Document:

exv10w2

Exhibit 10.2

 

GUARANTY AND SECURITY AGREEMENT

Dated as of January 7, 2009

among

AKORN, INC.,

AKORN (NEW JERSEY), INC.

and

Each Other Grantor

From Time to Time Party Hereto

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINED TERMS
	 	 	1	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Certain Other Terms
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II GUARANTY
	 	 	6	 
	Section 2.1 Guaranty
	 	 	6	 
	Section 2.2 Limitation of Guaranty
	 	 	6	 
	Section 2.3 Contribution
	 	 	6	 
	Section 2.4 Authorization; Other Agreements
	 	 	7	 
	Section 2.5 Guaranty Absolute and Unconditional
	 	 	7	 
	Section 2.6 Waivers
	 	 	8	 
	Section 2.7 Reliance
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III GRANT OF SECURITY INTEREST
	 	 	9	 
	Section 3.1 Collateral
	 	 	9	 
	Section 3.2 Grant of Security Interest in Collateral
	 	 	10	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	10	 
	Section 4.1 Title; No Other Liens
	 	 	10	 
	Section 4.2 Perfection and Priority
	 	 	10	 
	Section 4.3 Jurisdiction of Organization; Chief Executive Office
	 	 	11	 
	Section 4.4 Locations of Inventory, Equipment and Books and Records
	 	 	11	 
	Section 4.5 Pledged Collateral
	 	 	11	 
	Section 4.6 Instruments and Tangible Chattel Paper Formerly Accounts
	 	 	12	 
	Section 4.7 Intellectual Property
	 	 	12	 
	Section 4.8 Commercial Tort Claims
	 	 	12	 
	Section 4.9 Specific Collateral
	 	 	13	 
	Section 4.10 Enforcement
	 	 	13	 
	Section 4.11 Representations and Warranties of the Credit Agreement
	 	 	13	 
	 
	 	 	 	 
	ARTICLE V COVENANTS
	 	 	13	 
	Section 5.1 Maintenance of Perfected Security Interest; Further Documentation and Consents
	 	 	13	 
	Section 5.2 Changes in Locations, Name, Etc
	 	 	14	 
	Section 5.3 Pledged Collateral
	 	 	15	 
	Section 5.4 Accounts
	 	 	15	 
	Section 5.5 Commodity Contracts
	 	 	16	 
	Section 5.6 Delivery of Instruments and Tangible Chattel Paper and Control of Investment
Property, Letter-of-Credit Rights and Electronic Chattel Paper
	 	 	16	 
	Section 5.7 Intellectual Property
	 	 	17	 
	Section 5.8 Notices
	 	 	18	 
	Section 5.9 Notice of Commercial Tort Claims
	 	 	18	 
	Section 5.10 Controlled Securities Account
	 	 	18	 

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TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VI REMEDIAL PROVISIONS
	 	 	19	 
	Section 6.1 Code and Other Remedies
	 	 	19	 
	Section 6.2 Accounts and Payments in Respect of General Intangibles
	 	 	22	 
	Section 6.3 Pledged Collateral
	 	 	23	 
	Section 6.4 Proceeds to be Turned over to and Held by Agent
	 	 	24	 
	Section 6.5 Sale of Pledged Collateral
	 	 	24	 
	Section 6.6 Deficiency
	 	 	25	 
	 
	 	 	 	 
	ARTICLE VII THE AGENT
	 	 	25	 
	Section 7.1 Agent’s Appointment as Attorney-in-Fact
	 	 	25	 
	Section 7.2 Authorization to File Financing Statements
	 	 	27	 
	Section 7.3 Authority of Agent
	 	 	27	 
	Section 7.4 Duty; Obligations and Liabilities
	 	 	27	 
	 
	 	 	 	 
	ARTICLE VIII MISCELLANEOUS
	 	 	28	 
	Section 8.1 Reinstatement
	 	 	28	 
	Section 8.2 Release of Collateral
	 	 	29	 
	Section 8.3 Independent Obligations
	 	 	29	 
	Section 8.4 No Waiver by Course of Conduct
	 	 	29	 
	Section 8.5 Amendments in Writing
	 	 	30	 
	Section 8.6 Additional Grantors; Additional Pledged Collateral
	 	 	30	 
	Section 8.7 Notices
	 	 	30	 
	Section 8.8 Successors and Assigns
	 	 	30	 
	Section 8.9 Counterparts
	 	 	30	 
	Section 8.10 Severability
	 	 	31	 
	Section 8.11 Governing Law
	 	 	31	 
	Section 8.12 Waiver of Jury Trial
	 	 	31	 

ii

 

ANNEXES AND SCHEDULES

	 	 	 
	Annex 1

	 	Form of Pledge Amendment
	Annex 2

	 	Form of Joinder Agreement
	Annex 3

	 	Form of Intellectual Property Security Agreement
	 
	 	 
	Schedule 1

	 	Commercial Tort Claims
	Schedule 2

	 	Filings
	Schedule 3

	 	Jurisdiction of Organization; Chief Executive Office
	Schedule 4

	 	Location of Inventory and Equipment
	Schedule 5

	 	Pledged Collateral
	Schedule 6

	 	Intellectual Property

iii

 

     GUARANTY AND SECURITY AGREEMENT, dated as of January 7, 2009, by Akorn, Inc., a Louisiana
corporation (“Akorn”), Akorn (New Jersey), Inc., an Illinois corporation (“Akorn
NJ” and, together with Akorn, the “Borrowers”) and each of the other entities listed on
the signature pages hereof or that becomes a party hereto pursuant to Section 8.6 (together
with the Borrowers, the “Grantors”), in favor of General Electric Capital Corporation (“GE
Capital”), as administrative agent (in such capacity, together with its successors and
permitted assigns, the “Agent”) for the Lenders, the L/C Issuers and each other Secured Party
(each as defined in the Credit Agreement referred to below).

W I T N E S S E T H:

     WHEREAS, pursuant to the Credit Agreement dated as of the date hereof (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among the Borrowers, Akorn, as Borrower Representative, the other Credit Parties
party thereto, the Lenders, the L/C Issuers from time to time party thereto and GE Capital, as
Agent for the Lenders and the L/C Issuers, the Lenders and the L/C Issuers have severally agreed to
make extensions of credit to the Borrowers upon the terms and subject to the conditions set forth
therein;

     WHEREAS, each Grantor has agreed to guaranty the Obligations (as defined in the Credit
Agreement) of each Borrower (other than itself);

     WHEREAS, each Grantor will derive substantial direct and indirect benefits from the making of
the extensions of credit under the Credit Agreement; and

     WHEREAS, it is a condition precedent to the obligation of the Lenders and the L/C Issuers to
make their respective extensions of credit to the Borrowers under the Credit Agreement that the
Grantors shall have executed and delivered this Agreement to the Agent;

     NOW, THEREFORE, in consideration of the premises and to induce the Lenders, the L/C Issuers
and the Agent to enter into the Credit Agreement and to induce the Lenders and the L/C Issuers to
make their respective extensions of credit to the Borrowers thereunder, each Grantor hereby agrees
with the Agent as follows:

ARTICLE I

DEFINED TERMS

     Section 1.1 Definitions.

          (a) Capital terms used herein without definition are used as defined in the Credit Agreement.

GUARANTY AND SECURITY AGREEMENT

AKORN, INC.

 

 

          (b) The following terms have the meanings given to them in the UCC and terms used herein
without definition that are defined in the UCC have the meanings given to them in the UCC (such
meanings to be equally applicable to both the singular and plural forms of the terms defined):
“account”, “account debtor”, “as-extracted collateral”, “certificated
security”, “chattel paper”, “commercial tort claim”, “commodity
contract”, “deposit account”, “electronic chattel paper”, “equipment”,
“farm products”, “fixture”, “general intangible”, “goods”,
“health-care-insurance receivable”, “instruments”, “inventory”,
“investment property”, “letter-of-credit right”, “proceeds”,
“record”, “securities account”, “security”, “supporting obligation”
and “tangible chattel paper”.

          (c) The following terms shall have the following meanings:

          “Agreement” means this Guaranty and Security Agreement.

          “Applicable IP Office” means the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency within or outside the United States.

          “Cash Collateral Account” means a deposit account or securities account subject, in
each instance, to a Control Agreement, other than accounts established to cash collateralize L/C
Reimbursement Obligations.

          “Collateral” has the meaning specified in Section 3.1.

          “Controlled Securities Account” means each securities account (including all financial
assets held therein and all certificates and instruments, if any, representing or evidencing such
financial assets) that is the subject of an effective Control Agreement.

          “Excluded Equity” means (i) any voting stock in excess of 65% of the outstanding
voting stock of any Foreign Subsidiary, which, pursuant to the terms of the Credit Agreement, is
not required to guaranty the Obligations and (ii) Akorn’s interest in the Existing JV. For the
purposes of this definition, “voting stock” means, with respect to any issuer, the issued
and outstanding shares of each class of Stock of such issuer entitled to vote (within the meaning
of Treasury Regulations § 1.956-2(c)(2)).

          “Excluded Property” means, collectively, (i) Excluded Equity, (ii) any permit or
license or any Contractual Obligation entered into by any Grantor (A) that prohibits or requires
the consent of any Person other than a Borrower and its Affiliates which has not been obtained as a
condition to the creation by such Grantor of a Lien on any right, title or interest in such permit,
license or Contractual Obligation or any Stock or Stock Equivalent related thereto or (B) to the
extent that any Requirement of Law applicable thereto prohibits the creation of a Lien thereon, but
only, with respect to the prohibition in (A) and (B), to the extent, and for as long as, such
prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC
or any other Requirement of Law, (iii) Property owned by any Grantor that is subject to a

GUARANTY AND SECURITY AGREEMENT

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2

 

purchase money Lien or a Capital Lease permitted under the Credit Agreement if the Contractual
Obligation pursuant to which such Lien is granted (or in the document providing for such Capital
Lease) prohibits or requires the consent of any Person other than a Borrower and its Affiliates
which has not been obtained as a condition to the creation of any other Lien on such equipment and
(iv) any “intent to use” Trademark applications for which a statement of use has not been filed
(but only until such statement is filed); provided, however, “Excluded
Property” shall not include any proceeds, products, substitutions or replacements of Excluded
Property (unless such proceeds, products, substitutions or replacements would otherwise constitute
Excluded Property).

          “Existing JV” means Akorn-Strides, LLC, a Delaware limited liability company.

          “Existing Licenses” shall mean (i) that certain License and Supply Agreement dated as
of November 11, 2004 (as amended, modified, supplemented or restated) by and between Hameln and
Akorn, (ii) that certain Sales and Marketing Agreement dated as of September 22, 2004 (as amended,
modified, supplemented or restated) by and between Akorn and the Existing JV and (iii) that certain
Development and Exclusive Distribution Agreement dated as of November 7, 2006 (as amended,
modified, supplemented or restated) by and between Akorn and Serum.

          “Guaranteed Obligations” has the meaning set forth in Section 2.1.

          “Guarantor” means each Grantor, including each Borrower with respect to the
obligations of each other Borrower.

          “Guaranty” means the guaranty of the Guaranteed Obligations made by the Guarantors as
set forth in this Agreement.

          “Hameln” means Hameln Pharmaceuticals GMBH, a company organized and existing under the
laws of Germany.

          “Internet Domain Name” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to Internet domain names.

          “Material Intellectual Property” means Intellectual Property that is owned by or
licensed to a Grantor and material to the conduct of any Grantor’s business.

          “Pledged Certificated Stock” means all certificated securities and any other Stock or
Stock Equivalent of any Person evidenced by a certificate, instrument or other similar document (as
defined in the UCC), in each case owned by any Grantor, including all Stock and Stock Equivalents
listed on Schedule 5. Pledged Certificated Stock excludes any Excluded Property and any
Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by
Section 5.10 hereof.

GUARANTY AND SECURITY AGREEMENT

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          “Pledged Collateral” means, collectively, the Pledged Stock and the Pledged Debt
Instruments.

          “Pledged Debt Instruments” means all right, title and interest of any Grantor in
instruments evidencing any Indebtedness owed to such Grantor or other obligations, including all
Indebtedness described on Schedule 5, issued by the obligors named therein. Pledged Debt
Instruments excludes any Cash Equivalents that are not held in Controlled Securities Accounts to
the extent permitted by Section 5.10 hereof.

          “Pledged Investment Property” means any investment property of any Grantor, other than
any Pledged Stock or Pledged Debt Instruments. Pledged Investment Property excludes any Cash
Equivalents that are not held in Controlled Securities Accounts to the extent permitted by
Section 5.10 hereof.

          “Pledged Stock” means all Pledged Certificated Stock and all Pledged Uncertificated
Stock.

          “Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person that
is not Pledged Certificated Stock, including all right, title and interest of any Grantor as a
limited or general partner in any partnership not constituting Pledged Certificated Stock or as a
member of any limited liability company, all right, title and interest of any Grantor in, to and
under any Organization Document of any partnership or limited liability company to which it is a
party, including in each case those interests set forth on Schedule 5, to the extent such
interests are not certificated. Pledged Certificated Stock excludes any Excluded Property and any
Cash Equivalents that are not held in Controlled Securities Accounts to the extent permitted by
Section 5.10 hereof.

          “Software” means (a) all computer programs, including source code and object code
versions, (b) all data, databases and compilations of data, whether machine readable or otherwise,
and (c) all documentation, training materials and configurations related to any of the foregoing.

          “UCC” means the Uniform Commercial Code as from time to time in effect in the State of
New York; provided, however, that, in the event that, by reason of mandatory
provisions of any applicable Requirement of Law, any of the attachment, perfection or priority of
the Agent’s or any other Secured Party’s security interest in any Collateral is governed by the
Uniform Commercial Code of a jurisdiction other than the State of New York, “UCC” shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for purposes of the
definitions related to or otherwise used in such provisions.

          “Vehicles” means all vehicles covered by a certificate of title law of any state.

Section 1.2
Certain Other Terms.

GUARANTY AND SECURITY AGREEMENT

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4

 

          (a) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms. The terms “herein”, “hereof” and similar terms refer to
this Agreement as a whole and not to any particular Article, Section or clause in this Agreement.
References herein to an Annex, Schedule, Article, Section or clause refer to the appropriate Annex
or Schedule to, or Article, Section or clause in this Agreement. Where the context requires,
provisions relating to any Collateral when used in relation to a Grantor shall refer to such
Grantor’s Collateral or any relevant part thereof.

          (b) Other Interpretive Provisions.

          (i) Defined Terms. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto.

          (ii) The Agreement. The words “hereof”, “herein”, “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement.

          (iii) Certain Common Terms. The term “including” is not limiting and means
“including without limitation.”

          (iv) Performance; Time. Whenever any performance obligation hereunder (other
than a payment obligation) shall be stated to be due or required to be satisfied on a day
other than a Business Day, such performance shall be made or satisfied on the next
succeeding Business Day. In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including”; the words “to” and
“until” each mean “to but excluding”, and the word “through” means “to and including.” If
any provision of this Agreement refers to any action taken or to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such action.

          (v) Contracts. Unless otherwise expressly provided herein, references to
agreements and other contractual instruments, including this Agreement and the other Loan
Documents, shall be deemed to include all subsequent amendments, thereto, restatements and
substitutions thereof and other modifications and supplements thereto which are in effect
from time to time, but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document.

          (vi) Laws. References to any statute or regulation are to be construed as
including all statutory and regulatory provisions related thereto or

GUARANTY AND SECURITY AGREEMENT

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consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.

ARTICLE II

GUARANTY

      Section 2.1 Guaranty. To induce the Lenders to make the Loans and the L/C Issuers to Issue Letters of Credit and
each other Secured Party to make credit available to or for the benefit of one or more Grantors,
each Guarantor hereby, jointly and severally, absolutely, unconditionally and irrevocably
guarantees, as primary obligor and not merely as surety, the full and punctual payment when due,
whether at stated maturity or earlier, by reason of acceleration, mandatory prepayment or otherwise
in accordance with any Loan Document, of all the Obligations of each Borrower whether existing on
the date hereof or hereinafter incurred or created (the “Guaranteed Obligations”). This Guaranty
by each Guarantor hereunder constitutes a guaranty of payment and not of collection.

      Section 2.2 Limitation of Guaranty. Any term or provision of this Guaranty or any other Loan Document to the contrary
notwithstanding, the maximum aggregate amount for which any Guarantor shall be liable hereunder
shall not exceed the maximum amount for which such Guarantor can be liable without rendering this
Guaranty or any other Loan Document, as it relates to such Guarantor, subject to avoidance under
applicable Requirements of Law relating to fraudulent conveyance or fraudulent transfer (including
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act and Section 548 of title
11 of the United States Code or any applicable provisions of comparable Requirements of Law)
(collectively, “Fraudulent Transfer Laws”). Any analysis of the provisions of this Guaranty for
purposes of Fraudulent Transfer Laws shall take into account the right of contribution established
in Section 2.3 and, for purposes of such analysis, give effect to any discharge of intercompany
debt as a result of any payment made under the Guaranty.

