GUARANTY AND COLLATERAL AGREEMENT
EXHIBIT 10.75
THIS GUARANTY AND COLLATERAL AGREEMENT dated as of October 7, 2003 (this “Agreement”) is
entered into among AKORN, INC., a Louisiana corporation, (“Akorn”), AKORN (NEW JERSEY), INC., an
Illinois corporation (“Akorn New Jersey” and together with Akorn, the “Companies”, each being a
“Company”), and each other Person signatory hereto as a Grantor (together with any other Person
that becomes a party hereto as provided herein, the “Grantors”) in favor of LASALLE BANK NATIONAL
ASSOCIATION, as the Administrative Agent for all the Lenders party to the Credit Agreement (as
hereafter defined).
The Lenders have severally agreed to extend credit to each Company pursuant to the Credit
Agreement. Each Company is affiliated with each other Grantor. The proceeds of credit extended
under the Credit Agreement will be used in part to enable the Companies to make valuable transfers
to the Grantors in connection with the operation of their respective businesses. The Companies and
the other Grantors are engaged in interrelated businesses, and each Grantor will derive
substantial direct and indirect benefit from extensions of credit under the Credit Agreement. It
is a condition precedent to each Lender’s obligation to extend credit under the Credit Agreement
that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for
the ratable benefit of all the Lenders.
In consideration of the premises and to induce the Administrative Agent and the Lenders to
enter into the Credit Agreement and to induce the Lenders to extend credit thereunder, each
Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as
follows:
SECTION 1 DEFINITIONS.
1.1 Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement, and the
following terms are used herein as defined in the UCC: Accounts, Certificated Security,
Commercial Tort Claims, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment,
Farm Products, Goods, Health Care Insurance Receivables, Instruments, Inventory, Leases,
Letter-of-Credit Rights, Money, Payment Intangibles, Supporting Obligations, Tangible Chattel
Paper.
1.2 When used herein the following terms shall have the following meanings:
Assigned Agreements means Related Agreements.
Agreement has the meaning set forth in the preamble hereto.
Chattel Paper means all “chattel paper” as such term is defined in Section 9-102(a)(l
1) of the UCC and, in any event, including with respect to any Grantor, all Electronic Chattel
Paper and Tangible Chattel Paper.
Collateral means (a) all of the personal property now owned or at any time hereafter
acquired by any Grantor or in which any Grantor now has or at any time in the future may
acquire any right, title or interest, including all of each Grantor’s Accounts, Chattel Paper,
Commercial Tort Claims, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles,
Health Care Insurance Receivables, Farm Products, Goods, Instruments, Intellectual Property,
Inventory, Investment Property, Leases, Letter-of-Credit Rights, Money, Supporting Obligations and
Identified Claims, (b) all books and records pertaining to any of the foregoing, (c) all Proceeds
and products of any of the foregoing, and (d) all collateral security and guaranties given by any
Person with respect to any of the foregoing. Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s
Collateral or the relevant part thereof.
Company Obligations means all Obligations of the Companies.
Contract Rights means all of the Grantors’ rights and remedies with respect to the
Assigned Agreements.
Copyrights means all copyrights arising under the laws of the United States, any other
country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, including those listed on
Schedule 5, all registrations and
recordings thereof, and all applications in connection therewith, including all registrations,
recordings and applications in the United States Copyright Office, and the right to obtain all
renewals of any of the foregoing.
Copyright Licenses means all written agreements naming any Grantor as licensor or
licensee, including those listed on Schedule 5, granting any right under any Copyright,
including the grant of rights to manufacture, distribute, exploit and sell materials derived from
any Copyright.
Credit Agreement means the Credit Agreement of even date herewith among the
Companies, the Lenders and the Administrative Agent, as amended, supplemented, restated or
otherwise modified from time to time.
Fixtures means all of the following, whether now owned or hereafter acquired by a
Grantor: plant fixtures; business fixtures; other fixtures and storage facilities, wherever
located; and all additions and accessories thereto and replacements therefor.
General Intangibles means all “general intangibles” as such term is defined in
Section 9-102(a)(42) of the UCC and, in any event, including with respect to any Grantor, all
Payment Intangibles, all contracts and Contract Rights (including all Assigned Agreements and
Seller Undertakings), agreements, instruments and indentures in any form, and portions thereof, to
which such Grantor is a party or under which such Grantor has any right, title or interest or to
which such Grantor or any property of such Grantor is subject, as the same from time to time may
be amended, supplemented or otherwise modified, including all rights of such Grantor to receive
moneys due and to become due to it thereunder or in connection therewith, (b) all rights of such
Grantor to damages arising thereunder and (c) all rights of such Grantor to perform and to
exercise all remedies thereunder; provided, that the foregoing limitation shall not
affect, limit, restrict or impair the grant by such Grantor of a security interest pursuant to
this Agreement in
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any Receivable or any money or other amounts due or to become due under any such Payment
Intangible, contract, agreement, instrument or indenture.
Guarantor Obligations means, collectively, with respect to each Guarantor, all
Obligations of such Guarantor.
Guarantors means the collective reference to each Grantor including each Company with
respect to the Obligations of the other Company, if any.
Identified Claims means the Commercial Tort Claims described on Schedule 7 as
such schedule shall be supplemented from time to time.
Intellectual Property means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational
or foreign laws or otherwise, including the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to xxx at law or in
equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.
Intercompany Note means any promissory note evidencing loans made by any Grantor to
any other Grantor.
Investment Property means the collective reference to (a) all “investment property”
as such term is defined in Section 9-102(a)(49) of the UCC (other than the equity interest of any
foreign Subsidiary excluded from the definition of Pledged Equity), (b) all “financial assets” as
such term is defined in Section 8-102(a)(9) of the UCC, and (b) whether or not constituting
“investment property” as so defined, all Pledged Notes and all Pledged Equity.
Issuers means the collective reference to each issuer of any Investment Property.
Paid in Full means (a) the payment in full in cash and performance of all Secured
Obligations, (b) the termination of all Commitments and (c) either (i) the cancellation and return
to the Administrative Agent of all Letters of Credit or (ii) the cash collateralization of all
Letters of Credit in accordance with the Credit Agreement.
Patents means (a) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof and all goodwill associated
therewith, including any of the foregoing referred to in Schedule 5, (b) all applications
for letters patent of the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including any of the foregoing referred to in Schedule 5,
and (c) all rights to obtain any reissues or extensions of the foregoing.
Patent Licenses means all agreements, whether written or oral, providing for the
grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole
or in part by a Patent, including any of the foregoing referred to in
Schedule 5.
Pledged Equity means the equity interests listed on Schedule 1, together with
any other equity interests, certificates, options or rights of any nature whatsoever in respect of
the equity
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interests of any Person that may be issued or granted to, or held by, any Grantor while this
Agreement is in effect; provided that in no event shall more than 65% of the total
outstanding equity interests of any foreign Subsidiary be required to be pledged hereunder.
Pledged Notes means all promissory notes listed on Schedule 1, all
Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or
held by any Grantor (other than promissory notes issued in connection with extensions of trade
credit by any Grantor in the ordinary course of business).
Proceeds means all “proceeds” as such term is defined in Section 9-102(a)(64) of the
UCC and, in any event, shall include all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
Receivable means any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or
not it has been earned by performance (including any Accounts).
Secured Obligations means, collectively, the Company Obligations and Guarantor
Obligations.
