Exhibit 10.1


 


FIRST AMENDMENT


TO


FUNDING AND ROYALTY AGREEMENT


 


THIS FIRST AMENDMENT TO FUNDING AND ROYALTY
AGREEMENT (this “Amendment”), dated as of March 16,
2009, is made by and between Deerfield ED Corporation, a Delaware corporation (“ED”)
and VIVUS, Inc., a Delaware corporation (“VIVUS”).


 


Background Statement


 


ED and VIVUS previously entered into a Funding and Royalty Agreement,
dated as of April 3, 2008 (the “Funding and Royalty Agreement”).  Defined terms used in this Amendment and not
otherwise defined herein shall have the meaning given to them in the Funding
and Royalty Agreement.


 


Pursuant to the Funding and Royalty Agreement, ED agreed to provide
funds to VIVUS in consideration of the payment by VIVUS of a royalty on future
sales of certain pharmaceutical products owned by VIVUS, all as more fully
described in the Funding and Royalty Agreement.


 


Pursuant to the Funding and Royalty Agreement, ED entered into
subscription agreements (the “Subscription Agreements”) with Deerfield
Private Design International, L.P., a British Virgin Islands limited
partnership, and Deerfield Private Design Fund, L.P., a Delaware limited
partnership (“Private Design Fund”) to secure funding commitments
sufficient to fulfill ED’s obligations under the Funding and Royalty Agreement.


 


As of the date hereof, ED will terminate the Subscription Agreements
and obtain alternative funding commitments, sufficient to enable it to fund its
remaining obligations under the Funding and Royalty Agreement, pursuant to a
Note Purchase Agreement (the “Note Purchase Agreement”), between ED,
Deerfield PDI Financing, L.P., a British Virgin Islands limited partnership,
Private Design Fund and Deerfield Management Company, L.P., a Delaware limited
partnership, the form of which Note Purchase Agreement is attached as Exhibit A hereto.


 


ED and VIVUS are entering into this Amendment to provide for VIVUS’s
consent to the termination of the Subscription Agreements and for such changes
to the Funding and Royalty Agreement as are set forth herein.


 


Amendment


 


The Parties hereby amends the Funding and Royalty Agreement, effective
as of the date hereof, as follows:


 


ARTICLE I


 


AMENDMENTS TO THE FUNDING AND ROYALTY
AGREEMENT


 


1.1           Section 3(a).  Section 3(a) of the Funding and
Royalty Agreement is hereby replaced in its entirety with the following:


 

















 


(a)           Rate.  In consideration of the Funding Payments made
by ED, from the date hereof through the tenth (10th) anniversary of such date,
VIVUS shall pay to ED a royalty of twenty percent (20%) of Net Sales of Royalty
Products made on or after the date of this Agreement (the “Royalty”).  The Royalty shall be determined for each
Quarter for all Net Sales of Royalty Products made during such Quarter;
provided, that (i) only Net Sales occurring on or after the date of this
Agreement shall be considered in determining the Royalty for the initial
Quarter for which the Royalty is due and (ii) only Net Sales occurring on
or before the tenth (10th) anniversary of date of this Agreement shall be
considered in determining the Royalty for the final Quarter for which the
Royalty is due.  In addition,
notwithstanding anything herein to the contrary, the Royalty for each Quarter
during which any Funding Payment hereunder is overdue shall cease to accrue
during the period in which such Funding Payment is overdue.  The Royalty payable for any Quarter to be
prorated shall be calculated by multiplying twenty percent (20%) of the Net
Sales of Royalty Products for such Quarter by the ratio of the number of days
for which the Royalty has accrued in such Quarter to the total number of days
in such Quarter.


