Exhibit 10.1
$25,000,000 CREDIT FACILITY
CREDIT AGREEMENT
Dated as of January 7, 2009
by and among
AKORN, INC. and AKORN (NEW JERSEY), INC.,
as Borrowers,
THE OTHER PERSONS PARTY HERETO THAT ARE
DESIGNATED AS CREDIT PARTIES
GENERAL ELECTRIC CAPITAL CORPORATION
for itself, as a Lender, as L/C Issuer, Swingline Lender and as the Agent for
all
Lenders,
THE OTHER FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY
HERETO
as Lenders,
and
GE CAPITAL MARKETS, INC.,
as Sole Lead Arranger and Bookrunner

 

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TABLE OF CONTENTS

         
ARTICLE I. THE CREDITS
    1  
 
       
1.1 Amounts and Terms of Commitments
    1  
1.2 Notes
    8  
1.3 Interest
    8  
1.4 Loan Accounts
    10  
1.5 Procedure for Revolving Credit Borrowing
    11  
1.6 Conversion and Continuation Elections
    12  
1.7 Optional Prepayments and Revolving Loan Commitment Reductions
    12  
1.8 Mandatory Prepayments of Loans
    13  
1.9 Fees
    14  
1.10 Payments by the Borrowers
    16  
1.11 Payments by the Lenders to the Agent; Settlement
    17  
1.12 Eligible Accounts
    19  
1.13 Eligible Inventory
    19  
1.14 Eligible Equipment
    20  
1.15 Eligible Real Estate
    20  
1.16 Incremental Commitments
    20  
1.17 Borrower Representative
    21  
 
       
ARTICLE II. CONDITIONS PRECEDENT
    22  
 
       
2.1 Conditions of Initial Loans
    22  
2.2 Conditions to All Borrowings
    23  
 
       
ARTICLE III. REPRESENTATIONS AND WARRANTIES
    24  
 
       
3.1 Corporate Existence and Power
    24  
3.2 Corporate Authorization; No Contravention
    24  
3.3 Governmental Authorization
    25  
3.4 Binding Effect
    25  
3.5 Litigation
    25  
3.6 No Default
    26  
3.7 ERISA Compliance
    26  
3.8 Use of Proceeds; Margin Regulations
    27  
3.9 Title to Properties
    27  
3.10 Taxes
    27  
3.11 Financial Condition
    27  
3.12 Environmental Matters
    28  
3.13 Regulated Entities
    29  
3.14 Solvency
    29  
3.15 Labor Relations
    29  
3.16 Intellectual Property
    29  
3.17 Subsidiaries
    30  

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3.18 Brokers’ Fees; Transaction Fees
    30  
3.19 Insurance
    30  
3.20 Full Disclosure
    30  
3.21 Foreign Assets Control Regulations and Anti-Money Laundering
    30  
3.22 FDA Regulatory Compliance
    31  
3.23 Healthcare Regulatory Compliance
    32  
3.24 Reimbursement Coding
    33  
3.25 HIPAA
    33  
3.26 Subordinated Indebtedness
    34  
 
       
ARTICLE IV. AFFIRMATIVE COVENANTS
    34  
 
       
4.1 Financial Statements
    34  
4.2 Certificates; Other Information
    35  
4.3 Notices
    38  
4.4 Preservation of Corporate Existence, Etc
    40  
4.5 Maintenance of Property
    41  
4.6 Insurance
    41  
4.7 Payment of Obligations
    42  
4.8 Compliance with Laws
    42  
4.9 Inspection of Property and Books and Records
    43  
4.10 Use of Proceeds
    44  
4.11 Cash Management Systems
    44  
4.12 Landlord Agreements
    44  
4.13 Further Assurances
    44  
4.14 Subordinated Note
    45  
4.15 Licensor Consents
    46  
4.16 Post-Closing Covenants
    46  
 
       
ARTICLE V. NEGATIVE COVENANTS
    46  
 
       
5.1 Limitation on Liens
    46  
5.2 Disposition of Assets
    48  
5.3 Consolidations and Mergers
    49  
5.4 Loans and Investments
    49  
5.5 Limitation on Indebtedness
    50  
5.6 Transactions with Affiliates
    50  
5.7 Reserved
    50  
5.8 Use of Proceeds
    50  
5.9 Contingent Obligations
    51  
5.10 Compliance with ERISA
    51  
5.11 Restricted Payments
    51  
5.12 Change in Business
    52  
5.13 Change in Structure
    52  
5.14 Accounting Changes
    52  
5.15 Amendments to Material Agreements and Subordinated Indebtedness
    52  

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5.16 No Negative Pledges
    53  
5.17 OFAC
    53  
5.18 Press Release and Related Matters
    53  
5.19 Sale-Leasebacks
    54  
5.20 Hazardous Materials
    54  
 
       
ARTICLE VI. FINANCIAL COVENANTS
    54  
 
       
6.1 Fixed Charge Coverage Ratio
    54  
6.2 Minimum EBITDA
    54  
6.3 Minimum Liquidity
    55  
6.4 Capital Expenditures
    55  
 
       
ARTICLE VII. EVENTS OF DEFAULT
    55  
 
       
7.1 Event of Default
    55  
7.2 Remedies
    58  
7.3 Rights Not Exclusive
    59  
7.4 Cash Collateral for Letters of Credit
    59  
 
       
ARTICLE VIII. THE AGENT
    59  
 
       
8.1 Appointment and Duties
    59  
8.2 Binding Effect
    61  
8.3 Use of Discretion
    61  
8.4 Delegation of Rights and Duties
    61  
8.5 Reliance and Liability
    61  
8.6 Agent Individually
    63  
8.7 Lender Credit Decision
    63  
8.8 Expenses; Indemnities
    63  
8.9 Resignation of Agent or L/C Issuer
    64  
8.10 Release of Collateral or Guarantors
    65  
8.11 Additional Secured Parties
    65  
 
       
ARTICLE IX. MISCELLANEOUS
    66  
 
       
9.1 Amendments and Waivers
    66  
9.2 Notices
    67  
9.3 Electronic Transmissions
    68  
9.4 No Waiver; Cumulative Remedies
    69  
9.5 Costs and Expenses
    69  
9.6 Indemnity
    70  
9.7 Marshaling; Payments Set Aside
    71  
9.8 Successors and Assigns
    71  
9.9 Assignments and Participations; Binding Effect
    71  
9.10 Confidentiality
    74  
9.11 Set-off; Sharing of Payments
    75  
9.12 Counterparts
    76  

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9.13 Severability; Facsimile Signature
    76  
9.14 Captions
    76  
9.15 Independence of Provisions
    76  
9.16 Interpretation
    76  
9.17 No Third Parties Benefited
    77  
9.18 Governing Law and Jurisdiction
    77  
9.19 Waiver of Jury Trial
    77  
9.20 Entire Agreement; Release; Survival
    78  
9.21 Patriot Act
    79  
9.22 Replacement of Lender
    79  
9.23 Joint and Several
    79  
9.24 Creditor-Debtor Relationship
    79  
9.25 Location of Closing
    80  
 
       
ARTICLE X. TAXES, YIELD PROTECTION AND ILLEGALITY
    80  
 
       
10.1 Taxes
    80  
10.2 Illegality
    82  
10.3 Increased Costs and Reduction of Return
    83  
10.4 Funding Losses
    84  
10.5 Inability to Determine Rates
    85  
10.6 Reserves on LIBOR Rate Loans
    85  
10.7 Certificates of Lenders
    85  
 
       
ARTICLE XI. DEFINITIONS
    85  
 
       
11.1 Defined Terms
    86  
11.2 Other Interpretive Provisions
    107  
11.3 Accounting Terms and Principles
    108  
11.4 Payments
    108  
 
       
ARTICLE XII. CROSS-GUARANTY
    109  
 
       
12.1 Cross-Guaranty
    109  
12.2 Waivers by Borrowers
    110  
12.3 Benefit of Guaranty
    110  
12.4 Subordination of Subrogation, Etc
    110  
12.5 Election of Remedies
    110  
12.6 Limitation
    111  
12.7 Contribution with Respect to Guaranty Obligations
    111  
12.8 Liability Cumulative
    112  

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SCHEDULES

     
Schedule 1.1(b)
  Revolving Loan Commitments
Schedule 3.2
  Capitalization
Schedule 3.5
  Litigation
Schedule 3.7
  ERISA
Schedule 3.12
  Environmental
Schedule 3.15
  Labor Relations
Schedule 3.18
  Brokers’ and Transaction Fees
Schedule 3.22
  Recalls
Schedule 5.1
  Liens
Schedule 5.4
  Investments
Schedule 5.5
  Indebtedness
Schedule 5.9
  Contingent Obligations
Schedule 11.1
  Prior Indebtedness

EXHIBITS

     
Exhibit 1.1(c)
  Form of L/C Request
Exhibit 1.1(d)
  Form of Swing Loan Request
Exhibit 1.6
  Form of Notice of Conversion/Continuation
Exhibit 2.1
  Closing Checklist
Exhibit 4.2(b)
  Compliance Certificate
Exhibit 4.11
  Cash Management System
Exhibit 11.1(a)
  Form of Assignment
Exhibit 11.1(b)
  Borrowing Base Certificate
Exhibit 11.1(c)
  Notice of Borrowing
Exhibit 11.1(d)
  Revolving Note
Exhibit 11.1(e)
  Form of Swingline Note
Exhibit 11.1(f)
  Eligible Accounts
Exhibit 11.1(g)
  Eligible Inventory

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CREDIT AGREEMENT
     This CREDIT AGREEMENT (including all exhibits and schedules hereto, as the
same may be amended, modified and/or restated from time to time, this
“Agreement”) is entered into as of January 7, 2009, by and among Akorn, Inc., a
Louisiana corporation (“Akorn”), Akorn (New Jersey), Inc., an Illinois
corporation (“Akorn NJ”; together with Akorn, each a “Borrower” and together the
“Borrowers”), the other Persons party hereto that are now or hereafter
designated as a “Credit Party”, General Electric Capital Corporation, a Delaware
corporation (in its individual capacity, “GE Capital”), as Agent for the several
financial institutions from time to time party to this Agreement (collectively,
the “Lenders” and individually each a “Lender”) and for itself as a Lender
(including as Swingline Lender) and L/C Issuer, and such Lenders.
WITNESSETH:
     WHEREAS, the Borrowers have requested, and the Lenders have agreed to make
available to the Borrowers, a revolving credit facility (including a letter of
credit subfacility) upon and subject to the terms and conditions set forth in
this Agreement to (a) refinance Prior Indebtedness, (b) provide for working
capital and other general corporate purposes of the Borrowers and (c) fund
certain fees and expenses associated with the funding of the Loans;
     WHEREAS, the Borrowers desire to secure all of their Obligations under the
Loan Documents by granting to Agent, for the benefit of the Secured Parties, a
security interest in and lien upon substantially all of their personal and real
property;
     WHEREAS, subject to the terms hereof, each of the Borrowers’ Subsidiaries
is willing to guarantee all of the Obligations of Borrowers and to grant to
Agent, for the benefit of the Secured Parties, a security interest in and lien
upon substantially all of its personal and real property;
     NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I.
THE CREDITS
     1.1 Amounts and Terms of Commitments.
          (a) Reserved.
          (b) The Revolving Credit. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the Credit
Parties contained herein, each Revolving Lender severally and not jointly agrees
to make Loans to the Borrowers (each such Loan, a “Revolving Loan”) from time to
time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender’s name in Schedule 1.1(b)
under the heading “Revolving Loan

 

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Commitment” (such amount as the same may be reduced or increased from time to
time pursuant to Section 1.16 or as a result of one or more assignments pursuant
to Section 9.9, being referred to herein as such Lender’s “Revolving Loan
Commitment”); provided, however, that, after giving effect to any Borrowing of
Revolving Loans, the aggregate principal amount of the outstanding Revolving
Credit Exposure shall not exceed the Maximum Revolving Loan Balance. Subject to
the other terms and conditions hereof, amounts borrowed under this subsection
1.1(b) may be repaid and reborrowed from time to time. The “Maximum Revolving
Loan Balance” from time to time will be the lesser of:
               (i) the (y) Borrowing Base in effect from time to time minus
(z) such Reserves as may be imposed by Agent in its reasonable credit judgment
but not reflected in such Borrowing Base Certificate, or
               (ii) the Aggregate Revolving Loan Commitment then in effect;
less, in either case, $5,500,000 at all times on or prior to March 31, 2010;
provided, however, that until Agent has received Control Agreements with respect
to all deposit, securities, commodity and similar accounts maintained by the
Borrowers (other than any payroll account so long as such payroll account is a
zero balance account and withholding tax and fiduciary accounts), the Maximum
Revolving Loan Balance shall not exceed $5,000,000.
If at any time the then outstanding principal balance of Revolving Credit
Exposure exceeds the Maximum Revolving Loan Balance, then the Borrowers shall
immediately prepay outstanding Swing Loans, and then outstanding Revolving
Loans, in an amount sufficient to eliminate such excess.
               (iii) If the Borrowers request that Revolving Lenders make, or
permit to remain outstanding Revolving Loans in excess of the Borrowing Base
(any such excess Revolving Loan is herein referred to as an “Overadvance”),
Agent may, in its sole discretion, elect to make, or permit to remain
outstanding such Overadvance; provided, however, that Agent may not cause
Revolving Lenders to make, or permit to remain outstanding, (A) aggregate
Revolving Loans in excess of the Aggregate Revolving Loan Commitment less the
sum of outstanding Swing Loans plus the aggregate amount of Letter of Credit
Obligations or (B) an Overadvance in an aggregate amount in excess of 10% of the
Aggregate Revolving Loan Commitment. If an Overadvance is made, or permitted to
remain outstanding, pursuant to the preceding sentence, then all Revolving
Lenders shall be bound to make, or permit to remain outstanding, such
Overadvance based upon their respective Commitment Percentages of the Aggregate
Revolving Loan Commitment in accordance with the terms of this Agreement. If an
Overadvance remains outstanding for more than ninety (90) days during any one
hundred eighty (180) day period, Revolving Loans must be repaid immediately in
an amount sufficient to eliminate all of such Overadvance. Furthermore, Required
Lenders may prospectively revoke Agent’s ability to make or permit Overadvances
by written notice to Agent. All Overadvances shall constitute Base Rate Loans
and shall bear interest at the Base Rate plus the Applicable Margin for
Revolving

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Loans; provided, however that if not repaid within five (5) Business Days such
Overadvances shall, commencing on the following day, bear interest at the
default rate under Section 1.3(c).
          (c) Letters of Credit. (i) Commitment and Conditions. On the terms and
subject to the conditions contained herein, each L/C Issuer agrees to Issue, at
the request of the Borrower Representative, in accordance with such L/C Issuer’s
usual and customary business practices, and for the account of the Borrowers
(or, as long as the Borrowers remain responsible for the payment in full of all
amounts drawn thereunder and related fees, costs and expenses, for the account
of any Subsidiary of a Borrower), Letters of Credit (denominated in Dollars)
from time to time on any Business Day during the period from the Closing Date
through the earlier of the Revolving Termination Date and 7 days prior to the
date specified in clause (a) of the definition of Revolving Termination Date;
provided, however, that such L/C Issuer shall not be under any obligation to
Issue any Letter of Credit if, after giving effect to such Issuance:
     (A) (i) the aggregate outstanding principal balance of Revolving Credit
Exposure would exceed the Maximum Revolving Loan Balance or (ii) the Letter of
Credit Obligations for all Letters of Credit would exceed $5,000,000 (the “L/C
Sublimit”);
     (B) the expiration date of such Letter of Credit (i) is not a Business Day,
(ii) is more than one year after the date of issuance thereof or (iii) is later
than 7 days prior to the date specified in clause (a) of the definition of
Revolving Termination Date; provided, however, that any Letter of Credit with a
term not exceeding one year may provide for its renewal for additional periods
not exceeding one year as long as (x) such L/C Issuer has the option to prevent
such renewal before the expiration of such term or any such period and (y) such
L/C Issuer shall not permit any such renewal to extend such expiration date
beyond the date set forth in clause (iii) above; or
     (C) (i) any fee due in connection with, and on or prior to, such Issuance
has not been paid, (ii) such Letter of Credit is requested to be issued in a
form that is not acceptable to such L/C Issuer or (iii) such L/C Issuer shall
not have received, each in form and substance reasonably acceptable to it and
duly executed by the Borrowers or the Borrower Representative on their behalf
(and, if such Letter of Credit is issued for the account of any Subsidiary of a
Borrower, such Person), the documents that such L/C Issuer generally uses in the
ordinary course of its business for the Issuance of letters of credit of the
type of such Letter of Credit (collectively, the “L/C Reimbursement Agreement”).

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For each such Issuance, the applicable L/C Issuer may, but shall not be required
to, determine that, or take notice whether, the conditions precedent set forth
in Section 2.2 have been satisfied or waived in connection with the Issuance of
any Letter of Credit; provided, however, that no Letter of Credit shall be
Issued during the period starting on the first Business Day after the receipt by
such L/C Issuer of notice from the Agent or the Required Lenders that any
condition precedent contained in Section 2.2 is not satisfied and ending on the
date all such conditions are satisfied or duly waived.
     (ii) Notice of Issuance. The Borrower Representative shall give the
relevant L/C Issuer and the Agent a notice of any requested Issuance of any
Letter of Credit, which shall be effective only if received by such L/C Issuer
and the Agent not later than 11:00 a.m. (New York time) on the third Business
Day prior to the date of such requested Issuance. Such notice may be made in a
writing substantially in the form of Exhibit 1.1(c) duly completed or in a
writing in any other form acceptable to such L/C Issuer (an “L/C Request”) or by
telephone if confirmed promptly, but in any event within one Business Day and
prior to such Issuance, with such an L/C Request.
     (iii) Reporting Obligations of L/C Issuers. Each L/C Issuer agrees to
provide the Agent (which, after receipt, the Agent shall provide to each
Revolving Lender), in form and substance satisfactory to the Agent, each of the
following on the following dates: (A) (i) on or prior to any Issuance of any
Letter of Credit by such L/C Issuer, (ii) immediately after any drawing under
any such Letter of Credit or (iii) immediately after any payment (or failure to
pay when due) by the Borrowers of any related L/C Reimbursement Obligation,
notice thereof, which shall contain a reasonably detailed description of such
Issuance, drawing or payment; (B) upon the request of the Agent (or any
Revolving Lender through the Agent), copies of any Letter of Credit Issued by
such L/C Issuer and any related L/C Reimbursement Agreement and such other
documents and information as may reasonably be requested by the Agent; and
(C) upon the request of Agent or any Revolving Lender, but in no case more
frequently than once in any calendar month, a schedule of the Letters of Credit
Issued by such L/C Issuer, in form and substance reasonably satisfactory to the
Agent, setting forth the Letter of Credit Obligations for such Letters of Credit
outstanding on the last Business Day of the previous calendar week.
     (iv) Acquisition of Participations. Upon any Issuance of a Letter of Credit
in accordance with the terms of this Agreement resulting in any increase in the
Letter of Credit Obligations, each Revolving Lender shall be deemed to have
acquired, without recourse or warranty, an undivided interest and participation
in such Letter of Credit and the related Letter of Credit Obligations in an
amount equal to its Commitment Percentage of such Letter of Credit Obligations.

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     (v) Reimbursement Obligations of the Borrowers. The Borrowers agree to pay
to the L/C Issuer of any Letter of Credit each L/C Reimbursement Obligation
owing with respect to such Letter of Credit no later than the first Business Day
after the Borrowers or the Borrower Representative receive notice from such L/C
Issuer that payment has been made under such Letter of Credit or that such L/C
Reimbursement Obligation is otherwise due (the “L/C Reimbursement Date”) with
interest thereon computed as set forth in clause (A) below. In the event that
any L/C Issuer incurs any L/C Reimbursement Obligation not repaid by the
Borrowers as provided in this clause (v) (or any such payment by the Borrowers
is rescinded or set aside for any reason), such L/C Issuer shall promptly notify
the Agent of such failure (and, upon receipt of such notice, the Agent shall
forward a copy to each Revolving Lender) and, irrespective of whether such
notice is given, such L/C Reimbursement Obligation shall be payable on demand by
the Borrowers with interest thereon computed (A) from the date on which such L/C
Reimbursement Obligation arose to the L/C Reimbursement Date, at the interest
rate applicable during such period to Revolving Loans that are Base Rate Loans
and (B) thereafter until payment in full, at the interest rate applicable during
such period to past due Revolving Loans that are Base Rate Loans.
     (vi) Reimbursement Obligations of the Revolving Credit Lenders. Upon
receipt of the notice described in clause (v) above from the Agent, each
Revolving Lender shall pay to the Agent for the account of such L/C Issuer its
Commitment Percentage of such L/C Reimbursement Obligation. By making such
payment (other than during the continuation of an Event of Default under
subsection 7.1(f) or 7.1(g)), such Lender shall be deemed to have made a
Revolving Loan to the Borrowers, which, upon receipt thereof by such L/C Issuer,
the Borrowers shall be deemed to have used in whole to repay such L/C
Reimbursement Obligation. Any such payment that is not deemed a Revolving Loan
shall be deemed a funding by such Lender of its participation in the applicable
Letter of Credit and the related Letter of Credit Obligations. Such
participation shall not otherwise be required to be funded. Upon receipt by any
L/C Issuer of any payment from any Lender pursuant to this clause (vi) with
respect to any portion of any L/C Reimbursement Obligation, such L/C Issuer
shall promptly pay over to such Lender all payments received by such L/C Issuer
after such payment by such Lender with respect to such portion.
     (vii) Obligations Absolute. The obligations of the Borrowers and the
Revolving Lenders pursuant to clauses (iv), (v) and (vi) above shall be
absolute, unconditional and irrevocable and performed strictly in accordance
with the terms of this Agreement irrespective of (A) (i) the invalidity or
unenforceability of any term or provision in any Letter of Credit, any document
transferring or purporting to transfer a Letter of

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Credit, any Loan Document (including the sufficiency of any such instrument), or
any modification to any provision of any of the foregoing, (ii) any document
presented under a Letter of Credit being forged, fraudulent, invalid,
insufficient or inaccurate in any respect or failing to comply with the terms of
such Letter of Credit or (iii) any loss or delay, including in the transmission
of any document, (B) the existence of any setoff, claim, abatement, recoupment,
defense or other right that any Person (including any Credit Party) may have
against the beneficiary of any Letter of Credit or any other Person, whether in
connection with any Loan Document or any other Contractual Obligation or
transaction, or the existence of any other withholding, abatement or reduction,
(C) in the case of the obligations of any Revolving Lender, (i) the failure of
any condition precedent set forth in Section 2.2 to be satisfied (each of which
conditions precedent the Revolving Lenders hereby irrevocably waive) or (ii) any
adverse change in the condition (financial or otherwise) of any Credit Party and
(D) any other act or omission to act or delay of any kind of Agent, any Lender
or any other Person or any other event or circumstance whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions of this
subsection 1.1(c)(vii), constitute a legal or equitable discharge of any
obligation of the Borrowers or any Revolving Lender hereunder; provided,
however, that the foregoing shall not be construed to excuse Agent or any L/C
Issuer from liability to Borrower to the extent of damages suffered by Borrower
that are caused solely by Agent or such L/C Issuer’s gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction) in
connection with its review of documents presented in connection with draws under
any Letter of Credit.
          (d) Swing Loans. (i) Availability. Subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties of the
Credit Parties contained herein, the Swingline Lender may, in its sole
discretion, make Loans (each a “Swing Loan”) available to the Borrowers under
the Revolving Loan Commitments from time to time on any Business Day during the
period from the Closing Date until the Revolving Termination Date in an
aggregate principal amount at any time outstanding not to exceed its Swingline
Commitment; provided, however, that the Swingline Lender may not make any Swing
Loan (x) to the extent that after giving effect to such Swing Loan, the
aggregate principal amount of the Revolving Credit Exposure would exceed the
Maximum Revolving Loan Balance and (y) during the period commencing on the first
Business Day after it receives notice from the Agent or the Required Revolving
Lenders that one or more of the conditions precedent contained in Section 2.2
are not satisfied and ending when such conditions are satisfied or duly waived.
In connection with the making of any Swing Loan, the Swingline Lender may but
shall not be required to determine that, or take notice whether, the conditions
precedent set forth in Section 2.2 have been satisfied or waived. Each Swing
Loan shall be a Base Rate Loan and must be repaid in full on the earliest of
(x) the funding date of any Borrowing of Revolving Loans and (y) the Revolving
Termination Date. Within the

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limits set forth in the first sentence of this clause (i), amounts of Swing
Loans repaid may be reborrowed under this clause (i).
     (ii) Borrowing Procedures. In order to request a Swing Loan, the Borrower
Representative shall give to the Agent a notice to be received not later than
1:00 p.m. (New York time) on the day of the proposed Borrowing, which may be
made in a writing substantially in the form of Exhibit 1.1(d) duly completed (a
“Swingline Request”) or by telephone if confirmed promptly but, in any event,
prior to such Borrowing, with such a Swingline Request. In addition, if any
Notice of Borrowing of Revolving Loans requests a Borrowing of Base Rate Loans
(other than a Borrowing to refinance outstanding Swing Loans), the Swingline
Lender may, notwithstanding anything else to the contrary herein, make a Swing
Loan available to the Borrowers in an aggregate amount not to exceed such
proposed Borrowing, and the aggregate amount of the corresponding proposed
Borrowing shall be reduced accordingly by the principal amount of such Swing
Loan. The Agent shall promptly notify the Swingline Lender of the details of the
requested Swing Loan. Upon receipt of such notice and subject to the terms of
this Agreement, the Swingline Lender may make a Swing Loan available to the
Borrowers by making the proceeds thereof available to the Agent and, in turn,
the Agent shall make such proceeds available to the Borrowers on the date set
forth in the relevant Swingline Request or Notice of Borrowing.
     (iii) Refinancing Swing Loans. The Swingline Lender or, subject to
subsection 1.5(a), Borrower Representative, may at any time forward a demand to
the Agent (which the Agent shall, upon receipt, forward to each Revolving
Lender) that each Revolving Lender pay to the Agent, for the account of the
Swingline Lender, such Revolving Lender’s Commitment Percentage of all or a
portion of the outstanding Swing Loans. Each Revolving Lender shall pay such
Commitment Percentage to the Agent for the account of the Swingline Lender if
the notice or demand therefor was received by such Lender prior to 12:00 p.m.
(New York time) on any Business Day, on such Business Day and (B) otherwise, on
the Business Day following such receipt. Payments received by the Administrative
Agent after 2:00 p.m. (New York time) shall be deemed to be received on the next
Business Day. Upon receipt by the Agent of such payment (other than during the
continuation of any Event of Default under subsection 7.1(f) or 7.1(g)), such
Revolving Lender shall be deemed to have made a Revolving Loan to the Borrowers,
which, upon receipt of such payment by the Swingline Lender from the Agent, the
Borrowers shall be deemed to have used in whole to refinance such Swing Loan. In
addition, regardless of whether any such demand is made, upon the occurrence of
any Event of Default under subsection 7.1(f) or 7.1(g), each Revolving Lender
shall be deemed to have acquired, without recourse or warranty, an undivided
interest and participation in each Swing Loan in an amount equal to such
Lender’s Commitment Percentage of such Swing

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Loan. If any payment made by any Revolving Lender as a result of any such demand
is not deemed a Revolving Loan, such payment shall be deemed a funding by such
Lender of such participation. Such participation shall not be otherwise required
to be funded. Upon receipt by the Swingline Lender of any payment from any
Revolving Lender pursuant to this clause (iii) with respect to any portion of
any Swing Loan in which a Revolving Lender has purchased a participation, the
Swingline Lender shall promptly pay over to such Revolving Lender all payments
of principal (to the extent received after such payment by such Lender) and
interest (to the extent accrued with respect to periods after such payment)
received by the Swingline Lender with respect to such portion.
     (iv) Obligation to Fund Absolute. Each Revolving Lender’s obligations
pursuant to clause (iii) above shall be absolute, unconditional and irrevocable
and shall be performed strictly in accordance with the terms of this Agreement
under any and all circumstances whatsoever, including (A) the existence of any
setoff, claim, abatement, recoupment, defense or other right that such Lender,
any Affiliate thereof or any other Person may have against the Swingline Lender,
the Agent, any other Lender or L/C Issuer or any other Person, (B) the failure
of any condition precedent set forth in Section 2.2 to be satisfied or the
failure of the Borrower Representative to deliver a Notice of Borrowing (each of
which requirements the Revolving Lenders hereby irrevocably waive) and (C) any
adverse change in the condition (financial or otherwise) of any Credit Party.
     1.2 Notes.
          (a) The Revolving Loans made by each Revolving Lender shall be
evidenced by this Agreement and, if requested by such Lender, a Revolving Note
payable to the order of such Lender in an amount equal to such Lender’s
Revolving Loan Commitment.
          (b) Swing Loans made by the Swingline Lender shall be evidenced by
this Agreement and, if requested by such Lender, a Swingline Note in an amount
equal to the Swingline Commitment.
     1.3 Interest.
          (a) Subject to subsections 1.3(c) and 1.3(d), each Loan shall bear
interest on the outstanding principal amount thereof from the date when made at
a rate per annum equal to the LIBOR or the Base Rate, as the case may be, plus
the Applicable Margin; provided Swing Loans may not be LIBOR Rate Loans. Each
determination of an interest rate by the Agent shall be conclusive and binding
on each Borrower and the Lenders in the absence of manifest error. All
computations of fees and interest payable under this Agreement shall be made on
the basis of a 360-day year and actual days

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elapsed. Interest and fees shall accrue during each period during which interest
or such fees are computed from the first day thereof to the last day thereof.
          (b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any payment or
prepayment of Loans in full.
          (c) At the election of the Agent or the Required Lenders while any
Event of Default exists (or automatically while any Event of Default under
subsection 7.1(f) or 7.1(g) exists), the Borrowers shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
Obligations under the Loan Documents from and after the date of occurrence of
such Event of Default, at a rate per annum which is determined by adding two
percent (2.0%) per annum to the Applicable Margin then in effect for such Loans
(plus the LIBOR or Base Rate, as the case may be) and, in the case of
Obligations under the Loan Documents not subject to an Applicable Margin (other
than the fees described in subsection 1.9(c)), at a rate per annum equal to the
rate per annum applicable to Revolving Loans which are Base Rate Loans
(including the Applicable Margin with respect thereto) plus two percent (2.0%).
All such interest shall be payable on demand of the Agent or the Required
Lenders.
          (d) Anything herein to the contrary notwithstanding, the obligations
of the Borrowers hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by the respective Lender would be contrary to the
provisions of any law applicable to such Lender limiting the highest rate of
interest which may be lawfully contracted for, charged or received by such
Lender, and in such event the Borrowers shall pay such Lender interest at the
highest rate permitted by applicable law (“Maximum Lawful Rate”); provided,
however, that if at any time thereafter the rate of interest payable hereunder
is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest
received by Agent, on behalf of Lenders, is equal to the total interest that
would have been received had the interest payable hereunder been (but for the
operation of this paragraph) the interest rate payable since the Closing Date as
otherwise provided in this Agreement.
          (e) If the Agent or the Required Lenders shall have determined in good
faith that for any reason LIBOR applicable pursuant to subsection 1.3(a) for any
requested Interest Period with respect to any proposed or existing LIBOR Rate
Loan, or Base Rate with respect to any proposed or existing Base Rate Loan, does
not adequately and fairly reflect the cost to the Lenders of funding or
maintaining such Loan, the Agent or the Required Lenders will forthwith give
notice of such determination to the Borrowers and each Lender. Thereafter, LIBOR
or Base Rate, as applicable shall be adjusted to such higher rate as the Agent
or Required Lenders, as applicable, may from time to time designate to Borrowers
(and in the case of Required Lenders, to Agent and Borrowers) as the rate
necessary to adequately and fairly reflect the cost to Lenders of funding or
maintaining such Loan until such time as the Agent or the Required Lenders
notifies the Borrowers and each Lender that LIBOR or Base Rate, as the case may
be,

9

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adequately and fairly reflects the cost to the Lenders of funding or maintaining
such Loan. Upon receipt of such notice that LIBOR or Base Rate does not
adequately and fairly reflect the cost to the Lenders of funding or maintaining
such Loan, the Borrowers may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by the Borrower Representative on behalf
of the Borrowers. If the Borrowers do not revoke such notice, the Lenders shall
make, convert or continue the Loans, as proposed by the Borrowers, in the amount
specified in the applicable notice submitted by the Borrower Representative on
behalf of the Borrowers, but at the LIBOR or Base Rate so determined and set by
the Agent or Required Lenders, as the case may be.
     1.4 Loan Accounts.
          (a) The Agent, on behalf of the Lenders, shall record on its books and
records the amount of each Loan made, the interest rate applicable, all payments
of principal and interest thereon and the principal balance thereof from time to
time outstanding. The Agent shall deliver to the Borrower Representative on a
monthly basis a loan statement setting forth such record for the immediately
preceding month. Such record shall, absent manifest error, be conclusive
evidence of the amount of the Loans made by the Lenders to the Borrowers and the
interest and payments thereon. Any failure to so record or any error in doing
so, or any failure to deliver such loan statement shall not, however, limit or
otherwise affect the obligation of the Borrowers hereunder (and under any Note)
to pay any amount owing with respect to the Loans or provide the basis for any
claim against the Agent.
          (b) The Agent, acting as agent of the Borrowers solely for tax
purposes and solely with respect to the actions described in this subsection
1.4(b), shall establish and maintain at its address referred to in Section 9.2
(or at such other address as the Agent may notify the Borrower Representative)
(A) a record of ownership (the “Register”) in which the Agent agrees to register
by book entry the interests (including any rights to receive payment hereunder)
of the Agent, each Lender and each L/C Issuer in the Revolving Loans, Swing
Loans and Letter of Credit Obligations, each of their obligations under this
Agreement to participate in each Loan, Letter of Credit and L/C Reimbursement
Obligations, and any assignment of any such interest, obligation or right and
(B) accounts in the Register in accordance with its usual practice in which it
shall record (1) the names and addresses of the Lenders and the L/C Issuers (and
each change thereto pursuant to Sections 9.9 and 9.22), (2) the Commitment of
each Lender, (3) the amount of each Loan and each funding of any participation
described in clause (A) above, for LIBOR Rate Loans, the Interest Period
applicable thereto, (4) the amount of any principal or interest due and payable
or paid, (5) the amount of the L/C Reimbursement Obligations due and payable or
paid in respect of Letters of Credit and (6) any other payment received by the
Agent from a Borrower and its application to the Obligations.
          (c) Notwithstanding anything to the contrary contained in this
Agreement, the Loans (including any Notes evidencing such Loans and the
corresponding obligations to participate in Letter of Credit Obligations and
Swing Loans) and the L/C Reimbursement Obligations are registered obligations,
and the right, title and

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interest of the Lenders and the L/C Issuers and their assignees in and to such
Loans or L/C Reimbursement Obligations, as the case may be, shall be
transferable only upon notation of such transfer in the Register and no
assignment thereof shall be effective until recorded therein. This Section 1.4
and Section 9.9 shall be construed so that the Loans and L/C Reimbursement
Obligations are at all times maintained in “registered form” within the meaning
of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code.
          (d) The Credit Parties, the Agent, the Lenders and the L/C Issuers
shall treat each Person whose name is recorded in the Register as a Lender or
L/C Issuer, as applicable, for all purposes of this Agreement. Information
contained in the Register with respect to any Lender or any L/C Issuer shall be
available for access by the Borrowers, the Borrower Representative, the Agent,
such Lender or such L/C Issuer at any reasonable time and from time to time upon
reasonable prior notice. No Lender or L/C Issuer shall, in such capacity, have
access to or be otherwise permitted to review any information in the Register
other than information with respect to such Lender or L/C Issuer unless
otherwise agreed by the Agent.
     1.5 Procedure for Revolving Credit Borrowing.
          (a) Each Borrowing of a Revolving Loan shall be made upon the Borrower
Representative’s irrevocable (subject to Sections 1.3(e) and 10.5 hereof)
written notice delivered to the Agent in the form of a Notice of Borrowing,
which notice must be received by the Agent prior to 1:00 p.m. (New York time)
(i) on the requested Borrowing date in the case of each Base Rate Loan equal to
or less than $5,000,000 and in the case of the initial Loans to be made on the
Closing Date, (ii) on the date which is one (1) Business Day prior to the
requested Borrowing date of each Base Rate Loan in excess of $5,000,000 and
(iii) on the day which is three (3) Business Days prior to the requested
Borrowing date in the case of each LIBOR Rate Loan. Such Notice of Borrowing
shall specify:
               (i) the amount of the Borrowing (which shall be in an aggregate
minimum principal amount of $100,000 and multiples of $50,000 in excess
thereof);
               (ii) the requested Borrowing date, which shall be a Business Day;
               (iii) whether the Borrowing is to be comprised of LIBOR Rate
Loans or Base Rate Loans; and
               (iv) if the Borrowing is to be LIBOR Rate Loans, the Interest
Period applicable to such Loans.
          (b) Upon receipt of a Notice of Borrowing, the Agent will promptly
notify each Revolving Lender of such Notice of Borrowing and of the amount of
such Lender’s Commitment Percentage of the Borrowing.

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          (c) Unless the Agent is otherwise directed in writing by the Borrower
Representative, the proceeds of each requested Borrowing after the Closing Date
will be made available to the Borrowers by the Agent by wire transfer of such
amount to the Borrowers pursuant to the wire transfer instructions specified on
the signature page hereto.
     1.6 Conversion and Continuation Elections.
          (a) Borrowers shall have the option to (i) request that any Revolving
Loan be made as a LIBOR Rate Loan, (ii) convert at any time all or any part of
outstanding Loans (other than Swing Loans) from Base Rate Loans to LIBOR Rate
Loans, (iii) convert any LIBOR Rate Loan to a Base Rate Loan, subject to
Section 10.4 if such conversion is made prior to the expiration of the Interest
Period applicable thereto, or (iv) continue all or any portion of any Loan as a
LIBOR Rate Loan upon the expiration of the applicable Interest Period. Any Loan
or group of Loans having the same proposed Interest Period to be made or
continued as, or converted into, a LIBOR Rate Loan must be in a minimum amount
of $5,000,000 and integral multiples of $500,000 in excess of such amount. Any
such election must be made by Borrower Representative by 1:00 p.m. (New York
time) on the 3rd Business Day prior to (1) the date of any proposed Revolving
Loan which is to bear interest at LIBOR, (2) the end of each Interest Period
with respect to any LIBOR Rate Loans to be continued as such, or (3) the date on
which Borrowers wish to convert any Base Rate Loan to a LIBOR Rate Loan for an
Interest Period designated by Borrower Representative in such election. If no
election is received with respect to a LIBOR Rate Loan by 1:00 p.m. (New York
time) on the 3rd Business Day prior to the end of the Interest Period with
respect thereto, that LIBOR Rate Loan shall be converted to a Base Rate Loan at
the end of its Interest Period. Borrower Representative must make such election
by notice to Agent in writing, by fax or overnight courier (or by telephone, to
be confirmed in writing on such day). In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a “Notice
of Conversion/Continuation”) in the form of Exhibit 1.6. No Loan shall be made,
converted into or continued as a LIBOR Rate Loan, if an Event of Default has
occurred and is continuing and Agent or Required Lenders have determined not to
make or continue any Loan as a LIBOR Rate Loan as a result thereof.
          (b) Upon receipt of a Notice of Conversion/Continuation, the Agent
will promptly notify each Lender thereof. In addition, the Agent will, with
reasonable promptness, notify the Borrower Representative and the Lenders of
each determination of LIBOR; provided that any failure to do so shall not
relieve any Borrower of any liability hereunder or provide the basis for any
claim against the Agent. All conversions and continuations shall be made pro
rata according to the respective outstanding principal amounts of the Loans held
by each Lender with respect to which the notice was given.
          (c) Notwithstanding any other provision contained in this Agreement,
after giving effect to any Borrowing, or to any continuation or conversion of
any Loans, there shall not be more than seven (7) different Interest Periods in
effect.
     1.7 Optional Prepayments and Revolving Loan Commitment Reductions.

