EXHIBIT 10.75
GUARANTY AND COLLATERAL AGREEMENT
     THIS GUARANTY AND COLLATERAL AGREEMENT dated as of October 7, 2003 (this
“Agreement”) is entered into among AKORN, INC., a Louisiana corporation,
(“Akorn”), AKORN (NEW JERSEY), INC., an Illinois corporation (“Akorn New Jersey”
and together with Akorn, the “Companies”, each being a “Company”), and each
other Person signatory hereto as a Grantor (together with any other Person that
becomes a party hereto as provided herein, the “Grantors”) in favor of LASALLE
BANK NATIONAL ASSOCIATION, as the Administrative Agent for all the Lenders party
to the Credit Agreement (as hereafter defined).
     The Lenders have severally agreed to extend credit to each Company pursuant
to the Credit Agreement. Each Company is affiliated with each other Grantor. The
proceeds of credit extended under the Credit Agreement will be used in part to
enable the Companies to make valuable transfers to the Grantors in connection
with the operation of their respective businesses. The Companies and the other
Grantors are engaged in interrelated businesses, and each Grantor will derive
substantial direct and indirect benefit from extensions of credit under the
Credit Agreement. It is a condition precedent to each Lender’s obligation to
extend credit under the Credit Agreement that the Grantors shall have executed
and delivered this Agreement to the Administrative Agent for the ratable benefit
of all the Lenders.
     In consideration of the premises and to induce the Administrative Agent and
the Lenders to enter into the Credit Agreement and to induce the Lenders to
extend credit thereunder, each Grantor hereby agrees with the Administrative
Agent, for the ratable benefit of the Lenders, as follows:
SECTION 1 DEFINITIONS.
          1.1 Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement, and the following terms are used herein as defined in the UCC:
Accounts, Certificated Security, Commercial Tort Claims, Deposit Accounts,
Documents, Electronic Chattel Paper, Equipment, Farm Products, Goods, Health
Care Insurance Receivables, Instruments, Inventory, Leases, Letter-of-Credit
Rights, Money, Payment Intangibles, Supporting Obligations, Tangible Chattel
Paper.
          1.2 When used herein the following terms shall have the following
meanings:
     Assigned Agreements means Related Agreements.
     Agreement has the meaning set forth in the preamble hereto.
     Chattel Paper means all “chattel paper” as such term is defined in
Section 9-102(a)(l 1) of the UCC and, in any event, including with respect to
any Grantor, all Electronic Chattel Paper and Tangible Chattel Paper.
     Collateral means (a) all of the personal property now owned or at any time
hereafter acquired by any Grantor or in which any Grantor now has or at any time
in the future may

 

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acquire any right, title or interest, including all of each Grantor’s Accounts,
Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Equipment,
Fixtures, General Intangibles, Health Care Insurance Receivables, Farm Products,
Goods, Instruments, Intellectual Property, Inventory, Investment Property,
Leases, Letter-of-Credit Rights, Money, Supporting Obligations and Identified
Claims, (b) all books and records pertaining to any of the foregoing, (c) all
Proceeds and products of any of the foregoing, and (d) all collateral security
and guaranties given by any Person with respect to any of the foregoing. Where
the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the
relevant part thereof.
     Company Obligations means all Obligations of the Companies.
     Contract Rights means all of the Grantors’ rights and remedies with respect
to the Assigned Agreements.
     Copyrights means all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, including those
listed on Schedule 5, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office, and the right to obtain
all renewals of any of the foregoing.
     Copyright Licenses means all written agreements naming any Grantor as
licensor or licensee, including those listed on Schedule 5, granting any right
under any Copyright, including the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.
     Credit Agreement means the Credit Agreement of even date herewith among the
Companies, the Lenders and the Administrative Agent, as amended, supplemented,
restated or otherwise modified from time to time.
     Fixtures means all of the following, whether now owned or hereafter
acquired by a Grantor: plant fixtures; business fixtures; other fixtures and
storage facilities, wherever located; and all additions and accessories thereto
and replacements therefor.
     General Intangibles means all “general intangibles” as such term is defined
in Section 9-102(a)(42) of the UCC and, in any event, including with respect to
any Grantor, all Payment Intangibles, all contracts and Contract Rights
(including all Assigned Agreements and Seller Undertakings), agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or interest
or to which such Grantor or any property of such Grantor is subject, as the same
from time to time may be amended, supplemented or otherwise modified, including
all rights of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (b) all rights of such Grantor to damages
arising thereunder and (c) all rights of such Grantor to perform and to exercise
all remedies thereunder; provided, that the foregoing limitation shall not
affect, limit, restrict or impair the grant by such Grantor of a security
interest pursuant to this Agreement in

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any Receivable or any money or other amounts due or to become due under any such
Payment Intangible, contract, agreement, instrument or indenture.
     Guarantor Obligations means, collectively, with respect to each Guarantor,
all Obligations of such Guarantor.
     Guarantors means the collective reference to each Grantor including each
Company with respect to the Obligations of the other Company, if any.
     Identified Claims means the Commercial Tort Claims described on Schedule 7
as such schedule shall be supplemented from time to time.
     Intellectual Property means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks and the Trademark Licenses, and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
     Intercompany Note means any promissory note evidencing loans made by any
Grantor to any other Grantor.
     Investment Property means the collective reference to (a) all “investment
property” as such term is defined in Section 9-102(a)(49) of the UCC (other than
the equity interest of any foreign Subsidiary excluded from the definition of
Pledged Equity), (b) all “financial assets” as such term is defined in
Section 8-102(a)(9) of the UCC, and (b) whether or not constituting “investment
property” as so defined, all Pledged Notes and all Pledged Equity.
     Issuers means the collective reference to each issuer of any Investment
Property.
     Paid in Full means (a) the payment in full in cash and performance of all
Secured Obligations, (b) the termination of all Commitments and (c) either
(i) the cancellation and return to the Administrative Agent of all Letters of
Credit or (ii) the cash collateralization of all Letters of Credit in accordance
with the Credit Agreement.
     Patents means (a) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including any of the foregoing
referred to in Schedule 5, (b) all applications for letters patent of the United
States or any other country and all divisions, continuations and
continuations-in-part thereof, including any of the foregoing referred to in
Schedule 5, and (c) all rights to obtain any reissues or extensions of the
foregoing.
     Patent Licenses means all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including any of the
foregoing referred to in Schedule 5.
     Pledged Equity means the equity interests listed on Schedule 1, together
with any other equity interests, certificates, options or rights of any nature
whatsoever in respect of the equity