 


1.2           Section 8(d).
of the Funding and Royalty Agreement is hereby replaced in its entirety with
the following:


 


Note Purchase Agreement.  ED
has entered or will enter into a Note Purchase Agreement between ED, Deerfield
PDI Financing, L.P., a British Virgin Islands limited partnership, Deerfield
Private Design Fund, L.P., a Delaware limited partnership, and Deerfield
Management Company, L.P., a Delaware limited partnership (the “Note Purchase Agreement”), whereby ED will receive an
aggregate of $6,666,668 in financing for the purpose of satisfying ED’s
obligation to make Funding Payments under this Agreement.  ED further warrants that VIVUS is a third
party beneficiary under the Note Purchase Agreement with full rights of
enforcement as if a party to the Note Purchase Agreement.


 


ARTICLE II


 


GENERAL PROVISIONS


 


2.1           Termination of Subscription Agreements.  VIVUS hereby consents to the termination of
the Subscription Agreements


 


2.2           Conflicting Terms.  The Funding and Royalty Agreement remains in
full force and effect except as amended hereby. 
If the terms of this Amendment and the Funding and Royalty Agreement
conflict, the terms of this Amendment shall be deemed to supersede the
conflicting terms of the Funding and Royalty Agreement.


 


2.3           Counterparts.  This Amendment may be executed in any number
of counterparts, each of which shall be an original, but which together shall
constitute one and the same instrument. 
This Amendment may be executed on signature pages exchanged by
facsimile, 


 


2

















 


in which event
each Party shall promptly deliver to the other such number of original executed
copies as the other Party may reasonably request.


 


2.4           Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the state of Delaware.


 


[Remainder of Page Left Intentionally
Blank]


 


3

















 


IN WITNESS WHEREOF,
the Parties have caused this Amendment to be executed by their duly authorized
representatives as of the date first written above.


 


 


	
   

  	
  DEERFIELD ED CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey R. Kaplan

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jeffrey R. Kaplan

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VIVUS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy E. Morris

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Timothy E. Morris

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  



 


[Signature page to First Amendment to Funding and Royalty Agreement]


 
















 


Exhibit A


 


Form of Note Purchase Agreement




 





 


NOTE PURCHASE AGREEMENT


 


Dated as of March       ,
2009


 


between


 


DEERFIELD ED CORPORATION,


as Issuer,


 


and


 


DEERFIELD PDI FINANCING LP,

as initial Note Purchaser,


 


and


 


DEERFIELD PRIVATE DESIGN FUND LP

as initial Note Purchaser,


 


and


 


DEERFIELD MANAGEMENT COMPANY, L.P.


As Note Agent




 





 


A-1

















 


	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  A-2

  
	
  Section 1.01.

  	
  Defined Terms

  	
  A-2

  
	
  Section 1.02.

  	
  Rules of Interpretation

  	
  A-4

  
	
  ARTICLE II PURCHASE AND
  SALE OF THE NOTES

  	
  A-5

  
	
  Section 2.01.

  	
  Closing Date Note Purchase; Interest Rate and Tenor of Notes

  	
  A-5

  
	
  Section 2.02.

  	
  Additional Note Series

  	
  A-5

  
	
  Section 2.03.

  	
  The Notes; Payment

  	
  A-6

  
	
  Section 2.04.

  	
  Calculation and Payment of Interest

  	
  A-6

  
	
  Section 2.05.

  	
  Taxes

  	
  A-7

  
	
  ARTICLE III CONDITIONS
  PRECEDENT TO PURCHASE

  	
  A-9

  
	
  Section 3.01.

  	
  Conditions Precedent to Initial Purchase

  	
  A-9

  
	
  Section 3.02.

  	
  Conditions Precedent to Issuance of Additional Series

  	
  A-9

  
	
  ARTICLE IV ASSIGNMENTS

  	
  A-10

  
	
  Section 4.01.

  	
  Assignment

  	
  A-10

  
	
  Section 4.02.

  	
  Rights of Assignee

  	
  A-10

  
	
  Section 4.03.

  	
  Notice of Assignment

  	
  A-10

  
	
  ARTICLE V REPRESENTATIONS
  AND WARRANTIES

  	
  A-10

  
	
  Section 5.01.

  	
  Representations and Warranties of Note Purchasers

  	
  A-10

  
	
  Section 5.02.