Securities Act means the Securities Act of 1933, as amended.
Seller Undertakings means, collectively, all representations, warranties, covenants
and agreements in favor of any Grantor, and all indemnifications for the benefit of any Grantor
relating thereto, pursuant to the Assigned Agreements.
Trademarks means (a) all trademarks, trade names, corporate names, the Company names,
business names, fictitious business names, trade styles, service marks, logos and other source or
business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including any of the foregoing referred to
in Schedule 5, and (b) the right to obtain all renewals thereof.
Trademark Licenses means, collectively, each agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark, including any of
the foregoing referred to in Schedule 5.
UCC means the Uniform Commercial Code as in effect on the date hereof and from time
to time in the State of Illinois, provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the security interests in any
Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code
as in effect on or after the date hereof in any other jurisdiction, “UCC” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection or availability of such
remedy.
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SECTION 2 GUARANTY.
2.1 Guaranty. (a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, as a primary obligor and not only a surety, guaranties to the
Administrative Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and performance by the
Companies when due (whether at the stated maturity, by acceleration or otherwise) of the
Company Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan
Documents shall in no event exceed the amount which can be guaranteed by such Guarantor
under applicable federal and state laws relating to the insolvency of debtors (after giving
effect to the right of contribution established in Section 2.2).
(c) Each Guarantor agrees that the Secured Obligations may at any time and
from time to time exceed the amount of the liability of such Guarantor hereunder without
impairing the guaranty contained in this Section 2 or affecting the rights and
remedies of the Administrative Agent or any Lender hereunder.
(d) The guaranty contained in this Section 2 shall remain in full force and
effect until all of the Secured Obligations shall have been Paid in Full.
(e) No payment made by either Company, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative Agent or any
Lender from either Company, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Secured Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect
of the Secured Obligations or any payment received or collected from such Guarantor in respect
of the Secured Obligations), remain liable for the Secured Obligations up to the maximum
liability of such Guarantor hereunder until the Secured Obligations are Paid in Full.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent
that a Guarantor shall have paid more than its proportionate share of any payment made
hereunder, such Guarantor shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate share of such payment. Each
Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3.
The provisions of this Section 2.2 shall in no respect limit the obligations and
liabilities of any Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall remain liable
to the Administrative Agent and the Lenders for the full amount guarantied by such Guarantor
hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the Administrative Agent
or any Lender, no Guarantor shall be entitled to be subrogated to any of the rights of the
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Administrative Agent or any Lender against either Company or any other Guarantor or any collateral
security or guaranty or right of offset held by the Administrative Agent or any Lender for the
payment of the Secured Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from either Company or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all of the Secured Obligations are Paid in Full, no Letter
of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to
any Guarantor on account of such subrogation rights at any time when all of the Secured Obligations
shall not have been Paid in Full, such amount shall be held by such Guarantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact
form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if
required), to be applied against the Secured Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.
2.4
Amendments, etc. with respect to the Secured Obligations. Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any
of the Secured Obligations made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender and any of the Secured Obligations continued, and the Secured
Obligations, or the liability of any other Person upon or for any part thereof, or any collateral
security or guaranty therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the Credit Agreement and
the other Loan Documents and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the Required Lenders or all the Lenders, as the case may be) may deem advisable from
time to time. Neither the Administrative Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security for the Secured
Obligations or for the guaranty contained in this Section 2 or any property subject
thereto.
The Administrative Agent or any Lender may, from time to time, at its sole discretion and
without notice to any Guarantor (or any of them), take any or all of the following actions: (a)
retain or obtain a security interest in any property to secure any of the Secured Obligations or
any obligation hereunder, (b) retain or obtain the primary or secondary obligation of any obligor
or obligors, in addition to the undersigned, with respect to any of the Secured Obligations, (c)
extend or renew any of the Secured Obligations for one or more periods (whether or not longer than
the original period), alter or exchange any of the Secured Obligations, or release or compromise
any obligation of any of the undersigned hereunder or any obligation of any nature of any other
obligor with respect to any of the Secured Obligations, (d) release any guaranty or right of
offset or its security interest in, or surrender, release or permit any substitution or exchange
for, all or any part of any property securing any of the Secured Obligations or any obligation
hereunder, or extend or renew for one or more periods (whether or not longer than the original
period) or release, compromise, alter or exchange any obligations of any nature of any obligor
with respect to any such property, and (e) resort to the undersigned (or
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any of them) for payment of any of the Secured Obligations when due, whether or not the
Administrative Agent or such Lender shall have resorted to any property securing any of the Secured
Obligations or any obligation hereunder or shall have proceeded against any other of the
undersigned or any other obligor primarily or secondarily obligated with respect to any of the
Secured Obligations.
2.5 Waivers. Each Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Secured Obligations and notice of or proof of
reliance by the Administrative Agent or any Lender upon the guaranty contained in this Section
2 or acceptance of the guaranty contained in this Section 2; the Secured Obligations, and
any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guaranty contained in this Section 2, and all
dealings between either Company and any of the Guarantors, on the one hand, and the Administrative
Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guaranty contained in this Section 2. Each
Guarantor waives (a) diligence, presentment, protest, demand for payment and notice of default, dishonor
or nonpayment and all other notices whatsoever to or upon either Company or any of the
Guarantors with respect to the Secured Obligations, (b) notice of the existence or creation or
non-payment of all or any of the Secured Obligations and (c) all diligence in collection or
protection of or realization upon any Secured Obligations or any security for or guaranty of
any Secured Obligations.
2.6 Payments. Each Guarantor hereby guaranties that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the
office of the Administrative Agent specified in the Credit Agreement.
SECTION 3 GRANT OF SECURITY INTEREST.
3.1 Grant. Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Lenders
and (to the extent provided herein) their Affiliates, a continuing security interest in all of its
Collateral, as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations
or the Guarantor Obligations, as the case may be.
3.2 Collateral Assignment of Rights under the Assigned Agreements. Each
Grantor hereby irrevocably authorizes and empowers the Administrative Agent or its agents, in
their sole discretion, to assert, either directly or on behalf of any Grantor, at any time
that an Event of Default is in existence, any claims any Grantor may from time to time have against
Seller or any of its affiliates with respect to any and all of the Contract Rights or with
respect to any and all payments or other obligations due from Seller or any of its affiliates to either
Company under or pursuant to the Assigned Agreements (“Payments”), and to receive and
collect any damages, awards and other monies resulting therefrom and to apply the same on
account of the Secured Obligations. After the occurrence of any Event of Default, the
Administrative Agent may provide notice to the seller or any of its affiliates under any
Assigned
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Agreement that all Payments shall be made to or at the direction of the Administrative Agent for so
long as such Event of Default shall be continuing. Following the delivery of any such notice, the
Administrative Agent shall promptly notify the seller under the Assigned Agreement upon the
termination or waiver of any such Event of Default. Each Grantor hereby irrevocably makes,
constitutes and appoints the Administrative Agent (and all officers, employees, or agents
designated by the Administrative Agent) as such Grantor’s true and lawful attorney (and
agent-in-fact) for the purpose of enabling the Administrative Agent or its agents to assert and
collect such claims and to apply such monies in the manner set forth hereinabove.
SECTION 4 REPRESENTATIONS AND WARRANTIES.