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          (a) The Borrowers may at any time upon at least two (2) Business Days’
prior written notice by Borrower Representative to the Agent, prepay the Loans
in whole or in part in an amount greater than or equal to $100,000 (other than
Swing Loans for which prior written notice is not required and for which no
minimum shall apply), in each instance, without penalty or premium except as
provided in Section 10.4.
          (b) The notice of any prepayment shall not thereafter be revocable by
the Borrowers or Borrower Representative and the Agent will promptly notify each
Lender thereof and of such Lender’s Commitment Percentage of such prepayment.
The payment amount specified in such notice shall be due and payable on the date
specified therein. Together with each prepayment under this Section 1.7, the
Borrowers shall pay any amounts required pursuant to Section 10.4.
          (c) The Borrowers may at any time upon at least five (5) Business
Days’ prior written notice by Borrower Representative to the Agent, permanently
reduce or terminate the Revolving Loan Commitments; provided that (1) the
Revolving Loan Commitments shall not be reduced to an amount less than the
Revolving Credit Exposure then outstanding, unless (A) the Revolving Loan
Commitments are being terminated, (B) all Loans and other Obligations are
immediately paid in full and (C) all L/C Reimbursement Obligations are cash
collateralized in accordance with Section 7.4 (as if an Event of Default had
occurred) and (2) Borrower complies with Section 1.9(d). Any such reduction or
termination of the Revolving Loan Commitments must be accompanied by the payment
of the Fee required by Section 1.9(d), if any. Upon any such reduction or
termination of the Revolving Loan Commitments, Borrower’s right to request
Loans, or request that Letter of Credit Obligations be incurred on its behalf,
shall simultaneously be permanently reduced or terminated, as the case may be;
provided that a permanent reduction of the Revolving Loan Commitments below
$5,000,000 shall require a corresponding dollar for dollar reduction in the L/C
Sublimit and the Swingline Commitment.
     1.8 Mandatory Prepayments of Loans.
          (a) Reserved.
          (b) Revolving Loan. The Borrowers shall repay to the Lenders in full
on the date specified in clause (a) of the definition of “Revolving Termination
Date” the aggregate principal amount of the Revolving Loans and Swing Loans
outstanding on the Revolving Termination Date.
          (c) Asset Dispositions. If a Borrower or any Subsidiaries of a
Borrower shall at any time or from time to time:
               (i) make or agree to make a Disposition; or
               (ii) suffer an Event of Loss;

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and the aggregate amount of the Net Proceeds received by the Borrowers and their
Subsidiaries in connection with such Disposition or Event of Loss and all other
Dispositions and Events of Loss occurring during the fiscal year exceeds
$100,000, then (A) the Borrower Representative shall promptly notify the Agent
of such proposed Disposition or Event of Loss (including the amount of the
estimated Net Proceeds to be received by a Borrower and/or such Subsidiary in
respect thereof) and (B) promptly upon receipt by a Borrower and/or such
Subsidiary of the Net Proceeds of such Disposition or Event of Loss, the
Borrowers shall deliver, or cause to be delivered, such Net Proceeds to the
Agent for distribution to the Lenders as a prepayment of the Loans, which
prepayment shall be applied in accordance with subsection 1.8(e) hereof.
          (d) Issuance of Securities. Immediately upon the receipt by any Credit
Party or any Subsidiary of any Credit Party of the Net Issuance Proceeds of the
issuance of Stock or Stock Equivalents (including any capital contribution other
than a capital contribution to a Wholly-Owned Subsidiary which is, or within 15
Business Days after such capital contribution becomes, a Credit Party) or debt
securities (other than Net Issuance Proceeds from the issuance of (i) debt
securities in respect of Indebtedness permitted hereunder, and (ii) Excluded
Equity Issuances), the Borrowers shall deliver, or cause to be delivered, to the
Agent for application to the Loans in accordance with subsection 1.8(e) an
amount equal to (y) one hundred percent (100%) of such Net Issuance Proceeds
with respect to the issuance of any debt securities and (z) fifty percent (50%)
of such Net Issuance Proceeds with respect to the issuance of any Stock or Stock
Equivalents (including any capital contribution).
          (e) Application of Prepayments. Subject to subsection 1.10(c), any
prepayments pursuant to Section 1.7 and any prepayments pursuant to subsection
1.8(c) (other than prepayments of Swing Loans as set forth therein) or 1.8(d)
shall be applied first to prepay outstanding Swing Loans and second to prepay
outstanding Revolving Loans, effective as of the date that such prepayment is
made, without permanent reduction of the Revolving Loan Commitments. Amounts
prepaid shall be applied first to any Base Rate Loans then outstanding and then
to outstanding LIBOR Rate Loans with the shortest Interest Periods remaining.
Together with each prepayment under this Section 1.8, the Borrowers shall pay
any amounts required pursuant to Section 10.4 hereof.
     1.9 Fees.
          (a) Agent’s Fees. The Borrowers shall pay to the Agent, for the
Agent’s own account, fees in the amounts and at the times set forth in that
certain letter agreement among the Borrowers and the Agent dated of even date
herewith (as amended from time to time, the “Fee Letter”).
          (b) Unused Commitment Fee. The Borrowers shall pay to the Agent, for
the ratable benefit of the Revolving Lenders, a fee (the “Unused Commitment
Fee”) per annum in an amount equal to
               (i) the Aggregate Revolving Loan Commitment, less

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               (ii) the sum of (x) the average daily balance of all Revolving
Loans outstanding plus (y) the average daily amount of Letter of Credit
Obligations, in each case, during the preceding month,
multiplied by one-half of one percent (0.50%). Such fee shall be payable monthly
in arrears on the first day of the month following the date hereof and the first
day of each month thereafter. The Unused Commitment Fee provided in this
subsection 1.9(b) shall accrue at all times from and after mutual execution and
delivery of this Agreement until the Revolving Termination Date.
          (c) Letter of Credit Fee. The Borrowers agree to pay to Agent for the
ratable benefit of the Revolving Lenders, as compensation to such Lenders for
Letter of Credit Obligations incurred hereunder, (i) without duplication of
costs and expenses otherwise payable to Agent or Lenders hereunder or fees
otherwise paid by the Borrowers, all reasonable costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and
(ii) for each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the “Letter of Credit Fee”) per annum in an amount equal to
the product of the average daily undrawn face amount of all Letters of Credit
issued, guaranteed or supported by risk participation agreements multiplied by a
rate equal to the Applicable Margin with respect to Revolving Loans which are
LIBOR Rate Loans; provided, however, at Agent’s or Required Lenders’ option,
while an Event of Default exists (or automatically while an Event of Default
under subsection 7.1(f) or 7.1(g) exists), such rate shall be increased by two
percent (2.00%). Such fee shall be paid to Agent for the benefit of the
Revolving Lenders in arrears, on the first day of each calendar month and on the
Revolving Termination Date. In addition, the Borrowers shall pay to any L/C
Issuer, on demand, such reasonable fees, without duplication of fees otherwise
payable hereunder (including all per annum fees), charges and expenses of such
L/C Issuer in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Letter of Credit is
issued.
          (d) Revolver Reduction Fee. If the Borrowers reduce or terminate the
Revolving Loan Commitments, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, the Borrowers agree to pay to
the Agent for the ratable benefit of the Revolving Lenders as liquidated damages
and compensation for the costs of being prepared to make funds available
hereunder an amount equal to the Applicable Percentage (as defined below)
multiplied by the sum of the amount of the reduction of the Revolving Loan
Commitments. As used herein, the term “Applicable Percentage” shall mean (x) one
percent (1.00%), in the case of any reduction or termination of the Revolving
Loan Commitments on or prior to July 7, 2009, (y) one-half of one percent
(0.50%), in the case of any reduction or termination of the Revolving Loan
Commitments made after July 7, 2009 but on or prior to January 7, 2010, and
(z) zero percent (0%), in the case of any reduction or termination of the
Revolving Loan Commitments after January 7, 2010. The Borrowers agree that the
Applicable Percentages are a reasonable calculation of the lost profits of the
Lenders in view of the

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difficulties and impracticality of determining actual damages from an early
termination of the Revolving Loan Commitments.
     1.10 Payments by the Borrowers.
          (a) All payments (including prepayments) to be made by each Credit
Party on account of principal, interest, fees and other amounts required
hereunder shall be made without set-off, recoupment, counterclaim or deduction
of any kind, shall, except as otherwise expressly provided herein, be made to
the Agent (for the ratable account of the Persons entitled thereto) at the
address for payment specified in the signature page hereof in relation to the
Agent (or such other address as the Agent may from time to time specify in
accordance with Section 9.2), and shall be made in Dollars and in immediately
available funds, no later than 2:00 p.m. (New York time) on the date due. For
purposes of computing interest and Fees and determining Availability as of any
date, all payments shall be deemed received on the first Business Day following
the Business Day on which immediately available funds therefor are received in
the Collection Account prior to 2:00 p.m. New York time. Any payment which is
received by the Agent later than 2:00 p.m. (New York time) shall be deemed to
have been received on the immediately succeeding Business Day and any applicable
interest or fee shall continue to accrue. Each Borrower and each other Credit
Party hereby irrevocably waives the right to direct the application during the
continuance of an Event of Default of any and all payments in respect of any
Obligation and any proceeds of Collateral. Each Borrower hereby authorizes the
Agent and each Lender to make a Revolving Loan (which shall be a Base Rate Loan
and which may be a Swing Loan) to pay (i) interest, principal (including Swing
Loans), agent fees, Unused Commitment Fees and Letter of Credit Fees, in each
instance, on the date due, or (ii) after five (5) days prior notice to the
Borrower Representative, other fees, costs or expenses payable by a Borrower or
any of its Subsidiaries hereunder or under the other Loan Documents.
          (b) Subject to the provisions set forth in the definition of “Interest
Period” herein, if any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
          (c) During the continuance of an Event of Default, the Agent may, and
shall upon the direction of Required Lenders apply any and all payments in
respect of any Obligation in accordance with clauses first through sixth below.
Notwithstanding any provision herein to the contrary, all amounts collected or
received by the Agent after any or all of the Obligations have been accelerated
(so long as such acceleration has not been rescinded) and all proceeds received
by the Agent as a result of the exercise of its remedies under the Collateral
Documents after the occurrence and during the continuance of an Event of Default
shall be applied as follows:
     first, to payment of costs and expenses, including Attorney Costs, of the
Agent payable or reimbursable by the Credit Parties under the Loan Documents;

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     second, to payment of Attorney Costs of Lenders payable or reimbursable by
the Borrowers under this Agreement;
     third, to payment of all accrued unpaid interest on the Obligations and
fees owed to the Agent, Lenders, and L/C Issuers;
     fourth, to payment of principal of the Obligations including, without
limitation, L/C Reimbursement Obligations then due and payable, any Obligations
under any Secured Rate Contract and cash collateralization of L/C Reimbursement
Obligations to the extent not then due and payable;
     fifth, to payment of any other amounts owing constituting Obligations; and
     sixth, any remainder shall be for the account of and paid to whoever may be
lawfully entitled thereto.
     In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to the application to the next
succeeding category and (ii) each of the Lenders or other Persons entitled to
payment shall receive an amount equal to its pro rata share of amounts available
to be applied pursuant to clauses third, fourth and fifth above.
     1.11 Payments by the Lenders to the Agent; Settlement.
          (a) Agent may, on behalf of Lenders, disburse funds to the Borrowers
for Loans requested. Each Lender shall reimburse Agent on demand for all funds
disbursed on its behalf by Agent, or if Agent so requests, each Lender will
remit to Agent its Commitment Percentage of any Loan before Agent disburses same
to the Borrowers. If Agent elects to require that each Lender make funds
available to Agent prior to disbursement by Agent to the Borrowers, Agent shall
advise each Lender by telephone or fax of the amount of such Lender’s Commitment
Percentage of the Loan requested by the Borrower Representative no later than
1:00 p.m. (New York time) on the scheduled Borrowing date applicable thereto,
and each such Lender shall pay Agent such Lender’s Commitment Percentage of such
requested Loan, in same day funds, by wire transfer to Agent’s account on such
scheduled Borrowing date. If any Lender fails to pay its Commitment Percentage
within one (1) Business Day after Agent’s demand, Agent shall promptly notify
the Borrower Representative, and the Borrowers shall immediately repay such
amount to Agent. Any repayment required pursuant to this subsection 1.11(a)
shall be without premium or penalty. Nothing in this subsection 1.11(a) or
elsewhere in this Agreement or the other Loan Documents, including the remaining
provisions of Section 1.11, shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Agent, Swingline Lender or
Borrowers may have against any Lender as a result of any default by such Lender
hereunder.
          (b) At least once each calendar week or more frequently at Agent’s
election (each, a “Settlement Date”), Agent shall advise each Lender by
telephone or fax of the amount of such Lender’s Commitment Percentage of
principal, interest and Fees

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paid for the benefit of Lenders with respect to each applicable Loan. Provided
that each Lender has funded all payments required to be made by it and funded
all purchases of participations required to be funded by it under this Agreement
and the other Loan Documents as of such Settlement Date, Agent shall pay to each
Lender such Lender’s Commitment Percentage of principal, interest and fees paid
by the Borrowers since the previous Settlement Date for the benefit of such
Lender on the Loans held by it. Such payments shall be made by wire transfer to
such Lender) not later than 2:00 p.m. (New York time) on the next Business Day
following each Settlement Date. To the extent that any Lender (a “Non-Funding
Lender”) has failed to fund all such payments or failed to fund the purchase of
all such participations required to be funded by such Lender pursuant to this
Agreement, Agent shall be entitled to set off the funding shortfall against that
Non-Funding Lender’s Commitment Percentage of all payments received from the
Borrowers.
          (c) Availability of Lender’s Commitment Percentage. Agent may assume
that each Revolving Lender will make its Commitment Percentage of each Revolving
Loan available to Agent on each Borrowing date. If such Commitment Percentage is
not, in fact, paid to Agent by such Revolving Lender when due, Agent will be
entitled to recover such amount on demand from such Revolving Lender without
setoff, counterclaim or deduction of any kind. If any Revolving Lender fails to
pay the amount of its Commitment Percentage forthwith upon Agent’s demand, Agent
shall promptly notify the Borrower Representative and the Borrowers shall
immediately repay such amount to Agent. Nothing in this subsection 1.11(c) or
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Revolving Lender or to relieve
any Revolving Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that the Borrowers may have against any Revolving Lender
as a result of any default by such Revolving Lender hereunder. To the extent
that Agent advances funds to the Borrowers on behalf of any Revolving Lender and
is not reimbursed therefor on the same Business Day as such advance is made,
Agent shall be entitled to retain for its account all interest accrued on such
advance until reimbursed by the applicable Revolving Lender.
          (d) Return of Payments.
               (i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from the Borrowers and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
               (ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to any Credit Party or paid to any
other Person pursuant to any insolvency law or otherwise, then, notwithstanding
any other term or condition of this Agreement or any other Loan Document, Agent
will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender,

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together with interest at such rate, if any, as Agent is required to pay to any
Borrower or such other Person, without setoff, counterclaim or deduction of any
kind.
          (e) Non-Funding Lenders. The failure of any Non-Funding Lender to make
any Revolving Loan or any payment required by it hereunder, or to fund any
purchase of any participation to be made or funded by it on the date specified
therefor shall not relieve any other Lender (each such other Revolving Lender,
an “Other Lender”) of its obligations to make such loan or fund the purchase of
any such participation on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make a loan,
fund the purchase of a participation or make any other payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a “Lender” or a “Revolving Lender”
(or be included in the calculation of “Required Lenders” hereunder) for any
voting or consent rights under or with respect to any Loan Document, and
Non-Funding Lender shall not be entitled to receive any Unused Commitment Fee.
Notwithstanding anything set forth herein to the contrary, if any Lender is a
Non-Funding Lender, neither the Swingline Lender nor any L/C Issuer shall be
required to make any Swing Loans or issue any Letters of Credit until the
Swingline Lender or such L/C Issuer have entered into arrangements satisfactory
to it and the Borrower to eliminate the Swingline Lender’s risk or the L/C
Issuer’s risk, as the case may be, with respect to the interest and
participation of the Non-Funding Lender in the Swing Loans or Letter of Credit
Obligations, including by cash collateralizing such Non-Funding Lender’s
interest and participation in the Swing Loans or Letter of Credit Obligations,
as the case may be.
     1.12 Eligible Accounts. All of the Accounts owned by Borrowers and properly
reflected as “Eligible Accounts” in the most recent Borrowing Base Certificate
delivered by the Borrower Representative to Agent shall be “Eligible Accounts”
for purposes of this Agreement. Agent shall have the right to establish, modify
or eliminate Reserves against Eligible Accounts from time to time in its
reasonable credit judgment. In addition, Agent reserves the right, at any time
and from time to time after the Closing Date, to adjust any of the applicable
criteria, to establish new criteria and to adjust advance rates with respect to
Eligible Accounts, in its reasonable credit judgment, subject to the approval of
Required Lenders in the case of adjustments, new criteria or changes in advance
rates which have the effect of making more credit available.
     1.13 Eligible Inventory
     All of the Inventory owned by the Borrowers and properly reflected as
“Eligible Inventory” in the most recent Borrowing Base Certificate delivered by
the Borrower Representative to Agent shall be “Eligible Inventory”, as
applicable for purposes of this Agreement. Agent shall have the right to
establish, modify, or eliminate Reserves against Eligible Inventory from time to
time in its reasonable credit judgment. In addition, Agent reserves the right,
at any time and from time to time after the Closing Date, to adjust any of the
applicable criteria, to establish new criteria and to adjust advance rates with
respect to Eligible Inventory in its reasonable credit judgment, subject to the
approval of

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Required Lenders in the case of adjustments, new criteria or changes in advance
rates which have the effect of making more credit available.
     1.14 Eligible Equipment
     All of the Equipment owned by the Borrowers and properly reflected as
“Eligible Equipment” in the most recent Borrowing Base Certificate delivered by
the Borrower Representative to Agent shall be “Eligible Equipment”, as
applicable for purposes of this Agreement. Agent shall have the right to
establish, modify, or eliminate Reserves against Eligible Equipment from time to
time in its reasonable credit judgment. In addition, Agent reserves the right,
at any time and from time to time after the Closing Date, to adjust any of the
applicable criteria, to establish new criteria and to adjust advance rates with
respect to Eligible Equipment in its reasonable credit judgment, subject to the
approval of Required Lenders in the case of adjustments, new criteria or changes
in advance rates which have the effect of making more credit available.
     1.15 Eligible Real Estate
     Agent shall have the right to establish, modify, or eliminate Reserves
against Eligible Real Estate from time to time in its reasonable credit
judgment. In addition, Agent reserves the right, at any time and from time to
time after the Closing Date, to adjust any of the applicable criteria, to
establish new criteria and to adjust advance rates with respect to Eligible Real
Estate in its reasonable credit judgment, subject to the approval of Required
Lenders in the case of adjustments, new criteria or changes in advance rates
which have the effect of making more credit available.
     1.16 Incremental Commitments.
          (a) At any time prior to January 7, 2011 Borrowers may from time to
time, upon written notice to the Agent (who shall promptly provide a copy of
such notice to each Lender), propose to increase the Commitments by an aggregate
amount not to exceed Ten Million Dollars ($10,000,000) (the “Incremental
Revolver”), such that the Aggregate Revolving Loan Commitments after giving
effect to such increase are no greater than Thirty-Five Million Dollars
($35,000,000). Each Lender shall have the right for a period of fifteen
(15) days following receipt of such notice, to elect by written notice to the
Borrower Representative and the Agent, to commit to establish all or a portion
of such Incremental Revolver. Final allocations of the Incremental Revolver
shall be determined by the Agent after consultation with Borrowers. No Lender
(or any successor thereto) shall have any obligation to establish all or any
portion of such Incremental Revolver or to increase any other obligations under
this Agreement and the other Loan Documents, and any decision by a Lender to
establish all or any portion of such Incremental Revolver shall be made in its
sole discretion independently from any other Lender.
          (b) If the Lenders do not commit to establish the entire Incremental
Revolver pursuant to subsection (a) of this Section 1.16, the Borrowers may
designate another bank or other financial institution (which may be, but need
not be, one or more of

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the existing Lenders), provided, however that if such Person is not an existing
Lender, such Person must be reasonably acceptable to the Agent and join this
Agreement as a Lender (an “Additional Lender”).
          (c) In the event that the Borrowers desire to increase the Commitments
by the Incremental Revolver, the Borrowers will enter into an amendment with the
Agent, those Lenders providing the Incremental Revolver and Additional Lenders,
if any (which shall upon execution thereof become Lenders hereunder if not
theretofore Lenders) to provide for such Incremental Revolver, which amendment
shall set forth any terms and conditions of the Incremental Revolver not covered
by this Agreement as agreed by the Borrowers, Agent and such Lenders, and shall
provide for the issuance of promissory notes to evidence the Incremental
Revolver if requested by such Lenders (which notes shall constitute Notes for
purposes of this Agreement), such amendment to be in form and substance
reasonably acceptable to Agent and consistent with the terms of this
Section 1.16(c) and of the other provisions of this Agreement. No consent of any
Lender not committing to the Incremental Revolver is required to permit the
Incremental Revolver contemplated by and otherwise complying with this
Section 1.16(c) or the aforesaid amendment to effectuate the Incremental
Revolver. This clause (c) shall supersede any provisions contained in this
Agreement, including, without limitation, Section 9.1.
          (d) The increase of the Commitments by the Incremental Revolver will
be subject to the satisfaction of the following conditions precedent: (i) after
giving pro forma effect to such increase, no Default or Event of Default shall
have occurred and be continuing and Borrowers will be in pro forma compliance
with the covenants set forth in Article VI, (ii) execution of the amendment
hereto referenced in clause (c) above by Agent, the Lenders and Additional
Lenders providing the Incremental Revolver and the Credit Parties,
(iii) delivery to Agent of a certificate of the Secretary or an Assistant
Secretary of each Credit Party, in form and substance reasonably satisfactory to
Agent, certifying the resolutions of such Person’s board of directors (or
equivalent governing body) approving and authorizing the Incremental Revolver
(if not previously delivered to Agent), and certifying that none of the
organizational documents of such Credit Party delivered to the Agent prior
thereto have been modified or altered in any way (or if modifications have
occurred, certifying new copies of such organizational documents), (iv) delivery
to Agent of an opinion of counsel to the Credit Parties in form and substance
and from counsel reasonably satisfactory to the Agent, addressed to Agent and
Lenders extending the Incremental Revolver and covering such matters as the
Agent may reasonably request, (v) receipt by Agent of such new Notes and
reaffirmations of guaranties and Liens, as Agent may reasonably request,
together with amendments to any Mortgages reflecting that the Incremental
Revolver is secured pari passu with the Revolving Loan, and such endorsements to
title policies or additional title searches as the Agent may reasonably request
and (vi) the Incremental Revolver shall be provided on the same terms and
conditions as the existing Revolving Loan Commitments (including without
limitation as to fees, absence of original issue discount, interest rates and
maturity).
     1.17 Borrower Representative.

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     Each Borrower hereby designates and appoints Akorn as its representative
and agent on its behalf (the “Borrower Representative”) for the purposes of
issuing Notices of Borrowings, Notices of Conversion/Continuation, L/C Requests,
delivering certificates including Compliance Certificates, giving instructions
with respect to the disbursement of the proceeds of the Loans, selecting
interest rate options, giving and receiving all other notices and consents
hereunder or under any of the other Loan Documents and taking all other actions
(including in respect of compliance with covenants) on behalf of any Borrower or
Borrowers under the Loan Documents. Borrower Representative hereby accepts such
appointment. Agent and each Lender may regard any notice or other communication
pursuant to any Loan Document from Borrower Representative as a notice or
communication from all Borrowers. Each warranty, covenant, agreement and
undertaking made on behalf of a Borrower by Borrower Representative shall be
deemed for all purposes to have been made by such Borrower and shall be binding
upon and enforceable against such Borrower to the same extent as if the same had
been made directly by such Borrower.
ARTICLE II.
CONDITIONS PRECEDENT
     2.1 Conditions of Initial Loans. The obligation of each Lender to make its
initial Loans and of each L/C Issuer to Issue, or cause to be Issued, the
initial Letters of Credit hereunder is subject to satisfaction of the following
conditions:
          (a) Loan Documents. The Agent shall have received on or before the
Closing Date all of the agreements, documents, instruments and other items set
forth on Exhibit 2.1 (the “Closing Checklist”), each in form and substance
reasonably satisfactory to the Agent;
          (b) Availability. After giving effect to the payment of all costs and
expenses in connection therewith, funding of the initial Loans and issuance of
the initial Letters of Credit, Availability shall be not less than $10,000,000;
          (c) Due Diligence. The Agent shall have completed its business, tax
and legal due diligence, including a review of existing and potential contracts
with Serum for trials related to an ANDA for Hepatitis B, a review of background
checks on significant related parties, insurance review, customer and supplier
calls, satisfactory regulatory review and satisfactory review of all material
pending and threatened litigation or proceedings in court or any administrative
forum, all with results satisfactory to Agent.
          (d) Parexel Audit. Agent and its counsel shall have completed their
review of the October 2008 Parexel audit of the Borrowers as to FDA compliance
status, with results satisfactory to Agent, and Agent shall have received
confirmation that Borrowers have no additional FDA issues since the audited
period.
          (e) Structure; Joint Ventures; Other Indebtedness. The ownership,
capital, corporate, tax, organizational and legal structure of the Borrowers and
their

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subsidiaries, the equity structure of all joint venture arrangements of the
Borrowers and the terms and conditions of all other Indebtedness of each Credit
Party, including without limitation subordination provisions, shall be
acceptable to Agent in its sole discretion.
          (f) Approvals. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all material consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
Related Transactions, which consents and approvals shall be final and
non-appealable, or (ii) an officer’s certificate in form and substance
reasonably satisfactory to Agent affirming that no such consents or approvals
are required.
          (g) Fees and Expenses. Borrowers shall have paid the Fees required to
be paid on the Closing Date pursuant to the terms of this Agreement and the Fee
Letter, and shall have reimbursed Agent for all fees, costs and expenses of
closing presented as of the Closing Date.
          (h) EBITDA. The Borrowers shall have delivered evidence to the
satisfaction of the Agent demonstrating that EBITDA of the Borrowers for the
five-month period ending November 30, 2008 shall be not less than $5,750,000.
     2.2 Conditions to All Borrowings. Except as otherwise expressly provided
herein, no Lender or L/C Issuer shall be obligated to fund any Loan or incur any
Letter of Credit Obligation, if, as of the date thereof:
          (a) except as may be waived in writing by the Required Lenders, any
representation or warranty by any Credit Party contained herein or in any other
Loan Document is untrue or incorrect in any material respect (without
duplication of any materiality qualifier contained therein) as of such date,
except to the extent that such representation or warranty expressly relates to
an earlier date (in which event such representations and warranties were untrue
or incorrect as of such earlier date), and Agent or Required Lenders have
determined not to make such Loan or incur such Letter of Credit Obligation as a
result of the fact that such warranty or representation is untrue or incorrect;
          (b) any Default or Event of Default has occurred and is continuing or
would result after giving effect to any Loan (or the incurrence of any Letter of
Credit Obligation), and Agent or Required Lenders shall have determined not to
make any Loan or incur any Letter of Credit Obligation as a result of that
Default or Event of Default;
          (c) after giving effect to any Loan (or the incurrence of any Letter
of Credit Obligations), the aggregate outstanding amount of the Revolving Credit
Exposure would exceed the Maximum Revolving Loan Balance (except as provided in
Section 1.1(b)); or
          (d) after giving effect to such Loan and the application of the
proceeds thereof on the date of funding (including depositing such funds in a
Disbursement

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Account so long as cash in such Disbursement Account would not exceed (x) checks
outstanding against such Disbursement Account as of that date, plus (y) amounts
necessary to meet minimum balance requirements for such Disbursement Account),
the aggregate cash and Cash Equivalents of Borrowers and their Subsidiaries will
not exceed $5,000,000.
The request by Borrower Representative and acceptance by Borrowers of the
proceeds of any Loan or the incurrence of any Letter of Credit Obligations shall
be deemed to constitute, as of the date thereof, (i) a representation and
warranty by Borrowers that the conditions in this Section 2.2 have been
satisfied and (ii) a reaffirmation by each Credit Party of the granting and
continuance of Agent’s Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
     The Credit Parties, jointly and severally, represent and warrant to the
Agent and each Lender that the following are true, correct and complete:
     3.1 Corporate Existence and Power. Each Credit Party and each of their
respective Subsidiaries:
          (a) is a corporation, limited liability company or limited
partnership, as applicable, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, organization
or formation, as applicable;
          (b) has the power and authority and all Permits to own its assets,
carry on its business and execute, deliver, and perform its obligations under,
the Loan Documents and the Related Agreements to which it is a party;
          (c) is duly qualified as a foreign corporation, limited liability
company or limited partnership, as applicable, and licensed and in good
standing, under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such qualification
or license; and
          (d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d), to the extent that
the failure to do so would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
     3.2 Corporate Authorization; No Contravention.
          (a) The execution, delivery and performance by each of the Credit
Parties of this Agreement, and by each of the Credit Parties and each of their
respective Subsidiaries of any other Loan Document and Related Agreement to
which such Person is party, have been duly authorized by all necessary action,
and do not and will not:

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               (i) contravene the terms of any of that Person’s Organization
Documents;
               (ii) conflict with or result in any material breach or
contravention of, or result in the creation of any Lien under, any document
evidencing any material Contractual Obligation to which such Person is a party
or any order, injunction, writ or decree of any Governmental Authority to which
such Person or its Property is subject; or
               (iii) violate any material Requirement of Law in any material
respect.
          (b) Schedule 3.2 sets forth the authorized Stock and Stock Equivalents
of each of the Credit Parties and each of their respective Subsidiaries. All
issued and outstanding Stock and Stock Equivalents of each of the Credit Parties
and each of their respective Subsidiaries are duly authorized and validly
issued, fully paid, non-assessable, and, except with respect to Stock and Stock
Equivalents of Akorn, free and clear of all Liens other than, with respect to
the Stock and Stock Equivalents of the Borrowers and Subsidiaries of the
Borrowers, those in favor of the Agent for the benefit of the Secured Parties.
All such securities were issued in compliance with all applicable state and
federal laws concerning the issuance of securities. As of the Closing Date, all
of the issued and outstanding Stock and Stock Equivalents of the Subsidiaries of
Akorn are owned by the Persons and in the amounts set forth on Schedule 3.2.
Except as set forth on Schedule 3.2, there are no pre-emptive or other
outstanding rights, options, warrants, conversion rights or other similar
agreements or understandings for the purchase or acquisition of any Stock and
Stock Equivalents of any Credit Party other than Akorn.
     3.3 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance (measured as of each date this representation
and warranty is given as if all performance occurred on such date) by, or
enforcement against, any Credit Party or any Subsidiary of any Credit Party of
this Agreement, any other Loan Document or Related Agreement except (a) for
recordings and filings in connection with the Liens granted to the Agent under
the Collateral Documents and (b) those obtained or made on or prior to the
Closing Date.
     3.4 Binding Effect. This Agreement and each other Loan Document and Related
Agreement to which any Credit Party or any Subsidiary of any Credit Party is a
party constitute the legal, valid and binding obligations of each such Person
which is a party thereto, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles relating to enforceability.
     3.5 Litigation. Except as specifically disclosed in Schedule 3.5, there are
no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of each

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Credit Party, threatened in writing or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against any Credit Party, any
Subsidiary of any Credit Party or any of their respective Properties which:
          (a) purport to affect or pertain to this Agreement, any other Loan
Document or Related Agreement, or any of the transactions contemplated hereby or
thereby; or
          (b) would reasonably be expected to result in equitable relief or
monetary judgment(s), individually or in the aggregate, in excess of $50,000.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement, any other
Loan Document or any Related Agreement, or directing that the transactions
provided for herein or therein not be consummated as herein or therein provided.
As of the Closing Date, no Credit Party or any Subsidiary of any Credit Party is
the subject of an audit by the IRS or other Governmental Authority or, to each
Credit Party’s knowledge, any review or investigation by the IRS or other
Governmental Authority concerning the violation or possible violation of any
Requirement of Law.
     3.6 No Default. No Default or Event of Default exists or would result from
the incurring of any Obligations by any Credit Party or the grant or perfection
of the Agent’s Liens on the Collateral or the consummation of the transactions
contemplated by the Loan Documents. No Credit Party and no Subsidiary of any
Credit Party is in default under or with respect to any Contractual Obligation
in any respect which, individually or together with all such defaults, would
reasonably be expected to have a Material Adverse Effect.
     3.7 ERISA Compliance. Schedule 3.7 sets forth, as of the Closing Date, a
complete and correct list of, and that separately identifies, (a) all Title IV
Plans, (b) all Multiemployer Plans and (c) all material Benefit Plans. Each
Benefit Plan, and each trust thereunder, intended to qualify for tax exempt
status under Section 401 or 501 of the Code or other Requirements of Law so
qualifies. Except for those that would not, in the aggregate, have a Material
Adverse Effect, (x) each Benefit Plan is in compliance with applicable
provisions of ERISA, the Code and other Requirements of Law, (y) there are no
existing or pending (or to the knowledge of any Credit Party, threatened in
writing) claims (other than routine claims for benefits in the normal course),
sanctions, actions, lawsuits or other proceedings or investigation involving any
Benefit Plan to which any Credit Party incurs or otherwise has or could have an
obligation or any Liability and (z) no ERISA Event is reasonably expected to
occur. On the Closing Date, no ERISA Event has occurred in connection with which
obligations and liabilities (contingent or otherwise) remain outstanding. No
ERISA Affiliate would have any Withdrawal Liability as a result of a complete
withdrawal from any Multiemployer Plan on the date this representation is made.

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     3.8 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
intended to be and shall be used solely for the purposes set forth in and
permitted by Section 4.10, and are intended to be and shall be used in
compliance with Section 5.8. No Credit Party and no Subsidiary of any Credit
Party is engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
Proceeds of the Loans shall not be used for the purpose of purchasing or
carrying Margin Stock.
     3.9 Title to Properties. Each of the Credit Parties and each of their
respective Subsidiaries has good record and marketable title in fee simple to,
or valid leasehold interests in, all real Property, and owns, free of all Liens
other than those permitted under Section 5.1, all personal property and valid
leasehold interests in all leased personal property, in each instance, necessary
or used in the ordinary conduct of their respective businesses. The Property of
the Credit Parties and its Subsidiaries is subject to no Liens, other than
Permitted Liens. As of the Closing Date, none of the Credit Parties or their
Subsidiaries own any Real Estate in fee simple other than the Eligible Real
Estate.
     3.10 Taxes. All federal, state, local and foreign income and franchise and
other material tax returns, reports and statements (collectively, the “Tax
Returns”) required to be filed by any Tax Affiliate have been filed with the
appropriate Governmental Authorities in all jurisdictions in which such Tax
Returns are required to be filed, all such Tax Returns are true and correct in
all material respects, and all taxes, charges and other impositions reflected
therein or otherwise due and payable have been paid prior to the date on which
any Liability may be added thereto for non-payment thereof except for those
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves are maintained on the books of the appropriate Tax
Affiliate in accordance with GAAP. As of the Closing Date, no Tax Return is
under audit or examination by any Governmental Authority and no notice of such
an audit or examination or any assertion of any claim for Taxes has been given
or made by any Governmental Authority. Proper and accurate amounts have been
withheld by each Tax Affiliate from their respective employees for all periods
in full and complete compliance with the tax, social security and unemployment
withholding provisions of applicable Requirements of Law and such withholdings
have been timely paid to the respective Governmental Authorities. No Tax
Affiliate has participated in a “reportable transaction” within the meaning of
Treasury Regulation Section 1.6011-4(b) or has been a member of an affiliated,
combined or unitary group other than the group of which a Tax Affiliate is the
common parent.
     3.11 Financial Condition.
          (a) Each of (i) the audited consolidated balance sheets of the
Borrowers and their Subsidiaries dated December 31, 2007 and the related audited
consolidated statements of income or operations, shareholders’ equity and cash
flows for the fiscal year ended on that date and (ii) the unaudited interim
consolidated balance sheet of the Borrowers and their Subsidiaries dated
November 30, 2008 and the related unaudited consolidated statements of income,
shareholders’ equity and cash flows for the eleven months then ended:

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     (x) were prepared in accordance with GAAP consistently applied throughout
the respective periods covered thereby, except as otherwise expressly noted
therein, subject to, in the case of the unaudited interim financial statements,
normal year-end adjustments and the lack of footnote disclosures; and
     (y) present fairly in all material respects the consolidated financial
condition of the Borrowers and their Subsidiaries as of the dates thereof and
results of operations for the periods covered thereby.
          (b) Since December 31, 2007 there has been no Material Adverse Effect.
          (c) The Credit Parties and their Subsidiaries have no Indebtedness
other than Indebtedness permitted pursuant to Section 5.5 and have no Contingent
Obligations other than Contingent Obligations permitted pursuant to Section 5.9.
          (d) All financial performance projections delivered to the Agent
represent the Borrowers’ best good faith estimate of future financial
performance and are based on assumptions believed by the Borrowers to be fair
and reasonable in light of current market conditions, it being acknowledged and
agreed by the Agent and Lenders that projections as to future events are not to
be viewed as facts and that the actual results during the period or periods
covered by such projections may differ from the projected results.
     3.12 Environmental Matters. Except as set forth on Schedule 3.12, (a) the
operations of each Credit Party and each Subsidiary of each Credit Party are and
have been in compliance with all applicable Environmental Laws, including
obtaining, maintaining and complying with all Permits required by any applicable
Environmental Law, other than non-compliances that, in the aggregate, would not
have a reasonable likelihood of resulting in Material Environmental Liabilities
to all Credit Parties considered as a whole, (b) no Credit Party and no
Subsidiary of any Credit Party is party to, and no Credit Party and no
Subsidiary of any Credit Party and no real property currently (or to the
knowledge of any Credit Party previously) owned, leased, subleased, operated or
otherwise occupied by or for any such Person is subject to or the subject of,
any Contractual Obligation or any pending (or, to the knowledge of any Credit
Party, threatened) order, action, investigation, suit, proceeding, audit, claim,
demand, dispute or notice of violation or of potential liability or similar
notice relating in any manner to any Environmental Law other than those that, in
the aggregate, are not reasonably likely to result in Material Environmental
Liabilities to all Credit Parties considered as a whole, (c) no Lien in favor of
any Governmental Authority securing, in whole or in part, Environmental
Liabilities has attached to any property of any Credit Party or any Subsidiary
of any Credit Party and, to the knowledge of any Credit Party, no facts,
circumstances or conditions exist that could reasonably be expected to result in
any such Lien attaching to any such property, (d) no Credit Party and no
Subsidiary of any Credit Party has caused or suffered to occur a Release of
Hazardous Materials at, to or from any real property of any such Person and each
such real property is free of contamination by any Hazardous Materials except
for such Release or contamination that could not

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reasonably be expected to result, in the aggregate, in Material Environmental
Liabilities to all Credit Parties considered as a whole, (e) no Credit Party and
no Subsidiary of any Credit Party (i) is or has been engaged in, or has
permitted any current or former tenant to engage in, operations or (ii) knows of
any facts, circumstances or conditions, including receipt of any information
request or notice of potential responsibility under the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601 et
seq.) or similar Environmental Laws, that, in the aggregate, would have a
reasonable likelihood of resulting in Material Environmental Liabilities to all
Credit Parties considered as a whole and (f) each Credit Party has made
available to Agent copies of all existing environmental reports, reviews and
audits and all documents pertaining to actual or potential Environmental
Liabilities, in each case to the extent such reports, reviews, audits and
documents are in their possession, custody or control.
     3.13 Regulated Entities. None of any Credit Party, any Person controlling
any Credit Party, or any Subsidiary of any Credit Party, is (a) an “investment
company” within the meaning of the Investment Company Act of 1940 or (b) subject
to regulation under the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other Federal or state statute, rule or
regulation limiting its ability to incur Indebtedness, pledge its assets or
perform its Obligations under the Loan Documents.
     3.14 Solvency. Both before and after giving effect to (a) the Loans made
and Letters of Credit Issued on or prior to the date this representation and
warranty is made or remade, (b) the disbursement of the proceeds of such Loans
and (c) the payment and accrual of all transaction costs in connection with the
foregoing, both the Credit Parties taken as a whole and each Borrower
individually are Solvent.
     3.15 Labor Relations. There are no strikes, work stoppages, slowdowns or
lockouts existing, pending (or, to the knowledge of any Credit Party,
threatened) against or involving any Credit Party or any Subsidiary of any
Credit Party, except for those that would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth on
Schedule 3.15, as of the Closing Date, (a) there is no collective bargaining or
similar agreement with any union, labor organization, works council or similar
representative covering any employee of any Credit Party or any Subsidiary of
any Credit Party, (b) no petition for certification or election of any such
representative is existing or pending with respect to any employee of any Credit
Party or any Subsidiary of any Credit Party and (c) no such representative has
sought certification or recognition with respect to any employee of any Credit
Party or any Subsidiary of any Credit Party.
     3.16 Intellectual Property. Each Credit Party and each Subsidiary of each
Credit Party owns, or is licensed to use, all Intellectual Property necessary to
conduct its business as currently conducted except for such Intellectual
Property the failure of which to own or license would not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect. To
the knowledge of each Credit Party, (a) the conduct and operations of the
businesses of each Credit Party and each Subsidiary of each Credit Party does
not infringe, misappropriate, dilute, violate or otherwise impair any
Intellectual Property owned by any other Person and (b) no other Person has
contested any right, title or interest of any Credit Party or any Subsidiary of
any Credit

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Party in, or relating to, any Intellectual Property, other than, in each case,
as cannot reasonably be expected to affect the Loan Documents and the
transactions contemplated therein and would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
     3.17 Subsidiaries. As of the Closing Date, no Credit Party has any
Subsidiaries or equity investments in any other corporation or entity other than
those specifically disclosed in Schedule 3.2.
     3.18 Brokers’ Fees; Transaction Fees. Except as disclosed on Schedule 3.18
and except for fees payable to the Agent and Lenders, none of the Credit Parties
or any of their respective Subsidiaries has any obligation to any Person in
respect of any finder’s, broker’s or investment banker’s fee in connection with
the transactions contemplated hereby.
     3.19 Insurance. Each of the Credit Parties and each of their respective
Subsidiaries and their respective Properties are insured with financially sound
and reputable insurance companies which are not Affiliates of the Borrowers, in
such amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar Properties
in localities where such Person operates. A true and complete listing of such
insurance, including issuers, coverages and deductibles, has been provided to
the Agent.
     3.20 Full Disclosure. None of the representations or warranties made by any
Credit Party or any of their Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in each exhibit, report, statement or certificate furnished
by or on behalf of any Credit Party or any of their Subsidiaries in connection
with the Loan Documents (including the offering and disclosure materials, if
any, delivered by or on behalf of any Credit Party to the Lenders prior to the
Closing Date), when taken as a whole, contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
     3.21 Foreign Assets Control Regulations and Anti-Money Laundering.
          (a) OFAC. Neither any Credit Party nor any Subsidiary of any Credit
Party (i) is a person whose property or interest in property is blocked or
subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of
such executive order, or is otherwise associated with any such person in any
manner violative of Section 2, or (iii) is a person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations or
prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.

