Document:

exv10w1

 

EXHIBIT 10.1

FOURTH AMENDMENT TO CREDIT AGREEMENT

     This Fourth Amendment to Credit Agreement, dated as of September 30, 2005 (this “Amendment
Agreement”), is entered into among AKORN, INC., a Louisiana corporation (“Akorn”),
AKORN (NEW JERSEY), INC., an Illinois corporation and wholly-owned subsidiary of Akorn (“Akorn
New Jersey”, and together with Akorn, the “Companies”, each being a “Company”),
the financial institutions that are or may from time to time become parties to the Credit Agreement
as lenders (together with their respective successors and assigns, the “Lenders”) and
LASALLE BANK NATIONAL ASSOCIATION (in its individual capacity, “LaSalle”), as
administrative agent for the Lenders.

W I T N E S S E T H :

     WHEREAS, the Companies, the Loan Parties, the Lenders and the Agent entered into that certain
Credit Agreement dated as of October 7, 2003 (as amended by that certain First Amendment to Credit
Agreement, dated as of August 12, 2004, that certain Second Amendment to Credit Agreement, dated as
of August 26, 2004, and that certain Third Amendment to Credit Agreement, dated as of October 8,
2004, and as may be further amended, restated, modified, and supplemented, as amended, restated,
modified, and supplemented, the “Credit Agreement”);

     WHEREAS, the Companies have requested that the Revolving Commitment Amount be increased from
$5,000,000 to $10,000,000;

     WHEREAS, the Companies, the Lenders and the Administrative Agent desire to amend the Credit
Agreement to reflect such increase in the Revolving Commitment Amount and to make certain other
modifications to the Credit Agreement as set forth herein; and

     WHEREAS, this Amendment Agreement shall constitute a Loan Document and these Recitals shall be
construed as part of this Amendment Agreement.

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

     1. Defined Terms. Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to such terms in the Credit Agreement, as amended hereby.

     2. Amendments to Credit Agreement.

      2.1 Increase of Revolving Commitment Amount. The Companies, the Administrative
Agent and the Lenders hereby agree that the Revolving Commitment Amount shall be increased
from $5,000,000 to $10,000,000. The definition of Revolving Commitment Amount found in
Section 1.1 of the Credit Agreement is hereby deleted in its entirety and replaced
by the following definition:

“Revolving Commitment Amount” means $10,000,000, as reduced from time to
time pursuant to Section 6.1.

 

      2.2 Borrowing Base. The definition of Borrowing Base found in Section
1.1 of the Credit Agreement is hereby amended by deleting “30%” where it appears in such
definition and inserting “50%” in its place.

      2.3 Computation Period. The definition of Computation Period found in
Section 1.1 of the Credit Agreement is hereby deleted in its entirety and replaced
by the following definition:

Computation Period means (a) at any time on or before August 31, 2005, each
period of twelve consecutive calendar months ending on the last day of a calendar
month, and (b) at any time after August 31, 2005, each period of twelve consecutive
calendar months ending on the last day of a Fiscal Quarter; provided that for the
purpose of determining compliance with (i) Section 11.14.1, for any
Computation Period ending in the 2004 calendar year, such Computation Period shall
be the period beginning January 1, 2004 and ending on the last day of the applicable
calendar month and (ii) Section 11.14.2, the Computation Period used in (X)
determining EBITDA in the 2004 calendar year, shall be calculated by annualizing the
period beginning January 1, 2004 and ending on the last day of the applicable
calendar month and (Y) determining Interest Expense, for any Computation Period
ending prior to July 1, 2005, shall be calculated by annualizing the period
beginning on July 1, 2004 and ending on the last day of the applicable calendar
month, with respect to Interest Expense.

      2.4 Termination Date. The definition of Termination Date found in Section
1.1 of the Credit Agreement is hereby deleted in its entirety and replaced by the
following definition:

Termination Date” means the earlier of (a) September 30, 2008, or (b) such
other date on which the Commitments terminate pursuant to Section 6 or
13.

      2.5 Base Rate Margin. The definition of Base Rate Margin found in Section
1.1 of the Credit Agreement is hereby deleted in its entirety and replaced by the
following definition:

Base Rate Margin” — see the definition of Applicable Margin.

      2.6 The following definitions are added alphabetically to Section 1.1 of the
Credit Agreement:

Applicable Margin means, for any day, the rate per annum set forth below
opposite the level (the “Level”) then in effect, it being understood that
the Applicable Margin for (a) Revolving Loans that bear interest at the Base Rate
shall be the percentage set forth under the columns “Applicable Margins — Base Rate
Loans”, (b) Revolving Loans that bear interest at the LIBOR Rate shall be the
percentage set forth under the column “Applicable Margins — LIBOR Loans”, (c) the
Non-Use Fee Rate shall be the percentage set forth under the column

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“Non-Use Fee
Rate” and(d) the L/C Fee Rate shall be the percentage set forth under the column
“L/C Fee Rate”:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Applicable Margins	 
	 
	 	 	Senior Debt to	 	 	 	 	 	 	 	 
	 	 	EBITDA	 	Base Rate	 	LIBOR	 	Non-Use	 	L/C Fee
	Level	 	Ratio	 	Loans	 	Loans	 	Fee Rate	 	Rate
	I
	 	>= 1.75	 	 	1.25	%	 	 	3.25	%	 	 	0.50	%	 	 	1.50	%
	 
	II

	 	<1.75 >= 1.50
	 	 	1.00	%	 	 	3.00	%	 	 	0.50	%	 	 	1.50	%
	 
	III

	 	<1.50 >= 1.25
	 	 	0.75	%	 	 	2.75	%	 	 	0.375	%	 	 	1.50	%
	 
	IV

	 	<1.25
	 	 	0.50	%	 	 	2.50	%	 	 	0.375	%	 	 	1.50	%
	 

The Applicable Margins shall be adjusted based on the Level corresponding to the
Senior Debt to EBITDA Ratio reported for each Fiscal Quarter, to the extent
applicable, on the fifth (5th) Business Day after the Companies provide or are
required to provide a Compliance Certificate pursuant to Section 10.1.3.
Notwithstanding anything contained in this paragraph to the contrary, (a) if the
Companies fail to deliver such Compliance Certificate in accordance with the
provisions of Section 10.1.3, the Applicable Margins shall be based upon
Level I above beginning on the date such Compliance Certificate was required to be
delivered until the fifth (5th) Business Day after such Compliance Certificate is
actually delivered, whereupon the Applicable Margins shall be determined by the then
current Level; (b) no reduction to any Applicable Margin shall become effective at
any time when an Event of Default or Unmatured Event of Default has occurred and is
continuing; and (c) the initial Applicable Margins on the Fourth Amendment Date
shall be based on Level IV until the date on which the Compliance Certificate is
required to be delivered for the Fiscal Quarter ending September 30, 2005, and on
such date the Applicable Margins shall be adjusted, if necessary, as set forth
above.

Consolidated Tangible Net Worth means at any date the consolidated
stockholders’ equity of the Companies and their Subsidiaries plus debt outstanding
under the documents described in clauses (a) and (b) of the
definition of Kapoor Trust Subordinated Debt Documents, determined in accordance
with GAAP, less their consolidated Intangible Assets, all determined as of such
date, provided that any cumulative effect adjustment resulting from adoption of an
accounting principle shall be excluded from such calculation. For purposes of this
definition, “Intangible Assets” means the amount (to the extent reflected in
determining such consolidated stockholders’ equity) of all unamortized debt discount
and expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, organizational or developmental expenses and other
intangible items, all determined in accordance with GAAP.

