 63103. For Product intended by NOVADAQ for sale outside the U.S., AKORN may subcontract or assign any part of its manufacturing and supply obligations hereunder to any facility approved by the relevant Regulatory Authority for the manufacture of the Product. AKORN shall provide NOVADAQ documentation demonstrating that any subcontractor's or assignee's facility has been approved by the FDA (for Product intended for sale in the U.S.) or the relevant Regulatory Authority (for Product intended for sale outside the U.S.) for the manufacture of the Product.

2.3 FORECASTS.

2.3.1 ROLLING FORECASTS. Throughout the term of this Agreement, NOVADAQ shall provide AKORN with a rolling one (1) year forecast (the "Forecast") of its expected purchases of the Product, the mechanism for which shall be as follows:

(a) On or before the Effective Date, NOVADAQ shall have provided AKORN with a written forecast of its expected purchases of the Product for the period extending three
(3) Calendar Quarters beyond the Calendar Quarter containing the Effective Date.

(b) Beginning on the date of the first Calendar Quarter following the Effective Date and then on or prior to the first day of each subsequent Calendar Quarter, NOVADAQ shall provide AKORN with an update to its previously submitted Forecast of its expected purchases of the Product. Such update shall consist of a repetition of the previously forecasted three (3) Calendar Quarters along with a newly introduced forecast for the Calendar Quarter subsequent to the last Calendar Quarter previously forecasted.

2.3.2 AKORN shall provide sixty (60) days written notice to NOVADAQ in the event AKORN determines that it cannot fill an order or meet a forecast. In the event that AKORN is unable to provide NOVADAQ with its requirement for ICG-C, NOVADAQ may obtain the required quantity from an alternative source, but subject to the Termination provisions

hereof, only until such time as AKORN is able to again provide the required quantity. The inability of AKORN to supply amounts or fill orders exceeding the forecast in any quarter by more than 100% shall not be considered a default or breach of this Agreement.

2.4 SUBMISSION OF PURCHASE ORDERS. From time to time, NOVADAQ shall place orders with AKORN, in a format agreed upon by the Parties, for the purchase of Product, specifying the quantities of the Product desired and the place(s) to which and the manner and dates by which delivery is to be made; said delivery dates to be no earlier than one hundred twenty (120) calendar days after the purchase order date. All purchase orders shall be sent on forms previously reviewed by and jointly approved by the Parties and shall be delivered by NOVADAQ to the following address or as otherwise instructed by AKORN.

Akorn, Inc.
2500 Millbrook Rd.

Buffalo Grove, Illinois

Attn: Director of Materials Management Fax: (847) 279-6123

Purchase orders made in accordance with the provisions of this Article 2 shall be deemed to be accepted by AKORN if AKORN has not rejected said purchase orders within ten (10) business days of receipt of the same. To the extent the terms of any purchase order or acknowledgment thereof are inconsistent with the terms of this Agreement, the terms of this Agreement shall prevail.

2.5 DELIVERY. AKORN shall execute all accepted purchase orders consistent with this Agreement by delivery F.O.B. to NOVADAQ's designated carrier at AKORN's distribution facility of all ordered quantities of the Product no later than the delivery dates provided in NOVADAQ's purchase orders. Title and risk of loss will pass to NOVADAQ when each order of Product is delivered to NOVADAQ's designated carrier at AKORN's distribution facility.

2.6 LABELING. Within thirty (30) days after the Effective Date, NOVADAQ, at its own expense, will provide AKORN with NOVADAQ's labeling for the Product bearing NOVADAQ's corporate name and trade dress. AKORN, at NOVADAQ's expense, will print, either directly or through a Third Party, labels and other printed material to be included as part of the finished Product. Product manufactured by or for AKORN after AKORN's receipt of any new or altered labeling for the Product, shall bear such new labeling, provided, however, that AKORN shall have no responsibility with respect to the content of such labeling, provided the content of the labeling printed by AKORN is the same as the content or specification of the labeling provided by NOVADAQ. NOVADAQ shall reimburse AKORN for all reasonable costs incurred by AKORN in making any modifications to the labeling, branding or imprinting, packaging and/or manufacturing processes to accommodate NOVADAQ's labeling or to

accommodate any other changes requested by NOVADAQ. Such reimbursement shall be made pursuant to invoices submitted by AKORN to NOVADAQ, which invoices shall be payable within thirty (30) days after NOVADAQ's receipt thereof.

3. MANUFACTURE OF PRODUCTS

3.1 MANUFACTURE OF PRODUCT; CERTIFICATE OF ANALYSIS. AKORN shall, or shall cause any Third Party manufacturer contracted by AKORN to manufacture the Product to, manufacture the Product in compliance with applicable current good manufacturing practices as described in 21 C.F.R. parts 210 and 211 for ICG-C used in the United States and any equivalent provisions enforced by applicable Regulatory Authorities for ICG-C used in countries outside the United States. All Product supplied by AKORN to NOVADAQ shall materially conform to the Specifications. AKORN shall perform, or cause to be performed, release testing of each batch of Product, in a manner consistent with testing methods agreed upon by the Parties, and AKORN shall provide to NOVADAQ a Certificate of Analysis with each shipment of the Product to NOVADAQ or its designated recipient stating that the Product materially conforms to the Specifications. The Certificate of Analysis shall be in a format agreed upon by the Parties.

3.2 COMPLIANCE WITH LAWS AND REGULATIONS. While the Product is in its possession or under its, or its sub-contractor's control, AKORN shall comply, or ensure that its subcontractors comply, with all applicable federal, state and local statutory and regulatory requirements regarding the manufacture, if applicable, packaging, handling transportation and storage of the Product.

3.3 MANUFACTURING DIFFICULTIES. AKORN shall notify NOVADAQ (within 10 working days) upon any occasion in which AKORN, or any Third Party with whom AKORN has contracted for the manufacture of the Product, experiences any manufacturing problems in producing the Product which AKORN reasonably believes may delay shipment of the Product to NOVADAQ. Subject to the provisions of Section 12.1, AKORN shall use Commercially Reasonable Efforts to resolve those problems and shall keep NOVADAQ fully informed of the status of those efforts. If delays are reasonably expected to (or do) cause AKORN to be unable to supply Product in accordance with NOVADAQ'S purchase order, then NOVADAQ may obtain ICG-C from an alternative source until the supply problems are resolved by AKORN.

4. PURCHASE PRICE; TERMS OF PAYMENT.

4.1 PRICE. NOVADAQ shall purchase from AKORN and AKORN shall sell to NOVADAQ Product at a purchase price which shall, at all times, equals AKORN's best wholesale price for ICG for the calendar month immediately preceding the date of shipment of a Purchase Order, adjusted, however, to reflect any volume discounts resulting from increases in the amount of Product ordered

by NOVADAQ for the Calendar Year in which such Purchase Order is received and which are then being offered by AKORN to other Third Party purchasers of ICG products.

4.2 FREIGHT, INSURANCE AND TAXES. NOVADAQ shall pay all actual freight, insurance and government sales tax imposed on purchasers for resale, and duties and other fees (except tax on income to AKORN) incurred in connection with the sale and shipment of the Product to NOVADAQ.

4.3 PAYMENT. Payments to AKORN for the purchase price of delivered Product (as well as any other payment due from NOVADAQ to AKORN under this Agreement) shall be made by NOVADAQ within thirty (30) days after the date of shipment, except as to Product orders which are rejected by NOVADAQ in accordance with the procedures contained in Section 5, or which the Parties dispute constitute Acceptable Product. In the event Product is rejected by NOVADAQ, but is determined to be Acceptable Product pursuant to Section 5.2 hereof, the payment for such Product shall be due and payable within ten
(10) days after the determination with respect to such Product is made in accordance with Section 5.2 hereof.

4.4 MAINTENANCE OF RECORDS; AUDITS. AKORN shall keep complete records of its average wholesale cost for ICG product sales and, upon request of NOVADAQ, shall permit an independent certified public accountant selected by NOVADAQ, that has first executed an appropriate confidentiality agreement with AKORN and is reasonably acceptable to AKORN, to inspect and review AKORN's records during normal business hours and upon reasonable prior notice, but, in any event, no more than once per year, in order to verify or determine AKORN's average wholesale cost of ICG products. The independent certified public accountant selected by NOVADAQ may not disclose to NOVADAQ specific sales prices charged to any individual Third Party, but only whether or not the average wholesale price for ICG products as reported by AKORN is correct. NOVADAQ shall bear the costs and fees associated with such inspections and reviews unless it is determined by the independent certified public accountant that the average wholesale price was incorrect (in excess of five percent (5%)) in which case AKORN shall bear the costs and fees of such audit. AKORN shall promptly refund to NOVADAQ any overpayments made by NOVADAQ because of such unsupported pricing.