To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Companies thereunder, each
Grantor jointly and severally hereby represents and warrants to the Administrative Agent and each
Lender that:
4.1 Title: No Other Liens. Except for Permitted Liens, the Grantors own each
item of the Collateral free and clear of any and all Liens or claims of others. No financing
statement or other public notice with respect to all or any part of the Collateral is on file
or of record in any public office, except filings evidencing Permitted Liens and filings for which
termination statements have been delivered to the Administrative Agent.
4.2 Perfected First Priority Liens. The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions specified on Schedule
2 (which, in the case of all filings and other documents referred to on Schedule 2, have
been delivered to the Administrative Agent in completed and duly executed form) will constitute
valid perfected security interests in all of the Collateral in favor of the Administrative Agent,
for the ratable benefit of the Lenders, as collateral security for each Grantor’s Obligations,
enforceable in accordance with the terms hereof against all creditors of each Grantor and any Persons
purporting to purchase any Collateral from each Grantor and (b) are prior to all other Liens
on the Collateral in existence on the date hereof except for Permitted Liens for which priority
is accorded under applicable law. The filings and other actions specified on Schedule 2
constitute all of the filings and other actions necessary to perfect all security interests granted
hereunder.
4.3 Grantor Information. On the date hereof, Schedule 3 sets forth (a) each
Grantor’s jurisdiction of organization, (b) the location of each Grantor’s chief executive
office, (c) each Grantor’s exact legal name as it appears on its organizational documents and (d) each
Grantor’s organizational identification number (to the extent a Grantor is organized in a
state which assigns such numbers).
4.4 Collateral Locations. On the date hereof, Schedule 4 sets forth (a) each
place of business of each Grantor (including its chief executive office), (b) all locations
where all Inventory and the Equipment owned by each Grantor is kept, except with respect to Inventory
with a fair market value of less than (i) $100,000 in the case of “I-Sense” Inventory held on
consignment by CVS Corporation, and (ii) $400,000 in the case of “1C Green” raw material
Inventory located at the SP Pharmaceutical facility in Albuquerque, New Mexico (the “Permitted
Offsite Inventory”) (in the aggregate for all Grantors) which may be located at other
locations
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and (c) whether each such Collateral location and place of business (including each Grantor’s chief
executive office) is owned or leased (and if leased, specifies the complete name and notice address
of each lessor). No Collateral is located outside the United States or in the possession of any
lessor, bailee, warehouseman or consignee, except as indicated on Schedule 4.
4.5 Certain Property. None of the Collateral constitutes, or is the Proceeds of,
(a) Farm Products or (b) vessels, aircraft or any other property subject to any certificate of
title or other registration statute of the United States, any State or other jurisdiction, except for
personal vehicles owned by the Grantors and used by employees of the Grantors in the ordinary course of
business with an aggregate fair market value of less than $50,000 (in the aggregate for all
Grantors).
4.6 Investment Property. (a) The Pledged Equity pledged by each Grantor
hereunder constitute all the issued and outstanding equity interests of each Issuer owned by
such Grantor or, in the case of any foreign Subsidiary, 65% of all issued and outstanding equity
interests of such foreign Subsidiary.
(b) All of the Pledged Equity has been duly and validly issued and is fully
paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with its terms
(subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith
and fair dealing).
(d) Schedule 1 lists all Investment Property owned by each Grantor. Each
Grantor is the record and beneficial owner of, and has good and marketable title to, the
Investment Property pledged by it hereunder, free of any and all Liens or options in favor of,
or claims of, any other Person, except Permitted Liens.
4.7 Receivables. (a) No material amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Administrative Agent.
(b) No obligor on any Receivable is a Governmental Authority.
(c) The amounts represented by such Grantor to the Lenders from time to time
as owing to such Grantor in respect of the Receivables (to the extent such representations are
required by any of the Loan Documents) will at all such times be accurate.
4.8 Intellectual Property. (a) Schedule 5 lists all Intellectual Property
owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property owned by any Guarantor is
valid, subsisting, unexpired and enforceable, has not been abandoned.
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(c) Except as set forth in Schedule 5, none of the material Intellectual
Property is the subject of any licensing or franchise agreement pursuant to which such Grantor
is the licensor or franchisor.
(d) Each Grantor owns and possesses or has a license or other right to use all
Intellectual Property as is necessary for the conduct of the businesses of such Grantor,
without any infringement upon rights of others which could reasonably be expected to have a Material
Adverse Effect.
4.9 Depositary and Other Accounts. All depositary and other accounts maintained by
each Grantor are described on Schedule 6 hereto, which description includes for each such
account the name of the Grantor maintaining such account, the name, address, telephone and fax
numbers of the financial institution at which such account is maintained, the account number and
the account officer, if any, of such account.
SECTION 5 COVENANTS.
Each Grantor covenants and agrees with the Administrative Agent and the Lenders that, from
and after the date of this Agreement until the Secured Obligations shall have been Paid in Full:
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper. If any
amount payable under or in connection with any of the Collateral in excess of $10,000 (in the
aggregate for all Grantors) shall be or become evidenced by any Instrument, Certificated
Security or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall be
immediately delivered to the Administrative Agent, duly indorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement. In the event that
an Unmatured Event of Default or Event of Default shall have occurred and be continuing, upon the
request of the Administrative Agent, any Instrument, Certificated Security or Chattel Paper
not theretofore delivered to the Administrative Agent and at such time being held by any Grantor
shall be immediately delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement.
5.2
Maintenance of Perfected Security Interest; Further Documentation. (a)
Such Grantor shall maintain the security interest created by this Agreement as a perfected
security interest having at least the priority described in Section 4.2 and shall
defend such security interest against the claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the Lenders
from time to time statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection therewith as the Administrative
Agent may reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and
duly execute and deliver, and have recorded, such further instruments and documents and take
such further actions as the Administrative Agent may reasonably request for the purpose of
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obtaining
or preserving the full benefits of this Agreement and of the rights and powers herein
granted, including (i) filing any financing or continuation statements under the UCC (or other
similar laws) in effect in any jurisdiction with respect to the security interests created hereby
and (ii) in the case of Investment Property and any other relevant Collateral, taking any actions
necessary to enable the Administrative Agent to obtain “control” (within the meaning of the
applicable UCC) with respect thereto.
5.3 Changes in Locations, Name, etc. Such Grantor shall not, except upon 30
days’ prior written notice to the Administrative Agent and delivery to the Administrative
Agent of (a) all additional financing statements and other documents reasonably requested by the
Administrative Agent as to the validity, perfection and priority of the security interests
provided for herein and (b) if applicable, a written supplement to Schedule 4 showing any
additional location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a location other than those
listed on Schedule 4 (except with respect to Permitted Offsite Inventory).
(ii) change its jurisdiction of organization or the location of its chief executive
office from that specified on Schedule 3 or in any subsequent notice delivered
pursuant to this Section 5.3; or
(iii) change its name, identity or corporate structure.
5.4 Notices. Such Grantor will advise the Administrative Agent and the
Lenders promptly, in reasonable detail, of:
(a) any Lien (other than Permitted Liens) on any of the Collateral which
would adversely affect the ability of the Administrative Agent to exercise any of its remedies
hereunder; and
(b) the occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the Collateral or on the Liens
created hereby.