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Fourth Amendment means that certain Fourth Amendment to Credit Agreement,
dated the Fourth Amendment Date, by and among the Companies, the Administrative
Agent and the Lenders.

Fourth Amendment Date means September 30, 2005.

LIBOR Rate Margin — see the definition of Applicable Margin.

      2.7 L/C Commitment. Section 2.1.3 of the Credit Agreement is hereby
amended by deleting the amount “$1,000,000” where it appears in such section and replacing
it with “$2,000,000”.

      2.8 LIBOR Option. Section 2.2.4 of the Credit Agreement is hereby
deleted in its entirety.

      2.9 L/C Applications. Section 2.3.1 of the Credit Agreement is hereby
amended by inserting the clause “, in which case such Cash Collateralized Letter of Credit
shall have an expiration date no later than 180 days after the Termination Date” immediately
following the clause “unless such Letter of Credit is Cash Collateralized”.

      2.10 Interest Rates. Section 4.1 of the Credit Agreement is hereby
amended by deleting the clause “Each Company promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan until such
Loan is paid in full at a rate per annum equal to the sum of the Base Rate from time to time
in effect plus the Base Rate Margin from time to time in effect;” and replacing such clause
with the following:

“Each Company promises to pay interest on the unpaid principal amount of each Loan
for the period commencing on the date of such Loan until such Loan is paid in full
as follows:

(a) at all times while such Loan is a Base Rate Loan, at a rate per annum equal to
the sum of the Base Rate from time to time in effect plus the Base Rate Margin from
time to time in effect;

(b) at all times while such Loan is a LIBOR Loan, at a rate per annum equal to the
sum of the LIBOR Rate applicable to each Interest Period for such Loan plus the
LIBOR Margin from time to time in effect;”

      2.11 Compliance Certificates. Section 10.1.3 of the Credit Agreement
is hereby amended by deleting the words “each calendar month with respect to interim reports
pursuant to Section 10.1.2” and inserting in their place the following clause:

“each Fiscal Quarter of the Companies”.

      2.12 Borrowing Base Certificates. Section 10.1.6 of the Credit
Agreement is hereby amended by deleting the words “Within 3 Business Days of the end of each
calendar week” and inserting in their place the following clause:

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“Concurrently with the delivery of the interim reports pursuant to Section
10.1.2”.

      2.13 Senior Debt to EBITDA Ratio. Section 11.14.1 of the Credit
Agreement is hereby amended by deleting such section in its entirety and replacing it with
the following:

11.14.1 Senior Debt to EBITDA Ratio. Not permit the Senior Debt to EBITDA
Ratio as of the last day of any Computation Period to exceed the applicable ratio
set forth below for such Computation Period:

	 	 	 	 	 
	Computation	 	Senior Debt to	 
	Period Ending	 	EBITDA Ratio	 
	 
	 	 	 	 
	June 30, 2004; July 31, 2004; and August 31, 2004
	 	 	2.00	 
	September 30, 2004; October 31, 2004; and November 30, 2004
	 	 	1.75	 
	December 31, 2004 and the last day of each Computation
Period thereafter ending on or before May 31, 2005
	 	 	1.50	 
	June 30, 2005, July 31, 2005 and August 31, 2005
	 	 	1.25	 
	September 30, 2005 and the last day of each Computation
Period thereafter
	 	 	2.25	 

      2.14 Consolidated Tangible Net Worth. The following is added as Section
11.14.3 of the Credit Agreement:

11.14.3 Consolidated Tangible Net Worth. Not permit Consolidated Tangible
Net Worth of the Companies and their Subsidiaries as of the last day of any
Computation Period to be less than the sum of (a) $30,000,000 plus (b) the cash
proceeds from the issuance and sale of any Capital Securities of the Companies and
their Subsidiaries, net of any brokerage commissions and any other reasonable costs
or expenses directly attributable to such issuance.

     3. Conditions to Effectiveness. The effectiveness of this Amendment Agreement is
expressly conditioned upon the satisfaction of the following conditions, all in form and substance
satisfactory to the Administrative Agent and its counsel:

      3.1 Charter and Good Standing. Each Loan Party shall provide (i) copies of its
certificate of incorporation or formation or other constitutive document, together with all
amendments thereto, (ii) good standing certificates in its state of incorporation, (iii)
good standing certificates and certificates of qualification to do business in each
jurisdiction where its ownership or lease of property or the conduct of its business
requires such qualification, each dated a recent date prior to the date hereof and certified
by the applicable Secretary of State or other authorized governmental authority.

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      3.2 Bylaws and Resolutions. Each Loan Party shall provide (a) its bylaws,
operating agreement or similar governing document together with all amendments thereto and
(b) resolutions or unanimous written consent of each Loan Party’s board of directors,
managers or other similar governing body approving and authorizing the execution, delivery
and performance of this Amendment Agreement and the transactions to be consummated in
connection therewith, each certified as of the date hereof by such Loan Party’s corporate
secretary or an assistant secretary as being in full force and effect without any
modification or amendment.

      3.3 Incumbency Certificates. Each Loan Party shall provide signature and
incumbency certificates of the officers of each such Person executing this Amendment
Agreement, certified as of the date hereof by such Person’s corporate secretary or an
assistant secretary as being true, accurate, correct and complete.

      3.4 Increased Commitment Fee. The Companies shall pay (a) to the
Administrative Agent, for the ratable benefit of the Lenders, a closing fee in the amount of
$75,000, which fee shall be fully earned and non-refundable when paid.

      3.5 Other Documents. The Companies shall provide such other documents,
instruments and agreements as the Administrative Agent may reasonably request.

     4. Opinions of Counsel. Each Loan Party covenants that within seven days of the
Fourth Amendment Date, it shall deliver duly executed originals of opinions of Luce, Forward,
Hamilton & Scripps LLP and Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P., counsel
for each Loan Party, in form and substance satisfactory to the Administrative Agent and its
counsel, dated the Fourth Amendment Date, and accompanied by a letter addressed to such counsel
from the Loan Parties, authorizing and directing such counsel to address its opinion to the
Administrative Agent, on behalf of Lenders, and to include in such opinion an express statement to
the effect that the Administrative Agent and Lenders are authorized to rely on such opinion.

     5. Acknowledgements of the Loan Parties.

      5.1 Each Loan Party hereby acknowledges, confirms and agrees that the Administrative
Agent has and shall continue to have valid, enforceable and perfected liens upon and
security interests in the Collateral (as defined in the Guaranty and Collateral Agreement)
heretofore granted to the Administrative Agent pursuant to the Loan Documents or otherwise
granted to or held by the Administrative Agent.

      5.2 Each Loan Party hereby acknowledges, confirms and agrees that its status as a Loan
Party under the Loan Documents shall be unaffected by this Amendment Agreement, except as
set forth herein, and affirms its obligations under the Credit Agreement.

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     6. Representations and Warranties of the Loan Parties.

      6.1 Each Loan Party represents and warrants that the execution, delivery and
performance by such Loan Party of this Amendment Agreement have been duly authorized by all
necessary corporate, limited liability company or partnership action, as applicable, and
that this Amendment Agreement is a legal, valid and binding obligation of such Loan Party,
enforceable against such Loan Party in accordance with its terms, except as the enforcement
thereof may be subject to (a) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors’ rights generally and (b)
general principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).

