FACILITY AGREEMENT



FACILITY AGREEMENT
(this “Agreement”), dated as of December 3, 2013, by and among Flamel US Holdings, Inc., a Delaware corporation
(“Flamel US Holdings”), Éclat Pharmaceuticals, LLC, a Delaware limited liability company (“Éclat”),
Talec Pharma, LLC, a Delaware limited liability company, and Flamel Technologies, Inc., a Virginia corporation (each a “Borrower”
and collectively, the “Borrowers”), and Broadfin Healthcare Master Fund, Ltd. (the “Lender”
and, together with the Borrowers, the “Parties”).



WITNESSETH:



WHEREAS, the Borrowers
wish to borrow from the Lender up to fifteen million Dollars ($15,000,000) for the purpose described in Section 2.1; and



WHEREAS, the Lender
desires to make loans to the Borrowers for such purpose;



NOW, THEREFORE, in
consideration of the mutual agreements set forth herein, the Parties agree as follows:



ARTICLE 1DEFINITIONS



Section
1.1General Definitions. Wherever used in this
Agreement, the Exhibits or the Schedules attached hereto, unless the context otherwise requires, the following terms have the following
meanings:



“Affiliate”
means, with respect to any Person, any other Person:



(a)          that
owns, directly or indirectly, in the aggregate more than 10% of the beneficial ownership interest of such Person;



(b)          that
directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such
Person; or



(c)          that
directly or indirectly is a general partner, controlling shareholder, or managing member of such Person.



“Applicable
Laws” means all statutes, rules and regulations of the FDA and of other Governmental Authorities in the United States
or elsewhere exercising regulatory authority similar to that of the FDA applicable to the ownership, testing, development, manufacture,
packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal
of any product manufactured or distributed by or on behalf of any Borrower or its Subsidiaries.



“Authorizations”
has the meaning set forth in Section 3.1(p).



1







“Breaking
Stick” means Breaking Stick Holdings, LLC, a Delaware limited liability company formerly known as Éclat Holdings,
LLC.



“Breaking
Stick Indebtedness” means Indebtedness in an aggregate amount of $12,000,000 incurred pursuant to that certain Installment
Sale Note dated March 12, 2012 from the Borrowers to Breaking Stick.



“Business
Day” means a day on which banks are open for business in The City of New York.



“Closing Date”
means the first date all the conditions precedent in Article IV are satisfied or waived by Lender.



“Code”
means the Internal Revenue Code of 1986, as amended, and any Treasury Regulations promulgated thereunder.



“Deerfield”
means collectively, Deerfield Private Design Fund II, L.P. and Deerfield Private Design International II, L.P.



“Deerfield
Credit Facility” means the secured credit facility in the original principal amount of $15,000,000 established by Deerfield
in favor of the Flamel US Holdings, Inc. pursuant to the terms of the Deerfield Facility Agreement.



“Deerfield
Facility Agreement” means that certain Facility Agreement dated as of December 31, 2012 between Flamel US Holdings, Inc.
and Deerfield, as amended, restated, supplemented or otherwise modified from time to time.



“Deerfield
Intercreditor Agreement” means the Intercreditor Agreement by and among Lender, Deerfield, Breaking Stick, Borrowers
and SA.



“Default”
means any event which, at the giving of notice, lapse of time or fulfillment of any other applicable condition (or any combination
of the foregoing), would constitute an Event of Default.



“Default Rate”
means 18.0% simple interest per annum.



“Dollars”
and the “$” sign mean the lawful currency of the United States of America.



“Eligible
Market” means the over the counter Bulletin Board, the New York Stock Exchange, Inc., the NYSE Area, the NASDAQ Capital
Market, the NASDAQ Global Market, the NASDAQ Global Select Market or the NYSE Alternext U.S.



“Event of
Default” has the meaning given to it in Section 5.4.



“Exchange
Act” means the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.



2







“Excluded
Taxes” means with respect to Lender, (a) income or franchise Taxes imposed on (or measured by) Lender’s net income
by the United States of America, or by the jurisdiction (or any political subdivision thereof) under the laws of which Lender is
organized or incorporated or in which the applicable lending office of Lender is located, (b) any branch profits Taxes imposed
by the United States of America, or (c) any withholding Tax that is imposed on amounts payable to Lender at the time Lender becomes
a party to this Agreement (or designates a new lending office) or is directly attributable to Lender’s failure or inability
to comply with Section 2.5(d), except to the extent that Lender (or its assignor, if any) was entitled, at the time of designation
of a new lending office (or assignment), to receive additional amounts from the Borrowers with respect to such withholding Tax
pursuant to Section 2.5(a) or is legally unable to comply with Section 2.5(d) as a result of any change in the laws of the United
States of America, the British Virgin Islands or France occurring subsequent to the date Lender becomes a party to this Agreement
(or designates a new lending office).



“FDA”
means the U.S. Food and Drug Administration.



“Final Payment”
means such amount as may be necessary to repay the outstanding principal amount of the Note and any other amounts owing by the
Borrowers to the Lender pursuant to the Transaction Documents.



“Final Payment
Date” means the earlier of (i) the date on which the Borrowers voluntarily prepay the Note and any other outstanding
Obligations under the Transaction Documents and (ii) the earlier of (x) January 31, 2017, and (y) the date that Borrowers have
repaid in full the obligations owed to Deerfield under the Deerfield Credit Facility, provided that in no event shall such date
be earlier than November 15, 2015.



“GAAP”
means generally accepted accounting principles consistently applied as set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession).



“Government
Authority” means any government, governmental department, ministry, cabinet, commission, board, bureau, agency, tribunal,
regulatory authority, instrumentality, judicial, legislative, fiscal, or administrative body or entity, whether domestic or foreign,
federal, state or local, having jurisdiction over the matter or matters and Person or Persons in question.



“Hedging Obligations”
means all liabilities under take-or-pay or similar arrangements or under any interest rate swaps, caps, floors, collars and other
interest hedge or protection agreements, treasury locks, equity forward contracts, currency agreements or commodity purchase or
option agreements or other interest or exchange rate or commodity price hedging agreements and any other derivative instruments,
in each case, whether any Borrower and its Subsidiaries is liable contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which liabilities any Borrower or its Subsidiaries otherwise assures a creditor against loss.



“Indebtedness”
means the following:



| | (i) | all indebtedness for borrowed money;
| | --- | ------------------------------------

| |  | 
| |  | 

| | (ii) | the deferred purchase price of assets or services (other
than payables) which in accordance with GAAP would be shown to be a liability (or on the liability side of a balance sheet);
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (iii) | all guarantees of Indebtedness;
| | ----- | -------------------------------

| |  | 
| |  | 

| | (iv) | the maximum amount of all letters of credit issued or
acceptance facilities established for the account of Borrowers and any of their Subsidiaries, including without duplication, all
drafts drawn thereunder;
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (v) | all capitalized lease obligations;
| | --- | ----------------------------------

| |  | 
| |  | 

| | (vi) | all indebtedness of another Person secured by any Lien
on any property of the Borrowers or their Subsidiaries, whether or not such indebtedness has been assumed or is recourse (with
the amount thereof, in the case of any such indebtedness that has not been assumed by the Borrowers or their Subsidiaries, being
measured as the lower of (x) fair market value of such property and (y) the amount of the indebtedness secured);
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (vii) | all Hedging Obligations; and
| | ----- | ----------------------------

| |  | 
| |  | 

| | (viii) | indebtedness created or arising under any conditional
sale or title retention agreement.
| | ------ | ----------------------------------------------------------------------------------------



“Indemnified Person” has the meaning given to it in Section 6.11.



“Indemnified Taxes” means all Taxes including Other Taxes, other than Excluded Taxes.



“Indemnity” has the meaning given to it in Section 6.11.



“Intellectual
Property” means (i) all patents, patent applications, patent disclosures and inventions (whether patentable or unpatentable
and whether or not reduced to practice), (ii) all trademarks, service marks, trade dress, trade names, slogans, logos, and corporate
names and Internet domain names, together with all of the goodwill associated with each of the foregoing, (iii) copyrights, copyrightable
works, and licenses, (iv) registrations and applications for registration for any of the foregoing, (v) computer software (including
but not limited to source code and object code), data, databases, and documentation thereof, (vi) trade secrets and other confidential
information, (vii) other intellectual property, including the Product Regulatory Rights and (viii) copies and tangible embodiments
of the foregoing (in whatever form and medium).



“Interest
Payment Date” has the meaning given to it in Section 2.7.



“Interest
Rate” means 12.5% simple interest per annum.



“IP”
has the meaning given to it in Section 3.1(l).



“IP Asset
Disposition” shall mean any sale, assignment, or transfer of all or substantially all of Borrower’s Product Regulatory
Rights in any Product.



“Lien”
means any lien, pledge, preferential arrangement, mortgage, security interest, deed of trust, charge, assignment, hypothecation,
title retention, privilege or other encumbrance on or with respect to property or interest in property.



4







“Loan(s)”
has the meaning given to it in Section 2.2(a).



“Loss”
has the meaning given to it in Section 6.11.