5.5 Investment Property. (a) If such Grantor shall become entitled to receive
or shall receive any certificate, option or rights in respect of the equity interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any of the
Pledged Equity, or otherwise in respect thereof, such Grantor shall accept the same as the
agent of the Administrative Agent and the Lenders, hold the same in trust for the Administrative
Agent and the Lenders and deliver the same forthwith to the Administrative Agent in the exact form
received, duly indorsed by such Grantor to the Administrative Agent, if required, together
with an undated instrument of transfer covering such certificate duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature guarantied, to be held by
the Administrative Agent, subject to the terms hereof, as additional Collateral for the Secured
Obligations. Upon the occurrence and during the continuance of an Event of Default, (i) any
sums paid upon or in respect of the Investment Property upon the liquidation or dissolution of
any Issuer shall be paid over to the Administrative Agent to be held by it hereunder as
additional
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Collateral for the Secured Obligations, and (ii) in case any distribution of capital shall be
made on or in respect of the Investment Property or any property shall be distributed upon or with
respect to the Investment Property pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall,
unless otherwise subject to a perfected Lien in favor of the Administrative Agent, be delivered to
the Administrative Agent to be held by it hereunder as additional Collateral for the Secured
Obligations. Upon the occurrence and during the continuance of an Event of Default, if any sums of
money or property so paid or distributed in respect of the Investment Property shall be received by
such Grantor, such Grantor shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the Lenders, segregated from other
funds of such Grantor, as additional Collateral for the Secured Obligations.
(b) Without the prior written consent of the Administrative Agent, such
Grantor will not (i) vote to enable, or take any other action to permit, any Issuer to issue
any equity interests of any nature or to issue any other securities or interests convertible into
or granting the right to purchase or exchange for any equity interests of any nature of any
Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Investment Property or Proceeds thereof (except pursuant to a transaction expressly permitted
by the Credit Agreement) other than, with respect to Investment Property not constituting Pledged
Stock or Pledged Notes, any such action which is not prohibited by the Credit Agreement, (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of any Person
with respect to, any of the Investment Property or Proceeds thereof, or any interest therein,
except for Permitted Liens, or (iv) enter into any agreement or undertaking restricting the right or
ability of such Grantor or the Administrative Agent to sell, assign or transfer any of the Investment
Property or Proceeds thereof, except, with respect to such Investment Property, shareholders’
agreements entered into by such Grantor with respect to Persons in which such Grantor
maintains an ownership interest of 50% or less.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it
will be bound by the terms of this Agreement relating to the Investment Property issued by it
and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify
the Administrative Agent promptly in writing of the occurrence of any of the events described in
Section 5.5(a) with respect to the Investment Property issued by it and (iii) the
terms of Sections 6.3(c) and 6.7 shall apply to such Grantor with respect to all actions that
may be required of it pursuant to Section 6.3(c) or 6.7 regarding the Investment Property issued by
it.
5.6 Receivables. (a) Other than in the ordinary course of business consistent with
its past practice and in amounts which are not material to such Grantor, such Grantor will not (i)
grant any extension of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person
liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on any
Receivable or (v) amend, supplement or modify any Receivable in any manner that could adversely
affect the value thereof.
(b) Such Grantor will deliver the Administrative Agent a copy of each material demand, notice
or document received by it that questions or calls into doubt the validity
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or enforceability of more than 5% of the aggregate amount of the then outstanding Receivables for
all Grantors.
5.7 Intellectual Property. (a) Such Grantor (either itself or through licensees) will
(i) continue to use each Trademark material to its business in order to maintain such Trademark in
full force free from any claim of abandonment for non-use, (ii) maintain as in the past the quality
of products and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by applicable law,
(iv) not adopt or use any xxxx which is confusingly similar or a colorable imitation of such
Trademark unless the Administrative Agent, for the ratable benefit of the Lenders, shall obtain a
perfected security interest in such xxxx pursuant to this Agreement, and (v) not (and not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do any act, or
omit to do any act, whereby any Patent material to its business may become forfeited,
abandoned
or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ each
Copyright material to its business and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any material
portion
of such Copyrights may become invalidated or otherwise impaired. Such Grantor will not (either
itself or through licensees) do any act whereby any material portion of such Copyrights may
fall
into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any act that
knowingly uses any Intellectual Property material to its business to infringe the intellectual
property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the Lenders
immediately if it knows, or has reason to know, that any application or registration relating
to any material Intellectual Property may become forfeited, abandoned or dedicated to the public,
or of any adverse determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court or tribunal in any country) regarding,
such Grantor’s ownership of, or the validity of, any material Intellectual Property or such
Grantor’s right to register the same or to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any Intellectual
Property with
the United States Patent and Trademark Office, the United States Copyright Office or any
similar
office or agency in any other country or any political subdivision thereof, such Grantor shall
report such filing to the Administrative Agent concurrently with the next delivery of
financial
statements of the Companies pursuant to Section 10.1 of the Credit Agreement. Upon
the
request of the Administrative Agent, such Grantor shall execute and deliver, and have
recorded,
any and all agreements, instruments, documents, and papers as the Administrative Agent may
request to evidence the Administrative Agent’s and the Lenders’ security interest in any
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Copyright, Patent or Trademark and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each registration of all
material Intellectual Property owned by it.
(h) In the event that any material Intellectual Property is infringed upon or misappropriated
or diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall
reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii)
if such Intellectual Property is of material economic value, promptly notify the Administrative
Agent after it learns thereof and, to the extent, in its reasonable judgment, such Grantor
determines it appropriate under the circumstances, xxx for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.
5.8 Seller Undertakings.
(a) Each Grantor shall keep the Administrative Agent informed of all
circumstances bearing upon any potential claim under or with respect to the Assigned
Agreements and the Seller Undertakings and such Grantor shall not, without the prior written
consent of the Administrative Agent, (i) waive any of its rights or remedies under any
Assigned
Agreement with respect to any of the Seller Undertakings, (ii) settle, compromise or offset
any
amount payable by the sellers to such Grantor under any Assigned Agreement or (iii) amend or
otherwise modify any Assigned Agreement in any manner which is adverse to the interests of the
Administrative Agent or any Lender.
(b) Each Grantor shall perform and observe all the terms and conditions of
each Assigned Agreement to be performed by it, maintain each Assigned Agreement in full force
and effect, enforce each Assigned Agreement in accordance with its terms and take all such
action to such end as may from time to time be reasonably requested by the Administrative
Agent.
