LOAN AND SECURITY AGREEMENT

THIS  LOAN  AND  SECURITY  AGREEMENT is made on October 26, 2005, by and among **Alpharma Inc.**, a Delaware corporation (individually and, in its capacity as the representative of the other Borrowers pursuant to **Section 4.4**, "Parent"), **Alpharma Operating Corporation**, a Delaware corporation, **Alpharma USPD Inc.**, a Maryland corporation, **Alpharma U.S. Inc.**, a Delaware corporation, **G.F. Reilly Company**, a Delaware corporation, **Parmed Pharmaceuticals, Inc.**, a Delaware corporation, **Alpharma Euro Holdings Inc.**, a Delaware corporation, **Alpharma (Bermuda) Inc.**, a Delaware corporation, **Alpharma USHP Inc.**, a Delaware corporation, **Alpharma Animal Health Company**, a Texas corporation, **Mikjan Corporation**, an Arkansas corporation, **Alpharma Holdings Inc.**, a Delaware corporation, **Alpharma Pharmaceuticals Inc.**, a Delaware corporation, **Purepac Pharmaceutical Holdings, Inc.**, a Delaware corporation, **Alpharma Branded Products Division Inc.**, a Delaware corporation, **Purepac Pharmaceutical Co.**, a Delaware corporation and **Alpharma Investment Inc.**, a Delaware corporation (collectively referred to herein as "Borrowers," and individually as a "Borrower"); the various financial institutions listed on the signature pages hereof (together with their respective successors and permitted assigns, the "Lenders"); and **Bank of America, N.A.**, a national bank, in its capacity as a Lender, Issuing Bank and collateral and administrative agent for the Lenders pursuant to **Section 13** (together with its successors in such capacity, "Agent").  Capitalized terms used in this Agreement have the meanings assigned to them in **Section 1**.**R e c i t a l s:

Each Borrower has requested that Lenders make available a revolving credit, term loan and letter of credit facility to Borrowers, which shall be used by Borrowers to finance their mutual and collective enterprise of developing, manufacturing and marketing pharmaceutical products for humans and animals.  In order to utilize the financial powers of each Borrower in the most efficient and economical manner, and in order to facilitate the financing of each Borrower**'**s needs, Lenders will, at the request of any Borrower, make loans to all Borrowers under the term loan and  revolving credit facility on a combined basis and in accordance with the provisions hereinafter set forth.  Borrowers**'** business is a mutual and collective enterprise, and Borrowers believe that the consolidation of all****term loan and revolving credit loans under this Agreement will enhance the aggregate borrowing powers of each Borrower and ease the administration of their**term and revolving credit loan relationship with Lenders, all to the mutual advantage of Borrowers.  Lenders**'** willingness to extend credit to Borrowers and to administer each Borrower**'**s collateral security therefor, on a combined basis as more fully set forth in this Agreement, is done solely as an accommodation to Borrowers and at Borrowers**'** request in furtherance of Borrowers**'** mutual and collective enterprise.
Each Borrower has agreed to be jointly and severally liable for loans and all outstanding other obligations under this Agreement and to guarantee the obligations of each of the other Borrowers under this Agreement and each of the other Loan Documents.

NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration, the parties hereto, intending to be bound hereby, agree as follows:

 
**SECTION 1.   DEFINITIONS; RULES OF CONSTRUCTION

1.1     Definitions.**
As used in this Agreement, the following terms shall have the following meanings ascribed to them (terms used in the singular to have the same meaning when used in the plural, and *vice versa*):

Account - shall have the meaning given to the term "account" in the UCC and shall include any and all rights of a Borrower to payment for goods sold, leased, licensed, assigned or otherwise disposed of, or for services rendered that are not evidenced by an Instrument or Chattel Paper, whether or not they have been earned by performance.

Account Debtor - a Person who is or becomes obligated under or on account of an Account, Chattel Paper or General Intangible.