  	
  Representations and Warranties of the Issuer

  	
  A-11

  
	
  ARTICLE VI THE NOTE AGENT

  	
  A-12

  
	
  Section 6.01.

  	
  Authorization

  	
  A-12

  
	
  Section 6.02.

  	
  Reliance, Etc

  	
  A-12

  
	
  Section 6.03.

  	
  Agents and Affiliates

  	
  A-13

  
	
  Section 6.04.

  	
  Credit Decision by Note Purchasers

  	
  A-13

  
	
  Section 6.05.

  	
  Indemnification

  	
  A-13

  
	
  Section 6.06.

  	
  Successor Note Agent

  	
  A-13

  
	
  ARTICLE VII EVENTS OF
  DEFAULT

  	
  A-14

  
	
  Section 7.01.

  	
  “Event of Default”

  	
  A-14

  
	
  Section 7.02.

  	
  Acceleration of Maturity; Recission and Annulment

  	
  A-15

  
	
  Section 7.03.

  	
  Collection of Indebtedness and Suits for Enforcement by Note Agent

  	
  A-15

  
	
  Section 7.04.

  	
  Remedies

  	
  A-17

  
	
  Section 7.05.

  	
  Application of Cash Collected

  	
  A-18

  



 


A-i

















 


	
  Section 7.06.

  	
  Limitation on Suits

  	
  A-18

  
	
  Section 7.07.

  	
  Restoration of Rights and Remedies

  	
  A-18

  
	
  Section 7.08.

  	
  Rights and Remedies Cumulative

  	
  A-19

  
	
  Section 7.09.

  	
  Delay or Omission Not Waiver

  	
  A-19

  
	
  Section 7.10.

  	
  Control by Note Purchasers

  	
  A-19

  
	
  Section 7.11.

  	
  Waiver of Past Defaults

  	
  A-19

  
	
  Section 7.12.

  	
  Undertaking for Costs

  	
  A-20

  
	
  Section 7.13.

  	
  Action on the Notes

  	
  A-20

  
	
  ARTICLE VIII MISCELLANEOUS

  	
  A-20

  
	
  Section 8.01.

  	
  Amendments, Etc

  	
  A-20

  
	
  Section 8.02.

  	
  Notices, Etc

  	
  A-20

  
	
  Section 8.03.

  	
  No Waiver, Remedies

  	
  A-21

  
	
  Section 8.04.

  	
  Binding Effect; Survival

  	
  A-21

  
	
  Section 8.05.

  	
  Captions and Cross References

  	
  A-21

  
	
  Section 8.06.

  	
  Governing Law

  	
  A-21

  
	
  Section 8.07.

  	
  Submission to Jurisdiction

  	
  A-22

  
	
  Section 8.08.

  	
  Consent to Service of Process

  	
  A-22

  
	
  Section 8.09.

  	
  Waiver of Jury Trial

  	
  A-22

  
	
  Section 8.10.

  	
  Execution in Counterparts

  	
  A-22

  
	
  Section 8.11.

  	
  Indemnities by Issuer

  	
  A-22

  



 


Exhibit A -        Form of
Assignment and Acceptance


Exhibit B -        Form of
Note Purchase Request


 


A-ii

















 


NOTE PURCHASE AGREEMENT


 


This NOTE
PURCHASE AGREEMENT, dated as of March    , 2009 (this “Agreement”),
is by and among:


 


DEERFIELD ED
CORPORATION, a Delaware corporation (the “Issuer”);


 


DEERFIELD PDI
FINANCING LP, a British Virgin Islands limited partnership, as initial Note
Purchaser; and


 


DEERFIELD
DESIGN FUND LP, as initial Note Purchaser; and


 


DEERFIELD
MANAGEMENT COMPANY, L.P., as Note Agent for the Note Purchasers (the “Note Agent”).