(c) Anything herein to the contrary notwithstanding, (i) each applicable
Grantor shall remain liable under each Assigned Agreement to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if this Agreement
had
not been executed, (ii) the exercise by the Administrative Agent of any of its rights
hereunder
shall not release any Grantor from any of its duties or obligations under any Assigned
Agreement
and (iii) neither the Administrative Agent nor any other Lender shall have any obligation or
liability under any Assigned Agreement by reason of this Agreement, nor shall the
Administrative Agent or any other Lender be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
5.9 Depositary and Other Deposit Accounts. Each Grantor shall maintain all
of its principal deposit accounts with the Administrative Agent, except to the extent
permitted by
the Credit Agreement. No Grantor shall open any depositary or other deposit accounts, except
in
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accordance with the Credit Agreement and unless such Grantor shall have given the Administrative
Agent 10 days’ prior written notice of its intention to open any such new deposit accounts. The
Grantors shall deliver to the Administrative Agent a revised version of Schedule 6 showing any
changes thereto within 5 days of any such change. Each Grantor hereby authorizes the financial
institutions at which such Grantor maintains a deposit account to provide the Administrative Agent
with such information with respect to such deposit account as the Administrative Agent may from
time to time reasonably request, and each Grantor hereby consents to such information being
provided to the Administrative Agent. Each Grantor will cause each financial institution at which
such Grantor maintains a depositary or other deposit account to enter into a bank agency or other
similar agreement with the Administrative Agent and such Grantor, in form and substance
satisfactory to the Administrative Agent, in order to give the Administrative Agent “control” (as
defined in the UCC) of such account. Subject to the terms of the Credit Agreement, each Grantor
shall direct all Account Debtors to make all payments on the Accounts directly to a bank account or
Lockbox maintained with the Administrative Agent (an “Agent Account”). If any Grantor or any
director, officer, employee, agent of such Grantor, or any other Person acting for or in concert
with such Grantor shall receive any monies, checks, notes, drafts or other payments relating to or
as proceeds of Accounts or other Collateral, such Grantor and each such Person shall receive all
such items in trust for, and as the sole and exclusive property of, the Administrative Agent and
the Lenders and, immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in kind to the Agent Account. The Grantors, jointly and severally, agree to pay all fees,
costs and expenses which the Administrative Agent incurs in connection with opening and maintaining
the Agent Account and depositing for collection by the Administrative Agent any check or other item
of payment received by the Administrative Agent on account of the Obligations. All of such fees,
costs and expenses shall constitute Secured Obligations hereunder and shall be payable to the
Administrative Agent by the Grantors upon demand. All checks, drafts, instruments and other items
of payment or proceeds of Collateral shall be endorsed by the applicable Grantor to the
Administrative Agent, and, if that endorsement of any such item shall not be made for any reason,
the Administrative Agent is hereby irrevocably authorized to endorse the same on such Grantor’s
behalf. For the purpose of this section, each Grantor irrevocably hereby makes, constitutes and
appoints the Administrative Agent (and all Persons designated by the Administrative Agent for that
purpose) as such Grantor’s true and lawful attorney and agent-in-fact (a) to endorse such Grantor’s
name upon said items of payment and/or proceeds of Collateral and upon any Chattel Paper, document,
Instrument, invoice or similar document or agreement relating to any Account of such Grantor or
goods pertaining thereto; (b) to take control in any manner of any item of payment or proceeds
thereof; and (c) to have access to any lock box or postal box into which any of such Grantor’s mail
is deposited, and open and process all mail addressed to such Grantor and deposited therein. All
amounts received in an Agent Account shall be deemed received by the Administrative Agent in
accordance with Section 7.1 of the Credit Agreement and applied to Revolving Outstandings.
In no event shall any amount be applied unless and until such amount shall have been credited in
immediately available funds to an Agent Account.
5.10 Other Matters.
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(a) On the Closing Date, each of the Grantors shall cause to be delivered to
the Administrative Agent a Collateral Access Agreement with respect to (a) each bailee with
which such Grantor keeps Inventory or other assets as of the Closing Date with a fair market
value in excess of $10,000 and (b) each landlord which leases real property (and the
accompanying facilities) to any of the Grantors as of the Closing Date. If any Grantor shall
cause to be delivered Inventory or other property in excess of $10,000 in fair market value to
any
bailee after the Closing Date, such Grantor shall use reasonable efforts to cause such bailee
to
sign a Collateral Access Agreement. Such requirement may be waived at the option of the
Administrative Agent. If any Grantor shall lease any real property or facilities and the value
of
property of such Grantor located at such leased real property is in excess of $10,000 in fair market value after the Closing Date, such Grantor shall use reasonable efforts to cause the
landlord in respect of such leased property or facilities to sign a Collateral Access
Agreement.
Such requirement may be waived at the option of the Administrative Agent.
(b) Each Grantor authorizes the Administrative Agent to, at any time and from
time to time, file financing statements, continuation statements, and amendments thereto that
describe the Collateral as “all assets” of each Grantor, or words of similar effect, and which
contain any other information required pursuant to the UCC for the sufficiency of filing
office
acceptance of any financing statement, continuation statement, or amendment, and each Grantor
agrees to furnish any such information to the Administrative Agent promptly upon request. Any
such financing statement, continuation statement, or amendment may be signed by the
Administrative Agent on behalf of any Grantor and may be filed at any time in any
jurisdiction.
(c) Each Grantor shall, at any time and from time and to time, take such steps
as the Administrative Agent may reasonably request for the Administrative Agent (i) to obtain
an
acknowledgement, in form and substance reasonably satisfactory to the Administrative Agent, of
any bailee having possession of any of the Collateral, stating that the bailee holds such
Collateral
for the Administrative Agent, (ii) to obtain “control” of any letter-of-credit rights, or
electronic
chattel paper (as such terms are defined by the UCC with corresponding provisions thereof
defining what constitutes “control” for such items of Collateral), with any agreements
establishing control to be in form and substance reasonably satisfactory to the Administrative
Agent, and (iii) otherwise to insure the continued perfection and priority of the
Administrative
Agent’s security interest in any of the Collateral and of the preservation of its rights
therein. If
any Grantor shall at any time, acquire a “commercial tort claim” (as such term is defined in
the
UCC) in excess of $10,000, such Grantor shall promptly notify the Administrative Agent thereof
in writing and supplement Schedule 7, therein providing a reasonable description and
summary
thereof, and upon delivery thereof to the Administrative Agent, such Grantor shall be deemed
to
thereby grant to the Administrative Agent (and such Grantor hereby grants to the
Administrative
Agent) a security interest and lien in and to such commercial tort claim and all proceeds
thereof,
all upon the terms of and governed by this Agreement.
(d) Without limiting the generality of the foregoing, if any Grantor at any time
holds or acquires an interest in any electronic chattel paper or any “transferable record”, as
that
term is defined in Section 201 of the federal Electronic Signatures in Global and National
Commerce Act, or in §16 of the Uniform Electronic Transactions Act as in effect in any
relevant
jurisdiction, such Grantor shall promptly notify the Administrative Agent thereof and, at the
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request of the Administrative Agent, shall take such action as the Administrative Agent may
reasonably request to vest in the Administrative Agent “control” under Section 9-105 of the UCC of
such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, §16 of the Uniform Electronic Transactions
Act, as so in effect in such jurisdiction, of such transferable record. The Administrative Agent
agrees with the Grantors that the Administrative Agent will arrange, pursuant to procedures
satisfactory to the Administrative Agent and so long as such procedures will not result in the
Administrative Agent’s loss of control, for the Grantors to make alterations to the electronic
chattel paper or transferable record permitted under Section 9-105 of the UCC or, as the case may
be, Section 201 of the federal Electronic Signatures in Global and National Commerce Xxx xx §00 of
the Uniform Electronic Transactions Act for a party in control to make without loss of control,
unless an Event of Default has occurred and is continuing or would occur after taking into account
any action by any Grantor with respect to such electronic chattel paper or transferable record.
SECTION 6 REMEDIAL PROVISIONS.
6.1 Certain Matters Relating to Receivables. (a) At any time and from time to time
after the occurrence and during the continuance of an Event of Default, the Administrative Agent
shall have the right to make test verifications of the Receivables in any manner and through any
medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance
and information the Administrative Agent may require in connection with such test verifications.
