EXHIBIT 10.75**GUARANTY AND COLLATERAL AGREEMENT**     THIS GUARANTY AND COLLATERAL AGREEMENT dated as of October 7, 2003 (this “Agreement”) isentered into among AKORN, INC., a Louisiana corporation, (“Akorn”), AKORN (NEW JERSEY), INC., anIllinois 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 Personthat becomes a party hereto as provided herein, the “Grantors”) in favor of LASALLE BANK NATIONALASSOCIATION, as the Administrative Agent for all the Lenders party to the Credit Agreement (ashereafter defined).     The Lenders have severally agreed to extend credit to each Company pursuant to the CreditAgreement. Each Company is affiliated with each other Grantor. The proceeds of credit extendedunder the Credit Agreement will be used in part to enable the Companies to make valuable transfersto the Grantors in connection with the operation of their respective businesses. The Companies andthe other Grantors are engaged in interrelated businesses, and each Grantor will derivesubstantial direct and indirect benefit from extensions of credit under the Credit Agreement. Itis a condition precedent to each Lender’s obligation to extend credit under the Credit Agreementthat the Grantors shall have executed and delivered this Agreement to the Administrative Agent forthe ratable benefit of all the Lenders.     In consideration of the premises and to induce the Administrative Agent and the Lenders toenter into the Credit Agreement and to induce the Lenders to extend credit thereunder, eachGrantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, asfollows:SECTION 1 DEFINITIONS.          1.1 Unless otherwise defined herein, terms defined in the Credit Agreementand used herein shall have the meanings given to them in the Credit Agreement, and thefollowing 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 ChattelPaper.          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)(l1) of the UCC and, in any event, including with respect to any Grantor, all Electronic ChattelPaper and Tangible Chattel Paper.     Collateral means (a) all of the personal property now owned or at any time hereafteracquired by any Grantor or in which any Grantor now has or at any time in the future may
 

 
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 andIdentified Claims, (b) all books and records pertaining to any of the foregoing, (c) all Proceedsand products of any of the foregoing, and (d) all collateral security and guaranties given by anyPerson with respect to any of the foregoing. Where the context requires, terms relating to theCollateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’sCollateral 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 theAssigned Agreements.     Copyrights means all copyrights arising under the laws of the United States, any othercountry or any political subdivision thereof, whether registered or unregistered and whetherpublished or unpublished, including those listed onSchedule 5, all registrations andrecordings thereof, and all applications in connection therewith, including all registrations,recordings and applications in the United States Copyright Office, and the right to obtain allrenewals of any of the foregoing.     Copyright Licenses means all written agreements naming any Grantor as licensor orlicensee, 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 fromany Copyright.     Credit Agreement means the Credit Agreement of even date herewith among theCompanies, the Lenders and the Administrative Agent, as amended, supplemented, restated orotherwise modified from time to time.     Fixtures means all of the following, whether now owned or hereafter acquired by aGrantor: plant fixtures; business fixtures; other fixtures and storage facilities, whereverlocated; and all additions and accessories thereto and replacements therefor.     General Intangibles means all “general intangibles” as such term is defined inSection 9-102(a)(42) of the UCC and, in any event, including with respect to any Grantor, allPayment Intangibles, all contracts and Contract Rights (including all Assigned Agreements andSeller Undertakings), agreements, instruments and indentures in any form, and portions thereof, towhich such Grantor is a party or under which such Grantor has any right, title or interest or towhich such Grantor or any property of such Grantor is subject, as the same from time to time maybe amended, supplemented or otherwise modified, including all rights of such Grantor to receivemoneys due and to become due to it thereunder or in connection therewith, (b) all rights of suchGrantor to damages arising thereunder and (c) all rights of such Grantor to perform and toexercise all remedies thereunder; provided, that the foregoing limitation shall notaffect, limit, restrict or impair the grant by such Grantor of a security interest pursuant tothis Agreement in
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any Receivable or any money or other amounts due or to become due under any such PaymentIntangible, contract, agreement, instrument or indenture.     Guarantor Obligations means, collectively, with respect to each Guarantor, allObligations of such Guarantor.     Guarantors means the collective reference to each Grantor including each Company withrespect to the Obligations of the other Company, if any.     Identified Claims means the Commercial Tort Claims described on Schedule 7 assuch schedule shall be supplemented from time to time.     Intellectual Property means the collective reference to all rights, priorities andprivileges relating to intellectual property, whether arising under United States, multinationalor foreign laws or otherwise, including the Copyrights, the Copyright Licenses, the Patents, thePatent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or inequity for any infringement or other impairment thereof, including the right to receive allproceeds and damages therefrom.     Intercompany Note means any promissory note evidencing loans made by any Grantor toany 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 anyforeign Subsidiary excluded from the definition of Pledged Equity), (b) all “financial assets” assuch 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 SecuredObligations, (b) the termination of all Commitments and (c) either (i) the cancellation and returnto the Administrative Agent of all Letters of Credit or (ii) the cash collateralization of allLetters of Credit in accordance with the Credit Agreement.     Patents means (a) all letters patent of the United States, any other country or anypolitical subdivision thereof, all reissues and extensions thereof and all goodwill associatedtherewith, including any of the foregoing referred to in Schedule 5, (b) all applicationsfor letters patent of the United States or any other country and all divisions, continuations andcontinuations-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 thegrant by or to any Grantor of any right to manufacture, use or sell any invention covered in wholeor in part by a Patent, including any of the foregoing referred to inSchedule 5.     Pledged Equity means the equity interests listed on Schedule 1, together withany other equity interests, certificates, options or rights of any nature whatsoever in respect ofthe equity
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interests of any Person that may be issued or granted to, or held by, any Grantor while thisAgreement is in effect; provided that in no event shall more than 65% of the totaloutstanding equity interests of any foreign Subsidiary be required to be pledged hereunder.     Pledged Notes means all promissory notes listed on Schedule 1, allIntercompany Notes at any time issued to any Grantor and all other promissory notes issued to orheld by any Grantor (other than promissory notes issued in connection with extensions of tradecredit 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 theUCC 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 servicesrendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether ornot it has been earned by performance (including any Accounts).     Secured Obligations means, collectively, the Company Obligations and GuarantorObligations.     Securities Act means the Securities Act of 1933, as amended.     Seller Undertakings means, collectively, all representations, warranties, covenantsand agreements in favor of any Grantor, and all indemnifications for the benefit of any Grantorrelating 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 orbusiness identifiers, and all goodwill associated therewith, now existing or hereafter adopted oracquired, 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 theUnited States, any State thereof or any other country or any political subdivision thereof, orotherwise, and all common-law rights related thereto, including any of the foregoing referred toin 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 ofthe foregoing referred to in Schedule 5.     UCC means the Uniform Commercial Code as in effect on the date hereof and from timeto time in the State of Illinois, provided that if by reason of mandatory provisions oflaw, the perfection or the effect of perfection or non-perfection of the security interests in anyCollateral or the availability of any remedy hereunder is governed by the Uniform Commercial Codeas in effect on or after the date hereof in any other jurisdiction, “UCC” means the UniformCommercial Code as in effect in such other jurisdiction for purposes of the provisions hereofrelating to such perfection or effect of perfection or non-perfection or availability of suchremedy.