 


PRELIMINARY STATEMENTS


 


In
consideration of the premises and the mutual covenants herein contained, the
parties hereto hereby agree as follows:


 


ARTICLE I


DEFINITIONS


 


Section 1.01.          Defined Terms.  Capitalized terms used and not defined in
this Agreement shall have the respective meanings assigned thereto in the
Agreement.  In addition, as used in this
Agreement, the following terms shall have the following respective meanings:


 


“Accredited Investor”: An “accredited investor” as defined under Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).


 


“Affiliates”: For any specified
Person, any other Person who directly or indirectly controls, is controlled by,
or is under common control with, such specified Person.  For purposes of the preceding sentence, “control”
of a Person means possession, directly or indirectly (through one or more
intermediaries), of the power to direct or cause the direction of management
and policies of such Person through ownership of voting securities (or other
ownership interests), contract, voting trust or otherwise.


 


“Assignment and Acceptance”:
An assignment and acceptance in substantially the form of Exhibit A,
pursuant to which a Note Purchaser assigns all or a portion of its rights and
obligations under this Agreement in accordance with the terms of Section 4.01.


 


“Business Day”: A day on which
commercial banks and foreign exchange markets settle payments in each of New
York City, New York, and the British Virgin Islands and  any other city in which the office of the Note
Agent is located and, in the case of the final payment of principal of any
Note, the place of presentation of such Note.


 


A-2

















 


“Closing Date”:  March     , 2009.


 


“Code”:  The Internal Revenue Code of 1986, as
amended.


 


“Debt/Equity Ratio”: Means the ratio
as of the date of measurement of (i) the aggregate Outstanding Principal
Amount for all Series of Notes for all Note Purchasers plus all accrued
interest thereon, to (ii) the excess of (1) the aggregate capital
contributions to the Issuer over (2) distributions made by the Issuer in
redemption of its shares out of amounts other than earnings and profits.


 


“Default Interest”:  Interest accrued at
the per annum rate of [14]%, compounded annually on each December 31st.


 


“Eligible Assignee”:  Any Person which delivers to the Note Agent
and the Issuer an Assignment and Acceptance and such other documentation as
they may reasonably request evidencing that such Person is an Accredited
Investor and a Qualified Purchaser, that such Person is acquiring Notes in a
transaction complying with applicable securities law restrictions, and that
such Person has become a party to this Agreement.


 


“Event of Default”:
The meaning set forth in Section 7.01.


 


“Excess Interest”: The meaning set
forth in Section 2.04(d).


 


“Indemnified Amounts”:  The meaning set forth in  Section 8.11.


 


“Indemnified Parties”:  The meaning set forth in  Section 8.11.


 


“Interest Rate”: 10% per year.


 


“Issuer”: The meaning assigned to
such term in the preamble hereto.


 


“Issuers Account”:  The bank account for receipt of funds from
Note Purchasers, as identified in a notice from the Issuer from time to time.


 


“Majority Note Purchaser
Vote”: As of any
date, the vote of Note Purchasers holding greater than 50% of the Outstanding
Principal Amount of the Notes of all Series.


 


“Maturity Date”:
The meaning set forth in Section 2.01.


 


“Maximum Rate”: The meaning set
forth in Section 2.04(d).


 


“Note”:
Any of the Issuer’s notes issued under this Note Purchase Agreement.


 


“Note Agent”:
The meaning assigned to such term in the preamble hereto.


 


“Note Purchase Conditions”  The meaning set forth in Section 2.02(a).


 


A-3

















 


“Note Purchaser”:  Deerfield PDI Financing LP, a Cayman Islands
exempted limited partnership and Deerfield private Design Fund LP, and any
successors and permitted assigns pursuant to Section 4.01.


 


“Note Purchase Request”: The meaning
set forth in Section 2.02(b).


 


“Other Taxes”: The meaning set forth
in Section 2.05(b).


 


“Outstanding Principal
Amount”: As to any Note Purchaser at any time, the sum of
the aggregate outstanding principal amount of under the Notes registered in the
name of such Note Purchaser on the Register.