      6.2 Each Loan Party hereby certifies that (x) each of the representations and
warranties contained in the Credit Agreement is true and correct in all material respects on
and as of the date hereof as if made on the date hereof, except to the extent that any such
representation or warranty is stated to relate solely to an earlier date, in which case such
representation or warranty shall be true and correct on and as of such earlier date and (y)
no Unmatured Event of Default or Event of Default has occurred and is continuing.

      6.3 Since July 31, 2003, (a) no event or Event of Default or Unmatured Event of Default
has occurred or is existing which could reasonably be expected to have a Material Adverse
Effect; (b) no litigation has been commenced which, if successful, would have a Material
Adverse Effect or could challenge any of the transactions contemplated by the Credit
Agreement, as amended by this Amendment Agreement, and the other Loan Documents; (c) no Loan
Party has made any payments that are prohibited by Section 11.4 of the Credit
Agreement; and (d) there has been no material increase in liabilities, liquidated or
contingent, other than the Obligations, and no material decrease in assets of the Loan
Parties.

     7. Reference to and Effect on the Credit Agreement.

      7.1 Upon the effectiveness of this Amendment Agreement, each reference in the Credit
Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import and
each reference to the Credit Agreement in each Loan Document shall mean and be a reference
to the Credit Agreement as amended hereby.

      7.2 Except as specifically amended above, all of the terms, conditions and covenants of
the Credit Agreement and the other Loan Documents shall remain unaltered and in full force
and effect and shall be binding upon the Companies in all respects and are hereby ratified
and confirmed.

      7.3 The execution, delivery and effectiveness of this Amendment Agreement shall not
operate as a waiver of (a) any right, power or remedy of any Lender or the Administrative
Agent under the Credit Agreement or any of the Loan Documents, or (b) any Event of Default
or Unmatured Event of Default under the Credit Agreement.

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     8. Costs and Expenses. The Companies agree to pay on demand all costs and expenses of
the Administrative Agent in connection with the preparation, execution and delivery of this
Amendment Agreement, including the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto.

     9. CHOICE OF LAW. THIS AMENDMENT AGREEMENT AND EACH NOTE ISSUED PURSUANT TO THIS
AMENDMENT AGREEMENT AND THE CREDIT AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

     10. Execution in Counterparts. This Amendment Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.

     11. Headings. Section headings in this Amendment Agreement are included herein for
convenience of reference only and shall not constitute a part of this Amendment Agreement for any
other purposes.

[signature page to follow]

8

 

     IN WITNESS WHEREOF, the Companies, the Lenders and the Administrative Agent have
executed this Amendment Agreement as of the date first above written.

	 	 	 	 	 
	 	AKORN, INC., a Louisiana corporation

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

 	 
	 	By:  	/s/
Jeffrey A. Whitnell	 
	 	 	 	 
	 	Title:  	CFO	 
	 
	 	LASALLE BANK NATIONAL
ASSOCIATION, as a Lender and as Administrative Agent

 	 
	 	By:  	/s/
Patrick J. O’Toole	 
	 	 	 	 
	 	Title:  	First
Vice President	 

 

	 	 	 	 	 

REAFFIRMATION OF COLLATERAL DOCUMENTS

     Notwithstanding anything to the contrary contained in the Collateral Documents, each of the
undersigned hereby: (a) consents to and approves all of the terms of that certain Fourth Amendment
to Credit Agreement, dated as of the date hereof, by and among Akorn, Inc., Akorn (New Jersey),
Inc., the financial institutions party thereto as Lenders, and LaSalle Bank National Association,
as administrative agent (the “Amendment”), in connection with which this Reaffirmation of
Collateral Documents has been executed; (b) ratifies and confirms all of its indebtedness,
liabilities and obligations under the Collateral Documents to which it is a party; (c) reaffirms
that, after giving effect to the Amendment, all of its representations and warranties made in the
Collateral Documents to which it is a party remain true and correct as of the date of this
Amendment (except to the extent that such representations or warranties are expressly made only as
of another specific date, in which case they shall be true and correct as of such date); (d)
reaffirms all of its covenants, agreements, indebtedness, liabilities and obligations under the
Collateral Documents to which it is a party, which include, without limitation, the grant of Liens
in all of such party’s interests in the Collateral (as defined in the Guaranty and Collateral
Agreement) owned by it as security for the payment and performance of the Obligations; (e) agrees
that the Collateral Documents to which it is a party shall and do remain in full force and effect;
(f) agrees that the Collateral Documents to which it is a party shall and do continue to constitute
the legal, valid and binding obligations of such party, enforceable against it in accordance with
the terms of the Collateral Documents to which it is a party and that such obligations shall not be
discharged or affected by any modification, extension, renewal or amendment of the terms of the
Credit Agreement or the other Loan Documents; and (g) agrees and acknowledges that there are no
defenses, counterclaims or set-offs to the Collateral Documents to which it is a party or its
covenants, agreements, indebtedness, liabilities and obligations under the Collateral Documents,
and agrees that any (if any) such defenses, counterclaims or set-offs are hereby expressly waived.

Dated as
of this 30th day of September 2005.

	 	 	 	 	 
	 	AKORN, INC.

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

 	 
	 	By:  	 /s/ Jeffrey A. Whitnell 	 
	 	 	 	 
	 	Title:  	 CFOexv10w2

 

Exhibit 10.2

MASTER LETTER OF CREDIT AGREEMENT

Dated as of September     , 2005

THIS MASTER LETTER OF CREDIT AGREEMENT (this “Agreement”) is issued by the
undersigned applicant (the “Applicant”) in favor of LaSalle Bank National Association
(together with its affiliates as set forth in Section 11.8, the “Bank”).

The Applicant may from time to time request that the Bank issue letters of credit for the account
of the Applicant. The Applicant agrees that, except as provided below, any such letter of credit
shall be subject to the terms and provisions of this Agreement, and the Applicant further agrees
with and for the benefit of the Bank as follows:

SECTION 1 CERTAIN DEFINITIONS. When used herein the following terms shall have the following
meanings (such definitions to be applicable to both the singular and plural forms of such terms):

Application means, at any time, an application (which shall be in writing, including by
facsimile, or made by electronic transmission) for a letter of credit to be issued by the Bank,
specifying (a) the requested issuance date, the amount, the beneficiary and the expiration date of
such letter of credit, (b) the documentary requirements for drawing thereunder and (c) such other
information as the Bank may reasonably request.

Business Day means any day on which the Bank is open for commercial banking business at its
principal office in Chicago, Illinois.

Event of Default means any of the events described in Section 9.1.

Item means any draft, order, instrument, demand or other document drawn or presented, or to
be drawn or presented, under any Letter of Credit.

ISP means at any time the most recent International Standby Practices issued by the
Institute for International Banking Law & Practice, Inc.

Letter of Credit means any letter of credit issued (including any letter of credit issued
prior to the date hereof) by the Bank for the account of the Applicant (including any letter of
credit issued jointly for the account of the Applicant and any other Person), in each case as
amended or otherwise modified from time to time, but excluding any letter of credit that is issued
pursuant to an Application which expressly provides that such letter of credit is not issued
pursuant to this Agreement. A letter of credit issued by the Bank pursuant to an Application from
the Applicant (either individually or together with any other Person) shall be a Letter of Credit
hereunder even if another Person is named as the “Applicant” or “Account Party” in such letter of
credit.

Liabilities means all obligations of the Applicant to the Bank and its successors and
assigns, howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing or due or to become due, arising out of or in connection with
this Agreement, any Letter of Credit, any Application or any instrument or document delivered in
connection herewith or therewith.