“Major Transaction”
means any of the following:



(i)           a
consolidation, merger, exchange of shares, recapitalization, reorganization, business combination or other similar event, following
which the holders of the Ordinary Shares of SA (including holders of American Depository Shares attributable to underlying Ordinary
Shares) immediately preceding such consolidation, merger, exchange, recapitalization, reorganization, combination or event either
(a) no longer hold a majority of the Ordinary Shares (including American Depository Shares attributable to such Ordinary Shares)
of SA or the shares of the Successor Entity (or the Parent Entity of a Successor Entity) or (b) no longer have the ability to elect
a majority of the board of directors of SA or the Successor Entity (collectively, a “Change of Control Transaction”);



(ii)          a
sale or transfer of all or substantially all of the SA’s assets;



(iii)         a
purchase, tender or exchange offer, made to the holders of outstanding Ordinary Shares or American Depository Shares, such that
following the consummation of such purchase, tender or exchange offer a Change of Control Transaction shall have occurred;



(iv)         the
liquidation bankruptcy, insolvency, dissolution or winding-up (or the occurrence of any analogous proceeding) affecting SA;



(vi)         SA
fails at any time to own, directly or indirectly, one-hundred percent (100%) of the equity interest in each Borrower free and clear
of all Liens (other than Permitted Liens), except where such failure is as a result of a transaction permitted by the Facility
Agreement or



(vii)        either
of Michael S. Anderson or Steven A. Lisi shall for any reason cease to hold the office of Chief Executive Officer and Senior Vice
President, Business and Corporate Development of SA, respectively, or be actively engaged in the day-to-day management of SA and
Borrowers, unless within sixty (60) days of such cessation, a successor to the office of the effected individual is appointed by
Borrowers, which successor is acceptable to Lender; provided that this clause (vii) shall cease to be in effect from and after
November 1, 2015 if Michael S. Anderson and Steven A. Lisi (or an acceptable successor) continue to hold the office of Chief Executive
Officer and Senior Vice President, Business and Corporate Development of SA, respectively on November 1, 2015.



“Material
Adverse Effect” means a material adverse effect on the business, operations, condition (financial or otherwise) or assets
of the Borrowers and their Subsidiaries, taken as a whole.



“Medusa Technology”
means the Intellectual Property for the polymer-based sustained release technology for protein and peptide drugs known as the “Medusa
Technology”, including the regulatory history and submissions, clinical data, manufacturing know-how, copyrights and trademarks,
licenses, partnerships, manufacturing, supply and distribution agreements related thereto.



5







“Membership
Interest Purchase Agreement” means that certain Membership Interest Purchase Agreement, dated as of March 13, 2012, by
and among Breaking Stick, Éclat, SA and Flamel US Holdings, as amended, restated, supplemented or otherwise modified from
time to time.



“Note”
means has the meaning given to it in Section 2.2(c).



“Obligations”
means all obligations (monetary or otherwise) of the Borrowers arising under or in connection with the Transaction Documents.



“Organizational
Documents” means the documents under which any Borrower was organized, each as amended to date, of this Agreement.



“Other Taxes”
means any and all present or future stamp or documentary taxes or any other excise or property taxes, duties, other charges or
similar levies, and all liabilities with respect thereto, together with any interest, fees, additions to tax or penalties applicable
thereto (including by reason of any delay in payment) arising from any payment made hereunder or from the execution, delivery,
registration or enforcement of, or otherwise with respect to, any Transaction Document.



“Parent Entity”
of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of a Major Transaction.



“Permitted
Affiliate Transactions” means



| | (i) | The Royalty Agreement dated as of February 4, 2013 and
entered into by Éclat Pharmaceuticals, LLC, Deerfield Private Design Fund II, L.P., and Horizon Sante FLML, SARL;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (i) | The transactions pursuant to or in connection with the
Membership Interest Purchase Agreement, including without limitation the Breaking Stick Indebtedness and the warrants issued pursuant
to such Membership Interest Purchase Agreement;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (ii) | The Deerfield Credit Facility;
| | ---- | ------------------------------

| |  | 
| |  | 

| | (iii) | Transactions with the Lender and its Affiliates; and
| | ----- | ----------------------------------------------------

| |  | 
| |  | 

| | (iv) | Transactions between and among SA, the Borrowers and
their subsidiaries.
| | ---- | ------------------------------------------------------------------------



“ Permitted Indebtedness” means:



| | (i) | The Obligations;
| | --- | ----------------

| |  | 
| |  | 

| | (ii) | Indebtedness of the Borrowers under the Deerfield Credit
Facility;
| | ---- | ------------------------------------------------------------------



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| | (iii) | Item (ii) under the definition of Indebtedness (including
any earnout and other similar obligations incurred to a seller in an acquisition);
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (iv) | Item (v) under the definition of Indebtedness;
| | ---- | ----------------------------------------------

| |  | 
| |  | 

| | (v) | Indebtedness to purchase equipment and other assets,
including Indebtedness secured by purchase money Liens; provided that such Indebtedness when incurred by any Borrower or any of
its Subsidiaries shall not exceed the purchase price of the asset(s) financed;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (vi) | Indebtedness of any Person acquired pursuant to an acquisition,
provided that such Indebtedness is either (i) not incurred in contemplation of or in connection with such acquisition or (ii)
constitutes Indebtedness owing to the seller of the assets acquired in such acquisition;
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (vii) | Indebtedness existing as of the date hereof and set forth
on Exhibit B attached hereto;
| | ----- | ---------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (viii) | Hedging Obligations incurred in the ordinary course of
business not for speculative purposes;
| | ------ | ---------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (ix) | Indebtedness in respect of letters of credit in an aggregate
outstanding amount not to exceed $750,000 at any time;
| | ---- | -------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (x) | Performance bonds, surety bonds, bank guaranties and
similar instruments incurred in the ordinary course of business;
| | --- | ---------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (xi) | Guarantees with respect to any Permitted Indebtedness;
| | ---- | ------------------------------------------------------

| |  | 
| |  | 

| | (xii) | The Breaking Stick Indebtedness;
| | ----- | --------------------------------

| |  | 
| |  | 

| | (xiii) | Indebtedness incurred after the earlier to occur of (a)
the date on which all of the Loans have been disbursed, and (b) August 2, 2014, in an aggregate amount outstanding at any time
of not more than $15,000,000 that is subordinated in right of payment to the Note pursuant to a Subordination Agreement satisfactory
in form and content to the Lender;
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (xiv) | Unsecured Indebtedness in an aggregate amount of 15,000,000
Euros outstanding at any one time from a Government Authority of The Republic of France; and
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 
| |  | 

| | (xv) | Any refinancings, renewals, extensions, increases or
replacements of Indebtedness listed in clauses (iii), (iv), (v) and (vi) so long as no such Indebtedness shall be refinanced for
a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (xvi) | Other unsecured Indebtedness in an aggregate principal
amount not to exceed $1,000,000 at any time.
| | ----- | ---------------------------------------------------------------------------------------------------



7







“Permitted
Licensing” mean the licensing of Borrowers’ Intellectual Property, including the Product Regulatory Rights, by
the Borrowers to licensees in the ordinary course of business that is not an IP Asset Disposition.



“Permitted
Liens” means:



(i)Liens
existing on the date hereof and set forth on Exhibit C attached hereto, and any renewals or extensions thereof, provided that the
property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby is permitted
by clause (iv), (v) or (vii) of the definition of Permitted Indebtedness;



(ii)Liens
in favor of the Lender;



(iii)Liens
in favor Deerfield and Horizon Sante FLML, SARL under the Deerfield Credit Facility and the related agreements, documents and instruments
(including the related royalty agreements);



(iv)Statutory
Liens created by operation of applicable law;



(v)Liens
arising in the ordinary course of business and securing obligations that are not more than 30 days past due or are being contested
in good faith by appropriate proceedings;



(vi)Liens
for taxes, assessments or governmental charges or levies not more than 30 days past due and payable or that are being contested
in good faith by appropriate proceedings;



(vii)Liens
arising from judgments, decrees or attachments in circumstances not constituting an Event of Default;



(viii)Liens
in favor of financial institutions arising in connection with the Borrowers’ or their Subsidiaries’ accounts maintained
in the ordinary course of the Borrowers’ and their Subsidiaries’ business held at such institutions to secure standard
fees for services charged by, but not financing made available by, such institutions;



(ix)Liens
securing Indebtedness permitted pursuant to clauses (iv), (v) and (vi) of the definition of Permitted Indebtedness;



(x)Lessor
liens;



(xi)Pledges
or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other
social security legislation;



(xii)Deposits
to secure (i) the performance of tenders, bids, trade contracts, licenses and leases, statutory obligations, surety bonds, performance
bonds, bank guaranties and other obligations of a like nature incurred in the ordinary course of business (including earnest money
deposits in respect of any acquisition), or (ii) indemnification obligations relating to any disposition;



8







(xiii)Easements,
rights of way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial
in amount, and which do not in any case materially interfere with the ordinary conduct of the business of the applicable Person;



(xiv)Leases,
licenses or subleases granted to others not interfering in any material respect with the business of the Borrowers and their Subsidiaries;



(xv)Liens
of a collection bank arising under Section 4-210 of the Uniform Commercial Code (or equivalent in foreign jurisdictions) on items
in the course of collection;



(xvi)Permitted
Licensing;



(xvii)To
the extent constituting a Lien, good faith deposits required in connection with any acquisition and escrow arrangements securing
indemnification obligations associated with any acquisition;



(xviii)Liens
(i) on advances of cash or cash equivalents in favor of the seller of any property to be acquired by any Borrower or any of its
Subsidiaries to be applied against the purchase price for such acquisition; provided, that (x) the aggregate amount of such advances
of cash or cash equivalents shall not exceed the purchase price of such acquisition and (y) the property is acquired within 90
days following the date of the first such advance so made; and (ii) consisting of an agreement to dispose of any property in a
disposition of assets, in each case, solely to the extent such acquisition or disposition, as the case may be, would have been
permitted on the date of the creation of such Lien;



(xix)Liens
on cash collateral securing reimbursement obligations of the Borrowers and their Subsidiaries under letters of credit;



(xx)Liens
in favor Breaking Stick securing the Breaking Stick Indebtedness and other amounts owing under the Membership Interest Purchase
Agreement; and



(xxi)Liens
not otherwise permitted hereunder in respect of obligations in an aggregate amount not to exceed $500,000 at any time outstanding.