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          (b) Patriot Act. Each of the Credit Parties and each of their
respective Subsidiaries are in compliance, in all material respects, with the
Patriot Act. No part of the proceeds of the Loans will be used, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in violation of the United States
Foreign Corrupt Practices Act of 1977, as amended.
     3.22 FDA Regulatory Compliance.
          (a) Each of the Credit Parties and their Subsidiaries have all
Registrations from FDA or other Governmental Authority required to conduct their
respective businesses as currently conducted. Each of the Registrations is valid
and subsisting in full force and effect. To the knowledge of the Credit Parties
and their Subsidiaries, the FDA is not considering limiting, suspending, or
revoking such Registrations or changing the marketing classification or labeling
of the products of the Credit Parties and their Subsidiaries. To the knowledge
of the Credit Parties and their Subsidiaries, there is no false or misleading
information or significant omission in any product application or other
submission to FDA or any comparable Governmental Authority. The Credit Parties
and their Subsidiaries have fulfilled and performed their obligations under each
Registration, and no event has occurred or condition or state of facts exists
which would constitute a breach or default or would cause revocation or
termination of any such Registration. To the knowledge of the Credit Parties and
their Subsidiaries, any third party that is a manufacturer or contractor for the
Credit Parties and their Subsidiaries is in compliance with all Registrations
from the FDA or comparable Governmental Authority insofar as they pertain to the
manufacture of product components or products marketed or distributed by the
Credit Parties and their Subsidiaries.
          (b) All products developed, manufactured, tested, distributed or
marketed by or on behalf of the Credit Parties and their Subsidiaries that are
subject to the jurisdiction of the FDA or comparable Governmental Authority have
been and are being developed, tested, manufactured, distributed and marketed in
compliance with the FDA Laws or any other applicable Requirement of Law,
including, without limitation, product approval, good manufacturing practices,
labeling, advertising, record-keeping, and adverse event reporting, and have
been and are being tested, investigated, distributed, marketed, and sold in
compliance with FDA Laws or any other applicable Requirement of Law.
          (c) The Credit Parties and their Subsidiaries are not subject to any
obligation arising under an administrative or regulatory action, FDA inspection,
FDA warning letter, FDA notice of violation letter, or other notice, response or
commitment made to or with the FDA or any comparable Governmental Authority. The
Credit Parties and their Subsidiaries have made all notifications, submissions,
and reports required by any such obligation, and all such notifications,
submissions and reports were true, complete, and correct in all material
respects as of the date of submission to FDA or any comparable Governmental
Authority.

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          (d) No product has been seized, withdrawn, recalled, detained, or
subject to a suspension of manufacturing, except as set forth on Schedule 3.22,
and there are no facts or circumstances reasonably likely to cause (i) the
seizure, denial, withdrawal, recall, detention, public health notification,
safety alert or suspension of manufacturing relating to any product; (ii) a
change in the labeling of any product; or (iii) a termination, seizure or
suspension of marketing of any product. No proceedings in the United States or
any other jurisdiction seeking the withdrawal, recall, suspension, import
detention, or seizure of any product are pending or threatened against the
Credit Parties and their Subsidiaries.
     3.23 Healthcare Regulatory Compliance.
          (a) None of the Credit Parties or their Subsidiaries, nor any officer,
director, managing employee or agent (as those terms are defined in 42 C.F.R. §
1001.1001) thereof, is a party to, or bound by, any order, individual integrity
agreement, corporate integrity agreement or other formal or informal agreement
with any Governmental Authority concerning compliance with Federal Health Care
Program Laws.
          (b) None of the Credit Parties or their Subsidiaries, nor any officer,
director, managing employee or agent (as those terms are defined in 42 C.F.R. §
1001.1001) thereof: (i) has been charged with or convicted of any criminal
offense relating to the delivery of an item or service under any Federal Health
Care Program; (ii) has been debarred, excluded or suspended from participation
in any Federal Health Care Program; (iii) has had a civil monetary penalty
assessed against it, him or her under Section 1128A of the SSA; (iv) is
currently listed on the General Services Administration published list of
parties excluded from federal procurement programs and non-procurement programs;
or (v) to the knowledge of the Borrowers, is the target or subject of any
current or potential investigation relating to any Federal Health Care
Program-related offense.
          (c) None of the Credit Parties or their Subsidiaries, nor any officer,
director, managing employee or agent (as those terms are defined in 42 C.F.R. §
1001.1001): (i) has engaged in any activity that is in violation of the federal
Medicare or federal or state Medicaid statutes, Sections 1128, 1128A, 1128B,
1128C or 1877 of the SSA (42 U.S.C. §§ 1320a-7, 1320a-7a, 1320a-7b, 1320a-7c and
1395nn), the federal TRICARE statute (10 U.S.C. § 1071 et seq.), the civil False
Claims Act of 1863 (31 U.S.C. § 3729 et seq.), criminal false claims statutes
(e.g., 18 U.S.C. §§ 287 and 1001), the Program Fraud Civil Remedies Act of 1986
(31 U.S.C. § 3801 et seq.), the anti-fraud and related provisions of the Health
Insurance Portability and Accountability Act of 1996 (e.g., 18 U.S.C. §§ 1035
and 1347), or related regulations or other federal or state laws and regulations
(collectively, “Federal Health Care Program Laws”), including the following:
     (i) knowingly and willfully making or causing to be made a false statement
or representation of a material fact in any application for any benefit or
payment;

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     (ii) knowingly and willfully making or causing to be made a false statement
or representation of a material fact for use in determining rights to any
benefit or payment;
     (iii) knowingly and willfully soliciting or receiving any remuneration
(including any kickback, bribe, or rebate), directly or indirectly, overtly or
covertly, in cash or kind (1) in return for referring an individual to a person
for the furnishing or arranging for the furnishing of any item or service for
which payment may be made in whole or in part under any Federal Health Care
Program; or (2) in return for purchasing, leasing, or ordering, or arranging, or
arranging for or recommending purchasing, leasing, or ordering any good,
facility, service or item for which payment may be made in whole or in part
under any Federal Health Care Program;
     (iv) knowingly and willfully offering or paying any remuneration (including
any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in
cash or in kind, to any person to induce such person (1) to refer an individual
to a person for the furnishing or arranging for the furnishing of any item or
service for which payment may be made in whole or in part under a Federal Health
Care Program; or (2) to purchase, lease, order or arrange for or recommend
purchasing, leasing or ordering any good, facility, service or item for which
payment may be made in whole or in part under a Federal Health Care Program; or
     (v) any other activity that violates any state or federal law relating to
prohibiting fraudulent, abusive or unlawful practices connected in any way with
the provision of health care items or services or the billing for such items or
services provided to a beneficiary of any Federal Health Care Program.
          (d) To the knowledge of the Borrowers, no person has filed or has
threatened (in writing) to file against any Credit Party or any of their
Subsidiaries an action under any federal or state whistleblower statute,
including without limitation, under the False Claims Act of 1863 (31 U.S.C. §
3729 et seq.).
     3.24 Reimbursement Coding. To the extent the Credit Parties or any of their
Subsidiaries provide to their customers or any other Persons reimbursement
coding or billing advice regarding products offered for sale by the Credit
Parties and their Subsidiaries, such advice is complete and accurate, conforms
to the applicable American Medical Association’s Current Procedural Terminology
(CPT), the International Classification of Disease, Ninth Revision, Clinical
Modification (ICD 9 CM), and other applicable coding systems, and the advice can
be relied upon to create accurate claims for reimbursement by federal, state and
commercial payors.
     3.25 HIPAA. Each of the Credit Parties and their Subsidiaries is in
compliance, in all material respects, with the provisions of all business
associate

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agreements (as such term is defined by HIPAA) to which it is a party and has
implemented adequate policies, procedures and training designed to assure
continued compliance and to detect non-compliance.
     3.26 Subordinated Indebtedness. The Subordination Agreement is enforceable
against the holders of the Subordinated Indebtedness by the Agent and the
Lenders. All Obligations constitute “Senior Debt” under the Subordination
Agreement, entitled to all benefits thereof. Borrowers acknowledge that the
Agent and each Lender are entering into this Agreement and are extending the
Commitments and making the Loans in reliance upon the Subordination Agreement
and this Section 3.26.
ARTICLE IV.
AFFIRMATIVE COVENANTS
     Each Credit Party covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Loan or other Obligation (other than
contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) shall remain unpaid or unsatisfied:
     4.1 Financial Statements. Each Credit Party shall maintain, and shall cause
each of its Subsidiaries to maintain, a system of accounting established and
administered in accordance with sound business practices to permit the
preparation of financial statements in conformity with GAAP (provided that
monthly financial statements shall not be required to have footnote disclosures
and are subject to normal year-end adjustments). The Borrowers shall deliver to
the Agent and each Lender in electronic form and in detail reasonably
satisfactory to the Agent and the Required Lenders:
          (a) as soon as available, but not later than ninety (90) days after
the end of each fiscal year, a copy of the audited consolidated and
consolidating balance sheets of the Borrowers and each of their Subsidiaries as
at the end of such year and the related consolidated and consolidating
statements of income or operations, shareholders’ equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the unqualified opinion of any “Big
Four” or other nationally-recognized independent public accounting firm
reasonably acceptable to the Agent which report shall state that such
consolidated financial statements present fairly in all material respects the
financial position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years; and
          (b) as soon as available, but not later than forty-five (45) days
after the end of each fiscal quarter of each year, a copy of the unaudited
consolidated and consolidating balance sheets of the Borrowers and each of their
Subsidiaries, and the related consolidated and consolidating statements of
income, shareholders’ equity and cash flows as of the end of such quarter and
for the portion of the fiscal year then ended, all certified on behalf of the
Borrowers by an appropriate Responsible Officer of the Borrower Representative
as being complete and correct, in all material respects, and fairly presenting,
in all material respects, in accordance with GAAP, the financial

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position and the results of operations of the Borrowers and their Subsidiaries,
subject to normal year-end adjustments and absence of footnote disclosures.
          (c) as soon as available, but not later than thirty (30) days after
the end of each of the first two fiscal months of each fiscal quarter of each
year, a copy of the unaudited consolidated and consolidating balance sheets of
the Borrowers and each of their Subsidiaries, and the related consolidated and
consolidating statements of income, shareholders’ equity and cash flows as of
the end of such month and for the portion of the fiscal year then ended, all
certified on behalf of the Borrowers by an appropriate Responsible Officer of
the Borrower Representative as being complete and correct, in all material
respects, and fairly presenting, in all material respects, in accordance with
GAAP, the financial position and the results of operations of the Borrowers and
their Subsidiaries, subject to normal year-end adjustments and absence of
footnote disclosures.
     4.2 Certificates; Other Information. The Borrowers shall furnish in
electronic form, to the Agent and each Lender:
          (a) concurrently with each delivery of financial statements pursuant
to subsections 4.1(a) and 4.1(b), a management report, in reasonable detail,
signed by the chief financial officer of the Borrower Representative, describing
the operations and financial condition of the Credit Parties and their
Subsidiaries for the quarter and the portion of the fiscal year then ended (or
for the fiscal year then ended in the case of annual financial statements) and
discussing the reasons for any significant variations from the corresponding
periods or projections;
          (b) concurrently with the delivery of the financial statements
referred to in subsections 4.1(a), 4.1(b) and 4.1(c) above, (i) a report setting
forth in comparative form the corresponding figures for the corresponding
periods of the previous fiscal year and the corresponding figures from the most
recent projections for the current fiscal year delivered pursuant to subsection
4.2(f), and (ii) a fully and properly completed certificate in the form of
Exhibit 4.2(b) (a “Compliance Certificate”) certified on behalf of the Borrowers
by a Responsible Officer of the Borrower Representative;
          (c) promptly after the same are sent, copies of all financial
statements and reports which any Credit Party sends to its shareholders (except
with respect to financial statements and reports sent by Wholly-Owned
Subsidiaries of a Borrower to a Borrower) or other equity holders, as
applicable, generally and promptly after the same are filed, copies of all
financial statements and regular, periodic or special reports which such Person
may make to, or file with, the SEC or any successor or similar Governmental
Authority;
          (d) as soon as available and in any event within fifteen (15) days
after the end of each calendar month, and at such other times as the Agent may
reasonably require, a Borrowing Base Certificate, certified on behalf of the
Borrowers by a Responsible Officer of the Borrower Representative, setting forth
the Borrowing Base as at the end of the most-recently ended fiscal month or as
at such other date as the Agent may reasonably require;

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          (e) concurrently with the delivery of the Borrowing Base Certificate,
with respect to Credit Parties, a summary of Inventory by location and type with
a supporting perpetual Inventory report, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
          (f) concurrently with the delivery of the Borrowing Base Certificate,
with respect to Credit Parties, a monthly trial balance showing Accounts
outstanding aged from invoice date as follows: 1 to 30 days, 31 to 60 days, 61
to 90 days and 91 days or more, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
          (g) on a monthly basis or at such more frequent intervals (but no more
frequently than once per week unless a Default or Event of Default has occurred
and is continuing) as Agent may request from time to time (together with a copy
of all or any part of such delivery requested by any Lender in writing after the
Closing Date), collateral reports with respect to Borrowers, including all
additions and reductions (cash and non-cash) with respect to Accounts of
Borrowers, in each case accompanied by such supporting detail and documentation
as shall be requested by Agent in its reasonable discretion each of which shall
be prepared by the Borrower Representative as of the last day of the immediately
preceding week or the date 2 days prior to the date of any request;
          (h) at the time of delivery of each of the monthly or quarterly
financial statements delivered pursuant to Section 4.1(b) or Section 4.1(c);
               (i) a reconciliation of the most recent Borrowing Base, general
ledger and month-end Inventory reports of Borrowers to Borrowers’ consolidated
general ledger and monthly or quarterly financial statements delivered pursuant
to Section 4.1(b) or Section 4.1(c), as applicable, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
               (ii) a reconciliation of the perpetual inventory by location to
Borrowers’ most recent Borrowing Base Certificate, general ledger and monthly or
quarterly financial statements delivered pursuant to Section 4.1(b) or
Section 4.1(c), as applicable, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in its reasonable
discretion;
               (iii) an aging of accounts receivable and accounts payable and a
reconciliation of that accounts receivable and accounts payable aging to
Borrowers’ general ledger and monthly or quarterly financial statements
delivered pursuant to Section 4.1(b) or Section 4.1(c), as applicable, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
               (iv) a reconciliation of the outstanding Loans as set forth in
the monthly loan account statement provided by Agent to Borrowers’ general
ledger and monthly or quarterly financial statements delivered pursuant to
Section 4.1(b) or Section

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4.1(c), as applicable, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
          (i) at the time of delivery of the quarterly financial statements
delivered pursuant to Section 4.1(b) for each quarterly period, (i) a list of
any applications for the registration of any Patent, Trademark or Copyright
filed by any Credit Party with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in the prior
Fiscal Quarter and (ii) a report listing all new filings, and the status of all
existing filings, with the FDA;
          (j) at the time of delivery of each of the annual financial statements
delivered pursuant to Section 4.1(a), a listing of government contracts of
Borrowers subject to the Federal Assignment of Claims Act of 1940;
          (k) upon the request of the Agent, at any time if an Event of Default
shall have occurred and be continuing but otherwise not more often than once a
year, the Borrowers will obtain and deliver to the Agent a report of an
independent collateral auditor satisfactory to the Agent with respect to the
Accounts and Inventory of the Credit Parties;
          (l) as soon as available and in any event no later than the last day
of each fiscal year of the Borrower Representative (beginning with the 2009
fiscal year), board-approved projections of the Credit Parties (and their
Subsidiaries’) consolidated and consolidating financial performance for the
forthcoming three fiscal years on a year by year basis, and for the forthcoming
fiscal year on a month by month basis;
          (m) promptly upon receipt thereof, copies of any reports submitted by
the certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or internal
control systems of any Credit Party made by such accountants, including any
comment letters submitted by such accountants to management of any Credit Party
in connection with their services;
          (n) from time to time, if the Agent determines that obtaining
appraisals is necessary in order for the Agent or any Lender to comply with
applicable laws or regulations, and at any time if a Default or an Event of
Default shall have occurred and be continuing, the Agent may, or may require the
Borrowers to, in either case at the Borrowers’ expense, obtain appraisals in
form and substance and from appraisers reasonably satisfactory to the Agent
stating the then current fair market value of all or any portion of the real or
personal property of any Credit Party or any Subsidiary of any Credit Party;
          (o) promptly upon request of Agent, copies of any compliance
assessment or similar reports conducted by third parties on behalf of the
Borrowers; and
          (p) promptly, such additional business, financial, corporate affairs,
perfection certificates and other information as the Agent may from time to time
reasonably request.

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     4.3 Notices. The Borrowers shall notify promptly the Agent and each Lender
of each of the following (and in no event later than three (3) Business Days)
after a Responsible Officer becoming aware thereof:
          (a) the occurrence or existence of any Default or Event of Default, or
any event or circumstance that foreseeably will become a Default or Event of
Default pursuant to Sections 7.1(c) or 7.1(l) hereof;
          (b) any breach or non-performance of, or any default under, any
Contractual Obligation of any Credit Party or any Subsidiary of any Credit
Party, or any violation of, or non-compliance with, any Requirement of Law,
which would reasonably be expected to result, either individually or in the
aggregate, in a Material Adverse Effect, including a description of such breach,
non-performance, default, violation or non-compliance and the steps, if any,
such Person has taken, is taking or proposes to take in respect thereof;
          (c) the commencement of, or any material development in, any dispute,
litigation, investigation, proceeding or suspension which may exist at any time
between any Credit Party or any Subsidiary of any Credit Party and any
Governmental Authority which would reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect or which alleges
potential violations of the securities laws, the Federal Health Care Program
Laws or the FDA Laws;
          (d) any written notice that the FDA or other similar Governmental
Authority is limiting, suspending or revoking any Registration, changing the
market classification or labeling of the products of the Credit Parties and
their Subsidiaries, or considering any of the foregoing;
          (e) any Credit Party or any of its Subsidiaries becoming subject to
any administrative or regulatory action, FDA inspection, Form FDA 483
observation, FDA warning letter, FDA notice of violation letter, or other
notice, response or commitment made to or with the FDA or any comparable
Governmental Authority, or any product of any Credit Party or any of its
Subsidiaries being seized, withdrawn, recalled, detained, or subject to a
suspension of manufacturing, or the commencement of any proceedings in the
United States or any other jurisdiction seeking the withdrawal, recall,
suspension, import detention, or seizure of any product are pending or
threatened against the Credit Parties and their Subsidiaries;
          (f) the commencement of, or any material development in, any
litigation or proceeding affecting any Credit Party or any Subsidiary of any
Credit Party (i) in which the amount of damages claimed is $1,000,000 (or its
equivalent in another currency or currencies) or more, (ii) in which injunctive
or similar relief is sought and which, if adversely determined, would reasonably
be expected to have a Material Adverse Effect, or (iii) in which the relief
sought is an injunction or other stay of the performance of this Agreement, any
Loan Document or any Related Agreement;

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          (g) (i) the receipt by any Credit Party of any notice of violation of
or potential liability or similar notice under Environmental Law, (ii)(A)
unpermitted Releases, (B) the existence of any condition that could reasonably
be expected to result in violations of or liabilities under, any Environmental
Law or (C) the commencement of, or any material change to, any action,
investigation, suit, proceeding, audit, claim, demand, dispute alleging a
violation of or liability under any Environmental Law, that, for each of clauses
(A), (B) and (C) above (and, in the case of clause (C), if adversely
determined), in the aggregate for each such clause, could reasonably be expected
to result in Environmental Liabilities in excess of $500,000, (iii) the receipt
by any Credit Party of notification that any property of any Credit Party is
subject to any Lien in favor of any Governmental Authority securing, in whole or
in part, Environmental Liabilities and (iv) any proposed acquisition or lease of
real property, if such acquisition or lease would have a reasonable likelihood
of resulting in aggregate Environmental Liabilities in excess of $500,000;
          (h) (i) on or prior to any filing by any ERISA Affiliate of any notice
of intent to terminate any Title IV Plan, a copy of such notice and
(ii) promptly, and in any event within 10 days, after any officer of any ERISA
Affiliate knows that a request for a minimum funding waiver under Section 412 of
the Code has been filed with respect to any Title IV Plan or Multiemployer Plan,
a notice (which may be made by telephone if promptly confirmed in writing)
describing such waiver request and any action that any ERISA Affiliate proposes
to take with respect thereto, together with a copy of any notice filed with the
PBGC or the IRS pertaining thereto;
          (i) any Material Adverse Effect subsequent to the date of the most
recent audited financial statements delivered to the Agent and Lenders pursuant
to this Agreement;
          (j) any material change in accounting policies or financial reporting
practices by any Credit Party or any Subsidiary of any Credit Party;
          (k) any labor controversy resulting in or threatening to result in any
strike, work stoppage, boycott, shutdown or other labor disruption against or
involving any Credit Party or any Subsidiary of any Credit Party if the same
would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect;
          (l) the creation, establishment or acquisition of any Subsidiary;
          (m) the issuance by or to any Credit Party of any Stock or Stock
Equivalent; provided, however, that no notice shall be required for issuances of
up to 2,500,000 shares of common stock of Akorn, or stock options for such
shares, during any calendar year pursuant to the Akorn Stock Plans;
          (n) (i) the creation, or filing with the IRS or any other Governmental
Authority, of any Contractual Obligation or other document extending, or having
the effect of extending, the period for assessment or collection of any taxes
with respect to any Tax Affiliate and (ii) the creation of any Contractual
Obligation of any Tax Affiliate,

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or the receipt of any request directed to any Tax Affiliate, to make any
adjustment under Section 481(a) of the Code, by reason of a change in accounting
method or otherwise, which would have a Material Adverse Effect;
          (o) the receipt of any notices of default, acceleration or institution
of any other right or remedy under the Subordinated Note Documents received from
any holder or trustee of, under or with respect to any Subordinated Notes or in
connection with the Related Transactions;
          (p) Borrower becomes aware that the Accounts owing by any Account
Debtor and its Affiliates (other than AmerisourceBergen Corporation, McKesson
Drug Company or Cardinal Health, Inc.) to the Borrowers and their Subsidiaries
exceed twenty percent (20%) of all Accounts owing by all Account Debtors as of
any date;
          (q) the execution and delivery by any Borrower after the Closing Date
of any agreement or license that grants either Borrower the right to sell or
market Inventory, or to use patents, trademarks or other intellectual property
of third parties in connection with selling Inventory; and
          (r) the termination or expiration of the MBL Exclusive Distribution
Agreement.
Each notice pursuant to this Section shall be in electronic form accompanied by
(i) a statement by a Responsible Officer of the Borrower Representative, on
behalf of the Borrowers, setting forth details of the occurrence referred to
therein, and stating what action the Borrowers or other Person proposes to take
with respect thereto and at what time and (ii) with respect to clauses (e),
(g) or (n), copies of any response or correspondence related thereto sent or
received by the Borrowers. Each notice under subsection 4.3(a) shall describe
with particularity any and all clauses or provisions of this Agreement or other
Loan Document that have been breached or violated.
     4.4 Preservation of Corporate Existence, Etc. Each Credit Party shall, and
shall cause each of its Subsidiaries to:
          (a) preserve and maintain in full force and effect its organizational
existence and good standing under the laws of its jurisdiction of incorporation,
organization or formation, as applicable, except, with respect to the Borrowers’
Subsidiaries, in connection with transactions permitted by Section 5.3;
          (b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary in the
normal conduct of its business except in connection with transactions permitted
by Section 5.3 and sales of assets permitted by Section 5.2 and except as would
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect;
          (c) use its reasonable efforts, in the Ordinary Course of Business, to
preserve its business organization and preserve the goodwill and business of the
customers, suppliers and others having material business relations with it; and

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          (d) preserve or renew all of its registered trademarks, trade names
and service marks, the non-preservation of which would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.
     4.5 Maintenance of Property. Each Credit Party shall maintain, and shall
cause each of its Subsidiaries to maintain, and preserve all its Property which
is used or useful in its business in good working order and condition, ordinary
wear and tear excepted and shall make all necessary repairs thereto and renewals
and replacements thereof except where the failure to do so would not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect.
     4.6 Insurance.
          (a) Each Credit Party shall, and shall cause each of its Subsidiaries
to, (i) maintain or cause to be maintained in full force and effect all policies
of insurance of any kind with respect to the property and businesses of the
Credit Parties and such Subsidiaries (including policies of life, fire, theft,
product liability, public liability, property damage, other casualty, employee
fidelity, workers’ compensation, business interruption and employee health and
welfare insurance) with financially sound and reputable insurance companies or
associations (in each case that are not Affiliates of Borrowers) of a nature and
providing such coverage as is sufficient and as is customarily carried by
businesses of the size and character of the business of the Credit Parties and
(ii) cause all such insurance relating to any property or business of any Credit
Party to name Agent as additional insured or loss payee, as appropriate. All
policies of insurance on real and personal property of the Credit Parties will
contain an endorsement, in form and substance acceptable to Agent, showing loss
payable to Agent (Form CP 12 18 ISO or its equivalent) and extra expense and
business interruption endorsements. Such endorsement, or an independent
instrument furnished to Agent, will provide that the insurance companies will
give Agent at least 30 days’ prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default of
Borrowers or any other Person shall affect the right of Agent to recover under
such policy or policies of insurance in case of loss or damage. Each Credit
Party shall direct all present and future insurers under its “All Risk” policies
of insurance to pay all proceeds payable thereunder directly to Agent. If any
insurance proceeds are paid by check, draft or other instrument payable to any
Credit Party and Agent jointly, Agent may endorse such Credit Party’s name
thereon and do such other things as Agent may deem advisable to reduce the same
to cash, and so long as no Default or Event of Default has occurred and is
continuing, shall promptly notify Borrower Representative of such receipt and
endorsement. Agent reserves the right at any time, upon review of each Credit
Party’s risk profile, to require, in Agent’s commercially reasonable discretion,
additional forms and limits of insurance.
          (b) Unless the Borrowers provide the Agent with evidence of the
insurance coverage required by this Agreement within three Business Days after
Agent’s request therefor, the Agent may purchase insurance at the Credit
Parties’ expense to protect the Agent’s and Lenders’ interests in the Credit
Parties’ and their Subsidiaries’ properties. This insurance may, but need not,
protect the Credit Parties’ and their

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Subsidiaries’ interests. The coverage that the Agent purchases may exclude
coverage for claims that any Credit Party or any Subsidiary of any Credit Party
makes or any claim that is made against such Credit Party or any Subsidiary in
connection with said Property. The Borrowers may later cancel any insurance
purchased by the Agent, but only after providing the Agent with evidence that
there has been obtained insurance as required by this Agreement. If the Agent
purchases insurance, the Credit Parties will be responsible for the costs of
that insurance, including interest and any other reasonable charges the Agent
may impose in connection with the placement of insurance, until the effective
date of the cancellation or expiration of the insurance. The costs of the
insurance shall be added to the Obligations. The costs of the insurance may be
more than the cost of insurance the Borrowers may be able to obtain on their
own.
     4.7 Payment of Obligations. Such Credit Party shall, and shall cause each
of its Subsidiaries to, pay, discharge and perform as the same shall become due
and payable or required to be performed, all their respective obligations and
liabilities, including:
          (a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently prosecuted which stay the
enforcement of any Lien and for which adequate reserves in accordance with GAAP
are being maintained by such Person;
          (b) all lawful claims which, if unpaid, would by law become a Lien
upon its Property unless the same are being contested in good faith by
appropriate proceedings diligently prosecuted which stay the imposition or
enforcement of the Lien and for which adequate reserves in accordance with GAAP
are being maintained by such Person;
          (c) all Indebtedness having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$200,000, as and when due and payable, but subject to any subordination
provisions contained herein and/or in any instrument or agreement evidencing
such Indebtedness; and
          (d) the performance of all obligations under any Contractual
Obligation to such Credit Party or any of its Subsidiaries is bound, or to which
it or any of its properties is subject, including the Related Agreements, except
where the failure to perform would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
     4.8 Compliance with Laws.
          (a) Each Credit Party shall, and shall cause each of its Subsidiaries
to, comply with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business, except where the failure to comply would
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.

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          (b) Without limiting the generality of the foregoing, each Credit
Party shall, and shall cause each of its Subsidiaries to, comply with, and
maintain its real property, whether owned, leased, subleased or otherwise
operated or occupied, in compliance with, all applicable Environmental Laws
(including by implementing any Remedial Action necessary to achieve such
compliance or that is required by orders and directives of any Governmental
Authority) except for failures to comply that would not, in the aggregate, have
a Material Adverse Effect. Without limiting the foregoing, if an Event of
Default is continuing or if Agent at any time has a reasonable basis to believe
that there exist violations of Environmental Laws by any Credit Party or any
Subsidiary of any Credit Party or that there exist any Environmental
Liabilities, in each case, that would have, in the aggregate, a Material Adverse
Effect, then each Credit Party shall, promptly upon receipt of request from
Agent, cause the performance of, and allow Agent and its Related Persons access
to such real property for the purpose of conducting, such environmental audits
and assessments, including subsurface sampling of soil and groundwater, and
cause the preparation of such reports, in each case as Agent may from time to
time reasonably request. Such audits, assessments and reports, to the extent not
conducted by Agent or any of its Related Persons, shall be conducted and
prepared by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance reasonably acceptable to Agent, and
copies thereof shall be provided to Borrower promptly upon request.
          (c) Without limiting the generality of the foregoing, each Credit
Party shall, and shall cause each of its Subsidiaries to, comply with all
applicable statutes, rules, regulations, standards, guidelines, policies and
orders administered or issued by FDA (“FDA Laws”) or any comparable Governmental
Authority. All products developed, manufactured, tested, distributed or marketed
by or (to the extent within the control of a Credit Party or its Subsidiary) on
behalf of the Credit Parties and their Subsidiaries that are subject to the
jurisdiction of the FDA or comparable Governmental Authority shall be developed,
tested, manufactured, distributed and marketed in compliance with the FDA Laws
or any other Requirement of Law, including, without limitation, product
approval, good manufacturing practices, labeling, advertising, record-keeping,
and adverse event reporting.
     4.9 Inspection of Property and Books and Records. Each Credit Party shall
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of such Person. Each Credit Party
shall, and shall cause each of its Subsidiaries to, with respect to each owned,
leased, or controlled property, during normal business hours and upon reasonable
advance notice (unless an Event of Default shall have occurred and be
continuing, in which event no notice shall be required and Agent shall have
access at any and all times during the continuance thereof): (a) provide access
to such property in connection with this Agreement to Agent and any of its
Related Persons as frequently as Agent determines to be appropriate; (b) permit
Agent and any of its Related Persons to inspect, audit and make extracts and
copies (or take originals if reasonably necessary) from all of such Credit
Party’s books and records; (c) permit Agent and its Related Persons to perform a
compliance assessment not more frequently than

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once in any twelve-month period at Agent’s expense, unless a compliance
assessment has otherwise been performed by a third party auditor acceptable to
Agent during the most recently ended twelve-month period; and (d) permit Agent
and its Related Persons to inspect, review, evaluate and make physical
verifications and appraisals of all Accounts, Inventory, Eligible Equipment,
Eligible Real Estate and other Collateral in any manner and through any medium
that Agent considers advisable, in each instance, at the Credit Parties’ expense
provided the Credit Parties shall not be responsible for costs and expenses,
unless an Event of Default has occurred and is continuing, more than (i) four
(4) times per year with respect to Inventory Appraisals, (ii) four (4) times per
year with respect to field examinations of Accounts and Inventory and (iii) one
(1) time per year with respect to Equipment Appraisals and Real Estate
Appraisals. Any Lender may accompany Agent in connection with any inspection at
such Lender’s expense.
     4.10 Use of Proceeds. The Borrowers shall use the proceeds of the Loans
solely as follows: (a) first, to refinance on the Closing Date, Prior
Indebtedness and then (b) to pay costs and expenses required to be paid pursuant
to Section 2.1, and (c) for working capital and other general corporate purposes
not in contravention of any Requirement of Law and not in violation of this
Agreement.
     4.11 Cash Management Systems. On or prior to the Closing Date, Borrowers
will establish and will maintain until the Revolving Termination Date, the cash
management systems described in Exhibit 4.11 (the “Cash Management Systems”).
     4.12 Landlord Agreements. Each Credit Party shall, and shall cause each of
its Domestic Subsidiaries to, use commercially reasonable efforts to obtain a
landlord agreement or bailee or mortgagee waivers, as applicable, from the
lessor of each leased property, bailee in possession of any Collateral or
mortgagee of any owned property with respect to each location where any
Collateral is stored or located, which agreement shall be reasonably
satisfactory in form and substance to Agent. Agent may, in its discretion,
exclude from the Borrowing Base, or impose Reserves with respect to, Inventory
at each such location where a landlord agreement or bailee or mortgagee wavier
is not obtained.
     4.13 Further Assurances.
          (a) Each Credit Party shall ensure that all written information,
exhibits and reports furnished to the Agent or the Lenders, taken as a whole, do
not and will not contain any untrue statement of a material fact and do not and
will not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and will promptly disclose to the Agent and the Lenders and correct
any defect or error that may be discovered therein or in any Loan Document or in
the execution, acknowledgement or recordation thereof.
          (b) Promptly upon request by the Agent, the Credit Parties shall (and,
subject to the limitations hereinafter set forth, shall cause each of their
Subsidiaries to) take such additional actions as the Agent may reasonably
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Document, (ii) to subject to the
Liens created by any of the Collateral Documents any of

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the Properties, rights or interests covered by any of the Collateral Documents,
(iii) to perfect and maintain the validity, effectiveness and priority of any of
the Collateral Documents and the Liens intended to be created thereby, and (iv)
to better assure, convey, grant, assign, transfer, preserve, protect and confirm
to the Secured Parties the rights granted or now or hereafter intended to be
granted to the Secured Parties under any Loan Document or under any other
document executed in connection therewith. Without limiting the generality of
the foregoing and except as otherwise approved in writing by Required Lenders,
the Credit Parties shall cause each of their Domestic Subsidiaries and, to the
extent no 956 Impact exists, Foreign Subsidiaries to guaranty the Obligations
and to cause each such Subsidiary to grant to the Agent, for the benefit of the
Secured Parties, a security interest in, subject to the limitations hereinafter
set forth, all of such Subsidiary’s Property to secure such guaranty.
Furthermore and except as otherwise approved in writing by Required Lenders,
each Credit Party shall, and shall cause (x) each of its Domestic Subsidiaries
to, pledge all of the Stock and Stock Equivalents of each of its Domestic
Subsidiaries and First Tier Foreign Subsidiaries (provided that with respect to
any First Tier Foreign Subsidiary, if a 956 Impact exists such pledge shall be
limited to sixty-five percent (65%) of such Foreign Subsidiary’s outstanding
voting Stock and Stock Equivalents and one hundred percent (100%) of such
Foreign Subsidiary’s outstanding non-voting Stock and Stock Equivalents) and
(y) to the extent no 956 Impact exists, each of its Foreign Subsidiaries to,
pledge all of the Stock and Stock Equivalent of each of its Subsidiaries, in
each instance, to the Agent, for the benefit of the Secured Parties, to secure
the Obligations. In connection with each pledge of Stock and Stock Equivalents,
the Credit Parties shall deliver, or cause to be delivered, to the Agent,
irrevocable proxies and stock powers and/or assignments, as applicable, duly
executed in blank. In the event any Credit Party or any Domestic Subsidiary or,
to the extent no 956 Impact exists, any Foreign Subsidiary of any Credit Party
acquires any real Property, simultaneously with such acquisition, such Person
shall execute and/or deliver, or cause to be executed and/or delivered, to the
Agent, (x) a fully executed Mortgage, in form and substance reasonably
satisfactory to the Agent together with an A.L.T.A. lender’s title insurance
policy issued by a title insurer reasonably satisfactory to the Agent, in form
and substance and in an amount reasonably satisfactory to the Agent insuring
that the Mortgage is a valid and enforceable first priority Lien on the
respective property, free and clear of all defects, encumbrances and Liens,
(y) then current A.L.T.A. surveys, certified to the Agent by a licensed surveyor
sufficient to allow the issuer of the lender’s title insurance policy to issue
such policy without a survey exception and (z) an environmental site assessment
prepared by a qualified firm reasonably acceptable to the Agent, in form and
substance satisfactory to the Agent. A “956 Impact” will be deemed to exist to
the extent the issuance of a guaranty by, grant of a Lien by, or pledge of
greater than two-thirds of the voting Stock and Stock Equivalents of, a Foreign
Subsidiary, could reasonably be expected to result in material incremental
income tax liability under Section 956 of the Code, taking into account actual
anticipated repatriation of funds, foreign tax credits and other relevant
factors.
     4.14 Subordinated Note. No later than July 28, 2009, the Borrowers shall
have either (a) repaid in full the Subordinated Note (including all interest
accrued and added to the principal amount thereof), subject to compliance with
Section 5.11, or

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(b) obtained a written extension of the maturity of the Subordinated Note (and
all interest accrued and added to the principal amount thereof) to a date no
earlier than July 7, 2013.
     4.15 Licensor Consents. With respect to any agreements or licenses executed
by the Borrowers after the Closing Date that would restrict the ability of Agent
or its successors and assigns to sell Inventory, or to use any patents,
trademarks or other intellectual property in connection with the sale of
Inventory, without the consent of the licensor or other third party, the
Borrowers shall use their commercially reasonable efforts to obtain written
consents (in form reasonably satisfactory to Agent) from such licensors or third
parties.
     4.16 Post-Closing Covenants.
          (a) No later than fifteen (15) days after the Closing Date, or such
later date as Agent may in its discretion agree in writing, the Borrowers shall
have complied with their obligations under paragraph (a) of Exhibit 4.11.
          (b) No later than fifteen (15) days after the Closing Date, or such
later date as Agent may in its discretion agree in writing, the Borrowers shall
have delivered to Agent the final zoning reports, to be substantially in the
same form as the draft zoning reports delivered to Agent prior to the Closing
Date.
          (c) No later than March 31, 2009, or such later date as Agent may in
its discretion agree in writing, the Borrowers shall have completed all action
items described in the Akorn Response to all “Observations (Major)” set forth in
the Parexel Report.
ARTICLE V.
NEGATIVE COVENANTS
     Each Credit Party covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Loan or other Obligation (other than
contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) shall remain unpaid or unsatisfied:
     5.1 Limitation on Liens. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its Property, whether now owned or hereafter acquired, other than the
following (“Permitted Liens”):
          (a) any Lien existing on the Property of a Credit Party or a
Subsidiary of a Credit Party on the Closing Date and set forth in Schedule 5.1
securing Indebtedness outstanding on such date and permitted by subsection
5.5(c), including replacement Liens on the Property currently subject to such
Liens securing Indebtedness permitted by Section 5.5(c);
          (b) any Lien created under any Loan Document;

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          (c) Liens for taxes, fees, assessments or other governmental charges
(i) which are not delinquent or remain payable without penalty, or (ii) the
non-payment of which is permitted by Section 4.7;
          (d) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s,
repairmen’s or other similar Liens arising in the Ordinary Course of Business
which are not delinquent for more than ninety (90) days or remain payable
without penalty or which are being contested in good faith and by appropriate
proceedings diligently prosecuted, which proceedings have the effect of
preventing the forfeiture or sale of the Property subject thereto and for which
adequate reserves in accordance with GAAP are being maintained;
          (e) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the Ordinary Course of Business in connection with
workers’ compensation, unemployment insurance and other social security
legislation or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeals bonds, bids, leases, governmental contract,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money) or to
secure liability to insurance carriers;
          (f) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
Liens secure claims in the aggregate at any time outstanding for the Credit
Parties and their Subsidiaries not exceeding $500,000;
          (g) easements, rights-of-way, zoning and other restrictions, minor
defects or other irregularities in title, and other similar encumbrances
incurred in the Ordinary Course of Business which, either individually or in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the Property subject thereto or interfere
in any material respect with the ordinary conduct of the businesses of any
Credit Party or any Subsidiary of any Credit Party;
          (h) Liens on any Property acquired or held by any Credit Party or any
Subsidiary of any Credit Party securing Indebtedness incurred or assumed for the
purpose of financing (or refinancing) all or any part of the cost of acquiring
such Property and permitted under subsection 5.5(d); provided that (i) any such
Lien attaches to such Property concurrently with or within twenty (20) days
after the acquisition thereof, (ii) such Lien attaches solely to the Property so
acquired in such transaction, and (iii) the principal amount of the debt secured
thereby does not exceed 100% of the cost of such Property;
          (i) Liens securing Capital Lease Obligations permitted under
subsection 5.5(d);
          (j) any interest or title of a lessor or sublessor under any lease
permitted by this Agreement;

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          (k) Liens arising from precautionary uniform commercial code financing
statements filed under any lease permitted by this Agreement;
          (l) licenses, sublicenses, leases or subleases granted to third
parties in the Ordinary Course of Business not interfering with the business of
the Credit Parties or any of their Subsidiaries;
          (m) Liens in favor of collecting banks arising under Section 4-210 of
the UCC;
          (n) Liens (including the right of set-off) in favor of a bank or other
depository institution arising as a matter of law encumbering deposits;
          (o) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by a Borrower or any Subsidiary of a Borrower in the
Ordinary Course of Business; and
          (p) Liens in favor of customs and revenue authorities arising as a
matter of law which secure payment of customs duties in connection with the
importation or exportation of goods in the Ordinary Course of Business.
     5.2 Disposition of Assets. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any Property (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except:
          (a) dispositions of inventory, or used, worn-out or surplus equipment,
all in the Ordinary Course of Business;
          (b) dispositions not otherwise permitted hereunder which are made for
fair market value and the mandatory prepayment in the amount of the Net Proceeds
of such disposition is made if and to the extent required by Section 1.8;
provided, that (i) at the time of any disposition, no Event of Default shall
exist or shall result from such disposition, (ii) not less than 50% of the
aggregate sales price from such disposition shall be paid in cash, (iii) the
aggregate fair market value of all assets so sold by the Credit Parties and
their Subsidiaries, together, shall not exceed in any fiscal year $500,000 and
(iv) after giving effect to such disposition, the Credit Parties are in
compliance on a pro forma basis with the covenants set forth in Article VI,
recomputed for the most recent month for which financial statements have been
delivered;
          (c) dispositions of Cash Equivalents; and
          (d) licenses, sublicenses, leases or subleases granted to third
parties in the Ordinary Course of Business not interfering with the business of
the Credit Parties or any of their Subsidiaries.