Person means any natural person, corporation, partnership, trust, limited liability
company, association, governmental authority or unit, or any other entity, whether acting in an
individual, fiduciary or other capacity.

Prime Rate means the rate per annum established by the Bank from time to time as its “Prime
Rate” for commercial customers. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer.

UCC means at any time the Uniform Commercial Code as in effect in the State of Illinois.

UCP means at any time the most recent Uniform Customs and Practice for Documentary Credits
issued by the International Chamber of Commerce.

Unmatured Event of Default means any event which if it continues uncured will, with lapse
of time or notice or both, constitute an Event of Default.

SECTION 2 LETTER OF CREDIT PROCEDURES.

2.1 Issuance of Letters of Credit. Subject to the terms and conditions of this Agreement,
the Bank may from time to time, in its sole and complete discretion, issue Letters of Credit for
the account of the Applicant; provided that the terms and provisions of each Letter of
Credit and the Application therefor shall be satisfactory to the Bank in its discretion.

2.2 Applications. Not later than three Business Days prior to the date of the proposed
issuance of a Letter of Credit (or such later date as the Bank shall agree), the Applicant shall
deliver an Application for such Letter of Credit to the Bank. An Application may be sent by
facsimile, by United States mail, by overnight courier, by electronic transmission using the
system provided by the Bank, by personal delivery or by any other means acceptable to the Bank.

2.3 Form of Letters of Credit. (a) The Applicant authorizes the Bank to set forth the terms
of each Application in the Letter of Credit corresponding to such Application (and in any amendment
thereto) in such language as the Bank deems appropriate, with such variations from such terms as
the Bank may in its discretion determine to be necessary (which determination shall be conclusive)
and not materially inconsistent with such Application. The Bank may, but shall not be obligated to,
request the Applicant to review the form of a Letter of Credit prior to issuance thereof, in which
case the Applicant shall be deemed to have approved the form of such Letter of Credit. With respect
to any other Letter of Credit, the Applicant agrees that such Letter of Credit shall be
conclusively presumed to be in proper form unless the Applicant notifies the Bank in writing of any
inconsistency in such Letter of Credit within three Business Days of its issuance. Upon receipt of
timely notice of any discrepancy in any Letter of Credit, the Bank will endeavor to obtain the
consent of the beneficiary and any confirming bank for an appropriate modification to such Letter
of Credit; provided that the Bank shall have no liability or responsibility for its
failure to obtain such consent.

(b) The Applicant accepts the risk that a Letter of Credit will be interpreted or applied other
than as intended by the Applicant to the extent such Letter of Credit (i) permits presentation at a
place other than the place of issuance, (ii) permits application of laws or practice rules with
which the Applicant is unfamiliar, (iii) includes ambiguous, inconsistent or impossible
requirements, (iv) requires termination or reduction against a presentation made by the Applicant
rather than the beneficiary or (v) fails to incorporate appropriate letter of credit practices
rules.

2.4 Representations and Warranties. The delivery of each Application shall automatically
constitute a representation and warranty by the Applicant to the Bank to the effect that on the
requested date of issuance of such Letter of Credit, (a) the representations and warranties of the
Applicant set forth in Section 4 shall be true and correct as of such requested date as
though made on the date thereof and (b) no Event of Default or Unmatured Event of Default shall
have then occurred and be continuing or will result from such issuance.

SECTION 3 REIMBURSEMENT OBLIGATIONS; RESPONSIBILITIES, ETC.

3.1 Reimbursement Obligations. The Applicant hereby agrees to reimburse the Bank forthwith
upon demand in an amount equal to any payment or disbursement made by the Bank under any Letter of
Credit or any time draft issued pursuant thereto, together with interest on the amount so paid or
disbursed by the Bank from and including the date of payment or disbursement to but not including
the date the Bank is reimbursed by the Applicant at a rate per annum equal to the Prime
Rate from time to time in effect plus 2% (or, if less, the maximum rate permitted by applicable
law). The obligation of the Applicant to reimburse the Bank under this Section 3 for
payments and disbursements made by the Bank under any Letter of Credit or any time draft issued
pursuant thereto shall be absolute and unconditional under any and all circumstances, including,
without limitation, the following:

	(a)	 	any failure of any Item presented under such Letter of Credit to strictly comply with the
terms of such Letter of Credit;

	(b)	 	the legality, validity, regularity or enforceability of such Letter of Credit or of any Item
presented thereunder;

 

 

	(c)	 	any defense based on the identity of the transferee of such Letter of Credit
or the sufficiency of the transfer if such Letter of Credit is transferable;

	(d)	 	the existence of any claim, set-off, defense or other right that the Applicant may have at
any time against any beneficiary or transferee of such Letter of Credit, the Bank or any
other Person, whether in connection with this Agreement, the transactions contemplated hereby
or any unrelated transaction;

	(e)	 	any Item presented under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate in any
respect;

	(f)	 	honor of a demand for payment presented electronically even
if such Letter of Credit
requires that demand be in the form of a draft;

	(g)	 	waiver by the Bank of any requirement that exists for the Bank’s protection and not the
protection of the Applicant or any waiver by the Bank which does not in fact materially prejudice
the Applicant;

	(h)	 	any payment made by the Bank in respect of an Item presented after the date specified as the
expiration date of, or the date by which documents must be received under, such Letter of
Credit if payment after such date is authorized by the ISP, the UCC or the UCP, as
applicable; or

	(i)	 	any other circumstance or happening whatsoever, whether or not similar to any
of the foregoing;

provided that the Applicant shall not be obligated to reimburse the Bank for any wrongful
payment or disbursement made by the Bank under any Letter of Credit as a result of any act or
omission constituting gross negligence or willful misconduct on the part of the Bank.

3.2 Discrepancies. (a) The Applicant agrees that it will promptly examine any and all
instruments and documents delivered to it from time to time in connection with any Letter of
Credit, and if the Applicant has any claim of non-compliance with its instructions or of
discrepancies or other irregularity, the Applicant will immediately (and, in any event, within
three Business Days) notify the Bank thereof in writing, and the Applicant shall be deemed to have
waived any claim against the Bank unless such notice is given within such time period. Without
limiting the foregoing, if the Bank makes any payment or disbursement under a Letter of Credit and
the Applicant does not send a notice to the Bank within three Business Days objecting to such
payment or disbursement and specifying in reasonable detail the discrepancy or irregularity which
is the basis for such objection, then the Applicant shall be precluded from making any objection to
the Bank’s honor of the presentation with respect to which such payment or disbursement was made
(but shall not be precluded from asserting any objection to any different presentation under the
same or a different Letter of Credit).

(b) The Applicant’s acceptance or retention of any documents presented under or in connection
with a Letter of Credit (including originals or copies of documents sent directly to the Applicant)
or of any property for which payment is supported by a Letter of Credit shall ratify the Bank’s
honor of the documents and absolutely preclude the Applicant from raising a defense or claim with
respect to the Bank’s honor of the relevant presentation.