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interests of any Person that may be issued or granted to, or held by, any
Grantor while this Agreement is in effect; provided that in no event shall more
than 65% of the total outstanding equity interests of any foreign Subsidiary be
required to be pledged hereunder.
     Pledged Notes means all promissory notes listed on Schedule 1, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
     Proceeds means all “proceeds” as such term is defined in
Section 9-102(a)(64) of the UCC and, in any event, shall include all dividends
or other income from the Investment Property, collections thereon or
distributions or payments with respect thereto.
     Receivable means any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including
any Accounts).
     Secured Obligations means, collectively, the Company Obligations and
Guarantor Obligations.
     Securities Act means the Securities Act of 1933, as amended.
     Seller Undertakings means, collectively, all representations, warranties,
covenants and agreements in favor of any Grantor, and all indemnifications for
the benefit of any Grantor relating thereto, pursuant to the Assigned
Agreements.
     Trademarks means (a) all trademarks, trade names, corporate names, the
Company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including any of the foregoing referred to in
Schedule 5, and (b) the right to obtain all renewals thereof.
     Trademark Licenses means, collectively, each agreement, whether written or
oral, providing for the grant by or to any Grantor of any right to use any
Trademark, including any of the foregoing referred to in Schedule 5.
     UCC means the Uniform Commercial Code as in effect on the date hereof and
from time to time in the State of Illinois, provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interests in any Collateral or the availability
of any remedy hereunder is governed by the Uniform Commercial Code as in effect
on or after the date hereof in any other jurisdiction, “UCC” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection or availability of such remedy.

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SECTION 2 GUARANTY.
          2.1 Guaranty. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, as a primary obligor and not only a
surety, guaranties to the Administrative Agent, for the ratable benefit of the
Lenders and their respective successors, indorsees, transferees and assigns, the
prompt and complete payment and performance by the Companies when due (whether
at the stated maturity, by acceleration or otherwise) of the Company
Obligations.
          (b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
          (c) Each Guarantor agrees that the Secured Obligations may at any time
and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guaranty contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.
          (d) The guaranty contained in this Section 2 shall remain in full
force and effect until all of the Secured Obligations shall have been Paid in
Full.
          (e) No payment made by either Company, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from either Company, any of the Guarantors,
any other guarantor or any other Person by virtue of any action or proceeding or
any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Secured Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of any Guarantor hereunder
which shall, notwithstanding any such payment (other than any payment made by
such Guarantor in respect of the Secured Obligations or any payment received or
collected from such Guarantor in respect of the Secured Obligations), remain
liable for the Secured Obligations up to the maximum liability of such Guarantor
hereunder until the Secured Obligations are Paid in Full.
          2.2 Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor’s right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guarantied by such Guarantor hereunder.
          2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the

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Administrative Agent or any Lender against either Company or any other Guarantor
or any collateral security or guaranty or right of offset held by the
Administrative Agent or any Lender for the payment of the Secured Obligations,
nor shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from either Company or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all of the Secured Obligations are Paid
in Full, no Letter of Credit shall be outstanding and the Commitments are
terminated. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Secured Obligations shall not
have been Paid in Full, such amount shall be held by such Guarantor in trust for
the Administrative Agent and the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Secured Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.
          2.4 Amendments, etc. with respect to the Secured Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Secured
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Secured Obligations
continued, and the Secured Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guaranty therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all the Lenders, as the case may be) may deem advisable from time to
time. Neither the Administrative Agent nor any Lender shall have any obligation
to protect, secure, perfect or insure any Lien at any time held by it as
security for the Secured Obligations or for the guaranty contained in this
Section 2 or any property subject thereto.
          The Administrative Agent or any Lender may, from time to time, at its
sole discretion and without notice to any Guarantor (or any of them), take any
or all of the following actions: (a) retain or obtain a security interest in any
property to secure any of the Secured Obligations or any obligation hereunder,
(b) retain or obtain the primary or secondary obligation of any obligor or
obligors, in addition to the undersigned, with respect to any of the Secured
Obligations, (c) extend or renew any of the Secured Obligations for one or more
periods (whether or not longer than the original period), alter or exchange any
of the Secured Obligations, or release or compromise any obligation of any of
the undersigned hereunder or any obligation of any nature of any other obligor
with respect to any of the Secured Obligations, (d) release any guaranty or
right of offset or its security interest in, or surrender, release or permit any
substitution or exchange for, all or any part of any property securing any of
the Secured Obligations or any obligation hereunder, or extend or renew for one
or more periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such property, and (e) resort to the undersigned (or

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any of them) for payment of any of the Secured Obligations when due, whether or
not the Administrative Agent or such Lender shall have resorted to any property
securing any of the Secured Obligations or any obligation hereunder or shall
have proceeded against any other of the undersigned or any other obligor
primarily or secondarily obligated with respect to any of the Secured
Obligations.
          2.5 Waivers. Each Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Secured Obligations and notice of or
proof of reliance by the Administrative Agent or any Lender upon the guaranty
contained in this Section 2 or acceptance of the guaranty contained in this
Section 2; the Secured Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guaranty contained in this Section 2,
and all dealings between either Company and any of the Guarantors, on the one
hand, and the Administrative Agent and the Lenders, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
the guaranty contained in this Section 2. Each Guarantor waives (a) diligence,
presentment, protest, demand for payment and notice of default, dishonor or
nonpayment and all other notices whatsoever to or upon either Company or any of
the Guarantors with respect to the Secured Obligations, (b) notice of the
existence or creation or non-payment of all or any of the Secured Obligations
and (c) all diligence in collection or protection of or realization upon any
Secured Obligations or any security for or guaranty of any Secured Obligations.
          2.6 Payments. Each Guarantor hereby guaranties that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the office of the Administrative Agent specified in the Credit
Agreement.
SECTION 3 GRANT OF SECURITY INTEREST.
          3.1 Grant. Each Grantor hereby assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for the
ratable benefit of the Lenders and (to the extent provided herein) their
Affiliates, a continuing security interest in all of its Collateral, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the Borrower
Obligations or the Guarantor Obligations, as the case may be.
          3.2 Collateral Assignment of Rights under the Assigned Agreements.
Each Grantor hereby irrevocably authorizes and empowers the Administrative Agent
or its agents, in their sole discretion, to assert, either directly or on behalf
of any Grantor, at any time that an Event of Default is in existence, any claims
any Grantor may from time to time have against Seller or any of its affiliates
with respect to any and all of the Contract Rights or with respect to any and
all payments or other obligations due from Seller or any of its affiliates to
either Company under or pursuant to the Assigned Agreements (“Payments”), and to
receive and collect any damages, awards and other monies resulting therefrom and
to apply the same on account of the Secured Obligations. After the occurrence of
any Event of Default, the Administrative Agent may provide notice to the seller
or any of its affiliates under any Assigned