      Section 2.3 Contribution. To the extent that any Guarantor shall be required hereunder to pay any portion of any
Guaranteed Obligation exceeding the greater of (a) the amount of the value actually received by
such Guarantor and its Subsidiaries from the Loans and other Obligations and (b) the amount such
Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the
Guaranteed Obligations (excluding the amount thereof repaid by a Borrower that received the benefit
of the funds advanced that constituted Guaranteed Obligations) in the same proportion as such
Guarantor’s net worth on the date enforcement is sought hereunder bears to the aggregate net worth
of all the Guarantors on such date, then such Guarantor shall be reimbursed by such other
Guarantors for the amount of such excess, pro rata, based on the respective net worth of such
other Guarantors on such date.

GUARANTY AND SECURITY AGREEMENT

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      Section 2.4 Authorization; Other Agreements. The Secured Parties are hereby authorized, without notice to or demand upon any Guarantor
and without discharging or otherwise affecting the obligations of any Guarantor hereunder and
without incurring any liability hereunder, from time to time, to do each of the following:

          (a) (i) subject to compliance, if applicable, with Section 9.1 of the Credit Agreement,
modify, amend, supplement or otherwise change, (ii) accelerate or otherwise change the time of
payment or (iii) waive or otherwise consent to noncompliance with, any Guaranteed Obligation or any
Loan Document;

          (b) apply to the Guaranteed Obligations any sums by whomever paid or however realized to any
Guaranteed Obligation in such order as provided in the Loan Documents;

          (c) refund at any time any payment received by any Secured Party in respect of any Guaranteed
Obligation;

          (d) (i) sell, exchange, enforce, waive, substitute, liquidate, terminate, release, abandon,
fail to perfect, subordinate, accept, substitute, surrender, exchange, affect, impair or otherwise
alter or release any Collateral for any Guaranteed Obligation or any other guaranty therefor in any
manner, (ii) receive, take and hold additional Collateral to secure any Guaranteed Obligation,
(iii) add, release or substitute any one or more other Guarantors, makers or endorsers of any
Guaranteed Obligation or any part thereof and (iv) otherwise deal in any manner with a Borrower and
any other Guarantor, maker or endorser of any Guaranteed Obligation or any part thereof; and

          (e) settle, release, compromise, collect or otherwise liquidate the Guaranteed Obligations.

      Section 2.5 Guaranty Absolute and Unconditional. Each Guarantor hereby waives and agrees not to assert any defense, whether arising in
connection with or in respect of any of the following or otherwise, and hereby agrees that its
obligations under this Guaranty are irrevocable, absolute and unconditional and shall not be
discharged as a result of or otherwise affected by any of the following (which, the maximum extent
permitted by law, may not be pleaded and evidence of which may not be introduced in any proceeding
with respect to this Guaranty, in each case except in connection with a compulsory counterclaim or
as otherwise agreed in writing by the Agent):

          (a) the invalidity or unenforceability of any obligation of any other Borrower or any other
Guarantor under any Loan Document or any other agreement or instrument relating thereto (including
any amendment, consent or waiver thereto), or any security for, or other guaranty of, any
Guaranteed Obligation or any part thereof, or the lack of perfection or continuing perfection or
failure of priority of any security for the Guaranteed Obligations or any part thereof;

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          (b) the absence of (i) any attempt to collect any Guaranteed Obligation or any part thereof
from any other Borrower or any other Guarantor or other action to enforce the same or (ii) any
action to enforce any Loan Document or any Lien thereunder;

          (c) the failure by any Person to take any steps to perfect and maintain any Lien on, or to
preserve any rights with respect to, any Collateral;

          (d) any workout, insolvency, bankruptcy proceeding, reorganization, arrangement, liquidation
or dissolution by or against a Borrower, any other Guarantor or any of a Borrower’s other
Subsidiaries or any procedure, agreement, order, stipulation, election, action or omission
thereunder, including any discharge or disallowance of, or bar or stay against collecting, any
Guaranteed Obligation (or any interest thereon) in or as a result of any such proceeding;

          (e) any foreclosure, whether or not through judicial sale, and any other sale or other
disposition of any Collateral or any election following the occurrence of an Event of Default by
any Secured Party to proceed separately against any Collateral in accordance with such Secured
Party’s rights under any applicable Requirement of Law; or

          (f) any other defense, setoff, counterclaim or any other circumstance that might otherwise
constitute a legal or equitable discharge of a Borrower, any other Guarantor or any other
Subsidiary of a Borrower, in each case other than the payment in full of the Guaranteed
Obligations.

      Section 2.6 Waivers. Each Guarantor hereby unconditionally and irrevocably waives and agrees not to assert any
claim, defense, setoff or counterclaim based on diligence, promptness, presentment, requirements
for any demand or notice hereunder including any of the following: (a) any demand for payment or
performance and protest and notice of protest; (b) any notice of acceptance; (c) any presentment,
demand, protest or further notice or other requirements of any kind with respect to any Guaranteed
Obligation (including any accrued but unpaid interest thereon) becoming immediately due and
payable; and (d) any other notice in respect of any Guaranteed Obligation or any part thereof, and
any defense arising by reason of any disability or other defense of a Borrower or any other
Guarantor. Each Guarantor further unconditionally and irrevocably agrees not to (x) enforce or
otherwise exercise any right of subrogation or any right of reimbursement or contribution
or similar right against a Borrower or any other Guarantor by reason of any Loan Document or
any payment made thereunder or (y) assert any claim, defense, setoff or counterclaim it may have
against any other Credit Party or set off any of its obligations to such other Credit Party against
obligations of such Credit Party to such Guarantor. No obligation of any Guarantor hereunder shall
be discharged other than by complete performance.

      Section 2.7 Reliance. Each Guarantor hereby assumes responsibility for keeping itself informed of the financial
condition of each Borrower, each other Guarantor

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8

 

and any other guarantor, maker or endorser of any
Guaranteed Obligation or any part thereof, and of all other circumstances bearing upon the risk of
nonpayment of any Guaranteed Obligation or any part thereof that diligent inquiry would reveal, and
each Guarantor hereby agrees that no Secured Party shall have any duty to advise any Guarantor of
information known to it regarding such condition or any such circumstances. In the event any
Secured Party, in its sole discretion, undertakes at any time or from time to time to provide any
such information to any Guarantor, such Secured Party shall be under no obligation to (a) undertake
any investigation not a part of its regular business routine, (b) disclose any information that
such Secured Party, pursuant to accepted or reasonable commercial finance or banking practices,
wishes to maintain confidential or (c) make any future disclosures of such information or any other
information to any Guarantor.

ARTICLE III

GRANT OF SECURITY INTEREST

      Section 3.1 Collateral. For the purposes of this Agreement, all of the following property now owned or at any time
hereafter acquired by a Grantor or in which a Grantor now has or at any time in the future may
acquire any right, title or interest is collectively referred to as the “Collateral”:

          (a) all accounts, chattel paper, documents (as defined in the UCC), equipment, general
intangibles, instruments, inventory, investment property, letter of credit rights and any
supporting obligations related to any of the foregoing;

          (b) all deposit accounts, securities accounts and other bank accounts;

          (c) the commercial tort claims described on Schedule 1 and on any supplement thereto received
by the Agent pursuant to Section 5.9;

          (d) all books and records pertaining to the other property described in this Section 3.1;

          (e) all property of such Grantor held by any Secured Party, including all property of every
description, in the custody of or in transit to such Secured Party for any purpose, including
safekeeping, collection or pledge, for the account of such Grantor or as to which such Grantor may
have any right or power (but excluding property held in trust), including but not limited to cash;

          (f) all other goods (including but not limited to fixtures) and personal property of such
Grantor, whether tangible or intangible and wherever located; and

          (g) to the extent not otherwise included, all proceeds of the foregoing;

provided, however, that “Collateral” shall exclude all Excluded Property.

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      Section 3.2 Grant of Security Interest in Collateral. Each Grantor, as collateral security for the prompt and complete payment and
performance
when due (whether at stated maturity, by acceleration or otherwise) of the Obligations of such
Grantor (the “Secured Obligations”), hereby mortgages, pledges and hypothecates to the
Agent for the benefit of the Secured Parties, and grants to the Agent for the benefit of the
Secured Parties a Lien on and security interest in, all of its right, title and interest in, to and
under the Collateral of such Grantor; provided, however, notwithstanding the
foregoing, no Lien or security interest is hereby granted on any Excluded Property;
provided, further, that if and when any property shall cease to be Excluded
Property, a Lien on and security in such property shall be deemed granted therein. Each Grantor
hereby represents and warrants that the Excluded Property, with the exception of the Existing JV,
when taken as a whole, is not material to the business operations or financial condition of the
Grantors, taken as a whole.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

     To induce the Lenders, the L/C Issuers and the Agent to enter into the Loan Documents, each
Grantor hereby represents and warrants each of the following to the Agent, the Lenders, the L/C
Issuers and the other Secured Parties:

      Section 4.1 Title; No Other Liens. Except for the Lien granted to the Agent pursuant to this Agreement and other Permitted
Liens (except for those Permitted Liens not permitted to exist on any Collateral) under any Loan
Document (including Section 4.2), such Grantor owns each item of the Collateral pledged by such
Grantor free and clear of any and all Liens or claims of others. Such Grantor (a) is the record
(to the extent applicable) and beneficial owner of the Collateral pledged by it hereunder
constituting instruments or certificates
and (b) has rights in or the power to transfer each other item of Collateral in which a Lien
is granted by it hereunder, free and clear of any other Lien other than Permitted Liens.

      Section 4.2 Perfection and Priority. The security interest granted pursuant to this Agreement constitutes a valid and continuing
perfected security interest in favor of the Agent in all Collateral in which such Grantor holds an
interest subject, for the following Collateral, to the occurrence of the following: (i) in the
case of all Collateral in which a security interest may be perfected by filing a financing
statement under the UCC, the completion of the filings specified on Schedule 2 (which, in the case
of all filings referred to on such schedule, have been duly authorized by such Grantor), (ii) with
respect to any deposit account, the execution of Control Agreements, (iii) in the case of all
Copyrights, Trademarks and Patents for which UCC filings are insufficient, all appropriate filings
having been made with the United States Copyright Office or the United States Patent and Trademark
Office, as applicable, (iv) in the case of letter-of-credit rights that are not supporting
obligations of Collateral, the execution of a Contractual Obligation granting control to the Agent
over such letter-of-credit rights, (v)

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in the case of electronic chattel paper, the completion of
all steps necessary to grant control to the Agent over such electronic chattel paper and (vi) in
the case of Vehicles, the actions required under Section 5.1(e). Such security interest shall be
prior to all other Liens on the Collateral pledged by such Grantor except for Permitted Liens
having priority over the Agent’s Lien by operation of law or permitted pursuant to subsections
5.1(e), (g), (h), (i) or (k) of the Credit Agreement upon (i) in the case of all Pledged
Certificated Stock, Pledged Debt Instruments and Pledged Investment Property, the delivery thereof
to the Agent of such Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment
Property consisting of instruments and certificated securities, in each case properly endorsed for
transfer to the Agent or in blank, (ii) in the case of all Pledged Investment Property not in the
form of certificated securities, the execution of Control Agreements with respect to such
investment property and (iii) in the case of all other instruments and tangible chattel paper that
are not Pledged Certificated Stock, Pledged Debt Instruments or Pledged Investment Property, the
delivery thereof to the Agent of such instruments and tangible chattel paper. Except as set forth
in this Section 4.2, all actions by each Grantor necessary to perfect the Lien granted hereunder on
the Collateral have been duly taken.

      Section 4.3 Jurisdiction of Organization; Chief Executive Office. Such Grantor’s jurisdiction of organization, legal name and
organizational identification
number, if any, and the location of such Grantor’s chief executive office or sole place of
business, in each case as of the date hereof, is specified on Schedule 3 and such Schedule 3 also
lists all jurisdictions of incorporation, legal names and locations of such Grantor’s chief
executive office or sole place of business for the five years preceding the date hereof.

      Section 4.4 Locations of Inventory, Equipment and Books and Records. On the date hereof, such Grantor’s inventory and equipment
(other than inventory or
equipment in transit) and books and records concerning the Collateral are kept at the locations
listed on Schedule 4.

      Section 4.5 Pledged Collateral.

          (a) The Pledged Stock pledged by such Grantor hereunder (a) is listed on Schedule 5 and
constitutes that percentage of the issued and outstanding equity of all classes of each issuer
thereof as set forth on Schedule 5 and (b) has been duly authorized, validly issued and is fully
paid and nonassessable (other than Pledged Stock in limited liability companies and partnerships).

          (b) As of the Closing Date, all Pledged Collateral (other than Pledged Uncertificated Stock)
and all Pledged Investment Property consisting of instruments and certificated securities pledged
by such Grantor hereunder have been delivered to the Agent in accordance with Section 5.3(a).

          (c) Upon the occurrence and during the continuance of an Event of Default, the Agent shall be
entitled to exercise all of the rights of such Grantor granting

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the security interest in any
Pledged Stock, and a transferee or assignee of such Pledged Stock in a foreclosure sale held in
compliance with applicable law shall become a holder of such Pledged Stock to the same extent as
such Grantor and be entitled to participate in the management of the issuer of such Pledged Stock
and, upon the transfer of the entire interest of such Grantor, such Grantor shall, by operation of
law, cease to be a holder of such Pledged Stock.

      Section 4.6 Instruments and Tangible Chattel Paper Formerly Accounts. No amount payable to such Grantor under or in connection with any
account is evidenced by
any instrument or tangible chattel paper that has not been delivered to the Agent, properly
endorsed for transfer, to the extent delivery is required by Section 5.6(a).

      Section 4.7 Intellectual Property

          (a) Schedule 6 sets forth a true and complete list of the following Intellectual Property such
Grantor owns, licenses or otherwise has the right to use: (i) Intellectual Property that is
registered or subject to applications for registration, (ii) Internet Domain Names and (iii)
Material Intellectual Property and material Software, separately identifying that owned and
licensed to such Grantor and including for each of the foregoing items (1) the owner, (2) the
title, (3) the jurisdiction in which such item has been registered or otherwise arises or in which
an application for registration has been filed, (4) as applicable, the registration or application
number and registration or application date and (5) any IP Licenses or other rights (including
franchises) granted by the Grantor with respect thereto.

          (b) On the Closing Date, all Material Intellectual Property owned by such Grantor is valid, in
full force and effect, subsisting, unexpired and enforceable, and no Material Intellectual Property
has been abandoned. No breach or default of any material IP License shall be caused by any of the
following, and none of the following shall limit or impair the ownership, use, validity or
enforceability of, or any rights of such Grantor in, any Material Intellectual Property: (i) the
consummation of the transactions contemplated by any Loan Document or (ii) as of the Closing Date,
any holding, decision, judgment or order rendered by any Governmental Authority. There are no
pending (or, to the knowledge of such Grantor, threatened in writing) actions, investigations,
suits, proceedings, audits, claims, demands, orders or disputes challenging the ownership, use,
validity, enforceability of, or such Grantor’s rights in, any Material Intellectual Property of
such Grantor. To such Grantor’s knowledge, no Person has been or is infringing, misappropriating,
diluting, violating or otherwise impairing any Intellectual Property of such Grantor, in any such
case, that could reasonably be expected to have a Material Adverse Effect. Such Grantor, and to
such Grantor’s knowledge each other party thereto, is not in material breach or default of any
material IP License.

      Section 4.8 Commercial Tort Claims. To such Grantor’s knowledge, the only commercial tort claims of any Grantor in respect of
which the claims of such Grantor could reasonably be expected to exceed $100,000 existing on the
date hereof (regardless of whether the amount, defendant or other material facts can be determined
and

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regardless of whether such commercial tort claim has been asserted, threatened or has otherwise
been made known to the obligee thereof or whether litigation has been commenced for such claims)
are those listed on Schedule 1, which sets forth such information separately for each Grantor.

      Section 4.9 Specific Collateral. None of the Collateral is or is proceeds or products of farm products, as-extracted
collateral, health-care-insurance receivables or timber to be cut.

      Section 4.10 Enforcement. No Permit, notice to or filing with any Governmental Authority or any other Person or any
consent from any Person is required for the exercise by the Agent of its rights (including voting
rights) provided for in this Agreement or the enforcement of remedies in respect of the Collateral
pursuant to this Agreement, including the transfer of any Collateral, except (i) as may be required
in connection with the disposition of any portion of the Pledged Collateral by laws affecting the
offering and sale of securities generally or (ii) any approvals that may be required to be obtained
from any bailees or landlords to collect the Collateral, or (iii) any approvals or consents that
would be required under the Existing Licenses.