At any time and from time to time after the occurrence and during the continuance of an Event of
Default, upon the Administrative Agent’s request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to the Administrative
Agent to furnish to the Administrative Agent reports showing reconciliations, agings and test
verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to collect such
Grantor’s Receivables, and the Administrative Agent may curtail or terminate such authority at
any time after the occurrence and during the continuance of an Event of Default. If required
by
the Administrative Agent at any time after the occurrence and during the continuance of an
Event of Default, any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within 2 Business Days) deposited by such Grantor in the exact
form received, duly indorsed by such Grantor to the Administrative Agent if required, in a
collateral account maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the Lenders only as
provided in Section 6.5, and (ii) until so turned over, shall be held by such Grantor
in trust for the
Administrative Agent and the Lenders, segregated from other funds of such Grantor. Each such
deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable
detail the nature and source of the payments included in the deposit.
(c) At any time and from time to time after the occurrence and during the
continuance of an Event of Default, at the Administrative Agent’s request, each Grantor shall
deliver to the Administrative Agent all original and other documents evidencing, and relating
to,
the agreements and transactions which gave rise to the Receivables, including all original
orders,
invoices and shipping receipts.
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(d) Each Grantor hereby irrevocably authorizes and empowers the Administrative Agent, in the
Administrative Agent’s sole discretion, at any time after the occurrence and during the
continuance of an Event of Default, to assert, either directly or on behalf of such Grantor, any
claim such Grantor may from time to time have against the sellers under or with respect to the
Assigned Agreements and to receive and collect any and all damages, awards and other monies
resulting therefrom and to apply the same to the Obligations. Each Grantor hereby irrevocably
makes, constitutes and appoints the Administrative Agent as its true and lawful attorney in fact
for the purpose of enabling the Administrative Agent to assert and collect such claims and to
apply such monies in the manner set forth above, which appointment, being coupled with an
interest, is irrevocable.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The Administrative
Agent in its own name or in the name of others may at any time after the occurrence and during the
continuance of an Event of Default communicate with obligors under the Receivables to verify with
them to the Administrative Agent’s satisfaction the existence, amount and terms of any
Receivables.
(b) Upon the request of the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall notify
obligors
on the Receivables that the Receivables have been assigned to the Administrative Agent for the
ratable benefit of the Lenders and that payments in respect thereof shall be made directly to
the
Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor shall
remain liable in respect of each of the Receivables to observe and perform all the conditions
and
obligations to be observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto. Neither the Administrative Agent nor any Lender shall have
any obligation or liability under any Receivable (or any agreement giving rise thereto) by
reason
of or arising out of this Agreement or the receipt by the Administrative Agent or any Lender
of any payment relating thereto, nor shall the Administrative Agent or any Lender be obligated in
any manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable
(or any agreement giving rise thereto), to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any action to
enforce
any performance or to collect the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(d) For the purpose of enabling the Administrative Agent to exercise rights
and remedies under this Agreement, each Grantor hereby grants to the Administrative Agent, at
any time after the occurrence and during the continuance of an Event of Default, for the
benefit
of the Administrative Agent and the Lenders, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor) to use, license or
sublicense
any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the
same may be located, and including in such license access to all media in which any of the
licensed items may be recorded or stored and to all computer software and programs used for
the
compilation or printout thereof.
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6.3 Investment Property. (a) Unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given notice to the relevant Grantor
of the Administrative Agent’s intent to exercise its corresponding rights pursuant to
Section
6.3(b), each Grantor shall be permitted to receive all cash dividends and
distributions paid in
respect of the Pledged Equity and all payments made in respect of the Pledged Notes, to the
extent permitted in the Credit Agreement, and to exercise all voting and other rights with
respect
to the Investment Property; provided, that no vote shall be cast or other right
exercised or action
taken which could impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, this Agreement or any other Loan
Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to the relevant
Grantor
or Grantors, (i) the Administrative Agent shall have the right to receive any and all cash
dividends and distributions, payments or other Proceeds paid in respect of the Investment
Property and make application thereof to the Obligations in such order as the Administrative
Agent may determine, and (ii) any or all of the Investment Property shall be registered in the
name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting and other rights pertaining to such Investment Property
at
any meeting of holders of the equity interests of the relevant Issuer or Issuers or otherwise
and
(y) any and all rights of conversion, exchange and subscription and any other rights,
privileges or
options pertaining to such Investment Property as if it were the absolute owner thereof
(including
the right to exchange at its discretion any and all of the Investment Property upon the
merger,
consolidation, reorganization, recapitalization or other fundamental change in the corporate
or
other structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent
of any right, privilege or option pertaining to such Investment Property, and in connection
therewith, the right to deposit and deliver any and all of the Investment Property with any
committee, depositary, transfer agent, registrar or other designated agency upon such terms
and
conditions as the Administrative Agent may determine), all without liability except to account
for property actually received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be responsible for any
failure
to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any instruction
received by it from the Administrative Agent in writing that (x) states that an Event of
Default
has occurred and is continuing and (y) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from such Grantor, and each Grantor
agrees
that each Issuer shall be fully protected in so complying and (ii) unless otherwise expressly
permitted hereby, pay any dividends, distributions or other payments with respect to the
Investment Property directly to the Administrative Agent.
6.4
Proceeds to be Turned Over to Administrative Agent. In addition to the
rights of the Administrative Agent and the Lenders specified in Section 6.1 with
respect to
payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds
received by any Grantor consisting of cash, checks and other cash equivalent items shall be
held
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by such Grantor in trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the
Administrative Agent in the exact form received by such Grantor (duly indorsed by such Grantor to
the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder
shall be held by the Administrative Agent in a collateral account maintained under its sole
dominion and control. All Proceeds, while held by the Administrative Agent in any collateral
account (or by such Grantor in trust for the Administrative Agent and the Lenders) established
pursuant hereto, shall continue to be held as collateral security for the Secured Obligations and
shall not constitute payment thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed upon by the Companies
and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at
any time at the Administrative Agent’s election, the Administrative Agent may apply all or any
part of Proceeds from the sale of, or other realization upon, all or any part of the Collateral in
payment of the Secured Obligations in such order as the Administrative Agent shall determine in
its discretion. Any part of such funds which the Administrative Agent elects not so to apply and
deems not required as collateral security for the Secured Obligations shall be paid over from time
to time by the Administrative Agent to the applicable Grantor or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the Secured Obligations
shall have been Paid in Full shall be paid over to the applicable Grantor or to whomsoever may be
lawfully entitled to receive the same. In the absence of a specific determination by the
Administrative Agent, the Proceeds from the sale of, or other realization upon, all or any part of
the Collateral in payment of the Secured Obligations shall be applied in the following order:
FIRST, to the payment of all fees, costs, expenses and indemnities of the
Administrative Agent (in its capacity as such), including Attorney Costs, and any other
Secured Obligations owing to the Administrative Agent in respect of sums advanced by the
Administrative Agent to preserve the Collateral or to preserve its security interest in the
Collateral, until paid in full;
SECOND, to the payment of all fees, costs, expenses and indemnities of the Lenders,
pro-rata, until paid in full;
THIRD, to the payment of all of the Secured Obligations (other than Bank Product
Obligations and Hedging Obligations) consisting of accrued and unpaid interest owing to any
Lender, pro-rata, until paid in full;
FOURTH, to the payment of all Secured Obligations (other than Bank Product Obligations
and Hedging Obligations) consisting of principal owing to any Lender, pro-rata, until paid
in full;
FIFTH, to the payment to the Administrative Agent of an amount equal to all Secured
Obligations in respect of outstanding Letters of Credit to be held as cash collateral in
respect of such obligations;
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SIXTH, to the payment of all Bank Products Obligations and Hedging
Obligations owing to any Lender or its Affiliates, pro-rata, until paid in full;
SEVENTH, to the payment of all other Secured Obligations owing to each Lender,
pro-rata, until paid in full; and
EIGHTH, to the payment of any remaining Proceeds, if any, to whomever may be lawfully
entitled to receive such amounts.