5. INSPECTION OF PRODUCT.

5.1 INSPECTION; REJECTION OF PRODUCT. NOVADAQ shall analyze representative samples of each lot of Product delivered to NOVADAQ for purposes of determining whether the same meets the Specifications ("Acceptable Product") and, if performed, will do so within sixty (60) days from the date of delivery of the Product to NOVADAQ's carrier. NOVADAQ shall notify AKORN in writing within said sixty (60) days of any Product lot, or portion thereof, which

NOVADAQ is rejecting because NOVADAQ believes such Product is not Acceptable Product. If NOVADAQ fails to so notify AKORN that it is rejecting a lot of Product, or portion thereof, within such sixty
(60) day period, such lot of Product, or portion thereof, shall be deemed to be Acceptable Product. Payment terms will still remain net thirty days (30). Any Product which is properly rejected in accordance with the procedures set forth in this Section 5 for which NOVADAQ has already paid shall be replaced in accordance with
Section 5.3

5.2 THIRD PARTY ANALYSIS. If AKORN, after good faith consultation with NOVADAQ, disputes any finding by NOVADAQ that Product is not Acceptable Product, representative samples of the Product shall be forwarded for analysis to a suitably qualified independent Third Party jointly selected by AKORN and NOVADAQ, in their reasonable discretion, which analysis shall be performed in compliance with applicable FDA regulations for retesting of pharmaceutical products. The findings of such Third Party regarding whether the Product was Acceptable Product shall be binding upon the Parties. The cost of such analysis by such Third Party shall be borne by the Party whose findings differed from those generated by such Third Party laboratory.

5.3 REPLACEMENT OF PRODUCT. AKORN shall replace any Product order, or portion thereof, which is not Acceptable Product (unless such non-conformance is due to any negligent or wrongful act or omission by NOVADAQ or its agents or sub contractors), at AKORN's cost and expense, including shipping costs.

5.4 DISPOSITION OF REJECTED PRODUCT. AKORN shall instruct NOVADAQ as to the disposition of any Product order or portion thereof determined not to be Acceptable Product. At the sole option of AKORN, said Product may be returned to AKORN, at AKORN's expense including shipping costs, or destroyed in an environmentally acceptable manner, again at AKORN's expense.

6. INSPECTION AND ACCESS TO FACILITY AND RECORDS.

6.1 INSPECTION BY REGULATORY AUTHORITIES. Upon the request of the FDA or other Regulatory Authority, such authority shall have access to observe and inspect AKORN's or its Third Party manufacturers' facilities and procedures used for the manufacture, testing or warehousing of the Product and to audit such facilities for compliance with cGMP and/or other applicable regulatory standards.

6.2 NOTIFICATION OF INQUIRIES. AKORN shall notify NOVADAQ as soon as possible, and in any event, within ten (10) days, of any written or oral inquiries, notifications or inspection activity by the FDA or other Regulatory Authority in regard to or affecting the Product. AKORN shall furnish to NOVADAQ (i) within ten (10) business days after receipt, any report or correspondence issued by the FDA or other Governmental Authority in connection with such visit or inquiry, including, but not limited to, any FDA Form 483 (List of Inspectional Observations), Establishment Inspection Report or applicable portions of any

FDA Warning Letters which pertain to the Product in the Territory and (ii) not later than ten (10) business days after to the time it provides to the FDA or other Regulatory Authority, copies of proposed responses or explanations relating to items set forth above (each, a "Proposed Response"), in each case redacted of trade secrets or other confidential or proprietary information that is unrelated to the obligations under this Agreement or are unrelated to the Product. After the filing of a response with the FDA or other Regulatory Authority, AKORN will notify NOVADAQ of any further contacts with such agency relating to the subject matter of the response.

7. WARRANTIES AND INDEMNITIES.

7.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY. As of the Effective Date, each of NOVADAQ and AKORN hereby represents, warrants and covenants to the other Party hereto as follows:

(a) It is a corporation duly organized and validly existing under the laws of the state, province or other jurisdiction of its incorporation or formation;

(b) The execution, delivery and performance of this Agreement by such Party has been duly authorized by all requisite corporate action and does not require any shareholder action or approval;

(c) It has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

(d) The execution, delivery and performance by such Party of this Agreement and its compliance with the terms and provisions hereof does not and will not conflict with or result in a breach of any of the terms and provisions of or constitute a default under (i) a loan agreement, guaranty, financing agreement, agreement affecting a product or other agreement or instrument binding or affecting it or its property; (ii) the provisions of its charter or operative documents or bylaws; or (iii) any order, writ, injunction or decree of any court or governmental authority entered against it or by which any of its property is bound; and

(e) It shall at all times comply with all applicable material laws and regulations relating to its activities under this Agreement.

7.2 SETTLEMENT AND MUTUAL RELEASE. The Parties acknowledge the Settlement and Mutual Release and confirm and agree that all of the terms and conditions thereof shall be incorporated in this Agreement to the extent applicable.

7.3 PRODUCT WARRANTY. In addition to the representations and warranties made by AKORN in Section 7.1 hereof, AKORN represents and warrants to NOVADAQ that all Product supplied hereunder will conform to the Specifications.

7.4 DISCLAIMER OF ALL OTHER WARRANTIES. EXCEPT FOR THE WARRANTIES EXPRESSLY MADE BY AKORN IN SECTIONS 7.1 AND 7.3 HEREOF, AKORN MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED (WHETHER WRITTEN OR ORAL), INCLUDING, WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE PRODUCTS OR AKORN'S OBLIGATIONS HEREUNDER. IN ADDITION, BECAUSE AKORN WILL HAVE NO CONTROL OVER (A) ANY OTHER PRODUCT OR PROCEDURE OF WHICH THE PRODUCT IS A COMPONENT OR IN WHICH THE PRODUCT IS USED, (B) THE CONDITIONS UNDER WHICH THE PRODUCT OR ANY OTHER PRODUCT OR PROCEDURE OF WHICH THE PRODUCT IS A COMPONENT OR IS USED, (C) THE DIAGNOSIS OF THE PATIENTS, OR (D) THE METHODS OF ADMINISTERING OR HANDLING THE PRODUCT OR ANY OTHER PRODUCT OR PROCEDURE OF WHICH THE PRODUCT IS A COMPONENT OR IS USED AFTER THE PRODUCT LEAVES AKORN'S POSSESSION, AKORN DOES NOT WARRANT EITHER A GOOD EFFECT OR AGAINST AN ILL EFFECT FOLLOWING THE USE OF THE PRODUCT OR ANY OTHER PRODUCT OR PROCEDURE OF WHICH THE PRODUCT IS A COMPONENT OR IS USED. AKORN EXPRESSLY DISCLAIMS ANY WARRANTY UNDER SECTION 2-312(3) OF THE UNIFORM COMMERCIAL CODE.

7.5 INDEMNIFICATION BY AKORN. AKORN shall indemnify, defend and hold harmless NOVADAQ, its Affiliates and each of its and their respective officers, directors, shareholders, employees, agents and representatives (each a "NOVADAQ Indemnified Party") from any claims, losses, liabilities, costs, expenses (including reasonable attorney's fees) and damages to Third Parties, including any related to property or personal injury (each a "Liability"), which any NOVADAQ Indemnified Party may incur, suffer or be required to pay resulting from or arising in connection with (a) the breach by AKORN of any representation or warranty contained in this Agreement; (b) any violation by AKORN or any Third Party manufacturer of any applicable federal, state or local regulation, statute or order in the manufacture, packaging, storage or shipping of Products arising out of AKORN's duties under this Agreement which is not attributable to printed materials provided by NOVADAQ; or (c) any negligent act or omission by AKORN or its Affiliates in carrying out its obligations under this Agreement. Notwithstanding the foregoing, AKORN shall have no obligation to defend, indemnify or hold harmless any NOVADAQ Indemnified Party for any Liability that results from the negligence or intentional misconduct of NOVADAQ, its Affiliates, or any of its permitted sub-licensees or any of their respective officers, directors, employees, agents, consultants or representatives.