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     5.3 Consolidations and Mergers. No Credit Party shall, and no Credit Party
shall suffer or permit any of its Subsidiaries to, merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except upon not less than five (5) Business Days prior written notice to the
Agent, (a) any Subsidiary of Akorn may merge with, or dissolve or liquidate
into, a Borrower or a Wholly-Owned Subsidiary of a Borrower which is a Domestic
Subsidiary, provided that a Borrower or such Wholly-Owned Subsidiary which is a
Domestic Subsidiary shall be the continuing or surviving entity and (b) any
Foreign Subsidiary may merge with or dissolve or liquidate into another Foreign
Subsidiary provided if a First Tier Foreign Subsidiary is a constituent entity
in such merger, dissolution or liquidation, such First Tier Foreign Subsidiary
shall be the continuing or surviving entity.
     5.4 Loans and Investments. No Credit Party shall and no Credit Party shall
suffer or permit any of its Subsidiaries to (i) purchase or acquire, or make any
commitment to purchase or acquire any Stock or Stock Equivalents, or any
obligations or other securities of, or any interest in, any Person, including
the establishment or creation of a Subsidiary, or (ii) make or commit to make
any Acquisitions, or any other acquisition of all or substantially all of the
assets of another Person, or of any business or division of any Person,
including without limitation, by way of merger, consolidation or other
combination or (iii) make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of a Borrower or any Subsidiary of a Borrower (the items
described in clauses (i), (ii) and (iii) are referred to as “Investments”),
except for:
          (a) Investments in cash and Cash Equivalents;
          (b) extensions of credit by any Credit Party to any other Credit Party
if such extensions of credit are evidenced by notes; such notes shall be pledged
to the Agent, for the benefit of the Secured Parties, and have such terms as the
Agent may reasonably require;
          (c) Investments received as the non-cash portion of consideration
received in connection with transactions permitted pursuant to Section 5.2(b);
          (d) Investments acquired in connection with the settlement of
delinquent Accounts in the Ordinary Course of Business or in connection with the
bankruptcy or reorganization of suppliers or customers;
          (e) transfers of Inventory by any Borrower to any other Borrower;
          (f) contributions to the capital of any Wholly-Owned Subsidiary which
is, or within 15 Business Days after such capital contribution becomes, a Credit
Party; and
          (g) Investments existing on the Closing Date and set forth on
Schedule 5.4.

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     5.5 Limitation on Indebtedness. No Credit Party shall, and no Credit Party
shall suffer or permit any of its Subsidiaries to, create, incur, assume, permit
to exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
          (a) Indebtedness incurred pursuant to this Agreement;
          (b) Indebtedness consisting of Contingent Obligations described in
clause (i) of the definition thereof and permitted pursuant to Section 5.9;
          (c) Indebtedness existing on the Closing Date and set forth in
Schedule 5.5 including extensions and refinancings thereof which do not increase
the principal amount of such Indebtedness as of the date of such extension or
refinancing;
          (d) Indebtedness not to exceed $3,000,000 in the aggregate at any time
outstanding, consisting of Capital Lease Obligations or secured by Liens
permitted by subsection 5.1(h);
          (e) unsecured intercompany Indebtedness permitted pursuant to
subsection 5.4(b); and
          (f) Subordinated Indebtedness evidenced by the Subordinated Note in an
aggregate principal amount not to exceed the sum of $5,000,000 plus all accrued
interest added thereto in accordance with the terms of the Subordinated Note.
     5.6 Transactions with Affiliates. No Credit Party shall, and no Credit
Party shall suffer or permit any of its Subsidiaries to, enter into any
transaction with any Affiliate of a Borrower or of any such Subsidiary, except:
          (a) as expressly permitted by this Agreement;
          (b) in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of such Credit Party or such Subsidiary provided
that, in the case of this clause (b), such transaction is upon fair and
reasonable terms no less favorable to such Credit Party or such Subsidiary than
would be obtained in a comparable arm’s length transaction with a Person not an
Affiliate of a Borrower or such Subsidiary and which are disclosed in writing to
the Agent; or
          (c) issuances of Stock or Stock Equivalents of Akorn.
     5.7 Reserved.
     5.8 Use of Proceeds. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, use any portion of the Loan
proceeds, directly or indirectly, to purchase or carry Margin Stock or repay or
otherwise refinance Indebtedness of any Credit Party or others incurred to
purchase or carry Margin Stock, or otherwise in any manner which is in
contravention of any Requirement of Law or in violation of this Agreement.

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     5.9 Contingent Obligations. No Credit Party shall, and no Credit Party
shall suffer or permit any of its Subsidiaries to, create, incur, assume or
suffer to exist any Contingent Obligations except in respect of the Obligations
and except:
          (a) endorsements for collection or deposit in the Ordinary Course of
Business;
          (b) Rate Contracts entered into in the Ordinary Course of Business for
bona fide hedging purposes and not for speculation with the Agent’s prior
written consent, not to be unreasonably withheld;
          (c) Contingent Obligations of the Credit Parties and their
Subsidiaries existing as of the Closing Date and listed in Schedule 5.9,
including extension and renewals thereof which do not increase the amount of
such Contingent Obligations as of the date of such extension or renewal;
          (d) Contingent Obligations incurred in the Ordinary Course of Business
with respect to surety and appeal bonds, performance bonds and other similar
obligations;
          (e) Contingent Obligations arising under indemnity agreements to title
insurers to cause such title insurers to issue to the Agent title insurance
policies;
          (f) Contingent Obligations arising with respect to customary
indemnification obligations in favor of (i) sellers in connection with
Acquisitions permitted hereunder, (ii) purchasers in connection with
dispositions permitted under subsection 5.2(b), (iii) directors and officers of
any Borrower or its Subsidiaries and (iv) other parties to transactions entered
into in the Ordinary Course of Business with any Credit Party or any of their
Subsidiaries;
          (g) Contingent Obligations arising under Letters of Credit; and
          (h) Contingent Obligations arising under guarantees made in the
Ordinary Course of Business of obligations of any Credit Party, which
obligations are otherwise permitted hereunder; provided that if such obligation
is subordinated to the Obligations, such guarantee shall be subordinated to the
same extent.
     5.10 Compliance with ERISA. No ERISA Affiliate shall cause or suffer to
exist (a) any event that could result in the imposition of a Lien on any asset
of a Credit Party or a Subsidiary of a Credit Party with respect to any Title IV
Plan or Multiemployer Plan or (b) any other ERISA Event, that would, in the
aggregate, have a Material Adverse Effect. No Credit Party shall cause or suffer
to exist any event that could result in the imposition of a Lien with respect to
any Benefit Plan.
     5.11 Restricted Payments. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, (i) declare or make any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any Stock or Stock Equivalent, (ii) purchase, redeem
or otherwise acquire for value any

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Stock or Stock Equivalent now or hereafter outstanding or (iii) make any payment
or prepayment of principal of, premium, if any, interest, fees, redemption,
exchange, purchase, retirement, defeasance, sinking fund or similar payment with
respect to, Subordinated Indebtedness (the items described in clauses (i),
(ii) and (iii) above are referred to as “Restricted Payments”); except that:
          (a) any Wholly-Owned Subsidiary of a Borrower may declare and pay
dividends to a Borrower or any Wholly-Owned Subsidiary of a Borrower
          (b) Akorn may declare and make dividend payments or other
distributions payable solely in its Stock or Stock Equivalents; and
          (c) Akorn may repay the Subordinated Note and all accrued interest
thereon so long as (i) no Default or Event of Default shall have occurred and be
continuing, or would arise as a result of such repayment and (ii) such repayment
occurs on or before July 28, 2009.
     5.12 Change in Business. No Credit Party shall, and no Credit Party shall
permit any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it on the
date hereof.
     5.13 Change in Structure. Except as expressly permitted under Section 5.3,
no Credit Party shall, and no Credit Party shall permit any of its Subsidiaries
to, make any material changes in its equity capital structure (including in the
terms of its outstanding Stock or Stock Equivalents), or amend any of its
Organization Documents in any material respect or in any respect adverse to the
Agent or Lenders.
     5.14 Accounting Changes. No Credit Party shall, and no Credit Party shall
suffer or permit any of its Subsidiaries to, make any significant change in
accounting treatment or reporting practices, except as required by GAAP, or
change the fiscal year or method for determining fiscal quarters of any Credit
Party or of any consolidated Subsidiary of any Credit Party.
     5.15 Amendments to Material Agreements and Subordinated Indebtedness.
          (a) No Credit Party shall and no Credit Party shall permit any of its
Subsidiaries, to (i) amend, supplement, waive or otherwise modify any provision
of, any Material Agreement (other than the Subordinated Note Documents) in a
manner adverse to the Agent or Lenders or which would reasonably be expected to
have a Material Adverse Effect, or (ii) take or fail to take any action under
any Material Agreement that would reasonably be expected to have a Material
Adverse Effect.
          (b) No Credit Party shall, and no Credit Party shall permit any of its
Subsidiaries directly or indirectly to, change or amend the terms of any
(i) Subordinated Note Documents except to the extent permitted by the
Subordination Agreement or (ii) any other Subordinated Indebtedness if, with
respect to this clause (ii), the effect of such amendment is to: (A) increase
the interest rate on such Indebtedness; (B) shorten the dates upon which
payments of principal or interest are due on such Indebtedness; (C) add

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or change in a manner adverse to any Borrower any event of default or add or
make more restrictive any covenant with respect to such Indebtedness; (D) change
in a manner adverse to any Borrower the prepayment provisions of such
Indebtedness; (E) change the subordination provisions thereof (or the
subordination terms of any guaranty thereof); or (F) change or amend any other
term if such change or amendment would materially increase the obligations of
the obligor or confer additional material rights on the holder of such
Indebtedness in a manner adverse to any Borrower, any of their Subsidiaries, the
Agent or Lenders.
     5.16 No Negative Pledges. No Credit Party shall, and no Credit Party shall
permit any of its Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any consensual restriction or
encumbrance of any kind on the ability of any such Subsidiary to pay dividends
or make any other distribution on any of such Subsidiary’s Stock or Stock
Equivalents or to pay fees, including management fees, or make other payments
and distributions to a Borrower or any of its Subsidiaries. No Credit Party
shall, and no Credit Party shall permit any of its Subsidiaries to, directly or
indirectly, enter into, assume or become subject to any Contractual Obligation
prohibiting or otherwise restricting the existence of any Lien upon any of its
assets in favor of the Agent, whether now owned or hereafter acquired except
(i) in connection with any document or instrument governing Liens permitted
pursuant to subsections 5.1(h) and (i) provided that any such restriction
contained therein relates only to the asset or assets subject to such permitted
Liens and (ii) customary provisions in leases and other contracts restricting
the assignment thereof.
     5.17 OFAC. No Credit Party shall, and no Credit Party shall permit any of
its Subsidiaries to (i) become a person whose property or interests in property
are blocked or subject to blocking pursuant to Section 1 of Executive Order
13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg.
49079(2001), (ii) engage in any dealings or transactions prohibited by Section 2
of such executive order, or be otherwise associated with any such person in any
manner violative of Section 2, or (iii) otherwise become a person on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other OFAC regulation or executive order.
     5.18 Press Release and Related Matters. No Credit Party shall, and no
Credit Party shall permit any of its Affiliates to, issue any press release or
other public disclosure (other than any document filed with any Governmental
Authority relating to a public offering of securities of any Credit Party) using
the name, logo or otherwise referring to GE Capital or of any of its Affiliates,
the Loan Documents or any transaction contemplated therein to which the Agent is
party without the prior consent of GE Capital except to the extent required to
do so under applicable Requirements of Law or requirements of exchanges on which
the Stock or Stock Equivalents of a Credit Party is listed, and then only after
consulting with GE Capital prior thereto.

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     5.19 Sale-Leasebacks. No Credit Party shall, and no Credit Party shall
permit any of its Subsidiaries to, engage in a sale leaseback, synthetic lease
or similar transaction involving any of its assets.
     5.20 Hazardous Materials. No Credit Party shall, and no Credit Party shall
permit any of its Subsidiaries to, cause or suffer to exist any Release of any
Hazardous Material at, to or from any real property owned, leased, subleased or
otherwise operated or occupied by any Credit Party or any Subsidiary of any
Credit Party that would violate any Environmental Law, form the basis for any
Environmental Liabilities or otherwise adversely affect the value or
marketability of any real property (whether or not owned by any Credit Party or
any Subsidiary of any Credit Party), other than such violations, Environmental
Liabilities and effects that would not, in the aggregate, have a Material
Adverse Effect.
ARTICLE VI.
FINANCIAL COVENANTS
     Each Credit Party covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Loan or other Obligation (other than
contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) shall remain unpaid or unsatisfied:
     6.1 Fixed Charge Coverage Ratio. The Credit Parties shall not permit the
Fixed Charge Coverage Ratio for the nine-month period ending March 31, 2009 or
the twelve month period ending on any other date set forth below to be less than
the minimum ratio set forth in the table below opposite such date:

      Date   Minimum Fixed Charge Ratio
March 31, 2009, June 30, 2009, September 30, 2009
  1.00:1.00
December 31, 2009, March 31, 2010, June 30, 2010, and September 30, 2010
  1.10:1.00
December 31, 2010, March 31, 2011, June 30, 2011, and September 30, 2011
  1.20:1.00
Last day of each fiscal quarter thereafter
  1.25:1.00

“Fixed Charge Coverage Ratio” shall be calculated in the manner set forth in
Exhibit 4.2(b).
     6.2 Minimum EBITDA. The Credit Parties shall not permit EBITDA for the
nine-month period ending March 31, 2009 or the twelve month period ending on any
other date set forth below to be less than the minimum amount set forth in the
table below opposite such date:

      Date   Minimum EBITDA
March 31, 2009
  $7,563,000
June 30, 2009
  $9,585,000

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      Date   Minimum EBITDA
September 30, 2009
  $8,498,000
December 31, 2009
  $8,087,000
March 31, 2010
  $12,243,000
June 30, 2010
  $15,681,000
September 30, 2010
  $19,402,000
December 31, 2010
  $21,840,000
March 31, 2011
  $24,297,000
June 30, 2011
  $27,368,000
September 30, 2011
  $31,054,000
December 31, 2011
  $34,125,000
March 31, 2012
  $33,846,000
June 30, 2012
  $33,497,000
September 30, 2012
  $33,079,000
December 31, 2012
  $32,730,000

“EBITDA” shall be calculated in the manner set forth in Exhibit 4.2(b).
     6.3 Minimum Liquidity. The Credit Parties shall maintain Liquidity in the
aggregate of at least (x) $3,500,000 at all times through and including
March 31, 2010 and (y) $2,500,000 at all times thereafter. “Liquidity” shall be
calculated in the manner set forth in Exhibit 4.2(b).
     6.4 Capital Expenditures. The Credit Parties shall not make or commit to
make Capital Expenditures for any fiscal year (or shorter period) set forth
below in excess of the amount set forth in the table below with respect to such
fiscal year (or shorter period):

      Fiscal Period   Capital Expenditure Limitation
2009
  $10,000,000
2010
  $7,500,000
2011
  $5,000,000
2012
  $5,000,000

; provided, however, in the event the Credit Parties do not expend the entire
Capital Expenditure Limitation in any fiscal year, the Credit Parties may carry
forward the unutilized portion to the immediately succeeding fiscal year. All
Capital Expenditures shall first be applied to reduce the applicable Capital
Expenditure Limitation and then to reduce the carry-forward from the previous
fiscal year, if any. “Capital Expenditures” shall be calculated in the manner
set forth in Exhibit 4.2(b).
ARTICLE VII.
EVENTS OF DEFAULT
     7.1 Event of Default. Any of the following shall constitute an “Event of
Default”:

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          (a) Non-Payment. Any Credit Party fails (i) to pay when and as
required to be paid herein, any amount of principal of any Loan, including after
maturity of the Loans, or to pay any L/C Reimbursement Obligation or (ii) to pay
within three (3) Business Days after the same shall become due, interest on any
Loan, any fee or any other amount payable hereunder or pursuant to any other
Loan Document; or
          (b) Representation or Warranty. Any representation, warranty or
certification by or on behalf of any Credit Party or any of its Subsidiaries
made or deemed made herein, in any other Loan Document, or which is contained in
any certificate, document or financial or other statement by any such Person, or
their respective Responsible Officers, furnished at any time under this
Agreement, or in or under any other Loan Document, shall prove to have been
incorrect in any material respect on or as of the date made or deemed made; or
          (c) Specific Defaults. Any Credit Party fails to perform or observe
any term, covenant or agreement contained in any of Sections 4.1, 4.2(b),
4.2(d), 4.3(a), 4.3(r), 4.6, 4.9, 4.14, 4.16, Article V or Article VI hereof or
the Fee Letter; or
          (d) Other Defaults. Any Credit Party or Subsidiary of any Credit Party
fails to perform or observe any other term, covenant or agreement contained in
this Agreement or any other Loan Document, and such default shall continue
unremedied for a period of thirty (30) days after the earlier to occur of
(i) the date upon which a Responsible Officer of any Credit Party becomes aware
of such default and (ii) the date upon which written notice thereof is given to
the Borrower Representative by the Agent or Required Lenders; or
          (e) Cross-Default. Any Credit Party or any Subsidiary of any Credit
Party (i) fails to make any payment in respect of any Indebtedness (other than
the Obligations) or Contingent Obligation having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to
all creditors under any combined or syndicated credit arrangement) of more than
$200,000 when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the document relating
thereto on the date of such failure; or (ii) fails to perform or observe any
other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness or
Contingent Obligation, if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity (without regard
to any subordination terms with respect thereto), or such Contingent Obligation
to become payable or cash collateral in respect thereof to be demanded; or
          (f) Insolvency; Voluntary Proceedings. A Borrower, individually,
ceases or fails, or the Credit Parties and their Subsidiaries on a consolidated
basis, cease or fail, to be Solvent, or any Credit Party or any Subsidiary of
any Credit Party: (i)

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generally fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
          (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding
is commenced or filed against any Credit Party or any Subsidiary of any Credit
Party, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of any such Person’s
Properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within sixty (60) days after commencement,
filing or levy; (ii) any Credit Party or any of its Subsidiary of any Credit
Party admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) any Credit Party or any
Subsidiary of any Credit Party acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
Property or business; or
          (h) Monetary Judgments. One or more judgments, non-interlocutory
orders, decrees or arbitration awards shall be entered against any one or more
of the Credit Parties or any of their respective Subsidiaries involving in the
aggregate a liability (to the extent not covered by independent third-party
insurance) as to any single or related series of transactions, incidents or
conditions, of $500,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of thirty (30) consecutive
days after the entry thereof; or
          (i) Non-Monetary Judgments. One or more non-monetary judgments, orders
or decrees shall be rendered against any one or more of the Credit Parties or
any of their respective Subsidiaries which has or would reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect, and
there shall be any period of ten (10) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
          (j) Collateral. Any material provision of any Loan Document shall for
any reason cease to be valid and binding on or enforceable against any Credit
Party or any Subsidiary of any Credit Party party thereto or any Credit Party or
any Subsidiary of any Credit Party shall so state in writing or bring an action
to limit its obligations or liabilities thereunder; or any Collateral Document
shall for any reason (other than pursuant to the terms thereof) cease to create
a valid security interest in the Collateral purported to be covered thereby or
such security interest shall for any reason (other than the failure of the Agent
to take any action within its control) cease to be a perfected and first
priority security interest subject only to Permitted Liens; or
          (k) Control. Any of the following occurs: (a) any person or group of
persons (within the meaning of the Exchange Act), excluding Dr. John N. Kapoor,
the

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Kapoor Trust and Pequot Capital, shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act)
of 30% or more of the issued and outstanding shares of capital Stock of Akorn
having the right to vote for the election of directors of Akorn under ordinary
circumstances; (b) either (i) Dr. John N. Kapoor and the Kapoor Trust together
or (ii) Pequot Capital shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act) of 50% or
more of the issued and outstanding shares of capital Stock of Akorn having the
right to vote for the election of directors of Akorn under ordinary
circumstances; (c) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Akorn (together with any new directors whose election by the board
of directors of Akorn or whose nomination for election by the Stockholders of
Akorn was approved by a vote of at least a majority of the directors then still
in office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason other than death or disability to constitute a majority of the directors
then in office; or (d) any Borrower ceases to own and control all of the
economic and voting rights associated with all of the outstanding capital Stock
of any of its Subsidiaries; or
          (l) Government Authorities. FDA or any other Governmental Authority
initiates enforcement action against any Credit Party or any Subsidiary of any
Credit Party that causes such Credit Party or Subsidiary to discontinue
marketing any of its products and could reasonably be expected to have a
Material Adverse Effect; the FDA or any other Governmental Authority issues a
warning letter with respect to any manufacturing issue to any Credit Party or
any Subsidiary of any Credit Party which could reasonably be expected to have a
Material Adverse Effect; or any Credit Party or any Subsidiary of any Credit
Party conducts a recall which could reasonably be expected to have a Material
Adverse Effect; or any Credit Party or any of its Subsidiaries enters into a
settlement agreement with a Governmental Authority that results in aggregate
liability as to any single or related series of transactions, incidents or
conditions, of $750,000 or more, or could reasonably be expected to have a
Material Adverse Effect; or
          (m) Material Adverse Effect. A Material Adverse Effect occurs; or
          (n) Invalidity of Subordination Provisions. The subordination
provisions of the Subordination Agreement or any agreement or instrument
governing any Subordinated Indebtedness shall for any reason be revoked or
invalidated, or otherwise cease to be in full force and effect, or any Person
shall contest in any manner the validity or enforceability thereof or deny that
it has any further liability or obligation thereunder, or the Obligations, for
any reason shall not have the priority contemplated by this Agreement or such
subordination provisions.
     7.2 Remedies. Upon the occurrence and during the continuance of any Event
of Default, the Agent may, and shall at the request of the Required Lenders:

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          (a) declare all or any portion of the Commitment of each Lender to
make Loans or of the L/C Issuer to issue Letters of Credit to be terminated,
whereupon such Commitments shall forthwith be terminated;
          (b) declare all or any portion of the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable; without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by each Credit
Party; and/or
          (c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in
subsections 7.1(f) or 7.1(g) above (in the case of clause (i) of subsection
7.1(g) upon the expiration of the sixty (60) day period mentioned therein), the
obligation of each Lender to make Loans and the obligation of the L/C Issuer to
issue Letters of Credit shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable without further act of the Agent, any
Lender or the L/C Issuer.
     7.3 Rights Not Exclusive. The rights provided for in this Agreement and the
other Loan Documents are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter arising.
     7.4 Cash Collateral for Letters of Credit. If an Event of Default has
occurred and is continuing or this Agreement (or the Revolving Loan Commitment)
shall be terminated for any reason, then the Agent may, and upon request of
Required Lenders, shall, demand (which demand shall be deemed to have been
delivered automatically upon any acceleration of the Loans and other obligations
hereunder pursuant to Section 7.2 hereof), and the Borrowers shall thereupon
deliver to the Agent, to be held for the benefit of the L/C Issuer, Agent and
the Lenders entitled thereto, an amount of cash equal to 105% of the amount of
Letter of Credit Obligations as additional collateral security for Obligations
in respect of any outstanding Letter of Credit. The Agent may at any time apply
any or all of such cash and cash collateral to the payment of any or all of the
Credit Parties’ Obligations in respect of any Letters of Credit. Pending such
application, the Agent may (but shall not be obligated to) invest the same in an
interest bearing account in the Agent’s name, for the benefit of the Agent,
Lenders, and L/C Issuers, entitled thereto, under which deposits are available
for immediate withdrawal, at such bank or financial institution as the L/C
Issuer and Agent may, in their discretion, select.
ARTICLE VIII.
THE AGENT
     8.1 Appointment and Duties.

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          (a) Appointment of Agent. Each Lender and each L/C Issuer hereby
appoints GE Capital (together with any successor Agent pursuant to Section 8.9)
as the Agent hereunder and authorizes the Agent to (i) execute and deliver the
Loan Documents and accept delivery thereof on its behalf from any Credit Party,
(ii) take such action on its behalf and to exercise all rights, powers and
remedies and perform the duties as are expressly delegated to the Agent under
such Loan Documents and (iii) exercise such powers as are reasonably incidental
thereto.
          (b) Duties as Collateral and Disbursing Agent. Without limiting the
generality of clause (a) above, the Agent shall have the sole and exclusive
right and authority (to the exclusion of the Lenders and L/C Issuers), and is
hereby authorized, to (i) act as the disbursing and collecting agent for the
Lenders and the L/C Issuers with respect to all payments and collections arising
in connection with the Loan Documents (including in any proceeding described in
subsection 7.1(g) or any other bankruptcy, insolvency or similar proceeding),
and each Person making any payment in connection with any Loan Document to any
Secured Party is hereby authorized to make such payment to the Agent, (ii) file
and prove claims and file other documents necessary or desirable to allow the
claims of the Secured Parties with respect to any Obligation in any proceeding
described in subsection 7.1(g) or any other bankruptcy, insolvency or similar
proceeding (but not to vote, consent or otherwise act on behalf of such Person),
(iii) act as collateral agent for each Secured Party for purposes of the
perfection of all Liens created by such agreements and all other purposes stated
therein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take
such other action as is necessary or desirable to maintain the perfection and
priority of the Liens created or purported to be created by the Loan Documents,
(vi) except as may be otherwise specified in any Loan Document, exercise all
remedies given to the Agent and the other Secured Parties with respect to the
Collateral, whether under the Loan Documents, applicable Requirements of Law or
otherwise and (vii) execute any amendment, consent or waiver under the Loan
Documents on behalf of any Lender that has consented in writing to such
amendment, consent or waiver; provided, however, that the Agent hereby appoints,
authorizes and directs each Lender and L/C Issuer to act as collateral sub-agent
for the Agent, the Lenders and the L/C Issuers for purposes of the perfection of
all Liens with respect to the Collateral, including any deposit account
maintained by a Credit Party with, and cash and Cash Equivalents held by, such
Lender or L/C Issuer, and may further authorize and direct the Lenders and the
L/C Issuers to take further actions as collateral sub-agents for purposes of
enforcing such Liens or otherwise to transfer the Collateral subject thereto to
the Agent, and each Lender and L/C Issuer hereby agrees to take such further
actions to the extent, and only to the extent, so authorized and directed.
          (c) Limited Duties. Under the Loan Documents, the Agent (i) is acting
solely on behalf of the Lenders and the L/C Issuers (except to the limited
extent provided in subsection 1.4(b) with respect to the Register), with duties
that are entirely administrative in nature, notwithstanding the use of the
defined term “Agent”, the terms “agent”, “Agent” and “collateral agent” and
similar terms in any Loan Document to refer to the Agent, which terms are used
for title purposes only, (ii) is not assuming any obligation under any Loan
Document other than as expressly set forth therein or any role as agent,
fiduciary or trustee of or for any Lender, L/C Issuer or any other Person and
(iii)

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shall have no implied functions, responsibilities, duties, obligations or other
liabilities under any Loan Document, and each Lender and L/C Issuer hereby
waives and agrees not to assert any claim against the Agent based on the roles,
duties and legal relationships expressly disclaimed in clauses (i) through
(iii) above.
     8.2 Binding Effect. Each Lender and each L/C Issuer agrees that (i) any
action taken by the Agent or the Required Lenders (or, if expressly required
hereby, a greater proportion of the Lenders) in accordance with the provisions
of the Loan Documents, (ii) any action taken by the Agent in reliance upon the
instructions of Required Lenders (or, where so required, such greater
proportion) and (iii) the exercise by the Agent or the Required Lenders (or,
where so required, such greater proportion) of the powers set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all of the Secured Parties.
     8.3 Use of Discretion.
          (a) No Action without Instructions. The Agent shall not be required to
exercise any discretion or take, or to omit to take, any action, including with
respect to enforcement or collection, except any action it is required to take
or omit to take (i) under any Loan Document or (ii) pursuant to instructions
from the Required Lenders (or, where expressly required by the terms of this
Agreement, a greater proportion of the Lenders).
          (b) Right Not to Follow Certain Instructions. Notwithstanding clause
(a) above, the Agent shall not be required to take, or to omit to take, any
action (i) unless, upon demand, the Agent receives an indemnification
satisfactory to it from the Lenders (or, to the extent applicable and acceptable
to the Agent, any other Person) against all Liabilities that, by reason of such
action or omission, may be imposed on, incurred by or asserted against the Agent
or any Related Person thereof or (ii) that is, in the opinion of the Agent or
its counsel, contrary to any Loan Document or applicable Requirement of Law.
     8.4 Delegation of Rights and Duties. The Agent may, upon any term or
condition it specifies, delegate or exercise any of its rights, powers and
remedies under, and delegate or perform any of its duties or any other action
with respect to, any Loan Document by or through any trustee, co-agent,
employee, attorney-in-fact and any other Person (including any Secured Party).
Any such Person shall benefit from this Article VIII to the extent provided by
the Agent.
     8.5 Reliance and Liability.
          (a) The Agent may, without incurring any liability hereunder,
(i) treat the payee of any Note as its holder until such Note has been assigned
in accordance with Section 9.9, (ii) rely on the Register to the extent set
forth in Section 1.4, (iii) consult with any of its Related Persons and, whether
or not selected by it, any other advisors, accountants and other experts
(including advisors to, and accountants and experts engaged by, any Credit
Party) and (iv) rely and act upon any document and information (including those
transmitted by Electronic Transmission) and any telephone message or

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conversation, in each case believed by it to be genuine and transmitted, signed
or otherwise authenticated by the appropriate parties.
          (b) None of the Agent and its Related Persons shall be liable for any
action taken or omitted to be taken by any of them under or in connection with
any Loan Document, and each Lender, L/C Issuer, each Borrower and each other
Credit Party hereby waive and shall not assert (and each of the Borrowers shall
cause each other Credit Party to waive and agree not to assert) any right, claim
or cause of action based thereon, except to the extent of liabilities resulting
primarily from the gross negligence or willful misconduct of the Agent or, as
the case may be, such Related Person (each as determined in a final,
non-appealable judgment by a court of competent jurisdiction) in connection with
the duties expressly set forth herein. Without limiting the foregoing, the
Agent:
               (i) shall not be responsible or otherwise incur liability for any
action or omission taken in reliance upon the instructions of the Required
Lenders or for the actions or omissions of any of its Related Persons selected
with reasonable care (other than employees, officers and directors of the Agent,
when acting on behalf of the Agent);
               (ii) shall not be responsible to any Lender, L/C Issuer or other
Person for the due execution, legality, validity, enforceability, effectiveness,
genuineness, sufficiency or value of, or the attachment, perfection or priority
of any Lien created or purported to be created under or in connection with, any
Loan Document;
               (iii) makes no warranty or representation, and shall not be
responsible, to any Lender, L/C Issuer or other Person for any statement,
document, information, representation or warranty made or furnished by or on
behalf of any Credit Party or any Related Person of any Credit Party in
connection with any Loan Document or any transaction contemplated therein or any
other document or information with respect to any Credit Party, whether or not
transmitted or (except for documents expressly required under any Loan Document
to be transmitted to the Lenders) omitted to be transmitted by the Agent,
including as to completeness, accuracy, scope or adequacy thereof, or for the
scope, nature or results of any due diligence performed by the Agent in
connection with the Loan Documents; and
               (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any provision of any Loan Document, whether any
condition set forth in any Loan Document is satisfied or waived, as to the
financial condition of any Credit Party or as to the existence or continuation
or possible occurrence or continuation of any Default or Event of Default and
shall not be deemed to have notice or knowledge of such occurrence or
continuation unless it has received a notice from the Borrower Representative,
any Lender or L/C Issuer describing such Default or Event of Default clearly
labeled “notice of default” (in which case the Agent shall promptly give notice
of such receipt to all Lenders);
and, for each of the items set forth in clauses (i) through (iv) above, each
Lender, L/C Issuer and the Borrowers hereby waive and agree not to assert (and
each of the Borrowers

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shall cause each other Credit Party to waive and agree not to assert) any right,
claim or cause of action it might have against the Agent based thereon.
     8.6 Agent Individually. The Agent and its Affiliates may make loans and
other extensions of credit to, acquire Stock and Stock Equivalents of, engage in
any kind of business with, any Credit Party or Affiliate thereof as though it
were not acting as Agent and may receive separate fees and other payments
therefor. To the extent the Agent or any of its Affiliates makes any Loan or
otherwise becomes a Lender hereunder, it shall have and may exercise the same
rights and powers hereunder and shall be subject to the same obligations and
liabilities as any other Lender and the terms “Lender”, “Revolving Lender”,
“Required Lender” and any similar terms shall, except where otherwise expressly
provided in any Loan Document, include, without limitation, the Agent or such
Affiliate, as the case may be, in its individual capacity as Lender, Revolving
Lender or as one of the Required Lenders.
     8.7 Lender Credit Decision. Each Lender and each L/C Issuer acknowledges
that it shall, independently and without reliance upon the Agent, any Lender or
L/C Issuer or any of their Related Persons or upon any document (including any
offering and disclosure materials in connection with the syndication of the
Loans) solely or in part because such document was transmitted by the Agent or
any of its Related Persons, conduct its own independent investigation of the
financial condition and affairs of each Credit Party and make and continue to
make its own credit decisions in connection with entering into, and taking or
not taking any action under, any Loan Document or with respect to any
transaction contemplated in any Loan Document, in each case based on such
documents and information as it shall deem appropriate. Except for documents
expressly required by any Loan Document to be transmitted by the Agent to the
Lenders or L/C Issuers, the Agent shall not have any duty or responsibility to
provide any Lender or L/C Issuer with any credit or other information concerning
the business, prospects, operations, property, financial and other condition or
creditworthiness of any Credit Party or any Affiliate of any Credit Party that
may come in to the possession of the Agent or any of its Related Persons.
     8.8 Expenses; Indemnities.
          (a) Each Lender agrees to reimburse the Agent and each of its Related
Persons (to the extent not reimbursed by any Credit Party) promptly upon demand,
severably and ratably, of any costs and expenses (including fees, charges and
disbursements of financial, legal and other advisors and Other Taxes paid in the
name of, or on behalf of, any Credit Party) that may be incurred by the Agent or
any of its Related Persons in connection with the preparation, syndication,
execution, delivery, administration, modification, consent, waiver or
enforcement (whether through negotiations, through any work-out, bankruptcy,
restructuring or other legal or other proceeding or otherwise) of, or legal
advice in respect of its rights or responsibilities under, any Loan Document.
          (b) Each Lender further agrees to indemnify the Agent and each of its
Related Persons (to the extent not reimbursed by any Credit Party), severably
and ratably,

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from and against Liabilities (including taxes, interests and penalties imposed
for not properly withholding or backup withholding on payments made to on or for
the account of any Lender) that may be imposed on, incurred by or asserted
against the Agent or any of its Related Persons in any matter relating to or
arising out of, in connection with or as a result of any Loan Document, any
Related Document or any other act, event or transaction related, contemplated in
or attendant to any such document, or, in each case, any action taken or omitted
to be taken by the Agent or any of its Related Persons under or with respect to
any of the foregoing; provided, however, that no Lender shall be liable to the
Agent or any of its Related Persons to the extent such liability has resulted
primarily from the gross negligence or willful misconduct of the Agent or, as
the case may be, such Related Person, as determined by a court of competent
jurisdiction in a final non-appealable judgment or order.
     8.9 Resignation of Agent or L/C Issuer.
          (a) The Agent may resign at any time by delivering notice of such
resignation to the Lenders and the Borrower Representative, effective on the
date set forth in such notice or, if no such date is set forth therein, upon the
date such notice shall be effective. If the Agent delivers any such notice, the
Required Lenders shall have the right to appoint a successor Agent. If, within
30 days after the retiring Agent having given notice of resignation, no
successor Agent has been appointed by the Required Lenders that has accepted
such appointment, then the retiring Agent may, on behalf of the Lenders, appoint
a successor Agent from among the Lenders. Each appointment under this clause
(a) shall be subject to the prior consent of the Borrowers, which may not be
unreasonably withheld but shall not be required during the continuance of an
Event of Default.
          (b) Effective immediately upon its resignation, (i) the retiring Agent
shall be discharged from its duties and obligations under the Loan Documents,
(ii) the Lenders shall assume and perform all of the duties of the Agent until a
successor Agent shall have accepted a valid appointment hereunder, (iii) the
retiring Agent and its Related Persons shall no longer have the benefit of any
provision of any Loan Document other than with respect to any actions taken or
omitted to be taken while such retiring Agent was, or because such Agent had
been, validly acting as Agent under the Loan Documents and (iv) subject to its
rights under Section 8.3, the retiring Agent shall take such action as may be
reasonably necessary to assign to the successor Agent its rights as Agent under
the Loan Documents. Effective immediately upon its acceptance of a valid
appointment as Agent, a successor Agent shall succeed to, and become vested
with, all the rights, powers, privileges and duties of the retiring Agent under
the Loan Documents.
          (c) Any L/C Issuer may resign at any time by delivering notice of such
resignation to the Agent, effective on the date set forth in such notice or, if
no such date is set forth therein, on the date such notice shall be effective.
Upon such resignation, the L/C Issuer shall remain an L/C Issuer and shall
retain its rights and obligations in its capacity as such (other than any
obligation to Issue Letters of Credit but including the right to receive fees or
to have Lenders participate in any L/C Reimbursement Obligation thereof) with
respect to Letters of Credit issued by such L/C Issuer prior to the date of

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such resignation and shall otherwise be discharged from all other duties and
obligations under the Loan Documents.
     8.10 Release of Collateral or Guarantors. Each Lender and L/C Issuer hereby
consents to the release and hereby directs the Agent to release (or, in the case
of clause (b)(ii) below, release or subordinate) the following:
          (a) any Subsidiary of a Borrower from its guaranty of any Obligation
if all of the Stock and Stock Equivalents of such Subsidiary owned by any Credit
Party are sold or transferred in a transaction permitted under the Loan
Documents (including pursuant to a waiver or consent), to the extent that, after
giving effect to such transaction, such Subsidiary would not be required to
guaranty any Obligations pursuant to Section 4.13; and
          (b) any Lien held by the Agent for the benefit of the Secured Parties
against (i) any Collateral that is sold, transferred, conveyed or otherwise
disposed of by a Credit Party in a transaction permitted by the Loan Documents
(including pursuant to a valid waiver or consent), to the extent all Liens
required to be granted in such Collateral pursuant to Section 4.13 after giving
effect to such transaction have been granted, (ii) any property subject to a
Lien permitted hereunder in reliance upon subsection 5.1(h) or (i) and (iii) all
of the Collateral and all Credit Parties, upon (A) termination of the Revolving
Loan Commitments, (B) payment and satisfaction in full of all Loans, all L/C
Reimbursement Obligations and all other Obligations under the Loan Documents
(other than surviving indemnity obligations as to which no claim is then
pending) and all Obligations arising under Secured Rate Contracts, that the
Agent has theretofore been notified in writing by the holder of such Obligation
are then due and payable, (C) deposit of cash collateral with respect to all
contingent Obligations (or, in the case of any Letter of Credit Obligation,
receipt by Agent of a back-up letter of credit) in amounts and on terms and
conditions and with parties satisfactory to the Agent and each Indemnitee that
is, or may be, owed such Obligations and (D) to the extent requested by the
Agent, receipt by Agent and the Secured Parties of liability releases from the
Credit Parties each in form and substance acceptable to the Agent.
Each Lender and L/C Issuer hereby directs the Agent, and the Agent hereby
agrees, upon receipt of reasonable advance notice from the Borrower
Representative, to execute and deliver or file such documents and to perform
other actions reasonably necessary to release the guaranties and Liens when and
as directed in this Section 8.10.
     8.11 Additional Secured Parties. The benefit of the provisions of the Loan
Documents directly relating to the Collateral or any Lien granted thereunder
shall extend to and be available to any Secured Party that is not a Lender or
L/C Issuer party hereto as long as, by accepting such benefits, such Secured
Party agrees, as among the Agent and all other Secured Parties, that such
Secured Party is bound by (and, if requested by the Agent, shall confirm such
agreement in a writing in form and substance acceptable to the Agent) this
Article VIII, Section 9.3, Section 9.9, Section 9.10, Section 9.11,
Section 9.17, Section 9.24, and Section 10.1 and the decisions and actions of
the Agent and the Required Lenders (or, where expressly required by the terms of
this Agreement, a greater