6.6 Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in addition to
all
other rights and remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies
of
a secured party under the UCC or any other applicable law. Without limiting the generality of
the foregoing, the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon any Grantor or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give options to purchase, or otherwise dispose of and deliver
the
Collateral or any part thereof (or contract to do any of the foregoing), in one or more
parcels at
public or private sale or sales, at any exchange, broker’s board or office of the
Administrative
Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery with
assumption of
any credit risk. The Administrative Agent or any Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private sale or
sales, to
purchase the whole or any part of the Collateral so sold, free of any right or equity of
redemption
in any Grantor, which right or equity is hereby waived and released. Each Grantor further
agrees, at the Administrative Agent’s request, to assemble the Collateral and make it
available to
the Administrative Agent at places which the Administrative Agent shall reasonably select,
whether at such Grantor’s premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after deducting all
reasonable
costs and expenses of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of
the
Administrative Agent and the Lenders hereunder, including Attorney Costs to the payment in
whole or in part of the Secured Obligations, in such order as the Administrative Agent may
elect,
and only after such application and after the payment by the Administrative Agent of any other
amount required by any provision of law, need the Administrative Agent account for the
surplus,
if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Administrative Agent or any Lender
arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale
or
other disposition of Collateral shall be required by law, such notice shall be deemed
reasonable
and proper if given at least 10 days before such sale or other disposition.
6.7 Registration Rights. (a) If the Administrative Agent shall determine to
exercise its right to sell any or all of the Pledged Equity pursuant to Section 6.6,
and if in the
opinion of the Administrative Agent it is necessary or advisable to have the Pledged Equity,
or
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that portion thereof to be sold, registered under the provisions of the Securities Act, the
relevant Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the directors
and officers of such Issuer to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts as may be, in the opinion of the Administrative Agent,
necessary or advisable to register the Pledged Equity, or that portion thereof to be sold, under
the provisions of the Securities Act, (ii) use its best efforts to cause the registration
statement relating thereto to become effective and to remain effective for a period of one year
from the date of the first public offering of the Pledged Equity, or that portion thereof to be
sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion
of the Administrative Agent, are necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and Exchange Commission
applicable thereto. Each Grantor agrees to cause such Issuer to comply with the provisions of the
securities or “Blue Sky” laws of any and all jurisdictions which the Administrative Agent shall
designate and to make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of Section 1 l(a) of the
Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be unable to
effect a public sale of any or all the Pledged Equity, by reason of certain prohibitions
contained
in the Securities Act and applicable state securities laws or otherwise, and may be compelled
to
resort to one or more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each Grantor
acknowledges
and agrees that any such private sale may result in prices and other terms less favorable than
if
such sale were a public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Equity
for the period of time necessary to permit the Issuer thereof to register such securities or
other
interests for public sale under the Securities Act, or under applicable state securities laws,
even if
such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be done all
such other acts as may be necessary to make such sale or sales of all or any portion of the
Pledged Equity pursuant to this Section 6.7 valid and binding and in compliance with
applicable
law. Each Grantor further agrees that a breach of any of the covenants contained in this
Section 6.7 will cause irreparable injury to the Administrative Agent and the Lenders, that
the Administrative Agent and the Lenders have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section 6.7
shall be
specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not
to
assert any defenses against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-626 of the UCC. Each Grantor shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Secured Obligations in full and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Lender to collect such deficiency.
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SECTION 7 THE ADMINISTRATIVE AGENT.
7.1 Administrative Agent’s Appointment as Attorney-in-Fact, etc, (a) Each Grantor
hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in the name of such
Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of and at the expense of such Grantor, without notice to or assent by such
Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable or with respect to any other Collateral and file
any claim or take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Administrative Agent for the purpose of collecting any and all
such moneys due under any Receivable or with respect to any other Collateral whenever
payable;
(ii) in the case of any Intellectual Property, execute and deliver, and have recorded,
any and all agreements, instruments, documents and papers as the Administrative Agent may
request to evidence the Administrative Agent’s security interest in such Intellectual
Property and the goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) discharge Liens levied or placed on or threatened against the Collateral, and
effect any repairs or insurance called for by the terms of this Agreement and pay all or
any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6 or 6.7,
any indorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall direct; (2) ask or demand for,
collect, and receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any Collateral;
(3) sign and indorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such suit, action or
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proceeding and, in connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark,
throughout the world for such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; (8) vote any right or interest
with respect to any Investment Property; (9) order good standing certificates and conduct
lien searches in respect of such jurisdictions or offices as the Administrative Agent may
deem appropriate; and (10) generally sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely as though
the Administrative Agent were the absolute owner thereof for all purposes, and do, at the
Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time,
all acts and things which the Administrative Agent deems necessary to protect, preserve or
realize upon the Collateral and the Administrative Agent’s security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.l(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this
Section 7.1(a) unless an Event of Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Administrative Agent, at its option, but without any obligation so to
do, may perform or comply, or otherwise cause performance or compliance, with such agreement.
(c) Each Grantor hereby ratifies all that such attorneys shall lawfully do or
cause to be done by virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent’s sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral in its
possession shall be to deal with it in the same manner as the Administrative Agent deals with similar
property for its own account. Neither the Administrative Agent or any Lender nor any of their
respective officers, directors, employees or agents shall be liable for any failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or shall be under
any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the Collateral or any part
thereof.The powers conferred on the Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent’s and the Lenders’ interests in the Collateral and
shall not impose any duty upon the Administrative Agent or any Lender to exercise any such powers.
The Administrative Agent and the Lenders shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor for any act or
failure to act hereunder.
7.3 Authority of Administrative Agent. Each Grantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Agreement with respect to
any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative
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Agent of any option, voting right, request, judgment or other right or remedy provided for herein
or resulting or arising out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Administrative Agent and the Grantors,
the Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with
full and valid authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 8 MISCELLANEOUS.
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in accordance
with Section 15.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the Administrative
Agent or any Grantor hereunder shall be addressed to the Companies and effected in the manner
provided for in Section 15.3 of the Credit Agreement and each Grantor hereby appoints
Akorn as its agent to receive notices hereunder.