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Agreement that all Payments shall be made to or at the direction of the
Administrative Agent for so long as such Event of Default shall be continuing.
Following the delivery of any such notice, the Administrative Agent shall
promptly notify the seller under the Assigned Agreement upon the termination or
waiver of any such Event of Default. Each Grantor hereby irrevocably makes,
constitutes and appoints the Administrative Agent (and all officers, employees,
or agents designated by the Administrative Agent) as such Grantor’s true and
lawful attorney (and agent-in-fact) for the purpose of enabling the
Administrative Agent or its agents to assert and collect such claims and to
apply such monies in the manner set forth hereinabove.
SECTION 4 REPRESENTATIONS AND WARRANTIES.
          To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Companies thereunder, each Grantor jointly and severally hereby
represents and warrants to the Administrative Agent and each Lender that:
          4.1 Title: No Other Liens. Except for Permitted Liens, the Grantors
own each item of the Collateral free and clear of any and all Liens or claims of
others. No financing statement or other public notice with respect to all or any
part of the Collateral is on file or of record in any public office, except
filings evidencing Permitted Liens and filings for which termination statements
have been delivered to the Administrative Agent.
          4.2 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 2 (which, in the case of all filings and other documents
referred to on Schedule 2, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected security
interests in all of the Collateral in favor of the Administrative Agent, for the
ratable benefit of the Lenders, as collateral security for each Grantor’s
Obligations, enforceable in accordance with the terms hereof against all
creditors of each Grantor and any Persons purporting to purchase any Collateral
from each Grantor and (b) are prior to all other Liens on the Collateral in
existence on the date hereof except for Permitted Liens for which priority is
accorded under applicable law. The filings and other actions specified on
Schedule 2 constitute all of the filings and other actions necessary to perfect
all security interests granted hereunder.
          4.3 Grantor Information. On the date hereof, Schedule 3 sets forth
(a) each Grantor’s jurisdiction of organization, (b) the location of each
Grantor’s chief executive office, (c) each Grantor’s exact legal name as it
appears on its organizational documents and (d) each Grantor’s organizational
identification number (to the extent a Grantor is organized in a state which
assigns such numbers).
          4.4 Collateral Locations. On the date hereof, Schedule 4 sets forth
(a) each place of business of each Grantor (including its chief executive
office), (b) all locations where all Inventory and the Equipment owned by each
Grantor is kept, except with respect to Inventory with a fair market value of
less than (i) $100,000 in the case of “I-Sense” Inventory held on consignment by
CVS Corporation, and (ii) $400,000 in the case of “1C Green” raw material
Inventory located at the SP Pharmaceutical facility in Albuquerque, New Mexico
(the “Permitted Offsite Inventory”) (in the aggregate for all Grantors) which
may be located at other locations

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and (c) whether each such Collateral location and place of business (including
each Grantor’s chief executive office) is owned or leased (and if leased,
specifies the complete name and notice address of each lessor). No Collateral is
located outside the United States or in the possession of any lessor, bailee,
warehouseman or consignee, except as indicated on Schedule 4.
          4.5 Certain Property. None of the Collateral constitutes, or is the
Proceeds of, (a) Farm Products or (b) vessels, aircraft or any other property
subject to any certificate of title or other registration statute of the United
States, any State or other jurisdiction, except for personal vehicles owned by
the Grantors and used by employees of the Grantors in the ordinary course of
business with an aggregate fair market value of less than $50,000 (in the
aggregate for all Grantors).
          4.6 Investment Property. (a) The Pledged Equity pledged by each
Grantor hereunder constitute all the issued and outstanding equity interests of
each Issuer owned by such Grantor or, in the case of any foreign Subsidiary, 65%
of all issued and outstanding equity interests of such foreign Subsidiary.
          (b) All of the Pledged Equity has been duly and validly issued and is
fully paid and nonassessable.
          (c) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms (subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing).
          (d) Schedule 1 lists all Investment Property owned by each Grantor.
Each Grantor is the record and beneficial owner of, and has good and marketable
title to, the Investment Property pledged by it hereunder, free of any and all
Liens or options in favor of, or claims of, any other Person, except Permitted
Liens.
          4.7 Receivables. (a) No material amount payable to such Grantor under
or in connection with any Receivable is evidenced by any Instrument or Chattel
Paper which has not been delivered to the Administrative Agent.
          (b) No obligor on any Receivable is a Governmental Authority.
          (c) The amounts represented by such Grantor to the Lenders from time
to time as owing to such Grantor in respect of the Receivables (to the extent
such representations are required by any of the Loan Documents) will at all such
times be accurate.
          4.8 Intellectual Property. (a) Schedule 5 lists all Intellectual
Property owned by such Grantor in its own name on the date hereof.
          (b) On the date hereof, all material Intellectual Property owned by
any Guarantor is valid, subsisting, unexpired and enforceable, has not been
abandoned.

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          (c) Except as set forth in Schedule 5, none of the material
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
          (d) Each Grantor owns and possesses or has a license or other right to
use all Intellectual Property as is necessary for the conduct of the businesses
of such Grantor, without any infringement upon rights of others which could
reasonably be expected to have a Material Adverse Effect.
          4.9 Depositary and Other Accounts. All depositary and other accounts
maintained by each Grantor are described on Schedule 6 hereto, which description
includes for each such account the name of the Grantor maintaining such account,
the name, address, telephone and fax numbers of the financial institution at
which such account is maintained, the account number and the account officer, if
any, of such account.
SECTION 5 COVENANTS.
          Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the Secured
Obligations shall have been Paid in Full:
          5.1 Delivery of Instruments, Certificated Securities and Chattel
Paper. If any amount payable under or in connection with any of the Collateral
in excess of $10,000 (in the aggregate for all Grantors) shall be or become
evidenced by any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be immediately
delivered to the Administrative Agent, duly indorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement.
In the event that an Unmatured Event of Default or Event of Default shall have
occurred and be continuing, upon the request of the Administrative Agent, any
Instrument, Certificated Security or Chattel Paper not theretofore delivered to
the Administrative Agent and at such time being held by any Grantor shall be
immediately delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
          5.2 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority described in
Section 4.2 and shall defend such security interest against the claims and
demands of all Persons whomsoever.
          (b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection therewith as the Administrative Agent may reasonably request, all in
reasonable detail.
          (c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of