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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 theAdministrative Agent, for the ratable benefit of the Lenders and their respective successors,indorsees, transferees and assigns, the prompt and complete payment and performance by theCompanies when due (whether at the stated maturity, by acceleration or otherwise) of theCompany Obligations.          (b) Anything herein or in any other Loan Document to the contrarynotwithstanding, the maximum liability of each Guarantor hereunder and under the other LoanDocuments shall in no event exceed the amount which can be guaranteed by such Guarantorunder applicable federal and state laws relating to the insolvency of debtors (after givingeffect to the right of contribution established in Section 2.2).          (c) Each Guarantor agrees that the Secured Obligations may at any time andfrom time to time exceed the amount of the liability of such Guarantor hereunder withoutimpairing the guaranty contained in this Section 2 or affecting the rights andremedies of the Administrative Agent or any Lender hereunder.          (d) The guaranty contained in this Section 2 shall remain in full force andeffect until all of the Secured Obligations shall have been Paid in Full.          (e) No payment made by either Company, any of the Guarantors, any otherguarantor or any other Person or received or collected by the Administrative Agent or anyLender from either Company, any of the Guarantors, any other guarantor or any other Person byvirtue of any action or proceeding or any set-off or appropriation or application at any timeor from time to time in reduction of or in payment of the Secured Obligations shall be deemed tomodify, reduce, release or otherwise affect the liability of any Guarantor hereunder whichshall, notwithstanding any such payment (other than any payment made by such Guarantor in respectof the Secured Obligations or any payment received or collected from such Guarantor in respectof the Secured Obligations), remain liable for the Secured Obligations up to the maximumliability of such Guarantor hereunder until the Secured Obligations are Paid in Full.          2.2 Right of Contribution. Each Guarantor hereby agrees that to the extentthat a Guarantor shall have paid more than its proportionate share of any payment madehereunder, such Guarantor shall be entitled to seek and receive contribution from and againstany other Guarantor hereunder which has not paid its proportionate share of such payment. EachGuarantor’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 andliabilities of any Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall remain liableto the Administrative Agent and the Lenders for the full amount guarantied by such Guarantorhereunder.          2.3 No Subrogation. Notwithstanding any payment made by any Guarantorhereunder or any set-off or application of funds of any Guarantor by the Administrative Agentor 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 collateralsecurity or guaranty or right of offset held by the Administrative Agent or any Lender for thepayment of the Secured Obligations, nor shall any Guarantor seek or be entitled to seek anycontribution or reimbursement from either Company or any other Guarantor in respect of paymentsmade by such Guarantor hereunder, until all of the Secured Obligations are Paid in Full, no Letterof Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid toany Guarantor on account of such subrogation rights at any time when all of the Secured Obligationsshall not have been Paid in Full, such amount shall be held by such Guarantor in trust for theAdministrative 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 exactform received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, ifrequired), to be applied against the Secured Obligations, whether matured or unmatured, in suchorder as the Administrative Agent may determine.          2.4Amendments, etc. with respect to the Secured Obligations. Each Guarantor shallremain obligated hereunder notwithstanding that, without any reservation of rights against anyGuarantor and without notice to or further assent by any Guarantor, any demand for payment of anyof the Secured Obligations made by the Administrative Agent or any Lender may be rescinded by theAdministrative Agent or such Lender and any of the Secured Obligations continued, and the SecuredObligations, or the liability of any other Person upon or for any part thereof, or any collateralsecurity or guaranty therefor or right of offset with respect thereto, may, from time to time, inwhole 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 andthe other Loan Documents and any other documents executed and delivered in connection therewithmay be amended, modified, supplemented or terminated, in whole or in part, as the AdministrativeAgent (or the Required Lenders or all the Lenders, as the case may be) may deem advisable fromtime to time. Neither the Administrative Agent nor any Lender shall have any obligation toprotect, secure, perfect or insure any Lien at any time held by it as security for the SecuredObligations or for the guaranty contained in this Section 2 or any property subjectthereto.          The Administrative Agent or any Lender may, from time to time, at its sole discretion andwithout 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 orany obligation hereunder, (b) retain or obtain the primary or secondary obligation of any obligoror 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 thanthe original period), alter or exchange any of the Secured Obligations, or release or compromiseany obligation of any of the undersigned hereunder or any obligation of any nature of any otherobligor with respect to any of the Secured Obligations, (d) release any guaranty or right ofoffset or its security interest in, or surrender, release or permit any substitution or exchangefor, all or any part of any property securing any of the Secured Obligations or any obligationhereunder, or extend or renew for one or more periods (whether or not longer than the originalperiod) or release, compromise, alter or exchange any obligations of any nature of any obligorwith 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 theAdministrative Agent or such Lender shall have resorted to any property securing any of the SecuredObligations or any obligation hereunder or shall have proceeded against any other of theundersigned or any other obligor primarily or secondarily obligated with respect to any of theSecured 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 ofreliance by the Administrative Agent or any Lender upon the guaranty contained in this Section2 or acceptance of the guaranty contained in this Section 2; the Secured Obligations, andany 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 alldealings between either Company and any of the Guarantors, on the one hand, and the AdministrativeAgent and the Lenders, on the other hand, likewise shall be conclusively presumed to have beenhad or consummated in reliance upon the guaranty contained in this Section 2. EachGuarantor waives (a) diligence, presentment, protest, demand for payment and notice of default, dishonoror nonpayment and all other notices whatsoever to or upon either Company or any of theGuarantors with respect to the Secured Obligations, (b) notice of the existence or creation ornon-payment of all or any of the Secured Obligations and (c) all diligence in collection orprotection of or realization upon any Secured Obligations or any security for or guaranty ofany Secured Obligations.          2.6 Payments. Each Guarantor hereby guaranties that payments hereunderwill be paid to the Administrative Agent without set-off or counterclaim in Dollars at theoffice 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 AdministrativeAgent, and hereby grants to the Administrative Agent, for the ratable benefit of the Lendersand (to the extent provided herein) their Affiliates, a continuing security interest in all of itsCollateral, as collateral security for the prompt and complete payment and performance whendue (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligationsor the Guarantor Obligations, as the case may be.          3.2 Collateral Assignment of Rights under the Assigned Agreements. EachGrantor hereby irrevocably authorizes and empowers the Administrative Agent or its agents, intheir sole discretion, to assert, either directly or on behalf of any Grantor, at any timethat an Event of Default is in existence, any claims any Grantor may from time to time have againstSeller or any of its affiliates with respect to any and all of the Contract Rights or withrespect to any and all payments or other obligations due from Seller or any of its affiliates to eitherCompany under or pursuant to the Assigned Agreements (“Payments”), and to receive andcollect any damages, awards and other monies resulting therefrom and to apply the same onaccount of the Secured Obligations. After the occurrence of any Event of Default, theAdministrative Agent may provide notice to the seller or any of its affiliates under anyAssigned
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Agreement that all Payments shall be made to or at the direction of the Administrative Agent for solong as such Event of Default shall be continuing. Following the delivery of any such notice, theAdministrative Agent shall promptly notify the seller under the Assigned Agreement upon thetermination or waiver of any such Event of Default. Each Grantor hereby irrevocably makes,constitutes and appoints the Administrative Agent (and all officers, employees, or agentsdesignated by the Administrative Agent) as such Grantor’s true and lawful attorney (andagent-in-fact) for the purpose of enabling the Administrative Agent or its agents to assert andcollect 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 toinduce the Lenders to make their respective extensions of credit to the Companies thereunder, eachGrantor jointly and severally hereby represents and warrants to the Administrative Agent and eachLender that:          4.1 Title: No Other Liens. Except for Permitted Liens, the Grantors own eachitem of the Collateral free and clear of any and all Liens or claims of others. No financingstatement or other public notice with respect to all or any part of the Collateral is on fileor of record in any public office, except filings evidencing Permitted Liens and filings for whichtermination statements have been delivered to the Administrative Agent.          4.2 Perfected First Priority Liens. The security interests granted pursuant tothis Agreement (a) upon completion of the filings and other actions specified on Schedule2 (which, in the case of all filings and other documents referred to on Schedule 2, havebeen delivered to the Administrative Agent in completed and duly executed form) will constitutevalid 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 Personspurporting to purchase any Collateral from each Grantor and (b) are prior to all other Lienson the Collateral in existence on the date hereof except for Permitted Liens for which priorityis accorded under applicable law. The filings and other actions specified on Schedule 2constitute all of the filings and other actions necessary to perfect all security interests grantedhereunder.          4.3 Grantor Information. On the date hereof, Schedule 3 sets forth (a) eachGrantor’s jurisdiction of organization, (b) the location of each Grantor’s chief executiveoffice, (c) each Grantor’s exact legal name as it appears on its organizational documents and (d) eachGrantor’s organizational identification number (to the extent a Grantor is organized in astate which assigns such numbers).          4.4 Collateral Locations. On the date hereof, Schedule 4 sets forth (a) eachplace of business of each Grantor (including its chief executive office), (b) all locationswhere all Inventory and the Equipment owned by each Grantor is kept, except with respect to Inventorywith a fair market value of less than (i) $100,000 in the case of “I-Sense” Inventory held onconsignment by CVS Corporation, and (ii) $400,000 in the case of “1C Green” raw materialInventory located at the SP Pharmaceutical facility in Albuquerque, New Mexico (the “PermittedOffsite Inventory”) (in the aggregate for all Grantors) which may be located at otherlocations