“Person”
means and includes any natural person, individual, partnership, joint venture, corporation, trust, limited liability company, limited
company, joint stock company, unincorporated organization, government entity or any political subdivision or agency thereof, or
any other entity.



“Product Regulatory
Rights” shall mean each and every investigational new drug application or new drug application and/or state license or
registration that is held or obtained (if any) by Borrowers that is necessary to develop, conduct clinical trials relating to,
manufacture, have manufactured, distribute, promote, market or sell specified drugs in the United States.



9







“Products”
shall mean drugs approved pursuant to the FDA’s Drug Efficiency Study Implementation to which Borrowers owns the Product
Regulatory Rights.



“Register”
has the meaning set forth in Section 1.4.



“Royalty Agreement”
means that certain Royalty Agreement between Éclat Pharmaceuticals, LLC and Lender.



“SA”
means Flamel Technologies S.A.



“SA Guaranty”
means the guaranty made by SA for the benefit of the Lender guaranteeing the liabilities and obligations of the Borrowers under
this Agreement and the other Transaction Documents, including the obligations of Éclat Pharmaceuticals, LLC under the Royalty
Agreement.



“SA Security
Documents” means (i) the Intellectual Property Security Agreement governed by the laws of New York pursuant to which
SA grants to the Lender a lien and first priority security interest on the Medusa Technology to secure its obligations under the
SA Guaranty, (ii) the security agreements made by SA in favor of Lender granting a lien and first priority security interest on
the Medusa Technology to secure SA’s obligations under the SA Guaranty that Lender determines are necessary to establish,
continue and maintain a valid, enforceable, first priority security interest in the Medusa Technology to preserve Lender’s
rights and interests granted in the Medusa Technology, as against SA and third parties, with respect to the Medusa Technology registered
and in use under the laws of any jurisdiction outside of the United States, and (iii) agreements governed by the laws of France
pursuant to which SA grants to the Lender a lien on its property, plant and equipment located in Pessac, France to secure its obligations
under the SA Guaranty.



“SEC”
means the United States Securities and Exchange Commission.



“SEC Reports”
means the annual, quarterly and periodic reports filed by SA with the SEC.



“Securities
Act” means the Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder.



“Security
Agreements” mean (i) the SA Security Documents, and (ii) the Security Agreement governed by the laws of New York pursuant
to which the Borrowers grant liens in all of their assets to the Lender to secure their obligations under the Transaction Documents.



“Successor
Entity” means any Person purchasing SA’s assets or Ordinary Shares, or any successor entity resulting from such
Major Transaction.



“Subsidiary
or Subsidiaries” means, as to any Borrower, any entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly
or indirectly owned by such Borrower.



“Taxes”
means all present or future taxes, levies, imposts, stamp or other duties, fees, assessments, deductions, withholdings, all other
governmental charges, and all liabilities with respect thereto, together with any interest, fees, additions to tax or penalties
applicable thereto (including by reason of any delay in payment).



10







“Transaction
Documents” means this Agreement, the Note, the Security Agreements, the SA Guaranty, the Royalty Agreement, the Deerfield
Intercreditor Agreement and any other document or instrument delivered in connection with any of the foregoing and dated the date
of this Agreement or subsequent to such date, whether or not specifically mentioned herein or therein.



Section
1.2Interpretation. In this Agreement, unless
the context otherwise requires, all words and personal pronouns relating thereto shall be read and construed as the number and
gender of the party or parties requires and the verb shall be read and construed as agreeing with the required word and pronoun;
the division of this Agreement into Articles and Sections and the use of headings and captions is for convenience of reference
only and shall not modify or affect the interpretation or construction of this Agreement or any of its provisions; the words “herein,”
“hereof,” “hereunder,” “hereinafter” and “hereto” and words of similar import refer
to this Agreement as a whole and not to any particular Article or Section hereof; the words “include,” “including,”
and derivations thereof shall be deemed to have the phrase “without limitation” attached thereto unless otherwise expressly
stated; references to a specified Article, Exhibit, Section or Schedule shall be construed as a reference to that specified Article,
Exhibit, Section or Schedule of this Agreement; and any reference to any of the Transaction Documents means such document as the
same shall be amended, supplemented or modified and from time to time in effect.



Section
1.3Business Day Adjustment. If the day by which
a payment is due to be made is not a Business Day, that payment shall be made by the next succeeding Business Day unless that next
succeeding Business Day falls in a different calendar month, in which case that payment shall be made by the Business Day immediately
preceding the day by which such payment is due to be made.



Section
1.4Books and Records and Register.



(a)          The
Borrowers shall record on their books and records the amount of the Loans, the interest rate applicable, all payments of principal
and interest thereon and the principal balance thereof from time to time outstanding. Such record shall, absent manifest error,
be conclusive evidence of the amount of the Loans made by the Lender to the Borrowers and the interest and payments thereon.



(b)          The
Borrowers shall establish and maintain at their address referred to in Section 6.1, a record of ownership (the “Register”)
in which the Borrowers agree to register by book entry the interests (including any rights to receive payment hereunder) of Lender
in the Loans, and any assignment of any such interest, and (ii) accounts in the Register in accordance with its usual practice
in which it shall record (1) the name and address of the Lender (and any change thereto pursuant to this Agreement), (2) the amount
of the Loans and each funding of any participation therein, (3) the amount of any principal or interest due and payable or paid,
and (4) any other payment received by the Lender from the Borrowers and its application to the Loans.



(c)          Notwithstanding
anything to the contrary contained in this Agreement, the Loans (including any Note evidencing the Loans) is a registered obligation,
the right, title and interest of the Lender and its assignees in and to the Loans shall be transferable only upon notation of such
transfer in the Register and no assignment thereof shall be effective until recorded therein. This Section 1.4 shall be construed
so that the Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2)
and 881(c)(2) of the Code.



11







(d)          The
Borrowers and the Lender shall treat each Person whose name is recorded in the Register as a Lender for all purposes of this Agreement.
Information contained in the Register with respect to Lender shall be available for access by the Borrowers or Lender at any reasonable
time and from time to time upon reasonable prior notice.



ARTICLE 2AGREEMENT FOR THE LOANS



Section
2.1Use of Proceeds. The proceeds of the Loans
will be used for working capital without limitation as to its use, except as otherwise prohibited by the Transaction Documents.



Section
2.2Loans.



(a)          Subject
to the satisfaction of the conditions contained in Article 4, Lender agrees to make loans to Borrowers in an amount up to the $15,000,000,
as follows: (i) on the Closing Date, $5,000,000 (the “Initial Loan”), (ii) from the period from November 15,
2013 through August 15, 2014, at the request of the Borrowers, an additional loan in the amount of $5,000,000, and (iii) from the
period from November 15, 2013 through August 15, 2014, at the request of the Borrowers, a second additional loan in the amount
of $5,000,000 if Éclat has obtained FDA approval for a second Product, with such second Product being one of the three remaining
Éclat Products as defined in the Deerfield Facility Agreement (each of the additional loans described in the foregoing clauses
(ii) and (iii) is an “Additional Loan”, each Additional Loan and the Initial Loan, a “Loan”
and collectively, “Loans”). No amounts prepaid (or repaid) on account of any Loan may be reborrowed.



(b)          To
obtain an Additional Loan, Borrowers shall notify Lender (which notice shall be irrevocable) by electronic mail, facsimile, or
telephone by ten (10) Business Days prior to the date of the proposed date of funding.



(c)          Borrowers’
obligation to repay the Loans shall be evidenced by a promissory note (the “Note”) in substantially the form
attached hereto as Exhibit A.



(d)          Each
Borrower acknowledges that it is jointly and severally liable for all of the Obligations. Each Borrower expressly understands,
agrees and acknowledges that (i) Borrowers are all affiliated entities by common ownership, (ii) each Borrower desires to have
the availability of one common credit facility instead of separate credit facilities, (iii) each Borrower has requested that Lender
extend such a common credit facility to Borrowers on the terms provided herein, (iv) Lender will be lending against, and relying
on a lien upon, all or substantially all of the assets of Borrowers even though the proceeds of any particular Loan made hereunder
may not be advanced directly to or on behalf of a particular Borrower, (v) each Borrower will benefit by the making of the Loans
and the availability of a credit facility of a size greater than each could independently warrant, and (vi) all of the representations,
warranties, covenants, obligations, conditions, agreements and other terms contained in this Agreement shall be applicable to and
shall be binding upon each Borrower.



12







Section
2.3Payment and Prepayment.



(a)          The
Borrowers shall remit the Final Payment to the Lender on the earlier to occur of (i) the Final Payment Date and (ii) the date the
principal amount of the Note and all other outstanding Obligations under this Agreement are declared to be or automatically become
due and payable following an Event of Default.



(b)          The
Note may be prepaid in whole or in part, at any time, without any premium or penalty, upon five (5) Business Days’ notice
to the Lender prior to the date of the proposed prepayment (which notice shall be irrevocable), and such prepayment shall include
interest due on such date. Each prepayment shall be applied first, to accrued and unpaid interest and second, to principal.