7.6 INDEMNIFICATION BY NOVADAQ. NOVADAQ shall indemnify, defend and hold harmless AKORN and its Affiliates and subcontractors, and each of its and their respective employees, officers, directors and agents (each an "AKORN Indemnified Party") from and against any Liability which any AKORN Indemnified Party may incur, suffer or be required to pay resulting from or arising in connection with (a) the breach by NOVADAQ of any representation or warranty contained in this Agreement; (b) materials, including, but not limited to labeling, or promotional claims supplied or made by NOVADAQ, or (c) the use, packaging, promotion, distribution, testing, use, marketing, sale or other disposition of Product by NOVADAQ, its Affiliates, its permitted sub-licensees or their respective subcontractors. Notwithstanding the foregoing, NOVADAQ shall have no obligation to indemnify, defend, or hold harmless any AKORN Indemnified Party for any Liability that results from the intentional misconduct or negligence of AKORN, its Affiliates, its permitted subcontractors or any of their respective employees, officers, directors or agents, consultants or representatives.

7.7 CONDITIONS TO INDEMNIFICATION. The obligations of the indemnifying Party under Sections 7.4 and 7.5 are conditioned upon the delivery of written notice to the indemnifying Party of any potential Liability promptly after the indemnified Party becomes aware of such potential Liability. The indemnifying Party shall have the right to assume the defense of any suit or claim related to the Liability if it has assumed responsibility for the suit or claim in writing; provided, however, if in the reasonable judgment of the indemnified Party, such suit or claim involves an issue or matter which could have a materially adverse effect on the business operations or assets of the indemnified Party, the indemnified Party may waive its rights to indemnity under this Agreement and control the defense or settlement thereof, but in no event shall any such waiver be construed as a waiver of any indemnification rights such Party may have at law or in equity. If the indemnifying Party defends the suit or claim, the indemnified Party may participate in (but not control) the defense thereof at its sole cost and expense. Any indemnification payable to an indemnified Party shall be net of taxes, insurance or payment received by the indemnified Party from any Third Party.

7.8 LIMITATION OF LIABILITY. WITH RESPECT TO ANY CLAIM BY ONE PARTY AGAINST THE OTHER ARISING OUT OF THE PERFORMANCE OR FAILURE OF PERFORMANCE OF THE OTHER PARTY UNDER THIS AGREEMENT WHERE THE INABILITY OR FAILURE TO PERFORM IS FOR REASONS BEYOND THE REASONABLE CONTROL OF SUCH PARTY, THE PARTIES EXPRESSLY AGREE THAT THE LIABILITY OF SUCH PARTY TO THE OTHER PARTY FOR SUCH BREACH SHALL BE LIMITED UNDER THIS AGREEMENT OR OTHERWISE AT LAW OR EQUITY TO DIRECT DAMAGES ONLY AND IN NO EVENT SHALL A PARTY BE LIABLE FOR INCIDENTAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES OR LOST PROFITS.

7.9 SETTLEMENTS. Neither Party may settle a claim nor action related to a Liability without the consent of the other Party, if such settlement would impose any monetary obligation on the other Party, constitute or admission by the other Party, expose the other Party to any additional liability or prosecution, require the other Party to submit to an injunction or otherwise limit the other Party's rights under this Agreement. Except as otherwise expressly set forth in this Article 7, any payment made by a Party to settle any such claim or action shall be at its own cost and expense.

7.10 INSURANCE. AKORN and NOVADAQ shall obtain and maintain at all times during the term of this Agreement commercial general liability insurance, including products liability, with limits which are commercially reasonable for similarly situated companies and each agrees to provide the other with a Certificate of Insurance evidencing this coverage within thirty (30) days of the Effective Date.

8. RECALLS

8.1 PRODUCT RECALLS. In the event of an actual or threatened recall of the Product required or recommended by a Governmental Authority of competent jurisdiction within the Territory or if recall of any Product is (i) reasonably deemed advisable by AKORN or by NOVADAQ, or (ii) jointly deemed advisable by AKORN and NOVADAQ, such recall shall be promptly implemented and administered by NOVADAQ in a manner which is appropriate and reasonable under the circumstances and in conformity with accepted trade practices. In the event that a recall is caused due to the negligent acts or omissions of AKORN, its Affiliates or subcontractors, or by the fact that the Product supplied by AKORN to NOVADAQ does not conform to the Specifications, the cost, including NOVADAQ's reasonable out-of-pocket expenses, of any such recall shall be borne by AKORN. NOVADAQ shall pay all costs, including AKORN's reasonable out-of-pocket expenses, associated with a recall for any other reason, including, without limitation, recalls (i) caused by actions of Third Parties occurring after such Product is sold to NOVADAQ, or (ii) due to packaging or label defects for which NOVADAQ has responsibility, or (iii) due to any other breach by NOVADAQ of this Agreement.

8.2 NOTICE OF EVENTS THAT MAY LEAD TO PRODUCT RECALL. Each Party shall keep the other fully and promptly informed of any notification, event or other information, whether received directly or indirectly, which might affect the marketability, safety or effectiveness of the Product or might result in a recall of Product by the HPB, FDA or other Governmental Body.

8.3 RECALL DUE TO BREACH BY AKORN. In the event of any recall for which AKORN would be responsible for the costs in accordance with Section 8.1 hereof, AKORN shall, at the election of NOVADAQ either:

(a) Supply Product, without charge to NOVADAQ, in an amount sufficient to replace the amounts of Product recalled, or

(b) Refund to NOVADAQ the amount paid or give credit to NOVADAQ against outstanding receivables due from NOVADAQ for the price of Product to be delivered to NOVADAQ in the future, in amounts equal to the price paid by NOVADAQ to AKORN for Product so recalled plus the reasonable transportation costs incurred by NOVADAQ and not recovered by NOVADAQ in respect of such recalled Product.

8.4 DEFINITION OF RECALL. For Purposes of the Article 8, "recall" shall mean any action by NOVADAQ and its Affiliates, or AKORN and its Affiliates, to recover title or possession or halt distribution, prescription or consumption of Product sold or shipped to Third Parties.

8.5 SURVIVAL OF OBLIGATIONS. The provisions and obligations of this Article 8 shall survive any termination of this Agreement.

9. NON-COMPETITION AND PERMITTED USE

9.1 CONTINUING MANUFACTURE AND SALE OF OTHER ICG PRODUCTS. NOVADAQ acknowledges that AKORN and its Affiliates have sold and will continue to sell other products containing ICG prior to and subsequent to the execution of this Agreement. The Parties agree that this Agreement shall not be construed to limit the right of AKORN and its Affiliates to manufacture, have manufactured and sell other products containing ICG to Third Parties subject to AKORN's obligations of confidentiality and non-use under this Agreement.

9.2 RESTRICTIVE COVENANTS. Each Party hereby covenants and agrees with the other that for so long as this Agreement is in effect and for a period (the "Restricted Period") of five (5) years thereafter, neither Party shall, without the prior written consent of the other Party, which consent shall be within the sole and exclusive discretion of the other Party, either directly or indirectly, on its own account or as a consultant, agent, partner, joint venturer, owner, or shareholder of any other person (other than AKORN's status as a shareholder of NOVADAQ), entity, or in any other capacity, in any way:

9.2.1 Carry on, be engaged in or have any financial interest in any business which is in competition with the business of the other Party. For purposes of this Section 9.2, a business shall be deemed to be in competition with AKORN if it involves products which were at the relevant time or at the time of termination, being marketed in the Territory or which at such time were under study by AKORN and expected to be marketed in the Territory within six (6) months of such date for ophthalmic uses. For purposes of this Section 9.2, a business shall be deemed to be in competition with

NOVADAQ if it involves products which were, at the relevant time or at the time of termination, being marketed in the Territory by NOVADAQ or which at such time were under study by NOVADAQ and expected to be marketed in the Territory within six (6) months of such date of termination, in either case for any of the Indications only.

9.2.2 Solicit for the business of the other Party (as defined in paragraph 9.2.1) any then current customer or client of the other Party or any affiliate of the other Party or, after termination, anyone who was a customer or client at any time during the twelve (12) month period immediately preceding termination.

9.2.3 Solicit, employ or engage any person who is then an employee of the other Party or any affiliate of the other Party or was an employee of the other Party or, after termination, any affiliate of the other Party at any time during the twelve
(12) month period immediately preceding termination.

10. TERM AND TERMINATION.

10.1 TERM. This Agreement shall become effective upon the Effective Date and, unless earlier terminated as provided below, shall remain in full force and effect for a period ending on the seventh (7th) anniversary of the Effective Date (the "Initial Term"). Thereafter, this Agreement shall automatically renew for successive five (5) year terms (each a "Renewal Term" and together with the Initial Term, the "Term") unless, at least 180 days prior to any such Renewal Term, either Party shall have notified the other of its intention not to renew this Agreement. Upon expiration or termination of this Agreement for any reason, all unpaid amounts due pursuant to this Agreement, including, but not limited to, Section 4.3, shall become immediately due and payable.