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and (c) whether each such Collateral location and place of business (including each Grantor’s chiefexecutive office) is owned or leased (and if leased, specifies the complete name and notice addressof each lessor). No Collateral is located outside the United States or in the possession of anylessor, 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 oftitle or other registration statute of the United States, any State or other jurisdiction, except forpersonal vehicles owned by the Grantors and used by employees of the Grantors in the ordinary course ofbusiness with an aggregate fair market value of less than $50,000 (in the aggregate for allGrantors).          4.6 Investment Property. (a) The Pledged Equity pledged by each Grantorhereunder constitute all the issued and outstanding equity interests of each Issuer owned bysuch Grantor or, in the case of any foreign Subsidiary, 65% of all issued and outstanding equityinterests of such foreign Subsidiary.          (b) All of the Pledged Equity has been duly and validly issued and is fullypaid and nonassessable.          (c) Each of the Pledged Notes constitutes the legal, valid and bindingobligation of the obligor with respect thereto, enforceable in accordance with its terms(subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium andother similar laws relating to or affecting creditors’ rights generally, general equitableprinciples (whether considered in a proceeding in equity or at law) and an implied covenant of good faithand fair dealing).          (d) Schedule 1 lists all Investment Property owned by each Grantor. EachGrantor is the record and beneficial owner of, and has good and marketable title to, theInvestment 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 inconnection with any Receivable is evidenced by any Instrument or Chattel Paper which has notbeen 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 timeas owing to such Grantor in respect of the Receivables (to the extent such representations arerequired by any of the Loan Documents) will at all such times be accurate.          4.8 Intellectual Property. (a) Schedule 5 lists all Intellectual Propertyowned by such Grantor in its own name on the date hereof.          (b) On the date hereof, all material Intellectual Property owned by any Guarantor isvalid, subsisting, unexpired and enforceable, has not been abandoned.
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          (c) Except as set forth in Schedule 5, none of the material IntellectualProperty is the subject of any licensing or franchise agreement pursuant to which such Grantoris the licensor or franchisor.          (d) Each Grantor owns and possesses or has a license or other right to use allIntellectual 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 MaterialAdverse Effect.          4.9 Depositary and Other Accounts. All depositary and other accounts maintained byeach Grantor are described on Schedule 6 hereto, which description includes for each suchaccount the name of the Grantor maintaining such account, the name, address, telephone and faxnumbers of the financial institution at which such account is maintained, the account number andthe account officer, if any, of such account.SECTION 5 COVENANTS.          Each Grantor covenants and agrees with the Administrative Agent and the Lenders that, fromand 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 anyamount payable under or in connection with any of the Collateral in excess of $10,000 (in theaggregate for all Grantors) shall be or become evidenced by any Instrument, CertificatedSecurity or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall beimmediately delivered to the Administrative Agent, duly indorsed in a manner satisfactory tothe Administrative Agent, to be held as Collateral pursuant to this Agreement. In the event thatan Unmatured Event of Default or Event of Default shall have occurred and be continuing, upon therequest of the Administrative Agent, any Instrument, Certificated Security or Chattel Papernot theretofore delivered to the Administrative Agent and at such time being held by any Grantorshall be immediately delivered to the Administrative Agent, duly indorsed in a mannersatisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement.          5.2Maintenance of Perfected Security Interest; Further Documentation. (a)Such Grantor shall maintain the security interest created by this Agreement as a perfectedsecurity interest having at least the priority described in Section 4.2 and shalldefend such security interest against the claims and demands of all Persons whomsoever.          (b) Such Grantor will furnish to the Administrative Agent and the Lendersfrom time to time statements and schedules further identifying and describing the assets andproperty of such Grantor and such other reports in connection therewith as the AdministrativeAgent may reasonably request, all in reasonable detail.          (c) At any time and from time to time, upon the written request of theAdministrative Agent, and at the sole expense of such Grantor, such Grantor will promptly andduly execute and deliver, and have recorded, such further instruments and documents and takesuch further actions as the Administrative Agent may reasonably request for the purpose of
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obtainingor preserving the full benefits of this Agreement and of the rights and powers hereingranted, including (i) filing any financing or continuation statements under the UCC (or othersimilar laws) in effect in any jurisdiction with respect to the security interests created herebyand (ii) in the case of Investment Property and any other relevant Collateral, taking any actionsnecessary to enable the Administrative Agent to obtain “control” (within the meaning of theapplicable UCC) with respect thereto.          5.3 Changes in Locations, Name, etc. Such Grantor shall not, except upon 30days’ prior written notice to the Administrative Agent and delivery to the AdministrativeAgent of (a) all additional financing statements and other documents reasonably requested by theAdministrative Agent as to the validity, perfection and priority of the security interestsprovided for herein and (b) if applicable, a written supplement to Schedule 4 showing anyadditional 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 thoselisted on Schedule 4 (except with respect to Permitted Offsite Inventory).     (ii) change its jurisdiction of organization or the location of its chief executiveoffice from that specified on Schedule 3 or in any subsequent notice deliveredpursuant 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 theLenders promptly, in reasonable detail, of:          (a) any Lien (other than Permitted Liens) on any of the Collateral whichwould adversely affect the ability of the Administrative Agent to exercise any of its remedieshereunder; and          (b) the occurrence of any other event which could reasonably be expected tohave a material adverse effect on the aggregate value of the Collateral or on the Lienscreated hereby.          5.5 Investment Property. (a) If such Grantor shall become entitled to receiveor shall receive any certificate, option or rights in respect of the equity interests of anyIssuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any of thePledged Equity, or otherwise in respect thereof, such Grantor shall accept the same as theagent of the Administrative Agent and the Lenders, hold the same in trust for the AdministrativeAgent and the Lenders and deliver the same forthwith to the Administrative Agent in the exact formreceived, duly indorsed by such Grantor to the Administrative Agent, if required, togetherwith an undated instrument of transfer covering such certificate duly executed in blank by suchGrantor and with, if the Administrative Agent so requests, signature guarantied, to be held bythe Administrative Agent, subject to the terms hereof, as additional Collateral for the SecuredObligations. Upon the occurrence and during the continuance of an Event of Default, (i) anysums paid upon or in respect of the Investment Property upon the liquidation or dissolution ofany Issuer shall be paid over to the Administrative Agent to be held by it hereunder asadditional