(c)          Subject
to the terms of the Deerfield Intercreditor Agreement, upon receipt of net cash proceeds from any IP Asset Disposition, Borrowers
shall promptly repay the Loan in an amount equal to 100% of the net cash proceeds arising from such IP Asset Disposition, whether
received at the closing of such IP Asset Disposition or at any later date. Notwithstanding the forgoing, if any IP subject to an
IP Asset Disposition is subject to a prior lien in favor of Deerfield or Breaking Stick, and Deerfield or Breaking Stick (as applicable)
agrees to permit such IP Asset Disposition without requiring a prepayment of any Indebtedness owing to them, then the Borrowers
shall not be obligated to make any prepayment or repayment of the Loan in respect of such IP Asset Disposition.



Section
2.4Payments. Payments of any amounts due to
the Lender under this Agreement shall be made in Dollars in immediately available funds prior to 11:00 a.m New York City time on
such date that any such payment is due, at such bank or places as the Lender shall from time to time designate in writing at least
five (5) Business Days prior to the date such payment is due. The Borrowers shall pay all and any costs (administrative or otherwise)
imposed by banks, clearing houses, or any other financial institution, in connection with making any payments under any of the
Transaction Documents, except for any costs imposed by the Lender’s banking institutions.



Section
2.5Taxes, Duties and Fees.



(a)          Any
and all payments hereunder or under any other Transaction Document shall be made, in accordance with this Section 2.5, free and
clear of and without deduction for any and all present or future Indemnified Taxes except as required by applicable law. If Borrowers
shall be required by law to deduct any Indemnified Taxes from or in respect of any sum payable hereunder or under any other Transaction
Document, (i) the sum payable shall be increased by as much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 2.5) the Lender shall receive an amount equal to
the sum they would have received had no such deductions been made (any and all such additional amounts payable to Lender shall
hereafter be referred to as the “Additional Amounts”), (ii) Borrowers shall make such deductions, and (iii)
Borrowers shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of such Taxes, Borrowers shall furnish to the Lender the original or a certified
copy of a receipt evidencing payment thereof or other evidence of such payment reasonably satisfactory to Lender.



13







(b)          In
addition, Borrowers agree to pay, and authorize Lender to pay in their respective names, all Other Taxes. Within thirty (30) days
after the date of any payment of Other Taxes, Borrowers shall furnish to Lender the original or a certified copy of a receipt evidencing
payment thereof or other evidence of such payment reasonably satisfactory to Lender.



(c)          Borrowers
shall reimburse and indemnify, within ten (10) days after receipt of demand therefor, Lender for all Indemnified Taxes (including
all Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.5(c)) paid by Lender, whether or
not such Indemnified Taxes were correctly or legally asserted. A certificate of the Lender setting forth the amounts to be paid
thereunder and delivered to Borrowers shall be conclusive, binding and final for all purposes, absent manifest error.



(d)          Lender
shall (unless Lender is a Foreign Person) on or before the date hereof provide to Borrowers a properly completed and executed IRS
Form W-9 certifying that Lender is organized under the laws of the United States. If Lender is organized under the laws of a jurisdiction
outside the United States (a “Foreign Person”) and is entitled to an exemption from or reduction in U.S. withholding
tax it shall provide Borrowers with a properly completed and executed IRS Form W-8ECI, W-8BEN, W-8IMY or other applicable form,
or any other applicable certificate or document reasonably requested by the Borrowers, and, if such Foreign Person that is relying
on the portfolio interest exception of Section 871(h) or Section 881(c) of the Code (or any successor provision thereto), shall
also provide the Borrowers with a certificate (the “Portfolio Interest Certificate”) representing that such
Foreign Person is not a “bank” for purposes of Section 881(c) of the Code (or any successor provision thereto), is
not a 10% holder of the Borrowers described in Section 871(h)(3)(B) of the Code (or any successor provision thereto), is not a
controlled foreign corporation receiving interest from a related person (within the meaning of Sections 881(c)(3)(C) and 864(d)(4)
of the Code, or any successor provisions thereto) and is not a conduit entity participating in a conduit Transaction arrangement
as defined in Treasury Regulation Section 1.881-3 (or any successor provision thereto). Lender shall provide new forms (or successor
forms) upon the expiration or obsolescence of any previously delivered forms and shall promptly notify the Borrowers of any change
in circumstances which would modify or render invalid any claimed exemption or reduction.



(e)          If
Lender determines in good faith that it has received a refund from a Government Authority relating to Taxes in respect of which
the Borrowers paid Additional Amounts or made a payment pursuant to Section 2.5(c), Lender shall promptly pay such refund to the
Borrowers, net of all out-of-pocket expense (including any Taxes imposed thereon) of Lender incurred in obtaining such refund,
provided that the Borrowers, upon the request of Lender, agrees to repay the amount paid over to the Borrowers (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to Lender if Lender is required to repay such refund
to such Governmental Authority. Nothing in this Section shall require Lender to disclose any information it deems confidential
(including, without limitation, its tax returns) to any Person, including Borrowers.



14







Section
2.6Costs, Expenses and Losses. If, as a result
of any failure by the Borrowers to pay any sums due under this Agreement on the due date therefor (after the expiration of any
applicable grace periods), the Lender shall incur costs, expenses and/or losses, by reason of the liquidation or redeployment of
deposits from third parties or in connection with obtaining funds to make or maintain the Loans, the Borrowers shall pay to the
Lender upon request by the Lender, the amount of such costs, expenses and/or losses within fifteen (15) days after receipt by it
of a certificate from the Lender setting forth in reasonable detail such costs, expenses and/or losses, along with supporting documentation.
For the purposes of the preceding sentence, “costs, expenses and/or losses” shall include, without limitation, any
interest paid or payable to carry any unpaid amount and any loss, premium, penalty or expense which may be incurred in obtaining,
liquidating or employing deposits of or borrowings from third parties in order to make, maintain or fund the Loans or any portion
thereof.



Section
2.7Interest.



(a)          The
outstanding principal amount of the Note shall bear interest at the Interest Rate (calculated on the basis of the actual number
of days elapsed in each month). Interest shall be paid quarterly in arrears commencing on January 1, 2014 and on the first Business
Day of each April, July, October, and January thereafter (each, an “Interest Payment Date”).



(b)          Without
limiting the remedies available to the Lender under the Transaction Documents or otherwise, upon the occurrence and during the
continuation of an Event of Default, at the election of the Lender, the outstanding principal amount of the Note and all other
outstanding Obligations shall bear interest at the Default Rate.



Section
2.8Costs and Expenses. On the Closing Date,
the Borrowers shall reimburse the Lender for its legal costs and expense incurred in effecting such transaction up to a maximum
of $75,000.



ARTICLE 3REPRESENTATIONS AND WARRANTIES



Section
3.1Representations and Warranties of the Borrowers.
The Borrowers represent and warrant as of the date hereof that except as set forth in a Schedule to this Agreement or the SEC Reports
for the year ended December 31, 2012 or the quarterly periods ended March 31, 2013 and June 30, 2013, as in effect on the date
hereof:



(a)          Each
Borrower is conducting its business in compliance with its Organizational Documents, which are in full force and effect with no
defaults outstanding thereunder.



(b)          No
Default or Event of Default (or any other default or event of default, however described) has occurred under any of the Transaction
Documents.



(c)          Each
Borrower (i) is capable of paying its debts as they fall due, is not unable and has not admitted its inability to pay its debts
as they fall due, (ii) is not bankrupt or insolvent and (iii) has not taken action, and no such action has been taken by a third
party, for such Borrower’s winding up, dissolution, or liquidation or similar executory or judicial proceeding or for the
appointment of a liquidator, custodian, receiver, trustee, administrator or other similar officer for such Borrower or any or all
of its assets or revenues.



15







(d)          No
Lien exists on any Borrower’s assets, except for Permitted Liens.



(e)          The
obligation of the Borrowers to make any payment under this Agreement (together with all charges in connection therewith) is absolute
and unconditional, and there exists no right of setoff or recoupment, counterclaim, cross-claim or defense of any nature whatsoever
to any such payment.



(f)          No
Indebtedness of the Borrowers exists other than Permitted Indebtedness.



(g)          Each
of the Borrowers is validly existing as a corporation or limited liability company in good standing under the laws of its state
of incorporation or formation. Each Borrower has full power and authority to own its properties and conduct its business, and is
duly qualified to do business as a foreign entity and is in good standing in each jurisdiction in which the conduct of its business
makes such qualification necessary and in which the failure to so qualify would not have a Material Adverse Effect.



(h)          There
is not pending or, to the knowledge of the Borrowers, threatened, any action, suit or other proceeding before any Governmental
Authority (a) to which any Borrower is a party or (b) which has as the subject thereof any assets owned by the Borrowers that would
be expected to result in a Material Adverse Effect. There are no current or, to the knowledge of the Borrowers, pending, legal,
governmental or regulatory enforcement actions, suits or other proceedings to which any Borrower or any of its assets is subject
that would be expected to result in a Material Adverse Effect.