8.3 Indemnification by Grantors. THE GRANTORS, JOINTLY AND
SEVERALLY, HEREBY AGREE TO INDEMNIFY, EXONERATE AND HOLD EACH
LENDER PARTY FREE AND HARMLESS FROM AND AGAINST ANY AND ALL
INDEMNIFIED LIABILITIES, INCURRED BY THE LENDER PARTIES OR ANY OF
THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY
TENDER OFFER, MERGER, PURCHASE OF EQUITY INTERESTS, PURCHASE OF
ASSETS (INCLUDING THE RELATED TRANSACTIONS) OR OTHER SIMILAR
TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE
LOANS, (B)THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE,
TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY
HAZARDOUS SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY
GRANTOR, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH
RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY
GRANTOR OR THE OPERATIONS CONDUCTED THEREON, (D) THE
INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT
WHICH ANY LOAN PARTY OR THEIR RESPECTIVE PREDECESSORS ARE
ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF HAZARDOUS
SUBSTANCES OR (E) THE EXECUTION, DELIVERY, PERFORMANCE OR
ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY
ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED
LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A
FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING
UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, EACH
GRANTOR HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO
THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED
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LIABILITIES
WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL OBLIGATIONS PROVIDED
FOR IN THIS SECTION 8.3 SHALL SURVIVE REPAYMENT OF (AND SHALL BE) ALL SECURED OBLIGATIONS (AND
TERMINATION OF ALL COMMITMENTS UNDER THE CREDIT AGREEMENT), ANY FORECLOSURE UNDER, OR ANY
MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OF
THIS AGREEMENT.
8.4 Enforcement Expenses. (a) Each Grantor agrees, on a joint and several
basis, to pay or reimburse on demand each Lender and the Administrative Agent for all
reasonable out-of-pocket costs and expenses (including Attorney Costs) incurred in collecting
against any Guarantor under the guaranty contained in Section 2 or otherwise enforcing
or preserving any rights under this Agreement and the other Loan Documents.
(b) Each Grantor agrees to pay, and to save the Administrative Agent and the
Lenders harmless from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
(c) The agreements in this Section 8.4 shall survive repayment of (and shall
be) all Secured Obligations (and termination of all commitments under the Credit Agreement),
any foreclosure under, or any modification, release or discharge of, any or all of the
Collateral Documents and termination of this Agreement.
8.5 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
8.6 Nature of Remedies. All Secured Obligations of each Grantor and rights
of the Administrative Agent and the Lenders expressed herein or in any other Loan Document
shall be in addition to and not in limitation of those provided by applicable law. No failure
to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same Agreement. Receipt by telecopy of any executed signature page to this
Agreement or any other Loan Document shall constitute effective delivery of such signature
page.
8.8 Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way affect or
impair the legality or enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
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8.9 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties hereto and
supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal
or written, relating to the subject matter hereof and thereof and any prior arrangements made
with respect to the payment by any Grantor of (or any indemnification for) any fees, costs or
expenses payable to or incurred (or to be incurred) by or on behalf of the Administrative
Agent or the Lenders.
8.10 Successors: Assigns. This Agreement shall be binding upon Grantors, the
Lenders and the Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of Grantors, Lenders and the Administrative Agent and the successors and
assigns of the Lenders and the Administrative Agent. No other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents. No Grantor may assign or transfer
any of its rights or Obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.11 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
8.12 Forum Selection: Consent to Jurisdiction. ANY LITIGATION BASED
HEREON,OR ARISING OUT OF,UNDER,OR IN CONNECTION WITH THIS
AGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION. EACH GRANTOR HEREBY EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION
AS SET FORTH ABOVE. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH
GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
8.13 Waiver of Jury Trial. EACH GRANTOR, THE ADMINISTRATIVE
AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
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CONNECTION
HEREWITH AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
8.14 Set-off. Each Grantor agrees that the Administrative Agent and each
Lender have all rights of set-off and bankers’ lien provided by applicable law, and in
addition thereto, each Grantor agrees that at any time any Event of Default exists, the Administrative
Agent and each Lender may apply to the payment of any Secured Obligations, whether or not
then due, any and all balances, credits, deposits, accounts or moneys of such Grantor then or
hereafter with the Administrative Agent or such Lender.
8.15
Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between the
Grantors, on the one hand, and the Administrative Agent and the Lenders, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the Lenders or
among the Grantors and the Lenders.
8.16 Additional Grantors. Each Loan Party that is required to become a party to this Agreement pursuant to Section 10.10 of the Credit Agreement shall become a
Grantor for
all purposes of this Agreement upon execution and delivery by such Subsidiary of a joinder
agreement in the form of Annex I hereto.
8.17 Releases. (a) At such time as the Secured Obligations have been Paid in
Full, the Collateral shall be released from the Liens created hereby, and this Agreement and
all
obligations (other than those expressly stated to survive such termination) of the
Administrative
Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall revert to the
Grantors.
At the request and sole expense of any Grantor following any such termination, the
administrative Agent shall deliver to the Grantors any Collateral held by the Administrative
Agent hereunder, and execute and deliver to the Grantors such documents as the Grantors shall
reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any
Grantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the
request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases
or other documents reasonably necessary or desirable for the release of the Liens created hereby
on such Collateral. At the request and sole expense of Akorn, a Subsidiary Guarantor shall be
released from its obligations hereunder in the event that all the equity interests of such
Subsidiary Guarantor shall be sold, transferred or otherwise disposed of in a transaction
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permitted by the Credit Agreement; provided that Akorn shall have delivered to the
Administrative Agent, with reasonable notice prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms of the sale or
other disposition in reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Companies stating that such transaction is in
compliance with the Credit Agreement and the other Loan Documents.
8.18 Obligations and Liens Absolute and Unconditional. Each Grantor
understands and agrees that the obligations of each Grantor under this Agreement shall be
construed as a continuing, absolute and unconditional without regard to (a) the validity or
enforceability of any Loan Document, any of the Secured Obligations or any other collateral
security therefor or guaranty or right of offset with respect thereto at any time or from time
to time held by the Administrative Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be available to or be
asserted by any Grantor or any other Person against the Administrative Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of any Grantor)
which constitutes, or might be construed to constitute, an equitable or legal discharge of any
Grantor for the Secured Obligations, in bankruptcy or in any other instance. When making any
demand hereunder or otherwise pursuing its rights and remedies hereunder against any Grantor,
the Administrative Agent or any Lender may, but shall be under no obligation to, make a
similar demand on or otherwise pursue such rights and remedies as it may have against any other
Grantor or any other Person or against any collateral security or guaranty for the Secured
Obligations or any right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to make any such demand, to pursue such other rights or remedies or to
collect any payments from any other Grantor or any other Person or to realize upon any such
collateral security or guaranty or to exercise any such right of offset, or any release of any
other Grantor or any other Person or any such collateral security, guaranty or right of offset,
shall not relieve any Grantor of any obligation or liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against any Grantor. For the purposes hereof “demand”
shall include the commencement and continuance of any legal proceedings.
8.19 Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Grantor or any Pledged
Entity for liquidation or reorganization, should Grantor or any Pledged Entity become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee be appointed
for all or any significant part of Grantor’s or a Pledged Entity’s assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment and performance of the
Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced
in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a “voidable preference”, “fraudulent conveyance”, or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any part thereof,
is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
[signature page[s] follow[s]]
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Each of the undersigned has caused this Guaranty and Collateral Agreement to be duly
executed and delivered as of the date first above written.
| AKORN, INC., a Louisiana corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Title: | CFO | |||
| AKORN (NEW JERSEY), INC., an Illinois corporation |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Title: | CFO | |||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Title: | CEO | |||
| LASALLE BANK NATIONAL ASSOCIATION |
||||
| By: | /s/ Xxxxxxx X. X’Xxxxx | |||
| Title: | VP | |||
Signature Page to Guaranty and Collateral Agreement
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