      Section 4.11 Representations and Warranties of the Credit Agreement. The representations and warranties as to such Grantor and its
Subsidiaries made in Article
III (Representations and Warranties) of the Credit Agreement are true and correct on each date to
the extent required by Section 2.2 of the Credit Agreement.

ARTICLE V

COVENANTS

     Each Grantor agrees with the Agent to the following, as long as any Obligation or Commitment
remains outstanding (other than contingent indemnification Obligations to the extent no claim
giving rise thereto has been asserted):

      Section 5.1 Maintenance of Perfected Security Interest; Further Documentation
and Consents.

          (a) Generally. Such Grantor shall (i) not use or permit any Collateral to be used
unlawfully or in violation of any provision of any Loan Document, any Related Agreement, any
Requirement of Law or any policy of insurance covering the Collateral and (ii) not enter into any
Contractual Obligation or undertaking restricting the right or ability of such Grantor or the Agent
to sell, assign, convey or transfer any Collateral if such restriction would reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.

          (b) Such Grantor shall maintain the security interest created by this Agreement as a perfected
security interest having at least the priority described in

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Section 4.2 and shall defend such
security interest and such priority against the claims and demands of all Persons.

          (c) Such Grantor shall furnish to the Agent from time to time statements and schedules further
identifying and describing the Collateral and such other documents in connection with the
Collateral as the Agent may reasonably request, all in reasonable detail and in form and substance
satisfactory to the Agent.

          (d) At any time and from time to time, upon the written request of the Agent, such Grantor
shall, for the purpose of obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, (i) promptly and duly execute and deliver, and have recorded,
such further documents, including an authorization to file (or, as applicable, the filing) of any
financing statement or amendment under the UCC (or other filings under similar Requirements of Law)
in effect in any jurisdiction with respect to the security interest created hereby and (ii) take
such further action as the Agent may reasonably request, including (A) using its best efforts to
secure all approvals necessary or appropriate for the assignment to or for the benefit of the Agent
of any Contractual Obligation, including any IP License, held by such Grantor
and to enforce the security interests granted hereunder and (B) executing and delivering any
Control Agreements with respect to deposit accounts and securities accounts.

          (e) If requested by the Agent, the Grantor shall arrange for the Agent’s first priority
security interest to be noted on the certificate of title of each Vehicle and shall file any other
necessary documentation in each jurisdiction that the Agent shall deem advisable to perfect its
security interests in any Vehicle.

          (f) To ensure that a Lien and security interest is granted on any of the Excluded Property set
forth in clause (ii) of the definition of “Excluded Property” other than the Existing JV,
such Grantor shall use its best efforts to obtain any required consents from any Person other than
a Borrower and its Affiliates with respect to any permit or license or any Contractual Obligation
with such Person entered into by such Grantor that requires such consent as a condition to the
creation by such Grantor of a Lien on any right, title or interest in such permit, license or
Contractual Obligation or any Stock or Stock Equivalent related thereto except with respect to the
Existing Licenses.

      Section 5.2 Changes in Locations, Name, Etc. Except upon 30 days’ prior written notice to the Agent and delivery to the Agent
of (a) all
documents reasonably requested by the Agent to maintain the validity, perfection and priority of
the security interests provided for herein and (b) if applicable, a written supplement to
Schedule 4 showing any additional locations at which inventory or equipment shall be kept, such
Grantor shall not do any of the following:

          (i) permit any inventory or equipment to be kept at a location other than those listed
on Schedule 4, except for inventory or equipment in transit;

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          (ii) change its jurisdiction of organization or its location, in each case from that
referred to in Section 4.3; or

          (iii) change its legal name or organizational identification number, if any, or
corporation, limited liability company, partnership or other organizational structure to
such an extent that any financing statement filed in connection with this Agreement would
become misleading.

      Section 5.3 Pledged Collateral.

          (a) Delivery of Pledged Collateral. Such Grantor shall (i) deliver to the Agent, in
suitable form for transfer and in form and substance satisfactory to the Agent, (A) all Pledged
Certificated Stock, (B) all Pledged Debt Instruments with a fair market value of $50,000 or more
and (C) all certificates and instruments evidencing Pledged Investment Property with a fair market
value of $50,000 or more and (ii) other than property not required to be delivered under subclause
(B) or (C) of the preceding
clause (i), maintain all other Pledged Investment Property in a Controlled Securities Account.

          (b) Event of Default. During the continuance of an Event of Default, the Agent shall
have the right, at any time in its discretion and without notice to the Grantor, to (i) transfer to
or to register in its name or in the name of its nominees any Pledged Collateral or any Pledged
Investment Property and (ii) exchange any certificate or instrument representing or evidencing any
Pledged Collateral or any Pledged Investment Property for certificates or instruments of smaller or
larger denominations.

          (c) Cash Distributions with respect to Pledged Collateral. Except as provided in
Article VI and subject to the limitations set forth in the Credit Agreement, such Grantor shall be
entitled to receive all cash distributions paid in respect of the Pledged Collateral.

          (d) Voting Rights. Except as provided in Article VI, such Grantor shall be entitled
to exercise all voting, consent and corporate, partnership, limited liability company and similar
rights with respect to the Pledged Collateral; provided, however, that no vote
shall be cast, consent given or right exercised or other action taken by such Grantor that would
impair the Collateral or be inconsistent with or result in any violation of any provision of any
Loan Document.

      Section 5.4 Accounts.

          (a) Such Grantor shall not, other than in the Ordinary Course of Business, (i) grant any
extension of the time of payment of any account, (ii) compromise or settle any account for less
than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment
of any account, (iv) allow any credit or discount on any account or (v) amend, supplement or modify
any account in any manner that could adversely affect the value thereof.

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          (b) In connection with periodic audits conducted by Agent and at any time when an Event of
Default is continuing, the Agent shall have the right to make test verifications of the Accounts in
any manner and through any medium that it reasonably considers advisable, and such Grantor shall
furnish all such assistance and information as the Agent may reasonably require in connection
therewith. At any time and from time to time, upon the Agent’s reasonable request, such Grantor
shall cause independent public accountants or others reasonably satisfactory to the Agent to
furnish to the Agent reports showing reconciliations, aging and test verifications of, and trial
balances for, the accounts; provided, however, that unless an Event of Default
shall be continuing, the Agent shall request no more than four such reports during any calendar
year.

      Section 5.5 Commodity Contracts. Such Grantor shall not have any commodity contract unless subject to a Control Agreement.

      Section 5.6 Delivery of Instruments and Tangible Chattel Paper and Control of
Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper.

          (a) If any amount in excess of $100,000 payable under or in connection with any Collateral
owned by such Grantor shall be or become evidenced by an instrument or tangible chattel paper other
than such instrument delivered in accordance with Section 5.3(a) and in the possession of the
Agent, such Grantor shall mark all such instruments and tangible chattel paper with the following
legend: “This writing and the obligations evidenced or secured hereby are subject to the security
interest of General Electric Capital Corporation, as Agent” and, at the request of the Agent, shall
promptly deliver such instrument or tangible chattel paper to the Agent, duly indorsed in a manner
reasonably satisfactory to the Agent.

          (b) Such Grantor shall not grant “control” (within the meaning of such term under
Article 9-106 of the UCC) over any investment property to any Person other than the Agent.

          (c) If such Grantor is or becomes the beneficiary of a letter of credit that is (i) not a
supporting obligation of any Collateral and (ii) in excess of $100,000, such Grantor shall
promptly, and in any event within 5 Business Days after becoming a beneficiary, notify the Agent
thereof and use commercially reasonable efforts to enter into a Contractual Obligation with the
Agent, the issuer of such letter of credit or any nominated person with respect to the
letter-of-credit rights under such letter of credit. Such Contractual Obligation shall assign such
letter-of-credit rights to the Agent and such assignment shall be sufficient to grant control for
the purposes of Section 9-107 of the UCC (or any similar section under any equivalent UCC). Such
Contractual Obligation shall also direct all payments thereunder to a Cash Collateral Account. The
provisions of the Contractual Obligation shall be in form and substance reasonably satisfactory to
the Agent.

          (d) If any amount in excess of $100,000 payable under or in connection with any Collateral
owned by such Grantor shall be or become evidenced by

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electronic chattel paper, such Grantor shall
take all steps necessary to grant the Agent control of all such electronic chattel paper for the
purposes of Section 9-105 of the UCC (or any similar section under any equivalent UCC) and all
“transferable records” as defined in each of the Uniform Electronic Transactions Act and
the Electronic Signatures in Global and National Commerce Act.

      Section 5.7 Intellectual Property.

          (a) At the time of the delivery of the quarterly financial statements by the Borrowers
required under Section 4.1(b) of the Credit Agreement, such Grantor shall provide (i) the Agent
notification of any change to Schedule 6 and (ii) the short-form intellectual property agreements
and assignments as described in this Section 5.7 and other documents that the Agent reasonably
requests with respect thereto.

          (b) Such Grantor shall (and shall cause all its licensees to) (i) (1) continue to use each
Trademark included in the Material Intellectual Property in order to maintain such Trademark in
full force and effect with respect to each class of goods for which such Trademark is currently
used, free from any claim of abandonment for non-use, (2) maintain at least the same standards of
quality of products and services offered under such Trademark as are currently maintained, (3) use
such Trademark with the appropriate notice of registration and all other notices and legends
required by applicable Requirements of Law, (4) not adopt or use any other Trademark that is
confusingly similar or a colorable imitation of such Trademark unless the Agent shall obtain a
perfected security interest in such other Trademark pursuant to this Agreement and (ii) not do any
act or omit to do any act whereby (w) such Trademark (or any goodwill associated therewith) could
reasonably be expected to become destroyed, invalidated, impaired or harmed in any way, (x) any
Patent included in the Material Intellectual Property could reasonably be expected to become
forfeited, misused, unenforceable, abandoned or dedicated to the public, (y) any portion of the
Copyrights included in the Material Intellectual Property could reasonably be expected to become
invalidated, otherwise impaired or fall into the public domain or (z) any Trade Secret that is
Material Intellectual Property could reasonably be expected to become publicly available or
otherwise unprotectable.

          (c) Such Grantor shall notify the Agent promptly if it knows, or has reason to know, that any
application or registration relating to any Material Intellectual Property may become forfeited,
misused, unenforceable, abandoned or dedicated to the public, or of any adverse determination or
development regarding the validity or enforceability or such Grantor’s ownership of, interest in,
right to use, register, own or maintain any Material Intellectual Property (including the
institution of, or any such determination or development in, any proceeding relating to the
foregoing in any Applicable IP Office). Such Grantor shall take all actions that are necessary or
reasonably requested by the Agent to maintain and pursue each application (and to obtain the
relevant registration or recordation) and to maintain each registration and recordation included in
the Material Intellectual Property.

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          (d) Such Grantor shall not knowingly do any act or omit to do any act to infringe,
misappropriate, dilute, violate or otherwise impair the Intellectual Property of any other Person.
In the event that any Material Intellectual Property of such Grantor is or has been infringed,
misappropriated, violated, diluted or otherwise impaired by a third party, such Grantor shall take
such action as it reasonably deems appropriate under the circumstances in response thereto, which
may include, if commercially reasonable to do so, promptly bringing suit and recovering all damages
therefor.

          (e) Such Grantor shall execute and deliver to the Agent in form and substance reasonably
acceptable to the Agent and suitable for (i) filing in the Applicable IP Office the short-form
intellectual property security agreements in the form attached hereto as Annex 3 for all Copyrights
(if registered), Trademarks, Patents and IP Licenses (in each case to the extent recordable) of
such Grantor and (ii) recording with the appropriate Internet domain name registrar, a duly
executed form of assignment for all Internet Domain Names of such Grantor (together with
appropriate supporting documentation as may be requested by the Agent).

      Section 5.8 Notices. Such Grantor shall promptly notify the Agent in writing of its acquisition of any interest
hereafter in property that is of a type where a security interest or lien must be or may be
registered, recorded or filed under, or notice thereof given under, any federal statute or
regulation.

      Section 5.9 Notice of Commercial Tort Claims. Such Grantor agrees that, if it shall acquire any interest in any commercial tort claim
which could reasonably be expected to exceed $100,000 (whether from another Person or because such
commercial tort claim shall have come into existence), (a) such Grantor shall, promptly after
becoming aware of such acquisition, deliver to the Agent, in each case in form and substance
reasonably satisfactory to the Agent, a notice of the existence and nature of such commercial tort
claim and a supplement to Schedule 1 containing a specific description of such commercial tort
claim, (b) Section 3.1 shall apply to such commercial tort claim and (c) such Grantor shall execute
and deliver to the Agent, in each case in form and substance satisfactory to the Agent, any
document, and take all other action, deemed by the Agent to be reasonably necessary or appropriate
for the Agent to obtain, on behalf of the Lenders, a perfected security interest having at least
the priority set forth in Section 4.2 in such commercial tort claim. Any supplement to Schedule 1
delivered pursuant to this Section 5.9 shall, after the receipt thereof by the Agent, become part
of Schedule 1 for all purposes hereunder other than in respect of representations and warranties
made prior to the date of such receipt.

      Section 5.10 Controlled Securities Account. Each Grantor shall deposit all of its Cash Equivalents in securities accounts that are
Controlled Securities Accounts or deliver such Cash Equivalents to Agent pursuant to Section 5.3.
So long as no Event of Default has occurred and is continuing and no Loans are outstanding, upon
the request of such Grantor the Agent shall promptly return any Cash Equivalents delivered to it
hereunder to such Grantor to be used for any purpose permitted under the Loan Documents.

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ARTICLE VI

REMEDIAL PROVISIONS

      Section 6.1 Code and Other Remedies.

          (a) UCC Remedies. During the continuance of an Event of Default, the Agent may
exercise, in addition to all other rights and remedies granted to it in this Agreement and in any
other instrument or agreement securing, evidencing or relating to any Secured Obligation, all
rights and remedies of a secured party under the UCC or any other applicable law.

          (b) Disposition of Collateral. Without limiting the generality of the foregoing, the
Agent may, without demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or upon any Grantor or
any other Person (all and each of which demands, defenses, advertisements and notices are hereby
waived), during the continuance of any Event of Default (personally or through its agents or
attorneys), (i) enter upon the premises where any Collateral is located, without any obligation to
pay rent, through self-help, without judicial process, without first obtaining a final judgment or
giving any Grantor or any other Person notice or opportunity for a hearing on the Agent’s claim or
action, (ii) collect, receive, appropriate and realize upon any Collateral and (iii) sell, assign,
convey, transfer, grant option or options to purchase and deliver any Collateral (enter into
Contractual Obligations to do any of the foregoing), in one or more parcels at public or private
sale or sales, at any exchange, broker’s board or office of any Secured Party or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any credit risk. The Agent shall have
the right, upon any such public sale or sales and, to the extent permitted by the UCC and other
applicable Requirements of Law, upon any such private sale, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption of any Grantor, which right or
equity is hereby waived and released.

          (c) Management of the Collateral. Each Grantor further agrees, that, during the
continuance of any Event of Default, (i) at the Agent’s request, it shall assemble the Collateral
and make it available to the Agent at places that the Agent shall reasonably select, whether at
such Grantor’s premises or elsewhere, (ii) without limiting the foregoing, the Agent also has the
right to require that each Grantor store and keep any Collateral pending further action by the
Agent and, while any such Collateral is so stored or kept, provide such guards and maintenance
services as shall be necessary to protect the same and to preserve and maintain such Collateral in
good condition, (iii) until the Agent is able to sell, assign, convey or transfer any Collateral,
the Agent shall have the right to hold or use such Collateral to the extent that it deems
appropriate for the purpose of preserving the Collateral or its value or for any other purpose
deemed appropriate by the
Agent and (iv) the Agent may, if it so elects, seek the appointment of a receiver or keeper to
take possession of any Collateral and to enforce any of the Agent’s remedies (for the

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benefit of
the Secured Parties), with respect to such appointment without prior notice or hearing as to such
appointment, except as required by law. The Agent shall not have any obligation to any Grantor to
maintain or preserve the rights of any Grantor as against third parties with respect to any
Collateral while such Collateral is in the possession of the Agent.

          (d) Application of Proceeds. The Agent shall apply the cash proceeds of any action
taken by it pursuant to this Section 6.1, after deducting all reasonable costs and expenses of
every kind incurred in connection therewith or incidental to the care or safekeeping of any
Collateral or in any way relating to the Collateral or the rights of the Agent and any other
Secured Party hereunder, including reasonable attorneys’ fees and disbursements, to the payment in
whole or in part of the Secured Obligations, as set forth in the Credit Agreement, and only after
such application and after the payment by the Agent of any other amount required by any Requirement
of Law, need the Agent account for the surplus, if any, to any Grantor.