(i)          The
Transaction Documents have been duly authorized, executed and delivered by the Borrowers, and constitute a valid, legal and binding
obligation of the Borrowers enforceable in accordance with its terms, except as such enforceability may be limited by applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally. The execution,
delivery and performance of the Transaction Documents by the Borrowers and the consummation of the transactions therein contemplated
will not (A) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any Lien upon any assets of the Borrowers pursuant to, any agreement to which any Borrower
is a party or by which any Borrower is bound or to which any of the assets of any Borrower is subject, (B) result in any violation
of or conflict with the provisions of the Organizational Documents or (C) result in the violation of any law or any judgment, order,
rule, regulation or decree of any Governmental Authority. No consent, approval, authorization or order of, or registration or filing
with any Governmental Authority is required for the execution, delivery and performance of any of the Transaction Documents or
for the consummation by the Borrowers of the transactions contemplated hereby except filings contemplated with the Security Agreements
and each Borrower has the corporate power and authority to enter into the Transaction Documents and to consummate the transactions
contemplated under the Transaction Documents.



16







(j)          Each
Borrower holds, and is operating in compliance in all material respects with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any Governmental Authority (collectively, “Necessary Documents”)
required for the conduct of its business and all Necessary Documents are valid and in full force and effect; and no Borrower has
received written notice of any revocation or modification of any of the Necessary Documents and the Borrowers have no reason to
believe that any of the Necessary Documents will not be renewed in the ordinary course, and each Borrower is in compliance in all
material respects with all applicable federal, state, local and foreign laws, regulations, orders and decrees applicable to the
conduct of its business.



(k)          Each
Borrower has good and marketable title to all of its assets free and clear of all Liens except Permitted Liens. The property held
under lease by the Borrowers is held under valid, subsisting and enforceable leases with only such exceptions with respect to any
particular lease as do not interfere in any material respect with the conduct of the business of the Borrowers.



(l)          Each
Borrower owns or has the right to use pursuant to a valid and enforceable written license, implied license or other legally enforceable
right, all of the Intellectual Property that is necessary for the conduct of its business as currently conducted (the “IP”).
To the knowledge of the Borrowers, the IP that is registered with or issued by a Governmental Authority is valid and enforceable;
there is no outstanding, pending, or, to the knowledge of the Borrowers, threatened action, suit, other proceeding or claim by
any third person challenging or contesting the validity, scope, use, ownership, enforceability, or other rights of the Borrowers
in or to any IP and the Borrowers have not received any written notice regarding, any such action, suit, or other proceeding. To
the knowledge of the Borrowers, the Borrowers have not infringed or misappropriated any material rights of others. To the knowledge
of the Borrowers, there is no pending or threatened action, suit, other proceeding or claim by others that the Borrowers infringes
upon, violates or uses the Intellectual Property rights of others without authorization, and the Borrower have not received any
written notice regarding, any such action, suit, other proceeding or claim, which would be expected to result in a Material Adverse
Effect.



(m)          No
Borrower is in violation of the Organizational Documents, or in breach of or otherwise in default under, and no event has occurred
which, with notice or lapse of time or both, would constitute such breach or other default in the performance of any agreement
or condition contained in any agreement under which it may be bound, or to which any of its assets is subject, except for such
breaches or defaults as would not have a Material Adverse Effect.



(n)          The
Borrowers have timely filed, including pursuant to all extensions, all income and franchise tax returns required to be filed by
any Governmental Authority (except where the failure to file would not have a Material Adverse Effect) and are not in default in
the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto. There is no pending
dispute with any taxing authority relating to any of such returns, and no Borrower has any knowledge of any proposed liability
for any tax to be imposed upon its properties or assets, would be expected to result in a Material Adverse Effect.



17







(o)          The
Borrowers have not granted rights to develop, manufacture, produce, assemble, distribute, license, market or sell their products
to any other Person except in the ordinary course of business and are not bound by any agreement that affects the exclusive right
of the Borrowers to develop, manufacture, produce, assemble, distribute, license, market or sell their products except in the ordinary
course of business.



(p)          The
Borrowers: (A) at all times have complied in all material respects with all Applicable Laws; (B) have not received any warning
letter or other correspondence or notice from the FDA or any correspondence or notice from any other Governmental Authority alleging
or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits
and supplements or amendments thereto required by any Applicable Laws (together, the “Authorizations”), which
non-compliance would be expected to result in a Material Adverse Effect; (C) possess and comply in all material respects with the
Authorizations, which are valid and in full force and effect; (D) have not received written notice that any Governmental Authority
has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorization that be expected to result
in a Material Adverse Effect, and have no knowledge that any Governmental Authority is considering such action; (E) have filed,
obtained, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements
or amendments as required by any Applicable Laws or Authorizations, except as would not have a Material Adverse Effect; and (F)
have not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued,
any recall, market withdrawal or replacement, safety alert, post-sale warning, “dear doctor” letter, or other notice
or action relating to the alleged lack of safety or efficacy of any product or any alleged product defect or violation and, to
the Borrowers’ knowledge, no third party has initiated, conducted or intends to initiate any such notice or action.



(q)          The
studies, tests and preclinical and clinical trials conducted by or on behalf of the Borrowers were and, if still pending, are being
conducted in compliance in all material respects with experimental protocols, procedures and controls pursuant to accepted professional
scientific standards and all Applicable Laws and Authorizations, including, without limitation, the Federal Food, Drug and Cosmetic
Act and the rules and regulations promulgated thereunder; the Borrowers are not aware of any studies, tests or trials, the results
of which the Borrowers believe reasonably call into question any of its studies, tests or trial results and the Borrowers have
not received any written notices or correspondence from any Governmental Authority requiring the termination, suspension, or material
modification of any such studies, tests or preclinical or clinical trials.



(r)          The
financial statements of the Borrowers provided to the Lender prior to the Closing Date and any funding date in connection with
the making of an Additional Loan and identified as subject to this subsection (r) together with the related notes fairly present
the financial condition of the Borrowers as of the dates indicated and the results of operations and changes in cash flows for
the periods therein specified in conformity with GAAP consistently applied throughout the periods involved, subject, in the case
of unaudited financial statements, to year-end adjustments; and, except as disclosed in such Schedule, there are no material off-balance
sheet arrangements or any other relationships with unconsolidated entities or other persons, that may have a material current or,
to the Borrowers’ knowledge, material future effect on the Borrowers’ financial condition, results of operations, liquidity,
capital expenditures, capital resources or significant components of revenue or expenses.



18







(s)          The
Borrowers maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.



(t)          Flamel
US Holdings, Inc. has no Subsidiaries other than Flamel Technologies, Inc. and Éclat Pharmaceuticals LLC. Éclat Pharmaceuticals
LLC has no Subsidiaries other Talec Pharma, LLC.



(u)          The
representations and warranties set forth in this Section 3.1 are applicable to the Borrowers’ Subsidiaries.



Section
3.2Borrowers Acknowledgment. The Borrowers
acknowledge that they have made the representations and warranties referred to in Section 3.1 with the intention of persuading
the Lender to enter into the Transaction Documents and that the Lender has entered into the Transaction Documents on the basis
of, and in full reliance on, each of such representations and warranties. The Borrowers represent and warrant to the Lender that
none of such representations and warranties omits any matter the omission of which makes any of such representations and warranties
misleading.



Section
3.3Representations and Warranties of the Lender.
Lender represents and warrants to the Borrowers as of the date hereof that:



(a)          It
is acquiring the Note for its account for investment, not as an agent or nominee, and not with a view to or for resale in connection
with any distribution of the Note.



(b)          The
Note must be held indefinitely unless it is subsequently registered under the Securities Act or an exemption for such registration
is available.



(c)          Each
Transaction Document to which it is a party has been duly authorized, executed and delivered by Lender and constitutes its valid
and legally binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by (i) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii)
applicable equitable principles (whether considered in a proceeding at law or in equity).



ARTICLE 4CONDITIONS PRECEDENT



Section
4.1Conditions to the Closing the Initial Loan.
The obligation of the Lender to make the Initial Loan shall be subject to the fulfillment of the following conditions:



(a)          The
Lender shall have received executed counterparts of the Transaction Documents;



19







(b)          The
Lender shall have received an officer’s certificate from each Borrower, certifying as to such Borrower’s Organizational
Documents, resolutions authorizing the entering into the Transaction Documents, and incumbency;



(c)          The
Lender shall have received all documents and instruments, including Uniform Commercial Code financing statements, required by law
or reasonably requested by the Lender to be filed, registered or recorded to create or perfect the liens intended to be created
under the Transaction Documents and all such documents and instruments shall have been, or concurrently with the Closing Date are,
so filed, registered or recorded to the reasonable satisfaction of the Lender;



(e)          The
Lender shall have received certificates of insurance evidencing Borrowers’ insurance coverage, together with a lender’s
loss payable endorsement for property/casualty insurance and additional insured endorsement for liability insurance;



(f)          an
opinion of Troutman Sanders, LLP, U.S. counsel to the Borrowers, addressed to the Lender, as to such matters concerning the Borrowers
and the Transaction Documents as the Lender may reasonably request;



(g)          The
Lender shall have received a copy of SA’s resolutions authorizing the entering into the Transaction Documents; and



(h)          The
Lender shall have received such other certificates, documents, consents or opinions as the Lender reasonably may require.



Section
4.2Conditions to the Closing of Any Loan. The
obligation of the Lender to make any Loan shall be subject to the fulfillment of the following conditions:



(a)          Each
of the representations and warranties set forth in Section 3.1 and Section 3.2 and elsewhere in the Transaction Documents shall
be true and correct in all material respects on the date of such Loan, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations and warranties shall have been true and correct on and as
of such earlier date).



(b)          No
Default or Event of Default has occurred and is continuing or would result from the making of such Loan.