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proportion of the Lenders or other parties hereto as required herein) to the
same extent a Lender is bound; provided, however, that, notwithstanding the
foregoing, (a) such Secured Party shall be bound by Section 8.8 only to the
extent of Liabilities, costs and expenses with respect to or otherwise relating
to the Collateral held for the benefit of such Secured Party, in which case the
obligations of such Secured Party thereunder shall not be limited by any concept
of pro rata share or similar concept, (b) each of the Agent, the Lenders and the
L/C Issuers party hereto shall be entitled to act at its sole discretion,
without regard to the interest of such Secured Party, regardless of whether any
Obligation to such Secured Party thereafter remains outstanding, is deprived of
the benefit of the Collateral, becomes unsecured or is otherwise affected or put
in jeopardy thereby, and without any duty or liability to such Secured Party or
any such Obligation and (c) except as otherwise set forth herein, such Secured
Party shall not have any right to be notified of, consent to, direct, require or
be heard with respect to, any action taken or omitted in respect of the
Collateral or under any Loan Document.
ARTICLE IX.
MISCELLANEOUS
     9.1 Amendments and Waivers.
          (a) No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent with respect to any departure by any Credit
Party therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders (or by the Agent with the consent of the Required
Lenders), the Borrowers and acknowledged by the Agent, and then such waiver
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Lenders directly affected thereby
(or by the Agent with the consent of all the Lenders directly affected thereby),
in addition to the Required Lenders (or by the Agent with the consent of the
Required Lenders), the Borrowers and acknowledged by the Agent, do any of the
following:
               (i) increase or extend the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to subsection 7.2(a));
               (ii) postpone or delay any date fixed for, or waive, any
scheduled installment of principal or any payment of interest, fees or other
amounts due to the Lenders (or any of them) or L/C Issuer hereunder or under any
other Loan Document;
               (iii) reduce the principal of, or the rate of interest specified
herein or the amount of interest payable in cash specified herein on any Loan,
or of any fees or other amounts payable hereunder or under any other Loan
Document, including L/C Reimbursement Obligations;

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               (iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Lenders or
any of them to take any action hereunder;
               (v) amend this Section 9.1 or the definition of Required Lenders
or any provision providing for consent or other action by all Lenders; or
               (vi) discharge any Credit Party from its respective payment
Obligations under the Loan Documents, or release all or substantially all of the
Collateral, except as otherwise may be provided in this Agreement or the other
Loan Documents;
it being agreed that all Lenders shall be deemed to be directly affected by an
amendment or waiver of the type described in the preceding clauses (iv), (v) and
(vi).
          (b) No amendment, waiver or consent shall, unless in writing and
signed by the Agent, the Swingline Lender or the L/C Issuer, as the case may be,
in addition to the Required Lenders or all Lenders directly affected thereby as
the case may be (or by the Agent with the consent of the Required Lenders or all
the Lenders directly affected thereby, as the case may be), affect the rights or
duties of the Agent, the Swingline Lender or the L/C Issuer, as applicable,
under this Agreement or any other Loan Document. No amendment, modification or
waiver of this Agreement or any Loan Document altering the ratable treatment of
Obligations arising under Secured Rate Contracts resulting in such Obligations
being junior in right of payment to principal on the Loans or resulting in
Obligations owing to any Secured Swap Provider becoming unsecured (other than
releases of Liens permitted in accordance with the terms hereof), in each case
in a manner adverse to any Secured Swap Provider, shall be effective without the
written consent of such Secured Swap Provider or, in the case of a Secured Rate
Contract provided or arranged by GE Capital or an Affiliate of GE Capital, GE
Capital.
     9.2 Notices.
          (a) Addresses. All notices, demands, requests, directions and other
communications required or expressly authorized to be made by this Agreement
shall, whether or not specified to be in writing but unless otherwise expressly
specified to be given by any other means, be given in writing and (i) addressed
to the address set forth on the applicable signature page hereto, (ii) posted to
Intralinks® (to the extent such system is available and set up by or at the
direction of the Agent prior to posting) in an appropriate location by uploading
such notice, demand, request, direction or other communication to
www.intralinks.com, faxing it to 866-545-6600 with an appropriate bar-code fax
coversheet or using such other means of posting to Intralinks® as may be
available and reasonably acceptable to the Agent prior to such posting,
(iii) posted to any other E-System set up by or at the direction of Agent or
(iv) addressed to such other address as shall be notified in writing (A) in the
case of the Borrowers, the Agent and the Swingline Lender, to the other parties
hereto and (B) in the case of all other parties, to the Borrower Representative
and the Agent. Transmission by electronic mail (including E-

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Fax, even if transmitted to the fax numbers set forth above) shall not be
sufficient or effective to transmit any such notice under this clause (a) unless
such transmission is an available means to post to any E-System.
          (b) Effectiveness. All communications described in clause (a) above
and all other notices, demands, requests and other communications made in
connection with this Agreement shall be effective and be deemed to have been
received (i) if delivered by hand, upon personal delivery, (ii) if delivered by
overnight courier service, 1 Business Day after delivery to such courier
service, (iii) if delivered by mail, three Business Days after being deposited
in the mails, (iv) if delivered by facsimile (other than to post to an E-System
pursuant to clause (a)(ii) or (a)(iii) above), upon sender’s receipt of
confirmation of proper transmission, and (v) if delivered by posting to any
E-System, on the later of (A) the date of such posting if posted before 6pm New
York time, otherwise the following date and (B) the date access to such posting
is given to the recipient thereof in accordance with the standard procedures
applicable to such E-System if such access is given prior to 6pm, otherwise the
following date; provided, however, that no communications to Agent pursuant to
Article I shall be effective until received by Agent.
          (c) Each Lender shall notify the Agent in writing of any changes in
the address to which notices to such Lender should be directed, of addresses of
its Lending Office, of payment instructions in respect of all payments to be
made to it hereunder and of such other administrative information as the Agent
shall reasonably request.
     9.3 Electronic Transmissions.
          (a) Authorization. Subject to the provisions of Section 9.2(a), each
of Agent, Lenders, each Credit Party and each of their Related Persons, is
authorized (but not required) to transmit, post or otherwise make or
communicate, in its sole discretion, Electronic Transmissions in connection with
any Loan Document and the transactions contemplated therein. Each Credit Party
and each Secured Party hereto acknowledges and agrees that the use of Electronic
Transmissions is not necessarily secure and that there are risks associated with
such use, including risks of interception, disclosure and abuse and each
indicates it assumes and accepts such risks by hereby authorizing the
transmission of Electronic Transmissions.
          (b) Signatures. Subject to the provisions of Section 9.2(a), (i)(A) no
posting to any E-System shall be denied legal effect merely because it is made
electronically, (B) each E-Signature on any such posting shall be deemed
sufficient to satisfy any requirement for a “signature” and (C) each such
posting shall be deemed sufficient to satisfy any requirement for a “writing” or
a “record”, in each case including pursuant to any Loan Document, any applicable
provision of any UCC, the federal Uniform Electronic Transactions Act, the
Electronic Signatures in Global and National Commerce Act and any substantive or
procedural Requirement of Law governing such subject matter, (ii) each such
posting that is not readily capable of bearing either a signature or a
reproduction of a signature may be signed, and shall be deemed signed, by
attaching to, or logically associating with such posting, an E-Signature, upon
which

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Agent, each Secured Party and each Credit Party, provided that it is acting in
good faith, may rely and assume the authenticity thereof, (iii) each such
posting containing a signature, a reproduction of a signature or an E-Signature
shall, for all intents and purposes, have the same effect and weight as a signed
paper original and (iv) each party hereto or beneficiary hereof agrees not to
contest the validity or enforceability of any posting on any E-System or
E-Signature on any such posting under the provisions of any applicable
Requirement of Law requiring certain documents to be in writing or signed;
provided, however, that nothing herein shall limit such party’s or beneficiary’s
right to contest whether any posting to any E-System or E-Signature has been
altered after transmission.
          (c) Separate Agreements. All uses of an E-System shall be governed by
and subject to, in addition to Section 9.2 and this Section 9.3, separate terms
and conditions posted or referenced in such E-System and related Contractual
Obligations executed by Agent and Credit Parties in connection with the use of
such E-System.
          (d) LIMITATION OF LIABILITY. ALL E-SYSTEMS AND ELECTRONIC
TRANSMISSIONS SHALL BE PROVIDED “AS IS” AND “AS AVAILABLE”. NONE OF AGENT, ANY
LENDER OR ANY OF THEIR RELATED PERSONS WARRANTS THE ACCURACY, ADEQUACY OR
COMPLETENESS OF ANY E-SYSTEMS OR ELECTRONIC TRANSMISSION AND DISCLAIMS ALL
LIABILITY FOR ERRORS OR OMISSIONS THEREIN. NO WARRANTY OF ANY KIND IS MADE BY
AGENT, ANY LENDER OR ANY OF THEIR RELATED PERSONS IN CONNECTION WITH ANY
E-SYSTEMS OR ELECTRONIC COMMUNICATION, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS. Each Borrower, each
other Credit Party executing this Agreement and each Secured Party agrees that
Agent has no responsibility for maintaining or providing any equipment,
software, services or any testing required in connection with any Electronic
Transmission or otherwise required for any E-System.
     9.4 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. No course of dealing between any Credit Party, any Affiliate
of any Credit Party, the Agent or any Lender shall be effective to amend, modify
or discharge any provision of this Agreement or any of the other Loan Documents.
     9.5 Costs and Expenses. Any action taken by any Credit Party under or with
respect to any Loan Document, even if required under any Loan Document or at the
request of Agent or Required Lenders, shall be at the expense of such Credit
Party, and neither Agent nor any Secured Party shall be required under any Loan
Document to reimburse any Credit Party or any Subsidiary of any Credit Party
therefor except as expressly provided therein. In addition, the Borrowers agree
to pay or reimburse upon

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demand (a) the Agent for all reasonable out-of-pocket costs and expenses
incurred by it or any of its Related Persons in connection with the
investigation, development, preparation, negotiation, syndication, execution,
interpretation or administration of, any modification of any term of or
termination of, any Loan Document, any commitment or proposal letter therefor,
any other document prepared in connection therewith or the consummation and
administration of any transaction contemplated therein, in each case including
Attorney Costs to the Agent, (b) the Agent for all reasonable costs and expenses
incurred by it or any of its Related Persons in connection with internal audit
reviews, field examinations and Collateral examinations (which shall be
reimbursed, in addition to the out-of-pocket costs and expenses of such
examiners, at the per diem rate per individual regularly charged by the Agent
for its examiners), (c) each of the Agent, its Related Persons, and L/C Issuer
for all costs and expenses incurred in connection with (i) any refinancing or
restructuring of the credit arrangements provided hereunder in the nature of a
“work-out”, (ii) the enforcement or preservation of any right or remedy under
any Loan Document, any Obligation, with respect to the Collateral or any other
related right or remedy or (iii) the commencement, defense, conduct of,
intervention in, or the taking of any other action with respect to, any
proceeding (including any bankruptcy or insolvency proceeding) related to any
Credit Party, any Subsidiary of any Credit Party, Loan Document, Obligation or
Related Transaction (or the response to and preparation for any subpoena or
request for document production relating thereto), including Attorney Costs and
(d) fees and disbursements of Attorney Costs of one law firm on behalf of all
Lenders (other than Agent) incurred in connection with any of the matters
referred to in clause (c) above.
     9.6 Indemnity.
          (a) Each Credit Party agrees to indemnify, hold harmless and defend
Agent, each Lender, each L/C Issuer and each of their respective Related Persons
(each such Person being an “Indemnitee”) from and against all Liabilities
(including brokerage commissions, fees and other compensation) that may be
imposed on, incurred by or asserted against any such Indemnitee in any matter
relating to or arising out of, in connection with or as a result of (i) any Loan
Document, any Related Agreement, any Obligation (or the repayment thereof), any
Letter of Credit, the use or intended use of the proceeds of any Loan or the use
of any Letter of Credit or any securities filing of, or with respect to, any
Credit Party, (ii) any commitment letter, proposal letter or term sheet with any
Person or any Contractual Obligation, arrangement or understanding with any
broker, finder or consultant, in each case entered into by or on behalf of any
Credit Party or any Affiliate of any of them in connection with any of the
foregoing and any Contractual Obligation entered into in connection with any
E-Systems or other Electronic Transmissions, (iii) any actual or prospective
investigation, litigation or other proceeding, whether or not brought by any
such Indemnitee or any of its Related Persons, any holders of securities or
creditors (and including attorneys’ fees in any case), whether or not any such
Indemnitee, Related Person, holder or creditor is a party thereto, and whether
or not based on any securities or commercial law or regulation or any other
Requirement of Law or theory thereof, including common law, equity, contract,
tort or otherwise or (iv) any other act, event or transaction related,
contemplated in or attendant to any of the foregoing (collectively, the
“Indemnified Matters”); provided, however, that no Credit

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Party shall have any liability under this Section 9.6 to any Indemnitee with
respect to any Indemnified Matter, and no Indemnitee shall have any liability
with respect to any Indemnified Matter other than (to the extent otherwise
liable), to the extent such liability has resulted primarily from the gross
negligence or willful misconduct of such Indemnitee, as determined by a court of
competent jurisdiction in a final non-appealable judgment or order. Furthermore,
to the extent permitted by law, each Borrower and each other Credit Party
executing this Agreement waives and agrees not to assert against any Indemnitee,
and shall cause each other Credit Party to waive and not assert against any
Indemnitee, any right of contribution with respect to any Liabilities that may
be imposed on, incurred by or asserted against any Related Person.
          (b) Without limiting the foregoing, “Indemnified Matters” includes all
Environmental Liabilities, including those arising from, or otherwise involving,
any property of any Credit Party or any Related Person of any Credit Party or
any actual, alleged or prospective damage to property or natural resources or
harm or injury alleged to have resulted from any Release of Hazardous Materials
on, upon or into such property or natural resource or any property on or
contiguous to any real property of any Credit Party or any Related Person or any
Credit Party, whether or not, with respect to any such Environmental
Liabilities, any Indemnitee is a mortgagee pursuant to any leasehold mortgage, a
mortgagee in possession, the successor-in-interest to any Credit Party or any
Related Person of any Credit Party or the owner, lessee or operator of any
property of any Related Person through any foreclosure action, in each case
except to the extent such Environmental Liabilities (i) are incurred solely
following foreclosure by Agent or following Agent or any Lender having become
the successor-in-interest to any Credit Party or any Related Person of any
Credit Party and (ii) are attributable solely to acts of such Indemnitee.
     9.7 Marshaling; Payments Set Aside. No Secured Party shall be under any
obligation to marshal any property in favor of any Credit Party or any other
Person or against or in payment of any Obligation. To the extent that any
Secured Party receives a payment from a Borrower, from any other Credit Party,
from the proceeds of the Collateral, from the exercise of its rights of setoff,
any enforcement action or otherwise, and such payment is subsequently, in whole
or in part, invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party, then to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not occurred.
     9.8 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that any assignment by any Lender shall be
subject to the provisions of Section 9.9 hereof, and provided further that no
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the Agent and each Lender.
     9.9 Assignments and Participations; Binding Effect.

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          (a) This Agreement shall become effective when it shall have been
executed by the Borrowers, the other Credit Parties signatory hereto and the
Agent and when the Agent shall have been notified by each Lender and the initial
L/C Issuer that such Lender or L/C Issuer has executed it. Thereafter, it shall
be binding upon and inure to the benefit of, but only to the benefit of, the
Borrowers, the other Credit Parties hereto (in each case except for
Article VIII, except as provided in Section 8.9(a)), the Agent, each Lender and
L/C Issuer party hereto and, to the extent provided in Section 8.11, each other
Secured Party and, in each case, their respective successors and permitted
assigns. Except as expressly provided in any Loan Document (including in
Section 8.9), none of any Borrower, any other Credit Party, any L/C Issuer or
the Agent shall have the right to assign any rights or obligations hereunder or
any interest herein.
          (b) Each Lender may sell, transfer, negotiate or assign (a “Sale”) all
or a portion of its rights and obligations hereunder (including all or a portion
of its Commitments and its rights and obligations with respect to Loans and
Letters of Credit) to (i) any existing Lender or (ii) any other Person
acceptable (which acceptance shall not be unreasonably withheld or delayed) to
the Agent and, as long as no Event of Default is continuing, the Borrower
Representative; provided, however, that (x) such Sales must be ratable among the
obligations owing to and owed by such Lender with respect to the Revolving Loans
and (y) for each Loan, the aggregate outstanding principal amount (determined as
of the effective date of the applicable Assignment) of the Loans, Commitments
and Letter of Credit Obligations subject to any such Sale shall be in a minimum
amount of $1,000,000, unless such Sale is made to an existing Lender or an
Affiliate of any existing Lender, is of the assignor’s (together with its
Affiliates) entire interest in such Facility or is made with the prior consent
of the Borrower Representative and the Agent.
          (c) The parties to each Sale made in reliance on clause (b) above
(other than those described in clause (e) or (f) below) shall execute and
deliver to the Agent an Assignment via an electronic settlement system
designated by the Agent (or, if previously agreed with the Agent, via a manual
execution and delivery of the Assignment) evidencing such Sale, together with
any existing Note subject to such Sale (or any affidavit of loss therefor
acceptable to the Agent), any tax forms required to be delivered pursuant to
Section 10.1 and payment of an assignment fee in the amount of $3,500, provided
that (1) if a Sale by a Lender is made to an Affiliate of such assigning Lender,
then no assignment fee shall be due in connection with such Sale, and (2) if a
Sale by a Lender is made to an assignee that is not an Affiliate of such
assignor Lender, and concurrently to one or more Affiliates of such Assignee,
then only one assignment fee of $3,500 shall be due in connection with such
Sale. Upon receipt of all the foregoing, and conditioned upon such receipt and,
if such Assignment is made in accordance with Section 9.9(b)(iii), upon the
Agent (and the Borrowers, if applicable) consenting to such Assignment (if
required), from and after the effective date specified in such Assignment, the
Agent shall record or cause to be recorded in the Register the information
contained in such Assignment.
          (d) Subject to the recording of an Assignment by the Agent in the
Register pursuant to Section 1.4(b), (i) the assignee thereunder shall become a
party

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hereto and, to the extent that rights and obligations under the Loan Documents
have been assigned to such assignee pursuant to such Assignment, shall have the
rights and obligations of a Lender, (ii) any applicable Note shall be
transferred to such assignee through such entry and (iii) the assignor
thereunder shall, to the extent that rights and obligations under this Agreement
have been assigned by it pursuant to such Assignment, relinquish its rights
(except for those surviving the termination of the Commitments and the payment
in full of the Obligations) and be released from its obligations under the Loan
Documents, other than those relating to events or circumstances occurring prior
to such assignment (and, in the case of an Assignment covering all or the
remaining portion of an assigning Lender’s rights and obligations under the Loan
Documents, such Lender shall cease to be a party hereto).
          (e) In addition to the other rights provided in this Section 9.9, each
Lender may grant a security interest in, or otherwise assign as collateral, any
of its rights under this Agreement, whether now owned or hereafter acquired
(including rights to payments of principal or interest on the Loans), to (A) any
federal reserve bank (pursuant to Regulation A of the Federal Reserve Board),
without notice to the Agent or (B) any holder of, or trustee for the benefit of
the holders of, such Lender’s Indebtedness or equity securities, by notice to
the Agent; provided, however, that no such holder or trustee, whether because of
such grant or assignment or any foreclosure thereon (unless such foreclosure is
made through an assignment in accordance with clause (b) above), shall be
entitled to any rights of such Lender hereunder and no such Lender shall be
relieved of any of its obligations hereunder.
          (f) In addition to the other rights provided in this Section 9.9, each
Lender may, (x) with notice to the Agent, grant to an SPV the option to make all
or any part of any Loan that such Lender would otherwise be required to make
hereunder (and the exercise of such option by such SPV and the making of Loans
pursuant thereto shall satisfy the obligation of such Lender to make such Loans
hereunder) and such SPV may assign to such Lender the right to receive payment
with respect to any Obligation and (y) without notice to or consent from the
Agent or the Borrowers, sell participations to one or more Persons in or to all
or a portion of its rights and obligations under the Loan Documents (including
all its rights and obligations with respect to the Revolving Loans and Letters
of Credit); provided, however, that, whether as a result of any term of any Loan
Document or of such grant or participation, (i) no such SPV or participant shall
have a commitment, or be deemed to have made an offer to commit, to make Loans
hereunder, and, except as provided in the applicable option agreement, none
shall be liable for any obligation of such Lender hereunder, (ii) such Lender’s
rights and obligations, and the rights and obligations of the Credit Parties and
the Secured Parties towards such Lender, under any Loan Document shall remain
unchanged and each other party hereto shall continue to deal solely with such
Lender, which shall remain the holder of the Obligations in the Register, except
that (A) each such participant and SPV shall be entitled to the benefit of
Article X, but, with respect to Section 10.1, only to the extent such
participant or SPV delivers the tax forms such Lender is required to collect
pursuant to subsection 10.1(f) and then only to the extent of any amount to
which such Lender would be entitled in the absence of any such grant or
participation and (B) each such SPV may receive other payments that would
otherwise be made to such Lender with respect to

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Loans funded by such SPV to the extent provided in the applicable option
agreement and set forth in a notice provided to the Agent by such SPV and such
Lender, provided, however, that in no case (including pursuant to clause (A) or
(B) above) shall an SPV or participant have the right to enforce any of the
terms of any Loan Document, and (iii) the consent of such SPV or participant
shall not be required (either directly, as a restraint on such Lender’s ability
to consent hereunder or otherwise) for any amendments, waivers or consents with
respect to any Loan Document or to exercise or refrain from exercising any
powers or rights such Lender may have under or in respect of the Loan Documents
(including the right to enforce or direct enforcement of the Obligations),
except for those described in clauses (ii) and (iii) of subsection 9.1(a) with
respect to amounts, or dates fixed for payment of amounts, to which such
participant or SPV would otherwise be entitled and, in the case of participants,
except for those described in clause (vi) of subsection 9.1(a). No party hereto
shall institute (and each Borrower shall cause each other Credit Party not to
institute) against any SPV grantee of an option pursuant to this clause (f) any
bankruptcy, reorganization, insolvency, liquidation or similar proceeding, prior
to the date that is one year and one day after the payment in full of all
outstanding commercial paper of such SPV; provided, however, that each Lender
having designated an SPV as such agrees to indemnify each Indemnitee against any
Liability that may be incurred by, or asserted against, such Indemnitee as a
result of failing to institute such proceeding (including a failure to get
reimbursed by such SPV for any such Liability). The agreement in the preceding
sentence shall survive the termination of the Commitments and the payment in
full of the Obligations.
     9.10 Confidentiality. Each Lender, L/C Issuer and the Agent agree to use
all reasonable efforts to maintain, in accordance with its customary practices,
the confidentiality of information obtained by it pursuant to any Loan Document
and designated in writing by any Credit Party as confidential (the “Confidential
Information”) for a period of three (3) years following the date on which this
Agreement terminates in accordance with the terms hereof, except that such
information may be disclosed (i) with the Borrower Representative’s consent,
(ii) to Related Persons of such Lender, L/C Issuer or the Agent, as the case may
be, or to any Person that any L/C Issuer causes to issue Letters of Credit
hereunder, that are advised of the confidential nature of the Confidential
Information and are instructed to keep the Confidential Information
confidential, (iii) to the extent the Confidential Information presently is or
hereafter becomes available to such Lender, L/C Issuer or the Agent, as the case
may be, on a non-confidential basis from a source other than any Credit Party,
(iv) to the extent disclosure is required by applicable Requirements of Law or
other legal process or requested or demanded by any Governmental Authority,
(v) to the extent necessary or customary for inclusion in league table
measurements or in any tombstone or other advertising materials (and the Credit
Parties consent to the publication of such tombstone or other advertising
materials by the Agent, any Lender, any L/C Issuer or any of their Related
Persons), (vi) (A) to the National Association of Insurance Commissioners or any
similar organization, any examiner or any nationally recognized rating agency or
(B) otherwise to the extent consisting of general portfolio information that
does not identify borrowers, (vii) to current or prospective assignees, SPVs
(including the investors therein) or participants, direct or contractual
counterparties to any Secured Rate Contracts and to their respective Related
Persons, in each case to the extent such assignees, investors, participants,

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counterparties or Related Persons agree to be bound by provisions substantially
similar to the provisions of this Section 9.10 and (viii) in connection with the
exercise of any remedy under any Loan Document. The Agent, L/C Issuer and each
Lender agrees that upon the expiration of the three (3) year period noted above,
the Agent, L/C Issuer or such Lender shall destroy or return to the Borrowers
the Confidential Information; provided, however that the Agent, L/C Issuer or
such Lender shall be permitted to retain a copy of the Confidential Information
pursuant to its record retention policy. The Agent, L/C Issuer and each Lender
hereby agree to use commercially reasonable efforts to notify the Borrower
promptly upon the Agent, L/C Issuer or such Lender obtaining knowledge of any
unauthorized use or disclosure of the Confidential Information; provided,
however that the Agent, L/C Issuer or such Lender shall not be liable for any
damages as a result of failing to provide such notice. In the event of any
conflict between the terms of this Section 9.10 and those of any other
Contractual Obligation entered into with any Credit Party (whether or not a Loan
Document), the terms of this Section 9.10 shall govern.
Each Credit Party consents to the publication by Agent or any Lender of
advertising material relating to the financing transactions contemplated by this
Agreement using Borrowers’ or any other Credit Party’s name, product
photographs, logo or trademark. Agent or such Lender shall provide a draft of
any advertising material to Borrowers for review and comment prior to the
publication thereof.
     9.11 Set-off; Sharing of Payments.
          (a) Right of Setoff. Each of the Agent, each Lender, each L/C Issuer
and each Control Affiliate (including each branch office thereof) of any of them
is hereby authorized, without notice or demand (each of which is hereby waived
by each Credit Party), at any time and from time to time during the continuance
of any Event of Default and to the fullest extent permitted by applicable
Requirements of Law, to set off and apply any and all deposits (whether general
or special, time or demand, provisional or final) at any time held and other
Indebtedness, claims or other obligations at any time owing by the Agent, such
Lender, such L/C Issuer or any of their respective Control Affiliates to or for
the credit or the account of the Borrowers or any other Credit Party against any
Obligation of any Credit Party now or hereafter existing, whether or not any
demand was made under any Loan Document with respect to such Obligation and even
though such Obligation may be unmatured. Each of the Agent, each Lender and each
L/C Issuer agrees promptly to notify the Borrower Representative and the Agent
after any such setoff and application made by such Lender or its Control
Affiliates; provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights under this
Section 9.11 are in addition to any other rights and remedies (including other
rights of setoff) that the Agent, the Lenders, and the L/C Issuers, their
Control Affiliates and the other Secured Parties may have.
          (b) Sharing of Payments, Etc. If any Lender, directly or through an
Control Affiliate or branch office thereof, obtains any payment of any
Obligation of any Credit Party (whether voluntary, involuntary or through the
exercise of any right of setoff or the receipt of any Collateral or “proceeds”
(as defined under the applicable UCC) of Collateral) other than pursuant to
Article X and such payment exceeds the amount such

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Lender would have been entitled to receive if all payments had gone to, and been
distributed by, the Agent in accordance with the provisions of the Loan
Documents, such Lender shall purchase for cash from other Lenders such
participations in their Obligations as necessary for such Lender to share such
excess payment with such Lenders to ensure such payment is applied as though it
had been received by the Agent and applied in accordance with this Agreement
(or, if such application would then be at the discretion of the Borrowers,
applied to repay the Obligations in accordance herewith); provided, however,
that (a) if such payment is rescinded or otherwise recovered from such Lender or
L/C Issuer in whole or in part, such purchase shall be rescinded and the
purchase price therefor shall be returned to such Lender or L/C Issuer without
interest and (b) such Lender shall, to the fullest extent permitted by
applicable Requirements of Law, be able to exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Lender were the direct creditor of the applicable Credit Party in the
amount of such participation.
     9.12 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart. Delivery of an executed signature page of this Agreement by
facsimile transmission or Electronic Transmission shall be as effective as
delivery of a manually executed counterpart hereof.
     9.13 Severability; Facsimile Signature. The illegality or unenforceability
of any provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder. Any Loan Document, or other agreement, document or
instrument, delivered by facsimile transmission shall have the same force and
effect as if the original thereof had been delivered.
     9.14 Captions. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
     9.15 Independence of Provisions. The parties hereto acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
     9.16 Interpretation. This Agreement is the result of negotiations among and
has been reviewed by counsel to the Agent, each Lender and other parties hereto,
and is the product of all parties hereto. Accordingly, this Agreement and the
other Loan Documents shall not be construed against the Lenders or the Agent
merely because of the Agent’s or Lenders’ involvement in the preparation of such
documents and agreements.

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     9.17 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Borrowers, the other Credit
Parties, the Lenders, the L/C Issuer, the Agent, and subject to the provisions
of Section 8.11 hereof, each other Secured Party, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents. Neither the Agent nor any
Lender shall have any obligation to any Person not a party to this Agreement or
the other Loan Documents.
     9.18 Governing Law and Jurisdiction.
          (a) Governing Law. The laws of the State of New York shall govern all
matters arising out of, in connection with or relating to this Agreement,
including, without limitation, its validity, interpretation, construction,
performance and enforcement.
          (b) Submission to Jurisdiction. Any legal action or proceeding with
respect to any Loan Document may be brought in the courts of the State of New
York located in the City of New York, Borough of Manhattan, or of the United
States of America for the Southern District of New York and, by execution and
delivery of this Agreement, each Borrower and each other Credit Party executing
this Agreement hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
parties hereto (and, to the extent set forth in any other Loan Document, each
other Credit Party) hereby irrevocably waive any objection, including any
objection to the laying of venue or based on the grounds of forum non
conveniens, that any of them may now or hereafter have to the bringing of any
such action or proceeding in such jurisdictions.
          (c) Service of Process. Each Credit Party hereby irrevocably waives
personal service of any and all legal process, summons, notices and other
documents and other service of process of any kind and consents to such service
in any suit, action or proceeding brought in the United States of America with
respect to or otherwise arising out of or in connection with any Loan Document
by any means permitted by applicable Requirements of Law, including by the
mailing thereof (by registered or certified mail, postage prepaid) to the
address of Borrowers specified herein (and shall be effective when such mailing
shall be effective, as provided therein). Each Credit Party agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
          (d) Non-Exclusive Jurisdiction. Nothing contained in this Section 9.18
shall affect the right of Agent or any Lender to serve process in any other
manner permitted by applicable Requirements of Law or commence legal proceedings
or otherwise proceed against any Credit Party in any other jurisdiction.
     9.19 Waiver of Jury Trial. THE PARTIES HERETO, TO THE EXTENT PERMITTED BY
LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY

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ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO,
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED
HEREBY AND THEREBY. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING
WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.
     9.20 Entire Agreement; Release; Survival.
          (a) THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER
THEREOF AND ANY PRIOR LETTER OF INTEREST, COMMITMENT LETTER, CONFIDENTIALITY AND
SIMILAR AGREEMENTS INVOLVING ANY CREDIT PARTY AND ANY OF LENDER OR ANY L/C
ISSUER OR ANY OF THEIR RESPECTIVE AFFILIATES RELATING TO A FINANCING OF
SUBSTANTIALLY SIMILAR FORM, PURPOSE OR EFFECT OTHER THAN THE FEE LETTER. IN THE
EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THIS AGREEMENT AND ANY OTHER LOAN
DOCUMENT, THE TERMS OF THIS AGREEMENT SHALL GOVERN (UNLESS SUCH TERMS OF SUCH
OTHER LOAN DOCUMENTS ARE NECESSARY TO COMPLY WITH APPLICABLE REQUIREMENTS OF
LAW, IN WHICH CASE SUCH TERMS SHALL GOVERN TO THE EXTENT NECESSARY TO COMPLY
THEREWITH).
          (b) Execution of this Agreement by the Credit Parties constitutes a
full, complete and irrevocable release of any and all claims which each Credit
Party may have at law or in equity in respect of all prior discussions and
understandings, oral or written, relating to the subject matter of this
Agreement and the other Loan Documents. In no event shall any Indemnitee be
liable on any theory of liability for any special, indirect, consequential or
punitive damages (including any loss of profits, business or anticipated
savings). Each Borrower and each other Credit Party signatory hereto hereby
waives, releases and agrees (and shall cause each other Credit Party to waive,
release and agree) not to sue upon any such claim for any special, indirect,
consequential or punitive damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
          (c) (i) Any indemnification or other protection provided to any
Indemnitee pursuant to Article VIII (The Agent), Section 9.5 (Costs and
Expenses), Section 9.6 (Indemnity), this Section 9.20, and Article X (Taxes,
Yield Protection and Illegality) of this Agreement, (ii) solely for the two (2)
year time period specified therein, the provisions of Section 9.10 of this
Agreement and (iii) the provisions of Section 8.1 of the Guaranty and Security
Agreement, in each case, shall (x) survive the termination of the Commitments
and the payment in full of all other Obligations and (y) with respect to clause
(i) hereof, inure to the benefit of any Person that at any time held a right
thereunder (as an Indemnitee or otherwise) and, thereafter, its successors and
permitted assigns.

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     9.21 Patriot Act. Each Lender that is subject to the Patriot Act hereby
notifies the Borrowers that pursuant to the requirements of the Patriot Act, it
is required to obtain, verify and record information that identifies each
Borrower, which information includes the name and address of each Borrower and
other information that will allow such Lender to identify each Borrower in
accordance with the Patriot Act.
     9.22 Replacement of Lender. Within forty-five days after: (i) receipt by
the Borrower Representative of written notice and demand from any Lender (an
“Affected Lender”) for payment of additional costs as provided in Sections 10.1,
10.3 and/or 10.6; (ii) any default by a Lender in its obligation to make Loans
hereunder after all conditions thereto have been satisfied or waived in
accordance with the terms hereof, provided such default shall not have been
cured; or (iii) any failure by any Lender to consent to a requested amendment,
waiver or modification to any Loan Document in which Required Lenders have
already consented to such amendment, waiver or modification but the consent of
each Lender (or each Lender directly affected thereby, as applicable) is
required with respect thereto, the Borrowers may, at their option, notify the
Agent and such Affected Lender (or such defaulting or non-consenting Lender, as
the case may be) of the Borrowers’ intention to obtain, at the Borrowers’
expense, a replacement Lender (“Replacement Lender”) for such Affected Lender
(or such defaulting or non-consenting Lender, as the case may be), which
Replacement Lender shall be reasonably satisfactory to the Agent. In the event
the Borrowers obtain a Replacement Lender within forty-five (45) days following
notice of its intention to do so, the Affected Lender (or defaulting or
non-consenting Lender, as the case may be) shall sell and assign its Loans and
Commitments to such Replacement Lender, at par, provided that the Borrowers have
reimbursed such Affected Lender for its increased costs for which it is entitled
to reimbursement under this Agreement through the date of such sale and
assignment. In the event that a replaced Lender does not execute an Assignment
pursuant to Section 9.9 within five (5) Business Days after receipt by such
replaced Lender of notice of replacement pursuant to this Section 9.22 and
presentation to such replaced Lender of an Assignment evidencing an assignment
pursuant to this Section 9.22, the Borrowers shall be entitled (but not
obligated) to execute such an Assignment on behalf of such replaced Lender, and
any such Assignment so executed by the Borrowers, the Replacement Lender and the
Agent, shall be effective for purposes of this Section 9.22 and Section 9.9.
Upon any such assignment and payment and compliance with the other provisions of
Section 9.9, such replaced Lender shall no longer constitute a “Lender” for
purposes hereof; provided, any rights of such replaced Lender to indemnification
hereunder shall survive as to such replaced Lender.
     9.23 Joint and Several. The obligations of the Credit Parties hereunder and
under the other Loan Documents are joint and several.
     9.24 Creditor-Debtor Relationship. The relationship between Agent, each
Lender and the L/C Issuer, on the one hand, and the Credit Parties, on the other
hand, is solely that of creditor and debtor. No Secured Party has any fiduciary
relationship or duty to any Credit Party arising out of or in connection with,
and there is no agency, tenancy or joint venture relationship between the
Secured Parties and the Credit Parties by virtue of, any Loan Document or any
transaction contemplated therein.