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Collateral for the Secured Obligations, and (ii) in case any distribution of capital shall bemade on or in respect of the Investment Property or any property shall be distributed upon or withrespect to the Investment Property pursuant to the recapitalization or reclassification of thecapital 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 tothe Administrative Agent to be held by it hereunder as additional Collateral for the SecuredObligations. Upon the occurrence and during the continuance of an Event of Default, if any sums ofmoney or property so paid or distributed in respect of the Investment Property shall be received bysuch Grantor, such Grantor shall, until such money or property is paid or delivered to theAdministrative Agent, hold such money or property in trust for the Lenders, segregated from otherfunds of such Grantor, as additional Collateral for the Secured Obligations.          (b) Without the prior written consent of the Administrative Agent, suchGrantor will not (i) vote to enable, or take any other action to permit, any Issuer to issueany equity interests of any nature or to issue any other securities or interests convertible intoor granting the right to purchase or exchange for any equity interests of any nature of anyIssuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respectto, the Investment Property or Proceeds thereof (except pursuant to a transaction expressly permittedby the Credit Agreement) other than, with respect to Investment Property not constituting PledgedStock 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 Personwith 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 orability of such Grantor or the Administrative Agent to sell, assign or transfer any of the InvestmentProperty or Proceeds thereof, except, with respect to such Investment Property, shareholders’agreements entered into by such Grantor with respect to Persons in which such Grantormaintains an ownership interest of 50% or less.          (c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) itwill be bound by the terms of this Agreement relating to the Investment Property issued by itand will comply with such terms insofar as such terms are applicable to it, (ii) it will notifythe Administrative Agent promptly in writing of the occurrence of any of the events described inSection 5.5(a) with respect to the Investment Property issued by it and (iii) theterms of Sections 6.3(c) and 6.7 shall apply to such Grantor with respect to all actions thatmay be required of it pursuant to Section 6.3(c) or 6.7 regarding the Investment Property issued byit.          5.6 Receivables. (a) Other than in the ordinary course of business consistent withits 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 anyReceivable for less than the full amount thereof, (iii) release, wholly or partially, any Personliable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on anyReceivable or (v) amend, supplement or modify any Receivable in any manner that could adverselyaffect the value thereof.          (b) Such Grantor will deliver the Administrative Agent a copy of each material demand, noticeor 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 forall 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 infull force free from any claim of abandonment for non-use, (ii) maintain as in the past the qualityof products and services offered under such Trademark, (iii) use such Trademark with theappropriate 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 suchTrademark unless the Administrative Agent, for the ratable benefit of the Lenders, shall obtain aperfected security interest in such mark pursuant to this Agreement, and (v) not (and not permitany licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby suchTrademark may become invalidated or impaired in any way.          (b) Such Grantor (either itself or through licensees) will not do any act, oromit to do any act, whereby any Patent material to its business may become forfeited,abandonedor dedicated to the public.          (c) Such Grantor (either itself or through licensees) (i) will employ eachCopyright material to its business and (ii) will not (and will not permit any licensee orsublicensee thereof to) do any act or knowingly omit to do any act whereby any materialportionof such Copyrights may become invalidated or otherwise impaired. Such Grantor will not (eitheritself or through licensees) do any act whereby any material portion of such Copyrights mayfallinto the public domain.          (d) Such Grantor (either itself or through licensees) will not do any act thatknowingly uses any Intellectual Property material to its business to infringe the intellectualproperty rights of any other Person.          (e) Such Grantor will notify the Administrative Agent and the Lendersimmediately if it knows, or has reason to know, that any application or registration relatingto 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 suchdetermination or development in, any proceeding in the United States Patent and TrademarkOffice, 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 suchGrantor’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 IntellectualProperty withthe United States Patent and Trademark Office, the United States Copyright Office or anysimilaroffice or agency in any other country or any political subdivision thereof, such Grantor shallreport such filing to the Administrative Agent concurrently with the next delivery offinancialstatements of the Companies pursuant to Section 10.1 of the Credit Agreement. Upontherequest of the Administrative Agent, such Grantor shall execute and deliver, and haverecorded,any and all agreements, instruments, documents, and papers as the Administrative Agent mayrequest 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 relatingthereto or represented thereby.          (g) Such Grantor will take all reasonable and necessary steps to maintain and pursue eachapplication (and to obtain the relevant registration) and to maintain each registration of allmaterial Intellectual Property owned by it.          (h) In the event that any material Intellectual Property is infringed upon or misappropriatedor diluted by a third party, such Grantor shall (i) take such actions as such Grantor shallreasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii)if such Intellectual Property is of material economic value, promptly notify the AdministrativeAgent after it learns thereof and, to the extent, in its reasonable judgment, such Grantordetermines it appropriate under the circumstances, sue for infringement, misappropriation ordilution, to seek injunctive relief where appropriate and to recover any and all damages for suchinfringement, misappropriation or dilution.          5.8 Seller Undertakings.          (a) Each Grantor shall keep the Administrative Agent informed of allcircumstances bearing upon any potential claim under or with respect to the AssignedAgreements and the Seller Undertakings and such Grantor shall not, without the prior writtenconsent of the Administrative Agent, (i) waive any of its rights or remedies under anyAssignedAgreement with respect to any of the Seller Undertakings, (ii) settle, compromise or offsetanyamount payable by the sellers to such Grantor under any Assigned Agreement or (iii) amend orotherwise modify any Assigned Agreement in any manner which is adverse to the interests of theAdministrative Agent or any Lender.          (b) Each Grantor shall perform and observe all the terms and conditions ofeach Assigned Agreement to be performed by it, maintain each Assigned Agreement in full forceand effect, enforce each Assigned Agreement in accordance with its terms and take all suchaction to such end as may from time to time be reasonably requested by the AdministrativeAgent.          (c) Anything herein to the contrary notwithstanding, (i) each applicableGrantor shall remain liable under each Assigned Agreement to the extent set forth therein toperform all of its duties and obligations thereunder to the same extent as if this Agreementhadnot been executed, (ii) the exercise by the Administrative Agent of any of its rightshereundershall not release any Grantor from any of its duties or obligations under any AssignedAgreementand (iii) neither the Administrative Agent nor any other Lender shall have any obligation orliability under any Assigned Agreement by reason of this Agreement, nor shall theAdministrative Agent or any other Lender be obligated to perform any of the obligations orduties of any Grantor thereunder or to take any action to collect or enforce any claim forpayment assigned hereunder.          5.9 Depositary and Other Deposit Accounts. Each Grantor shall maintain allof its principal deposit accounts with the Administrative Agent, except to the extentpermitted bythe Credit Agreement. No Grantor shall open any depositary or other deposit accounts, exceptin
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accordance with the Credit Agreement and unless such Grantor shall have given the AdministrativeAgent 10 days’ prior written notice of its intention to open any such new deposit accounts. TheGrantors shall deliver to the Administrative Agent a revised version of Schedule 6 showing anychanges thereto within 5 days of any such change. Each Grantor hereby authorizes the financialinstitutions at which such Grantor maintains a deposit account to provide the Administrative Agentwith such information with respect to such deposit account as the Administrative Agent may fromtime to time reasonably request, and each Grantor hereby consents to such information beingprovided to the Administrative Agent. Each Grantor will cause each financial institution at whichsuch Grantor maintains a depositary or other deposit account to enter into a bank agency or othersimilar agreement with the Administrative Agent and such Grantor, in form and substancesatisfactory to the Administrative Agent, in order to give the Administrative Agent “control” (asdefined in the UCC) of such account. Subject to the terms of the Credit Agreement, each Grantorshall direct all Account Debtors to make all payments on the Accounts directly to a bank account orLockbox maintained with the Administrative Agent (an “Agent Account”). If any Grantor or anydirector, officer, employee, agent of such Grantor, or any other Person acting for or in concertwith such Grantor shall receive any monies, checks, notes, drafts or other payments relating to oras proceeds of Accounts or other Collateral, such Grantor and each such Person shall receive allsuch items in trust for, and as the sole and exclusive property of, the Administrative Agent andthe Lenders and, immediately upon receipt thereof, shall remit the same (or cause the same to beremitted) 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 maintainingthe Agent Account and depositing for collection by the Administrative Agent any check or other itemof 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 theAdministrative Agent by the Grantors upon demand. All checks, drafts, instruments and other itemsof payment or proceeds of Collateral shall be endorsed by the applicable Grantor to theAdministrative 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’sbehalf. For the purpose of this section, each Grantor irrevocably hereby makes, constitutes andappoints the Administrative Agent (and all Persons designated by the Administrative Agent for thatpurpose) as such Grantor’s true and lawful attorney and agent-in-fact (a) to endorse such Grantor’sname 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 orgoods pertaining thereto; (b) to take control in any manner of any item of payment or proceedsthereof; and (c) to have access to any lock box or postal box into which any of such Grantor’s mailis deposited, and open and process all mail addressed to such Grantor and deposited therein. Allamounts received in an Agent Account shall be deemed received by the Administrative Agent inaccordance 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 inimmediately 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 tothe Administrative Agent a Collateral Access Agreement with respect to (a) each bailee withwhich such Grantor keeps Inventory or other assets as of the Closing Date with a fair marketvalue in excess of $10,000 and (b) each landlord which leases real property (and theaccompanying facilities) to any of the Grantors as of the Closing Date. If any Grantor shallcause to be delivered Inventory or other property in excess of $10,000 in fair market value toanybailee after the Closing Date, such Grantor shall use reasonable efforts to cause such baileetosign a Collateral Access Agreement. Such requirement may be waived at the option of theAdministrative Agent. If any Grantor shall lease any real property or facilities and the valueofproperty 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 thelandlord in respect of such leased property or facilities to sign a Collateral AccessAgreement.Such requirement may be waived at the option of the Administrative Agent.          (b) Each Grantor authorizes the Administrative Agent to, at any time and fromtime to time, file financing statements, continuation statements, and amendments thereto thatdescribe the Collateral as “all assets” of each Grantor, or words of similar effect, and whichcontain any other information required pursuant to the UCC for the sufficiency of filingofficeacceptance of any financing statement, continuation statement, or amendment, and each Grantoragrees to furnish any such information to the Administrative Agent promptly upon request. Anysuch financing statement, continuation statement, or amendment may be signed by theAdministrative Agent on behalf of any Grantor and may be filed at any time in anyjurisdiction.          (c) Each Grantor shall, at any time and from time and to time, take such stepsas the Administrative Agent may reasonably request for the Administrative Agent (i) to obtainanacknowledgement, in form and substance reasonably satisfactory to the Administrative Agent, ofany bailee having possession of any of the Collateral, stating that the bailee holds suchCollateralfor the Administrative Agent, (ii) to obtain “control” of any letter-of-credit rights, orelectronicchattel paper (as such terms are defined by the UCC with corresponding provisions thereofdefining what constitutes “control” for such items of Collateral), with any agreementsestablishing control to be in form and substance reasonably satisfactory to the AdministrativeAgent, and (iii) otherwise to insure the continued perfection and priority of theAdministrativeAgent’s security interest in any of the Collateral and of the preservation of its rightstherein. Ifany Grantor shall at any time, acquire a “commercial tort claim” (as such term is defined intheUCC) in excess of $10,000, such Grantor shall promptly notify the Administrative Agent thereofin writing and supplement Schedule 7, therein providing a reasonable description andsummarythereof, and upon delivery thereof to the Administrative Agent, such Grantor shall be deemedtothereby grant to the Administrative Agent (and such Grantor hereby grants to theAdministrativeAgent) a security interest and lien in and to such commercial tort claim and all proceedsthereof,all upon the terms of and governed by this Agreement.          (d) Without limiting the generality of the foregoing, if any Grantor at any timeholds or acquires an interest in any electronic chattel paper or any “transferable record”, asthatterm is defined in Section 201 of the federal Electronic Signatures in Global and NationalCommerce Act, or in §16 of the Uniform Electronic Transactions Act as in effect in anyrelevantjurisdiction, 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 mayreasonably request to vest in the Administrative Agent “control” under Section 9-105 of the UCC ofsuch electronic chattel paper or control under Section 201 of the federal Electronic Signatures inGlobal and National Commerce Act or, as the case may be, §16 of the Uniform Electronic TransactionsAct, as so in effect in such jurisdiction, of such transferable record. The Administrative Agentagrees with the Grantors that the Administrative Agent will arrange, pursuant to proceduressatisfactory to the Administrative Agent and so long as such procedures will not result in theAdministrative Agent’s loss of control, for the Grantors to make alterations to the electronicchattel paper or transferable record permitted under Section 9-105 of the UCC or, as the case maybe, Section 201 of the federal Electronic Signatures in Global and National Commerce Act or §16 ofthe 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 accountany 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 timeafter the occurrence and during the continuance of an Event of Default, the Administrative Agentshall have the right to make test verifications of the Receivables in any manner and through anymedium that it reasonably considers advisable, and each Grantor shall furnish all such assistanceand 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 ofDefault, upon the Administrative Agent’s request and at the expense of the relevant Grantor, suchGrantor shall cause independent public accountants or others satisfactory to the AdministrativeAgent to furnish to the Administrative Agent reports showing reconciliations, agings and testverifications of, and trial balances for, the Receivables.          (b) The Administrative Agent hereby authorizes each Grantor to collect suchGrantor’s Receivables, and the Administrative Agent may curtail or terminate such authority atany time after the occurrence and during the continuance of an Event of Default. If requiredbythe Administrative Agent at any time after the occurrence and during the continuance of anEvent of Default, any payments of Receivables, when collected by any Grantor, (i) shall beforthwith (and, in any event, within 2 Business Days) deposited by such Grantor in the exactform received, duly indorsed by such Grantor to the Administrative Agent if required, in acollateral 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 asprovided in Section 6.5, and (ii) until so turned over, shall be held by such Grantorin trust for theAdministrative Agent and the Lenders, segregated from other funds of such Grantor. Each suchdeposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonabledetail 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 thecontinuance of an Event of Default, at the Administrative Agent’s request, each Grantor shalldeliver to the Administrative Agent all original and other documents evidencing, and relatingto,the agreements and transactions which gave rise to the Receivables, including all originalorders,invoices and shipping receipts.
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          (d) Each Grantor hereby irrevocably authorizes and empowers the Administrative Agent, in theAdministrative Agent’s sole discretion, at any time after the occurrence and during thecontinuance of an Event of Default, to assert, either directly or on behalf of such Grantor, anyclaim such Grantor may from time to time have against the sellers under or with respect to theAssigned Agreements and to receive and collect any and all damages, awards and other moniesresulting therefrom and to apply the same to the Obligations. Each Grantor hereby irrevocablymakes, constitutes and appoints the Administrative Agent as its true and lawful attorney in factfor the purpose of enabling the Administrative Agent to assert and collect such claims and toapply such monies in the manner set forth above, which appointment, being coupled with aninterest, is irrevocable.          6.2 Communications with Obligors; Grantors Remain Liable. (a) The AdministrativeAgent in its own name or in the name of others may at any time after the occurrence and during thecontinuance of an Event of Default communicate with obligors under the Receivables to verify withthem to the Administrative Agent’s satisfaction the existence, amount and terms of anyReceivables.          (b) Upon the request of the Administrative Agent at any time after theoccurrence and during the continuance of an Event of Default, each Grantor shall notifyobligorson the Receivables that the Receivables have been assigned to the Administrative Agent for theratable benefit of the Lenders and that payments in respect thereof shall be made directly totheAdministrative Agent.          (c) Anything herein to the contrary notwithstanding, each Grantor shallremain liable in respect of each of the Receivables to observe and perform all the conditionsandobligations to be observed and performed by it thereunder, all in accordance with the terms ofany agreement giving rise thereto. Neither the Administrative Agent nor any Lender shall haveany obligation or liability under any Receivable (or any agreement giving rise thereto) byreasonof or arising out of this Agreement or the receipt by the Administrative Agent or any Lenderof any payment relating thereto, nor shall the Administrative Agent or any Lender be obligated inany manner to perform any of the obligations of any Grantor under or pursuant to anyReceivable(or any agreement giving rise thereto), to make any payment, to make any inquiry as to thenature or the sufficiency of any payment received by it or as to the sufficiency of anyperformance by any party thereunder, to present or file any claim, to take any action toenforceany performance or to collect the payment of any amounts which may have been assigned to it orto which it may be entitled at any time or times.          (d) For the purpose of enabling the Administrative Agent to exercise rightsand remedies under this Agreement, each Grantor hereby grants to the Administrative Agent, atany time after the occurrence and during the continuance of an Event of Default, for thebenefitof the Administrative Agent and the Lenders, an irrevocable, nonexclusive license (exercisablewithout payment of royalty or other compensation to such Grantor) to use, license orsublicenseany Intellectual Property now owned or hereafter acquired by such Grantor, and wherever thesame may be located, and including in such license access to all media in which any of thelicensed items may be recorded or stored and to all computer software and programs used forthecompilation or printout thereof.