3.3 Documents. Unless specified to the contrary in the relevant Application, the Applicant
agrees that the Bank and its correspondents: (a) may accept as complying with the applicable Letter
of Credit any Item drawn, issued or presented under such Letter of Credit which is issued or
purportedly issued by an agent, executor, trustee in bankruptcy, receiver or other representative
of the party identified in such Letter of Credit as the party permitted to draw, issue or present
such Item; and (b) may in its or their discretion, but shall not be obligated to, accept or honor
(i) any Item which substantially complies with the terms of the applicable Letter of Credit; (ii)
any Item which substantially complies under the laws, rules, regulations and general banking or
trade customs and usages of the place of presentation, negotiation or payment; (iii) drafts which
fail to bear any or adequate reference to the applicable Letter of Credit; (iv) any Item presented
to the Bank after the stated expiration date of a Letter of Credit but within any applicable time
period during which such Letter of Credit may be honored in accordance with the UCP, the UCC and/or
the ISP, as applicable (and, in any event, any Item presented to the Bank on the Business Day
immediately following the stated expiration date of any Letter of Credit, if such stated expiration
date falls on a day which is not a Business Day); or (v) any Item which substantially complies with the requirements of the UCP, the UCC and/or
the ISP, as applicable. In determining whether to pay under any Letter of Credit, the Bank shall
have no obligation to the Applicant or any other Person except to confirm that the Items required
to be delivered under such Letter of Credit appear to have been delivered and appear on their face
to substantially comply with the requirements of such Letter of Credit. For purposes of the
foregoing, an Item “substantially complies” unless there are discrepancies in the presentation
which appear to be substantial and which reflect corresponding defects in the beneficiary’s
performance in the underlying transaction. A discrepancy is not substantial if it is unrelated or
immaterial to the nature or amount of the Applicant’s loss. For example, documents honored by the
Bank that do not comply with the timing requirements of the Letter of Credit for presenting or
dating any required beneficiary statement nonetheless substantially comply if those timing
requirements are not material in determining whether the underlying agreement has been
substantially performed or violated.

3.4 Exculpation. In addition to the exculpatory provisions contained in the UCP, the UCC
and/or the ISP, as applicable, the Bank and its correspondents shall not be responsible for, and
the Applicant’s obligation to reimburse the Bank shall not be affected by, (a) compliance with any
law, custom or regulation in effect in the country of issuance, presentation, negotiation or
payment of any Letter of Credit, (b) any refusal by the Bank to honor any Item because of an
applicable law, regulation or ruling of any governmental agency, whether now or hereafter in
effect, (c) any action or inaction required or permitted under the UCC, the UCP, the ISP or the
United Nations Convention on Independent Guarantees and Stand-by Letters of Credit, in each case as
applicable, or (d) any act or the failure to act of any agent or correspondent of the Bank,
including, without limitation, failure of any such agent or correspondent to pay any Item because
of any law, decree, regulation, ruling or interpretation of any governmental agency.

3.5 Risks. The Applicant assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit (it being understood that such assumption is not intended to,
and shall not, preclude the Applicant from pursuing any right or remedy it may have against any
such beneficiary or transferee). The Applicant further agrees that any action or omission by the
Bank under or in connection with any Letter of Credit or any related Item, document or property
shall, unless in breach of good faith, be binding on the Applicant and shall not put the Bank under
any resulting liability to the Applicant. Without limiting the foregoing, the Applicant agrees that
in no event shall the Bank be liable for incidental, consequential, punitive, exemplary or special
damages.

3.6 Limitation on Bank’s Obligations. Without limiting any other provision herein, the Bank
is expressly authorized and directed to honor any request for payment which is made under and in
compliance with the terms of any Letter of Credit without regard to, and without any duty on the
part of the Bank to inquire into, the existence of any dispute or controversy between any of the
Applicant, the beneficiary of any Letter of Credit or any other Person, or the respective rights,
duties or liabilities of any of them, or whether any facts represented in any Item presented under
a Letter of Credit are true or correct. Furthermore, the Applicant agrees that the Bank’s
obligation to the Applicant shall be limited to honoring requests for payment made under and in
compliance with the terms of any Letter of Credit, and the Bank’s obligation remains so limited
even if the Bank may have prepared or assisted in the preparation of the wording of any Letter of
Credit or any Item required to be presented thereunder or the Bank may otherwise be aware of the
underlying transaction giving rise to any Letter of Credit.

3.7 Automatic Renewal of Letters of Credit. IF ANY LETTER OF CREDIT CONTAINS ANY PROVISION
FOR AUTOMATIC RENEWAL, THE APPLICANT ACKNOWLEDGES AND AGREES THAT THE BANK IS UNDER NO OBLIGATION
TO ALLOW SUCH RENEWAL TO OCCUR AND ANY SUCH RENEWAL SHALL REMAIN WITHIN THE SOLE AND ABSOLUTE
DISCRETION OF THE BANK. THE APPLICANT IRREVOCABLY CONSENTS TO THE AUTOMATIC RENEWAL OF EACH SUCH
LETTER OF CREDIT IN ACCORDANCE WITH ITS TERMS IF THE BANK ALLOWS SUCH RENEWAL TO OCCUR;
PROVIDED THAT THE APPLICANT SHALL HAVE THE RIGHT TO REQUEST THE BANK TO DISALLOW ANY SUCH
RENEWAL ON THE CONDITION THAT THE APPLICANT SHALL GIVE THE BANK PRIOR WRITTEN

 

 

NOTICE OF SUCH REQUEST NOT LESS THAN 30 DAYS PRIOR TO THE DEADLINE IMPOSED UPON THE BANK FOR
NOTIFICATION TO THE BENEFICIARY OF NON-RENEWAL OF ANY SUCH LETTER OF CREDIT.

SECTION 4 REPRESENTATIONS AND WARRANTIES. The Applicant represents and warrants to the Bank that:

	(a)	 	Organization, etc. The Applicant is duly organized or formed, validly
existing and (to the extent applicable under the laws of the relevant jurisdiction) in good
standing under the laws of the jurisdiction of its organization or formation, and the
Applicant is duly qualified and in good standing as a foreign entity authorized to do business
in each other jurisdiction where, because of the nature of its activities or properties, such
qualification is required.

	(b)	 	Authorization; No Conflict. The execution and delivery by the Applicant of this
Agreement and each Application, the issuance of Letters of Credit for the account of the
Applicant hereunder and the performance by the Applicant of its obligations under this
Agreement and the Applications are within the organizational powers of the Applicant, have
been duly authorized by all necessary organizational action, have received all necessary
governmental approval (if any shall be required), and do not and will not contravene or
conflict with, or result in or require the imposition of any lien or security interest under,
any provision of law or of the charter or by-laws of the Applicant or of any indenture, loan
agreement or other contract, or any judgment, order or decree, which is binding upon the
Applicant.

	(c)	 	Validity and Binding Nature. This Agreement is, and upon delivery to the Bank each
Application will be, the legal, valid and binding obligation of the Applicant, enforceable
against the Applicant in accordance with its terms, subject to bankruptcy, insolvency and
similar laws of general application affecting the rights of creditors and to general
principles of equity.

	(d)	 	Approvals. No authorization, approval or consent of, or notice to or filing with, any
governmental or regulatory authority is required to be made in connection with the execution
and delivery by the Applicant of this Agreement or the issuance of any Letter of Credit for
the account of the Applicant pursuant hereto.

SECTION 5 FEES. The Applicant agrees to pay the Bank all reasonable fees of the Bank (at the rates
specified by the Bank from time to time in schedules delivered by the Bank to the Applicant) with
respect to each Letter of Credit (including, without limitation, all fees associated with any
amendment to, drawing under, banker’s acceptance pursuant to, or transfer of a Letter of Credit),
such fees to be payable on demand by the Bank therefor.