 


“Person”: Any individual,
corporation, partnership, limited partnership, limited liability limited
partnership, limited liability partnership, limited liability company, trust,
estate, unincorporated organization, association, governmental entity or other
entity, and the heirs, executors, administrators, legal representatives,
successors and assigns of such Person where the context so admits.


 


“Proceeding”: Any suit in equity,
action at law or other judicial or administrative proceeding.


 


“Qualified Purchaser”: A “qualified
purchaser” or a company beneficially owned exclusively by one or more “qualified
purchasers” and/or “knowledgeable employees” as such terms are defined in the
Investment Company Act of 1940, as amended.


 


“Register”:
The meaning set forth in Section 4.01(b).


 


“Series”
or “Note Series”  or  “Series of Notes”:
The meaning set forth in Section 2.01.


 


“Subsequent Tax Certificate”: The
meaning set forth in Section 2.05(d).


 


“Taxes”:
The meaning set forth in Section 2.05(a).


 


“Third Party Claim”: The meaning set
froth in Section 8.11.


 


Section 1.02.          Rules of Interpretation.  The headings, subheadings, and table of
contents herein are solely for convenience of reference and shall not affect the
meaning, construction or effect of any provision hereof.  Except as otherwise expressly provided,
references herein to articles, sections, paragraphs, clauses, annexes, exhibits
and schedules are references to articles, sections, paragraphs, clauses, annexes,
exhibits and schedules in or to this Agreement. 
All definitions set forth herein shall apply to the singular as well as
the plural form of the applicable defined term, and all references to the
masculine gender shall include reference to the feminine or neuter gender, and
vice versa, as the context may require. 
The word “including” and all variations thereof shall mean including
without limiting the generality of any description preceding such term.  All references to any agreement or document
shall mean such agreement or document as amended, supplemented, restated or
otherwise modified from time to time.


 


A-4
















 


ARTICLE II


PURCHASE AND SALE OF THE NOTES


 


Section 2.01.          Closing Date Note Purchase;
Interest Rate and Tenor of Notes.  At
or prior to 1:00 p.m. (New York City time) on the Closing Date, the
initial Note Purchasers shall purchase 
$2,553,334 and $4,113,334, respectively, in principal amount of
Notes.  Such Notes shall be the first
series of Notes.  Each Note series (a “Series”) shall have interest fixed
upon the issuance date at the Interest Rate and have a maturity date (the “Maturity Date”) of the earliest to
occur of (a) April 29, 2018, (b) the occurrence of the Option
Closing and (c) the occurrence of the Put Closing , as such terms are
defined in the Amended and Restated Option and Put Agreement, dated as of the
date of this Agreement, by and among VIVUS, Inc., the Issuer, Deerfield
Private Design Fund LP and Deerfield Private Design International LP, except as
provided in this Agreement.


 


Section 2.02.          Additional Note Series.


 


(a)           On the terms and subject to the
conditions set forth in this Agreement, and in reliance on the covenants,
representations and agreements set forth herein, from time to time during the
period from and including the Closing Date, the Issuer may request Note
Purchasers to purchase, and the Note Purchasers in their discretion may choose
to agree to purchase, an additional Series of  Notes. 
Each aggregate purchase of an additional Series shall be made by
the Note Purchasers in whatever proportion they may individually agree upon
with the Issuer.  Without limiting any
other provision of this Agreement, each Note Purchaser’s agreement to purchase
additional Notes shall be subject to the satisfaction of the conditions
precedent set forth in Article III, as applicable (the “Note Purchase Conditions”).


 


(b)           The Issuer shall give the Note Agent
notice of the issuance of each additional Note Series (each, a “Note Purchase Request”) no later
than 1:00 p.m. (New York City time) five Business Days before the date of
the proposed Note issuance date (which notice period may be waived by any Note
Purchaser).  The Note Agent shall give
notice to each Note Purchaser no later than 2:00 p.m. (New York City time)
nine Business Days before the proposed Note issuance date (unless such period
has been waived by such Note Purchaser). 
Any Note Purchase Request given to the Note Agent pursuant to this Section 2.02(b) shall
be transmitted by facsimile or email, shall be substantially in the form of Exhibit B,
and shall specify (1) the proposed Series issuance date (which shall
be a Business Day), (2) the principal amount of such proposed Series, (3) the
proposed principal amount for each Note Purchaser, and (4) the Interest
Rate for such Series.  The Note Agent
shall promptly notify each Note Purchaser of its applicable portion of such
Series.