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     9.25 Location of Closing. Each Lender acknowledges and agrees that it has
delivered, with the intent to be bound, its executed counterparts of this
Agreement to the Agent, c/o King & Spalding LLP, 1185 Avenue of the Americas,
New York, New York 10036. Each Borrower acknowledges and agrees that it has
delivered, with the intent to be bound, its executed counterparts of this
Agreement and each other Loan Document, together with all other documents,
instruments, opinions, certificates and other items required under Section 2.1,
to the Agent, c/o King & Spalding LLP, 1185 Avenue of the Americas, New York,
New York 10036. All parties agree that closing of the transactions contemplated
by this Credit Agreement has occurred in New York.
ARTICLE X.
TAXES, YIELD PROTECTION AND ILLEGALITY
     10.1 Taxes.
          (a) Except as otherwise provided in this Section 10.1, each payment by
any Credit Party under any Loan Document shall be made free and clear of all
present or future taxes, levies, imposts, deductions, charges or withholdings
and all liabilities with respect thereto (and without deduction for any of them)
(collectively, but excluding the taxes set forth in clauses (i) and (ii) below,
the “Taxes”) other than for (i) taxes measured by net income (including branch
profits taxes) and franchise taxes imposed in lieu of net income taxes, in each
case imposed on any Secured Party as a result of a present or former connection
between such Person and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than such connection arising solely from any Secured Party having
executed, delivered or performed its obligations or received a payment under, or
enforced, any Loan Document) or (ii) taxes that are directly attributable to the
failure (other than as a result of a change in any Requirement of Law) by Agent
or any Lender to deliver the documentation required to be delivered pursuant to
clause (f) below.
          (b) If any Taxes shall be required by law to be deducted from or in
respect of any amount payable under any Loan Document to any Secured Party
(i) such amount shall be increased as necessary to ensure that, after all
required deductions for Taxes are made (including deductions applicable to any
increases to any amount under this Section 10.1), such Secured Party receives
the amount it would have received had no such deductions been made, (ii) the
relevant Credit Party shall make such deductions, (iii) the relevant Credit
Party shall timely pay the full amount deducted to the relevant taxing authority
or other authority in accordance with applicable Requirements of Law and
(iv) within 30 days after such payment is made, the relevant Credit Party shall
deliver to the Agent an original or certified copy of a receipt evidencing such
payment; provided, however, that no such increase shall be made with respect to,
and no Credit Party shall be required to indemnify any Secured Party pursuant to
clause (d) below for, withholding taxes to the extent that the obligation to
withhold amounts existed on the date that such Person became a Secured Party
under this Agreement in the capacity under which such Person makes a claim under
this clause (b), except in each case to the extent such Person is a direct or
indirect assignee (other than pursuant to Section 9.22) of any other Secured

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Party that was entitled, at the time the assignment to such Person became
effective, to receive additional amounts under this clause (b).
          (c) In addition, Borrowers agree to pay, and authorize the Agent to
pay in their name, any stamp, documentary, excise or property tax, charges or
similar levies imposed by any applicable Requirement of Law or Governmental
Authority and all Liabilities with respect thereto (including by reason of any
delay in payment thereof), in each case arising from the execution, delivery or
registration of, or otherwise with respect to, any Loan Document or any
transaction contemplated therein (collectively, “Other Taxes”). The Swingline
Lender may, without any need for notice, demand or consent from the Borrowers,
by making funds available to the Agent in the amount equal to any such payment,
make a Swing Loan to the Borrowers in such amount, the proceeds of which shall
be used by the Agent in whole to make such payment. Within 30 days after the
date of any payment of Taxes or Other Taxes by any Credit Party, the Borrowers
shall furnish to the Agent, at its address referred to in Section 9.2, the
original or a certified copy of a receipt evidencing payment thereof.
          (d) Borrowers shall reimburse and indemnify, within 30 days after
receipt of demand therefor (with copy to the Agent), each Secured Party for all
Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any
jurisdiction on amounts payable under this Section 10.1) paid by such Secured
Party and any Liabilities arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted. A certificate
of the Secured Party (or of the Agent on behalf of such Secured Party) claiming
any compensation under this clause (d), setting forth the amounts to be paid
thereunder and delivered to the Borrower Representative with copy to the Agent,
shall be conclusive, binding and final for all purposes, absent manifest error.
In determining such amount, the Agent and such Secured Party may use any
reasonable averaging and attribution methods.
          (e) Any Lender claiming any additional amounts payable pursuant to
this Section 10.1 shall use its reasonable efforts (consistent with its internal
policies and Requirements of Law) to change the jurisdiction of its lending
office if such a change would reduce any such additional amounts (or any similar
amount that may thereafter accrue) and would not, in the sole determination of
such Lender, be otherwise disadvantageous to such Lender.
          (f) (i) Each Non-U.S. Lender Party that, at any of the following
times, is entitled to an exemption from United States withholding tax or, after
a change in any Requirement of Law, is subject to such withholding tax at a
reduced rate under an applicable tax treaty, shall (w) on or prior to the date
such Non-U.S. Lender Party becomes a “Non-U.S. Lender Party” hereunder, (x) on
or prior to the date on which any such form or certification expires or becomes
obsolete, (y) after the occurrence of any event requiring a change in the most
recent form or certification previously delivered by it pursuant to this clause
(i) and (z) from time to time if requested by the Borrower Representative or the
Agent (or, in the case of a participant or SPV, the relevant Lender), provide
the Agent and the Borrower Representative (or, in the case of a participant or
SPV, the relevant Lender) with two completed originals of each of the following,
as

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applicable: (A) Forms W-8ECI (claiming exemption from U.S. withholding tax
because the income is effectively connected with a U.S. trade or business),
W-8BEN (claiming exemption from, or a reduction of, U.S. withholding tax under
an income tax treaty) and/or W-8IMY or any successor forms, (B) in the case of a
Non-U.S. Lender Party claiming exemption under Sections 871(h) or 881(c) of the
Code, Form W-8BEN (claiming exemption from U.S. withholding tax under the
portfolio interest exemption) or any successor form and a certificate in form
and substance acceptable to the Agent that such Non-U.S. Lender Party is not
(1) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (2) a
“10 percent shareholder” of the Borrowers within the meaning of
Section 881(c)(3)(B) of the Code or (3) a “controlled foreign corporation”
described in Section 881(c)(3)(C) of the Code or (C) any other applicable
document prescribed by the IRS certifying as to the entitlement of such Non-U.S.
Lender Party to such exemption from United States withholding tax or reduced
rate with respect to all payments to be made to such Non-U.S. Lender Party under
the Loan Documents. Unless the Borrower Representative and the Agent have
received forms or other documents satisfactory to them indicating that payments
under any Loan Document to or for a Non-U.S. Lender Party are not subject to
United States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Credit Parties and the Agent shall withhold amounts
required to be withheld by applicable Requirements of Law from such payments at
the applicable statutory rate.
          (ii) Each U.S. Lender Party shall (A) on or prior to the date such
U.S. Lender Party becomes a “U.S. Lender Party” hereunder, (B) on or prior to
the date on which any such form or certification expires or becomes obsolete,
(C) after the occurrence of any event requiring a change in the most recent form
or certification previously delivered by it pursuant to this clause (f) and
(D) from time to time if requested by the Borrower Representative or the Agent
(or, in the case of a participant or SPV, the relevant Lender), provide the
Agent and the Borrower Representative (or, in the case of a participant or SPV,
the relevant Lender) with two completed originals of Form W-9 (certifying that
such U.S. Lender Party is entitled to an exemption from U.S. backup withholding
tax) or any successor form.
          (iii) Each Lender having sold a participation in any of its
Obligations or identified an SPV as such to the Agent shall collect from such
participant or SPV the documents described in this clause (f) and provide them
to the Agent.
     10.2 Illegality. If after the date hereof any Lender shall determine that
the introduction of any Requirement of Law, or any change in any Requirement of
Law or in the interpretation or administration thereof, has made it unlawful, or
that any central bank or other Governmental Authority has asserted that it is
unlawful, for any Lender or its Lending Office to make LIBOR Rate Loans, then,
on notice thereof by such Lender to the Borrowers through the Agent, the
obligation of that Lender to make LIBOR Rate Loans shall be suspended until such
Lender shall have notified the Agent and the Borrower Representative that the
circumstances giving rise to such determination no longer exists.

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          (a) Subject to clause (c) below, if any Lender shall determine that it
is unlawful to maintain any LIBOR Rate Loan, the Borrowers shall prepay in full
all LIBOR Rate Loans of such Lender then outstanding, together with interest
accrued thereon, either on the last day of the Interest Period thereof if such
Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBOR
Rate Loans, together with any amounts required to be paid in connection
therewith pursuant to Section 10.4.
          (b) If the obligation of any Lender to make or maintain LIBOR Rate
Loans has been terminated, the Borrowers may elect, by giving notice to such
Lender through the Agent, that all Loans which would otherwise be made by any
such Lender as LIBOR Rate Loans shall be instead Base Rate Loans.
          (c) Before giving any notice to the Agent pursuant to this
Section 10.2, the affected Lender shall designate a different Lending Office
with respect to its LIBOR Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Lender, be illegal or otherwise disadvantageous to the Lender.
     10.3 Increased Costs and Reduction of Return.
          (a) If any Lender or L/C Issuer shall determine that, due to either
(i) the introduction of, or any change in, or in the interpretation of, any law
or regulation or (ii) the compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law), in the case of either clause (i) or (ii) subsequent to the date hereof,
there shall be any increase in the cost to such Lender or L/C Issuer of agreeing
to make or making, funding or maintaining any LIBOR Rate Loans or of issuing or
maintain any Letter of Credit, then the Borrowers shall be liable for, and shall
from time to time, within thirty (30) days of demand therefor by such Lender or
L/C Issuer (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender or L/C Issuer, additional amounts as are sufficient to
compensate such Lender or L/C Issuer for such increased costs; provided, that
the Borrowers shall not be required to compensate any Lender or L/C Issuer
pursuant to this Section for any increased costs incurred more than 180 days
prior to the date that such Lender or L/C Issuer notifies the Borrower
Representative, in writing of the increased costs and of such Lender’s or L/C
Issuer’s intention to claim compensation thereof; provided, further, that if the
circumstance giving rise to such increased costs is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
          (b) If any Lender or L/C Issuer shall have determined that:
               (i) the introduction of any Capital Adequacy Regulation;
               (ii) any change in any Capital Adequacy Regulation;

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               (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof; or
               (iv) compliance by such Lender or L/C Issuer (or its Lending
Office) or any entity controlling the Lender or L/C Issuer pursuant to the order
of any Governmental Authority issued after the date hereof, with any Capital
Adequacy Regulation;
affects the amount of capital required or expected to be maintained by such
Lender or L/C Issuer or any entity controlling such Lender or L/C Issuer and
(taking into consideration such Lender’s or such entities’ policies with respect
to capital adequacy and such Lender’s or L/C Issuer’s desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitment(s), loans, credits or obligations under this Agreement, then, within
thirty (30) days of demand of such Lender or L/C Issuer (with a copy to the
Agent), the Borrowers shall pay to such Lender or L/C Issuer, from time to time
as specified by such Lender or L/C Issuer, additional amounts sufficient to
compensate such Lender or L/C Issuer (or the entity controlling the Lender or
L/C Issuer) for such increase; provided, that the Borrowers shall not be
required to compensate any Lender or L/C Issuer pursuant to this Section for any
amounts incurred more than 180 days prior to the date that such Lender or L/C
Issuer notifies the Borrower Representative, in writing of the amounts and of
such Lender’s or L/C Issuer’s intention to claim compensation thereof; provided,
further, that if the event giving rise to such increase is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
     10.4 Funding Losses. The Borrowers agree to reimburse each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of:
          (a) the failure of the Borrowers to make any payment or mandatory
prepayment of principal of any LIBOR Rate Loan (including payments made after
any acceleration thereof);
          (b) the failure of the Borrowers to borrow, continue or convert a Loan
after the Borrower Representative has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation;
          (c) the failure of the Borrowers to make any prepayment after the
Borrowers have given a notice in accordance with Section 1.7;
          (d) the prepayment (including pursuant to Section 1.8) of a LIBOR Rate
Loan on a day which is not the last day of the Interest Period with respect
thereto; or
          (e) the conversion pursuant to Section 1.6 of any LIBOR Rate Loan to a
Base Rate Loan on a day that is not the last day of the applicable Interest
Period;

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including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans hereunder or from fees
payable to terminate the deposits from which such funds were obtained. Solely
for purposes of calculating amounts payable by the Borrowers to the Lenders
under this Section 10.4 and under subsection 10.3(a): each LIBOR Rate Loan made
by a Lender (and each related reserve, special deposit or similar requirement)
shall be conclusively deemed to have been funded at the LIBOR used in
determining the interest rate for such LIBOR Rate Loan by a matching deposit or
other borrowing in the interbank eurodollar market for a comparable amount and
for a comparable period, whether or not such LIBOR Rate Loan is in fact so
funded.
     10.5 Inability to Determine Rates. If the Agent shall have determined in
good faith that for any reason adequate and reasonable means do not exist for
ascertaining the LIBOR for any requested Interest Period with respect to a
proposed LIBOR Rate Loan, the Agent will forthwith give notice of such
determination to the Borrower Representative and each Lender. Thereafter, the
obligation of the Lenders to make or maintain LIBOR Rate Loans hereunder shall
be suspended until the Agent revokes such notice in writing. Upon receipt of
such notice, the Borrower Representative may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the Borrower
Representative does not revoke such notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower Representative, in the amount
specified in the applicable notice submitted by the Borrower Representative, but
such Loans shall be made, converted or continued as Base Rate Loans.
     10.6 Reserves on LIBOR Rate Loans. The Borrowers shall pay to each Lender,
as long as such Lender shall be required under regulations of the Federal
Reserve Board to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
“Eurocurrency liabilities”), additional costs on the unpaid principal amount of
each LIBOR Rate Loan equal to actual costs of such reserves allocated to such
Loan by such Lender (as determined by such Lender in good faith, which
determination shall be conclusive absent manifest error), payable on each date
on which interest is payable on such Loan provided the Borrower Representative
shall have received at least fifteen (15) days’ prior written notice (with a
copy to the Agent) of such additional interest from the Lender. If a Lender
fails to give notice fifteen (15) days prior to the relevant Interest Payment
Date, such additional interest shall be payable fifteen (15) days from receipt
of such notice.
     10.7 Certificates of Lenders. Any Lender claiming reimbursement or
compensation pursuant to this Article X shall deliver to the Borrower
Representative (with a copy to the Agent) a certificate setting forth in
reasonable detail the amount payable to such Lender hereunder and such
certificate shall be conclusive and binding on the Borrowers in the absence of
manifest error.
ARTICLE XI.
DEFINITIONS

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     11.1 Defined Terms. The following terms are defined in the Sections or
subsections referenced opposite such terms:

     
“956 Impact”
  4.13(b)
“Additional Lender”
  1.16(b)
“Affected Lender”
  9.22
“Akorn”
  Preamble
“Akorn NJ”
  Preamble
“Borrower” and “Borrowers”
  Preamble
“Borrower Representative”
  1.17
“Capital Expenditures”
  Exhibit 4.2(b)
“Cash Management Systems”
  4.11
“Closing Checklist”
  2.1(a)
“Compliance Certificate”
  4.2(b)
“Concentration Account”
  Exhibit 4.11
“Concentration Limit”
  Exhibit 11.1(f)
“Confidential Information”
  9.10
“Disbursement Account” and “Disbursement Accounts”
  Exhibit 4.11
“EBITDA”
  Exhibit 4.2(b)
“Eligible Accounts”
  Exhibit 11.1(f)
“Eligible Inventory”
  Exhibit 11.1(g)
“Event of Default”
  7.1
“Exchange Act”
  3.26
“FDA Laws”
  4.8(c)
“Federal Healthcare Program Laws”
  3.23(c)
“Fee Letter”
  1.9(a)
“Fixed Charge Coverage Ratio”
  Exhibit 4.2(b
“Guaranteed Obligations”
  12.1
“Incremental Revolver”
  1.16(a)
“Indemnified Matters”
  9.5
“Indemnitee”
  9.5
“L/C Reimbursement Agreement”
  1.1(c)
“L/C Reimbursement Date”
  1.1(c)
“L/C Request”
  1.1(c)
“L/C Sublimit”
  1.1(c)
“Lender”
  Preamble
“Letter of Credit Fee”
  1.9(c)
“Lock Box”
  Exhibit 4.11
“Lock Box Account”
  Exhibit 4.11
“Lock Box Bank”
  Exhibit 4.11
“Maximum Lawful Rate”
  1.3(d)
“Maximum Revolving Loan Balance”
  1.1(b)
“Non-Funding Lender”
  1.11(b)
“Notice of Conversion/Continuation”
  1.6(a)
“Other Lender”
  1.11(e)
“Other Taxes”
  10.1(b)
“Permitted Liens”
  5.1

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“Relationship Bank”
  Exhibit 4.11
“Register”
  1.4(b)
“Restricted Payments”
  5.11
“Replacement Lender”
  9.22
“Revolving Loan Commitment”
  1.1(b)
“Revolving Loan”
  1.1(b)
“Sale”
  9.9(a)
“SEC”
  3.26
“Settlement Date”
  1.11(b)
“Taxes”
  10.1(a)
“Unused Commitment Fee”
  1.9(b)

In addition to the terms defined elsewhere in this Agreement, the following
terms have the following meanings:
     “Account” means, as at any date of determination, any “account” (as such
term is defined in the UCC) of any Borrower or any of its Subsidiaries,
including, without limitation, the unpaid portion of the obligation of a
customer of a Borrower or any of its Subsidiaries in respect of Inventory
purchased by and shipped to such customer and/or the rendition of services by a
Borrower or such Subsidiary, as stated on the respective invoice of a Borrower
or such Subsidiary, net of any credits, rebates or offsets owed to such
customer.
     “Account Debtor” means the customer of a Borrower or any of its
Subsidiaries who is obligated on or under an Account.
     “Acquisition” means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business, product
line or division of a Person, (b) the acquisition of in excess of fifty percent
(50%) of the Stock and Stock Equivalents of any Person or otherwise causing any
Person to become a Subsidiary of a Borrower, or (c) a merger or consolidation or
any other combination with another Person.
     “Affiliate” means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of five percent
(5%) or more of the Stock (either directly or through ownership of Stock
Equivalents) of a Person shall for the purposes of this Agreement, be deemed to
control the other Person. Notwithstanding the foregoing, neither the Agent nor
any Lender shall be deemed an “Affiliate” of any Credit Party or of any
Subsidiary of any Credit Party.
     “Agent” means GE Capital in its capacity as administrative agent for the
Lenders hereunder, and any successor administrative agent.

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     “Aggregate Revolving Loan Commitment” means the combined Revolving Loan
Commitments of the Lenders, which shall initially be in the amount of
$25,000,000, as such amount may be reduced from time to time pursuant to this
Agreement.
     “Akorn Response” shall mean the response from Akorn, Inc. to the Parexel
Report delivered to Agent prior to closing.
     “Akorn Stock Plans” shall mean the (a) Amended and Restated Akorn, Inc.
1988 Incentive Compensation Program, (b) Amended and Restated 1991 Akorn, Inc.
Stock Option Plan for Directors, (c) Amended and Restated Akorn, Inc. 2003 Stock
Option Plan and (d) Amended and Restated Akorn, Inc. Employee Stock Purchase
Plan, each as amended, modified or restated and as in effect as of the Closing
Date.
     “ANDA” means Abbreviated New Drug Application with respect to applications
to the FDA for approval of certain generic drugs.
     “Applicable Margin” means:
     (a) for the period commencing on the Closing Date through April 14, 2009,
(i) (x) if a Base Rate Loan, four percent (4%) per annum and (y) if a LIBOR Rate
Loan, five percent (5%) per annum; and
     (b) thereafter, the Applicable Margin shall equal the applicable LIBOR
margin or Base Rate margin in effect from time to time determined as set forth
below based upon the applicable Average Unused Commitment Percentage for the
most recently ended fiscal quarter of Akorn, Inc. pursuant to the appropriate
column under the table below:

                  Average Unused         Commitment Percentage   LIBOR Margin  
Base Rate Margin
Less than 33.3333%
    4.75 %     3.75 %
Greater than or equal to 33.3333% but less than 66.6666%
    5.00 %     4.00 %
Greater than or equal to 66.6666%
    5.25 %     4.25 %

The Applicable Margin shall be adjusted on the fifteenth day after the end of
each fiscal quarter, commencing on April 15, 2009, based upon the Average Unused
Commitment Percentage for such fiscal quarter. Notwithstanding anything herein
to the contrary, Swing Loans may not be LIBOR Rate Loans.
     “Approved Bank” means any commercial bank that is (a) organized under the
laws of the United States, any state thereof or the District of Columbia, (b)
“adequately capitalized” (as defined in the regulations of its primary federal
banking regulators) and (c) has Tier 1 capital (as defined in such regulations)
in excess of $250,000,000.

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     “Assignment” means an assignment agreement entered into by a Lender, as
assignor, and any Person, as assignee, pursuant to the terms and provisions of
Section 9.9 (with the consent of any party whose consent is required by
Section 9.9), accepted by the Agent, in substantially the form of Exhibit
 11.1(a) or any other form approved by the Agent.
     “Attorney Costs” means and includes all reasonable fees and disbursements
of any law firm or other external counsel.
     “Availability” means, as of any date of determination, the amount by which
(a) the Maximum Revolving Loan Balance, exceeds (b) the aggregate outstanding
principal balance of the Revolving Credit Exposure.
     “Average Unused Commitment Percentage” means, for any period, (a) the
average outstanding Revolving Credit Exposure for such period, divided by
(b) the Aggregate Revolving Loan Commitment as of the last day of such period.
     “Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. §101, et seq.), as amended and in effect from time to time and the
regulations issued from time to time thereunder.
     “Base Rate” means, at any time, a rate per annum equal to the highest of
(a) the rate last quoted by the print version of The Wall Street Journal as the
“base rate on corporate loans posted by at least 75% of the nation’s largest
banks” in the United States or, if the print version of The Wall Street Journal
ceases to quote such rate, the highest per annum interest rate published by the
Federal Reserve Board in Federal Reserve Statistical Release H.15 (519)
(Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no
longer quoted therein, any similar rate quoted therein (as determined by Agent)
or any similar release by the Federal Reserve Board (as determined by Agent),
(b) the sum of 0.5% per annum and the Federal Funds Rate, and (c) the sum of
1.0% and LIBOR determined on a daily basis for a one-month Interest Period at
such time (or if such day is not a Business Day, the immediately preceding
Business Day); provided, however, that Base Rate shall be subject to adjustment
as contemplated in Section 1.3(e). Any change in the Base Rate due to a change
in any of the foregoing shall be effective on the effective date of such change
in the “bank prime loan” rate or the Federal Funds Rate.
     “Base Rate Loan” means a Loan that bears interest based on the Base Rate.
     “Benefit Plan” means any employee benefit plan as defined in Section 3(3)
of ERISA (whether governed by the laws of the United States or otherwise) to
which any Credit Party incurs or otherwise has any obligation or liability,
contingent or otherwise.
     “Borrowing” means a borrowing hereunder consisting of Loans made to or for
the benefit of the Borrowers on the same day by the Lenders pursuant to
Article I.
     “Borrowing Base” means, as of any date of determination by Agent, from time
to time, an amount equal to the sum at such time of (a) 85% of the book value of
Eligible Accounts; plus (b) the least of (1) 50% of the book value of Eligible
Inventory valued at

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the lower of cost (determined on an average cost basis) or market, (2) 85% of
the Net Orderly Liquidation Value of Eligible Inventory, (3) an amount such that
no more than 75% of the value of the Borrowing Base is attributable to Eligible
Inventory and (4) 75% of the Aggregate Revolving Loan Commitments; plus (c) 85%
of the Net Orderly Liquidation Value of Eligible Equipment; plus (d) 50% of the
Distressed Value of Eligible Real Estate, less (e) any Reserves established by
Agent at such time.
     “Borrowing Base Certificate” means a certificate of the Borrowers, in
substantially the form of Exhibit 11.1(b) hereto, duly completed as of a date
acceptable to the Agent in its sole discretion.
     “Business Day” means any day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close and, if the applicable Business Day relates to any LIBOR Rate Loan, a
day on which dealings are carried on in the London interbank market.
     “Capital Adequacy Regulation” means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Lender or of any corporation controlling a Lender.
     “Capital Lease” means any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease.
     “Capital Lease Obligations” means all monetary obligations of any Credit
Party or any Subsidiary of any Credit Party under any Capital Leases.
     “Cash Equivalents” means: (a) securities issued or fully guaranteed or
insured by the United States Government or any agency thereof having maturities
of not more than six (6) months from the date of acquisition; (b) certificates
of deposit, time deposits, repurchase agreements, reverse repurchase agreements,
or bankers’ acceptances, having in each case a tenor of not more than six
(6) months, issued by any Lender, or by any U.S. commercial bank or any branch
or agency of a non-U.S. bank licensed to conduct business in the U.S. having
combined capital and surplus of not less than $250,000,000; (c) commercial paper
of an issuer rated at least A-1 by Standard & Poor’s Corporation or P-1 by
Moody’s Investors Service Inc. and in either case having a tenor of not more
than three (3) months and (d) money market funds provided that substantially all
of the assets of such fund are comprised of securities of the type described in
clauses (a) through (c).
     “Closing Date” means the date on which all conditions precedent set forth
in Section 2.1 are satisfied or waived by the Agent and all Lenders.
     “Code” means the Internal Revenue Code of 1986, and regulations promulgated
thereunder.
     “Collateral” means all Property and interests in Property and proceeds
thereof now owned or hereafter acquired by any Credit Party, any of their
respective Subsidiaries and any other Person who has granted a Lien to the
Agent, in or upon which a Lien now

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or hereafter exists in favor of any Lender or the Agent for the benefit of the
Agent, Lenders and other Secured Parties, whether under this Agreement or under
any other documents executed by any such Persons and delivered to the Agent.
     “Collateral Access Agreement” means an agreement in form and substance
reasonably satisfactory to the Agent, executed by a landlord or mortgagee of
real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory, Equipment or other
property owned by any Credit Party.
     “Collateral Documents” means, collectively, the Guaranty and Security
Agreement, the Mortgages, the Control Agreements, the Collateral Access
Agreements and all other security agreements, pledge agreements, patent and
trademark security agreements, lease assignments, guarantees and other similar
agreements, and all amendments, restatements, modifications or supplements
thereof or thereto, by or between any one or more of any Credit Party, any of
their respective Subsidiaries or any other Person pledging or granting a lien on
Collateral or guaranteeing the payment and performance of the Obligations, and
any Lender or the Agent for the benefit of the Agent, Lenders and other Secured
Parties now or hereafter delivered to the Lenders or the Agent pursuant to or in
connection with the transactions contemplated hereby, and all financing
statements (or comparable documents now or hereafter filed in accordance with
the UCC or comparable law) against any such Person as debtor in favor of any
Lender or the Agent for the benefit of the Agent, Lenders and the other Secured
Parties, as secured party, as any of the foregoing may be amended, restated
and/or modified from time to time.
     “Collection Account” means that certain account of Agent, account number
50271079 in the name of Agent at Deutsche Bank Trust Company Americas in New
York, New York, ABA No. 021-001-033, or such other account as may be specified
in writing by Agent as the “Collection Account.”
     “Commitment” means, for each Lender, its Revolving Loan Commitment.
     “Commitment Percentage” means, as to any Lender, the percentage equivalent
of such Lender’s Revolving Loan Commitment divided by the Aggregate Revolving
Loan Commitment.
     “Contingent Obligation” means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person: (a) with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (b) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; (c) under
any Rate Contracts; (d) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement; or
(e) for the obligations of another Person through any agreement to purchase,
repurchase or otherwise acquire such obligation or any

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Property constituting security therefor, to provide funds for the payment or
discharge of such obligation or to maintain the solvency, financial condition or
any balance sheet item or level of income of another Person. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if not a fixed and determined amount, the
maximum amount so guaranteed or supported.
     “Contractual Obligations” means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its Property is bound.
     “Control Affiliate” means any Affiliate without giving effect to the third
sentence of the definition of Affiliate.
     “Control Agreement” means a tri-party deposit account, securities account
or commodities account control agreement by and among the applicable Credit
Party, Agent and the depository, securities intermediary or commodities
intermediary, and each in form and substance reasonably satisfactory in all
respects to Agent and in any event providing to Agent “control” of such deposit
account, securities or commodities account within the meaning of Articles 8 and
9 of the UCC.
     “Conversion Date” means any date on which the Borrowers convert a Base Rate
Loan to a LIBOR Rate Loan or a LIBOR Rate Loan to a Base Rate Loan.
     “Copyrights” means all rights, title and interests (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to
copyrights and all mask work, database and design rights, whether or not
registered or published, all registrations and recordations thereof and all
applications in connection therewith.
     “Credit Parties” means each Borrower and each other Person (a) which
executes this Agreement as a “Credit Party,” (b) which executes a guaranty of
the Obligations, (c) which grants a Lien on all or substantially all of its
assets to secure payment of the Obligations and (d) all of the Stock of which is
pledged to Agent for the benefit of the Secured Parties.
     “Default” means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured or otherwise remedied during
such time) constitute an Event of Default.
     “Disposition” means (a) the sale, lease, conveyance or other disposition of
Property, other than sales or other dispositions expressly permitted under
subsection 5.2(a), 5.2(c) and 5.2(d), and (b) the sale or transfer by a Borrower
or any Subsidiary of a Borrower of any Stock or Stock Equivalent issued by any
Subsidiary of a Borrower and held by such transferor Person.
     “Distressed Value” shall mean, with respect to Eligible Real Estate, the
“Go-Dark” liquidation value of the Eligible Real Estate expected to be realized
assuming a three to six month sale thereof.

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     “Dollars”, “dollars” and “$” each mean lawful money of the United States of
America.
     “Domestic Subsidiary” means, with respect to any Person, a Subsidiary of
such Person, which Subsidiary is incorporated or otherwise organized under the
laws of a state of the United States of America.
     “Electronic Transmission” means each document, instruction, authorization,
file, information and any other communication transmitted, posted or otherwise
made or communicated by e-mail or E-Fax, or otherwise to or from an E-System or
other equivalent service.
     “Eligible Equipment” shall mean all machinery and equipment owned by the
Borrowers and subject to the most recent Equipment Appraisal delivered to the
Agent.
     “Eligible Real Estate” shall mean the Real Estate owned by the Borrowers in
fee simple located in Decatur, Illinois consisting of two parcels located at 150
South Wyckles Road and 1222 West Grand Avenue; provided, however, that (i) no
Real Estate subject to any proceedings, instituted or threatened, seeking
condemnation or a taking by eminent domain or like process shall constitute
“Eligible Real Estate” hereunder and (ii) no Real Estate shall constitute
“Eligible Real Estate” hereunder until the Junior Mortgage (including Security
Agreement, Assignment of Rents and Leases, and Fixture Filing, dated March 21,
2001), executed by Akorn, Inc. to The Northern Trust Company, filed on May 7,
2001 in the real estate records of Macon County, Illinois at Book 3056 Page 544
as document no. 1563431 (the “Northern Trust Mortgage”) has been terminated and
each title policy has been endorsed to remove the Northern Trust Mortgage as an
exception thereto, all to the satisfaction of Agent.
     “Environmental Laws” means all present and future Requirements of Law and
Permits imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and natural
resources, and including public notification requirements and environmental
transfer of ownership, notification or approval statutes.
     “Environmental Liabilities” means all Liabilities (including costs of
Remedial Actions, natural resource damages and costs and expenses of
investigation and feasibility studies) that may be imposed on, incurred by or
asserted against any Credit Party or any Subsidiary of any Credit Party as a
result of, or related to, any claim, suit, action, investigation, proceeding or
demand by any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or common law or
otherwise, arising under any Environmental Law or in connection with any
environmental, health or safety condition or with any Release and resulting from
the ownership, lease, sublease or other operation or occupation of property by
any Credit Party or any Subsidiary of any Credit Party, whether on, prior or
after the date hereof.
     “Equipment Appraisal” means the appraisal of the Eligible Equipment of the
Borrowers delivered to the Agent specifying the Net Orderly Liquidation Value of
such

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Eligible Equipment and performed by an independent appraiser acceptable to the
Agent; if more than one such Equipment Appraisal has been conducted, then the
Net Orderly Liquidation Value on any date for the Eligible Equipment of the
Borrowers shall be the value determined from the most recent Equipment Appraisal
that is conducted pursuant to this Agreement and the report of which is
satisfactory to the Agent. The initial Equipment Appraisal shall mean the
appraisal of the Eligible Equipment dated as of September 5, 2008 and performed
by AccuVal Associates, Incorporated.
     “ERISA” means the Employee Retirement Income Security Act of 1974.
     “ERISA Affiliate” means, collectively, any Credit Party and any Person
under common control or treated as a single employer with, any Credit Party,
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
     “ERISA Event” means any of the following: (a) a reportable event described
in Section 4043(b) of ERISA (or, unless the 30-day notice requirement has been
duly waived under the applicable regulations, Section 4043(c) of ERISA) with
respect to a Title IV Plan; (b) the withdrawal of any ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any ERISA Affiliate from any Multiemployer
Plan; (d) with respect to any Multiemployer Plan, the filing of a notice of
reorganization, insolvency or termination (or treatment of a plan amendment as
termination) under Section 4041A of ERISA; (e) the filing of a notice of intent
to terminate a Title IV Plan (or treatment of a plan amendment as termination)
under Section 4041 of ERISA; (f) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure to make any
required contribution to any Title IV Plan or Multiemployer Plan when due;
(h) the imposition of a lien under Section 412 or 430(k) of the Code or
Section 302, 303(k) or 4068 of ERISA on any property (or rights to property,
whether real or personal) of any ERISA Affiliate or a violation of Section 436
of the Code with respect to a Title IV Plan; (i) the failure of a Benefit Plan
or any trust thereunder intended to qualify for tax exempt status under
Section 401 or 501 of the Code or other Requirements of Law to qualify
thereunder; and (j) any other event or condition that might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of any liability upon any ERISA
Affiliate under Title IV of ERISA other than for PBGC premiums due but not
delinquent.
     “Event of Loss” means, with respect to any Property, any of the following:
(a) any loss, destruction or damage of such Property; (b) any pending or
threatened (in writing) institution of any proceedings for the condemnation or
seizure of such Property or for the exercise of any right of eminent domain; or
(c) any actual condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, of such Property, or confiscation of such Property
or the requisition of the use of such Property.
     “Excluded Equity Issuance” means the issuance of (a) Stock or Stock
Equivalents by a Wholly-Owned Subsidiary of a Borrower to a Borrower or another
Wholly-Owned

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subsidiary of a Borrower constituting an Investment permitted hereunder and
(b) Stock or Stock Equivalents by a Foreign Subsidiary of such Foreign
Subsidiary to qualify directors where required pursuant to a Requirement of Law
or to satisfy other requirements of applicable law, in each instance, with
respect to the ownership of Stock of Foreign Subsidiaries.
     “E-Fax” means any system used to receive or transmit faxes electronically.
     “E-Signature” means the process of attaching to or logically associating
with an Electronic Transmission an electronic symbol, encryption, digital
signature or process (including the name or an abbreviation of the name of the
party transmitting the Electronic Transmission) with the intent to sign,
authenticate or accept such Electronic Transmission.
     “E-System” means any electronic system, including Intralinks® and ClearPar®
and any other Internet or extranet-based site, whether such electronic system is
owned, operated or hosted by Agent, any of its Related Persons or any other
Person, providing for access to data protected by passcodes or other security
system.
     “FDA” means the United States Food and Drug Administration and any
successor thereto.
     “Federal Funds Rate” means, for any day, the rate per annum (rounded upward
to the nearest 1/100th of 1%) equal to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such day, provided
that if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Agent on
such day on such transactions as determined by the Agent in a commercially
reasonable manner.
     “Federal Health Care Program” has the meaning specified in Section 1128B(f)
of the SSA and includes the Medicare, Medicaid and TRICARE programs.
     “Federal Reserve Board” means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.
     “Fees” means any and all fees payable to Agent or any Lender pursuant to
the Agreement or any of the other Loan Documents.
     “First Tier Foreign Subsidiary” means a Foreign Subsidiary more than fifty
percent (50%) of the voting Stock (directly or through ownership of Stock
Equivalents) of which are held directly by a Borrower or indirectly by a
Borrower through one or more Domestic Subsidiaries.
     “Foreign Subsidiary” means, with respect to any Person, a Subsidiary of
such Person, which Subsidiary is not a Domestic Subsidiary.

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     “GAAP” means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), which are applicable to the circumstances as of the date of
determination.
     “Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
     “Guaranty and Security Agreement” means that certain Guaranty and Security
Agreement, dated as of even date herewith, in form and substance reasonably
acceptable to the Agent and Borrowers, made by the Credit Parties in favor of
the Agent, for the benefit of the Secured Parties, as the same may be amended,
restated and/or modified from time to time.
     “Hazardous Materials” means any substance, material or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including petroleum or any fraction thereof,
asbestos, polychlorinated biphenyls and radioactive substances.
     “HIPAA” means the Health Insurance Portability and Accountability Act of
1996.
     “Indebtedness” of any Person means, without duplication: (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of Property or services (other than trade
payables entered into in the Ordinary Course of Business); (c) the face amount
of all letters of credit issued for the account of such Person and without
duplication, all drafts drawn thereunder and all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments issued by such Person; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of Property, assets or businesses;
(e) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to Property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such Property); (f) all Capital Lease Obligations, the
principal amount of which shall be the principal component thereof determined in
accordance with GAAP; (g) the principal balance outstanding under any synthetic
lease, off-balance sheet loan or similar off balance sheet financing product;
(h) all obligations, whether or not contingent, to purchase, redeem, retire,
defease or otherwise acquire for value any of its own Stock or Stock Equivalents
(or any Stock or Stock Equivalent of a direct or indirect parent entity thereof)
prior to the date that is 180

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days after the date set forth in clause (a) of the definition of Revolving
Termination Date, valued at, in the case of redeemable preferred Stock, the
greater of the voluntary liquidation preference and the involuntary liquidation
preference of such Stock plus accrued and unpaid dividends; (i) all indebtedness
referred to in clauses (a) through (h) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in Property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such indebtedness; and (j) all Contingent Obligations
described in clause (i) of the definition thereof in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (i) above.
     “Insolvency Proceeding” means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case in (a) and (b) above, undertaken under U.S. Federal,
state or foreign law, including the Bankruptcy Code.
     “Intellectual Property” means all rights, title and interests in or
relating to intellectual property (including, without limitation, industrial
property) arising under any Requirement of Law and all IP Ancillary Rights
relating thereto, including all Copyrights, Patents, Trademarks, Internet domain
names, Trade Secrets and IP Licenses.
     “Interest Payment Date” means, (a) with respect to any LIBOR Rate Loan, the
last day of each Interest Period applicable to such Loan and (b) with respect to
Base Rate Loans (including Swing Loans) the first day of each calendar month.
     “Interest Period” means, with respect to any LIBOR Rate Loan, the period
commencing on the Business Day such Loan is disbursed or continued or on the
Conversion Date on which a Base Rate Loan is converted to the LIBOR Rate Loan
and ending on the date one, two or three months thereafter, as selected by the
Borrower Representative in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:
     (a) if any Interest Period pertaining to a LIBOR Rate Loan would otherwise
end on a day which is not a Business Day, that Interest Period shall be extended
to the next succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
     (b) any Interest Period pertaining to a LIBOR Rate Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and

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     (c) no Interest Period for any Revolving Loan shall extend beyond the
Revolving Termination Date.
     “Inventory” means “inventory” (as such term is defined in the UCC) of any
Borrower or any of its Subsidiaries, including, but not limited to, all
merchandise, raw materials, parts, supplies, work-in-process and finished goods
intended for sale, together with containers, packing, packaging, shipping and
similar materials related thereto, and including such inventory as is
temporarily out of a Borrower’s or such Subsidiary’s custody or possession,
including inventory on the premises of others and items in transit.
     “Inventory Appraisal” means the appraisal of the Eligible Inventory of the
Borrowers delivered to the Agent specifying the Net Orderly Liquidation Value of
such Eligible Inventory and performed by an independent appraiser acceptable to
the Agent; if more than one such Inventory Appraisal has been conducted, then
the Net Orderly Liquidation Value on any date for the Eligible Inventory of the
Borrowers shall be the value determined from the most recent Inventory Appraisal
that is conducted pursuant to this Agreement and the report of which is
satisfactory to the Agent. The initial Inventory Appraisal shall mean the
appraisal of the Eligible Inventory dated as of July 31, 2008 and performed by
AccuVal Associates, Incorporated.
     “IP Ancillary Rights” means, with respect to any other Intellectual
Property, as applicable, all foreign counterparts to, and all divisionals,
reversions, continuations, continuations-in-part, reissues, reexaminations,
renewals and extensions of, such Intellectual Property and all income,
royalties, proceeds and Liabilities at any time due or payable or asserted under
or with respect to any of the foregoing or otherwise with respect to such
Intellectual Property, including all rights to sue or recover at law or in
equity for any past, present or future infringement, misappropriation, dilution,
violation or other impairment thereof, and, in each case, all rights to obtain
any other IP Ancillary Right.
     “IP License” means all Contractual Obligations (and all related IP
Ancillary Rights), whether written or oral, granting any right, title and
interest in or relating to any Intellectual Property.
     “IRS” means the Internal Revenue Service of the United States and any
successor thereto.
     “Issue” means, with respect to any Letter of Credit, to issue, extend the
expiration date of, renew (including by failure to object to any automatic
renewal on the last day such objection is permitted), increase the face amount
of, or reduce or eliminate any scheduled decrease in the face amount of, such
Letter of Credit, or to cause any Person to do any of the foregoing. The terms
“Issued” and “Issuance” have correlative meanings.
     “L/C Issuer” means GE Capital or a Subsidiary thereof or a bank or other
legally authorized Person selected by or acceptable to Agent in its sole
discretion, in such Person’s capacity as an issuer of Letters of Credit
hereunder.

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     “L/C Reimbursement Obligation” means, for any Letter of Credit, the
obligation of the Borrowers to the L/C Issuer thereof, as and when matured, to
pay all amounts drawn under such Letter of Credit.
     “Lending Office” means, with respect to any Lender, the office or offices
of such Lender specified as its “Lending Office” beneath its name on the
applicable signature page hereto, or such other office or offices of such Lender
as it may from time to time notify the Borrower Representative and the Agent.
     “Letter of Credit” means documentary or standby letters of credit issued
for the account of the Borrowers by L/C Issuers, and bankers’ acceptances issued
by a Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.
     “Letter of Credit Obligations” means all outstanding obligations incurred
by Agent and Lenders at the request of the Borrowers or the Borrower
Representative, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance of Letters of Credit by L/C Issuers or the
purchase of a participation as set forth in Section 1.1(c) with respect to any
Letter of Credit. The amount of such Letter of Credit Obligations shall equal
the maximum amount that may be payable by Agent and Lenders thereupon or
pursuant thereto.
     “Liabilities” means all claims, actions, suits, judgments, damages, losses,
liability, obligations, responsibilities, fines, penalties, sanctions, costs,
fees, taxes, commissions, charges, disbursements and expenses, in each case of
any kind or nature (including interest accrued thereon or as a result thereto
and fees, charges and disbursements of financial, legal and other advisors and
consultants), whether joint or several, whether or not indirect, contingent,
consequential, actual, punitive, treble or otherwise.
     “Liquidity Factor” shall mean (i) total cash collections divided by (ii)
(A) gross revenue minus (B) dilution, calculated as of a trailing twelve month
period, as determined by Agent based on the most recent field examination
obtained by Agent.
     “LIBOR” means, for each Interest Period, the offered rate per annum for
deposits of Dollars for the applicable Interest Period that appears on Reuters
Screen LIBOR01 Page as of 11:00 A.M. (London, England time) two (2) Business
Days prior to the first day in such Interest Period. If no such offered rate
exists, such rate will be the rate of interest per annum, as determined by the
Agent (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which
deposits of Dollars in immediately available funds are offered at 11:00 A.M.
(London, England time) two (2) Business Days prior to the first day in such
Interest Period by major financial institutions reasonably satisfactory to the
Agent in the London interbank market for such Interest Period for the applicable
principal amount on such date of determination; provided, however, that in no
event shall LIBOR be less than 2.75% per annum; provided, further, however, that
LIBOR shall be subject to adjustment as contemplated in Section 1.3(e).
     “LIBOR Rate Loan” means a Loan that bears interest based on LIBOR.