10.2 TERMINATION

(a) This Agreement shall terminate upon the mutual written agreement of the Parties.

(b) If either Party breaches or defaults in the performance or observance of any of the material provisions of this Agreement, and such breach or default is not cured within 60 days after the giving of notice by the non-defaulting Party specifying such breach or default, the non-defaulting Party shall have the right to terminate this Agreement, effective immediately upon notice to the defaulting Party.

(c) Either Party shall have the right to terminate this Agreement upon 30 days' notice to the other Party, if that other Party becomes involved in financial difficulties as evidenced:

(i) by that other Party's commencement of a voluntary case under any applicable bankruptcy code or statue, or by its authorizing, by appropriate proceedings, the commencement of such voluntary case; or

(ii) by its failing to receive dismissal of any involuntary case under any applicable bankruptcy code or statute within 90 days after initiation of such action or petition; or

(iii) by its seeking relief as a debtor under any applicable law of any jurisdiction relating to the liquidation or reorganization of debtors or to the modification or alteration of the rights of creditors, or by consenting to or acquiescing in such relief; or

(iv) by the entry of an order by a court of competent jurisdiction finding it to be bankrupt or insolvent, or ordering or approving its liquidation, reorganization or any modification or alteration of the rights of its creditors or assuming custody of, or appointing a receiver or other custodian for, all or a substantial part of its property or assets; or

(v) by its making an assignment for the benefit of, or entering into an agreement with, its creditors, or appointing or consenting to the appointment of a receiver or other custodian for all or a substantial part of its property or by the appointment of such a receiver by a Third Party, which appointment is not revoked by a Court of competent jurisdiction within sixty (60) days of its occurrence.

(d) The failure by a Party to exercise its right to terminate this Agreement pursuant to Section 9.2. in the event of any occurrence giving rise thereto shall not constitute waiver of the right in the event of any subsequent occurrence.

10.3 EFFECT OF TERMINATION.

(a) Unless otherwise agreed to between the Parties, all Product on hand as of the effective date of expiration or termination of this Agreement will be treated as follows as soon as practicable:

(i) Product manufactured and packaged pursuant to purchase orders previously received from NOVADAQ, will be delivered by AKORN to NOVADAQ, whereupon

NOVADAQ will pay AKORN therefore in accordance with the terms hereof; and

(ii) Work in progress commenced by AKORN in accordance with a Binding Quarterly Forecast will, at the option of NOVADAQ (but at the option of AKORN in the case of termination hereof by AKORN under
Section 10.2(b)), (A) cease, and such work in progress will remain with AKORN (in which case NOVADAQ will pay AKORN an amount equal to AKORN's actual costs incurred in connection with the performance and cessation of such work less the cost to AKORN of materials that can be returned by AKORN or used by AKORN in later batches of other products manufactured by AKORN as reasonably determined by AKORN) or (B) be completed by AKORN and delivered to NOVADAQ whereupon NOVADAQ will pay AKORN therefore in accordance with the terms hereof.

(b) In the event that NOVADAQ terminates this Agreement either pursuant to Section 10.2.(b) because of a Material Breach, or pursuant to 10.2.(c), then, in either event, NOVADAQ shall thereafter be permitted to order all further supply of Product directly from any Third Party which is at the time of termination a Permitted Manufacturer or other qualified supplier. AKORN will license to NOVADAQ, within 60 (sixty) days of the date of this Agreement, for the Indications, all required Know-How necessary to manufacture the Product which license shall become effective only in the event that NOVADAQ terminates this Agreement either pursuant to Section 10.2(b) because of a Material Breach or pursuant to 10.2(c).

10.4 ACCRUED OBLIGATIONS. Termination of this Agreement for any cause shall not release either Party from any obligation or liability incurred prior to or upon termination hereof or which subsequently arises under Section 10.6.

10.5 NO WAIVER. The failure on the part of either Party to exercise or enforce any right conferred upon it hereunder shall not be deemed to be a waiver of any such right nor operate to bar the exercise or enforcement thereof at any time thereafter.

10.6 SURVIVAL. Subject to Section 10.3 hereof, the following provisions shall survive expiration or termination of this Agreement: Sections 4.4, 5.3, 5.4, 9.2, 12.3, 12.4, 12.5, 12.6, 12.7, 12.8, and 12.9 and Articles 7, 8 and 11.

11. CONFIDENTIALITY.

11.1 NONDISCLOSURE OBLIGATION. Each of NOVADAQ and AKORN agree to use any information received by it from the other Party (the "Information") only in accordance with this Agreement and not to disclose Information to any Third Party, without the prior written consent of the other Party, for a period of five (5) years from the termination or expiration of this Agreement. These obligations shall not apply to Information that:

(a) Is known by the receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by the receiving Party's business records;

(b) Is at the time of disclosure or thereafter becomes published or otherwise part of the public domain without breach of this Agreement by the receiving Party;

(c) Is subsequently disclosed to the receiving Party by a Third Party who has the right to make such disclosure;

(d) Is developed by the receiving Party independently of the Information received from the disclosing Party and such independent development can be documented by the receiving Party; or

(e) Is required by law, regulation, rule, act or order of any governmental authority or agency to be disclosed by a Party, provided that notice is promptly delivered to the other Party in order to provide an opportunity to seek a protective order or other similar order with respect to such Information and thereafter the disclosing Party discloses to the requesting entity only the minimum Information required to be disclosed in order to comply with the request, whether or not a protective order or other similar order is obtained by the other Party.

11.2 PERMITTED DISCLOSURES. Information may be disclosed to employees, agents, consultants, sub-licensees or suppliers or Third Party manufacturers of the recipient Party or its Affiliates, but only to the extent required to accomplish the purposes of this Agreement and only if the recipient Party obtains prior agreement from its employees, agents, consultants, sub-licensees, suppliers or Third Party manufacturers to whom disclosure is to be made to hold in confidence and not make use of such Information for any purpose other than those permitted by this Agreement. Each Party will use at least the same standard of care as it uses to protect proprietary or confidential information of its own to ensure that such employees, agents, consultants, sub-licensees, suppliers or Third Party manufacturers do not disclose or make any unauthorized use of the Information.

11.3 DISCLOSURE OF AGREEMENT. Neither NOVADAQ nor AKORN shall release to any Third Party or publish in any way any non-public information with respect to the terms of this Agreement or concerning their cooperation without the prior written consent of the other, which consent will not be unreasonably withheld or delayed, provided, however, that either Party may disclose the terms of this Agreement to the extent required to comply with applicable laws, including, without limitation the rules and regulations promulgated by the United States Securities and Exchange Commission, provided, however, that prior to making any such disclosure, the Party intending to so disclose the terms of this Agreement shall (i) provide the non-disclosing Party with written notice of the proposed disclosure and a opportunity to review and comment on the intended disclosure which is reasonable under the circumstances and (ii) shall seek confidential treatment for as much of the disclosure as is reasonable under the circumstances, including, without limitation, seeking confidential treatment of any information as may be requested by the other Party. Notwithstanding any other provision of this Agreement, each Party may disclose the terms of this Agreement to lenders, investment bankers and other financial institutions of its choice solely for purposes of financing the business operations of such Party, if the disclosing Party uses reasonable efforts to obtain a signed confidentiality agreement with such financial institution with respect to such information on terms substantially similar to those contained in this Article 11.

11.4 PUBLICITY. Subject to Section 11.3, all publicity, press releases and other announcements relating to this Agreement or the transactions contemplated hereby shall be reviewed in advance by, and shall be subject to the approval of, both Parties. The Party responding to a request for such approval shall respond to the other Party in writing within five (5) days of such request.

12. MISCELLANEOUS.

12.1 FORCE MAJEURE. Except for the obligation to make payment when due, each Party shall be excused from liability for the failure or delay in performance of any obligation under this Agreement by reason of any event beyond such Party's reasonable control including but not limited to Acts of God, fire, flood, explosion, earthquake, or other natural forces, war, civil unrest, accident, destruction or other casualty, any act, inaction or delay of any government or government agency, or any other event similar to those enumerated above. Such excuse from liability shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the Party has not caused such event(s) to occur. Notice of a Party's failure or delay in performance due to force majeure must be given to the other party within Ten (10) days after its occurrence. All delivery dates in this Agreement that have been affected by force majeure shall be suspended for the duration of such force majeure.