 


(c)           Subject to the provisions hereof and
upon the satisfaction of the conditions precedent set forth in Article III,
each Note Purchaser purchasing a Note shall, before 3:00 p.m. (New York
City time) on the applicable Note Series issuance date, make available to
the Issuer, in immediately available funds, such Note Purchaser’s applicable
portion (if any) of such Series by depositing such funds into the Issuer’s
Account.


 


A-5

















 


Section 2.03.          The Notes; Payment.


 


(a)           On each date that (i) any
Outstanding Principal Amount of a Note Purchaser’s Notes is assigned pursuant
to the terms hereof, or (ii) the principal amount of any Series is
reduced, a duly authorized officer, employee or agent of the Note Agent shall
make appropriate notations in the Register and the allocation thereof among the
Note Purchasers.  The Issuer and each
Note Purchaser authorizes each duly authorized officer, employee and agent of
the Note Agent to make such notations in the Register as aforesaid and every
such notation made in accordance with the foregoing authority shall be prima  facie
evidence of the accuracy of the information so recorded and shall be binding on
the Issuer and each Note Purchaser absent manifest error.


 


(b)           Notwithstanding any other provisions
herein or in the Agreement, the Issuer agrees that all payments to each Note
Purchaser for interest, principal and other amounts shall be made directly to
the Note Purchaser at the account specified therefor from time to time to the
Issuer by such Note Purchaser.


 


(c)           The Issuer may prepay any Series of
Notes without penalty upon three Business Days’ prior written notice to the
Note Agent (which shall promptly notify each affected Note Purchaser upon
receipt of such notice).   The Notes of
any Series being prepaid shall be paid pro rata and pari passu, based upon
their respective Outstanding Principal Amounts.


 


(d)           The Issuer’s obligation to repay the
principal and interest of any Note at its Maturity Date shall be subject to the
related Note Purchaser’s surrender of the Note to the Issuer at its principal
place of business.  All Notes surrendered
for payment and registration of transfer shall be surrendered to Issuer and
shall promptly be canceled by it and may not be reissued or resold.


 


(e)           If (i) any mutilated or defaced
Note is surrendered to the Issuer, or if there shall be delivered to the Issuer
evidence to its reasonable satisfaction of the destruction, loss or theft of
any Note, and (ii there is delivered to the Issuer such security or indemnity
as may reasonably be required by them to save each of them harmless then, in
the absence of notice to the Issuer that such Note has been acquired by a bona
fide purchaser, the Issuer shall execute and deliver, in lieu of any such
mutilated, defaced, destroyed, lost or stolen Note, a new Note as such
mutilated, defaced, destroyed, lost or stolen Note, of like tenor and Series (including
the same date of issuance) and equal principal amount, registered in the same
manner, dated the date of its execution, bearing interest from the date to
which interest has been paid on the mutilated, defaced, destroyed, lost or
stolen Note and bearing a number not contemporaneously outstanding.


 


Section 2.04.          Calculation and Payment of Interest.  (a) With any notice of prepayment of
principal, with each payment of interest, the Note Agent shall calculate for
the applicable period and for each affected Series of Notes the amount of
interest accrued on such Series of Notes at the Interest Rate for such Series plus
applicable Default Interest through but not including such payment date.


 


A-6

















 


(b)           Any
prepayment of the principal of any Series of Notes shall be accompanied by
the payment of all interest accrued on that Series through, but not
including, that date of payment.