ARTICLE 5PARTICULAR COVENANTS AND EVENTS OF DEFAULT



Section
5.1Affirmative Covenants. Unless the Lender
shall otherwise agree:



(a)          Each
Borrower shall and shall cause its Subsidiaries to maintain its existence and qualify and remain qualified to do its business as
currently conducted, except where the failure to so maintain such qualification would not reasonably be expected to have a Material
Adverse Effect.



20







(b)          Each
Borrower shall and shall cause its Subsidiaries to comply in all material respects with all Applicable Laws, except where the necessity
of compliance therewith is contested in good faith by appropriate proceedings or where the failure to comply would not have a Material
Adverse Effect.



(c)          Each
Borrower shall obtain and shall cause its Subsidiaries to make and keep in full force and effect all licenses, certificates, approvals,
registrations, clearances, authorizations and permits required to conduct their businesses, except where the failure to do so would
not have a Material Adverse Effect.



(d)          The
Borrowers shall promptly notify the Lender of the occurrence of (i) any Default or Event of Default and (ii) any claims, litigation,
arbitration, mediation or administrative or regulatory proceedings that are instituted or threatened against the any Borrower or
any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, and (iii) each event which, at the
giving of notice, lapse of time, determination of materiality or fulfillment of any other applicable condition (or any combination
of the foregoing), would constitute an Event of Default under this Agreement or an event of default (however described) under any
Transaction Document.



(e)          (i)
If SA is not required to file reports pursuant to the Exchange Act, the Borrowers will cause SA to provide unaudited quarterly
consolidated financial statements of SA and its Subsidiaries within forty-five (45) days after the end of each of the first three
fiscal quarters of each calendar year, and audited annual consolidated financial statements of SA and its Subsidiaries within one
hundred (120) days after the end of each calendar year prepared in accordance with GAAP (subject, in the case of unaudited financial
statements, to the absence of footnotes and other presentation items and to normal year-end adjustments) with, in the case of annual
financial statements, a report thereon by SA’s independent certified public accountants, (ii) SA will timely file with the
SEC (subject to appropriate extensions made under the Exchange Act) any annual reports, quarterly reports and other periodic reports
required to be filed pursuant to the Exchange Act, and (iii) SA and its Subsidiaries will provide to the Lender copies of all documents,
reports, financial data and other information that the Lender may reasonably request.



Section
5.2Negative Covenants. Unless the Lender shall
otherwise agree:



(a)          No
Borrower shall and shall not permit any Subsidiary to (i) liquidate (other than Flamel Technologies Inc. which shall be liquidated
and all proceeds thereof distributed to SA), provided that a Subsidiary may merge into any Borrower, or dissolve (unless such Subsidiary
ceases to own any operating assets or conduct business), or (ii) enter into any merger, consolidation or reorganization, unless
a Borrower is the surviving corporation. The Borrowers shall not maintain or establish any Subsidiary in the United States unless
such Subsidiary executes and delivers to the Lender a guarantee substantially in the form of the SA Guaranty if such Subsidiary
is organized outside of the United States, in the form of a guaranty to the same effect as the SA Guaranty customary in the jurisdiction
in which such Subsidiary is organized.



21







(b)          No
Borrower shall, nor shall any Borrower permit any Subsidiary to (i) enter into any partnership, joint venture, syndicate, pool,
profit-sharing or royalty agreement or other combination, or engage in any transaction, in any such case with an Affiliate, whereby
its income or profits are, or might be, shared with such Affiliate other than Permitted Affiliate Transactions, (ii) enter into
any management contract or similar arrangement whereby a substantial part of its business is managed by another Person (other than
contracts and similar arrangements between or among Borrowers or SA), or (iii) distribute, or permit the distribution of, any of
the Product Regulatory Rights to any Person (other than distributions to another Borrower or in connection with Permitted Licensing).



(c)          No
Borrower shall, nor shall any Borrower permit any Subsidiary to create, incur or suffer any Lien upon any of its assets, now owned
or hereafter acquired, except Permitted Liens, provided that upon the occurrence and continuance of an Event of Default, no Borrower
shall license any of its Intellectual Property, including Permitted Licensing, without the prior consent of the Lender.



(d)          No
Borrower shall, nor shall any Borrower permit any Subsidiary to assign, sell, transfer or otherwise dispose of, any Transaction
Document, or the rights and obligations thereunder.



(e)          No
Borrower shall, nor shall any Borrower permit any Subsidiary to create, incur, assume, guarantee or remain liable with respect
to any Indebtedness, other than Permitted Indebtedness.



(f)          No
Borrower shall, nor shall any Borrower permit any Subsidiary to acquire any assets (other than assets acquired in the ordinary
course of business consistent with past practices and other asset acquisitions from SA or another Borrower or Subsidiary of a Borrower),
directly or indirectly, in one or more related transaction, for a consideration, in cash or other property (valued at its fair
market value) greater than $500,000.



Section
5.3Major Transaction. The Borrowers shall give
the Lender notice of the consummation of a Major Transaction involving SA on the shorter of thirty (30) days prior to such consummation
or two (2) days following the public announcement thereof. Within five (5) days after the receipt of such notice, the Lender, in
the exercise of its sole discretion, may deliver a notice to the Borrowers (the “Put Notice”), that the Final
Payment shall be due and payable upon consummation of such Major Transaction. If the Lender delivers a Put Notice, then simultaneously
with consummation of such Major Transaction, the Borrowers shall make or cause to be made the Final Payment to the Lender. The
Borrowers shall take such steps as may be required to ensure that SA shall not consummate any Major Transaction until the Borrowers
comply with the provisions of this Section 5.3.



Section
5.4General Acceleration Provision upon Events of
Default. If one or more of the events specified in this Section 5.4 shall have occurred and be continuing beyond the applicable
cure period (each, an “Event of Default”), the Lender, by written notice to the Borrowers, may declare the principal
of, and accrued and unpaid interest on, the Note or any part of any of it (together with any other amounts accrued or payable under
the Transaction Documents) to be, and the same shall thereupon become, immediately due and payable, without any further notice
and without any presentment, demand, or protest of any kind, all of which are hereby expressly waived by the Borrowers, and take
any further action available at law or in equity, including, without limitation, the sale of the Loans and all other rights acquired
in connection with the Loans:



22







(a)          The
Borrowers shall have failed to make payment of principal and interest under the Note when due.



(b)          The
Borrowers shall have failed to comply with the due observance or performance of any covenant contained in any Transaction Document
(other than the covenants described in clause (a) above), and such failure shall not have been cured by the Borrowers within thirty
(30) days.



(c)          Any
representation or warranty made by the Borrowers in any Transaction Document shall have been incorrect, false or misleading as
of the date it was made.



(d)          (i)
Any Borrower shall generally be unable to pay its debts as such debts become due, or shall admit in writing its inability to pay
its debts as they come due or shall make a general assignment for the benefit of creditors; (ii) any Borrower shall declare a moratorium
on the payment of its debts; (iii) the commencement by any Borrower of proceedings to be adjudicated bankrupt or insolvent, or
the consent by it to the commencement of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganization, intervention or other similar relief under any applicable law, or the consent by it to
the filing of any such petition or to the appointment of an intervenor, receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of all or substantially all of its assets; (iv) the commencement against any Borrower of a proceeding in
any court of competent jurisdiction under any bankruptcy or other applicable law (as now or hereafter in effect) seeking its liquidation,
winding up, dissolution, reorganization, arrangement, adjustment, or the appointment of an intervenor, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official), and any such proceeding shall continue undismissed, or any order, judgment or
decree approving or ordering any of the foregoing shall continue unstayed or otherwise in effect, for a period of thirty (30) days;
(v) the making by any Borrower of an assignment for the benefit of creditors, or the admission by it in writing of its inability
to pay its debt generally as they become due; or (vi) any other event shall have occurred which under any applicable law would
have an effect analogous to any of those events listed above in this subsection.



(e)          One
or more judgments against any Borrower or any Subsidiary or attachments against any of their respective property that could reasonably
be expected to have a Material Adverse Effect remain(s) unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a
period of thirty (30) days from the date of entry of such judgment.



(f)          Any
Authorization held by any Borrower from any Government Authority shall have been suspended, canceled or revoked and such suspension,
cancellation or revocation shall not have been cured within thirty (30) days.



(g)          Any
authorization necessary for the execution, delivery or performance of any Transaction Document or for the validity or enforceability
of any of the Obligations under any Transaction Document is not given or is withdrawn or ceases to remain in full force or effect.



23







(h)          The
validity of any Transaction Document shall be contested by the Borrowers, or any treaty, law, regulation, communiqué, decree,
ordinance or policy of any jurisdiction shall purport to render any material provision of any Transaction Document invalid or unenforceable
or shall purport to prevent or materially delay the performance or observance by the Borrowers of the Obligations.



(i)          SA
has failed to comply in any material respect with the reporting requirements of the Exchange Act, if applicable and such non-compliance
shall not have been remedied by the Borrowers within thirty (30) days.



(j)          There
is a failure to perform in any agreement to which any Borrower or any Subsidiary is a party with a third party or parties resulting
in a right by such third party or parties to accelerate the maturity of any Indebtedness for borrowed money in an amount in excess
of$500,000.



(k)          If
an event of default occurs under the Installment Sale Note dated March 12, 2012 from the Borrowers to Éclat Holdings LLC
in the principal amount of $12,000,000 and such note shall have been accelerated as a result thereof.



(l)          If
an event of default occurs under the Deerfield Credit Facility.



Section 5.5           Automatic
Acceleration on Dissolution or Bankruptcy. Notwithstanding any other provisions of this Agreement, if an Event of Default under
Section 5.4(d) shall occur, the principal of the Note together with any other outstanding Obligations under this Agreement shall
thereupon become immediately due and payable without any presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrowers.