12.2 ASSIGNMENT

(a) ASSIGNMENT BY NOVADAQ. NOVADAQ may assign any or all of its rights or obligations under this Agreement in the Territory to any of its Affiliates, for so long as they remain Affiliates. In addition, NOVADAQ may assign any or all of its rights or obligations under this Agreement in the Territory in conjunction with a merger or acquisition of NOVADAQ. NOVADAQ may not otherwise assign any of its rights or obligations under this Agreement without AKORN's prior written consent, which consent shall not be unreasonably withheld. AKORN shall respond to such requests by NOVADAQ for assignment within thirty
(30) days from such request. Any permitted assignment shall not relieve NOVADAQ of its responsibilities for performance of its obligations under this Agreement.

(b) ASSIGNMENT BY AKORN. AKORN may assign any or all of its rights or obligations under this Agreement to any of its Affiliates. AKORN may also assign any or all of its rights or obligations under this Agreement in conjunction with a merger or acquisition of AKORN. In addition, AKORN may assign all or part of its obligations to a Third Party manufacturer after receiving NOVADAQ's prior written consent, (other than to a Permitted Manufacturer for which consent shall not be required) which consent shall not be unreasonably withheld or delayed. Any permitted assignment shall not relieve AKORN of its responsibilities for performance of its obligations under this Agreement.

(c) BINDING NATURE OF ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the Parties. Any assignment not in accordance with this Section 12.2 shall be void.

12.3 NO WAIVER. The failure of either Party to require performance by the other Party of any of that other Party's obligations hereunder shall in no manner affect the right of such Party to enforce the same at a later time. No waiver by any Party hereto of any condition, or of the breach of any provision, term, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach, or of any other condition or of the breach of any other provision, term, representation or warranty hereof.

12.4 SEVERABILITY. If a court or other tribunal of competent jurisdiction should hold any term or provision of this Agreement to be excessive, or invalid, void or unenforceable, the offending term or provision shall be deleted or revised to the

extent necessary to be enforceable, and, if possible, replaced by a term or provision which, so far as practicable achieves the legitimate aims of the Parties.

12.5 RELATIONSHIP BETWEEN THE PARTIES. Both Parties are independent contractors under this Agreement. Nothing herein contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties hereto or any of their agents or employees, or any other legal arrangement that would impose liability upon one Party for the act or failure to act of the other Party. Neither Party shall have any express or implied power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever.

12.6 CORRESPONDENCE AND NOTICES.

(a) Ordinary Notices. Correspondence, reports, documentation, and any other communication in writing between the Parties in the course of ordinary implementation of this Agreement shall be delivered by hand, sent by facsimile, overnight courier or by airmail to the employee or representative of the other Party who is designated by such other Party to receive such written communication.

(b) Extraordinary Notices. Extraordinary notices and communications (including, without limitation, notices of termination, force majeure, material breach, change of address) shall be in writing and sent by prepaid registered or certified mail, overnight courier or by facsimile confirmed by prepaid registered or certified mail letter, and shall be deemed to have been properly served to the addressee three days after mailing by registered or certified mail, the next day if sent by overnight courier and upon receipt if sent by facsimile.

(c) Addresses. In the case of NOVADAQ, the proper address for communications and for all payments shall be:

Novadaq Technologies, Inc. 924 The East Mall, Suite 100 Toronto, Ontario M9B 6K1 Attn: Chief Financial Officer Fax: (416) 695-3993

and in the case of AKORN, the proper address for communications and for all payments shall be:

Akorn, Inc.
2500 Millbrook Drive
Buffalo Grove, Illinois 60089 Attn: Chief Financial Officer Fax: (847) 279-6123

12.7 CHOICE OF LAW. This Agreement is subject to and governed by the laws of the State of Illinois, excluding its conflict of laws provisions.

12.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth the complete, final and exclusive agreement between the Parties with respect to the subject matter hereto and supersedes and terminates all prior and contemporaneous agreements and understandings between the Parties, whether oral or in writing. No subsequent alteration, amendment, change, waiver or addition to this Agreement shall be binding upon the Parties unless reduced to writing and signed by an authorized officer of each Party. No understanding, agreement, representation or promise, not explicitly set forth herein, other than the Settlement and Mutual Release executed by the Parties on the date hereof, has been relied on by either Party in deciding to execute this Agreement as set forth herein.

12.9 ARBITRATION. The Parties shall attempt in good faith to promptly resolve any controversy, claim or dispute arising between them. In the event that the Parties are unable to resolve any such controversy, claim or dispute within 30 days, then any such controversy, claim or dispute between the Parties, directly or indirectly, concerning this Agreement or the breach hereof, or the subject matter hereof, shall be finally settled by binding arbitration in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce. Prior to initiating such arbitration proceedings the Parties shall attempt to resolve the dispute by good faith negotiations between themselves. The situs of the arbitration proceedings shall be the City of Toronto, Ontario, Canada, if the arbitration was requested or initiated by NOVADAQ, and in the City of Chicago, Illinois, U.S.A., if the arbitration was requested or initiated by Akorn, and judgment upon the award rendered may be entered in any court having a jurisdiction hereof. In deciding the dispute the arbitrator(s) shall apply first the plain meaning of this Agreement, but in matters not fairly provided for in this Agreement, shall apply the substantive law of the State of Illinois. All pleadings, evidence, testimony, or other submissions to the arbitrator(s) shall be in the English language as shall be the judgment of the arbitrator(s). Pending resolution of any such arbitration, any Party may deposit with its solicitors or another mutually agreeable party an amount equal to 50% of any monetary amount in dispute or such other amount as may be directed by the arbitrator(s) upon preliminary application.

12.10 HEADINGS. The headings and captions used in this Agreement are solely for the convenience of reference and shall not affect its interpretation.

12.11 COUNTERPARTS. This Agreement may be executed in one or more counterparts each of which shall be an original and all of which shall constitute together the same document.

12.12 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all other acts, as may be necessary or appropriate in

order to carry out the purposes and intent of this Agreement including, without limitation, any filings with any antitrust agency which may be required.

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date set forth below.

AKORN, INC.                                    NOVADAQ TECHNOLOGIES, INC.


By:______________________________              By:______________________________

Name:____________________________              Name:____________________________

Title:___________________________              Title:___________________________

SCHEDULE A
SPECIFICATIONS

Exhibit 10.23

MUTUAL TERMINATION AND SETTLEMENT AGREEMENT

WHEREAS, The Johns Hopkins University, a Maryland corporation, acting through its Applied Physics Laboratory having a place of business at 11100 Johns Hopkins Road, Laurel, MD 20723-6099 (hereinafter "JHU/APL"), and Akorn, Inc. (hereinafter "Akorn"), a Louisiana corporation, having a place of business at 2500 Millbrook Drive, Buffalo Grove, IL 60089, entered into a license agreement effective April 26, 2000, as amended by Amendment No. 1, effective July 15, 2001, (hereinafter collectively "License") as relates to the JHU/APL PATENT RIGHTS, as defined therein; and

WHEREAS, JHU/APL is the sole owner of the entire right, title, and interest in and to the JHU/APL PATENT RIGHTS, as defined in the License; and

WHEREAS, by letter dated January 16, 2002, JHU/APL provided notice of breach/default of the License to Akorn; and

WHEREAS, Akorn filed suit on March 29, 2002 against The Johns Hopkins University in the United States District Court for the Northern District of Illinois ("the Court"), Civil Action No. 02C 2299 ("the Action"), seeking among other relief a declaration from the Court that Akorn had not breached the License; and

WHEREAS, JHU/APL and Akorn now mutually desire to terminate the License and settle the Action;

Now, therefore, in consideration of the premise and the mutual covenants and agreements herein contained, and for good and valuable consideration, the sufficiency and receipt of which is hereby mutually acknowledged, and intending to be legally bound hereby, the parties hereto do covenant and agree as follows:

(1) The License is by mutual agreement hereby terminated and of no further effect, with each party having no recourse against the other as to the License. Hereafter, Akorn shall have no right or license in the JHU/APL PATENT RIGHTS, as defined in the License. Both JHU/APL and Akorn shall be free to pursue business arrangements relating to technologies for the treatment of age-related macular degeneration subject only to the terms of this Agreement and applicable laws and regulations.

(2) Akorn shall be entitled to retain the $300,000 comprising the final $300,000 installment of the license execution fee payment due under Section 4.2b) of the License.