          (e) Direct Obligation. Neither the Agent nor any other Secured Party shall be
required to make any demand upon, or pursue or exhaust any right or remedy against, any Grantor,
any other Credit Party or any other Person with respect to the payment of the Obligations or to
pursue or exhaust any right or remedy with respect to any Collateral therefor or any direct or
indirect guaranty thereof. All of the rights and remedies of the Agent and any other Secured Party
under any Loan Document shall be cumulative, may be exercised individually or concurrently and not
exclusive of any other rights or remedies provided by any Requirement of Law. To the extent it may
lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Agent or any Lender, any valuation, stay,
appraisement, extension, redemption or similar laws and any and all rights or defenses it may have
as a surety, now or hereafter existing, arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other disposition of any Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.

          (f) Commercially Reasonable. To the extent that applicable Requirements of Law impose
duties on the Agent to exercise remedies in a commercially reasonable manner, each Grantor
acknowledges and agrees that it is not commercially unreasonable for the Agent to do any of the
following:

          (i) fail to incur significant costs, expenses or other Liabilities reasonably deemed
as such by the Agent to prepare any Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished products for disposition;

          (ii) fail to obtain Permits, or other consents, for access to any Collateral to sell
or for the collection or sale of any Collateral, or, if not required
by other Requirements of Law, fail to obtain Permits or other consents for the
collection or disposition of any Collateral;

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          (iii) fail to exercise remedies against account debtors or other Persons obligated on
any Collateral or to remove Liens on any Collateral or to remove any adverse claims against
any Collateral;

          (iv) advertise dispositions of any Collateral through publications or media of general
circulation, whether or not such Collateral is of a specialized nature, or to contact other
Persons, whether or not in the same business as any Grantor, for expressions of interest in
acquiring any such Collateral;

          (v) exercise collection remedies against account debtors and other Persons obligated
on any Collateral, directly or through the use of collection agencies or other collection
specialists, hire one or more professional auctioneers to assist in the disposition of any
Collateral, whether or not such Collateral is of a specialized nature, or, to the extent
deemed appropriate by the Agent, obtain the services of other brokers, investment bankers,
consultants and other professionals to assist the Agent in the collection or disposition of
any Collateral, or utilize Internet sites that provide for the auction of assets of the
types included in the Collateral or that have the reasonable capacity of doing so, or that
match buyers and sellers of assets to dispose of any Collateral;

          (vi) dispose of assets in wholesale rather than retail markets;

          (vii) disclaim disposition warranties, such as title, possession or quiet enjoyment;
or

          (viii) purchase insurance or credit enhancements to insure the Agent against risks of
loss, collection or disposition of any Collateral or to provide to the Agent a guaranteed
return from the collection or disposition of any Collateral.

Each Grantor acknowledges that the purpose of this Section 6.1 is to provide a
non-exhaustive list of actions or omissions that are commercially reasonable when exercising
remedies against any Collateral and that other actions or omissions by the Secured Parties shall
not be deemed commercially unreasonable solely on account of not being indicated in this
Section 6.1. Without limitation upon the foregoing, nothing contained in this
Section 6.1 shall be construed to grant any rights to any Grantor or to impose any duties
on the Agent that would not have been granted or imposed by this Agreement or by applicable
Requirements of Law in the absence of this Section 6.1.

          (g) IP Licenses. For the purpose of enabling the Agent to exercise rights and
remedies under this Section 6.1 (including in order to take possession of, collect,
receive, assemble, process, appropriate, remove, realize upon, sell, assign,
convey, transfer or grant options to purchase any Collateral) at such time as the Agent shall
be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Agent,
for the benefit of the Secured Parties, (i) an irrevocable, nonexclusive,

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worldwide license
(exercisable without payment of royalty or other compensation to such Grantor), including in such
license the right to sublicense, use and practice any Intellectual Property now owned or hereafter
acquired by such Grantor and access to all media in which any of the licensed items may be recorded
or stored and to all Software and programs used for the compilation or printout thereof and (ii) an
irrevocable license (without payment of rent or other compensation to such Grantor) to use, operate
and occupy all real Property owned, operated, leased, subleased or otherwise occupied by such
Grantor.

      Section 6.2 Accounts and Payments in Respect of General Intangibles.

          (a) In addition to, and not in substitution for, any similar requirement in the Credit
Agreement, if required by the Agent at any time during the continuance of an Event of Default, any
payment of accounts or payment in respect of general intangibles, when collected by any Grantor,
shall be promptly (and, in any event, within 2 Business Days) deposited by such Grantor in the
exact form received, duly indorsed by such Grantor to the Agent, in a Cash Collateral Account,
subject to withdrawal by the Agent as provided in Section 6.4. Until so turned over, such payment
shall be held by such Grantor in trust for the Agent, segregated from other funds of such Grantor.
Each such deposit of proceeds of accounts and payments in respect of general intangibles shall be
accompanied by a report identifying in reasonable detail the nature and source of the payments
included in the deposit.

          (b) At any time during the continuance of an Event of Default:

          (i) each Grantor shall, upon the Agent’s request, deliver to the Agent all original
and other documents evidencing, and relating to, the Contractual Obligations and
transactions that gave rise to any account or any payment in respect of general
intangibles, including all original orders, invoices and shipping receipts and notify
account debtors that the accounts or general intangibles have been collaterally assigned to
the Agent and that payments in respect thereof shall be made directly to the Agent;

          (ii) the Agent may, without notice, at any time during the continuance of an Event of
Default, limit or terminate the authority of a Grantor to collect its accounts or amounts
due under general intangibles or any thereof and, in its own name or in the name of others,
communicate with account debtors to verify with them to the Agent’s satisfaction the
existence, amount and terms of any account or amounts due under any general intangible. In
addition, the Agent may at any time enforce such Grantor’s rights against such account
debtors and obligors of general intangibles; and

          (iii) each Grantor shall take all actions, deliver all documents and provide all
information necessary or reasonably requested by the Agent to ensure any Internet Domain
Name is registered.

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          (c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
each account and each payment in respect of general intangibles to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in accordance with
the terms of any agreement giving rise thereto. No Secured Party shall have any obligation or
liability under any agreement giving rise to an account or a payment in respect of a general
intangible by reason of or arising out of any Loan Document or the receipt by any Secured Party of
any payment relating thereto, nor shall any Secured Party be obligated in any manner to perform any
obligation of any Grantor under or pursuant to any agreement giving rise to an account or a payment
in respect of a general intangible, to make any payment, to make any inquiry as to the nature or
the sufficiency of any payment received by it or as to the sufficiency of any performance by any
party thereunder, to present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts that may have been assigned to it or to which it may be entitled
at any time or times.

      Section 6.3 Pledged Collateral.

          (a) Voting Rights. During the continuance of an Event of Default, upon notice by the
Agent to the relevant Grantor or Grantors, the Agent or its nominee may exercise (A) any voting,
consent, corporate and other right pertaining to the Pledged Collateral at any meeting of
shareholders, partners or members, as the case may be, of the relevant issuer or issuers of Pledged
Collateral or otherwise and (B) any right of conversion, exchange and subscription and any other
right, privilege or option pertaining to the Pledged Collateral as if it were the absolute owner
thereof (including the right to exchange at its discretion any Pledged Collateral upon the merger,
amalgamation, consolidation, reorganization, recapitalization or other fundamental change in the
corporate or equivalent structure of any issuer of Pledged Stock, the right to deposit and deliver
any Pledged Collateral with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Agent may determine), all without liability
except to account for property actually received by it; provided, however, that the
Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing.

          (b) Proxies. In order to permit the Agent to exercise the voting and other consensual
rights that it may be entitled to exercise pursuant hereto and to receive all dividends and other
distributions that it may be entitled to receive hereunder, (i) each Grantor shall promptly execute
and deliver (or cause to be executed and delivered) to the Agent all such proxies, dividend payment
orders and other instruments as the Agent may from time to time reasonably request and (ii) without
limiting the effect of clause (i)
above, such Grantor hereby grants to the Agent an irrevocable proxy to vote all or any part of
the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a
holder of the Pledged Collateral would be entitled (including giving or withholding written
consents of shareholders, partners or members, as the case may be, calling special meetings of
shareholders, partners or members, as the case may be, and voting at such meetings), which proxy
shall be effective, automatically and without the

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necessity of any action (including any transfer
of any Pledged Collateral on the record books of the issuer thereof) by any other person (including
the issuer of such Pledged Collateral or any officer or agent thereof) during the continuance of an
Event of Default and which proxy shall only terminate upon the payment in full of the Secured
Obligations (other than contingent indemnification obligations to the extent no claim giving rise
thereto has been asserted).

          (c) Authorization of Issuers. Each Grantor hereby expressly irrevocably authorizes
and instructs, without any further instructions from such Grantor, each issuer of any Pledged
Collateral pledged hereunder by such Grantor to (i) comply with any instruction received by it from
the Agent in writing that states that an Event of Default is continuing and is otherwise in
accordance with the terms of this Agreement and each Grantor agrees that such issuer shall be fully
protected from Liabilities to such Grantor in so complying and (ii) if so directed by Agent, pay
any dividend or make any other payment with respect to the Pledged Collateral directly to the
Agent.

      Section 6.4 Proceeds to be Turned over to and Held by Agent. Unless otherwise expressly provided in the Credit Agreement or this
Agreement, upon the
occurrence and during the continuation of an Event of Default, all proceeds of any Collateral
received by any Grantor hereunder in cash or Cash Equivalents shall be held by such Grantor in
trust for the Agent and the other Secured Parties, segregated from other funds of such Grantor, and
shall, promptly upon receipt by any Grantor, be turned over to the Agent in the exact form received
(with any necessary endorsement). All such proceeds of Collateral and any other proceeds of any
Collateral received by the Agent in cash or Cash Equivalents shall be held by the Agent in a Cash
Collateral Account. All proceeds being held by the Agent in a Cash Collateral Account (or by such
Grantor in trust for the Agent) shall continue to be held as collateral security for the Secured
Obligations and shall not constitute payment thereof until applied as provided in the Credit
Agreement.

      Section 6.5 Sale of Pledged Collateral.

          (a) Each Grantor recognizes that the Agent may be unable to effect a public sale of any
Pledged Collateral by reason of certain prohibitions contained in the Securities Act and applicable
state or foreign securities laws or otherwise or may determine that a public sale is impracticable,
not desirable or not commercially reasonable and, accordingly, may resort to one or more private
sales thereof to a
restricted group of purchasers that shall be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in
prices and other terms less favorable than if such sale were a public sale and, notwithstanding
such circumstances, agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Agent shall be under no obligation to delay a sale of any
Pledged Collateral for the period of time necessary to permit the issuer thereof to register such
securities for public sale under

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the Securities Act or under applicable state securities laws even
if such issuer would agree to do so.

          (b) Each Grantor agrees to use its best efforts to do or cause to be done all such other acts
as may be necessary to make such sale or sales of any portion of the Pledged Collateral pursuant to
Section 6.1 and this Section 6.5 valid and binding and in compliance with all applicable
Requirements of Law. Each Grantor further agrees that a breach of any covenant contained herein
will cause irreparable injury to the Agent and other Secured Parties, that the Agent and the other
Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained herein shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defense against an action for
specific performance of such covenants except for a defense that no Event of Default has occurred
under the Credit Agreement. Each Grantor waives any and all rights of contribution or subrogation
upon the sale or disposition of all or any portion of the Pledged Collateral by Agent.

      Section 6.6 Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other
disposition of any Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorney employed by the Agent or any other Secured Party to collect such
deficiency.

ARTICLE VII

THE AGENT

      Section 7.1 Agent’s Appointment as Attorney-in-Fact.

          (a) Each Grantor hereby irrevocably constitutes and appoints the Agent and any Related Person
thereof, with full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in the name of such
Grantor or in its own name, for the purpose of carrying out the terms of the Loan Documents, to
take any appropriate action and to
execute any document or instrument that may be necessary or desirable to accomplish the
purposes of the Loan Documents, and, without limiting the generality of the foregoing, each Grantor
hereby gives the Agent and its Related Persons the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any of the following when an Event of Default
shall be continuing:

          (i) in the name of such Grantor, in its own name or otherwise, take possession of and
indorse and collect any check, draft, note, acceptance or other instrument for the payment
of moneys due under any account or general intangible or with respect to any other
Collateral and file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Agent for the purpose of collecting any such
moneys due under

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any account or general intangible or with respect to any other Collateral
whenever payable;

          (ii) in the case of any Intellectual Property owned by or licensed to the Grantors,
execute, deliver and have recorded any document that the Agent may request to evidence,
effect, publicize or record the Agent’s security interest in such Intellectual Property and
the goodwill and general intangibles of such Grantor relating thereto or represented
thereby;

          (iii) pay or discharge taxes and Liens levied or placed on or threatened against any
Collateral, effect any repair or pay any insurance called for by the terms of the Credit
Agreement (including all or any part of the premiums therefor and the costs thereof);

          (iv) execute, in connection with any sale provided for in Section 6.1 or Section 6.5,
any document to effect or otherwise necessary or appropriate in relation to evidence the
sale of any Collateral; or

          (v) (A) direct any party liable for any payment under any Collateral to make payment
of any moneys due or to become due thereunder directly to the Agent or as the Agent shall
direct, (B) ask or demand for, and collect and receive payment of and receipt for, any
moneys, claims and other amounts due or to become due at any time in respect of or arising
out of any Collateral, (C) sign and indorse any invoice, freight or express bill, bill of
lading, storage or warehouse receipt, draft against debtors, assignment, verification,
notice and other document in connection with any Collateral, (D) commence and prosecute any
suit, action or proceeding at law or in equity in any court of competent jurisdiction to
collect any Collateral and to enforce any other right in respect of any Collateral, (E)
defend any actions, suits, proceedings, audits, claims, demands, orders or disputes brought
against such Grantor with respect to any Collateral, (F) settle, compromise or adjust any
such actions, suits, proceedings, audits, claims, demands, orders or disputes and, in
connection therewith, give such discharges or releases as the Agent may deem appropriate,
(G) assign any Intellectual Property owned by the Grantors or any IP Licenses of
the Grantors throughout the world on such terms and conditions and in such manner as
the Agent shall in its sole discretion determine, including the execution and filing of any
document necessary to effectuate or record such assignment and (H) generally, sell, assign,
convey, transfer or grant a Lien on, make any Contractual Obligation with respect to and
otherwise deal with, any Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes and do, at the Agent’s option, at any time or from
time to time, all acts and things that the Agent deems necessary to protect, preserve or
realize upon any Collateral and the Secured Parties’ security interests therein and to
effect the intent of the Loan Documents, all as fully and effectively as such Grantor might
do.

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          (vi) If any Grantor fails to perform or comply with any Contractual Obligation
contained herein, the Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such Contractual
Obligation.

          (b) The expenses of the Agent incurred in connection with actions undertaken as provided in
this Section 7.1, together with interest thereon at a rate set forth in subsection 1.3(c) of the
Credit Agreement, from the date of payment by the Agent to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Agent on demand.

          (c) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue of this Section 7.1. All powers, authorizations and agencies contained in this Agreement
are coupled with an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released as described in Section 8.2.

      Section 7.2 Authorization to File Financing Statements. Each Grantor authorizes the Agent and its Related Persons, at any time and from
time to
time, to file or record financing statements, amendments thereto, and other filing or recording
documents or instruments with respect to any Collateral in such form and in such offices as the
Agent reasonably determines appropriate to perfect the security interests of the Agent under this
Agreement, and such financing statements and amendments may described the Collateral covered
thereby as “all assets of the debtor”, but, with respect to Akorn, shall expressly exclude
the Existing JV. A photographic or other reproduction of this Agreement, where permitted by
applicable law, shall be sufficient as a financing statement or other filing or recording document
or instrument for filing or recording in any jurisdiction. Such Grantor also hereby ratifies its
authorization for the Agent to have filed any initial financing statement or amendment thereto
under the UCC (or other similar laws) in effect in any jurisdiction if filed prior to the date
hereof.

      Section 7.3 Authority of Agent. Each Grantor acknowledges that the rights and responsibilities of the Agent under this
Agreement with respect to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, voting right, request, judgment or other right or remedy provided for herein
or resulting or arising out of this Agreement shall, as between the Agent and the other Secured
Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Agent and the Grantors, the Agent shall
be conclusively presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any obligation or
entitlement to make any inquiry respecting such authority.

      Section 7.4 Duty; Obligations and Liabilities.