Section 5.6           Recovery
of Amounts Due. If any amount payable hereunder is not paid as and when due, the Borrowers hereby authorize the Lender to proceed,
to the fullest extent permitted by applicable law, without prior notice, by right of set-off, banker’s lien or counterclaim,
against any moneys or other assets of the Borrowers to the full extent of all amounts payable to the Lender.



ARTICLE 6MISCELLANEOUS



Section
6.1Notices. Any notices required or permitted
to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally
or by courier (including a recognized overnight delivery service) or by facsimile or by electronic mail and shall be effective
five (5) days after being placed in the mail, if mailed by regular United States mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or by facsimile, or when red by electronic mail (sender shall
have received a “read by recipient” confirmation) in each case addressed to a party. The addresses for such communications
shall be:



24







If to the Borrowers:



Flamel US Holdings, Inc.

702 Spirit 40 Park Drive, Ste. 108

Chesterfield MO 63005

Fax: 636-449-1850

Email: Anderson@flamel.com

Attn: Michael S. Anderson



With copy to:



Troutman Sanders LLP

The Chrysler Building

405 Lexington Avenue

New York, NY 10174-0700

Fax: (212) 704-6288

Email: clark.sullivan@troutmansanders.com

Attn: Clark G. Sullivan



If to the Lender:

Broadfin Healthcare Master Fund, Ltd.

c/o Broadfin Capital, LLC
237 Park Avenue, Suite 900
New York, NY 10017

Fax: 212-808-2464

Email: kevin@broadfincapital.com

Attn: Kevin Kotler



With a copy to:



Greenberg Traurig, LLP
One International Place
Boston, MA 02110
Fax: 617.279.8433
Email: puopolor@gtlaw.com
Attn: Robert E. Puopolo



Section
6.2Waiver of Notice. Whenever any notice is
required to be given to the Lender or the Borrowers under the any of the Transaction Documents, a waiver thereof in writing signed
by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.



Section
6.3Reimbursement of Legal and Other Expenses.
If any amount owing to the Lender under any Transaction Document shall be collected through enforcement of this Agreement, any
Transaction Document or restructuring of the Loans in the nature of a work-out, settlement, negotiation, or any process of law,
or shall be placed in the hands of third Persons for collection, the Borrowers shall pay (in addition to all monies then due in
respect of the Loans or otherwise payable under any Transaction Document) attorneys’ and other fees and expenses incurred
in respect of such collection.



25







Section
6.4Governing Law.All questions concerning
the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to contracts made and to be performed in such State. Each party agrees
that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall
be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law. The parties hereby waive all rights to a trial by jury.



Section
6.5Successors and Assigns. This Agreement shall
bind and inure to the respective successors and assigns of the Parties, except that no Borrower may assign or otherwise transfer
all or any part of its rights under this Agreement or the Obligations without the prior written consent of the Lender.



Section
6.6Entire Agreement. The Transaction Documents
contain the entire understanding of the Parties with respect to the matters covered thereby and supersede any and all other written
and oral communications, negotiations, commitments and writings with respect thereto. The provisions of this Agreement may be waived,
modified, supplemented or amended only by an instrument in writing signed by the authorized officer of each Party.



Section
6.7Severability. If any provision of this Agreement
shall be invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. The Parties shall endeavor in good faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible
to that of the invalid, illegal or unenforceable provision.



Section
6.8Counterparts. This Agreement may be executed
in several counterparts, and by each Party on separate counterparts, each of which and any photocopies and facsimile copies thereof
shall be deemed an original, but all of which together shall constitute one and the same agreement.



26







Section
6.9Survival.



(a)          This
Agreement and all agreements, representations and warranties made in the Transaction Documents, and in any document, certificate
or statement delivered pursuant thereto or in connection therewith shall be considered to have been relied upon by the other Parties
and shall survive the execution and delivery of this Agreement and the making of the Loans hereunder regardless of any investigation
made by any such other Party or on its behalf, and shall continue in force until all amounts payable under the Transaction Documents
shall have been fully paid in accordance with the provisions thereof, and the Lender shall not be deemed to have waived, by reason
of making the Loans, any Event of Default that may arise by reason of such representation or warranty proving to have been false
or misleading, notwithstanding that the Lender may have had notice or knowledge of any such Event of Default or may have had notice
or knowledge that such representation or warranty was false or misleading at the time any Loan was made.



(b)          The
obligations of the Borrowers under Section 2.5 and the obligations of the Borrowers and the Lender under this Article 6 shall survive
and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the
Loans, or the termination of this Agreement or any provision hereof.



Section
6.10Waiver. Neither the failure of, nor any delay on the
part of, any Party in exercising any right, power or privilege hereunder, or under any agreement, document or instrument mentioned
herein, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder,
or under any agreement, document or instrument mentioned herein, preclude other or further exercise thereof or the exercise of
any other right, power or privilege; nor shall any waiver of any right, power, privilege or default hereunder, or under any agreement,
document or instrument mentioned herein, constitute a waiver of any other right, power, privilege or default or constitute a waiver
of any default of the same or of any other term or provision. No course of dealing and no delay in exercising, or omission to exercise,
any right, power or remedy accruing to the Lender upon any default under this Agreement, or any other agreement shall impair any
such right, power or remedy or be construed to be a waiver thereof or an acquiescence therein; nor shall the action of the Lender
in respect of any such default, or any acquiescence by it therein, affect or impair any right, power or remedy of the Lender in
respect of any other default. All rights and remedies herein provided are cumulative and not exclusive of any rights or remedies
otherwise provided by law.



Section
6.11Indemnity.



(a)          The
Parties shall, at all times, indemnify and hold each other harmless (the “Indemnity”) and each of their respective
directors, partners, officers, employees, agents, counsel and advisors (each, an “Indemnified Person”) in connection
with any losses, claims (including the cost of defending against such claims), damages, liabilities, penalties, or other expenses
arising out of, or relating to, the Transaction Documents, the extension of credit hereunder or the Loans or the use or intended
use of the Loans, which an Indemnified Person may incur or to which an Indemnified Person may become subject (each, a “Loss”).
The Indemnity shall not apply to the extent that a court or arbitral tribunal with jurisdiction over the subject matter of the
Loss, and over the Lender or any Borrower, as applicable, and such other Indemnified Person that had an adequate opportunity to
defend its interests, determines that such Loss resulted from the gross negligence or willful misconduct of the Indemnified Person,
which determination results in a final, non-appealable judgment or decision of a court or tribunal of competent jurisdiction. The
Indemnity is independent of and in addition to any other agreement of any Party under any Transaction Document to pay any amount
to the Lender or any Borrower, as applicable, and any exclusion of any obligation to pay any amount under this subsection shall
not affect the requirement to pay such amount under any other section hereof or under any other agreement.



27







(b)          Promptly
after receipt by an Indemnified Person under this Section 6.11 of notice of the commencement of any action (including any governmental
action), such Indemnified Person shall, if a Loss in respect thereof is to be made against the Borrowers under this Section 6.11,
deliver to the Borrowers a written notice of the commencement thereof, and the Borrowers shall have the right to participate in,
and, to the extent the Borrowers so desire, to assume control of the defense thereof with counsel mutually satisfactory to the
Borrowers and the Indemnified Person, as the case may be.



(c)          An
Indemnified Person shall have the right to retain its own counsel with the reasonable fees and expenses to be paid by the Borrowers,
if, in the reasonable opinion of counsel for the Lender, the representation by such counsel of the Indemnified Person and the Borrowers
would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented
by such counsel in such proceeding. The Borrowers shall pay for only one separate legal counsel for the Indemnified Persons, and
such legal counsel shall be selected by the Lender. The failure to deliver written notice to the Borrowers within a reasonable
time of the commencement of any such action shall not relieve the Borrowers of any liability to the Indemnified Person under this
Section 6.11, except to the extent that the Borrowers are actually prejudiced in their ability to defend such action. The indemnification
required by this Section 6.11 shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and payable.



(d)          Without
prejudice to the survival of any other agreement of any of the Parties hereunder, the agreements and the obligations of the Parties
contained in this Section 6.11 shall survive the termination of each other provision hereof and the payment of all amounts
payable to the Lender hereunder.



Section
6.12No Usury. The Transaction Documents are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of acceleration or otherwise, shall the amount paid or
agreed to be paid to the Lender for the Loans exceed the maximum amount permissible under applicable law. If from any circumstance
whatsoever fulfillment of any provision hereof, at the time performance of such provision shall be due, shall involve transcending
the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstance the Lender shall ever receive anything which might be deemed interest under applicable
law, that would exceed the highest lawful rate, such amount that would be deemed excessive interest shall be applied to the reduction
of the principal amount owing on account of the Loans, or if such deemed excessive interest exceeds the unpaid balance of principal
of the Loans, such deemed excess shall be refunded to the Borrowers. All sums paid or agreed to be paid to the Lender for the Loans
shall, to the extent permitted by applicable law, be deemed to be amortized, prorated, allocated and spread throughout the full
term of the Loans until payment in full so that the deemed rate of interest on account of the Loans is uniform throughout the term
thereof. The terms and provisions of this Section shall control and supersede every other provision of this Agreement and the Note.



28







Section
6.13Further Assurances. From time to time, the Borrowers
shall perform any and all acts and execute and deliver to the Lender such additional documents as may be necessary or as requested
by the Lender to carry out the purposes of any Transaction Document or any or to preserve and protect the Lender’s rights
as contemplated therein.