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obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including (i) filing any financing or continuation
statements under the UCC (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby and (ii) in the case of
Investment Property and any other relevant Collateral, taking any actions
necessary to enable the Administrative Agent to obtain “control” (within the
meaning of the applicable UCC) with respect thereto.
          5.3 Changes in Locations, Name, etc. Such Grantor shall not, except
upon 30 days’ prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional financing statements and other
documents reasonably requested by the Administrative Agent as to the validity,
perfection and priority of the security interests provided for herein and (b) if
applicable, a written supplement to Schedule 4 showing any additional location
at which Inventory or Equipment shall be kept:
     (i) permit any of the Inventory or Equipment to be kept at a location other
than those listed on Schedule 4 (except with respect to Permitted Offsite
Inventory).
     (ii) change its jurisdiction of organization or the location of its chief
executive office from that specified on Schedule 3 or in any subsequent notice
delivered pursuant to this Section 5.3; or
     (iii) change its name, identity or corporate structure.
          5.4 Notices. Such Grantor will advise the Administrative Agent and the
Lenders promptly, in reasonable detail, of:
          (a) any Lien (other than Permitted Liens) on any of the Collateral
which would adversely affect the ability of the Administrative Agent to exercise
any of its remedies hereunder; and
          (b) the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the Liens created hereby.
          5.5 Investment Property. (a) If such Grantor shall become entitled to
receive or shall receive any certificate, option or rights in respect of the
equity interests of any Issuer, whether in addition to, in substitution of, as a
conversion of, or in exchange for, any of the Pledged Equity, or otherwise in
respect thereof, such Grantor shall accept the same as the agent of the
Administrative Agent and the Lenders, hold the same in trust for the
Administrative Agent and the Lenders and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated instrument of
transfer covering such certificate duly executed in blank by such Grantor and
with, if the Administrative Agent so requests, signature guarantied, to be held
by the Administrative Agent, subject to the terms hereof, as additional
Collateral for the Secured Obligations. Upon the occurrence and during the
continuance of an Event of Default, (i) any sums paid upon or in respect of the
Investment Property upon the liquidation or dissolution of any Issuer shall be
paid over to the Administrative Agent to be held by it hereunder as additional

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Collateral for the Secured Obligations, and (ii) in case any distribution of
capital shall be made on or in respect of the Investment Property or any
property shall be distributed upon or with respect to the Investment Property
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected Lien in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held by it
hereunder as additional Collateral for the Secured Obligations. Upon the
occurrence and during the continuance of an Event of Default, if any sums of
money or property so paid or distributed in respect of the Investment Property
shall be received by such Grantor, such Grantor shall, until such money or
property is paid or delivered to the Administrative Agent, hold such money or
property in trust for the Lenders, segregated from other funds of such Grantor,
as additional Collateral for the Secured Obligations.
          (b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any equity interests of any nature or to issue any other
securities or interests convertible into or granting the right to purchase or
exchange for any equity interests of any nature of any Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Investment Property or Proceeds thereof (except pursuant to a
transaction expressly permitted by the Credit Agreement) other than, with
respect to Investment Property not constituting Pledged Stock or Pledged Notes,
any such action which is not prohibited by the Credit Agreement, (iii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Investment Property or Proceeds thereof, or
any interest therein, except for Permitted Liens, or (iv) enter into any
agreement or undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Investment Property
or Proceeds thereof, except, with respect to such Investment Property,
shareholders’ agreements entered into by such Grantor with respect to Persons in
which such Grantor maintains an ownership interest of 50% or less.
          (c) In the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in
Section 5.5(a) with respect to the Investment Property issued by it and
(iii) the terms of Sections 6.3(c) and 6.7 shall apply to such Grantor with
respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.7 regarding the Investment Property issued by it.
          5.6 Receivables. (a) Other than in the ordinary course of business
consistent with its past practice and in amounts which are not material to such
Grantor, such Grantor will not (i) grant any extension of the time of payment of
any Receivable, (ii) compromise or settle any Receivable for less than the full
amount thereof, (iii) release, wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or discount whatsoever on any
Receivable or (v) amend, supplement or modify any Receivable in any manner that
could adversely affect the value thereof.
          (b) Such Grantor will deliver the Administrative Agent a copy of each
material demand, notice or document received by it that questions or calls into
doubt the validity

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or enforceability of more than 5% of the aggregate amount of the then
outstanding Receivables for all Grantors.
          5.7 Intellectual Property. (a) Such Grantor (either itself or through
licensees) will (i) continue to use each Trademark material to its business in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable law, (iv) not adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless the Administrative Agent, for the
ratable benefit of the Lenders, shall obtain a perfected security interest in
such mark pursuant to this Agreement, and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do any act whereby
such Trademark may become invalidated or impaired in any way.
          (b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any Patent material to its business may
become forfeited, abandoned or dedicated to the public.
          (c) Such Grantor (either itself or through licensees) (i) will employ
each Copyright material to its business and (ii) will not (and will not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby any material portion of such Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
do any act whereby any material portion of such Copyrights may fall into the
public domain.
          (d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any Intellectual Property material to its business to
infringe the intellectual property rights of any other Person.
          (e) Such Grantor will notify the Administrative Agent and the Lenders
immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any court or tribunal in any country)
regarding, such Grantor’s ownership of, or the validity of, any material
Intellectual Property or such Grantor’s right to register the same or to own and
maintain the same.
          (f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent concurrently with the next delivery of
financial statements of the Companies pursuant to Section 10.1 of the Credit
Agreement. Upon the request of the Administrative Agent, such Grantor shall
execute and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Administrative Agent may request to evidence the
Administrative Agent’s and the Lenders’ security interest in any

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Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.
          (g) Such Grantor will take all reasonable and necessary steps to
maintain and pursue each application (and to obtain the relevant registration)
and to maintain each registration of all material Intellectual Property owned by
it.
          (h) In the event that any material Intellectual Property is infringed
upon or misappropriated or diluted by a third party, such Grantor shall (i) take
such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and, to the extent, in its
reasonable judgment, such Grantor determines it appropriate under the
circumstances, sue for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.
          5.8 Seller Undertakings.
          (a) Each Grantor shall keep the Administrative Agent informed of all
circumstances bearing upon any potential claim under or with respect to the
Assigned Agreements and the Seller Undertakings and such Grantor shall not,
without the prior written consent of the Administrative Agent, (i) waive any of
its rights or remedies under any Assigned Agreement with respect to any of the
Seller Undertakings, (ii) settle, compromise or offset any amount payable by the
sellers to such Grantor under any Assigned Agreement or (iii) amend or otherwise
modify any Assigned Agreement in any manner which is adverse to the interests of
the Administrative Agent or any Lender.
          (b) Each Grantor shall perform and observe all the terms and
conditions of each Assigned Agreement to be performed by it, maintain each
Assigned Agreement in full force and effect, enforce each Assigned Agreement in
accordance with its terms and take all such action to such end as may from time
to time be reasonably requested by the Administrative Agent.
          (c) Anything herein to the contrary notwithstanding, (i) each
applicable Grantor shall remain liable under each Assigned Agreement to the
extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (ii) the exercise
by the Administrative Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under any Assigned Agreement and
(iii) neither the Administrative Agent nor any other Lender shall have any
obligation or liability under any Assigned Agreement by reason of this
Agreement, nor shall the Administrative Agent or any other Lender be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
          5.9 Depositary and Other Deposit Accounts. Each Grantor shall maintain
all of its principal deposit accounts with the Administrative Agent, except to
the extent permitted by the Credit Agreement. No Grantor shall open any
depositary or other deposit accounts, except in