(3) JHU/APL shall pay to Akorn fifteen percent (15%) of all cash payments and twenty percent (20%) of all equity received by JHU/APL from any licensee of the U.S. JHU/APL PATENT RIGHTS less any cash or equity returned

by JHU/APL to such licensee, the combined total of all such cash and equity payments made by JHU/APL to Akorn not to exceed One Million Twenty-Five Thousand Dollars ($1,025,000). JHU/APL agrees that it will accept only cash or equity as consideration from any licensee for a license under the U.S. JHU/APL PATENT RIGHTS. JHU/APL further agrees that it will instruct any licensee to issue any equity due under this Agreement to Akorn directly to Akorn in Akorn's name, and JHU/APL will include as a provision in any license agreement with such licensee the requirement that the licensee issue such equity in that fashion to Akorn. Akorn agrees to accept such equity from such licensee, and is not aware of any facts, circumstances, or reasons why such licensee would not or could not issue any such equity in that fashion to Akorn, PROVIDED, HOWEVER, that in the event that such licensee does not issue any such equity to Akorn, JHU/APL will promptly transfer the corresponding cash equivalent in lieu of equity to Akorn. The first of such payments totaling One Hundred Twenty-Five Thousand Dollars ($125,000) in cash shall be made by JHU/APL to Akorn within thirty (30) days of the effective date of this Agreement and JHU/APL shall make such first payment regardless of whether any payments have been or will be received by JHU/APL from any licensee of the U.S. JHU/APL PATENT RIGHTS. All remaining of such payments shall be made by JHU/APL to Akorn only after receipt of cash payments or equity from a licensee and then within thirty (30) days of the end of each calendar quarter for cash payments and equity received from a licensee during that quarter. Such payments made to Akorn shall be in kind, that is, 15% of any cash received from a licensee shall be made in cash to Akorn and 20% of any equity received from a licensee shall be made in equity to Akorn. Furthermore, the first payment of $125,000 in cash made by JHU/APL to Akorn, as required above, shall be considered an advance towards cash payments but not equity due Akorn and, therefore, JHU/APL shall be entitled to a dollar for dollar credit against such future cash payments due Akorn up to $125,000.

(4) JHU/APL shall make and retain, for a period of three (3) years following each payment required by paragraph (3), true and accurate records, files and books of account containing all the data reasonably required for the full computation and verification of the payments required in paragraph (3). Such books and records shall be in accordance with generally accepted accounting principles consistently applied. JHU/APL shall forward to Akorn a copy of any license agreement entered into by JHU/APL relating to the U.S. JHU/APL PATENT RIGHTS within ten (10) days of entry into such an agreement. JHU/APL shall also permit the inspection and copying of such records, files and books of account by Akorn or its agents during regular business hours upon ten (10) business days' written notice to JHU/APL. Such inspection shall not be made more than once each calendar year. All costs of such inspection and copying shall be paid by Akorn, provided that if any such inspection shall reveal that an error has been made in the amount equal to five percent (5%) or more of such payment, such costs shall be borne by JHU/APL.

(5) Except for the rights, duties, and obligations arising under this Agreement and the JHU/APL PATENT RIGHTS, each party hereto hereby completely releases, acquits, and forever discharges and covenants not to sue the other party hereto, including the other party's parents, subsidiaries, divisions, and affiliates, and the other party's current and former directors, officers, and employees, as well as the other party's representatives, distributors, customers, dealers, attorneys, and agents, from all asserted and unasserted claims (including claims for damages, costs, expenses, and/or attorneys fees) arising from the actions of the parties occurring prior to the effective date of this Agreement which each party hereto has now or may have in the future against the other party hereto, including the other party's parents, subsidiaries, divisions, and affiliates, and the other party's current and former directors, officers, and employees, as well as the other party's representatives, distributors, customers, dealers, attorneys, and agents including but not limited to any and all claims relating to the License or otherwise relating to or arising out of the facts and circumstances giving rise to the Action.

(6) Within seven (7) days of the execution of this Agreement, the parties will dismiss the Action with prejudice by filing with the Court a fully executed Stipulation and Order of Dismissal with Prejudice.

(7) As of the effective date of this Agreement and, thereafter, the parties hereto, and their employees, agents, and attorneys, shall keep confidential the terms of this Agreement, except that the parties and their attorneys may make such disclosures as may be required by law, financial reporting and disclosure requirements and generally accepted accounting principles (including but not limited to reporting requirements for publicly traded corporations and lender disclosure requirements), or by court order. Upon inquiry, the parties and their attorneys may respond that the License and the Action have been amicably terminated and settled, respectively. Additionally, the parties agree that neither party shall provide negative commentary to any third parties on the other party's technology related to the License including the JHU/APL PATENT RIGHTS except that factual results of any research may be released to third parties if not otherwise subject to an obligation of confidentiality.

(8) This Agreement constitutes the complete, final, and entire understanding of the parties with respect to the subject matter hereof, and the parties shall not be bound by any terms, covenants, conditions, or representations not expressly contained herein with respect to the subject matter hereof. This Agreement may not be modified except by an agreement in writing signed by all parties.

(9) A waiver of any term or condition contained in this Agreement shall not be effective unless made and/or confirmed in the writing by all of the parties; unless such writing expressly states otherwise, no such waiver shall be construed as a waiver of a subsequent breach or failure of the term or condition or a waiver of any other term or condition contained in this Agreement.

(10) The parties agree that this Agreement shall be construed, applied, and interpreted in accordance with the laws of the State of Maryland, including in relation to all matters of formation, interpretation, construction, validity, performance, and enforcement, and without regard to conflict of law provisions. In the event any dispute whatsoever arises which related to or concerns in any way the terms and conditions of this Agreement and/or the performance by the parties of their respective obligations hereunder, such dispute will be subject to the jurisdiction and venue of the U.S. District Court for the District of Maryland, Northern Division.

(11) No determination by any court, governmental or administrative body, or otherwise that any provisions of this Agreement or any amendment hereof is illegal, invalid, or unenforceable in any instance shall affect the validity or enforceability of (i) such provision in any circumstance not controlled by such determination or (ii) any other provision of the Agreement. Each provision shall be valid and enforceable to the fullest extent allowed by, and shall be construed whenever possible as being consistent with, applicable law. In the event any provision of this Agreement is declared illegal, invalid, or unenforceable, the remainder of the Agreement shall continue in full force and effect.

(12) Each of the parties shall be responsible for its respective fees and expenses, including court costs, legal fees, and expert fees that are related to or arise out of the Action.

(13) There shall be no right to set-off any payment due under this Agreement against any payment arising out of any other contract, agreement, or controversy between JHU/APL, on the one hand, and Akorn, on the other hand.

(14) The terms of this Agreement are contractual, and the parties hereto represent and warrant that they possess the full and complete authority to covenant and agree as provided herein, and further represent and warrant that they have full and complete authority to execute this Agreement. In addition, the individuals executing this Agreement on behalf of the respective parties warrant and represent that they have been duly authorized and empowered to execute this Agreement on behalf of their respective parties.

(15) This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective subsidiaries, affiliates, divisions, parents, successors, permitted assigns, trustees, officers, directors, employees, attorneys, and agents. Except as set forth in the preceding sentence, nothing in this Agreement is intended to confer, expressly or by implication, upon any person or entity other than the parties to this Agreement, any right or remedies under or by reason of this Agreement. Neither party hereto shall assign its rights and/or obligations under this Agreement without the prior written consent of the other party hereto.

(16) This Agreement is intended to be and is a settlement and compromise of disputed claims. The execution of this Agreement, and the exchange of consideration, releases, and other actions provided herein, are not to be construed as any admission or concession on the part of any party with respect to any liability, claim, counterclaim, or defense.

(17) Each party and counsel for each party have reviewed and approved this Agreement, and accordingly any presumption or other rule of construction that any ambiguities be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

(18) The parties agree to cooperate fully and to execute any and all supplementary documents and to take all additional actions that may be reasonably necessary or appropriate to give full force and effect to the terms of this Agreement.

IN WITNESS WHEREOF the respective parties hereto have executed this Agreement in duplicate originals by their duly authorized officers to be effective as of the date of the last party to execute this Agreement.