SECTION 6 COMPUTATION OF INTEREST AND FEES. All interest and fees hereunder shall be computed for
the actual number of days elapsed on the basis of a year of 360 days. The interest rate applicable
to Letter of Credit reimbursement obligations shall change simultaneously with each change in the
Prime Rate.

SECTION 7 MAKING OF PAYMENTS. (a) All payments of principal of, or interest on, letter of credit
reimbursement obligations, all payments of fees and all other payments hereunder shall be made by
the Applicant in immediately available funds to the Bank at its principal office in Chicago not
later than 12:30 P.M., Chicago time, on the date due, and funds received after that time shall be
deemed to have been received by the Bank on the next Business Day. If any payment of principal,
interest or fees falls due on a Saturday, Sunday or other day which is not a Business Day, then
such due date shall be extended to the next Business Day, and additional interest shall accrue and
be payable for the period of such extension.

(b) The Applicant irrevocably agrees that the Bank or any affiliate thereof may (but neither the
Bank nor any such affiliate shall be obligated to) debit any deposit account of the Applicant in an
amount sufficient to pay any fee, reimbursement obligation or other amount that is due and payable
hereunder. The Bank or the applicable affiliate shall promptly notify the Applicant of any such
debit (but failure of the Bank or any such affiliate to do so shall not impair the effectiveness
thereof or impose any liability on the Bank or such affiliate).

(c) The Applicant shall reimburse the Bank for each payment under a Letter of Credit in the same
currency in which such payment was made; provided that, if the Bank so requests (in its
discretion), the Applicant shall reimburse the Bank in United States dollars for any payment under
a Letter of Credit made in a foreign currency at the rate at which the Bank could sell such foreign
currency in exchange for United States dollars for transfer to the place of payment of such payment
or, if there is no such rate, the United States dollar equivalent of the Bank’s actual cost of
settlement. The Applicant agrees to pay the Bank on demand in United States dollars such amounts as
the Bank may be required to expend to comply with any and all governmental exchange regulations now
or hereafter applicable to the purchase of foreign currency.

(d) All payments by the Applicant hereunder shall be made free and clear of and without deduction
for any present or future income, excise or stamp taxes and any other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by the Bank’s net income or receipts
(such non-excluded items being called “Taxes”). If any withholding or deduction from any
payment to be made by the Bank hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Applicant will

	(i)	 	pay directly to the relevant authority the full amount required to be so withheld or
deducted;

	(ii)	 	promptly forward to the Bank an official receipt or other documentation satisfactory to the
Bank evidencing such payment to such authority, and

	(iii)	 	pay to the Bank such additional amount as is necessary to ensure that the net amount
actually received by the Bank will equal the full amount the Bank would have received had no such
withholding or deduction been required.

Moreover, if any Taxes are directly asserted against the Bank or on any payment received by the
Bank hereunder, the Bank may pay such Taxes and the Applicant will promptly pay such additional
amount (including any penalty, interest or expense) as is necessary in order that the net amount
received by the Bank after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount the Bank would have received had no such Taxes been asserted.

If the Applicant fails to pay any Taxes when due to the appropriate taxing authority or fails to
remit to the Bank the required receipts or other required documentary evidence, the Applicant shall
indemnify the Bank for any incremental Tax, interest, penalty or expense that may become payable by
the Bank as a result of such failure.

SECTION 8 INCREASED COSTS. If, after the date hereof, the adoption of, or any change in, any
applicable law, rule or regulation, or any change in the interpretation or administration of any
applicable law, rule or regulation by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by the Bank with any
request, guideline or directive (whether or not having the force of law) of any such authority,
central bank or comparable agency,

	(a)	 	affects or would affect the amount of capital required or expected to be maintained by the
Bank or any corporation controlling the Bank and (taking into consideration the Bank’s or such
controlling corporation’s policies with respect to capital adequacy) the Bank determines that
the amount of such capital is increased as a consequence of this Agreement or the Letters of
Credit; or

	(b)	 	imposes, modifies or deems applicable any reserve (including, without limitation, any reserve
imposed by the Board of Governors of the Federal Reserve System), special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by the
Bank with respect to letters of credit, or imposes on the Bank any other condition affecting
this Agreement or the Letters of Credit, and the Bank determines that the result of any of the
foregoing is to increase the cost to, or to impose a cost on, the Bank of issuing or
maintaining any Letter of Credit or of making any payment or disbursement under any Letter of
Credit, or to reduce the amount of any sum received or receivable by the Bank under this
Agreement;

 

 

then within five Business Days after demand by the Bank (which demand shall be
accompanied by a statement setting forth in reasonable detail the basis of such demand and a
calculation thereof in reasonable detail), the Applicant shall pay directly to the Bank such
additional amount as will compensate the Bank for such increased capital requirement, such
increased cost or such reduction, as the case may be. Determinations and statements of the Bank
pursuant to this Section 8 shall be conclusive absent manifest error, and the provisions of
this Section 8 shall survive termination of this
Agreement.

SECTION 9 EVENTS OF DEFAULT AND THEIR EFFECT.

9.1 Events of Default. Each of the following shall constitute an Event of Default under
this Agreement:

	      9.1.1	 	Non-Payment of Liabilities, etc. Default in the payment when due of any principal
of or interest on any Liabilities; or default, and continuance thereof for five days after notice
thereof from the Bank, in the payment when due of any fees or other amounts payable by the
Applicant hereunder.

	      9.1.2	 	Bankruptcy, etc. The Applicant or any guarantor of the Liabilities shall become
insolvent or admit in writing its inability to pay debts as they mature, or the Applicant or
any such guarantor shall apply for, consent to or acquiesce in the appointment of a trustee
or receiver, or in the absence of such application, consent or acquiescence, a trustee or
receiver is appointed for the Applicant or any such guarantor, or any proceeding under any
bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted by
or against the Applicant or any such guarantor and, if instituted against the Applicant or
such guarantor, remains for 30 days undismissed, or any writ of attachment is issued against
any substantial portion of the Applicant’s or any such guarantor’s property and is not
released within 30 days of service, or the Applicant or any such guarantor takes any action
to authorize, or in furtherance of, any of the foregoing.

	      9.1.3	 	Other Agreements with Bank. Any default shall occur (subject to any applicable
grace period) under any other agreement between the Applicant and the Bank or any of its
affiliates (including any agreement under which the Applicant is a borrower and the Bank or any
such affiliate and one or more other financial institutions are the lenders); or the Applicant
shall fail to comply with or to perform (subject to any applicable grace period) any covenant set
forth in any such other agreement as such covenant is in effect on the date hereof or is amended
from time to time with the consent of the Bank (but without giving effect to the expiration or
termination of any such agreement unless such agreement is replaced by another agreement to which
the Bank is a party).

	      9.1.4	 	Representations and Warranties. Any representation or warranty made by the
Applicant herein or in any writing furnished in connection with or pursuant to this Agreement
shall be false or misleading in any material respect on the date made.

9.2 Effect of Event of Default. If any Event of Default described in Section
9.1.2 shall occur, all Liabilities shall immediately become due and payable and the
Applicant shall immediately become obligated to deliver to the Bank cash collateral in an amount
equal to the face amount of all outstanding Letters of Credit; and if any other Event of Default
shall occur, the Bank may declare all Liabilities to be due and payable and may demand that the
Applicant immediately deliver to the Bank cash collateral in an amount equal to the face amount of
all outstanding Letters of Credit, whereupon all Liabilities shall become immediately due and
payable and the Applicant shall immediately become obligated to deliver to the Bank cash collateral
in an amount equal to the face amount of all outstanding Letters of Credit. The Bank shall promptly
advise the Applicant of any such declaration, but failure to do so shall not impair the effect of
such declaration. The Applicant hereby grants the Bank a security interest in all cash collateral
delivered hereunder. All cash collateral shall be held by the Bank and applied to Liabilities
arising in connection with any drawing under a Letter of Credit. After all Letters of Credit have
been fully drawn, expired or been terminated, such cash collateral shall be applied by the Bank,
first, to any remaining Liabilities and, then, to any other liabilities of the Applicant to the
Bank, and any excess shall be delivered to the Applicant or as a court of competent jurisdiction
may direct.