 


(c)           Upon
the occurrence and doing the continuance of an Event of Default,  Default Interest shall accrue on each Series of
Notes in addition to interest at the Interest Rate. All references to the
calculation and payment of  “interest” in
this Agreement shall include Default Interest to the extent it has accrued.


 


(d)           Notwithstanding
any provision to the contrary contained in this Agreement, the Issuer shall not
be required to pay, and the Note Purchasers shall not be permitted to collect,
any amount of interest in excess of the maximum amount of interest permitted by
law (“Excess Interest”).  If any Excess Interest is provided for or
determined by a court of competent jurisdiction to have been provided for in this
Agreement, then in such event: (i) the provisions of this paragraph shall
control; (ii) the Issuer shall not be obligated to pay any Excess
Interest; (iii) any Excess Interest that a Note Purchaser may have
received hereunder shall be, at the Note Purchaser’s option, (A) applied
as a credit against the Outstanding Principal Amount of the Note (without any
prepayment penalty therefor) or for accrued and unpaid interest thereunder (not
to exceed the maximum amount permitted by law), (B) refunded to the Issuer,
or (C) any combination of the foregoing; (iv) the Interest Rate shall
be automatically reduced to the maximum lawful rate allowed from time to time
under applicable law (the “Maximum Rate”),
and this Agreement and the Note shall be deemed to have been and shall be,
reformed and modified to reflect such reduction; and (v) the Issuer shall
not have any action against the Note Purchaser for any damages arising out of
the payment or collection of any Excess Interest.  Notwithstanding the foregoing, if for any
period of time interest on any Note due and owing to the Note Purchaser is
calculated at the Maximum Rate rather than the applicable rate under this
Agreement, and thereafter such applicable rate becomes less than the Maximum
Rate, the rate of interest payable on such Note due and owing to the Note
Purchaser shall, to the extent permitted by law, remain at the Maximum Rate
until the Note Purchaser shall have received the amount of interest which the
Note Purchaser would have received during such period on the Note due and owing
to the Note Purchaser had the rate of interest not been limited to the Maximum
Rate during such period.


 


Section 2.05.          Taxes.


 


(a)           Except to the extent required under
applicable law, any and all payments and deposits required to be made hereunder
by the Issuer to or for the benefit of any Note Purchaser shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto  (all such amounts being
hereinafter referred to as “Taxes”)
that are imposed on the Note Purchaser by the United States or any State
thereof.  If the Issuer shall be required
by law to deduct any Taxes from or in respect of any sum required to be paid or
deposited hereunder or under any instrument delivered hereunder to or for the
benefit of a Note Purchaser, then the Issuer shall make such required
deductions and shall pay the full amount of such deductions to the relevant
taxation authority or other authority in accordance with applicable law.


 


A-7

















 


(b)           The Issuer shall pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies imposed by the United States or any State thereof
which arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, the Notes (“Other
Taxes”).


 


(c)           Each Note Purchaser shall indemnify
the Issuer for the full amount of Taxes (excluding Other Taxes) and any
liability (including penalties, interest and expenses) arising therefrom or
required to be paid with respect thereto. 
The Issuer shall promptly notify the Note Agent and each affected Note
Purchaser of any payment of Taxes made by it and, if practicable, any request,
demand or notice received in respect thereof prior to such payment.  A certificate as to the amount of such
indemnification submitted to any Note Purchaser and the Note Agent by the
Issuer, setting forth the calculation thereof, shall (absent manifest error) be
conclusive and binding for all purposes.


 