AKORN, INC.                         THE JOHNS HOPKINS UNIVERSITY
                                    Applied Physics Laboratory

By                                  By
   ---------------------------         ---------------------------------
      Ben Pothast                         Ruth E. Nimmo
      Chief Financial Officer             Assistant Director, Operations

Date                                Date
     -------------------------           -------------------------------

Exhibit 10.24

FOURTH AMENDMENT

THIS FOURTH AMENDMENT dated as of January 1, 2002, by and among AKORN, INC., a Louisiana corporation ("Akorn"), AKORN (NEW JERSEY), INC., an Illinois corporation "Akorn NJ") (Akorn and Akorn NJ being sometimes referred to herein individually as a "Borrower" and collectively as the "Borrowers"), and THE NORTHERN TRUST COMPANY, an Illinois banking corporation (the "Lender");

WITNESSETH:

WHEREAS, the following documents (collectively, the "Documents") were heretofore entered into by the parties indicated:

(i) Amended and Restated Credit Agreement dated as of September 15, 1999, among the Borrowers and the Lender (which, as amended by the documents referred to below, is referred to herein as the "Credit Agreement");

(ii) Amended and Restated Security Agreement dated as of December 29, 1997, from the Borrowers to the Lender;

(iii) Intellectual Property Security Agreement dated as of September 15, 1999, from Akorn to the Lender;

(iv) Junior Mortgage dated as of March 21, 2001, from Akorn to the Lender recorded in the Office of the Recorder of Deeds of Macon County, Illinois, on May 7, 2001, in Book 3056, Page 544;

(v) First Amendment dated as of December 28, 1999, among the Borrowers and the Lender;

(vi) Second Amendment and Waiver dated as of February 15, 2001, among the Borrowers and the Lender;

(vii) Third Amendment and Waiver dated as of April 16, 2001 (the "Third Amendment"), among the Borrowers and the Lender;

(viii) Note dated April 16, 2001, from the Borrowers to the Lender in the principal amount of $45,000,000;

(ix) Forbearance Agreement dated as of July 12, 2001 (the "Forbearance Agreement"), by and among the Borrowers and the Lender;

(x) Subordination and Standby Agreement dated as of July 12, 2001, by The John N. Kapoor Trust dated September 20, 1989, in favor of the Lender and containing the Acknowledgment of the Borrowers;

(xi) Waiver letter from the Lender to the Borrowers dated December 10, 2001, and accepted and agreed to by the Borrowers, relating to a loan to Akorn by NeoPharm, Inc., a Delaware corporation ("NeoPharm");

(xii) Subordination, Standby and Intercreditor Agreement dated as of December 20, 2001, between NeoPharm and the Lender and containing the Acknowledgment of Subordination by the Borrowers;

(xiii) Amendment to Forbearance Agreement dated as of December 20, 2001, by and among the Borrowers and the Lender;

(xiv) Notice dated January 30, 2002, from the Lender to the Borrowers, given pursuant to the Amendment to Forbearance Agreement referred to in (xiii) above; and

(xv) Second Amendment to Forbearance Agreement dated as of February 21, 2002, by and among the Borrowers and the Lender; and

WHEREAS, the parties desire to make certain modifications and amendments to the Documents, as previously modified and amended, as provided for herein;

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

Section 1. Recitals Part of Agreement; References to Documents Defined Terms. (a) The foregoing recitals are hereby incorporated into and made a part of this Agreement.

(b) Except as otherwise stated herein, all references in this Agreement to any one or more of the Documents shall be deemed to include the previous modifications and amendments to the Documents provided for in the Documents described above, whether or not express reference is made to such previous modifications and amendments.

(c) The following new defined terms are hereby added in alphabetical order in Section 1.1 of the Credit Agreement:

"DEA" means the Drug Enforcement Administration of the United States Department of Justice.

"SEC" means the United States Securities and Exchange Commission.

(d) All capitalized terms used and not otherwise defined in this Agreement shall have the same meanings as the defined terms contained in the Credit Agreement, including the defined terms being added to the Credit Agreement by this Agreement. Unless otherwise defined or the context otherwise, all financial and accounting terms used in this Agreement shall be defined in accordance with GAAP.

Section 2. Extension of Termination Date. The parties acknowledge that the date appearing in the definition of the term "Termination Date" in
Section 1.1 of the Credit Agreement, as previously modified and amended, is "January 2, 2002". The definition of the term "Termination Date" in Section 1.1 of the Credit Agreement, as previously modified and

amended, is hereby further modified and amended by changing the date appearing therein from "January 1, 2002" to "June 30, 2002". The Lender agrees that such extension of the Termination Date supersedes the requirement in Section 5(c) of the Forbearance Agreement that the Borrowers pay all principal, interest and other amounts due under the Documents on the last day of the Forbearance Period under the Forbearance Agreement.

Section 3. Commitment Terminated. The parties acknowledge that pursuant to the terms of Section 4 of the Forbearance Agreement, the Commitment of the Lender to make Advances and to issue Letters of Credit under the Credit Agreement is not in effect and shall not be in effect from and after the date of this Agreement, and that the Lender is not and shall not be obligated to make, and that the Borrowers do not and shall not have the right to receive, any additional Advances or Letters of Credit under the Credit Agreement from and after the date of this Agreement.

Section 4. Interest Rate. The parties acknowledge that pursuant to the terms of the Credit Agreement as modified and amended by the Third Amendment, absent the occurrence and continuance of an Event of Default under the Documents and notice, the interest rate on the Loan is the Prime Rate, which is defined as that rate per year announced from time to time by the Lender called its prime rate, which rate at any time may not be the lowest rate charged by the Lender, plus 3% per annum.

Section 5. Mandatory Principal Payments. (a) The parties acknowledge that the principal amount of the Loans outstanding on the date of this Agreement is $44,800,000.

(b) Section 2.3 of the Credit Agreement, as previously modified and amended, is hereby amended and restated in its entirety to read as follows:

2.3 Voluntary and Mandatory Prepayments.

(a) Voluntary Prepayments. Borrowers shall have the right at any time on three (3) days' prior written notice to the Lender to voluntarily prepay all or part of the Loans, and no prepayment fee, premium or penalty shall be payable in connection with any such voluntary prepayment.

(b) Mandatory Prepayments.

(i) In addition to the other payments required by this clause (b), within three Business Days after the date on which Borrowers receive a refund of federal income taxes in respect of the tax year ended December 31, 2001, Borrowers shall make a payment on the principal of the Loans in the amount of $5,580,000; provided, however, that if Borrowers fail to file their federal income tax return for such tax year on or before April 15, 2002, such principal payment shall be due and payable on or before the earlier of June 15, 2002, and the date on which Borrowers receive a refund of federal income taxes in respect of such tax year.

(ii) In addition to the other payments required by this clause (b), within three Business Days after the date on the date on which Borrowers receive a refund of federal income taxes in respect of the tax year ended December 31 2001, Borrowers shall make a payment on the principal of the Loans in an amount equal to the positive difference, if any, between

the amount of such tax refund and the amount of any payment on the principal of the Loans made pursuant to the provisions of subparagraph (i) of this clause (b).

(iii) Borrowers shall immediately pay all of the principal of and interest on the Loans if any of the following shall occur:

(A) At any time after January 1, 2002, the FDA shall file any judicial or administrative proceeding or take any administrative action that results in a partial or total suspension of production or shipment of products for the account of either of Borrowers or under any contract under which either of Borrowers manufactures product for any third party.

(B) As of June 1, 2002, Borrowers have not issued a written request to the FDA, with a copy to the Lender, to make a re-inspection relating to the 483 M Warning Letter issued by the FDA.

(C) At any time after January 1, 2002, Borrowers fail to make a written response, within 10 Business Days, to the FDA, with a copy to the Lender, to any written communication received from the FDA after January 1, 2002, that raises any deficiencies.

(D) At any time after January 1, 2002, one or more fines, penalties or other monetary obligation due and payable to any Governmental Authority is assessed against Borrowers, or either of them, and the aggregate amount thereof is more than $250,000.

(E) At any time after January 1, 2002, there is a cessation in the public trading of the stock of Akorn, other than as a result of a cessation of trading generally in the United States securities markets.

(F) At any time after January 1, 2002, there is any restatement of or adjustment to the operating results of Borrowers for any one or more Fiscal Years ended on or prior to December 31, 2001, and the aggregate amount of all such restatements and adjustments is more than $27,000,000.

(G) As of June 15, 2002, Borrowers have not entered into an engagement letter in a form acceptable to the Lender in its reasonable judgment, with an investment banker acceptable to the Lender in its reasonable judgment, for the underwriting of an offering of equity securities (a "Qualifying Underwriting Engagement") (it being understood that if the Lender does not object to a proposed engagement letter with a proposed underwriter within 10 Business Days after receipt of such proposed engagement letter, including the name of the proposed

underwriter, the Lender shall be deemed to have approved such proposed engagement letter and underwriter).

(H) At any time after June 15, 2002, Borrowers do not have a Qualifying Underwriting Engagement in effect.

(I) At any time after April 12, 2002, any materially adverse action is taken by the FDA, the SEC, the DEA, or any other Governmental Authority, or any state or federal court, with respect to either of Borrowers, based on an alleged failure to comply with laws or regulations, including, without limitation, any ban on sale, recall or seizure of products, any total or partial suspension of production, or the entry of any restraining order or injunction against violations of the law, or the filing of any judicial or administrative proceeding seeking any of the foregoing; provided, however, that the foregoing provisions of this subparagraph (I) shall not apply to a consent decree relating to SEC or DEA matters, or the judicial proceeding in which it is entered, if such consent decree does not result in the occurrence of any of the events described in subparagraphs (A) through (H) above.