          (a) Duty of Agent. The Agent’s sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession shall be to deal

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with it in the same
manner as the Agent deals with similar property for its own account. The powers conferred on the
Agent hereunder are solely to protect the Agent’s interest in the Collateral and shall not impose
any duty upon the Agent to exercise any such powers. The Agent shall be accountable only for
amounts that it receives as a result of the exercise of such powers, and neither it nor any of its
Related Persons shall be responsible to any Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct as finally determined by a court of competent
jurisdiction. In addition, the Agent shall not be liable or responsible for any loss or damage to
any Collateral, or for any diminution in the value thereof, by reason of the act or omission of any
warehousemen, carrier, forwarding agency, consignee or other bailee if such Person has been
selected by the Agent in good faith.

          (b) Obligations and Liabilities with respect to Collateral. No Secured Party and no
Related Person thereof shall be liable for failure to demand, collect or realize upon any
Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or any other Person or to take any other
action whatsoever with regard to any Collateral. The powers conferred on the Agent hereunder shall
not impose any duty upon any other Secured Party to exercise any such powers. The other Secured
Parties shall be accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their respective officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.

ARTICLE VIII

MISCELLANEOUS

      Section 8.1 Reinstatement. Each Grantor agrees that, if any payment made by any Credit Party or other Person and
applied to the Secured Obligations is at any time annulled, avoided, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or
repaid, or the proceeds of any Collateral are required to be returned by any Secured Party to such
Credit Party, its estate, trustee, receiver or any other party, including any Grantor, under any
bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, any Lien or other Collateral securing such liability shall be and remain in
full force and effect, as fully as if such payment had never been made. If, prior to any of the
foregoing, (a) any Lien or other Collateral securing such Grantor’s liability hereunder shall have
been released or terminated by virtue of the foregoing or (b) any provision of the Guaranty
hereunder shall have been terminated, cancelled or surrendered, such Lien, other Collateral or
provision shall be reinstated in full force and effect and such prior release, termination,
cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the
obligations of any such Grantor in

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respect of any Lien or other Collateral securing such obligation
or the amount of such payment.

      Section 8.2 Release of Collateral.

          (a) At the time provided in subsection 8.1(b)(iii) of the Credit Agreement, the Collateral
shall be released from the Lien created hereby and this Agreement and all obligations (other than
those expressly stated to survive such termination) of the Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. Each Grantor is hereby authorized to file
UCC amendments at such time evidencing the termination of the Liens so released. At the request of
any Grantor following any such termination, the Agent shall deliver to such Grantor any Collateral
of such Grantor held by the Agent hereunder and execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination.

          (b) If the Agent shall be directed or permitted pursuant to subsection 8.10(b) of the Credit
Agreement to release any Lien or any Collateral, such Collateral shall be released from the Lien
created hereby to the extent provided under, and subject to the terms and conditions set forth in,
such subsection. In connection therewith, the Agent, at the request of any Grantor, shall execute
and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence
such release.

          (c) At the time provided in subsection 8.10(b) of the Credit Agreement and at the request of
the Borrower Representative, a Grantor shall be released from its obligations hereunder in the
event that all the Stock and Stock Equivalents of such Grantor shall be sold to any Person that is
not an Affiliate of a Borrower or the Subsidiaries of a Borrower in a transaction permitted by the
Loan Documents.

      Section 8.3 Independent Obligations. The obligations of each Grantor hereunder are independent of and separate from the Secured
Obligations and the Guaranteed Obligations. If any Secured Obligation or Guaranteed Obligation is
not paid when due, or upon any Event of Default, the Agent may, at its sole election, proceed
directly and at once, without notice, against any Grantor and any Collateral to collect and recover
the full amount of any Secured Obligation or Guaranteed Obligation then due, without first
proceeding against any other Grantor, any other Credit Party or any other Collateral and without
first joining any other Grantor or any other Credit Party in any proceeding.

      Section 8.4 No Waiver by Course of Conduct. No Secured Party shall by any act (except by a written instrument pursuant to
Section 8.6),
delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of any Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or privilege

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hereunder
shall preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by any Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy that such Secured Party would otherwise have
on any future occasion.

      Section 8.5 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 9.1 of the Credit Agreement; provided,
however, that annexes to this Agreement may be supplemented (but no existing provisions may
be modified and no Collateral may be released) through Pledge Amendments and Joinder Agreements, in
substantially the form of Annex 1 and Annex 2, respectively, in each case duly executed by the
Agent and each Grantor directly affected thereby.

      Section 8.6 Additional Grantors; Additional Pledged Collateral.

          (a) Joinder Agreements. If, at the option of a Borrower or as required pursuant to
Section 4.13 of the Credit Agreement, a Borrower shall cause any Subsidiary
that is not a Grantor to become a Grantor hereunder, such Subsidiary shall execute and deliver
to the Agent a Joinder Agreement substantially in the form of Annex 2 and shall thereafter for all
purposes be a party hereto and have the same rights, benefits and obligations as a Grantor party
hereto on the Closing Date.

          (b) Pledge Amendments. To the extent any Pledged Collateral has not been delivered as
of the Closing Date, such Grantor shall deliver a pledge amendment duly executed by the Grantor in
substantially the form of Annex 1 (each, a “Pledge Amendment”). Such Grantor authorizes
the Agent to attach each Pledge Amendment to this Agreement.

      Section 8.7 Notices. All notices, requests and demands to or upon the Agent or any Grantor hereunder shall be
effected in the manner provided for in Section 9.2 of the Credit Agreement; provided,
however, that any such notice, request or demand to or upon any Grantor shall be addressed
to the Borrowers’ notice address set forth in such Section 9.2.

      Section 8.8 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Grantor and shall
inure to the benefit of each Secured Party and their successors and assigns; provided,
however, that no Grantor may assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Agent.

      Section 8.9 Counterparts. This Agreement may be executed in any number of counterparts and by different parties in
separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Signature pages may be detached
from multiple separate counterparts and attached to a single counterpart. Delivery of an executed
signature page

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of this Agreement by facsimile transmission or by Electronic Transmission shall be
as effective as delivery of a manually executed counterpart hereof.

      Section 8.10 Severability. Any provision of this Agreement being held illegal, invalid or unenforceable in any
jurisdiction shall not affect any part of such provision not held illegal, invalid or
unenforceable, any other provision of this Agreement or any part of such provision in any other
jurisdiction.

      Section 8.11 Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by,
and construed and interpreted in accordance with, the law of the State of New York.

      Section 8.12 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO OTHER PARTY AND NO RELATED
PERSON OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND
THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.12.

     EACH GRANTOR AGREES TO BE BOUND BY THE PROVISIONS OF SUBSECTION 9.18(b) AND (c) OF THE CREDIT
AGREEMENT.

[SIGNATURE PAGES FOLLOW]

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     IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty and Security Agreement to
be duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	AKORN, INC.

as Grantor

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

	 	 	 	 	 
	 	AKORN (NEW JERSEY), INC.

as Grantor

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

ACCEPTED AND AGREED

as of the date first above written:

GENERAL ELECTRIC CAPITAL CORPORATION

     as Agent

	 	 	 	 	 
	 	 	 
	By:  	/s/
Dennis Cloud	 
	 	Name:  	Dennis Cloud	 
	 	Title:  	Duly Authorized Signatory	 
	 

[SIGNATURE PAGE TO GUARANTY AND SECURITY AGREEMENT]

 

 

ANNEX 1

TO

GUARANTY AND SECURITY AGREEMENT 1

FORM OF PLEDGE AMENDMENT

     This Pledge Amendment, dated as of
                     ___, 20___, is delivered pursuant to
Section 8.6 of the Guaranty and Security Agreement, dated as of January 7, 2009, by Akorn,
Inc., a Louisiana corporation and Akorn (New Jersey), Inc., an Illinois corporation (together, the
“Borrowers”), the undersigned Grantor and the other Affiliates of the Borrowers from time
to time party thereto as Grantors in favor of General Electric Capital Corporation, as Agent for
the Secured Parties referred to therein (the “Guaranty and Security Agreement”).
Capitalized terms used herein without definition are used as defined in the Guaranty and Security
Agreement.

     The undersigned hereby agrees that this Pledge Amendment may be attached to the Guaranty and
Security Agreement and that the Pledged Collateral listed on Annex 1-A to this Pledge
Amendment shall be and become part of the Collateral referred to in the Guaranty and Security
Agreement and shall secure all Obligations of the undersigned.

     The undersigned hereby represents and warrants that each of the representations and warranties
contained in Sections 4.1, 4.2, 4.5 and 4.10 of the Guaranty and
Security Agreement is true and correct in all material respects as of the date hereof as if made on
and as of such date.

	 	 	 	 	 
	 	[GRANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

			
	To be used for pledge of Additional Pledged Collateral by existing Grantor.

GUARANTY AND SECURITY AGREEMENT

AKORN, INC.

A1-1

 

Annex 1-A

PLEDGED STOCK

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	NUMBER
	 	 	 	 	 	 	 	 	OF
	 	 	 	 	 	 	 	 	SHARES,
	 	 	 	 	CERTIFICATE	 	 	 	UNITS OR
	ISSUER	 	CLASS	 	NO(S).	 	PAR VALUE	 	INTERESTS
	 

	 	 
	 	 	 	 
	 	 

PLEDGED DEBT INSTRUMENTS

	 	 	 	 	 	 	 	 	 
	 	 	DESCRIPTION OF	 	CERTIFICATE	 	FINAL	 	PRINCIPAL
	ISSUER	 	DEBT	 	NO(S).	 	MATURITY	 	AMOUNT
	 

	 	 
	 	 
	 	 	 	 

GUARANTY AND SECURITY AGREEMENT

AKORN, IN

A1-2

 

ACKNOWLEDGED AND AGREED

as of the date first above written:

GENERAL ELECTRIC CAPITAL CORPORATION

     as Agent

	 	 	 	 	 
	 	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

GUARANTY AND SECURITY AGREEMENT

AKORN, INC.

A1-3

 

ANNEX 2

TO

GUARANTY AND SECURITY AGREEMENT

FORM OF JOINDER AGREEMENT

     This JOINDER AGREEMENT, dated as of
                     ___, 20___, is delivered pursuant to
Section 8.6 of the Guaranty and Security Agreement, dated as of January 7, 2009, by Akorn,
Inc., a Louisiana corporation and Akorn (New Jersey), Inc., an Illinois corporation (together, the
“Borrowers”) and the Affiliates of the Borrowers from time to time party thereto as
Grantors in favor of the General Electric Capital Corporation, as Agent for the Secured Parties
referred to therein (the “Guaranty and Security Agreement”). Capitalized terms used herein
without definition are used as defined in the Guaranty and Security Agreement.

     By executing and delivering this Joinder Agreement, the undersigned, as provided in
Section 8.6 of the Guaranty and Security Agreement, hereby becomes a party to the Guaranty
and Security Agreement as a Grantor thereunder with the same force and effect as if originally
named as a Grantor therein and, without limiting the generality of the foregoing, as collateral
security for the prompt and complete payment and performance when due (whether at stated maturity,
by acceleration or otherwise) of the Secured Obligations of the undersigned, hereby mortgages,
pledges and hypothecates to the Agent for the benefit of the Secured Parties, and grants to the
Agent for the benefit of the Secured Parties a lien on and security interest in, all of its right,
title and interest in, to and under the Collateral of the undersigned and expressly assumes all
obligations and liabilities of a Grantor thereunder. The undersigned hereby agrees to be bound as
a Grantor for the purposes of the Guaranty and Security Agreement.

     The information set forth in Annex 1-A is hereby added to the information set forth in
Schedules 1 through 6 to the Guaranty and Security Agreement. By acknowledging and
agreeing to this Joinder Agreement, the undersigned hereby agree that this Joinder Agreement may be
attached to the Guaranty and Security Agreement and that the Pledged Collateral listed on
Annex 1-A to this Joinder Amendment shall be and become part of the Collateral referred to
in the Guaranty and Security Agreement and shall secure all Secured Obligations of the undersigned.

     The undersigned hereby represents and warrants that each of the representations and warranties
contained in Article IV of the Guaranty and Security Agreement applicable to it is true and
correct on and as the date hereof as if made on and as of such date.

GUARANTY AND SECURITY AGREEMENT

AKORN, INC.

A2-1

 

     IN WITNESS WHEREOF, THE UNDERSIGNED HAS CAUSED THIS JOINDER AGREEMENT TO BE DULY EXECUTED AND
DELIVERED AS OF THE DATE FIRST ABOVE WRITTEN.

	 	 	 	 	 
	 	[Additional Grantor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

GUARANTY AND SECURITY AGREEMENT

AKORN, INC.

A2-2

 

ACKNOWLEDGED AND AGREED

as of the date first above written:

[EACH GRANTOR PLEDGING

ADDITIONAL COLLATERAL]

	 	 	 	 	 
	 	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

GENERAL ELECTRIC CAPITAL CORPORATION

      as Agent

	 	 	 	 	 
	 	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

GUARANTY AND SECURITY AGREEMENT

AKORN, INC.

A2-3

 

ANNEX 3

TO

GUARANTY AND SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT1

     THIS [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT, dated as of January 7, 2009, is made
by each of the entities listed on the signature pages hereof (each a “Grantor” and,
collectively, the “Grantors”), in favor of General Electric Capital Corporation (“GE
Capital”), as administrative agent (in such capacity, together with its successors and
permitted assigns, the “Agent”) for the Lenders and the L/C Issuers (as defined in the
Credit Agreement referred to below) and the other Secured Parties.

W I T N E S S E T H:

     WHEREAS, pursuant to the Credit Agreement, dated as of January 7, 2009 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrowers, the Borrower Representative, the other Credit Parties, the
Lenders and the L/C Issuers from time to time party thereto and GE Capital, as Agent for the
Lenders and the L/C Issuers, the Lenders and the L/C Issuers have severally agreed to make
extensions of credit to the Borrowers upon the terms and subject to the conditions set forth
therein;

     WHEREAS, each Grantor has agreed, pursuant to a Guaranty and Security Agreement of even date
herewith in favor of the Agent (the “Guaranty and Security Agreement”), to guarantee the
Obligations (as defined in the Credit Agreement) of each Borrower; and

     WHEREAS, all of the Grantors are party to the Guaranty and Security Agreement pursuant to
which the Grantors are required to execute and deliver this [Copyright] [Patent] [Trademark]
Security Agreement;

     NOW, THEREFORE, in consideration of the premises and to induce the Lenders, the L/C Issuers
and the Agent to enter into the Credit Agreement and to induce the Lenders and the L/C Issuers to
make their respective extensions of credit to the Borrowers thereunder, each Grantor hereby agrees
with the Agent as follows:

     Section 1. Defined Terms. Capitalized terms used herein without definition
are used as defined in the Guaranty and Security Agreement.

     Section 2. Grant of Security Interest in [Copyright] [Trademark] [Patent]
Collateral. Each Grantor, as collateral security for the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured
Obligations of such Grantor, hereby mortgages, pledges and hypothecates to the Agent for the
benefit of the Secured Parties, and grants to the Agent for the benefit of the Secured Parties a
Lien on and security interest in, all of its right, title and interest in, to

 

			
	1	 	Separate agreements should be executed relating to
each Grantor’s respective Copyrights, Patents, and Trademarks.

A3-1

 

and under the following Collateral of such Grantor (the “[Copyright] [Patent] [Trademark]
Collateral”):

          (a) [all of its Copyrights and all IP Licenses providing for the grant by or to such Grantor
of any right under any Copyright, including, without limitation, those referred to on
Schedule 1 hereto;

          (b) all renewals, reversions and extensions of the foregoing; and

          (c) all income, royalties, proceeds and Liabilities at any time due or payable or asserted
under and with respect to any of the foregoing, including, without limitation, all rights to sue
and recover at law or in equity for any past, present and future infringement, misappropriation,
dilution, violation or other impairment thereof.]

or

          (a) [all of its Patents and all IP Licenses providing for the grant by or to such Grantor of
any right under any Patent, including, without limitation, those referred to on Schedule 1
hereto;

          (b) all reissues, reexaminations, continuations, continuations-in-part, divisionals, renewals
and extensions of the foregoing; and

          (c) all income, royalties, proceeds and Liabilities at any time due or payable or asserted
under and with respect to any of the foregoing, including, without limitation, all rights to sue
and recover at law or in equity for any past, present and future infringement, misappropriation,
dilution, violation or other impairment thereof.]

or

          (a) [all of its Trademarks and all IP Licenses providing for the grant by or to such Grantor
of any right under any Trademark, including, without limitation, those referred to on
Schedule 1 hereto;

          (b) all renewals and extensions of the foregoing;

          (c) all goodwill of the business connected with the use of, and symbolized by, each such
Trademark; and

          (d) all income, royalties, proceeds and Liabilities at any time due or payable or asserted
under and with respect to any of the foregoing, including, without limitation, all rights to sue
and recover at law or in equity for any past, present and future infringement, misappropriation,
dilution, violation or other impairment thereof.]