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accordance with the Credit Agreement and unless such Grantor shall have given
the Administrative Agent 10 days’ prior written notice of its intention to open
any such new deposit accounts. The Grantors shall deliver to the Administrative
Agent a revised version of Schedule 6 showing any changes thereto within 5 days
of any such change. Each Grantor hereby authorizes the financial institutions at
which such Grantor maintains a deposit account to provide the Administrative
Agent with such information with respect to such deposit account as the
Administrative Agent may from time to time reasonably request, and each Grantor
hereby consents to such information being provided to the Administrative Agent.
Each Grantor will cause each financial institution at which such Grantor
maintains a depositary or other deposit account to enter into a bank agency or
other similar agreement with the Administrative Agent and such Grantor, in form
and substance satisfactory to the Administrative Agent, in order to give the
Administrative Agent “control” (as defined in the UCC) of such account. Subject
to the terms of the Credit Agreement, each Grantor shall direct all Account
Debtors to make all payments on the Accounts directly to a bank account or
Lockbox maintained with the Administrative Agent (an “Agent Account”). If any
Grantor or any director, officer, employee, agent of such Grantor, or any other
Person acting for or in concert with such Grantor shall receive any monies,
checks, notes, drafts or other payments relating to or as proceeds of Accounts
or other Collateral, such Grantor and each such Person shall receive all such
items in trust for, and as the sole and exclusive property of, the
Administrative Agent and the Lenders and, immediately upon receipt thereof,
shall remit the same (or cause the same to be remitted) in kind to the Agent
Account. The Grantors, jointly and severally, agree to pay all fees, costs and
expenses which the Administrative Agent incurs in connection with opening and
maintaining the Agent Account and depositing for collection by the
Administrative Agent any check or other item of payment received by the
Administrative Agent on account of the Obligations. All of such fees, costs and
expenses shall constitute Secured Obligations hereunder and shall be payable to
the Administrative Agent by the Grantors upon demand. All checks, drafts,
instruments and other items of payment or proceeds of Collateral shall be
endorsed by the applicable Grantor to the Administrative Agent, and, if that
endorsement of any such item shall not be made for any reason, the
Administrative Agent is hereby irrevocably authorized to endorse the same on
such Grantor’s behalf. For the purpose of this section, each Grantor irrevocably
hereby makes, constitutes and appoints the Administrative Agent (and all Persons
designated by the Administrative Agent for that purpose) as such Grantor’s true
and lawful attorney and agent-in-fact (a) to endorse such Grantor’s name upon
said items of payment and/or proceeds of Collateral and upon any Chattel Paper,
document, Instrument, invoice or similar document or agreement relating to any
Account of such Grantor or goods pertaining thereto; (b) to take control in any
manner of any item of payment or proceeds thereof; and (c) to have access to any
lock box or postal box into which any of such Grantor’s mail is deposited, and
open and process all mail addressed to such Grantor and deposited therein. All
amounts received in an Agent Account shall be deemed received by the
Administrative Agent in accordance with Section 7.1 of the Credit Agreement and
applied to Revolving Outstandings. In no event shall any amount be applied
unless and until such amount shall have been credited in immediately available
funds to an Agent Account.
          5.10 Other Matters.

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          (a) On the Closing Date, each of the Grantors shall cause to be
delivered to the Administrative Agent a Collateral Access Agreement with respect
to (a) each bailee with which such Grantor keeps Inventory or other assets as of
the Closing Date with a fair market value in excess of $10,000 and (b) each
landlord which leases real property (and the accompanying facilities) to any of
the Grantors as of the Closing Date. If any Grantor shall cause to be delivered
Inventory or other property in excess of $10,000 in fair market value to any
bailee after the Closing Date, such Grantor shall use reasonable efforts to
cause such bailee to sign a Collateral Access Agreement. Such requirement may be
waived at the option of the Administrative Agent. If any Grantor shall lease any
real property or facilities and the value of property of such Grantor located at
such leased real property is in excess of $10,000 in fair market value after the
Closing Date, such Grantor shall use reasonable efforts to cause the landlord in
respect of such leased property or facilities to sign a Collateral Access
Agreement. Such requirement may be waived at the option of the Administrative
Agent.
          (b) Each Grantor authorizes the Administrative Agent to, at any time
and from time to time, file financing statements, continuation statements, and
amendments thereto that describe the Collateral as “all assets” of each Grantor,
or words of similar effect, and which contain any other information required
pursuant to the UCC for the sufficiency of filing office acceptance of any
financing statement, continuation statement, or amendment, and each Grantor
agrees to furnish any such information to the Administrative Agent promptly upon
request. Any such financing statement, continuation statement, or amendment may
be signed by the Administrative Agent on behalf of any Grantor and may be filed
at any time in any jurisdiction.
          (c) Each Grantor shall, at any time and from time and to time, take
such steps as the Administrative Agent may reasonably request for the
Administrative Agent (i) to obtain an acknowledgement, in form and substance
reasonably satisfactory to the Administrative Agent, of any bailee having
possession of any of the Collateral, stating that the bailee holds such
Collateral for the Administrative Agent, (ii) to obtain “control” of any
letter-of-credit rights, or electronic chattel paper (as such terms are defined
by the UCC with corresponding provisions thereof defining what constitutes
“control” for such items of Collateral), with any agreements establishing
control to be in form and substance reasonably satisfactory to the
Administrative Agent, and (iii) otherwise to insure the continued perfection and
priority of the Administrative Agent’s security interest in any of the
Collateral and of the preservation of its rights therein. If any Grantor shall
at any time, acquire a “commercial tort claim” (as such term is defined in the
UCC) in excess of $10,000, such Grantor shall promptly notify the Administrative
Agent thereof in writing and supplement Schedule 7, therein providing a
reasonable description and summary thereof, and upon delivery thereof to the
Administrative Agent, such Grantor shall be deemed to thereby grant to the
Administrative Agent (and such Grantor hereby grants to the Administrative
Agent) a security interest and lien in and to such commercial tort claim and all
proceeds thereof, all upon the terms of and governed by this Agreement.
          (d) Without limiting the generality of the foregoing, if any Grantor
at any time holds or acquires an interest in any electronic chattel paper or any
“transferable record”, as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in §16 of the
Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
such Grantor shall promptly notify the Administrative Agent thereof and, at the