Section 6. Collection and Deposit of Cash Receipts. (a) Notwithstanding the provisions of Section 6(a) of the Forbearance Agreement, the authority granted to the Borrowers by the Lender in Section 6(a) of the Forbearance Agreement to collect their accounts receivable shall not terminate at the end of the Forbearance Period, and such authority shall continue until the Termination Date or the earlier occurrence of any Event of Default.

(b) The provisions of Sections 6(b), (c), (d) and (e) of the Forbearance Agreement (which relate to, among other things, the requirement that the Borrowers deposit cash receipts in an account at the Lender and have their cash and investments on deposit in accounts maintained with the Lender) shall continue to apply from and after the date of this Agreement, and without limitation on the generality of such provisions, those provision shall apply with respect to the proceeds of any offering of securities by either of the Borrowers; provided, however, that unless and until an Event of Default has occurred and is continuing, the Lender shall not exercise the rights referred to in Section 6(c) of the Credit Agreement or the right to apply payments or proceeds on deposit in the lockbox account referred to in Section 6(d) of the Credit Agreement to the Obligations of the Borrowers under the Documents. The Credit Agreement is hereby modified and amended to incorporate the provisions of this paragraph.

Section 7. Fees and Expenses. The provisions of Section 8 of the Forbearance Agreement shall continue to apply from and after the date of this Agreement and the Credit Agreement is hereby modified and amended to incorporate the provisions of this Section.

Section 8. Lender's Consultant and Personnel. The Borrowers understand that the Lender may from time to time engage consultants to review the accounting and business practices of the Borrowers and that the Lender's collateral evaluation personnel will from time to time, and not less often than monthly, make visits to the Borrowers' places of business to inspect the tangible collateral for the Loan, review the books and records of the Borrowers and confer with the Borrowers' personnel. The Borrowers shall cooperate with such consultants and collateral evaluation personnel and allow them to have access to the Borrowers' books and

records and personnel and to the collateral for the Loan. The Borrowers acknowledge that the fees of such consultant shall be reimbursable to the Lender by the Borrowers in accordance with Section 10.4 of the Credit Agreement. The provisions of this Section are without limitation on the provisions of Section 2.11 of the Credit Agreement. The Credit Agreement is hereby modified and amended to incorporate the provisions of this Section.

Section 9. Indebtedness. (a) The provisions of Sections 7(b), (c) and (d) of the Forbearance Agreement (which relate to matters concerning subordinated loan transactions) shall continue to apply from and after the date of this Agreement.

(b) Section 7.3 of the Credit Agreement is hereby modified and amended by adding the following sentence at the end thereof:

In addition to the foregoing restrictions contained in this Section, from and after January 1, 2002, Borrowers shall not incur any additional Indebtedness other than (i) obligations to trade creditors incurred in the ordinary course of business, and (ii) obligations to vendors in connection with capital expenditures that do not violate the conditions provided for in Section 7.18 of this Agreement.

Section 10. Amendments to Section 7.10 of Credit Agreement. Section 7.10 of the Credit Agreement, as previously modified and amended, is hereby modified and amended by deleting clauses (a) through (f) thereof. New clauses
(g) and (h) are added to Section 7.10 of the Credit Agreement by Sections 11 and 12 of this Agreement, respectively.

Section 11. Inventory Matters. (a) The provisions of Section 10 of the Forbearance Agreement shall no longer apply from and after the date of this Agreement.

(b) The following new clause (g) is hereby added to Section 7.10 of the Credit Agreement:

(g) Commencing with the three-month period ended January 31, 2002, for each period of three calendar months, Borrowers' returns of inventory for credit shall not exceed $750,000.

Section 12. Receipts. (a) The following new defined terms are hereby added in alphabetical order in Section 1.1 of the Credit Agreement:

"Gross Receipts" shall mean, for any period, the amount of the gross proceeds received by Borrowers during such period from sales of merchandise, including collections of accounts receivable, all determined on a cash basis.

"Net Receipts" shall mean, for any period, an amount equal to
(i) the amount of Gross Receipts for such period, minus (ii) the amount of all of the cash expenditures of Borrowers during such period, excluding only capital expenditures that are permitted under the provisions of Section 7.18 of this Agreement; all determined on a cash basis.

(b) The following new clause (h) is hereby added to Section 7.10 of the Credit Agreement:

(h) For the periods commencing on January 1, 2002, and ending on the last day of each of the months set forth in Column A below, the cumulative Gross Receipts and cumulative Net Receipts of Borrowers shall be not less than the amount set forth beside such month in Column B and Column C below, respectively:

Column A          Column B              Column C
--------          --------              --------
                  Cumulative Gross      Cumulative Net
                  Receipts For          Receipts For
                  Period                Period
                  January 1, 2002,      January 1, 2002,
                  through Last          through Last Day
                  Day of Month Not      of Month Not
Month, 2002       Less Than             Less Than

March             $11,500,000                 $0

April             $15,500,000           $430,000

May               $19,400,000           $525,000

Borrowers acknowledge and agree that the amounts provided for in this clause have been established at levels that are substantially lower than Borrowers' actual expectations, and that any failure to satisfy the foregoing condition of this clause shall be deemed to be material, regardless of the amount of such failure.

Section 13. Dividends. From and after the date of this Agreement, the Borrowers shall not pay any cash dividend on any of their capital stock, and
Section 7.14 of the Credit Agreement is hereby modified and amended accordingly.

Section 14. Capital Expenditures. The Borrowers together in the aggregate shall not make capital expenditures of more than $4,735,000 during the first six months of the calendar year 2002, which capital expenditures shall consist only of the following:

(i) Capital expenditures in an aggregate amount not exceeding $1,129,000 made at Akorn's Decatur, Illinois, place of business for the purpose of complying with requirements of the FDA.

(ii) Other capital expenditures in an aggregate amount not exceeding $182,000 made at Akorn's Decatur, Illinois, place of business

(iii) Capital expenditures in connection with Akorn's lyophilization project, in an aggregate amount not exceeding $2,600,000, paid from the proceeds of the loan to Akorn from NeoPharm.

(iv) Up to $600,000 for interest required to be capitalized under GAAP on borrowings to finance Akorn's lyophilization project.

(v) Other capital expenditures in an aggregate amount not exceeding $149,000 made in accordance with the capital expenditures budget previously furnished to the Lender by the Borrowers.

(vi) Other capital expenditures in an aggregate amount not exceeding $75,000.

Section 7.18 of the Credit Agreement is hereby modified and amended to include the foregoing provisions of this Section.

Section 15. Regulatory Matters. Section 6.14 of the Credit Agreement is hereby modified and amended by adding the following provision at the end thereof:

Borrowers shall provide the Lender with copies of any communications to or from the FDA (whether relating to the 483 M Warning Letter received by Akorn from the FDA, or relating to any other matters), the SEC, the DEA or any other Governmental Authority, or any United States attorney, concerning any investigation or inquiry, and shall inform the Lender of the substance of any oral communication with the FDA, the SEC, the DEA or any other Governmental Authority, or any United States attorney, concerning any of such matters, in each case not later than the first Business Day after the date of any such communication.

Section 16. Reports and Notices. From and after the date of this Agreement, the Borrowers shall provide the Lender with the Financial Statements, reports and notices provided for in the following paragraphs of this Section, and Section 5.1 of the Credit Agreement, as previously modified and amended, is hereby modified and amended accordingly:

(a) Quarterly Reports of Borrowers. Within forty-five (45) days after the end of each Fiscal Quarter of Borrowers, Borrowers shall deliver to Lender a copy of an unaudited financial statement of Borrowers prepared on a basis consistent with the audited financial statements of Borrowers previously furnished to Lender and, if requested by Lender, prepared on a consolidating and consolidated basis, signed by an authorized officer of Akorn and consisting of at least (i) a balance sheet as at the close of such quarter and (ii) a statement of earnings and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter.

(b) Audit Report of Borrowers. Within one hundred twenty (120) days after the end of each Fiscal Year of Borrowers, Borrowers shall deliver to Lender a copy of an annual audit report of Borrowers prepared in conformity with GAAP on a basis consistent with the audited financial statements of Borrowers and any Subsidiary and, if requested by Lender, prepared on a consolidating and consolidated basis, duly certified by independent certified public accountants of recognized standing satisfactory to Lender, accompanied by an opinion without significant qualification; provided, however, that in the case of Fiscal Year 2001, if the annual audit report has not been issued within such time period, Borrowers shall deliver unaudited financial statements within such time period and shall deliver the annual audit report with