     Section 3. Guaranty and Security Agreement. The security interest granted
pursuant to this [Copyright] [Patent] [Trademark] Security Agreement is granted in conjunction with
the security interest granted to the Agent pursuant to the Guaranty and

A3-2

 

Security Agreement and each Grantor hereby acknowledges and agrees that the rights and
remedies of the Agent with respect to the security interest in the [Copyright] [Patent] [Trademark]
Collateral made and granted hereby are more fully set forth in the Guaranty and Security Agreement,
the terms and provisions of which are incorporated by reference herein as if fully set forth
herein.

     Section 4. Grantor Remains Liable. Each Grantor hereby agrees that, anything
herein to the contrary notwithstanding, such Grantor shall assume full and complete responsibility
for the prosecution, defense, enforcement or any other necessary or desirable actions in connection
with their [Copyrights] [Patents] [Trademarks] and IP Licenses subject to a security interest
hereunder.

     Section 5. Counterparts. This [Copyright] [Patent] [Trademark] Security
Agreement may be executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Signature pages may be detached from
multiple separate counterparts and attached to a single counterpart.

     Section 6. Governing Law. This [Copyright] [Patent] [Trademark] Security
Agreement and the rights and obligations of the parties hereto shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York.

[SIGNATURE PAGES FOLLOW]

A3-3

 

     IN WITNESS WHEREOF, each Grantor has caused this [Copyright] [Patent] [Trademark] Security
Agreement to be executed and delivered by its duly authorized officer as of the date first set
forth above.

	 	 	 	 	 
	 	Very truly yours,

[GRANTOR]

     as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

ACCEPTED AND AGREED

as of the date first above written:

GENERAL ELECTRIC CAPITAL CORPORATION

      as Agent

	 	 	 	 	 
	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

[SIGNATURE PAGE TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]

A3-4

 

ACKNOWLEDGMENT OF GRANTOR

	 	 	 	 	 	 	 	 	 
	State of

	 	                        

	 	 	)	 	 	 
	 

	 	 	 	 	)	 	 	ss.
	County of

	 	                        

	 	 	)	 	 	 

     On this ___ day of                      ___, 20___ before me personally appeared                     ,
proved to me on the basis of satisfactory evidence to be the person who executed the foregoing
instrument on behalf of                     , who being by me duly sworn did depose and say that he is
an authorized officer of said corporation, that the said instrument was signed on behalf of said
corporation as authorized by its Board of Directors and that he acknowledged said instrument to be
the free act and deed of said corporation.

	 	 	 	 	 
	 	 	 
	  	  	 	 
	  	 	           Notary Public	 
	 

[ACKNOWLEDGEMENT OF GRANTOR FOR [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]

A3-5

 

SCHEDULE I

TO

[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

[Copyright] [Patent] [Trademark] Registrations

     1. REGISTERED [COPYRIGHTS] [PATENTS] [TRADEMARKS]

     [Include Registration Number and Date]

     2. [COPYRIGHT] [PATENT] [TRADEMARK] APPLICATIONS

     [Include Application Number and Date]

     3. IP LICENSES

     [Include complete legal description of agreement (name of agreement, parties and date)]exv10w3

Exhibit 10.3

	 	 	 	 	 	 
	This instrument was prepared by
	 	 	 	 	 
	and after recording, return to:
	 	 	 	 	 
	Susan E. Foxworth, Esq.
	 	 	 	 	 
	King & Spalding LLP
	 	 	 	 	 
	1180 Peachtree Street
	 	 	 	 	 
	Atlanta, Georgia 30309
	 	 	 	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 
	 

	 	 	 	 	This space reserved for Recorder’s use only.
	 
	 	 	 	 	 
	 	 	 

Macon County, Illinois

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF

LEASES AND RENTS, FINANCING STATEMENT AND

FIXTURE FILING

BY

AKORN, INC.

Mortgagor,

TO

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent and Mortgagee,

Relating to Premises in:

Macon County, Illinois

DATED: As of January 7, 2009

 

 

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF

LEASES AND RENTS, FINANCING STATEMENT AND FIXTURE FILING

          THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, FINANCING STATEMENT AND
FIXTURE FILING (“Mortgage”) is made as of January 7, 2009, by AKORN, INC., a Louisiana
corporation, with an office at 1925 West Field Court, Suite 300, Lake Forest, Illinois 60045
(“Mortgagor”), to GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, with an
office at 500 West Monroe, Chicago, Illinois 60661, as secured party, in its capacity as agent on
behalf of itself as a Lender and for the Lenders, as hereinafter defined (together with any
successors or assigns in such capacity, the “Agent” or “Mortgagee”).

I.

RECITALS

          WHEREAS, Mortgagor is the owner and holder of fee simple title in and to all of that certain
real property located in Illinois (the “State”), and more fully described in Exhibit
A attached hereto (the “Premises”), which Premises forms a portion of the Property
described below;

          WHEREAS, on the date hereof, Mortgagor entered into that certain Credit Agreement (as the same
may be further amended, restated, modified or otherwise supplemented and in effect from time to
time, hereinafter the “Credit Agreement”), by and among Mortgagor and Akorn (New Jersey),
Inc. (collectively, “Borrowers”), each of the other persons party thereto that are
designated as credit parties, General Electric Capital Corporation, for itself, as a Lender, as L/C
Issuer, Swingline Lender and as the agent for all the Lenders, and each of the other financial
institutions from time to time party thereto (collectively, the “Lenders”), under which the
Lenders agreed to make available to Borrowers certain loans and other financial accommodations;

          WHEREAS, Mortgagor wishes to provide further assurance and security to the Agent and the
Lenders and as a condition to the Agent and the Lenders executing the Credit Agreement, the Agent
and the Lenders are requiring that Mortgagor grant to the Agent, on behalf of the Lenders, a
security interest in and a first mortgage lien upon the Property (as hereinafter defined), subject
to the Permitted Liens (as such term is defined in the Credit Agreement), to secure all of
Mortgagor’s obligations under the Credit Agreement, this Mortgage and the Loan Documents (as such
term is defined in the Credit Agreement). All capitalized terms used herein but not defined herein
shall have the meanings ascribed to them in the Credit Agreement.

II.

THE GRANT

2

 

          NOW, THEREFORE, in order to secure the payment of the obligations of Mortgagor under the
Credit Agreement, this Mortgage and the other Loan Documents that may now or hereafter become owing
from Mortgagor to Mortgagee and the Lenders (the “Secured Indebtedness”), and in
consideration of Ten and No/100 Dollars ($10.00) in hand paid by Mortgagee to Mortgagor, the
Recitals above stated, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Mortgagor hereby GRANTS, BARGAINS, SELLS, ASSIGNS, RELEASES,
ALIENS, TRANSFERS, WARRANTS, DEMISES, CONVEYS and MORTGAGES to Mortgagee and its successors and
assigns (for the benefit of the Lenders) forever (and grants to Mortgagee and its successors and
assigns (for the benefit of the Lenders) forever a continuing security interest in and to all of
Mortgagor’s estate, right, claim and interest in and to the Premises, together with all of
Mortgagor’s estate, right, claim and interest in and to the following described property, all of
which other property is pledged primarily on a parity with the Premises and not secondarily (the
Premises and the following described rights, interests, claims and property are collectively
referred to as the “Property”):

     (a) all buildings, structures and other improvements of every kind and description now
or hereafter erected, situated, or placed upon the Premises (the “Improvements”),
together with any and all personal property now or hereafter owned by Mortgagor and located
in or on, forming part of, attached to, used or intended to be used in connection with, or
incorporated in any such Improvements, including all extensions of, additions to,
betterments, renewals of, substitutions for and replacements for any of the foregoing;

     (b) all claims, demands, rights, title and interest of Mortgagor now owned or hereafter
acquired, including without limitation, any after-acquired title, franchise, license,
remainder or reversion, in and to any and all (i) land or vaults lying within the
right-of-way of any street, avenue, way, passage, highway, or alley, open or proposed,
vacated or otherwise, adjoining the Premises; (ii) alleys, sidewalks, streets, avenues,
strips and gores of land belonging, adjacent or pertaining to the Premises or the
Improvements; (iii) storm and sanitary sewer, water, gas, electric, railway and telephone
services relating to the Premises and the Improvements; (iv) development rights, air rights,
water, water rights, water stock, gas, oil, minerals, coal and other substances of any kind
or character underlying or relating to the Premises or any part thereof; and (v) tenements,
hereditaments, easements, appurtenances, other rights, liberties, reservations, allowances
and privileges relating to the Premises or the Improvements or in any way now or hereafter
appertaining thereto, including homestead and any other claims at law or in equity;

     (c) all right, title and interest of Mortgagor in any and all leases, subleases,
management agreements, arrangements, concessions or agreements, written or oral, relating to
the use and occupancy of the Premises or the Improvements or any portion thereof, now or
hereafter existing or entered into (collectively “Leases”);

     (d) all rents, issues, profits, royalties, revenue, advantages, income, avails, claims
against guarantors, all cash or security deposits, advance rentals, deposits or payments
given and other benefits now or hereafter derived directly or indirectly from the

3

 

Premises and Improvements under the Leases or otherwise (collectively “Rents”),
subject to the right, power and authority granted to Mortgagee pursuant to Section 3.8
hereof;

     (e) all right, title and interest of Mortgagor in and to all options to purchase or
lease the Premises or the Improvements or any portion thereof or interest therein, or any
other rights, interests or greater estates in the rights and properties comprising the
Property now owned or hereafter acquired by Mortgagor;

     (f) any interests, estates or other claims of every name, kind or nature, both in law
and in equity, which Mortgagor now has or may acquire in the Premises and Improvements or
other rights, interests or properties comprising the Property now owned or hereafter
acquired;

     (g) all rights of Mortgagor to any and all plans and specifications, designs, drawings
and other matters prepared for any construction on the Premises or regarding the
Improvements;

     (h) all rights of Mortgagor under any contracts executed by Mortgagor with any provider
of goods or services for or in connection with any construction undertaken on or services
performed or to be performed in connection with the Premises or the Improvements;

     (i) all right, title and interest of Mortgagor in and to all tangible personal property
(“Personal Property”) now or hereafter owned by Mortgagor and located in, on or at
the Premises or the Improvements and used or useful in connection therewith, including,
without limitation:

     (i) all building materials and equipment located upon the Premises and intended
for construction, reconstruction, alteration, repair or incorporation in or to the
Improvements now or hereafter to be constructed thereon, whether or not yet
incorporated in such Improvements (all of which shall be deemed to be included in
the Property upon delivery thereto);

     (ii) all machines, machinery, fixtures, apparatus, equipment or articles used
in supplying heating, gas, electricity, air-conditioning, water, light, power,
plumbing, sprinkler, waste removal, refrigeration, ventilation, and all fire
sprinklers, alarm systems, protection, electronic monitoring equipment and devices;

     (iii) all window, structural, maintenance and cleaning equipment and rigs; and

     (iv) all Fixtures now or hereafter owned by Mortgagor and attached to or
contained in and used or useful in connection with the Premises or the Improvements;
and

     (j) all the estate, interest, right, title or other claim or demand which the Mortgagor
now has or may hereafter have or acquire with respect to (i) proceeds of

4

 

insurance in effect with respect to the Property and (ii) any and all awards, claims
for damages, judgments, settlements and other compensation made for or consequent upon the
taking by condemnation, eminent domain or any like proceeding, or by any proceeding or
purchase in lieu thereof, of the whole or any part of the Property, including, without
limitation, any awards and compensation resulting from a change of grade of streets and
awards and compensation for severance damages (collectively “Awards”).

          TO HAVE AND TO HOLD the Property hereby mortgaged and conveyed or so intended, unto the
Mortgagee, its successors and assigns, forever, for the uses and purposes herein set forth,
subject, however, only to the Permitted Liens.

          The Mortgagor hereby covenants with the Mortgagee: (i) that at the execution and delivery
hereof, Mortgagor owns the Property and has good, indefeasible fee simple estate therein; (ii) that
the Property is free from all encumbrances and exceptions to title (and any claim of any other
person) other than Permitted Liens, (iii) that it has good and lawful right to sell, mortgage and
convey the Property; and (iv) that Mortgagor and its successors and assigns shall forever warrant
and defend the Property against all claims and demands whatsoever, other than those arising from
Permitted Liens.

III.

GENERAL AGREEMENTS

     3.1 Payment of Indebtedness.
Mortgagor shall pay promptly and when due all amounts owing by Mortgagor in respect of the
Secured Indebtedness at the times and in the manner provided in the Credit Agreement, the Notes,
this Mortgage, or any of the other Loan Documents.

     3.2 Impositions.
Except as otherwise permitted under Section 4.7 of the Credit Agreement, Mortgagor shall pay
prior to delinquency, all general taxes, special taxes, special assessments, water charges, sewer
charges, and any other charges, fees, taxes, claims, levies, expenses, liens and assessments,
ordinary or extraordinary, governmental or nongovernmental, statutory or otherwise (all of the
foregoing being herein collectively referred to as “Impositions”), that may be asserted
against the Property or any part thereof or Mortgagor’s interest therein.

     3.3 Payment of Impositions by Mortgagee.
Upon the occurrence and during the continuance of an Event of Default (as hereinafter
defined), Mortgagee is hereby authorized to make or advance, in the place and stead of Mortgagor,
any payment relating to Impositions. Mortgagee may do so according to any bill, statement, or
estimate procured from the appropriate public office without inquiry into the accuracy or the
validity of any Impositions, lien, sale, forfeiture, or related title or claim. Mortgagee is
further authorized to make or advance, in place of Mortgagor, unless such matter is being properly
contested by Mortgagor in accordance with Section 4.7 of the Credit Agreement, any payment relating
to any apparent or threatened adverse title, lien, statement of lien,
encumbrance, claim, charge, or payment otherwise relating to any other purpose herein and
hereby authorized, but not enumerated in this Section 3.3, whenever, in Mortgagee’s judgment and
discretion, such advance is necessary to protect the full security

5

 

intended to be created by this
Mortgage. All such advances and indebtedness authorized by this Section 3.3 shall constitute
Secured Indebtedness and shall be repayable by Mortgagor upon demand with interest at the rate set
forth under Section 1.3(c) of the Credit Agreement.

     3.4 Condemnation and Eminent Domain.
Mortgagor shall give Mortgagee prompt notice of all proceedings, instituted or threatened,
seeking condemnation or a taking by eminent domain or like process (herein collectively called
“Taking”), of all or any part of the Property or any related easement or appurtenance, and
shall deliver to Mortgagee copies of any and all papers served upon Mortgagor in connection with
any such proceeding. Mortgagee (or, after entry of decree of foreclosure, the purchaser at the
foreclosure sale or decree creditor, as the case may be) is hereby authorized at its option to
participate in such proceeding and, upon the occurrence and during the continuance of an Event of
Default, control the same and to be represented therein by counsel of its own choice, and Mortgagor
will deliver, or cause to be delivered to Mortgagee such instruments as may be requested by it from
time to time to permit such participation or control. Mortgagor hereby assigns, transfers and sets
over unto Mortgagee the entire proceeds of any and all Awards resulting from any Taking. Mortgagee
is hereby authorized to collect and receive from the condemnation authorities all Awards and is
further authorized to give appropriate receipts and acquittances. Such Award or payment, less the
amount of any expenses incurred in litigating, arbitrating, compromising, or settling any claim
arising out of a Taking, shall be applied in the same manner as if they were proceeds from a
casualty loss covered by insurance in accordance with Section 4.6 of the Credit Agreement and in
accordance with Section 3.5 hereafter.

     3.5 Restoration.
In the event there shall be casualty loss or a Taking, and Mortgagee elects to cause the
applicable insurance proceeds or Award to be applied to restore, repair or replace the Property
(“Restoration”), Mortgagee shall disburse such insurance proceeds or Award in accordance
with disbursement procedures reasonably acceptable to Mortgagee, including, without limitation,
such procedures as are customarily utilized by construction lenders to insure the lien free
completion of construction projects. No such insurance proceeds or Award shall be disbursed unless
the following conditions are satisfied promptly upon the occurrence of the casualty loss or Taking
(but in no event later than one hundred eighty (180) days following such occurrence):

          (a) Mortgagee shall have received and approved complete plans and specifications for the
Restoration;

          (b) Mortgagee shall have received and approved a construction contract for the work of
Restoration with a contractor reasonably acceptable to Mortgagee;

          (c) Mortgagee shall have received copies of all permits and approvals required in connection
with the Restoration to be issued prior to the commencement of the Restoration; and

          (d) Mortgagee shall be satisfied that the amount of the insurance proceeds or Award actually
received, together with such funds as may be available, if any, under the Credit Agreement and as
Mortgagor requests be reserved for such purpose, are sufficient to pay all costs

6

 

of the Restoration
(as evidenced by a cost estimate prepared by an architect or engineer reasonably acceptable to
Mortgagee).