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request of the Administrative Agent, shall take such action as the
Administrative Agent may reasonably request to vest in the Administrative Agent
“control” under Section 9-105 of the UCC of such electronic chattel paper or
control under Section 201 of the federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, §16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record. The Administrative Agent agrees with the Grantors that the
Administrative Agent will arrange, pursuant to procedures satisfactory to the
Administrative Agent and so long as such procedures will not result in the
Administrative Agent’s loss of control, for the Grantors to make alterations to
the electronic chattel paper or transferable record permitted under
Section 9-105 of the UCC or, as the case may be, Section 201 of the federal
Electronic Signatures in Global and National Commerce Act or §16 of the Uniform
Electronic Transactions Act for a party in control to make without loss of
control, unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by any Grantor with respect to such
electronic chattel paper or transferable record.
SECTION 6 REMEDIAL PROVISIONS.
          6.1 Certain Matters Relating to Receivables. (a) At any time and from
time to time after the occurrence and during the continuance of an Event of
Default, the Administrative Agent shall have the right to make test
verifications of the Receivables in any manner and through any medium that it
reasonably considers advisable, and each Grantor shall furnish all such
assistance and information the Administrative Agent may require in connection
with such test verifications. At any time and from time to time after the
occurrence and during the continuance of an Event of Default, upon the
Administrative Agent’s request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to the
Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, agings and test verifications of, and trial balances for, the
Receivables.
          (b) The Administrative Agent hereby authorizes each Grantor to collect
such Grantor’s Receivables, and the Administrative Agent may curtail or
terminate such authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within 2 Business Days) deposited by such Grantor
in the exact form received, duly indorsed by such Grantor to the Administrative
Agent if required, in a collateral account maintained under the sole dominion
and control of the Administrative Agent, subject to withdrawal by the
Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor. Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
          (c) At any time and from time to time after the occurrence and during
the continuance of an Event of Default, at the Administrative Agent’s request,
each Grantor shall deliver to the Administrative Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Receivables, including all original orders, invoices and
shipping receipts.

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          (d) Each Grantor hereby irrevocably authorizes and empowers the
Administrative Agent, in the Administrative Agent’s sole discretion, at any time
after the occurrence and during the continuance of an Event of Default, to
assert, either directly or on behalf of such Grantor, any claim such Grantor may
from time to time have against the sellers under or with respect to the Assigned
Agreements and to receive and collect any and all damages, awards and other
monies resulting therefrom and to apply the same to the Obligations. Each
Grantor hereby irrevocably makes, constitutes and appoints the Administrative
Agent as its true and lawful attorney in fact for the purpose of enabling the
Administrative Agent to assert and collect such claims and to apply such monies
in the manner set forth above, which appointment, being coupled with an
interest, is irrevocable.
          6.2 Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent’s satisfaction the existence, amount and terms of any
Receivables.
          (b) Upon the request of the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables that the Receivables have been assigned to
the Administrative Agent for the ratable benefit of the Lenders and that
payments in respect thereof shall be made directly to the Administrative Agent.
          (c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable in respect of each of the Receivables to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any Lender of any payment relating thereto, nor shall
the Administrative Agent or any Lender be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
          (d) For the purpose of enabling the Administrative Agent to exercise
rights and remedies under this Agreement, each Grantor hereby grants to the
Administrative Agent, at any time after the occurrence and during the
continuance of an Event of Default, for the benefit of the Administrative Agent
and the Lenders, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use, license or
sublicense any Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.

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          6.3 Investment Property. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent’s intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends and distributions paid in respect of the Pledged
Equity and all payments made in respect of the Pledged Notes, to the extent
permitted in the Credit Agreement, and to exercise all voting and other rights
with respect to the Investment Property; provided, that no vote shall be cast or
other right exercised or action taken which could impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document.
          (b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends and distributions, payments or other
Proceeds paid in respect of the Investment Property and make application thereof
to the Obligations in such order as the Administrative Agent may determine, and
(ii) any or all of the Investment Property shall be registered in the name of
the Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise (x) all voting and other rights pertaining to
such Investment Property at any meeting of holders of the equity interests of
the relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Investment Property as if it were the absolute owner
thereof (including the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other structure
of any Issuer, or upon the exercise by any Grantor or the Administrative Agent
of any right, privilege or option pertaining to such Investment Property, and in
connection therewith, the right to deposit and deliver any and all of the
Investment Property with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
          (c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying and (ii) unless otherwise expressly
permitted hereby, pay any dividends, distributions or other payments with
respect to the Investment Property directly to the Administrative Agent.
          6.4 Proceeds to be Turned Over to Administrative Agent. In addition to
the rights of the Administrative Agent and the Lenders specified in Section 6.1
with respect to payments of Receivables, if an Event of Default shall occur and
be continuing, all Proceeds received by any Grantor consisting of cash, checks
and other cash equivalent items shall be held

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by such Grantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Administrative Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Administrative
Agent, if required). All Proceeds received by the Administrative Agent hereunder
shall be held by the Administrative Agent in a collateral account maintained
under its sole dominion and control. All Proceeds, while held by the
Administrative Agent in any collateral account (or by such Grantor in trust for
the Administrative Agent and the Lenders) established pursuant hereto, shall
continue to be held as collateral security for the Secured Obligations and shall
not constitute payment thereof until applied as provided in Section 6.5.
          6.5 Application of Proceeds. At such intervals as may be agreed upon
by the Companies and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent’s
election, the Administrative Agent may apply all or any part of Proceeds from
the sale of, or other realization upon, all or any part of the Collateral in
payment of the Secured Obligations in such order as the Administrative Agent
shall determine in its discretion. Any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Secured Obligations shall be paid over from time to time by the
Administrative Agent to the applicable Grantor or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Secured Obligations shall have been Paid in Full shall be paid over to the
applicable Grantor or to whomsoever may be lawfully entitled to receive the
same. In the absence of a specific determination by the Administrative Agent,
the Proceeds from the sale of, or other realization upon, all or any part of the
Collateral in payment of the Secured Obligations shall be applied in the
following order:
     FIRST, to the payment of all fees, costs, expenses and indemnities of the
Administrative Agent (in its capacity as such), including Attorney Costs, and
any other Secured Obligations owing to the Administrative Agent in respect of
sums advanced by the Administrative Agent to preserve the Collateral or to
preserve its security interest in the Collateral, until paid in full;
     SECOND, to the payment of all fees, costs, expenses and indemnities of the
Lenders, pro-rata, until paid in full;
     THIRD, to the payment of all of the Secured Obligations (other than Bank
Product Obligations and Hedging Obligations) consisting of accrued and unpaid
interest owing to any Lender, pro-rata, until paid in full;
     FOURTH, to the payment of all Secured Obligations (other than Bank Product
Obligations and Hedging Obligations) consisting of principal owing to any
Lender, pro-rata, until paid in full;
     FIFTH, to the payment to the Administrative Agent of an amount equal to all
Secured Obligations in respect of outstanding Letters of Credit to be held as
cash collateral in respect of such obligations;