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          6.3 Investment Property. (a) Unless an Event of Default shall have occurredand be continuing and the Administrative Agent shall have given notice to the relevant Grantorof the Administrative Agent’s intent to exercise its corresponding rights pursuant toSection6.3(b), each Grantor shall be permitted to receive all cash dividends anddistributions paid inrespect of the Pledged Equity and all payments made in respect of the Pledged Notes, to theextent permitted in the Credit Agreement, and to exercise all voting and other rights withrespectto the Investment Property; provided, that no vote shall be cast or other rightexercised or actiontaken which could impair the Collateral or which would be inconsistent with or result in anyviolation of any provision of the Credit Agreement, this Agreement or any other LoanDocument.          (b) If an Event of Default shall occur and be continuing and theAdministrative Agent shall give notice of its intent to exercise such rights to the relevantGrantoror Grantors, (i) the Administrative Agent shall have the right to receive any and all cashdividends and distributions, payments or other Proceeds paid in respect of the InvestmentProperty and make application thereof to the Obligations in such order as the AdministrativeAgent may determine, and (ii) any or all of the Investment Property shall be registered in thename of the Administrative Agent or its nominee, and the Administrative Agent or its nomineemay thereafter exercise (x) all voting and other rights pertaining to such Investment Propertyatany meeting of holders of the equity interests of the relevant Issuer or Issuers or otherwiseand(y) any and all rights of conversion, exchange and subscription and any other rights,privileges oroptions pertaining to such Investment Property as if it were the absolute owner thereof(includingthe right to exchange at its discretion any and all of the Investment Property upon themerger,consolidation, reorganization, recapitalization or other fundamental change in the corporateorother structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agentof any right, privilege or option pertaining to such Investment Property, and in connectiontherewith, the right to deposit and deliver any and all of the Investment Property with anycommittee, depositary, transfer agent, registrar or other designated agency upon such termsandconditions as the Administrative Agent may determine), all without liability except to accountfor property actually received by it, but the Administrative Agent shall have no duty to anyGrantor to exercise any such right, privilege or option and shall not be responsible for anyfailureto do so or delay in so doing.          (c) Each Grantor hereby authorizes and instructs each Issuer of anyInvestment Property pledged by such Grantor hereunder to (i) comply with any instructionreceived by it from the Administrative Agent in writing that (x) states that an Event ofDefaulthas occurred and is continuing and (y) is otherwise in accordance with the terms of thisAgreement, without any other or further instructions from such Grantor, and each Grantoragreesthat each Issuer shall be fully protected in so complying and (ii) unless otherwise expresslypermitted hereby, pay any dividends, distributions or other payments with respect to theInvestment Property directly to the Administrative Agent.          6.4Proceeds to be Turned Over to Administrative Agent. In addition to therights of the Administrative Agent and the Lenders specified in Section 6.1 withrespect topayments of Receivables, if an Event of Default shall occur and be continuing, all Proceedsreceived by any Grantor consisting of cash, checks and other cash equivalent items shall beheld
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by such Grantor in trust for the Administrative Agent and the Lenders, segregated from other fundsof such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to theAdministrative Agent in the exact form received by such Grantor (duly indorsed by such Grantor tothe Administrative Agent, if required). All Proceeds received by the Administrative Agent hereundershall be held by the Administrative Agent in a collateral account maintained under its soledominion and control. All Proceeds, while held by the Administrative Agent in any collateralaccount (or by such Grantor in trust for the Administrative Agent and the Lenders) establishedpursuant hereto, shall continue to be held as collateral security for the Secured Obligations andshall 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 Companiesand the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, atany time at the Administrative Agent’s election, the Administrative Agent may apply all or anypart of Proceeds from the sale of, or other realization upon, all or any part of the Collateral inpayment of the Secured Obligations in such order as the Administrative Agent shall determine inits discretion. Any part of such funds which the Administrative Agent elects not so to apply anddeems not required as collateral security for the Secured Obligations shall be paid over from timeto time by the Administrative Agent to the applicable Grantor or to whomsoever may be lawfullyentitled to receive the same. Any balance of such Proceeds remaining after the Secured Obligationsshall have been Paid in Full shall be paid over to the applicable Grantor or to whomsoever may belawfully entitled to receive the same. In the absence of a specific determination by theAdministrative Agent, the Proceeds from the sale of, or other realization upon, all or any part ofthe 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 theAdministrative Agent (in its capacity as such), including Attorney Costs, and any otherSecured Obligations owing to the Administrative Agent in respect of sums advanced by theAdministrative Agent to preserve the Collateral or to preserve its security interest in theCollateral, 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 ProductObligations and Hedging Obligations) consisting of accrued and unpaid interest owing to anyLender, pro-rata, until paid in full;     **FOURTH,**to the payment of all Secured Obligations (other than Bank Product Obligationsand Hedging Obligations) consisting of principal owing to any Lender, pro-rata, until paidin full;     **FIFTH,**to the payment to the Administrative Agent of an amount equal to all SecuredObligations in respect of outstanding Letters of Credit to be held as cash collateral inrespect of such obligations;
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     **SIXTH,** to the payment of all Bank Products Obligations and HedgingObligations 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 lawfullyentitled to receive such amounts.          6.6 Code and Other Remedies. If an Event of Default shall occur and becontinuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition toallother rights and remedies granted to them in this Agreement and in any other instrument oragreement securing, evidencing or relating to the Secured Obligations, all rights and remediesofa secured party under the UCC or any other applicable law. Without limiting the generality ofthe foregoing, the Administrative Agent, without demand of performance or other demand,presentment, protest, advertisement or notice of any kind (except any notice required by lawreferred 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 forthwithcollect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or mayforthwith sell, lease, assign, give options to purchase, or otherwise dispose of and delivertheCollateral or any part thereof (or contract to do any of the foregoing), in one or moreparcels atpublic or private sale or sales, at any exchange, broker’s board or office of theAdministrativeAgent or any Lender or elsewhere upon such terms and conditions as it may deem advisable andat such prices as it may deem best, for cash or on credit or for future delivery withassumption ofany credit risk. The Administrative Agent or any Lender shall have the right upon any suchpublic sale or sales, and, to the extent permitted by law, upon any such private sale orsales, topurchase the whole or any part of the Collateral so sold, free of any right or equity ofredemptionin any Grantor, which right or equity is hereby waived and released. Each Grantor furtheragrees, at the Administrative Agent’s request, to assemble the Collateral and make itavailable tothe 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 netproceeds of any action taken by it pursuant to this Section 6.6, after deducting allreasonablecosts and expenses of every kind incurred in connection therewith or incidental to the care orsafekeeping of any of the Collateral or in any way relating to the Collateral or the rights oftheAdministrative Agent and the Lenders hereunder, including Attorney Costs to the payment inwhole or in part of the Secured Obligations, in such order as the Administrative Agent mayelect,and only after such application and after the payment by the Administrative Agent of any otheramount required by any provision of law, need the Administrative Agent account for thesurplus,if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives allclaims, damages and demands it may acquire against the Administrative Agent or any Lenderarising out of the exercise by them of any rights hereunder. If any notice of a proposed saleorother disposition of Collateral shall be required by law, such notice shall be deemedreasonableand proper if given at least 10 days before such sale or other disposition.          6.7 Registration Rights. (a) If the Administrative Agent shall determine toexercise its right to sell any or all of the Pledged Equity pursuant to Section 6.6,and if in theopinion 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, therelevant Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the directorsand officers of such Issuer to execute and deliver, all such instruments and documents, and do orcause 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, underthe provisions of the Securities Act, (ii) use its best efforts to cause the registrationstatement relating thereto to become effective and to remain effective for a period of one yearfrom the date of the first public offering of the Pledged Equity, or that portion thereof to besold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinionof the Administrative Agent, are necessary or advisable, all in conformity with the requirementsof the Securities Act and the rules and regulations of the Securities and Exchange Commissionapplicable thereto. Each Grantor agrees to cause such Issuer to comply with the provisions of thesecurities or “Blue Sky” laws of any and all jurisdictions which the Administrative Agent shalldesignate and to make available to its security holders, as soon as practicable, an earningsstatement (which need not be audited) which will satisfy the provisions of Section 1 l(a) of theSecurities Act.          (b) Each Grantor recognizes that the Administrative Agent may be unable toeffect a public sale of any or all the Pledged Equity, by reason of certain prohibitionscontainedin the Securities Act and applicable state securities laws or otherwise, and may be compelledtoresort to one or more private sales thereof to a restricted group of purchasers which will beobliged to agree, among other things, to acquire such securities for their own account forinvestment and not with a view to the distribution or resale thereof. Each Grantoracknowledgesand agrees that any such private sale may result in prices and other terms less favorable thanifsuch sale were a public sale and, notwithstanding such circumstances, agrees that any suchprivate sale shall be deemed to have been made in a commercially reasonable manner. TheAdministrative Agent shall be under no obligation to delay a sale of any of the Pledged Equityfor the period of time necessary to permit the Issuer thereof to register such securities orotherinterests for public sale under the Securities Act, or under applicable state securities laws,even ifsuch Issuer would agree to do so.          (c) Each Grantor agrees to use its best efforts to do or cause to be done allsuch other acts as may be necessary to make such sale or sales of all or any portion of thePledged Equity pursuant to this Section 6.7 valid and binding and in compliance withapplicablelaw. Each Grantor further agrees that a breach of any of the covenants contained in thisSection 6.7 will cause irreparable injury to the Administrative Agent and the Lenders, thatthe Administrative Agent and the Lenders have no adequate remedy at law in respect of such breachand, as a consequence, that each and every covenant contained in this Section 6.7shall bespecifically enforceable against such Grantor, and such Grantor hereby waives and agrees nottoassert any defenses against an action for specific performance of such covenants except for adefense 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 orprivileges which it may acquire under Section 9-626 of the UCC. Each Grantor shall remain liablefor any deficiency if the proceeds of any sale or other disposition of the Collateral areinsufficient to pay the Secured Obligations in full and the fees and disbursements of anyattorneys 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 Grantorhereby irrevocably constitutes and appoints the Administrative Agent and any officer or agentthereof, with full power of substitution, as its true and lawful attorney-in-fact with fullirrevocable power and authority in the place and stead of such Grantor and in the name of suchGrantor or in its own name, for the purpose of carrying out the terms of this Agreement, to takeany and all appropriate action and to execute any and all documents and instruments which may benecessary or desirable to accomplish the purposes of this Agreement, and, without limiting thegenerality of the foregoing, each Grantor hereby gives the Administrative Agent the power andright, on behalf of and at the expense of such Grantor, without notice to or assent by suchGrantor, to do any or all of the following:     (i) in the name of such Grantor or its own name, or otherwise, take possession of andindorse and collect any checks, drafts, notes, acceptances or other instruments for thepayment of moneys due under any Receivable or with respect to any other Collateral and fileany claim or take any other action or proceeding in any court of law or equity or otherwisedeemed appropriate by the Administrative Agent for the purpose of collecting any and allsuch moneys due under any Receivable or with respect to any other Collateral wheneverpayable;     (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 mayrequest to evidence the Administrative Agent’s security interest in such IntellectualProperty and the goodwill and general intangibles of such Grantor relating thereto orrepresented thereby;     (iii) discharge Liens levied or placed on or threatened against the Collateral, andeffect any repairs or insurance called for by the terms of this Agreement and pay all orany 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 withrespect to the Collateral; and     (v) (1) direct any party liable for any payment under any of the Collateral to makepayment of any and all moneys due or to become due thereunder directly to theAdministrative 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 otheramounts 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 orwarehouse receipts, drafts against debtors, assignments, verifications, notices and otherdocuments 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 tocollect the Collateral or any portion thereof and to enforce any other right in respect ofany Collateral; (5) defend any suit, action or proceeding brought against such Grantor withrespect 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 theAdministrative 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 theAdministrative Agent shall in its sole discretion determine; (8) vote any right or interestwith respect to any Investment Property; (9) order good standing certificates and conductlien searches in respect of such jurisdictions or offices as the Administrative Agent maydeem appropriate; and (10) generally sell, transfer, pledge and make any agreement withrespect to or otherwise deal with any of the Collateral as fully and completely as thoughthe Administrative Agent were the absolute owner thereof for all purposes, and do, at theAdministrative 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 orrealize upon the Collateral and the Administrative Agent’s security interests therein and toeffect 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 thisSection 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 agreementscontained herein, the Administrative Agent, at its option, but without any obligation so todo, 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 orcause to be done by virtue hereof. All powers, authorizations and agencies contained in thisAgreement are coupled with an interest and are irrevocable until this Agreement is terminatedand the security interests created hereby are released.     7.2 Duty of Administrative Agent. The Administrative Agent’s sole duty withrespect to the custody, safekeeping and physical preservation of the Collateral in itspossession shall be to deal with it in the same manner as the Administrative Agent deals with similarproperty for its own account. Neither the Administrative Agent or any Lender nor any of theirrespective 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 underany obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor orany other Person or to take any other action whatsoever with regard to the Collateral or any partthereof.The powers conferred on the Administrative Agent and the Lenders hereunder aresolely to protect the Administrative Agent’s and the Lenders’ interests in the Collateral andshall 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 theyactually receive as a result of the exercise of such powers, and neither they nor any of theirofficers, directors, employees or agents shall be responsible to any Grantor for any act orfailure to act hereunder.     7.3 Authority of Administrative Agent. Each Grantor acknowledges that therights and responsibilities of the Administrative Agent under this Agreement with respect toany 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 hereinor resulting or arising out of this Agreement shall, as between the Administrative Agent and theLenders, be governed by the Credit Agreement and by such other agreements with respect thereto asmay 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 withfull and valid authority so to act or refrain from acting, and no Grantor shall be under anyobligation, or entitlement, to make any inquiry respecting such authority.SECTION 8 MISCELLANEOUS.     8.1 Amendments in Writing. None of the terms or provisions of thisAgreement may be waived, amended, supplemented or otherwise modified except in accordancewith Section 15.1 of the Credit Agreement.     8.2 Notices. All notices, requests and demands to or upon the AdministrativeAgent or any Grantor hereunder shall be addressed to the Companies and effected in the mannerprovided for in Section 15.3 of the Credit Agreement and each Grantor hereby appointsAkorn as its agent to receive notices hereunder.     8.3 Indemnification by Grantors. **THE GRANTORS, JOINTLY ANDSEVERALLY, HEREBY AGREE TO INDEMNIFY, EXONERATE AND HOLD EACHLENDER PARTY FREE AND HARMLESS FROM AND AGAINST ANY AND ALLINDEMNIFIED LIABILITIES, INCURRED BY THE LENDER PARTIES OR ANY OFTHEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANYTENDER OFFER, MERGER, PURCHASE OF EQUITY INTERESTS, PURCHASE OFASSETS (INCLUDING THE RELATED TRANSACTIONS) OR OTHER SIMILARTRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR INPART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THELOANS, (B)THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE,TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANYHAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANYGRANTOR, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITHRESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANYGRANTOR OR THE OPERATIONS CONDUCTED THEREON, (D) THEINVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS ATWHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS AREALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUSSUBSTANCES OR (E) THE EXECUTION, DELIVERY, PERFORMANCE ORENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BYANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIEDLIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’SGROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY AFINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENTJURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOINGUNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, EACHGRANTOR HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TOTHE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED**
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**LIABILITIESWHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL OBLIGATIONS PROVIDEDFOR IN THIS****SECTION 8.3****SHALL SURVIVE REPAYMENT OF (AND SHALL BE) ALL SECURED OBLIGATIONS (ANDTERMINATION OF ALL COMMITMENTS UNDER THE CREDIT AGREEMENT), ANY FORECLOSURE UNDER, OR ANYMODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OFTHIS AGREEMENT.**     8.4 Enforcement Expenses. (a) Each Grantor agrees, on a joint and severalbasis, to pay or reimburse on demand each Lender and the Administrative Agent for allreasonable out-of-pocket costs and expenses (including Attorney Costs) incurred in collectingagainst any Guarantor under the guaranty contained in Section 2 or otherwise enforcingor preserving any rights under this Agreement and the other Loan Documents.     (b) Each Grantor agrees to pay, and to save the Administrative Agent and theLenders harmless from, any and all liabilities with respect to, or resulting from any delay inpaying, any and all stamp, excise, sales or other taxes which may be payable or determined tobe payable with respect to any of the Collateral or in connection with any of the transactionscontemplated by this Agreement.     (c) The agreements in this Section 8.4 shall survive repayment of (and shallbe) 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 theCollateral Documents and termination of this Agreement.     8.5 Captions. Section captions used in this Agreement are for convenienceonly and shall not affect the construction of this Agreement.     8.6 Nature of Remedies. All Secured Obligations of each Grantor and rightsof the Administrative Agent and the Lenders expressed herein or in any other Loan Documentshall be in addition to and not in limitation of those provided by applicable law. No failureto 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 anysingle or partial exercise of any right, remedy, power or privilege hereunder preclude anyother 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 ofcounterparts and by the different parties hereto on separate counterparts and each suchcounterpart shall be deemed to be an original, but all such counterparts shall togetherconstitute but one and the same Agreement. Receipt by telecopy of any executed signature page to thisAgreement or any other Loan Document shall constitute effective delivery of such signaturepage.     8.8 Severability. The illegality or unenforceability of any provision of thisAgreement or any instrument or agreement required hereunder shall not in any way affect orimpair the legality or enforceability of the remaining provisions of this Agreement or anyinstrument or agreement required hereunder.