     3.6 Maintenance of Property. 
Mortgagor shall:

          (a) subject to Section 3.5 hereof, promptly repair, restore, replace or rebuild any material
portion of the Property which may become damaged, destroyed, altered, removed, severed, or
demolished, with replacements at least equal in quality and condition as previously existed, free
from any security interest in, encumbrances on or reservation of title thereto except the lien of
this Mortgage and Permitted Liens;

          (b) keep the Property in good condition and repair, without waste, and free from mechanics’,
materialmen’s or like liens or claims except for Permitted Liens and liens which have been properly
bonded with the appropriate judicial or other authority in accordance with the terms of the Credit
Agreement; and

          (c) not make any material alterations in the Property, except as required by law or municipal
ordinance or in the ordinary course of business or as otherwise may reasonably be necessary in
light of Mortgagee’s business activities conducted in accordance with the Credit Agreement.

     3.7 Prohibited Liens; Prohibited Transfers.

          (a) Except as otherwise permitted in Section 5.1 of the Credit Agreement, Mortgagor shall not
create, suffer, or permit to be created or filed against the Property any Lien superior or inferior
to the lien created by this Mortgage.

          (b) Except as otherwise provided in Section 5.2 of the Credit Agreement, Mortgagor may not
sell, lease or convey all or any part of the Property or any interest therein.

     3.8 Assignment of Leases and Rents.
(a) All right, title, and interest of Mortgagor in and to all Leases and Rents are hereby
transferred and assigned simultaneously herewith to Mortgagee. Although it is the intention of the
parties that the assignment contained in this paragraph shall be a present
assignment, it is expressly understood and agreed, anything to the contrary notwithstanding,
that Mortgagee shall not exercise any of the rights or powers conferred upon it by this paragraph
until an Event of Default shall exist and be continuing under this Mortgage.

          (b) Following the occurrence of an Event of Default and during the continuance thereof, (a)
Mortgagee shall have the rights and powers as are provided herein, (b) this Mortgage shall
constitute a direction to each lessee under the Leases and each guarantor thereof to pay all Rents
directly to Mortgagee without proof of the Event of Default, and (c) Mortgagee shall have the
authority, as Mortgagor’s attorney-in-fact (such authority being

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coupled with an interest and
irrevocable), to sign the name of Mortgagor and to bind Mortgagor on all papers and documents
relating to the operation, leasing and maintenance of the Property.

          (c) If Mortgagor, as lessor under any Lease, shall neglect or refuse to perform, observe and
keep all of the covenants, provisions and agreements contained in such Lease, then Mortgagee may
perform and comply with any such Lease covenants, agreements and provisions. All reasonable costs
and expenses incurred by Mortgagee in complying with such covenants, agreements, and provisions
shall constitute Secured Indebtedness and shall be payable upon demand with interest payable at the
rate set forth under Section 1.3(c) of the Credit Agreement.

          (d) Mortgagee shall not be obligated to perform or discharge any obligation, duty or liability
under any Lease, and Mortgagor shall and does hereby agree, except to the extent of Mortgagee’s
gross negligence or willful misconduct, to indemnify and hold the Mortgagee harmless of and from
any and all liability, loss or damage which it may or might incur under any Lease or under or by
reason of their assignments and of and from any and all claims and demands whatsoever which may be
asserted against it by reason of alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants or agreements contained in such Lease. Should Mortgagee
incur any such liability, loss or damage under any Lease or under or by reason of its assignment to
Mortgagee, or in the defense of any claims or demands, the amount thereof, including costs,
expenses and reasonable attorneys’ fees, shall constitute Secured Indebtedness and shall be payable
upon demand with interest payable at the rate set forth under Section 1.3(c) of the Credit
Agreement.

     3.9 Uniform Commercial Code.
(a) This Mortgage constitutes a Security Agreement as that term is used in the Uniform
Commercial Code in the State (the “Code”) with respect to any part of the Property which
may or might now or hereafter be or be deemed to be personal property, fixtures or property other
than real estate (including all replacements thereof, additions thereto and substitutions therefor)
(collectively, the “Personal Property Collateral”). Mortgagor hereby grants to Mortgagee a
security interest in and to all Personal Property Collateral to secure the payment of the Secured
Indebtedness.

          (b) At any time after an Event of Default has occurred and shall be continuing, Mortgagee
shall have the remedies of a secured party under the Code, including without limitation the right
to take immediate and exclusive possession of the Personal Property Collateral or any part thereof.
The remedies of Mortgagee hereunder are cumulative and the exercise of any one or more of the
remedies provided for herein or under the Code shall not be
construed as a waiver of any of the other remedies of the Mortgagee, including having the
Personal Property Collateral deemed part of the realty upon any foreclosure so long as any part of
the Secured Indebtedness remains unsatisfied.

          (c) This Mortgage is intended to be a “fixture filing” for purposes of the Code with respect
to the items of Property which are or may become fixtures relating to the Premises upon recording
of this Mortgage in the real estate records of the proper office. The addresses of Mortgagor
(Debtor) and Mortgagee (Secured Party) are set forth on the first page hereof.

          (d) The Mortgagor hereby directs that the Mortgagee shall cause to be recorded in the County
in which the Premises are located, as well as with the applicable offices

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of the State, such
financing statements and fixture filings as shall be necessary in order to perfect and preserve the
priority of Mortgagee’s lien upon the Personal Property Collateral.

     3.10 Releases.

          Without notice and without regard to the consideration therefor, and to the existence at that
time of any inferior liens, Mortgagee may release from the lien created hereby all or any part of
the Property, or release from liability any person obligated to repay any of the Obligations,
without affecting the liability of any party to any of the Notes, this Mortgage, or any of the
other Loan Documents (including without limitation any guaranty given as additional security) and
without in any way affecting the priority of the lien created hereby. Mortgagee may agree with any
liable party to extend the time for payment of any part or all of the Obligations. Such agreement
shall not in any way release or impair the lien created by this Mortgage or reduce or modify the
liability of any person or entity obligated personally to repay the Obligations, but shall extend
the lien created by this Mortgage as against the title of all parties having any interest in the
Property.

     3.11 Further Assurances.

          Mortgagor agrees that, upon the request of Mortgagee from time to time, it will, at
Mortgagor’s sole cost and expense, execute, acknowledge and deliver all such additional instruments
and further assurances of title and will do or cause to be done all such further acts and things as
may reasonably be necessary to fully effectuate the intent of this Mortgage. In the event that
Mortgagor shall fail to do any of the foregoing, Mortgagee may, in its sole discretion, do so in
the name of Mortgagor, and Mortgagor hereby appoints Mortgagee as its attorney-in-fact to do any of
the foregoing.

IV.

EVENT OF DEFAULT AND REMEDIES

     4.1 Event of Default.

          The occurrence of an “Event of Default,” as such term is defined in the Credit Agreement,
shall constitute an “Event of Default” under this Mortgage. The Secured Indebtedness shall be
subject to acceleration upon an Event of Default.

     4.2 Foreclosure and Remedies.

          Upon the occurrence and during the continuation of an Event of Default, Mortgagee shall have
the right to foreclose the lien hereof for the Secured Indebtedness or any part thereof and/or
exercise any right, power or remedy provided in this Mortgage or any of the other Loan Documents.
In the event of any foreclosure sale, the Property may be sold in one or more parcels. Mortgagee
may bid for and acquire the Property or any part thereof at any sale made under or by virtue of
this Mortgage and, in lieu of paying cash therefor, may make settlement for the purchase price by
crediting against the purchase price the unpaid amounts due and owing in respect of any Loans,
Secured Indebtedness or any other liabilities after deducting from the sales price the expenses of
the sale and the costs of the action or proceedings and any other sums that Mortgagee is authorized
to deduct under this Mortgage or applicable law.

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     4.3 Sale of Personal Property Collateral.

          Upon the occurrence and during the continuation of an Event of Default, at the request of the
Mortgagee, and to the extent permitted under applicable law, the Personal Property Collateral shall
be sold concurrently with and in conjunction with a sale of the Premises, in which case the
provisions of Section 4.2 hereof shall apply to the Personal Property Collateral as well as to the
Premises. The Mortgagor stipulates and agrees that a sale of the Personal Property Collateral in
conjunction with the Premises is a commercially reasonable manner of disposing of the Personal
Property Collateral. Alternatively, upon the occurrence and during the continuation of an Event of
Default, the Mortgagee may sell or otherwise dispose of the Personal Property Collateral separately
and apart from the Premises in the time and manner provided by the Code. To the extent that the
Code shall require prior notice of sale or other disposition of the Personal Property Collateral,
twenty (20) days written notice shall be deemed to be reasonable notice. Upon the occurrence and
during the continuation of an Event of Default, the Mortgagee also may (a) require the Mortgagor
to, and the Mortgagor hereby agrees that the Mortgagor will at the Mortgagor’s expense and upon
request of the Mortgagee forthwith, assemble all or part of the Personal Property Collateral as
directed by the Mortgagee and make it available to the Mortgagee at a place to be designated by the
Mortgagee which is reasonably convenient to the parties; and (b) sell the Personal Property
Collateral or any part thereof in one or more parcels at public or private sale for cash or credit
or for future delivery, and at such price or prices and upon such other terms as are commercially
reasonable. The Mortgagee shall not be obligated to make any sale of the Personal Property
Collateral regardless of a notice of sale having been given. The Mortgagee may adjourn any public
or private sale from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was so adjourned.

     4.4 Remedies Cumulative and Non-Waiver.
(a) No remedy or right of Mortgagee hereunder or under the Notes, or any of the Loan Documents
or otherwise, or available under applicable law, shall be exclusive of any other right or remedy.
Each such remedy or right shall be in addition to every other remedy or right now or hereafter
existing under any such document or under applicable law. No delay in the exercise of, or omission
to exercise, any remedy or right accruing on the occurrence of any Event of Default shall impair
any such remedy or right or be construed to be a waiver of any such Event of Default or an
acquiescence therein, nor shall it affect any subsequent Event of Default of the same or a
different nature, nor shall it extend or affect any grace period. Every
remedy or right may be exercised concurrently or independently, when and as often as may be
deemed expedient by the Mortgagee. All obligations of the Mortgagor, and all rights, powers and
remedies of the Mortgagee shall be in addition to, and not in limitation of, those provided by law
or in the Notes or contained in any of the Loan Documents or any other written agreement or
instrument relating to any of the Secured Indebtedness or any security therefor.

          (b) Mortgagee may elect to subordinate this Mortgage to all or only selected Leases, as
determined or selected by Mortgagee in its sole and absolute discretion, and to foreclose this
Mortgage subject to all Leases or such selected Leases. However, Mortgagee’s election not to
foreclose this Mortgage subject to all Leases or selected Leases will not be, or be asserted by
Mortgagor to be, a defense to any proceedings instituted by Mortgagee to collect the indebtedness
hereby secured or to collect any deficiency remaining unpaid after the foreclosure

10

 

sale of the
Property or any portion thereof. Otherwise, any foreclosure sale of the Property or any portion
thereof pursuant to this Mortgage, without further notice, shall create the relation of landlord
and tenant at sufferance between the purchaser and Mortgagor or any person holding possession of
the Property through Mortgagor. Upon the failure of Mortgagor or any such person to surrender such
possession immediately upon the purchaser’s written request, Mortgagor or such person may be
removed by a writ of possession obtained by the purchaser in any court then having jurisdiction and
venue

     4.5 Expenses.

          In any proceeding to foreclose or partially foreclose the lien of this Mortgage, there shall
be allowed and included, as additional indebtedness in the judgment or decree resulting therefrom,
all expenses paid or incurred by or on behalf of Mortgagee in the protection of the Property and
the exercise of Mortgagee’s rights and remedies hereunder, which expenses may be estimated as to
items to be expended after entry of any judgment or decree of foreclosure. Such expenses shall
include: reasonable attorney’s fees, appraiser’s fees, outlays for documentary and expert
evidence, stenographer’s charges, publication costs, survey costs, and costs of procuring all
abstracts of title, title searches and examinations, title insurance policies, and any similar data
and assurances with respect to title to the Property as Mortgagee may deem reasonably necessary
either to prosecute any such proceeding or to evidence to bidders at any sale pursuant to such
decree the true condition of the title to or value of the Premises or the Property. All such
expenses shall be due and payable by Mortgagor upon demand with interest thereon at the rate set
forth under Section 1.3(c) of the Credit Agreement.

     4.6 Mortgagee’s Performance of Mortgagor’s Obligations.

          Following the occurrence of an Event of Default and during the continuance thereof, Mortgagee,
either before or after acceleration of the Secured Indebtedness or the foreclosure of the lien
hereof and during the period of redemption, if any, may, but shall not be required to (a) make any
payment or perform any act herein, in the Notes or any other Loan Document which is required of
Mortgagor (whether or not Mortgagor is personally liable therefor) in any form and manner deemed
expedient to Mortgagee; (b) make full or partial payments of principal or interest on any permitted
prior mortgage or encumbrance and purchase, discharge, compromise or settle any tax lien or other
prior lien on title or claim thereof, or redeem from any tax sale or forfeiture affecting the
Premises, or contest any Impositions; and (c)
complete construction, furnishing and equipping of the Improvements upon the Premises and
rent, operate and manage the Premises and such Improvements and pay operating costs and expenses,
including management fees, of every kind and nature in connection therewith, so that the Premises
and Improvements shall be operational and usable for their intended purposes. All monies paid for
any of the purposes herein authorized, and all expenses paid or incurred in connection therewith,
including reasonable attorneys’ fees, shall constitute Secured Indebtedness, and shall become due
and payable upon demand and with interest thereon at the rate set forth under Section 1.3(c) of the
Credit Agreement. Mortgagee, in making any payment hereby authorized: (x) for the payment of
Impositions, may do so according to any bill or statement, without inquiry into the validity of any
tax, assessment, sale, forfeiture, tax lien or title or claim thereof; (y) for the purchase,
discharge, compromise or settlement of any other prior lien, may do so without inquiry as to the
validity or amount of any claim or lien which may be

11

 

asserted; or (z) for the completion of
construction, furnishing or equipping of the Improvements or the Premises or the rental, operation
or management of the Premises or the payment of operating cost and expenses thereof, may do so in
such amounts and to such persons as Mortgagee may deem appropriate and may enter into such
contracts therefor as Mortgagee may deem appropriate or may perform the same itself.

     4.7 Right of Possession.

          Following the occurrence of an Event of Default and during the continuance thereof, Mortgagor
shall, immediately upon Mortgagee’s demand, surrender to Mortgagee, and Mortgagee shall be entitled
to take actual possession of the Property or any part thereof, personally or by its agent or
attorneys. Mortgagee may enter upon and take and maintain possession or may apply to the court in
which a foreclosure is pending to be placed in possession of all or any part of the Property,
together with all documents, books, records, papers, and accounts of Mortgagor or the then owner of
the Property relating thereto. Mortgagee may exclude Mortgagor, such owner, and any agents and
servants from the Property. As attorney-in-fact or agent of Mortgagor or such owner, or in its own
name Mortgagee may hold, operate, manage, and control all or any part of the Property, either
personally or by its agents. Mortgagee shall have full power to use such measures, legal or
equitable, as it may deem proper or necessary to enforce the payment or security of the rents,
issues, deposits, profits, and avails of the Property, including actions for recovery of rent,
actions in forcible detainer, and actions in distress for rent, all without notice to Mortgagor.

     4.8 Application of Income Received by Mortgagee.

          Mortgagee, in the exercise of the rights and powers hereinabove conferred upon it, shall have
full power to use and apply the avails, rents, issues and profits of the Property to the payment of
or on account of the following, in such order as Mortgagee may determine: (i) to the payment of
the operating expenses of the Property including cost of management thereof, established claims for
damages, if any, and premiums on insurance hereinabove authorized; (ii) to the payment of taxes and
special assessments now due or which may hereafter become due on the Premises; (iii) to all other
items which may under the terms hereof constitute Secured Indebtedness additional to that evidenced
by the Notes, with interest thereon as provided herein or in the other Loan Documents; and (iv) to
all principal and interest remaining unpaid on the Notes.