SECTION 10 SECURITY.

10.1 Grant of Security Interest. As security for the prompt payment and performance of all
Liabilities, and in addition to any other security given to the Bank by separate agreement, the
Applicant hereby grants to the Bank a continuing security interest in all of the following, whether
now existing or hereafter arising: (i) all property shipped, stored or dealt with in connection
with any Letter of Credit; and (ii) all drafts, documents, instruments, contracts (including,
without limitation, shipping documents, warehouse receipts and policies or certificates of
insurance), inventory, accounts, chattel paper and general intangibles, and all proceeds of the
foregoing, arising from or in connection with any Letter of Credit, including, without limitation,
any of the foregoing which is in the Bank’s actual or constructive possession or is in transit to
the Bank or any of its affiliates, agents or correspondents (and regardless of whether such
property has been released to the Applicant). The Applicant further agrees that the Bank or any of
its affiliates may set off and apply to any of the Liabilities which are then due and payable (by
acceleration or otherwise) any deposit of the Applicant at any time held by the Bank or any of its
affiliates. The Applicant agrees that this Agreement (or a carbon or photographic copy hereof) may
be filed as a financing statement to the extent permitted by law. The Applicant authorizes the Bank
to file such financing statements as may be required by the Bank to perfect the security interest
of the Bank hereunder. The Applicant also agrees that, on request by the Bank, the Applicant shall
execute and deliver such financing statements and other documents or instruments as may be required
by the Bank to perfect or maintain the security interest of the Bank hereunder.

10.2 Rights and Remedies. The Bank shall have all rights and remedies of a secured party
under the UCC. If prior notice to the Applicant is required for any action, the Bank shall give the
Applicant at least five days’ notice in writing of the time and place of the sale, disposition or
other event giving rise to such required notice, and the Applicant agrees that such notice will be
deemed commercially reasonable. Any property or document representing collateral may be held by the
Bank in its name or in the name of the Bank’s nominee, all without prior notice. Proceeds of any
sale or other disposition of collateral shall be applied, in order, to the expenses of retaking,
holding and preparing the collateral for sale (including reasonable attomeys’ fees and legal
expenses), and then to the obligations of the Applicant hereunder until paid in full. The Applicant
shall be liable for any deficiency.

SECTION 11 GENERAL.

11.1 Waiver; Amendments. No delay on the part of the Bank in the exercise of any
right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power or remedy preclude other or further exercise thereof, or the exercise of any
other right, power or remedy. No amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement shall be effective unless the same shall be in writing and signed
and delivered by the Bank, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.

11.2 Notices. (a) Except as otherwise expressly provided herein, all notices hereunder
shall be in writing (including facsimile and electronic transmission, which shall be considered
original writings). Notices given by mail shall be deemed to have been given three Business Days
after the date sent if sent by registered or certified mail, postage prepaid, to the applicable
party at its address shown below its signature hereto or at such other address as such party may,
by written notice received by the other party to this Agreement, have designated as its address for
notices. Notices given by facsimile or electronic transmission shall be deemed to have been given
when sent. Notices sent by any other means shall be deemed to have been given when received (or
when delivery is refused).

(b) The Bank may rely on any writing (including any facsimile, any electronic transmission or any
information on a computer disk or similar medium which may be reduced to writing), or any
telephonic or other oral message or instruction (including, without limitation, any oral waiver of
any discrepancy with respect to any Item), that the Bank believes in good faith to have been
received from an authorized officer, employee or representative of the Applicant, and the Bank
shall not be liable for any action taken in good faith with respect to any writing, message or
instruction from an unauthorized person. The Bank shall not be under any duty to verify the
identity of any

 

 

person submitting any Application or other writing or making any other communication
hereunder. Notwithstanding the foregoing, the Bank is not obligated to recognize the authenticity
of any request to issue, amend, honor or otherwise act on any Letter of Credit that is not
evidenced to the Bank’s satisfaction by a writing originally signed by a person the Applicant has
certified is authorized to act for the Applicant hereunder or by a message or instruction
authenticated to the Bank’s satisfaction.

11.3 Costs, Expenses and Taxes, Indemnification. (a) The Applicant agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Bank (including the reasonable fees and
charges of counsel for the Bank) in connection with the enforcement of this Agreement. In addition,
the Applicant agrees to pay, and to save the Bank harmless from all liability for, any stamp or
other taxes which may be payable in connection with the execution or delivery of this Agreement,
the issuance of Letters of Credit hereunder, or the issuance of any other instrument or document
provided for herein or delivered or to be delivered hereunder or in connection herewith.

(b) The Applicant agrees to indemnify the Bank and each of its affiliates and each of their
respective officers, directors, employees and agents (each an “Indemnified Party”) against,
and to hold each Indemnified Party harmless from, any and all actions, causes of action, suits,
losses, costs, damages, expenses (including reasonable attorneys’ fees and charges, expert witness
fees and other dispute resolution expenses) and other liabilities (collectively the
“Indemnified Liabilities”) incurred by any Indemnified Party as a result of, or arising out
of, or relating to, this Agreement or any Letter of Credit (and without regard to whether the
applicable Indemnified Party is a party to any proceeding out of which such Indemnified Liabilities
arise), except to the extent that a court of competent jurisdiction determines in a final,
non-appealable order that any Indemnified Liability resulted directly from the gross negligence or
willful misconduct of such Indemnified Party. Without limiting the generality of the foregoing
sentence, the term “Indemnified Liabilities” includes any claim or liability in which an advising,
confirming or other nominated bank, or a beneficiary requested to issue its own undertaking, seeks
to be reimbursed, indemnified or compensated. If and to the extent the foregoing undertaking may be
unenforceable for any reason, the Applicant agrees to make the maximum contribution to the payment
of each of the Indemnified Liabilities which is permitted under applicable law.

(c) Without limiting clause (b), the Applicant agrees to indemnify the Bank, and to hold
the Bank harmless from, any loss or expense incurred by the Bank as a result of any judgment or
order being given or made for the payment of any amount due hereunder in a particular currency (the
“Currency of Account”) and such judgment or order being expressed in a currency
(the “Judgment Currency”) other than the Currency of Account and as a result of any
variation having occurred in the rate of exchange between the date which such amount is converted
into the Judgment Currency and the date of actual payment pursuant thereto. The foregoing indemnity
shall constitute a separate and independent obligation of the Applicant.

(d) All obligations provided for in this Section 11.3 shall survive any termination
of this Agreement.

11.4 Captions. Section captions used in this Agreement are for convenience only and shall
not affect the construction of this Agreement.

11.5 Governing Law. This Agreement shall be a contract made under and governed by the laws
of the State of Illinois applicable to contracts made and to be performed entirely within such
State. Except to the extent inconsistent with such state law or otherwise expressly stated in any
Letter of Credit, each Letter of Credit and this Agreement also are subject to the terms of (i)
with respect to matters relating to standby Letters of Credit and Applications therefor, the ISP,
and (ii) with respect to matters relating to commercial Letters of Credit and Applications
therefor, the UCP. Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement. All obligations of the Applicant and rights of the Bank
expressed herein shall be in addition to and not in limitation of those provided by applicable law.