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     8.9 Entire Agreement. This Agreement, together with the other LoanDocuments, embodies the entire agreement and understanding among the parties hereto andsupersedes all prior or contemporaneous agreements and understandings of such Persons, verbalor written, relating to the subject matter hereof and thereof and any prior arrangements madewith respect to the payment by any Grantor of (or any indemnification for) any fees, costs orexpenses payable to or incurred (or to be incurred) by or on behalf of the AdministrativeAgent or the Lenders.     8.10 Successors: Assigns. This Agreement shall be binding upon Grantors, theLenders and the Administrative Agent and their respective successors and assigns, and shallinure to the benefit of Grantors, Lenders and the Administrative Agent and the successors andassigns of the Lenders and the Administrative Agent. No other Person shall be a direct orindirect legal beneficiary of, or have any direct or indirect cause of action or claim inconnection with, this Agreement or any of the other Loan Documents. No Grantor may assign or transferany of its rights or Obligations under this Agreement without the prior written consent of theAdministrative Agent.     8.11 Governing Law. THIS AGREEMENT SHALL BE A CONTRACTMADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OFILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELYWITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.     8.12 Forum Selection: Consent to Jurisdiction. ANY LITIGATION BASEDHEREON,OR ARISING OUT OF,UNDER,OR IN CONNECTION WITH THISAGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THECOURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THISAGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THEADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGALACTION IN ANY OTHER JURISDICTION. EACH GRANTOR HEREBY EXPRESSLYAND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THESTATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THENORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATIONAS SET FORTH ABOVE. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TOTHE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BYPERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACHGRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLESTEXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW ORHEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATIONBROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAM THATANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.     8.13 Waiver of Jury Trial. EACH GRANTOR, THE ADMINISTRATIVEAGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY INANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDERTHIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT ORAGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
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CONNECTIONHEREWITH AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BETRIED BEFORE A COURT AND NOT BEFORE A JURY.     8.14 Set-off. Each Grantor agrees that the Administrative Agent and eachLender have all rights of set-off and bankers’ lien provided by applicable law, and inaddition thereto, each Grantor agrees that at any time any Event of Default exists, the AdministrativeAgent and each Lender may apply to the payment of any Secured Obligations, whether or notthen due, any and all balances, credits, deposits, accounts or moneys of such Grantor then orhereafter with the Administrative Agent or such Lender.     8.15Acknowledgements. Each Grantor hereby acknowledges that:     (a) it has been advised by counsel in the negotiation, execution and deliveryof this Agreement and the other Loan Documents to which it is a party;     (b) neither the Administrative Agent nor any Lender has any fiduciaryrelationship with or duty to any Grantor arising out of or in connection with thisAgreement or any of the other Loan Documents, and the relationship between theGrantors, on the one hand, and the Administrative Agent and the Lenders, on the otherhand, 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 orotherwise exists by virtue of the transactions contemplated hereby among the Lenders oramong 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 aGrantor forall purposes of this Agreement upon execution and delivery by such Subsidiary of a joinderagreement in the form of Annex I hereto.     8.17 Releases. (a) At such time as the Secured Obligations have been Paid inFull, the Collateral shall be released from the Liens created hereby, and this Agreement andallobligations (other than those expressly stated to survive such termination) of theAdministrativeAgent and each Grantor hereunder shall terminate, all without delivery of any instrument orperformance of any act by any party, and all rights to the Collateral shall revert to theGrantors.At the request and sole expense of any Grantor following any such termination, theadministrative Agent shall deliver to the Grantors any Collateral held by the AdministrativeAgent hereunder, and execute and deliver to the Grantors such documents as the Grantors shallreasonably request to evidence such termination.     (b) If any of the Collateral shall be sold, transferred or otherwise disposed of by anyGrantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at therequest and sole expense of such Grantor, shall execute and deliver to such Grantor all releasesor other documents reasonably necessary or desirable for the release of the Liens created herebyon such Collateral. At the request and sole expense of Akorn, a Subsidiary Guarantor shall bereleased from its obligations hereunder in the event that all the equity interests of suchSubsidiary 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 theAdministrative Agent, with reasonable notice prior to the date of the proposed release, a writtenrequest for release identifying the relevant Subsidiary Guarantor and the terms of the sale orother disposition in reasonable detail, including the price thereof and any expenses in connectiontherewith, together with a certification by the Companies stating that such transaction is incompliance with the Credit Agreement and the other Loan Documents.     8.18 Obligations and Liens Absolute and Unconditional. Each Grantorunderstands and agrees that the obligations of each Grantor under this Agreement shall beconstrued as a continuing, absolute and unconditional without regard to (a) the validity orenforceability of any Loan Document, any of the Secured Obligations or any other collateralsecurity therefor or guaranty or right of offset with respect thereto at any time or from timeto 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 beasserted 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 anyGrantor for the Secured Obligations, in bankruptcy or in any other instance. When making anydemand 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 asimilar demand on or otherwise pursue such rights and remedies as it may have against any otherGrantor or any other Person or against any collateral security or guaranty for the SecuredObligations or any right of offset with respect thereto, and any failure by the AdministrativeAgent or any Lender to make any such demand, to pursue such other rights or remedies or tocollect any payments from any other Grantor or any other Person or to realize upon any suchcollateral security or guaranty or to exercise any such right of offset, or any release of anyother 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 affectthe rights and remedies, whether express, implied or available as a matter of law, of theAdministrative 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 andcontinue to be effective should any petition be filed by or against Grantor or any PledgedEntity for liquidation or reorganization, should Grantor or any Pledged Entity become insolvent ormake an assignment for the benefit of creditors or should a receiver or trustee be appointedfor all or any significant part of Grantor’s or a Pledged Entity’s assets, and shall continue to beeffective or be reinstated, as the case may be, if at any time payment and performance of theSecured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reducedin 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 suchpayment 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 anddeemed 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 dulyexecuted and delivered as of the date first above written.      AKORN, INC., a Louisiana corporation**