     4.9 Appointment of Receiver.
If an Event of Default has occurred and is continuing, to the full extent permitted by law,
Mortgagee, without regard to the value, adequacy or occupancy of the Property as security for the
Secured Indebtedness, shall be entitled as a matter of right if it so elects to the appointment of
a receiver (“Receiver”), either ex parte, to the extent permitted by applicable law, or
upon prior notice to Mortgagor, to enter upon and take possession of the Property, and to collect
and apply the Rents in the manner it deems appropriate or as the court otherwise may direct. Any
such Receiver shall have all the usual powers and duties of receivers in similar cases. This
Mortgage shall secure the expenses, including without limitation Receiver’s fees, attorney’s fees,
costs and agent’s compensation, which are incurred pursuant to the powers herein contained. The
right to enter, take possession of, manage and operate the Property, and collect the Rents, whether
by Receiver or otherwise, shall be

12

 

cumulative to any other right or remedy and may be exercised
concurrently therewith or independently thereof. Mortgagee or Receiver, as the case may be, shall
be liable to account only for such rents, income and other benefits actually received by Mortgagee
or Receiver. Notwithstanding the appointment of Receiver or any other custodian, Mortgagee shall
be entitled as pledgee to the possession and control of any cash, deposits or instruments at the
time held by, or payable or deliverable under the terms of this Mortgage to, Mortgagee and/or the
Lenders.

     4.10 Rescission of Notice of Default.
Mortgagee (on behalf of the Lenders) may from time to time rescind any notice of default or
notice of sale before any foreclosure sale as provided above, by executing and delivering to
Mortgagor a written notice of such rescission, which such notice, when recorded, shall also
constitute a cancellation of any prior declaration of default and demand for sale. The exercise by
Mortgagee of such right of rescission shall not constitute a waiver of any breach or default then
existing or subsequently occurring, or impair the right of Mortgagee to execute and deliver to
Mortgagor, as above provided, other declarations or notices of default to satisfy the obligations
of this Mortgage or the obligations secured hereby, nor otherwise affect any provision, covenant or
condition of any Loan Document or any of the rights, obligations or remedies of Mortgagee or the
Lenders hereunder or thereunder.

     4.11 Application of Proceeds of Foreclosure Sale.
The proceeds of any foreclosure sale of the Property shall be distributed and applied in the
following order of priority: first, to all costs and expenses incident to the foreclosure
proceedings, including all such items as are mentioned in Section 4.5 above; second, to all other
items which may under the terms hereof constitute Secured Indebtedness additional to that evidenced
by the Notes, with interest thereon as provided herein or in the other Loan Documents; third, to
all principal and interest remaining unpaid on the Notes; and fourth, any surplus to Mortgagor, its
successors or assigns, as their rights may appear or to any other party legally entitled thereto.

     4.12 Insurance Upon Foreclosure.
In case of an insured loss after foreclosure proceedings have been instituted, the proceeds of
any insurance policy or policies, if not applied in repairing, restoring, replacing or rebuilding
any portion of the Property, shall be used to pay the amount due in accordance with any decree of
foreclosure that may be entered in any such proceedings, and the balance, if any, shall be paid as
the court may direct. In case of the foreclosure of this Mortgage, the court in its judgment may
provide that the judgment creditor may cause a new or additional loss clause to be attached to each
of said policies making the loss thereunder payable to said judgment creditor; and any such
foreclosure judgment may further provide, unless the right of redemption has been waived, that in
case of redemption under said judgment, then, and in every such case, the redemptory may cause the
preceding loss clause attached to each insurance policy to be canceled and a new loss clause to be
attached thereto, making the loss thereunder payable to such redemptory.

     4.13 Waiver of Statutory Rights. Mortgagor shall not apply for or avail itself of any appraisement, valuation, redemption,
stay, extension, or exemption laws, or any so-called “moratorium laws,” now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this Mortgage, and
Mortgagor hereby waives the benefit of such laws. Mortgagor, for itself and all who may claim
through or under it, waives any and all rights to have the Property and estates comprising the
Property marshaled upon any foreclosure of the

13

 

lien of this Mortgage, and agrees that any court
having jurisdiction to foreclose such lien may order the Property sold in its entirety. Mortgagor
further waives any and all rights of homestead, dower, elective or distributive share and
redemption from foreclosure and from sale under any order or decree of foreclosure of the lien
created by this Mortgage, for itself and on behalf of: (i) any trust estate of which the Premises
are a part; (ii) all beneficially interested persons; (iii) each and every person acquiring any
interest in the Property or title to the Premises subsequent to the date of this Mortgage; and (iv)
all other persons to the extent permitted by the provisions of laws of the State in which the
Premises are located.

     4.14 Effect of Judgment.
The obtaining of any judgment by Mortgagee and any levy of any execution under any judgment
upon the Property shall not affect in any manner or to any extent the Lien of this Mortgage upon
the Property or any part thereof, or any Liens, powers, rights and remedies of Mortgagee hereunder,
but such Liens, powers, rights and remedies shall continue unimpaired as before until the judgment
or levy is satisfied.

     4.15 Jury Trial Waiver.

          TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, MORTGAGOR AND MORTGAGEE EACH HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS MORTGAGE.

     4.16 Request for Notice.
Mortgagor hereby requests a copy of any notice of default and requests that any notice of sale
hereunder be mailed to Mortgagor at the address referenced in Section 5.1 hereof. Otherwise,
Mortgagee is not under any obligation to notify any person or entity of any action or proceeding of
any kind in which Mortgagor, and/or Mortgagee shall be a party, unless brought by Mortgagee, or of
any pending sale under any other mortgage or Mortgage.

V.

MISCELLANEOUS

     5.1 Notices.
Any notice or other communication required or permitted to be given under this Mortgage shall
be given or sent, deemed received and otherwise governed in accordance with Section 9.2 of the
Credit Agreement.

     5.2 Time of Essence.
Time is of the essence of this Mortgage.

     5.3 Covenants Run with Land. All of the covenants of this Mortgage shall run with the land constituting the Premises.

     5.4 GOVERNING LAW.
THIS MORTGAGE SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO

14

 

CONFLICTS OF LAW PRINCIPLES, EXCEPT TO
THE EXTENT ILLINOIS LAW NECESSARILY APPLIES BECAUSE THE PROPERTY IS LOCATED IN ILLINOIS.

     5.5 Severability. If any provision of this Mortgage, or any paragraph, sentence, clause, phrase, or word, or
their application, in any circumstance, is held invalid, the validity of the remainder of this
Mortgage shall be construed as if such invalid part were never included.

     5.6 Non-Waiver. Unless expressly provided in this Mortgage to the contrary, no consent or waiver, express
or implied, by any party, to or of any breach or default by any other party shall be deemed a
consent to or waiver of the performance by such defaulting party of any other obligations or the
performance by any other party of the same, or of any other, obligations.

     5.7 Attorney-in-Fact. Mortgagor hereby irrevocably appoints Mortgagee (on behalf of the Lenders) and its
successors and assigns, as its attorney-in-fact, which agency is coupled with an interest, (a) to
execute and/or record any notices of completion, cessation of labor or any other notices that
Mortgagee deems appropriate to protect Mortgagee’s interest, if Mortgagor shall fail to do so
within twenty (20) days after written request by Mortgagee, (b) upon the issuance of a deed
pursuant to the foreclosure of this Mortgage or the delivery of a deed in lieu of foreclosure, to
execute all instruments of assignment, conveyance or further assurance with respect to the Leases,
Rents, Fixtures, personalty, plans and property agreements in favor of the Mortgagee of any such
deed and as may be necessary or desirable for such purpose, (c) to prepare, execute and file or
record financing statements, continuation statements, applications for registration and like papers
necessary to create, perfect or preserve Mortgagee’s security interests and rights in or to any of
the collateral, and (d) while any Event of Default exists, to perform any obligation of Mortgagor
hereunder; however: (i) Mortgagee shall not under any circumstances be obligated to perform any
obligation of Mortgagor; (ii) any sums advanced by Mortgagee in such performance shall be added to
and included in the Secured Indebtedness and shall bear interest at the rate set forth under
Section 1.3(c) of the Credit Agreement; (iii) Mortgagee as such attorney-in-fact shall only be
accountable for such funds as are actually received by Mortgagee; and (iv) Mortgagee shall not be
liable to Mortgagor or any other person or entity for any failure to take any action which it is
empowered to take under this Section. This appointment shall not terminate on the disability of
the Mortgagor.

     5.8 Headings. The headings of sections and paragraphs in this Mortgage are for convenience or reference
only and shall not be construed in any way to limit or define the content, scope, or intent of the
provisions.

     5.9 Grammar. As used in this Mortgage, the singular shall include the plural, and masculine, feminine,
and neuter pronouns shall be fully interchangeable, where the context so requires.

     5.10 Successors and Assigns. This Mortgage shall be binding upon Mortgagor, its successors, assigns, legal
representatives, and all other persons or entities claiming under or through Mortgagor. The word
“Mortgagee,” when used herein, shall include the Agent in its capacity as a Lender and as Agent for
the Lenders, together with its successors, assigns and legal representatives.

15

 

     5.11 Counterparts. This Mortgage may be executed in any number of separate counterparts, each of which shall
collectively and separately constitute one Mortgage.

     5.12 Mortgagee in Possession. Nothing contained in this Mortgage shall be construed as constituting Mortgagee a mortgagee
in possession in the absence of the actual taking of possession of the Property.

     5.13 Incorporation of Credit Agreement; No Conflicts. The terms of the Credit Agreement are incorporated by reference herein as though set forth
in full detail. In the event of any conflict between the terms and provisions of Section 3.9 of
this Mortgage and the Security Agreement, the terms and provisions of the Security Agreement shall
control; in the event of a conflict between any other term or provision of this Mortgage and the
Credit Agreement, the terms and provisions of the Credit Agreement shall control.

     5.14 Additional Provisions.

          Notwithstanding anything contained herein to the contrary:

          (a) Where any provision of this Mortgage is inconsistent with any provision of Illinois law
regulating the creation or enforcement of a lien or security interest in real or personal property
including, but not by way of limitation, the Illinois Mortgage Foreclosure Law (765 ILCS 5/15-1101
et seq.), as amended, modified and/or replaced from time to time, the provisions of Illinois law
shall take precedence over the provisions of this Mortgage, but shall not invalidate or render
unenforceable any other provisions of this Mortgage that can be construed in a manner consistent
with Illinois law.

          (b) The term “Secured Indebtedness” as defined in this Mortgage shall include, without
limitation, any judgment(s) or final decree(s) rendered to collect any money obligations of
Mortgagor to Mortgagee and/or the Lenders and/or to enforce the performance or collection of all
rights, remedies, obligations, covenants, agreements, conditions, indemnities, representations,
warranties, and other liabilities of the Mortgagor under this Mortgage or any or all of the other
Loan Documents. The obtaining of any judgment by Mortgagee and/or the Lenders (other than a
judgment foreclosing this Mortgage) and any levy of any execution under any such judgment upon the
Property shall not affect in any manner or to any extent the lien of this Mortgage upon the
Property or any part thereof, or any liens, powers, rights and remedies of Mortgagee and/or the
Lenders hereunder, but such liens, powers, rights and remedies shall continue unimpaired as before
until the judgment or levy is satisfied. Furthermore, Mortgagor acknowledges and agrees that the
Secured Indebtedness is secured by the Property and various other collateral at the time of
execution of this Mortgage. Mortgagor specifically acknowledges and agrees that the Property, in
and of itself, if foreclosed or realized upon would not be sufficient to satisfy the outstanding
amount of the Secured Indebtedness. Accordingly, Mortgagor acknowledges that it is in Mortgagor’s
contemplation that the other collateral pledged to secure the Secured Indebtedness may be pursued
by Mortgagee in separate proceedings in the various states and counties where such collateral may
be located and additionally that Mortgagor will remain liable for any deficiency judgments in
addition to any amounts Mortgagee and/or the Lenders may realize on sales of other property or any
other collateral given as security for the Secured Indebtedness. Specifically, and without
limitation of the foregoing, it is agreed that it is

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the intent of  the parties hereto that in the
event of a foreclosure of this Mortgage, that the
Secured Indebtedness shall not be deemed merged into any judgment of foreclosure, but shall
rather remain outstanding to the fullest extent permitted by applicable law.

          (c) To the extent the laws of the State of Illinois limit (i) the availability of the exercise
of any of the remedies set forth in this Mortgage, including without limitation the right of
Mortgagee and the Lenders to exercise self-help in connection with the enforcement of the terms of
this Mortgage, or (ii) the enforcement of waivers and indemnities made by Mortgagor, such remedies,
waivers, or indemnities shall be exercisable or enforceable, any provisions in this Mortgage to the
contrary notwithstanding, if, and to the extent, permitted by the laws in force at the time of the
exercise of such remedies or the enforcement of such waivers or indemnities without regard to the
enforceability of such remedies, waivers or indemnities at the time of the execution and delivery
of this Mortgage.

          (d) This Mortgage secures the payment of future advances of revolving loans which may be made
after the date hereof to the same extent as if such future advances were made on the date of the
execution of this Mortgage, although there may be no advance made on the date of the execution of
this Mortgage, and although there may be no indebtedness outstanding at the time any advance is
made. The total principal amount of Secured Indebtedness secured by this Mortgage may decrease or
increase from time to time but the total unpaid principal balance so secured at any one time shall
not exceed One Hundred Fifty Million Dollars ($150,000,000.00), plus interest thereon, and any and
all disbursements made by Mortgagee for the payment of taxes, special assessments or insurance on
the Property, with interest on such disbursements. The parties hereby acknowledge and intend that
all advances of the revolving loans, including future advances whenever hereafter made, shall be a
lien from the time this Mortgage is recorded.

          (e) This Mortgage secures, among other obligations, a revolving line of credit pursuant to the
terms and conditions of the Credit Agreement, under the terms of which funds may be advanced, paid
back, and readvanced, PROVIDED, HOWEVER, the maximum aggregate amount secured by this Mortgage at
any one time shall not exceed One Hundred Fifty Million Dollars ($150,000,000).

          (f) Even though the lien of this Mortgage shall be released from the Property subject to
Article I, any of the terms and provisions of this Mortgage that are intended to survive shall
nevertheless survive the release or satisfaction of this Mortgage whether voluntarily granted by
Mortgagee or the Lenders, as a result of a judgment upon judicial foreclosure of this Mortgage or
in the event a deed in lieu of foreclosure is granted by Mortgagor to Mortgagee and/or the Lenders.

     5.15 No Strict Construction.
The parties hereto have participated jointly in the negotiation and drafting of this Mortgage.
In the event an ambiguity or question of intent or interpretation arises, this Mortgage shall be
construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of this Mortgage.

     5.16 Satisfaction of Mortgage Lien.

17

 

          If and when Mortgagor has paid all of the Secured Indebtedness and has strictly performed and
observed all of the agreements, terms, conditions, provisions and warranties contained herein and
in the Guaranty and in all of the Loan Documents and there exist no commitments of the Lenders
under the Loan Documents which could give rise to Secured Indebtedness, Mortgagee will release the
Property from the lien of this Mortgage, whether in whole or in part, in accordance with all
applicable Illinois laws. When the Property has been fully released, such release will operate as a
reassignment of all future Rents of the Property to the person legally entitled.

     5.17 Compliance with Applicable Law.
If any provision of this Mortgage shall grant to Mortgagee (including Mortgagee acting as a
mortgagee-in-possession) or a receiver appointed pursuant to the provisions of this Mortgage, any
rights or remedies prior to, upon or following the occurrence of an Event of Default which are more
limited than the rights that would otherwise be vested in Mortgagee or such receiver under the
Illinois Foreclosure Law in the absence of said provision, Mortgagee and such receiver shall be
vested with the rights granted under the Illinois Foreclosure Law to the full extent permitted by
law.

     5.18 Variable Interest Rate.

          The Notes and Credit Agreement which this Mortgage secures contains a variable rate feature.

(SIGNATURE PAGE FOLLOWS)

18

 

          IN WITNESS WHEREOF, Mortgagor has duly signed and delivered this Mortgage as of the date first
above written.

	 	 	 	 	 
	 	AKORN, INC., a Louisiana corporation

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

 

 

	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	
STATE OF Illinois
	 	 	)	 	 	 
	 
	 	 	 	 	)	 	 	SS
	
COUNTY OF Lake
	 	 	)	 	 	 

          On
Jan. 6th 2008, before me, the undersigned, a Notary Public in and for said State
personally appeared Jeffrey A. Whitnell known to me to be the CFO of AKORN, INC.,
a Louisiana corporation, and acknowledged to me that such individual executed the within instrument
on behalf of said corporation.

          WITNESS my hand and official seal.

	 	 	 	 	 
	 
	 
	 	/s/ J. A. Richardson	 	 
	 
	 	Notary Public in and for	 	 
	 

	 	said County and State	 	 

[SEAL]

[SIGNATURE PAGE TO IL MORTGAGE]

 

 

EXHIBIT A

LEGAL DESCRIPTION

Lot 2 of Taylor Subdivision, as per Plat recorded in Book 1832 page 676 of the Records in the Recorder’s
Office of Macon County, Illinois. Situated in Macon County, Illinois

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