Accounts Formula Amount - on any date of determination thereof, an amount equal to the lesser of:

(i) the Revolver Commitments on such date or 

(ii) the sum of:

(x) 85% of the net amount of Eligible Accounts (other than Eligible Generic Accounts) on such date, and 

(y) the lesser of (I) $30,000,000, (II) 90% of Trailing Receipts and (III) the Applicable Advance Rate of the net amount of Eligible Generic Accounts on such date.

As used herein, the phrase "net amount of Eligible Accounts" and "net amount of Eligible Generic Accounts" shall mean (a) the face amount of such Accounts on any date less (without duplication) (b) any and all actual returns, rebates, discounts, credits, allowances, including, any and all direct and indirect customer rebates, floor stock adjustments, general sales allowances and other allowances, accrued free goods, and customer rebate accruals, or Taxes (including sales, excise or other taxes) at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with, or any interest accrued on the amount of, such Accounts at such date, in each case, in accordance with GAAP and consistent with past practices of Borrowers; provided that in no event shall such reserve be greater than the amount of the Account for which a reserve has been established under GAAP.

Adjusted LIBOR Rate - for any Interest Period, with respect to LIBOR Loans, the rate of interest per annum determined pursuant to the following formula:

LIBOR Rate 	=
Offshore Base Rate		____

1.00 - Eurodollar Reserve Percentage  

Where,

"Offshore Base Rate" means the rate per annum appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) 2 Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.  If for any reason such rate is not available, the Offshore Base Rate shall be, for any Interest Period, the rate per annum appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) 2 Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.  If for any reason none of the foregoing rates is available, the Offshore Base Rate shall be, for any Interest Period, the rate per annum determined by Agent as the rate of interest at which Dollar deposits in the approximate amount of the applicable LIBOR Loan would be offered by BofA**'**s London Branch to major banks in the offshore Dollar market at their request at or about 11:00 a.m. (London time) 2 Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.

"Eurodollar Reserve Percentage" means for any day during any Interest Period, the reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day applicable to member banks under regulations issued from time to time by the Board of Governors for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities").  The Offshore Rate for each outstanding LIBOR Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

Affiliate - with respect to any Person, any other Person (i) who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Person; or (ii) who is an officer, director, partner or managing member of such Person.  For purposes hereof, "control" means the possession, directly or indirectly, of the power to vote 10% or more of the voting interests of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of any Equity Interest, by contract or otherwise.

After-Acquired Real Estate - as such term is defined in **Section 7.3** hereof.

Agent Advances - as defined in **Section 2.1.6**.

Agent Indemnitees - Agent and all of it**'**s present and future officers, directors, employees, agents and attorneys.

Agent Professionals - attorneys, accountants, appraisers, business valuation experts, environmental engineers or consultants, turnaround consultants and other professionals or experts retained by Agent.

Agreement - this Loan and Security Agreement and all Exhibits and Schedules thereto.

ALI - A.L. Industrier AS.

ANDA - an Abbreviated New Drug Application that is filed with the FDA.

Anti-Terrorism Laws - any laws relating to terrorism or money laundering, including Executive Order No. 13224 and the USA Patriot Act.

Applicable Advance Rate -  85%, subject to adjustment from time to time by Agent in its reasonable credit judgment based upon the Dilution Adjustment.

Applicable Law - all laws, rules and regulations applicable to the Person, conduct, transaction, covenant or Loan Document in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations and orders of Governmental Authorities; and all applicable orders, judgments and decrees of all courts and arbitrators.

Applicable Margin - a percentage equal to 0.25% with respect to Revolver Loans that are Base Rate Loans, 1.75% with respect to Revolver Loans that are LIBOR Loans, 1.75% with respect to each Term Loan Advance made or outstanding as a Base Rate Loan, 3.25% with respect to each Term Loan Advance made or outstanding as a LIBOR Loan and 0.30% with respect to the Unused Line Fee, provided that the Applicable Margin shall be increased or decreased, on a quarterly basis (commencing with the first full Fiscal Quarter after the Closing Date), according to the performance of Borrowers as measured by the Average Availability for the immediately preceding Fiscal Quarter, as follows:

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