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     “Lien” means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement intended as security, encumbrance,
lien (statutory or otherwise) for security or other security interest of any
kind or nature whatsoever (including those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the UCC or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest of a
lessor under a lease which is not a Capital Lease.
     “Loan” means an extension of credit by a Lender to the Borrowers pursuant
to Article I hereof, and may be a Base Rate Loan or a LIBOR Rate Loan.
     “Loan Documents” means this Agreement, the Notes, the Fee Letter, the
Collateral Documents, the Subordination Agreement and all documents delivered to
the Agent and/or any Lender in connection with any of the foregoing.
     “Margin Stock” means “margin stock” as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
     “Material Adverse Effect” means: (a) a material adverse change in, or a
material adverse effect upon, the operations, business, Properties, condition
(financial or otherwise) or prospects of any Credit Party or the Credit Parties
and the Subsidiaries taken as a whole; (b) a material impairment of the ability
of any Credit Party, any Subsidiary of any Credit Party or any other Person
(other than the Agent or Lenders) to perform in any material respect its
obligations under any Loan Document; or (c) a material adverse effect upon
(i) the legality, validity, binding effect or enforceability of any Loan
Document, or (ii) the perfection or priority of any Lien granted to the Lenders
or to the Agent for the benefit of the Secured Parties under any of the
Collateral Documents.
     “Material Environmental Liabilities” means Environmental Liabilities
exceeding $500,000 in the aggregate.
     “MBL Exclusive Distribution Agreement” means that certain Exclusive
Distribution Agreement dated as of March 22, 2007 between Akorn and the
University of Massachusetts, as represented by the Massachusetts Biological
Laboratories and as amended, modified or supplemented from time to time.
     “Mortgage” means any deed of trust, leasehold deed of trust, mortgage,
leasehold mortgage, deed to secure debt, leasehold deed to secure debt or other
document creating a Lien on real Property or any interest in real Property.
     “Multiemployer Plan” means any multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, as to which any ERISA Affiliate incurs or otherwise
has any obligation or liability, contingent or otherwise.

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     “Net Issuance Proceeds” means, in respect of any issuance of debt or
equity, cash proceeds (including cash proceeds as and when received in respect
of non-cash proceeds received or receivable in connection with such issuance),
net of underwriting discounts and reasonable out-of-pocket costs and expenses
paid or incurred in connection therewith in favor of any Person not an Affiliate
of a Borrower.
     “Net Orderly Liquidation Value,” with respect to (a) any Inventory of the
Borrowers on any date, means the orderly liquidation value of such Inventory
expected to be realized at an orderly, negotiated sale held within a reasonable
period of time, net of all reasonable liquidation expenses, as determined from
the Inventory Appraisal and (b) any Eligible Equipment of the Borrowers on any
date, means the orderly liquidation value of such Eligible Equipment expected to
be realized at an orderly, negotiated sale held within a reasonable period of
time, net of all reasonable liquidation expenses, as determined from the
Equipment Appraisal.
     “Net Proceeds” means proceeds in cash, checks or other cash equivalent
financial instruments (including Cash Equivalents) as and when received by the
Person making a Disposition and insurance proceeds received on account of an
Event of Loss, net of: (a) in the event of a Disposition (i) the direct costs
relating to such Disposition excluding amounts payable to a Borrower or any
Affiliate of a Borrower, (ii) sale, use or other transaction taxes paid or
payable as a result thereof, and (iii) amounts required to be applied to repay
principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Lien on the asset which is the subject of such Disposition and
(b) in the event of an Event of Loss, (i) all money actually applied to repair
or reconstruct the damaged Property or Property affected by the condemnation or
taking, (ii) all of the costs and expenses reasonably incurred in connection
with the collection of such proceeds, award or other payments, and (iii) any
amounts retained by or paid to parties having superior rights to such proceeds,
awards or other payments.
     “Non-U.S. Lender Party” means each of the Agent, each Lender, each L/C
Issuer, each SPV and each participant, in each case that is not a United States
person under and as defined in Section 7701(a)(30) of the Code.
     “Note” means any Revolving Note or Swingline Note and “Notes” means all
such Notes.
     “Notice of Borrowing” means a notice given by the Borrower Representative
to the Agent pursuant to Section 1.5, in substantially the form of
Exhibit 11.1(c) hereto.
     “Obligations” means all Loans, and other Indebtedness, advances, debts,
liabilities, obligations, covenants and duties owing by any Credit Party to any
Lender, the Agent, any L/C Issuer, any Secured Swap Provider or any other Person
required to be indemnified, that arises under any Loan Document or any Secured
Rate Contract, whether or not for the payment of money, whether arising by
reason of an extension of credit, loan, guaranty, indemnification or in any
other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.

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     “Ordinary Course of Business” means, in respect of any transaction
involving any Credit Party or any Subsidiary of any Credit Party, the ordinary
course of such Person’s business, as conducted by any such Person in accordance
with past practice or otherwise on a commercially reasonable basis and
undertaken by such Person in good faith and not for purposes of evading any
covenant or restriction in any Loan Document.
     “Organization Documents” means, (a) for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, (b) for any partnership, the partnership
agreement and, if applicable, certificate of limited partnership, (c) for any
limited liability company, the operating agreement and articles or certificate
of formation or (d) any other document setting forth the manner of election or
duties of the officers, directors, managers or other similar persons, or the
designation, amount or relative rights, limitations and preference of the Stock
of a Person.
     “Parexel” shall mean PAREXEL International LLC.
     “Parexel Report” shall mean the Compliance Assessment Report Executive
Summary prepared by Parexel with respect to its assessment of Akorn’s Decatur,
IL sterile drug manufacturing operations on October 6-10, 2008.
     “Patents” means all rights, title and interests (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to letters
patent and applications therefor.
     “Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L.
107-56, as amended.
     “PBGC” means the United States Pension Benefit Guaranty Corporation or any
successor thereto.
     “Pequot Capital” shall mean Pequot Capital Management, Inc. and any fund
controlled or managed by Pequot Capital Management, Inc.
     “Permits” means, with respect to any Person, any permit, approval,
authorization, license, registration, certificate, concession, grant, franchise,
variance or permission from, and any other Contractual Obligations with, any
Governmental Authority, in each case whether or not having the force of law and
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
     “Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.

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     “Pledged Collateral” has the meaning specified in the Guaranty and Security
Agreement and shall include any other Collateral required to be delivered to
Agent pursuant to the terms of any Collateral Document.
     “Prior Indebtedness” means the Indebtedness and obligations specified on
Schedule 11.1 hereto.
     “Property” means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
     “Rate Contracts” means swap agreements (as such term is defined in
Section 101 of the Bankruptcy Code) and any other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
     “Real Estate Appraisal” means the most recent appraisal of the Eligible
Real Estate of the Borrowers specifying the Distressed Value of such Eligible
Real Estate and performed by an independent appraiser acceptable to the Agent.
The initial Real Estate Appraisals shall mean the appraisals of the Eligible
Real Estate dated as of August 29, 2008 and performed by Cushman & Wakefield of
Illinois, Inc.
     “Registrations” means authorizations, approvals, licenses, permits,
certificates, or exemptions issued by any Governmental Authority (including
pre-market approval applications, pre-market notifications, investigational
device exemptions, product recertifications, manufacturing approvals and
authorizations, CE Marks, pricing and reimbursement approvals, labeling
approvals or their foreign equivalent) held by the Credit Parties or their
Subsidiaries immediately prior to the Closing Date, that are required for the
research, development, manufacture, distribution, marketing, storage,
transportation, use and sale of the products of the Credit Parties and their
Subsidiaries.
     “Related Agreements” means the Subordinated Note Documents.
     “Related Persons” means, with respect to any Person, each Affiliate of such
Person and each director, officer, employee, agent, trustee, representative,
attorney, accountant and each insurance, environmental, legal, financial and
other advisor (including those retained in connection with the satisfaction or
attempted satisfaction of any condition set forth in Article II) and other
consultants and agents of or to such Person or any of its Affiliates.
     “Related Transactions” means the transactions contemplated by the Related
Agreements.
     “Releases” means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material into
or through the environment.
     “Remedial Action” means all actions required to (a) clean up, remove, treat
or in any other way address any Hazardous Material in the indoor or outdoor
environment, (b)

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prevent or minimize any Release so that a Hazardous Material does not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment or (c) perform pre remedial studies and investigations and
post-remedial monitoring and care with respect to any Hazardous Material.
     “Required Lenders” means at any time (a) Lenders then holding more than
fifty percent (50%) of the Aggregate Revolving Loan Commitment then in effect,
or (b) if the Aggregate Revolving Loan Commitments have terminated, Lenders then
having more than fifty percent (50%) of the sum of the aggregate unpaid
principal amount of Loans (other than Swing Loans) then outstanding, outstanding
Letter of Credit Obligations, amounts of participations in Swing Loans and the
principal amount of unparticipated portions of Swing Loans.
     “Requirement of Law” means, as to any Person, any law (statutory or
common), ordinance, treaty, rule, regulation, order, policy, other legal
requirement or determination of an arbitrator or of a Governmental Authority, in
each case applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject, including without
limitation the FDA Laws and the Federal Health Care Program Laws.
     “Reserves” means, with respect to the Borrowing Base (a) reserves
established by Agent from time to time against Eligible Accounts and Eligible
Inventory pursuant to Exhibit 11.1(b), and (b) such other reserves against
Eligible Accounts, Eligible Inventory or Availability that Agent may, in its
reasonable credit judgment, establish from time to time. Without limiting the
generality of the foregoing, Reserves established with respect to past due
credit balances, dilution, rent and allowance for doubtful accounts and to
ensure the payment of accrued interest expenses or Indebtedness shall be deemed
to be a reasonable exercise of Agent’s credit judgment, provided the amount of
any such Reserve shall be determined in the Agent’s reasonable credit judgment.
     “Responsible Officer” means the chief executive officer, chief financial
officer or the president of a Borrower or Borrower Representative, as
applicable, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants or
delivery of financial information, the chief financial officer or the treasurer
of a Borrower or Borrower Representative, as applicable, or any other officer
having substantially the same authority and responsibility; or, with respect to
Notices of Borrowing, Notices of Conversion/Continuation, Swingline Requests and
LC Requests, the controller.
     “Revolving Credit Exposure” means, as of any date, the aggregate principal
amount of Revolving Loans, Swing Loans and Letter of Credit Obligations
outstanding on such date.
     “Revolving Lender” means each Lender with a Revolving Loan Commitment (or
if the Revolving Loan Commitments have terminated, who hold Revolving Loans or
participations in Swing Loans and L/C Reimbursement Obligations.)

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     “Revolving Note” means a promissory note of the Borrowers payable to the
order of a Lender in substantially the form of Exhibit 11.1(d) hereto,
evidencing Indebtedness of the Borrowers under the Revolving Loan Commitment of
such Lender.
     “Revolving Termination Date” means the earlier to occur of: (a) January 7,
2013; and (b) the date on which the Aggregate Revolving Loan Commitment shall
terminate in accordance with the provisions of this Agreement.
     “Secured Party” means the Agent, each Lender, each L/C Issuer, each other
Indemnitee and each other holder of any Obligation of a Credit Party.
     “Secured Rate Contract” means any Rate Contract between Borrower and the
counterparty thereto, which (a) has been provided or arranged by GE Capital or
an Affiliate of GE Capital, or (b) the Agent has acknowledged in writing
constitutes a “Secured Rate Contract” hereunder.
     “Secured Swap Provider” means (a) a Lender or an Affiliate of a Lender (or
a Person who was a Lender or an Affiliate of a Lender at the time of execution
and delivery of a Rate Contract) who has entered into a Secured Rate Contract
with Borrower, or (b) a Person with whom Borrower has entered into a Secured
Rate Contract provided or arranged by GE Capital or an Affiliate of GE Capital,
and any assignee thereof.
     “Serum” shall mean Serum Institute of India, Ltd.
     “Solvent” means, with respect to any Person as of any date of
determination, that, as of such date, (a) the value of the assets of such Person
(both at fair value and present fair saleable value) is greater than the total
amount of liabilities (including contingent and unliquidated liabilities) of
such Person, (b) such Person is able to pay all liabilities of such Person as
such liabilities mature and (c) such Person does not have unreasonably small
capital. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities shall be computed at the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
     “SPV” means any special purpose funding vehicle identified as such in a
writing by any Lender to the Agent.
     “SSA” means the Social Security Act of 1935, codified at Title 42,
Chapter 7, of the United States Code.
     “Stock” means all shares of capital stock (whether denominated as common
stock or preferred stock), equity interests, beneficial, partnership or
membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a
Person (other than an individual), whether voting or non-voting.
     “Stock Equivalents” means all securities convertible into or exchangeable
for Stock or any other Stock Equivalent and all warrants, options or other
rights to purchase,

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subscribe for or otherwise acquire any Stock or any other Stock Equivalent,
whether or not presently convertible, exchangeable or exercisable.
     “Subordinated Indebtedness” means the Indebtedness of any Credit Party or
any Subsidiary of any Credit Party which is subordinated in right of payment to
the Obligations, which shall be on terms and conditions, including subordination
provisions, acceptable to the Agent, including without limitation the
Indebtedness evidenced by the Subordinated Note.
     “Subordinated Lender” means the John N. Kapoor Trust dated September 20,
1989.
     “Subordinated Note Documents” means the Subordinated Note and all other
documents, agreements and instruments executed in connection therewith.
     “Subordinated Note” means that certain Subordinated Promissory Note dated
July 28, 2008 in the initial principal amount of $5,000,000 payable by Akorn in
favor of the Subordinated Lender.
     “Subordination Agreement” means that certain Subordination Agreement dated
as of even date herewith by and among the Agent, the Credit Parties and the
Subordinated Lenders, as the same may be amended, restated and/or modified from
time to time in accordance with the terms thereof.
     “Subsidiary” of a Person means any corporation, association, limited
liability company, partnership, joint venture or other business entity of which
more than fifty percent (50%) of the voting Stock (in the case of Persons other
than corporations), is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a combination thereof.
     “Swingline Commitment” means $5,000,000.
     “Swingline Lender” means, each in its capacity as Swingline Lender
hereunder, GE Capital or, upon the resignation of GE Capital as Agent hereunder,
any Lender (or Affiliate of any Lender) that agrees, with the approval of the
Agent (or, if there is no such successor Agent, the Required Lenders) and the
Borrower, to act as the Swingline Lender hereunder.
     “Swingline Note” means a promissory note of the Borrower payable to the
order of the Swingline Lender, in substantially the form of Exhibit 11.1(e),
evidencing the Indebtedness of the Borrower to the Swingline Lender resulting
from the Swing Loans made to the Borrower by the Swingline Lender.
     “Swingline Request” has the meaning specified in subsection 1.1(d)(ii).
     “Swing Loan” has the meaning specified in subsection 1.1(d)(i).

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     “Tax Affiliate” means, (a) each Borrower and its Subsidiaries and (b) any
Affiliate of a Borrower with which such Borrower files or is eligible to file
consolidated, combined or unitary tax returns.
     “Title IV Plan” means a pension plan subject to Title IV of ERISA, other
than a Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has
any obligation or liability, contingent or otherwise.
     “Trade Secrets” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to trade
secrets.
     “Trademark” means all rights, title and interests (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos and other source
or business identifiers and, in each case, all goodwill associated therewith,
all registrations and recordations thereof and all applications in connection
therewith.
     “UCC” means the Uniform Commercial Code as in effect from time to time in
the State of New York.
     “United States” and “U.S.” each means the United States of America.
     “U.S. Lender Party” means each of the Agent, each Lender, each L/C Issuer,
each SPV and each participant, in each case that is a United States person under
and as defined in Section 7701(a)(30) of the Code.
     “Wholly-Owned Subsidiary” means any Subsidiary in which (other than
directors’ qualifying shares required by law) one hundred percent (100%) of the
Stock and Stock Equivalents, at the time as of which any determination is being
made, is owned, beneficially and of record, by any Credit Party, or by one or
more of the other Wholly-Owned Subsidiaries, or both.
     “Withdrawal Liabilities” means, at any time, any liability incurred
(whether or not assessed) by any ERISA Affiliate and not yet satisfied or paid
in full at such time with respect to any Multiemployer Plan pursuant to
Section 4201 of ERISA.
     11.2 Other Interpretive Provisions.
          (a) Defined Terms. Unless otherwise specified herein or therein, all
terms defined in this Agreement or in any other Loan Document shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto. The meanings of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. Terms
(including uncapitalized terms) not otherwise defined herein and that are
defined in the UCC shall have the meanings therein described.
          (b) The Agreement. The words “hereof”, “herein”, “hereunder” and words
of similar import when used in this Agreement or any other Loan Document shall

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refer to this Agreement or such other Loan Document as a whole and not to any
particular provision of this Agreement or such other Loan Document; and
subsection, section, schedule and exhibit references are to this Agreement or
such other Loan Documents unless otherwise specified.
          (c) Certain Common Terms. The term “documents” includes any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced. The term “including” is not limiting and means
“including without limitation.”
          (d) Performance; Time. Whenever any performance obligation hereunder
or under any other Loan Document (other than a payment obligation) shall be
stated to be due or required to be satisfied on a day other than a Business Day,
such performance shall be made or satisfied on the next succeeding Business Day.
In the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including”; the words “to” and “until”
each mean “to but excluding”, and the word “through” means “to and including.”
If any provision of this Agreement or any other Loan Document refers to any
action taken or to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be interpreted to encompass any and all means,
direct or indirect, of taking, or not taking, such action.
          (e) Contracts. Unless otherwise expressly provided herein or in any
other Loan Document, references to agreements and other contractual instruments,
including this Agreement and the other Loan Documents, shall be deemed to
include all subsequent amendments, thereto, restatements and substitutions
thereof and other modifications and supplements thereto which are in effect from
time to time, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document.
          (f) Laws. References to any statute or regulation are to be construed
as including all statutory and regulatory provisions related thereto or
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
     11.3 Accounting Terms and Principles. All accounting determinations
required to be made pursuant hereto shall, unless expressly otherwise provided
herein, be made in accordance with GAAP. No change in the accounting principles
used in the preparation of any financial statement hereafter adopted by
Borrowers shall be given effect for purposes of measuring compliance with any
provision of Article V or VI unless the Borrowers, the Agent and the Required
Lenders agree to modify such provisions to reflect such changes in GAAP and,
unless such provisions are modified, all financial statements, Compliance
Certificates and similar documents provided hereunder shall be provided together
with a reconciliation between the calculations and amounts set forth therein
before and after giving effect to such change in GAAP.
     11.4 Payments. The Agent may set up standards and procedures to determine
or redetermine the equivalent in Dollars of any amount expressed in any currency
other

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than Dollars and otherwise may, but shall not be obligated to, rely on any
determination made by any Credit Party or any L/C Issuer. Any such determination
or redetermination by the Agent shall be conclusive and binding for all
purposes, absent manifest error. No determination or redetermination by any
Secured Party or any Credit Party and no other currency conversion shall change
or release any obligation of any Credit Party or of any Secured Party (other
than the Agent and its Related Persons) under any Loan Document, each of which
agrees to pay separately for any shortfall remaining after any conversion and
payment of the amount as converted. The Agent may round up or down, and may set
up appropriate mechanisms to round up or down, any amount hereunder to nearest
higher or lower amounts and may determine reasonable de minimis payment
thresholds.
ARTICLE XII.
CROSS-GUARANTY
          12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower (“Guaranteed Obligations”). Each Borrower
agrees that its guaranty obligation hereunder is a continuing guaranty of
payment and performance and not of collection, that its obligations under this
Section 12 shall not be discharged until payment and performance, in full, of
the Obligations has occurred, and that its obligations under this Section 12
shall be absolute and unconditional, irrespective of, and unaffected by,
          (a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document or
any other agreement, document or instrument to which any Borrower is or may
become a party;
          (b) the absence of any action, against any Person other than such
Borrower, to enforce this Agreement (including this Section 12) or any other
Loan Document or the waiver or consent by Agent and Lenders with respect to any
of the provisions thereof;
          (c) the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the absence of
any action, by Agent and Lenders in respect thereof (including the release of
any such security);
          (d) the insolvency of any Credit Party; or
          (e) any other action or circumstances that might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor.

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Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Guaranteed Obligations.
          12.2 Waivers by Borrowers. Each Borrower expressly waives all rights
it may have now or in the future under any statute, or at common law, or at law
or in equity, or otherwise, to compel Agent or Lenders to marshal assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Guaranteed Obligations before proceeding against, or as a
condition to proceeding against, such Borrower. It is agreed among each
Borrower, Agent and Lenders that the foregoing waivers are of the essence of the
transaction contemplated by this Agreement and the other Loan Documents and
that, but for the provisions of this Section 12 and such waivers, Agent and
Lenders would decline to enter into this Agreement.
          12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of
this Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
          12.4 Subordination of Subrogation, Etc. Notwithstanding anything to
the contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are paid in full in cash and the
applicable preference period has passed. Each Borrower acknowledges and agrees
that this subordination is intended to benefit Agent and Lenders and shall not
limit or otherwise affect such Borrower’s liability hereunder or the
enforceability of this Section 12, and that Agent, Lenders and their respective
successors and assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 12.4.
          12.5 Election of Remedies. If Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agent or such Lender a Lien upon any Collateral, whether owned by any
Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, Agent or any Lender may, at its sole option,
determine which of its remedies or rights it may pursue without affecting any of
its rights and remedies under this Section 12. If, in the exercise of any of its
rights and remedies, Agent or any Lender shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to “election of remedies” or the like, each Borrower hereby consents to such
action by Agent or such Lender and waives any claim based upon such action, even
if such action by Agent or such Lender shall result in a full or partial loss of
any rights of subrogation that such Borrower might otherwise have had

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but for such action by Agent or such Lender. Any election of remedies that
results in the denial or impairment of the right of Agent or any Lender to seek
a deficiency judgment against any Borrower shall not impair any other Borrower’s
obligation to pay the full amount of the Obligations. In the event Agent or any
Lender shall bid at any foreclosure or trustee’s sale or at any private sale
permitted by law or the Loan Documents, Agent or such Lender may bid all or less
than the amount of the Obligations and the amount of such bid need not be paid
by Agent or such Lender but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether Agent, Lender or any
other party is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 12, notwithstanding
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which Agent or any Lender
might otherwise be entitled but for such bidding at any such sale.
          12.6 Limitation. Notwithstanding any provision herein contained to the
contrary, each Borrower’s liability under this Section 12 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
          (a) the net amount of all Loans advanced to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
          (b) the amount that could be claimed by Agent and Lenders from such
Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower’s right of contribution and indemnification from each
other Borrower under Section 12.7.
          12.7 Contribution with Respect to Guaranty Obligations.
          (a) To the extent that any Borrower shall make a payment under this
Section 12 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a “Guarantor Payment”) that, taking
into account all other Guarantor Payments then previously or concurrently made
by any other Borrower, exceeds the amount that such Borrower would otherwise
have paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount”
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
payment in full in cash of the Obligations, termination of the Commitments and
the passage of the

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applicable preference period, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.
          (b) As of any date of determination, the “Allocable Amount” of any
Borrower shall be equal to the maximum amount of the claim that could then be
recovered from such Borrower under this Section 12 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
          (c) This Section 12.7 is intended only to define the relative rights
of Borrowers and nothing set forth in this Section 12.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1. Nothing contained in this
Section 12.7 shall limit the liability of any Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
          (d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.
          (e) The rights of the indemnifying Borrowers against other Credit
Parties under this Section 12.7 shall be exercisable upon the full and payment
of the Obligations, the termination of the Commitments and the passage of the
applicable preference period.
          12.8 Liability Cumulative. The liability of Borrowers under this
Section 12 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
[Balance of page intentionally left blank; signature page follows.]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.

                  AKORN, INC.    
 
           
 
  By:   /s/ Jeffrey A. Whitnell    
 
           
 
  Title:   CFO    
 
                FEIN: 72-0717400    
 
                Address for notices:    
 
                1925 West Field Court
Suite 300         Lake Forest, Illinois 60045         Attn: Jeff Whitnell      
  Facsimile: (847) 353-4936    
 
                Address for Wire Transfers:    
 
                Bank of America         135 South LaSalle Street
Chicago, IL 60603
ABA# 026009593
Account #5800508409
Account Name: Akorn, Inc.    

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.

                  AKORN (NEW JERSEY), INC.    
 
           
 
  By:   /s/ Jeffrey A. Whitnell    
 
           
 
  Title:   CFO    
 
                FEIN: 36-4301474    
 
                Address for notices:    
 
                72 Veronica Avenue         Somerset, New Jersey 08873    
 
  Attn:   Jeffrey Whitnell    
 
           
 
  Facsimile:   (847) 353-4936  
 
     
 
   

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.

                  GENERAL ELECTRIC CAPITAL
CORPORATION, as the Agent, L/C Issuer,
Swingline Lender and as a Lender    
 
           
 
  By:   /s/ Dennis Cloud    
 
     
 
        Title: Its Duly Authorized Signatory    
 
                Address for Notices:    
 
                General Electric Capital Corporation
500 West Monroe
Chicago, IL 60661-3671
Attn: Akorn Account Manager
Facsimile: (866) 388-3572    
 
                With a copy to:    
 
                General Electric Capital Corporation
2 Bethesda Metro Center Suite 600
Bethesda, MD 20814
Attn: Maryanne Courtney, Internal Counsel
Facsimile: (866) 358-1754    
 
                And    
 
                King & Spalding
1180 Peachtree St NE
Atlanta, GA 30309
Attn: Carolyn Alford, Esq.
Facsimile: (404) 572-5128    
 
                Address for payments:    
 
                ABA No.: 021-001-033
Account Number: 50271079
Deutsche Bank Trust Company Americas
New York, NY         Account Name: HH Cash Flow Collections
Reference: Akorn, Inc. (HFS3010)    

[SIGNATURE PAGE TO CREDIT AGREEMENT]

 

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Schedule 1.1(b)
Revolving Loan Commitments

                 
General Electric Capital Corporation
    —     $ 25,000,000  

Schedule 1.1(b)

 

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EXHIBIT 1.1(c)
TO
CREDIT AGREEMENT
FORM OF LETTER OF CREDIT REQUEST
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent under the Credit Agreement referred to below
500 West Monroe Street
Chicago, Illinois 60661
Attn: Portfolio Manager — Akorn, Inc.
                                                    ,            
     Re: Akorn, Inc. and certain of its Subsidiaries (the “Borrowers”)
     Reference is made to the Credit Agreement, dated as of January 7, 2009 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”), among the Borrowers, Akorn, Inc., as the
Borrower Representative, the other Credit Parties party thereto, the Lenders and
L/C Issuers party thereto and General Electric Capital Corporation, as agent for
the Lenders and L/C Issuers. Capitalized terms used herein without definition
are used as defined in the Credit Agreement.
     The Borrower Representative, on behalf of the Borrowers, hereby gives you
notice, irrevocably, pursuant to Section 1.1(c) of the Credit Agreement, of its
request for your Issuance of a Letter of Credit, in the form attached hereto,
for the benefit of [Name of Beneficiary], in the amount of
$                    , to be issued on                     ,
                     (the “Issue Date”) with an expiration date of
                    ,                     .
     The undersigned hereby certifies that, except as set forth on Schedule A
attached hereto, the following statements are true on the date hereof and will
be true on the Issue Date, both before and after giving effect to the Issuance
of the Letter of Credit requested above and any Loan to be made or any other
Letter of Credit to be Issued on or before the Issue Date:
     (a) except as otherwise waived in writing by the Required Lenders, the
representations and warranties set forth in Article III of the Credit Agreement
and elsewhere in the Loan Documents are true and correct in all material
respects (without duplication of any materiality qualifier contained therein),
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties were true and
correct as of such date;
     (b) no Default or Event of Default has occurred and is continuing; and
     (c) the aggregate outstanding amount of the Revolving Credit Exposure does
not exceed the Maximum Revolving Loan Balance.

                  AKORN, INC., as Borrower Representative    
 
           
 
  By:        
 
     
 
Name:    
 
      Title:    

1

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EXHIBIT 1.1(d)
TO
CREDIT AGREEMENT
Form of Swing Loan Request
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent under the Credit Agreement referred to below
500 West Monroe Street
Chicago, Illinois 60661
Attn: Portfolio Manager – Akorn, Inc.
                          ,           
     Re: Akorn, Inc. and certain of its Subsidiaries (the “Borrowers”)
     Reference is made to the Credit Agreement, dated as of January 7, 2009 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”), among the Borrowers, Akorn, Inc. as Borrower
Representative, each other “Credit Party” that is a party thereto, the Lenders,
L/C Issuer party thereto and General Electric Capital Corporation, as agent for
the Lenders. Capitalized terms used herein but not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Credit
Agreement.
     The Borrower Representative on behalf of the Borrowers hereby gives you
irrevocable notice pursuant to Section 1.1(e) of the Credit Agreement that it
requests Swing Loans under the Credit Agreement (the “Proposed Advance”) and, in
connection therewith, sets for the following information:
     A. The date of the Proposed Advance is                     , ___(the
“Funding Date”).
     B. The aggregate principal amount of Proposed Advance is
$                    .
          The undersigned hereby certifies that, except as set forth on
Schedule A attached hereto, the following statements are true on the date hereof
both before and after giving effect to the Proposed Advance and any other Loan
to be made or Letter of Credit to be issued on or before the Funding Date:
     (i) except as otherwise waived in writing by the Required Lenders, the
representations and warranties set forth in Article III of the Credit Agreement
and elsewhere in the Loan Documents are true and correct in all material
respects (without duplication of any materiality qualifier contained therein)
with the same effect as though

 

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made on and as of such Funding Date, except to the extent such representations
and warranties expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all material respects
(without duplication of any materiality qualifier contained therein) as of such
date;
     (ii) no Default or Event of Default has occurred and is continuing;
     (iii) the aggregate outstanding amount of the Revolving Credit Exposure
will not exceed the Maximum Revolving Loan Balance; and
     (iv) after giving effect to such Loan and the application of the proceeds
thereof on the date of funding (including depositing such funds in a
Disbursement Account so long as cash in such Disbursement Account would not
exceed (x) checks outstanding against such Disbursement Account as of that date,
plus (y) amounts necessary to meet minimum balance requirements for such
Disbursement Account), the aggregate cash and Cash Equivalents of Borrowers and
their Subsidiaries will not exceed $5,000,000.

                  Sincerely,    
 
                AKORN, INC., as the Borrower Representative
 
           
 
  By:
Name:    
 
     
 
           
 
  Title:        
 
           

 

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EXHIBIT 1.6
TO
CREDIT AGREEMENT
FORM OF NOTICE OF CONVERSION OR CONTINUATION
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent under the Credit Agreement referred to below
                          ,           
Attention:
     Re: Akorn, Inc. and its Subsidiaries (the “Borrowers”)
     Reference is made to the Credit Agreement, dated as of January 7, 2009 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”), among the Borrowers, Akorn, Inc., as Borrower
Representative, the other Credit Parties party thereto, the Lenders and L/C
Issuers party thereto and General Electric Capital Corporation, as
administrative agent for the Lenders and L/C Issuers. Capitalized terms used
herein and not otherwise defined herein are used herein as defined in the Credit
Agreement.
     The Borrower Representative, on behalf of Borrowers, hereby gives you
irrevocable notice, pursuant to Section 1.6 of the Credit Agreement of its
request for the following:
     (a) a continuation, on                     , ___, as LIBOR Rate Loans
having an Interest Period of ___ months of Revolving Loans in an aggregate
outstanding principal amount of $                     having an Interest Period
ending on the proposed date for such continuation;
     (b) a conversion, on                     , ___, to LIBOR Rate Loans having
an Interest Period of ___ months of Revolving Loans in an aggregate outstanding
principal amount of $___; and1
     (c) a conversion, on                     , ___, to Base Rate Loans, of
Revolving Loans in an aggregate outstanding principal amount of
$                    .
 

1   Cannot be used prior to the Syndication Completion Date.

 

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     In connection herewith, the undersigned hereby certifies that, except as
set forth on Schedule A attached hereto, no Default or Event of Default has
occurred and is continuing on the date hereof, both before and after giving
effect to any Loan to be made or Letter of Credit to be Issued on or before any
date for any proposed conversion or continuation set forth above.

            AKORN, INC., as the Borrower Representative
      By:           Name:           Title:        

[SIGNATURE PAGE TO NOTICE OF CONVERSION/CONTINUATION DATED                     
___, ____]

 

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EXHIBIT 2.1
TO
CREDIT AGREEMENT
CLOSING CHECKLIST
     The Agent shall have received on or prior to the Closing Date each of the
following, each dated the Closing Date unless otherwise agreed by the Agent, in
form and substance satisfactory to the Agent and each Lender:
     1. this Agreement duly executed by the Borrowers;
     2. a Revolving Note for each applicable Lender and a Swingline Note for the
Swingline Lender, each dated as of the Closing Date and duly executed by the
Borrowers;
     3. the Guaranty and Security Agreement, duly executed by each Credit Party,
together with (A) copies of UCC, Patent, Trademark, Copyright and other
appropriate search reports and of all effective prior filings listed therein,
together with evidence of the termination of such prior filings and other
documents with respect to the priority of the security interest of the Agent in
the Collateral, in each case as may be reasonably requested by the Agent,
(B) all documents representing all securities being pledged pursuant to such
Guaranty and Security Agreement and related undated powers or endorsements duly
executed in blank, (C) a perfection certificate duly executed by the Borrowers,
and (D) duly executed Collateral Access Agreements with respect to any Real
Estate on which Collateral is stored or otherwise located, except to the extent
that Agent takes a rent Reserve with respect to such Real Estate;
     4. Mortgages, duly executed by the applicable Borrower, covering all of the
Eligible Real Estate, together with: (A) title insurance policies, current
as-built surveys, zoning letters, flood insurance certifications and
certificates of occupancy, in each case reasonably satisfactory in form and
substance to Agent, in its sole discretion; (B) evidence that counterparts of
the Mortgages have been recorded in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable first
priority lien (subject to Permitted Liens) on the Eligible Real Estate in favor
of Agent for the benefit of itself and Lenders (or in favor of such other
trustee as may be required or desired under local law); and (C) an opinion of
counsel in each state in which any Eligible Real Estate is located from counsel
reasonably satisfactory to Agent;
     5. Trademark Security Agreements and Patent Security Agreements, each dated
the Closing Date and signed by each Credit Party that owns Trademarks and/or
Patents, as applicable;
     6. a copy of each Organization Document of each Credit Party that is on
file with any Governmental Authority in any jurisdiction, certified as of a
recent date by such Governmental Authority, together with, if applicable,
certificates attesting to the good standing of such Credit Party in such
jurisdiction and each other jurisdiction where such

1

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Credit Party is qualified to do business as a foreign entity or where such
qualification is necessary (and, if appropriate in any such jurisdiction,
related tax certificates);
     7. a certificate of the secretary or other officer of each Credit Party in
charge of maintaining books and records of such Credit Party certifying as to
(A) the names and signatures of each officer of such Credit Party authorized to
execute and deliver any Loan Document, (B) the Organization Documents of such
Credit Party attached to such certificate are complete and correct copies of
such Organization Documents as in effect on the date of such certification (or,
for any such Organization Document delivered pursuant to clause (v) above, that
there have been no changes from such Organization Document so delivered) and
(C) the resolutions of such Credit Party’s board of directors or other
appropriate governing body approving and authorizing the execution, delivery and
performance of each Loan Document to which such Credit Party is a party;
     8. duly executed opinions of counsel for the Credit Parties, together with
any local counsel opinions reasonably requested by Agent, dated the Closing
Date;
     9. a certificate of a Responsible Officer of the Borrower Representative to
the effect that (A) each condition set forth in Section 2.2 has been satisfied,
(B) there has been no material adverse change in the industry in which Borrowers
operate; (C) no order, injunction or pending litigation exits in which there is
a reasonable possibility of a decision that would have a Material Adverse Effect
or could challenge any of the transactions contemplated by the Agreement and the
other Loan Documents; and (D) each Credit Party is Solvent after giving effect
to the initial Loans and Letters of Credit, the application of the proceeds
thereof in accordance with this Agreement and the payment of all estimated
legal, accounting and other fees and expenses related hereto and thereto;
     10. an initial Borrowing Base Certificate duly executed by the Borrower
Representative, dated the Closing Date, reflecting information concerning
Eligible Accounts, Eligible Inventory, Eligible Equipment and Eligible Real
Estate of Borrowers as of a date not more than 15 days after the last day of the
month that ends at least 45 days before the Closing Date.
     11. a limited scope field examination performed by the Agent verifying the
information on the Borrowing Base Certificate delivered pursuant to paragraph 10
above;
     12. audited financial statements for the Borrowers and their Subsidiaries
for the fiscal year ending December 31, 2007 and unaudited financial statements
for the Borrowers and their Subsidiaries for the eleven months ending
November 30, 2008;
     13. a pro forma balance sheet of the Borrowers and their Subsidiaries as of
December 31, 2008 which gives effect to: (A) the Loans made on the Closing Date,
(B) all Related Transactions and (C) any fees or expenses payable by the
Borrowers or their Subsidiaries in connection therewith;

2

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     14. the Subordination Agreement, duly executed by the Borrowers and the
holder of the Subordinated Notes, together with certified copies of all
Subordinated Note Documents;
     15. insurance certificates demonstrating that the insurance policies
required by Section 4.6 are in full force and effect and have all endorsements
required by such Section 4.6;
     16. Phase I Environmental Site Assessment Reports, consistent with American
Society of Testing and Materials (ASTM) Standard E 1527-00 (or the current ASTM
standard for Phase I environmental site assessment reports), and applicable
state requirements, on all of the Real Estate, dated no more than six months
prior to the Closing Date, prepared by environmental engineers reasonably
satisfactory to Agent; together with such environmental review and audit
reports, including Phase II reports, with respect to the Real Estate of any
Credit Party as Agent shall have requested, and letters executed by the
environmental firms preparing such environmental reports authorizing Agent and
Lenders to rely on such reports;
     17. a Notice of Borrowing for the initial Revolving Loan, together with a
letter of direction with respect to the disbursement on the Closing Date of the
proceeds of the Revolving Loan, each duly executed by the Borrower
Representative;
     18. a payoff letter regarding the payment in full of all Prior
Indebtedness, together with releases and terminations of all Liens covering the
Collateral other than Permitted Liens, or the agreement of the holder thereof,
reasonably acceptable to Agent, to deliver such releases and terminations
promptly following receipt of the amount stated therein;
     19. a certified copy of the Akorn Response to the Parexel Report; and
     20. such other certificates, documents and agreements respecting any Credit
Party as Agent may reasonably request.

3

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EXHIBIT 4.2(b)
COMPLIANCE CERTIFICATE
Akorn, Inc.
Date:                     , 20___
     This Compliance Certificate (this “Certificate”) is given by Akorn, Inc., a
Louisiana corporation (the “Borrower Representative”), pursuant to subsection
4.2(b) of that certain Credit Agreement dated as of January 7, 2009 among
Borrower Representative, Akorn (New Jersey), Inc. (together with Borrower
Representative, the “Borrowers”), the other Credit Parties party thereto,
General Electric Capital Corporation, as administrative agent (in such capacity,
“Agent”), as L/C Issuer and as a Lender, and the additional Lenders party
thereto (as such agreement may be amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”). Capitalized terms used
herein without definition shall have the meanings set forth in the Credit
Agreement.
     The officer executing this Certificate is a Responsible Officer of the
Borrower Representative and as such is duly authorized to execute and deliver
this Certificate on behalf of Borrowers. By executing this Certificate, such
officer hereby certifies to Agent, Lenders and L/C Issuer, on behalf of
Borrowers, that:
          (a) the financial statements delivered with this Certificate in
accordance with subsection 4.1(a), 4.1(b) and/or 4.1(c) of the Credit Agreement
are correct and complete in all material respects and fairly present, in all
material respects, in accordance with GAAP, the financial position and the
results of operations of Borrowers and their Subsidiaries as of the dates of and
for the periods covered by such financial statements (subject, in the case of
interim financial statements, to normal year-end adjustments and the absence of
footnote disclosure);
          (b) to the best of such officer’s knowledge, each Credit Party and
each of their Subsidiaries, during the period covered by such financial
statements, has observed and performed all of their respective covenants and
other agreements in the Credit Agreement and the other Loan Documents to be
observed, performed or satisfied by them, and such officer had not obtained
knowledge of any Default or Event of Default [except as specified on the written
attachment hereto];
          (c) Exhibit A hereto is a correct calculation of each of the financial
covenants contained in Article VI of the Credit Agreement; and
          (d) since the Closing Date and except as disclosed in prior Compliance
Certificates delivered to Agent, no Credit Party and no Subsidiary of any Credit
Party has:
               (i) changed its legal name, identity, jurisdiction of
incorporation, organization or formation or organizational structure or formed
or acquired any Subsidiary except as follows:
                                                            ;

 

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               (ii) acquired the assets of, or merged or consolidated with or
into, any Person, except as follows:
                                                  ; or
               (iii) changed its address or otherwise relocated, acquired fee
simple title to any real property or entered into any real property leases,
except as follows:                                         
                                                            .
     IN WITNESS WHEREOF, Borrower Representative has caused this Certificate to
be executed by one of its Responsible Officers this ___ day of
                    , 20___.

                  AKORN, INC., as Borrower Representative    
 
           
 
  By:
Its:    
 
     
 
           

Note: Unless otherwise specified, all financial covenants are calculated for
Borrowers and their Subsidiaries on a consolidated basis in accordance with GAAP
and all calculations are without duplication.