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     SIXTH, to the payment of all Bank Products Obligations and Hedging
Obligations owing to any Lender or its Affiliates, pro-rata, until paid in full;
     SEVENTH, to the payment of all other Secured Obligations owing to each
Lender, pro-rata, until paid in full; and
     EIGHTH, to the payment of any remaining Proceeds, if any, to whomever may
be lawfully entitled to receive such amounts.
          6.6 Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under the UCC or
any other applicable law. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of the Administrative Agent or any Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery with assumption of any credit
risk. The Administrative Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in any Grantor, which right or equity is
hereby waived and released. Each Grantor further agrees, at the Administrative
Agent’s request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at such Grantor’s premises or elsewhere. The Administrative
Agent shall apply the net proceeds of any action taken by it pursuant to this
Section 6.6, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including Attorney Costs to the
payment in whole or in part of the Secured Obligations, in such order as the
Administrative Agent may elect, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, need the Administrative Agent account for the surplus, if any,
to any Grantor. To the extent permitted by applicable law, each Grantor waives
all claims, damages and demands it may acquire against the Administrative Agent
or any Lender arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
          6.7 Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Equity
pursuant to Section 6.6, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Equity, or

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that portion thereof to be sold, registered under the provisions of the
Securities Act, the relevant Grantor will cause the Issuer thereof to
(i) execute and deliver, and cause the directors and officers of such Issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Administrative Agent,
necessary or advisable to register the Pledged Equity, or that portion thereof
to be sold, under the provisions of the Securities Act, (ii) use its best
efforts to cause the registration statement relating thereto to become effective
and to remain effective for a period of one year from the date of the first
public offering of the Pledged Equity, or that portion thereof to be sold, and
(iii) make all amendments thereto and/or to the related prospectus which, in the
opinion of the Administrative Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. Each
Grantor agrees to cause such Issuer to comply with the provisions of the
securities or “Blue Sky” laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 1 l(a) of the Securities
Act.
          (b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Equity, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Equity
for the period of time necessary to permit the Issuer thereof to register such
securities or other interests for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
          (c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Equity pursuant to this Section 6.7 valid and
binding and in compliance with applicable law. Each Grantor further agrees that
a breach of any of the covenants contained in this Section 6.7 will cause
irreparable injury to the Administrative Agent and the Lenders, that the
Administrative Agent and the Lenders have no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section 6.7 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that no
Event of Default has occurred under the Credit Agreement.
          6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-626 of the UCC.
Each Grantor shall remain liable for any deficiency if the proceeds of any sale
or other disposition of the Collateral are insufficient to pay the Secured
Obligations in full and the fees and disbursements of any attorneys employed by
the Administrative Agent or any Lender to collect such deficiency.

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SECTION 7 THE ADMINISTRATIVE AGENT.
                7.1 Administrative Agent’s Appointment as Attorney-in-Fact, etc,
(a) Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
and at the expense of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:
     (i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Receivable or with
respect to any other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such moneys due
under any Receivable or with respect to any other Collateral whenever payable;
     (ii) in the case of any Intellectual Property, execute and deliver, and
have recorded, any and all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative Agent’s security
interest in such Intellectual Property and the goodwill and general intangibles
of such Grantor relating thereto or represented thereby;
     (iii) discharge Liens levied or placed on or threatened against the
Collateral, and effect any repairs or insurance called for by the terms of this
Agreement and pay all or any part of the premiums therefor and the costs
thereof;
     (iv) execute, in connection with any sale provided for in Section 6.6 or
6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
     (v) (1) direct any party liable for any payment under any of the Collateral
to make payment of any and all moneys due or to become due thereunder directly
to the Administrative Agent or as the Administrative Agent shall direct; (2) ask
or demand for, collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral; (3) sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection
with any of the Collateral; (4) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise or
adjust any such suit, action or

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     proceeding and, in connection therewith, give such discharges or releases
as the Administrative Agent may deem appropriate; (7) assign any Copyright,
Patent or Trademark, throughout the world for such term or terms, on such
conditions, and in such manner, as the Administrative Agent shall in its sole
discretion determine; (8) vote any right or interest with respect to any
Investment Property; (9) order good standing certificates and conduct lien
searches in respect of such jurisdictions or offices as the Administrative Agent
may deem appropriate; and (10) generally sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things which
the Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent’s security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.
     Anything in this Section 7.l(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
     (b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Administrative Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
     (c) Each Grantor hereby ratifies all that such attorneys shall lawfully do
or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
     7.2 Duty of Administrative Agent. The Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. Neither
the Administrative Agent or any Lender nor any of their respective officers,
directors, employees or agents shall be liable for any failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent’s and the Lenders’ interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder.
     7.3 Authority of Administrative Agent. Each Grantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative

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Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement shall, as
between the Administrative Agent and the Lenders, be governed by the Credit
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Administrative Agent and the
Grantors, the Administrative Agent shall be conclusively presumed to be acting
as agent for the Lenders with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.
SECTION 8 MISCELLANEOUS.
     8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 15.1 of the Credit Agreement.
     8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be addressed to the
Companies and effected in the manner provided for in Section 15.3 of the Credit
Agreement and each Grantor hereby appoints Akorn as its agent to receive notices
hereunder.
     8.3 Indemnification by Grantors. THE GRANTORS, JOINTLY AND SEVERALLY,
HEREBY AGREE TO INDEMNIFY, EXONERATE AND HOLD EACH LENDER PARTY FREE AND
HARMLESS FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES, INCURRED BY THE
LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO
(A) ANY TENDER OFFER, MERGER, PURCHASE OF EQUITY INTERESTS, PURCHASE OF ASSETS
(INCLUDING THE RELATED TRANSACTIONS) OR OTHER SIMILAR TRANSACTION FINANCED OR
PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE
PROCEEDS OF ANY OF THE LOANS, (B)THE USE, HANDLING, RELEASE, EMISSION,
DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY GRANTOR, (C) ANY VIOLATION OF
ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR
LEASED BY ANY GRANTOR OR THE OPERATIONS CONDUCTED THEREON, (D) THE
INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY LOAN
PARTY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR
INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION, DELIVERY,
PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY
OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED LIABILITIES ARISING ON
ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE
UNENFORCEABLE FOR ANY REASON, EACH GRANTOR HEREBY AGREES TO MAKE THE MAXIMUM
CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED

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LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL OBLIGATIONS PROVIDED
FOR IN THIS SECTION 8.3 SHALL SURVIVE REPAYMENT OF (AND SHALL BE) ALL SECURED
OBLIGATIONS (AND TERMINATION OF ALL COMMITMENTS UNDER THE CREDIT AGREEMENT), ANY
FORECLOSURE UNDER, OR ANY MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF
THE COLLATERAL DOCUMENTS AND TERMINATION OF THIS AGREEMENT.
     8.4 Enforcement Expenses. (a) Each Grantor agrees, on a joint and several
basis, to pay or reimburse on demand each Lender and the Administrative Agent
for all reasonable out-of-pocket costs and expenses (including Attorney Costs)
incurred in collecting against any Guarantor under the guaranty contained in
Section 2 or otherwise enforcing or preserving any rights under this Agreement
and the other Loan Documents.
     (b) Each Grantor agrees to pay, and to save the Administrative Agent and
the Lenders harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.
     (c) The agreements in this Section 8.4 shall survive repayment of (and
shall be) all Secured Obligations (and termination of all commitments under the
Credit Agreement), any foreclosure under, or any modification, release or
discharge of, any or all of the Collateral Documents and termination of this
Agreement.
     8.5 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
     8.6 Nature of Remedies. All Secured Obligations of each Grantor and rights
of the Administrative Agent and the Lenders expressed herein or in any other
Loan Document shall be in addition to and not in limitation of those provided by
applicable law. No failure to exercise and no delay in exercising, on the part
of the Administrative 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.
     8.7 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. Receipt
by telecopy of any executed signature page to this Agreement or any other Loan
Document shall constitute effective delivery of such signature page.
     8.8 Severability. 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.

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     8.9 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof and any prior arrangements made with respect to the payment by any
Grantor of (or any indemnification for) any fees, costs or expenses payable to
or incurred (or to be incurred) by or on behalf of the Administrative Agent or
the Lenders.
     8.10 Successors: Assigns. This Agreement shall be binding upon Grantors,
the Lenders and the Administrative Agent and their respective successors and
assigns, and shall inure to the benefit of Grantors, Lenders and the
Administrative Agent and the successors and assigns of the Lenders and the
Administrative Agent. 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. No Grantor
may assign or transfer any of its rights or Obligations under this Agreement
without the prior written consent of the Administrative Agent.
     8.11 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
     8.12 Forum Selection: Consent to Jurisdiction. ANY LITIGATION BASED
HEREON,OR ARISING OUT OF,UNDER,OR IN CONNECTION WITH THIS AGREEMENT SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
     8.13 Waiver of Jury Trial. EACH GRANTOR, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN

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CONNECTION HEREWITH AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
     8.14 Set-off. Each Grantor agrees that the Administrative Agent and each
Lender have all rights of set-off and bankers’ lien provided by applicable law,
and in addition thereto, each Grantor agrees that at any time any Event of
Default exists, the Administrative Agent and each Lender may apply to the
payment of any Secured Obligations, whether or not then due, any and all
balances, credits, deposits, accounts or moneys of such Grantor then or
hereafter with the Administrative Agent or such Lender.
     8.15 Acknowledgements. Each Grantor hereby acknowledges that:
     (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
     (b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantors, on the one hand, and the Administrative Agent and the Lenders, on
the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and
     (c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Grantors and the Lenders.
     8.16 Additional Grantors. Each Loan Party that is required to become a
party to this Agreement pursuant to Section 10.10 of the Credit Agreement shall
become a Grantor for all purposes of this Agreement upon execution and delivery
by such Subsidiary of a joinder agreement in the form of Annex I hereto.
     8.17 Releases. (a) At such time as the Secured Obligations have been Paid
in Full, the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to survive
such termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
administrative Agent shall deliver to the Grantors any Collateral held by the
Administrative Agent hereunder, and execute and deliver to the Grantors such
documents as the Grantors shall reasonably request to evidence such termination.
     (b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of Akorn, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the equity interests of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction

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permitted by the Credit Agreement; provided that Akorn shall have delivered to
the Administrative Agent, with reasonable notice prior to the date of the
proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Companies stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.
     8.18 Obligations and Liens Absolute and Unconditional. Each Grantor
understands and agrees that the obligations of each Grantor under this Agreement
shall be construed as a continuing, absolute and unconditional without regard to
(a) the validity or enforceability of any Loan Document, any of the Secured
Obligations or any other collateral security therefor or guaranty or right of
offset with respect thereto at any time or from time to time held by the
Administrative Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by any Grantor or any other Person against the
Administrative Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of any Grantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of any Grantor
for the Secured Obligations, in bankruptcy or in any other instance. When making
any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Grantor, the Administrative Agent or any Lender may, but shall be
under no obligation to, make a similar demand on or otherwise pursue such rights
and remedies as it may have against any other Grantor or any other Person or
against any collateral security or guaranty for the Secured Obligations or any
right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to make any such demand, to pursue such other rights or
remedies or to collect any payments from any other Grantor or any other Person
or to realize upon any such collateral security or guaranty or to exercise any
such right of offset, or any release of any other Grantor or any other Person or
any such collateral security, guaranty or right of offset, shall not relieve any
Grantor of any obligation or liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of
law, of the Administrative Agent or any Lender against any Grantor. For the
purposes hereof “demand” shall include the commencement and continuance of any
legal proceedings.
     8.19 Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against Grantor
or any Pledged Entity for liquidation or reorganization, should Grantor or any
Pledged Entity become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or any
significant part of Grantor’s or a Pledged Entity’s assets, and shall continue
to be effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a “voidable
preference”, “fraudulent conveyance”, or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
[signature page[s] follow[s]]

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     Each of the undersigned has caused this Guaranty and Collateral Agreement
to be duly executed and delivered as of the date first above written.

            AKORN, INC., a Louisiana corporation
      By:   /s/ Bernard J. Pothast       Title:   CFO      

            AKORN (NEW JERSEY), INC.,
an Illinois corporation
      By:   /s/ Bernard J. Pothast       Title:   CFO      

                  By:   /s/ Arthur S. Przybyl       Title:   CEO      

            LASALLE BANK NATIONAL ASSOCIATION
      By:   /s/ Patrick J. O’Toole       Title:   VP      

Signature Page to Guaranty and Collateral Agreement

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