Section
6.14Independent Transaction Documents. Each Transaction
Document constitutes an independent agreement between the parties thereto (the “Transaction Parties”) and no
Transaction Document shall be construed so as to affect the rights of the Transaction Parties to their rights and remedies under
another Transaction Document.



Section
6.15Currency. All amounts owing under this Agreement, the
Note and the Security Agreement shall be paid in Dollars



Section
6.16Judgment Currency.



(a)          If,
for the purpose of obtaining or enforcing judgment against the Borrowers in any court in any jurisdiction with respect to any Transaction
Document, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 6.16 referred
to as the “Judgment Currency”) an amount due in United States dollars, the conversion shall be made at the last
exchange rate published in the Wall Street Journal on the business day immediately preceding (the “Exchange Rate”):



(i)the
date actual payment of the amount is due, in the case of any proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to payment being due on such date; or



(ii)the
date on which the French or any other non U.S. court determines, in the case of any proceeding in the courts of any other jurisdiction
(the date as of which such payment is made pursuant to this Section 6.16 being hereinafter referred to as the “Judgment
Payment Date”).



(b)          If
in the case of any proceeding in the court of any jurisdiction referred to in Section 6.16(a)(ii) above, there is a change in the
Exchange Rate on the date of calculation prevailing between the Judgment Payment Date and the date of actual payment of the amount
due, the Borrowers shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency,
when converted at the Exchange Rate prevailing on the date of payment, will produce the amount of United States dollars which could
have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing
on the Judgment Payment Date.



29







(c)          Any
amount due from the Borrowers under this Section 6.16 shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amount due under or in respect of this Agreement and/or the Note.



[SIGNATURE PAGE FOLLOWS]



30







IN WITNESS WHEREOF,
the Lender and the Borrowers have caused this Agreement to be duly executed as of the date first above written.



| | BORROWERS:                           
| | -------------------------------------
| |                                      
| | FLAMEL US HOLDINGS, INC.             
| |                                      
| | By:                                  
| |                                      
| |                                      
| |                                      
| | ÉCLAT PHARMACEUTICALS, LLC           
| |                                      
| | By:                                  
| |                                      
| |                                      
| |                                      
| | TALEC PHARMA, LLC                    
| |                                      
| | By:                                  
| |                                      
| |                                      
| |                                      
| | FLAMEL TECHNOLOGIES, INC.            
| |                                      
| | By:                                  
| |                                      
| |                                      
| |                                      
| | LENDER:                              
| |                                      
| | BROADFIN HEALTHCARE MASTER FUND, LTD.
| |                                      
| | By:                                  
| |                                      
| |                                      











Exhibit A



PROMISSORY NOTE



|$15,000,000 | December 3, 2013
|----------- | ----------------



FOR VALUE RECEIVED,
Flamel US Holdings, Inc., a Delaware corporation, Éclat Pharmaceuticals, LLC, a Delaware limited liability company, and
Talec Pharma, LLC, a Delaware limited liability company (each a “Borrower” and collectively, the “Borrowers”),
by means of this Promissory Note (this “Note”), hereby jointly and severally, unconditionally promise to pay
to Broadfin Healthcare Master Fund, Ltd. (the “Lender”), a principal amount equal to $15,000,000, or, if less,
the outstanding principal amount of all Loans (as such term is defined in the Facility Agreement referenced below) in lawful money
of the United States of America and in immediately available funds, on the dates provided in the Facility Agreement.



This Note is the “Note”
referred to in the Facility Agreement dated as of December 3, 2013 between the Borrowers and the Lender (as modified and supplemented
and in effect from time to time, the “Facility Agreement”), with respect to the Loans made or to be made by
the Lender thereunder. Capitalized terms used herein and not expressly defined in this Note shall have the respective meanings
assigned to them in the Facility Agreement.



This Note shall bear
interest on the principal amount hereof pursuant to the provisions of the Facility Agreement.



The Borrowers shall
make all payments to the Lender of interest and principal under this Note in the manner provided in and otherwise in accordance
with the Facility Agreement. The outstanding principal amount of this Note shall be due and payable in full on the Final Payment
Date.



If default is made
in the punctual payment of principal or any other amount under this Note in accordance with the Facility Agreement, or if any other
Event of Default has occurred and is continuing, this Note shall, at the Lender’s option exercised at any time upon or after
the occurrence and during the continuance of any Event of Default and in accordance with the applicable provisions of the Facility
Agreement, become immediately due and payable.



All payments of any
kind due to the Lender from the Borrowers pursuant to this Note shall be made in the full face amount thereof. Subject to the terms
of the Facility Agreement, all such payments will be free and clear of, and without deduction or withholding for, any present or
future taxes. The Borrowers shall pay all and any costs (administrative or otherwise) imposed by the Borrowers’ banks, clearing
houses, or any other financial institution, in connection with making any payments hereunder.



The Borrowers shall
pay all costs of collection, including, without limitation, all reasonable, documented legal expenses and attorneys’ fees,
paid or incurred by the Lender in collecting and enforcing this Note.











Other than those notices
required to be provided by Lender to Borrowers under the terms of the Facility Agreement, the Borrowers and every endorser of this
Note, or the obligations represented hereby, expressly waive presentment, protest, demand, notice of dishonor or default, and notice
of any kind with respect to this Note and the Facility Agreement or the performance of the obligations under this Note and/or the
Facility Agreement. No renewal or extension of this Note or the Facility Agreement, no release of any Person primarily or secondarily
liable on this Note or the Facility Agreement, including the Borrowers and any endorser, no delay in the enforcement of payment
of this Note or the Facility Agreement, and no delay or omission in exercising any right or power under this Note or the Facility
Agreement shall affect the liability of the Borrowers or any endorser of this Note.



No delay or omission
by the Lender in exercising any power or right hereunder shall impair such right or power or be construed to be a waiver of any
default, nor shall any single or partial exercise of any power or right hereunder preclude the full exercise thereof or the exercise
of any other power or right. The provisions of this Note may be waived or amended only in a writing signed by the Borrowers and
the Lender. This Note may be prepaid in whole or in part in accordance with the provisions of the Facility Agreement.



This Note, and any
rights of the Lender arising out of or relating to this Note, may, at the option of the Lender, be enforced by the Lender in the
courts of the United States of America located in the Southern District of the State of New York or in any other courts having
jurisdiction. For the benefit of the Lender, the Borrowers hereby irrevocably agree that any legal action, suit or other proceeding
arising out of or relating to this Note may be brought in the courts of the State of New York or of the United States of America
for the Southern District of New York, and hereby consents that personal service of summons or other legal process may be made
as set forth in Section 5.1 of the Facility Agreement, which service the Borrowers agree shall be sufficient and valid. The Borrowers
hereby waive any and all rights to demand a trial by jury in any action, suit or other proceeding arising out of or relating to
this Note or the transactions contemplated by this Note.



This Note shall be
governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed
in such State, without giving effect to the conflicts of laws principles thereof other than Sections 5-1401 and 5-1402 of the General
Obligations Law of the State of New York.



[Signature page follow]











IN WITNESS WHEREOF,
an authorized representative of each Borrower has executed this Note as of the date first written above.



| | FLAMEL US HOLDINGS, INC.  
| | --------------------------
| |                           
| | By:                       
| |                           
| |                           
| |                           
| | ÉCLAT PHARMACEUTICALS, LLC
| |                           
| | By:                       
| |                           
| |                           
| |                           
| | TALEC PHARMA, LLC         
| |                           
| | By:                       
| |                           
| |                           
| |                           
| | FLAMEL TECHNOLOGIES, INC. 
| |                           
| | By:                       
| |                           
| |                           











Exhibit B



Indebtedness



In December 2004, Flamel
and GSK (GSK) entered into a four year supply agreement whereby Flamel agreed to supply GSK with commercial supplies of product.
The provisions of the agreement include payments to Flamel of $20,717,000 to support the costs and capital expenditure relative
to the creation of a manufacturing area for the production of commercial supply of the product. The capital expenditures consist
of both buildings and fixtures, and production equipment. Flamel acquired immediate title to buildings and fixtures; however title
to production equipment remained with GSK for the duration of the supply agreement.



In connection with
this 2004 supply agreement, Flamel received funds to finance facilities related assets. A total of $8,188,000 has been spent on
the acquisition of buildings and fixtures and a total of $11,138,000 has been spent on behalf of GSK for the purchase of production
equipment. As of December 31, 2012 the funds received from GSK to finance the acquisition of assets owned by Flamel are classified
as a current liability for $316,000 and as a long term liability for $3,818,000. In July 2006, Flamel and GSK entered into a side
agreement to the original agreement whereby GSK partially sponsored the extension of the Micropump development facility. This facility
was completed in March 2008. As of December 31, 2007, Flamel had received all installments from GSK for financing of this project.
The total installments amounted to $8,097,000. As of December 31, 2012, the funds received from GSK are classified as a current
liability for $353,000 and as a long term liability for $2,527,000



If Flamel breaches
the supply agreement through gross negligence, GSK can choose to terminate the supply agreement. In the event of a breach and a
decision to terminate the agreement, all payments received become repayable to GSK and Flamel will receive immediate title to all
production equipment. Upon cessation of the supply agreement, in the normal course of business, GSK will pass title to all production
equipment to Flamel without cost of any kind.











Exhibit C



Liens



Pursuant to the 2004 supply
agreement with GSK, GSK retains title to certain production equipment financed with advances from GSK for the duration of the supply
agreement.