11.6 Counterparts. This Agreement may be executed in any number of counterparts and by the
parties hereto on separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the same Agreement.

11.7 Successors and Assigns. This Agreement shall be binding upon the Applicant and its
successors and assigns, provide d that the Applicant may not assign any of its rights or
obligations hereunder without the prior written consent of the Bank.

11.8 Right of Bank to Act through Branches and Affiliates. The Bank may cause any Letter of
Credit requested by the Applicant to be issued by a branch or affiliate of the Bank, and all
references to the “Bank” herein or in any related document shall include each applicable branch or
affiliate.

11.9 Foreign Assets Control Regulations. The Applicant certifies that no transaction in
foreign commodities covered by any Application will be prohibited under the foreign assets control
regulations of the United States Treasury Department and that any importation related to any Letter
of Credit will conform with all applicable laws, rules and regulations.

11.10 Mitigation. Limitation of Liability. The Applicant agrees to take action to avoid or
reduce the amount of any damages which may be claimed against the Bank. For example, (a) in the
case of wrongful honor, the Applicant agrees to enforce its rights arising out of the underlying
transaction (except to the extent that enforcement is impractical due to the insolvency of the
beneficiary or other Person from whom the Applicant might otherwise recover), and (b) in the case
of wrongful dishonor, the Applicant agrees to specifically and timely authorize the Bank to effect
a cure and give written assurances to the beneficiary that a cure is being arranged. The
Applicant’s aggregate remedies against the Bank for honoring a presentation or retaining honored
documents in breach of the Bank’s obligations to the Applicant (whether arising under this
Agreement, applicable letter of credit practice or law, or any other agreement or law) are limited
to the aggregate amount paid by the Applicant to the Bank with respect to the honored presentation.

11.11 Subrogation. The Bank shall be subrogated (for purposes of defending against the
Applicant’s claims and proceeding against others to the extent of any liability of the Bank to the
Applicant) to the Applicant’s rights against any Person who may be liable to the Applicant on any
underlying transaction, to the rights of any holder in due course or Person with similar status
against the Applicant and to the rights of the beneficiary of any Letter of Credit or its assignee
or any Person with similar status against the Applicant.

11.12 Co-Applicants. (a) If this Agreement is signed by two or more Persons (each a
“Co-Applicant”), then the term “Applicant” shall mean each such Person and all such Persons
shall be jointly and severally liable for all obligations of the “Applicant” hereunder and in
respect of the Letters of Credit issued pursuant hereto. Any Co-Applicant shall have the right to
issue all instructions relating to Letters of Credit (including, without limitation, instructions
as to the disposition of documents and waiver of discrepancies) and to agree with the Bank upon any
amendment, extension, renewal or modification of, or change in the amount of, any Letter of Credit,
and such instructions and agreements shall be binding upon all Co-Applicants. Each Co-Applicant
shall be bound by (i) any notice from the Bank to any other CoApplicant, (ii) any other
Co-Applicant’s settlement or release of any claim against the Bank arising under this Agreement and
(iii) any default under this Agreement attributable to any other Co-Applicant.

(b) Each Co-Applicant agrees that if at any time all or any part of any payment theretofore applied
by the Bank to any of the Liabilities is or must be rescinded or returned by the Bank for any
reason whatsoever (including the insolvency, bankruptcy or reorganization of any Co-Applicant),
such Liabilities shall, to the extent that such payment is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such application by the Bank, and the
obligations of such Co-Applicant with respect thereto shall continue to be effective or be
reinstated, as the case may be, as to such Liabilities, all as though such application by the Bank
had not been made.

(c) The Bank may, from time to time, in its sole discretion and without affecting the obligation of
any Co-Applicant, take any or all of the following actions: (a) retain or obtain the primary or
secondary obligation of any other obligor, in addition to such Co-Applicant, with respect to any of
the Liabilities, and take any security for the obligations of any such other obligor, (b) extend

 

 

or renew any of the Liabilities for one or more periods (whether or not longer
than the original period), alter or exchange any of the Liabilities, or release
or compromise any obligation of any other Co-Applicant or any obligation of any
nature of any other obligor with respect to any of the Liabilities, (c) release
its security interest in, or surrender, release or permit any substitution or
exchange for, all or any part of any property securing any of the Liabilities,
or extend or renew for one or more periods (whether or not longer than the
original period) or release, compromise, alter or exchange any obligations of
any nature of any obligor with respect to any such property, and (d) resort to
such Co-Applicant for payment of any of the Liabilities when due, whether or not
the Bank shall have resorted to any property securing any of the Liabilities or
shall have proceeded against any other Co-Applicant or any other obligor
primarily or secondarily obligated with respect to any of the Liabilities.

11.13 Continuation of Liability. Regardless of the expiry date of any Letter of
Credit, the Applicant shall remain liable hereunder until the Bank is released
from liability by every Person that is entitled to draw or demand payment under
each Letter of Credit issued pursuant hereto.

11.14 Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY APPLICATION, SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF COOK COUNTY, ILLINOIS OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE BANK’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE APPLICANT HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF COOK COUNTY, ILLINOIS
AND OF THE UNITED STATES (DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR) THE PURPOSE OF ANY SUCH LITIGATION. THE APPLICANT FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
ADDRESS SET FORTH BENEATH ITS SIGNATURE HERETO (OR SUCH OTHER ADDRESS AS IT
SHALL HAVE SPECIFIED IN WRITING TO THE BANK AS ITS ADDRESS FOR NOTICES
HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE
APPLICANT EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

11.15 Waiver of Jury Trial. EACH OF THE APPLICANT AND, BY ISSUING ANY LETTER OF
CREDIT, THE BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY
APPLICATION, INSTRUMENT, DOCUMENT, AMENDMENT OR AGREEMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

11.16 This Agreement is being executed and delivered by the parties hereto in
connection with that certain Credit Agreement, dated as of October 7, 2003 (as
heretofore and hereafter amended, restated, supplemented or otherwise modified,
the “Credit Agreement"), by and among the Applicant, the Co-Applicant, the
financial institutions party thereto from time to time as lenders and the Bank
as administrative agent. In the event of any conflict or inconsistency between
this Agreement and the Credit Agreement, the provisions of the Credit Agreement
shall control.

Delivered at Chicago, Illinois, as of the day and year first above written.

Akorn, Inc.

[Applicant]

	 	 	 	 	 
	By:  	 /s/ Jeffrey A. Whitnell	 
	Title 	 	 CFO
	 
	By:  	 	 
	Title 	 	 

	 	 	 
	Address:

	 	2500 Millbrook Drive

Buffalo Grove, IL 60089
	 
	 	 
	Attention:

	 	Chief Financial Officer
	 
	 	 
	Facsimile:

	 	847-279-6123

Akorn (New Jersey), Inc.

[Second Applicant, if applicable]

	 	 	 	 	 
	By:  	 /s/ Jeffrey A. Whitnell	 
	Title 	 	 CFO
	 
	By:  	 	 
	Title 	 	 

	 	 	 
	Address:

	 	2500 Millbrook Drive

Buffalo Grove, IL 60089
	 
	 	 
	Attention:

	 	Chief Financial Officer
	 
	 	 
	Facsimile:

	 	847-279-6123

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]