 

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EXHIBIT A TO EXHIBIT 4.2(b)
COMPLIANCE CERTIFICATE
Covenant 6.1 Fixed Charge Coverage
Fixed Charge Coverage is defined as follows:

         
EBITDA (as defined below) for the applicable period of measurement
  $    
 
     
 
       
Fixed Charges is defined as the sum of the following, without duplication:
       
 
       
Cash Interest Expense:
       
 
       
Gross interest expense for such period paid or required to be paid in cash
(including all commissions, discounts, fees and other charges in connection with
letters of credit and similar instruments and net amounts paid or payable and/or
received or receivable under permitted Rate Contracts in respect of interest
rates) for the Borrowers and their Subsidiaries on a consolidated basis
  $    
 
     
 
       
Plus: Scheduled principal payments of Indebtedness during such period, including
without limitation with respect to any Capital Leases, but excluding the
repayment of the Prior Indebtedness and the repayment of the Subordinated Note
to the extent permitted under Section 5.11(c).
       
 
     
 
       
Plus: Taxes on or measured by income paid or payable in cash during such period
       
 
     
 
       
Plus: Other Restricted Payments paid in cash during such period (excluding
dividends from Subsidiaries of the Borrowers to the Borrowers or other
Subsidiaries of the Borrowers)
       
 
     
 
       
Plus: The aggregate of all expenditures and other obligations for the applicable
period ending on the last day of the month covered by such financial statements
which should be capitalized under GAAP (“Capital Expenditures”), excluding
Capital Expenditures financed by third parties, but including Capital
Expenditures financed by drawings under the Revolving Loan Commitments.
       
 
     
 
       
Fixed Charges for the applicable period of measurement:
  $    
 
     
 
       
Fixed Charge Coverage (EBITDA divided by Fixed Charges)
       
 
     
 
       
Required Fixed Charge Coverage
       
 
     
 
       
In Compliance
  Yes/No

A-1

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Covenant 6.2 Minimum EBITDA
EBITDA is defined as follows:

         
Net income (or loss) for the applicable period of measurement of Borrowers and
their Subsidiaries on a consolidated basis determined in accordance with GAAP,
but excluding: (a) the income (or loss) of any Person which is not a Subsidiary
of a Borrower, except to the extent of the amount of dividends or other
distributions actually paid to a Borrower or any of its Subsidiaries in cash by
such Person during such period and the payment of dividends or similar
distributions by that Person is not at the time prohibited by operation of the
terms of its charter or of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Person; (b) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of a Borrower or is merged into or consolidated with a Borrower or any of a
Borrower’s Subsidiaries or that Person’s assets are acquired by a Borrower or a
Borrower’s Subsidiaries; (c) the proceeds of any life insurance policy;
(d) gains or losses from the sale, exchange, transfer or other disposition of
Property or assets not in the Ordinary Course of Business of the Borrowers and
their Subsidiaries, and related tax effects in accordance with GAAP; and (e) any
other extraordinary or non-recurring gains or losses of the Borrowers or their
Subsidiaries, and related tax effects in accordance with GAAP;
  $    
 
     
 
       
Less: To the extent not previously deducted in the calculation of Net Income,
all research and development expenditures, including without limitation all
payments made or required to be made under development funding agreements or
similar agreements with third parties
       
 
     
 
       
Plus: All amounts deducted in calculating net income (or loss) for depreciation
or amortization for such period
       
 
     
 
       
Plus: Interest expense (less interest income) deducted in calculating net income
(or loss) for such period
       
 
     
 
       
Plus: All accrued taxes on or measured by income to the extent deducted in
calculating net income (or loss) for such period
       
 
     

A-2

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Plus: All non-cash losses or expenses (or minus non-cash income or gain)
included or deducted in calculating net income (or loss) for such period,
including, without limitation, any non-cash loss or expense due to the
application of FAS No. 106 regarding post-retirement benefits, FAS No. 133
regarding hedging activity, FAS No. 142 regarding impairment of good will, FAS
No. 150 regarding accounting for financial instruments with debt and equity
characteristics and non-cash expenses deducted as a result of any grant of Stock
or Stock Equivalents to employees, officers or directors, but excluding any
non-cash loss or expense (a) that is an accrual of a reserve for a cash
expenditure or payment to be made, or anticipated to be made, in a future period
or (b) relating to a write-down, write off or reserve with respect to Accounts
and Inventory,
       
 
     
 
       
Plus: Fees and expenses paid to Agent and Lenders in connection with the Loan
Documents, to the extent deducted in calculating net income (or loss) for such
period
       
 
     
 
       
EBITDA for the applicable period of measurement:
  $    
 
     
 
       
Required Minimum EBITDA
  $    
 
     
 
       
In Compliance
  Yes/No

A-3

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Covenant 6.3 Minimum Liquidity
For purposes of Covenant 6.3, Liquidity is defined as follows:

         
The “Borrowing Base” (as calculated pursuant to the Borrowing Base Certificate)
then in effect from time to time
  $    
 
     
 
       
Less: Such Reserves as may be imposed by Agent in its reasonable credit judgment
but not reflected in the Borrowing Base Certificate
  $    
 
     
 
       
Plus: Available cash and Cash Equivalents in bank accounts and investment
accounts in which the Agent has a first priority perfected Lien
  $    
 
     
 
       
Less: The aggregate outstanding principal amount of the Revolving Credit
Exposure:
  $    
 
     
 
       
Liquidity as of the date of measurement
  $    
 
     
 
       
Required Minimum Liquidity
  $    
 
     
 
       
In Compliance
  Yes/No

A-2

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Covenant 6.4 Maximum Capital Expenditures
For purposes of Covenant 6.4, Capital Expenditures are defined as follows:

         
The aggregate of all expenditures and obligations, for the relevant test period
set forth in Section 6.4 of the Credit Agreement, which should be capitalized
under GAAP
  $    
 
     
 
       
Less: Net Proceeds from Dispositions and/or Events of Loss which Borrower is
permitted to reinvest pursuant to subsection 1.8(c) and which are included above
       
 
     
 
       
Less: To the extent included above, expenditures financed with cash proceeds
from Excluded Equity Issuances
       
 
     
 
       
Capital Expenditures
       
 
     
 
       
Permitted Capital Expenditures (including carry forward of $______ from prior
period)
       
 
     
 
       
In Compliance
  Yes/No
 
     

A-3

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EXHIBIT B TO EXHIBIT 4.2(b)
COMPLIANCE CERTIFICATE
Calculation of Cash Flow

         
EBITDA for the applicable period of measurement
  $    
 
     
 
       
Less: Unfinanced Capital Expenditures, which is defined as follows:
       
 
     
 
       
The aggregate of all expenditures and other obligations for the twelve month
period ending on the last day of the month covered by such financial statements
which should be capitalized under GAAP (“Capital Expenditures”)
       
 
     
 
       
Less: To the extent included above, expenditures financed with cash proceeds
from Excluded Equity Issuances
       
 
     
 
       
Capital Expenditures
       
 
     
 
       
Less: Portion of Capital Expenditures financed under Capital Leases or other
Indebtedness (Indebtedness, for this purpose, does not include drawings under
the Revolving Loan Commitment)
       
 
       
Unfinanced Capital Expenditures (used in calculation of Cash Flow)
       
 
     
 
       
Cash Flow (used in calculation of Fixed Charge Coverage)
  $    
 
     

B-1

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EXHIBIT 4.11
CASH MANAGEMENT SYSTEM
     The Borrowers shall, and shall cause its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
     (a) Each Credit Party shall, and shall cause each depository to, and each
Borrower shall, and shall cause each securities intermediary or commodities
intermediary, to enter into Control Agreements with respect to each deposit,
securities, commodity or similar account maintained by such Person, as the case
may be (other than any payroll account so long as such payroll account is a zero
balance account and withholding tax and fiduciary accounts) not later than
fifteen days after the Closing Date, or such later date as Agent may in its
discretion agree in writing, with respect to such accounts maintained as of the
Closing Date and upon formation with respect to any such account opened after
the Closing Date. Each Credit Party shall deliver to Agent with such Control
Agreements such legal opinions and other diligence as Agent shall reasonably
request.
     (b) On or before the Closing Date, Borrowers shall have established a
concentration account in their name into which the proceeds of the Lockbox
Account will be transferred (the “Concentration Account”) at an Approved Bank.
On or before the Closing Date and thereafter, until the Revolving Termination
Date, Borrowers shall establish and maintain a lock box (a “Lock Box”) and an
associated lockbox account (each a “Lockbox Account”) with an Approved Bank (the
“Lockbox Bank”), subject to the provisions of this Agreement and shall execute
with the Lockbox Bank a lockbox agreement in such form as may be reasonably
acceptable to Agent. Borrowers shall direct their respective Account Debtors to
make payments on all Accounts into such Lock Box for deposit into such Lockbox
Account, and Borrowers shall cause all funds deposited into such Lockbox Account
to be immediately transferred (but in all events within two (2) Business Days of
such deposit) to the Concentration Account or to such other deposit account
maintained by Agent as determined by Agent in its sole discretion by written
notice to Borrowers and the Lockbox Bank.
     (c) Borrowers shall deposit, and cause their respective Subsidiaries to
deposit or cause to be deposited, promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made or
received in respect of any Collateral that have not been delivered to a Lock Box
(without implying that such is permitted under the Credit Agreement) into the
Concentration Account.
     (d) From and after the Closing Date, each Borrower may maintain, in such
Borrower’s name, an account (each a “Disbursement Account” and collectively, the
“Disbursement Accounts”) at an Approved Bank into which Agent shall, from time
to time, deposit proceeds of Revolving Loans made to such Borrower pursuant to
Section 1.1 for use by such Borrower in accordance with the provisions of
Section 4.10.

1

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     (e) Unless otherwise agreed by Agent, each Control Agreement for the
Concentration Account and each Disbursement Account shall provide, among other
things, that (i) all items of payment deposited in such account and proceeds
thereof deposited in the applicable deposit account are held by such bank as
agent or bailee-in-possession for Agent, on behalf of itself and Lenders,
(ii) the bank executing such agreement has no rights of setoff or recoupment or
any other claim against such deposit account, as the case may be, other than for
payment of its service fees and other charges directly related to the
administration of such account and for returned checks or other items of
payment, and (iii) (A) with respect to banks at which a Lockbox Account is
maintained, such bank agrees to forward immediately all amounts in each Lockbox
Account to the Concentration Account and (B) with respect to the Concentration
Account, the applicable bank agrees to forward all amounts received in the
Concentration Account to the Collection Account through sweeps from the
Concentration Account on each Business Day into the Collection Account. So long
as any Loan remains outstanding, Borrowers shall not, and shall not cause or
permit any Subsidiary thereof to, accumulate or maintain cash in Disbursement
Accounts or payroll accounts for (10) consecutive days (or if an Event of
Default exists, at any date of determination) in excess of checks outstanding
against such deposit accounts as of that date, plus amounts necessary to meet
minimum balance requirements for such deposit accounts.
     (f) So long as no Event of Default has occurred and is continuing,
Borrowers may add or replace a Lockbox Account, Concentration Account or any
Disbursement Account with an Approved Bank, provided that concurrently with the
opening of such account or Lock Box, Borrowers and such Approved Bank shall have
executed and delivered to Agent a Control Agreement. Borrowers shall close any
of its deposit accounts (and establish replacement deposit accounts in
accordance with the foregoing sentence) promptly following the date on which any
bank at which a deposit account is located that is, or is required to be,
subject to a Control Agreement first fails to constitute an Approved Bank.
     (g) The Lock Boxes, Lockbox Accounts, Disbursement Accounts and the
Concentration Account shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which, Borrowers and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and the other
Secured Parties, pursuant to the Guaranty and Security Agreement.
     (h) All amounts transferred to the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 and if applicable, the Fee
Letter and shall be applied (and allocated) by Agent in accordance with
Sections 1.10 and 1.11. In no event shall any amount be so applied unless and
until such amount shall have been credited in immediately available funds to the
Collection Account. After application of any amounts transferred to the
Collection Account in accordance with Sections 1.10 and 1.11, excess amounts
shall be returned to the Disbursement Account.

2

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EXHIBIT 11.1(a)
TO
CREDIT AGREEMENT
FORM OF ASSIGNMENT
     This ASSIGNMENT, dated as of the Effective Date, is entered into between
                     (“the Assignor”) and                      (“the Assignee”).
     The parties hereto hereby agree as follows:

     
Borrowers:
  Akorn, Inc., a Louisiana corporation and Akorn (New Jersey), Inc., an Illinois
corporation (the “Borrowers”)
 
   
Agent:
  General Electric Capital Corporation, as agent for the Lenders and L/C Issuers
(in such capacity and together with its successors and permitted assigns, the
“Agent”)
 
   
Credit Agreement:
  Credit Agreement, dated as of January 7, 2009, among the Borrowers, the other
Credit Parties party thereto, the Lenders and L/C Issuers party thereto and the
Agent (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”; capitalized terms used herein without
definition are used as defined in the Credit Agreement)
 
   
[Trade Date:
                      , ___]2
 
   
Effective Date:
                      , ___3

 

2   Insert for informational purposes only if needed to determine other
arrangements between the assignor and the assignee.   3   To be filled out by
Agent upon entry in the Register.

1

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                              Aggregate amount of     Aggregate amount of      
  Revolving Loan/   Commitments or     Commitments4 or         Commitment  
principal amount of     principal amount of         Assigned   Loans for all
Lenders5     Loans Assigned5     Percentage Assigned6  
 
  $       $         __.____ %
 
                   
 
  $       $         __.____ %
 
                   
 
  $       $         __.____ %
 
                   

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]
 

4   Include Revolving Loans and interests, participations and obligations to
participate in Letter of Credit Obligations.   5   Amount to be adjusted by the
counterparties to take into account any payments or prepayments made between the
Trade Date and the Effective Date. The aggregate amounts are inserted for
informational purposes only to help in calculating the percentages assigned
which, themselves, are for informational purposes only.   6   Set forth, to at
least 9 decimals, the Assigned Interest as a percentage of the aggregate
Commitment or Loans in the Facility. This percentage is set forth for
informational purposes only and is not intended to be binding. The assignments
are based on the amounts assigned not on the percentages listed in this column.

ASSIGNMENT
FOR AKORN, INC. CREDIT AGREEMENT

2

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     Section 1. Assignment. Assignor hereby sells and assigns to Assignee, and
Assignee hereby purchases and assumes from Assignor, Assignor’s rights and
obligations in its capacity as Lender under the Credit Agreement (including
Liabilities owing to or by Assignor thereunder) and the other Loan Documents, in
each case to the extent related to the amounts identified above (the “Assigned
Interest”).
     Section 2. Representations, Warranties and Covenants of Assignors. Assignor
(a) represents and warrants to Assignee and the Agent that (i) it has full power
and authority, and has taken all actions necessary for it, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby
and (ii) it is the legal and beneficial owner of its Assigned Interest and that
such Assigned Interest is free and clear of any Lien and other adverse claims
and (iii) by executing signing and delivering this assignment via ClearPar® or
any other electronic settlement system designated by the Agent, the Person
signing, executing and delivering this Assignment on behalf of the Assignor is a
duly authorized signatory for the Assignor and is authorized to execute, sign
and deliver this agreement, (b) makes no other representation or warranty and
assumes no responsibility, including with respect to the aggregate amount of the
Loans and Commitments, the percentage of the Loans and Commitments represented
by the amounts assigned, any statements, representations and warranties made in
or in connection with any Loan Document or any other document or information
furnished pursuant thereto, the execution, legality, validity, enforceability or
genuineness of any Loan Document or any document or information provided in
connection therewith and the existence, nature or value of any Collateral,
(c) assumes no responsibility (and makes no representation or warranty) with
respect to the financial condition of any Credit Party or the performance or
nonperformance by any Credit Party of any obligation under any Loan Document or
any document provided in connection therewith and (d) attaches any Notes held by
it evidencing at least in part the Assigned Interest of such Assignor (or, if
applicable, an affidavit of loss or similar affidavit therefor) and requests
that the Agent exchange such Notes for new Notes in accordance with Section 1.2
of the Credit Agreement.
     Section 3. Representations, Warranties and Covenants of Assignees. Assignee
(a) represents and warrants to Assignor and the Agent that (i) it has full power
and authority, and has taken all actions necessary for Assignee, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby,
(ii) it is [not] an Affiliate of ___, a Lender and (iii) it is sophisticated
with respect to decisions to acquire assets of the type represented by the
Assigned Interest assigned to it hereunder and either Assignee or the Person
exercising discretion in making the decision for such assignment is experienced
in acquiring assets of such type, (iv) by executing, signing and delivering this
Assignment via ClearPar® or any other electronic settlement system designated by
the Agent, the Person signing, executing and delivering this Assignment on
behalf of the Assignor is a duly authorized signatory for the Assignor and is
authorized to execute, sign and deliver this Agreement (b) appoints and
authorizes the Agent to take such action as administrative agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto, (c) shall perform in accordance with their terms all
obligations that, by the terms of the Loan Documents, are required to be
performed by it as a Lender, (d) confirms it has received such documents and
information as it has deemed
ASSIGNMENT
FOR AKORN, INC. CREDIT AGREEMENT

3

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appropriate to make its own credit analysis and decision to enter into this
Assignment and shall continue to make its own credit decisions in taking or not
taking any action under any Loan Document independently and without reliance
upon Agent, any L/C Issuer, any Lender or any other Indemnitee and based on such
documents and information as it shall deem appropriate at the time,
(e) acknowledges and agrees that, as a Lender, it may receive material
non-public information and confidential information concerning the Credit
Parties and their Affiliates and their Stock and agrees to use such information
in accordance with Section 9.10 of the Credit Agreement, (f) specifies as its
applicable lending offices (and addresses for notices) the offices at the
addresses set forth beneath its name on the signature pages hereof, (g) shall
pay to the Agent an assignment fee in the amount of $3,500 to the extent such
fee is required to be paid under Section 9.9 of the Credit Agreement and (h) to
the extent required pursuant to Section 10.2(f) of the Credit Agreement,
attaches two completed originals of Forms W-8ECI, W-8BEN, W-8IMY or W-9 and, if
applicable, a portfolio interest exemption certificate.
     Section 4. Determination of Effective Date; Register. Following the due
execution and delivery of this Assignment by Assignor, Assignee and, to the
extent required by Section 9.9 of the Credit Agreement, the Borrowers, this
Assignment (including its attachments) will be delivered to the Agent for its
acceptance and recording in the Register. The effective date of this Assignment
(the “Effective Date”) shall be the later of (i) the acceptance of this
Assignment by the Agent and (ii) the recording of this Assignment in the
Register. The Agent shall insert the Effective Date when known in the space
provided therefor at the beginning of this Assignment.
     Section 5. Effect. As of the Effective Date, (a) Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment, have the
rights and obligations of a Lender under the Credit Agreement and (b) Assignor
shall, to the extent provided in this Assignment, relinquish its rights (except
those surviving the termination of the Commitments and payment in full of the
Obligations) and be released from its obligations under the Loan Documents other
than those obligations relating to events and circumstances occurring prior to
the Effective Date.
     Section 6. Distribution of Payments. On and after the Effective Date, the
Agent shall make all payments under the Loan Documents in respect of each
Assigned Interest (a) in the case of amounts accrued to but excluding the
Effective Date, to Assignor and (b) otherwise, to Assignee.
     Section 7. Miscellaneous. (a) The parties hereto, to the extent permitted
by law, waive all right to trial by jury in any action, suit, or proceeding
arising out of, in connection with or relating to, this Assignment and any other
transaction contemplated hereby. This waiver applies to any action, suit or
proceeding whether sounding in tort, contract or otherwise.
     (b) On and after the Effective Date, this Assignment shall be binding upon,
and inure to the benefit of, the Assignor, Assignee, the Agent and their Related
Persons and their successors and assigns.
     (c) This Assignment shall be governed by, and be construed and interpreted
in accordance with, the law of the State of New York.
ASSIGNMENT
FOR AKORN, INC. CREDIT AGREEMENT

4

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     (d) This Assignment may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same agreement.
     (e) Signature pages may be detached from multiple separate counterparts and
attached to a single counterpart. Delivery of an executed signature page of this
Assignment by facsimile transmission or Electronic Transmission shall be as
effective as delivery of a manually executed counterpart of this Assignment.
ASSIGNMENT
FOR AKORN, INC. CREDIT AGREEMENT

5

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     IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

            [NAME OF ASSIGNOR]
             as Assignor
      By:           Name:           Title:           [NAME OF ASSIGNEE]
            as Assignee
      By:           Name:           Title:           Lending Office for
Eurodollar Rate Loans:

[Insert Address (including contact name, fax number
and e-mail address)]

Lending Office (and address for notices)
            for any other purpose:

[Insert Address (including contact name, fax number
and e-mail address)]
   

[SIGNATURE PAGE FOR ASSIGNMENT FOR AKORN, INC. CREDIT AGREEMENT]

 

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ACCEPTED and AGREED
this ___ day of ___:
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent

         
By:
   
 
Name:    
 
  Title:    
 
        AKORN, INC.7    
 
       
By:
       
 
       
 
  Name:    
 
  Title:    
 
        AKORN (NEW JERSEY), INC.7    
 
       
By:
       
 
       
 
  Name:    
 
  Title:    

 

7   Include only if required pursuant to Section 9.9 of the Credit Agreement.  
7   Include only if required pursuant to Section 9.9 of the Credit Agreement.

[SIGNATURE PAGE FOR ASSIGNMENT FOR AKORN, INC. CREDIT AGREEMENT]

 

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EXHIBIT 11.1(b)
FORM OF BORROWING BASE CERTIFICATE

         
Accounts Receivable per Aging as of XX/XX/XX
    —  
Ineligibles
       
Payments in-transit (Unapplied Cash)
    —  
Cash Discounts reserve
    —  
Chargebacks reserve
    —  
Rebates/Distribution Fee reserve
    —  
Special Pricing Reserve
    —  
Foreign A/R
    —  
Government A/R
    —  
Deduct for Customer A/P due (Contra)
    —  
Past Due balance > 60 days
    —  
Cross-age (>50% past due)
    —  
AR Balance Exceeding Concentration Limit
    —  
Other
    —  
 
       
Total Ineligibles
    —  
 
       
Preliminary Eligible AR
    —  
Liquidity Factor
       
 
       
Adjusted Eligible Accounts Receivable
    —  
Advance Rate
    85.0 %
 
       
Adjusted Eligible Accounts Receivable
    —  
Past Due Credit Balances
    —  
 
       
Available Accounts Receivable
    —  
 
       
Inventory per balance sheet as of XX/XX/XX
    —  
Reconciling Items
       
N/A
    —  
 
       
TOTAL
    —  
Inventory per GL sheet as of XX/XX/XX
    —  
Reconciling Items
       
WIP
    —  
Inventory in-transit
    —  
Other
    —  
 
       
TOTAL
    —  
Inventory per perpetual as of XX/XX/XX
    —  
Ineligibles
       
Components
    —  
Akron Strides Inventory — JV Inventory
    —  
Raw Materials
    —  
Expired Products
    —  
Product with Expiration < 6 months
    —  
FG Under Quarantine
    —  
Obsolete/Slow Moving
    —  
Product Net Realizable Value Reserve
    —  
Inventory Without License Consent
    —  
Other
    —  
 
       
Total Ineligible
    —  
 
       
Eligible Inventory
    —  
NOLV %
    66.0 %
 
       
NOLV of Eligible Inventory
    —  
Advance Rate
    85.0 %
 
       
Available Inventory
    —  
 
       
 
  OR  
Eligible Inventory
    —  
Advance Rate
    50.0 %
 
       
Available Inventory
    —  
 
       
 
       
Lesser of NOLV @ 85% or 50% Advance Rate (Capped @ 75% of Total Availability)
    —  
Less: Three-Month Rent Reserve (if applicable)
    —  
 
       
Net Available Inventory
    —  
 
       
 
       
NOLV M&E
    —  
Advance Rate
    85.0 %
 
       
Available M&E
    —  
 
       
 
       
Real Estate
    —  
Advance Rate
    50.0 %
 
       
Available Real Estate
    —  
 
       
 
       
Borrowing Base
    —  
Lesser of Borrowing Base or Aggregate Revolving Loan Commitment
    —  
Availability Block through March 31, 2010
    5,500  
Maximum Revolving Loan Balance(1)
    —  
Less Outstanding Revolver as of XX/XX/XX
    —  
 
       
Excess Availability Before Loan Request
    —  
 
       
Borrower Requests a Loan in the Amount of
    —  
New Loan Balance
    —  
 
       
Remaining Availability
    —  
 
       

 

(1)   Limited to $5MM until receipt of Control Agreement(s) per Section 1.1 of
Credit Agreement

This certificate is given by the undersigned, being the Chief Financial Officer
of Akorn, Inc., a Louisiana corporation (“Borrower Representative”), pursuant to
Section 4.2(d) of that certain Credit Agreement, dated as of January 7, 2009,
among the Borrowers, the financial institutions party thereto from time to time
as Lenders and General Electric Capital Corporation, a Delaware corporation, as
Agent, L/C Issuer, and as a Lender (as amended, restated, supplemented or
otherwise modified from time to time the “Credit Agreement”). Capitalized terms
used herein without definition shall have the meanings set forth in the Credit
Agreement.
I am the Chief Financial Officer and a Responsible Officer of the Borrower
Representative and as such am duly authorized to execute and deliver this
certificate on behalf of the Borrowers. By executing this certificate I hereby
certify, in my capacity as Chief Financial Officer, to Agent and Lenders that:
(a) Provided herein is a calculation of the Borrowing Base for the Borrowers as
of the above date;
(b) based on the Borrowing Base, Availability as of the above date is:
$                    
IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate
as of this ___ day of ___, 20___.
Signature:                                                             
Name:                                                             
Title:                                                             

 

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EXHIBIT 11.1(c)
TO
CREDIT AGREEMENT
FORM OF NOTICE OF BORROWING
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent under the Credit Agreement referred to below
                          ,           
Attention:
     Re: Akorn, Inc. and certain of its Subsidiaries (the “Borrowers”)
     Reference is made to the Credit Agreement, dated as of January 7, 2009 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Credit Agreement”), among the Borrowers, Akorn, Inc. as Borrower
Representative, the other Credit Parties, the Lenders and L/C Issuers party
thereto and General Electric Capital Corporation, as agent for such Lenders and
L/C Issuers. Capitalized terms used herein without definition are used as
defined in the Credit Agreement.
     The Borrower Representative, on behalf of Borrowers, hereby gives you
irrevocable notice, pursuant to Section 1.5 of the Credit Agreement of its
request of a Borrowing (the “Proposed Borrowing”) under the Credit Agreement
and, in that connection, sets forth the following information:
     THE DATE OF THE PROPOSED BORROWING IS                     , ___(THE
“FUNDING DATE”).
     THE AGGREGATE PRINCIPAL AMOUNT OF REQUESTED REVOLVING LOANS IS
$                    , OF WHICH $                     CONSISTS OF BASE RATE
LOANS AND $                     CONSISTS OF LIBOR RATE LOANS HAVING AN INITIAL
INTEREST PERIOD OF                      MONTHS.
     The undersigned hereby certifies that, except as set forth on Schedule A
attached hereto, the following statements are true on the date hereof and will
be true on the Funding Date, both before and after giving effect to the Proposed
Borrowing and any other Loan to be made or Letter of Credit to be Issued on or
before the Funding Date:
     1. except as otherwise waived in writing by the Required Lenders, the
representations and warranties set forth in Article III of the Credit Agreement
and elsewhere in the Loan Documents are true and correct in all material
respects (without duplication of any materiality qualifier contained therein),
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties were true and
correct as of such date;

 

--------------------------------------------------------------------------------

 

     2. no Default or Event of Default has occurred and is continuing;
     3. the aggregate outstanding amount of the Revolving Credit Exposure will
not exceed the Maximum Revolving Loan Balance; and
     4. after giving effect to such Loan and the application of the proceeds
thereof on the date of funding (including depositing such funds in a
Disbursement Account so long as cash in such Disbursement Account would not
exceed (x) checks outstanding against such Disbursement Account as of that date,
plus (y) amounts necessary to meet minimum balance requirements for such
Disbursement Account), the aggregate cash and Cash Equivalents of Borrowers and
their Subsidiaries will not exceed $5,000,000.

            AKORN, INC., as the Borrower Representative
      By:           Name:           Title:        

 

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EXHIBIT 11.1(d)
TO
CREDIT AGREEMENT
FORM OF REVOLVING LOAN NOTE

          Lender: [NAME OF LENDER]
Principal Amount: $                       New York, New York
                    , 20___

     FOR VALUE RECEIVED, the undersigned, AKORN, INC., a Louisiana corporation
and AKORN (NEW JERSEY), INC. (the “Borrowers”), hereby promise to pay to the
order of the Lender set forth above (the “Lender”) the Principal Amount set
forth above, or, if less, the aggregate unpaid principal amount of all Revolving
Loans (as defined in the Credit Agreement referred to below) of the Lender to
the Borrowers, payable at such times and in such amounts as are specified in the
Credit Agreement.
     The Borrowers promise to pay interest on the unpaid principal amount of the
Revolving Loans from the date made until such principal amount is paid in full,
payable at such times and at such interest rates as are specified in the Credit
Agreement. Demand, diligence, presentment, protest and notice of non-payment and
protest are hereby waived by the Borrowers.
     Both principal and interest are payable in Dollars to General Electric
Capital Corporation, as Agent, at the address set forth in the Credit Agreement,
in immediately available funds.
     This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, dated as of January 7, 2009 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among the Borrowers, the other Credit Parties party
thereto, the Lenders and the L/C Issuers party thereto and General Electric
Capital Corporation, as administrative agent for the Lenders and L/C Issuers.
Capitalized terms used herein without definition are used as defined in the
Credit Agreement.
     The Credit Agreement, among other things, (a) provides for the making of
Revolving Loans by the Lender to the Borrowers in an aggregate amount not to
exceed at any time outstanding the Principal Amount set forth above, the
indebtedness of the Borrowers resulting from such Revolving Loans being
evidenced by this Note and (b) contains provisions for acceleration of the
maturity of the unpaid principal amount of this Note upon the happening of
certain stated events and also for prepayments on account of the principal
hereof prior to the maturity hereof upon the terms and conditions specified
therein.
     This Note is a Loan Document, is entitled to the benefits of the Loan
Documents and is subject to certain provisions of the Credit Agreement,
including Sections 9.18(b) (Submission to Jurisdiction), 9.20 (Waiver of Jury
Trial) and 11.2 (Other Interpretive Provisions) thereof.
     This Note is a registered obligation, transferable only upon notation in
the Register, and no assignment hereof shall be effective until recorded
therein.

1

--------------------------------------------------------------------------------

 

     This Note shall be governed by, and construed and interpreted in accordance
with, the law of the State of New York.
[$                    ] REVOLVING LOAN NOTE
OF AKORN, INC. FOR THE BENEFIT OF [NAME OF LENDER]

2

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed and
delivered by its duly authorized officer as of the day and year and at the place
set forth above.

         
 
  AKORN, INC.    
 
       
 
  By:    
 
 
 
Name:    
 
  Title:    
 
       
 
  AKORN (NEW JERSEY), INC.    
 
       
 
  By:    
 
 
 
   
 
  Name:    
 
  Title:    

 

--------------------------------------------------------------------------------

 

EXHIBIT 11.1(e)
TO
CREDIT AGREEMENT
FORM OF SWINGLINE NOTE
New York, New York

          Swingline Lender: General Electric Capital Corporation
Principal Amount: $5,000,000  
                    , 2009

     FOR VALUE RECEIVED, the undersigned, AKORN, INC., a Louisiana corporation
and AKORN (NEW JERSEY), INC., an Illinois corporation (the “Borrowers”), hereby
promise to pay to the order of the Swingline Lender set forth above (the
“Swingline Lender”) the Principal Amount set forth above, or, if less, the
aggregate unpaid principal amount of all Swingline Loans (as defined in the
Credit Agreement referred to below) of the Swingline Lender to the Borrowers,
payable at such times and in such amounts as are specified in the Credit
Agreement.
     The Borrowers promise to pay interest on the unpaid principal amount of the
Swingline Loans from the date made until such principal amount is paid in full,
payable at such times and at such interest rates as are specified in the Credit
Agreement. Demand, diligence, presentment, protest and notice of non-payment and
protest are hereby waived by the Borrowers.
     Both principal and interest are payable in Dollars to General Electric
Capital Corporation, as Agent, at the address set forth in the Credit Agreement,
in immediately available funds.
     This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, dated as of January 7, 2009 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), among the Borrowers, the other Credit Parties party
thereto, the Lenders, the L/C Issuer, the Swingline Lender and General Electric
Capital Corporation, as administrative agent for the Lenders and L/C Issuer.
Capitalized terms used herein without definition are used as defined in the
Credit Agreement.
     The Credit Agreement, among other things, (a) provides for the making of
Swing Line Loans by the Swingline Lender to the Borrowers in an aggregate amount
not to exceed at any time outstanding the Principal Amount set forth above, the
indebtedness of the Borrowers resulting from such Swingline Loans being
evidenced by this Note and (b) contains provisions for acceleration of the
maturity of the unpaid principal amount of this Note upon the happening of
certain stated events and also for prepayments on account of the principal
hereof prior to the maturity hereof upon the terms and conditions specified
therein.
     This Note is a Loan Document, is entitled to the benefits of the Loan
Documents and is subject to certain provisions of the Credit Agreement,
including Sections 9.18(b) (Submission to Jurisdiction), 9.19 (Waiver of Jury
Trial) and 11.2 (Other Interpretive Provisions) thereof.

 

--------------------------------------------------------------------------------

 

     This Note is a registered obligation, transferable only upon notation in
the Register, and no assignment hereof shall be effective until recorded
therein.
     This Note shall be governed by, and construed and interpreted in accordance
with, the law of the State of New York.
[Remainder of page intentionally left blank;
signature page follows]

2

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     IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed and
delivered by its duly authorized officer as of the day and year and at the place
set forth above.

                  AKORN, INC., a Louisiana corporation
 
           
 
  By:
Name:    
 
     
 
           
 
  Title:        
 
           
 
                AKORN (NEW JERSEY), INC., an Illinois corporation
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

 

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EXHIBIT 11.1(f)
ELIGIBLE ACCOUNTS
     “Eligible Accounts” shall mean all Accounts of the Borrowers reflected as
accounts receivable on the Borrowers’ balance sheet (as of the date above), but
solely to the extent of the unpaid portion of the obligations stated on the
respective invoices issued to a customer of a Borrower with respect to inventory
sold and shipped or services performed in the ordinary course of business, net
of any credits, rebates, distribution fees, cash discounts, offsets, special
pricing or chargebacks owed by such Borrower to the respective customer,
excluding all Ineligible Accounts, multiplied by the Liquidity Factor
“Ineligible Accounts” shall mean, without duplication,
(a) Accounts that do not arise from the sale of goods or the performance of
services by Borrowers in the ordinary course of their business or accounts
arising from the sale of goods that have been returned;
(b) Accounts (i) upon which a Borrower’s right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) as to which a Borrower is not able to bring suit or otherwise enforce its
remedies against the Account Debtor through judicial process, or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor’s obligation to pay that invoice is subject to a Borrower’s completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;
(c) Any Account to the extent that any defense, counterclaim, setoff or dispute
is asserted as to such Account, to the extent of the amount disputed;
(d) Accounts that are not true and correct statements of bona fide indebtedness
incurred in the amount of such Account for product sold to or services rendered
and accepted by the applicable Account Debtor;
(e) Accounts with respect to which an invoice, in Borrowers’ standard form
previously approved by Agent or in another form reasonably acceptable to Agent
in form and substance, has not been sent to the applicable Account Debtor;
(f) Accounts that (i) are not owned by a Borrower or (ii) are subject to any
right, claim, security interest or other interest of any other Person, other
than Liens in favor of Agent, on behalf of itself and Lenders;

 

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(g) Accounts that arise from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer or
director with any Credit Party;
(h) Accounts that are the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof unless Agent, in
its sole discretion, has agreed to the contrary in writing and Borrowers, if
necessary or desirable, have complied with respect to such obligation with the
Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with respect to such
obligation;
(i) Accounts that are the obligations of an Account Debtor located in a foreign
country other than Canada unless payment thereof is assured by a letter of
credit assigned and delivered to Agent, satisfactory to Agent as to form, amount
and issuer, or Agent has otherwise waived in writing the requirement to deliver
a letter of credit with respect to such Account;
(j) Accounts to the extent any Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to any Borrower
or any Subsidiary thereof but only to the extent of the potential offset;
(k) Accounts that arise with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) Accounts that are in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:

  (i)   the Account is not paid within the earlier of: 60 days following its due
date or 90 days following its original invoice date;     (ii)   the Account
Debtor obligated upon such Account suspends business, makes a general assignment
for the benefit of creditors or fails to pay its debts generally as they come
due; or     (iii)   a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal, state
or foreign (including any provincial) receivership, insolvency relief or other
law or laws for the relief of debtors;

(m) Accounts that are the obligations of an Account Debtor if 50% or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under
the other criteria set forth in this Exhibit 11.1(f);

2

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(n) Accounts as to which Agent’s Lien thereon, on behalf of itself and Lenders,
is not a first priority perfected Lien;
(o) Accounts as to which any of the representations or warranties in the Loan
Documents are untrue;
(p) Accounts that are evidenced by a judgment, Instrument or Chattel Paper;
(q) Accounts to the extent such Account exceeds any credit limit established by
Agent, in its reasonable credit judgment, following prior notice of such limit
by Agent to Borrowers;
(r) Accounts to the extent that such Account, together with all other Accounts
owing to such Account Debtor and its Affiliates as of any date of determination
exceed 10% of all Eligible Accounts (the “Concentration Limit”); provided,
however, that so long as any of the following Account Debtors have a credit
rating of at least BB+/Ba1, or such other level as Agent may agree in writing
from time to time, from S&P or Moody’s assigned to their senior, unsecured
long-term debt securities, the Concentration Limit for such Account Debtor shall
be as set forth below;

          Concentration Account Debtor   Limit
AmerisourceBergen Corporation
   25% of all Eligible Accounts
McKesson Drug Company
   25% of all Eligible Accounts
Cardinal Health, Inc.
   30% of all Eligible Accounts

provided, further, however, that so long as Henry Schein, Inc. owns at least 51%
of GIV and either (i) the trailing four quarter profit of Henry Schein, Inc. is
at least $50,000,000 or (ii) GIV has no past due Accounts, then the
Concentration Limit for GIV shall be 30% of all Eligible Accounts.
(s) Accounts that are payable in any currency other than Dollars; or
(t) Accounts that are otherwise unacceptable to Agent in its reasonable credit
judgment of which Borrower has been provided written notice.

3

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EXHIBIT 11.1(g)
ELIGIBLE INVENTORY
     “Eligible Inventory” shall mean Inventory owned by a Borrower and located
in the United States of America (as of the date above, including adequate
reserves for obsolete, slow-moving or excess quantities), excluding all
Ineligible Inventory.
“Ineligible Inventory” shall mean, without duplication,

(a) Inventory that is not owned by a Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Borrower’s performance with respect to that Inventory), except the Liens in
favor of Agent, on behalf of itself and Lenders;
(b) Inventory that (i) is not located on premises owned, leased or rented by
Borrowers and set forth on Schedule IV to the Guaranty and Security Agreement,
(ii) is stored at a leased location, unless Agent has given its prior consent
thereto and unless (x) a reasonably satisfactory landlord waiver has been
delivered to Agent, or (y) Reserves satisfactory to Agent have been established
with respect thereto, (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory, acknowledged bailee letter has been received by Agent
or Reserves reasonably satisfactory to Agent have been established with respect
thereto, or (iv) is located at an owned location subject to a mortgage in favor
of a lender other than Agent, unless a reasonably satisfactory mortgagee waiver
has been delivered to Agent, or (v) is located at any site if the aggregate book
value of Inventory at any such location is less than $100,000;
(c) Inventory that is placed on consignment or is in transit, except Inventory
in transit between domestic locations of Borrowers as to which Agent’s Liens
have been perfected at origin and destination;
(d) Inventory that is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(e) Inventory that is slow moving, excess, discontinued, quarantined, expired,
shopworn, seconds, damaged, obsolete, unmerchantable, defective, used, unfit for
sale, having an expiration of less than six months, not salable at prices
approximating at least the cost of such Inventory in the ordinary course of
business or unacceptable due to age, type, category, quantity, and/or failure to
meet applicable customer specifications or acceptance procedures; or which does
not comply with the rules or regulations of the United States Food and Drug
Administration or any similar regulatory body located in the jurisdiction in
which such Inventory is held for sale; or which is the subject of a recall;

 

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(f) Inventory that consists of display items or packing or shipping materials,
manufacturing supplies, work-in-process Inventory, raw materials or replacement
parts;
(g) Inventory that consists of goods which have been returned by the buyer;
(h) Inventory that is not of a type held for sale in the ordinary course of
business of Borrowers;
(i) Inventory that is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders subject to Permitted Liens;
(j) Inventory that breaches any of the representations or warranties pertaining
to Inventory set forth in the Loan Documents;
(k) Inventory that consists of any costs associated with “freight-in” charges;
(l) Inventory that consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(m) Inventory that is not covered by casualty insurance maintained in accordance
with the Loan Documents;
(n) Inventory that is otherwise unacceptable to Agent in its reasonable credit
judgment; or
(o) Inventory subject to any licensing, trademark, trade name or copyright
agreements with any third parties which would require any consent of any third
party for the sale or disposition of that Inventory (which consent has not been
obtained) or the payment of any monies to any third party upon such sale or
other disposition (to the extent of such monies).

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