(d)           Each Note Purchaser
that is not a United States Person hereby agrees to complete, execute and
deliver to the Issuer and the Note Agent, on or prior to the 30th day after the
later of (x) the Closing Date, and (y) the date such Note Purchaser
first becomes a Note Purchaser (but in any event not later than the 10th
Business Day before any payment is due or any deposit is required to be made
hereunder or in connection herewith for the benefit of such Note Purchaser),
two accurate and complete original signed copies of Internal Revenue Service Form W-8ECI, W-8BEN, W-8EXP or
W-8IMY (with accurate and complete original signed copies of such forms properly
completed and attached for all indirect investors), as applicable (or any
successor form), certifying to such Note Purchaser’s entitlement to a complete
exemption from United States withholding tax and backup withholding tax with
respect to any sum required to be paid or deposited hereunder or under any
instrument delivered hereunder to or for the benefit of such Note Purchaser,
together with a Portfolio Interest Exemption Certificate in the form annexed
hereto as Exhibit C, if the Note purchaser is relying on the exemption
from the United States withholding tax provided in Section 881(c) of
the Code.  In addition, each of the Note
Agent and each Note Purchaser agrees that from time to time thereafter, when a
lapse in time or change in circumstances renders a previous certification
obsolete or inaccurate in any material respect, it will deliver to the Note
Agent or the Note Agent, as applicable, two new accurate and complete original
signed copies of Internal Revenue Service Form W-8ECI, W-8BEN, W-8EXP or W-8IMY
(with accurate and complete original signed copies of such forms properly
completed and attached for all indirect investors), as applicable, or such
other forms or certificates as may be required in order to confirm or establish
such Note Purchaser’s entitlement to a continued exemption from United States
withholding tax and backup withholding tax with respect to any sum required to
be paid or deposited hereunder or under any instrument delivered hereunder to
or for the benefit of such Note Purchaser (collectively, for any Note
Purchaser, the “Subsequent Tax
Certificates”), or it shall promptly notify the Note
Agent and the Issuer of its inability to deliver any such Subsequent Tax
Certificate.  Notwithstanding anything in
this Section to the contrary, to the extent the Issuer is required to do
so by applicable law, the Issuer shall be entitled to deduct or withhold any
applicable Taxes from or in respect of any sum required to be paid or deposited
hereunder or under any instrument delivered hereunder to or for the benefit of
such Note Purchaser.  The Issuer shall
have no obligation to make any additional payment in respect of such deducted
or withheld amounts and the Issuer shall not be required to indemnify against
Taxes paid by a Note Purchaser.


 


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(e)           The Issuer and the Note Agent may
each request, and each Note Purchaser agrees to provide, such information as
the Issuer and the Note Agent may reasonably request and which tax counsel to
the Issuer shall deem reasonably appropriate for the purpose of determining the
obligation of the Issuer to deduct any U.S. federal withholding tax from any
payment made to or on behalf of a Note Purchaser.


 


ARTICLE III


CONDITIONS PRECEDENT TO PURCHASE


 


Section 3.01.          Conditions Precedent to Initial
Purchase.  The purchase of the Notes
on the Closing Date is subject to the following conditions precedent:


 


(i)            each
of the following statements shall be true, and the Note Agent and each initial
Note Purchaser shall have received a certificate, dated the Closing Date, of an
appropriate officer of the Issuer in which such officer shall state that, to
the best knowledge of such officer:


 


(A)          no
Event of Default has occurred and is continuing;


 


(B)           this
Agreement is in full force and effect;


 


(C)           the
Debt Equity Ratio is not greater than 1:5:1 after giving effect to the issuance
of the Notes;


 


(D)          all
conditions precedent to the issuance and purchase of the Notes set forth in
this Agreement have been satisfied (or waived pursuant to the terms hereof or
thereof); and


 


(ii)           the
Notes shall have been duly executed by the Issuer and delivered to the
applicable initial Note Purchaser.


 


Section 3.02.          Conditions Precedent to Issuance of
Additional Series.  Except to the
extent any of the following conditions are waived in writing by each affected
Note Purchaser, the purchase of any additional Series of Notes shall be
subject to the following conditions precedent after giving effect to the
issuance; and


 


(i)            at
the time of and immediately after giving effect to such issuance, no Event of
Default shall have occurred and be continuing;


 


(ii)           the
Note Agent and the Note Purchasers shall have received a Note Purchase Request
in accordance with Section 2.02; and


 


(iii)          all
representations and warranties made by the Issuer in this Agreement are true
and correct in all material respects, as if repeated on the date of such
issuance with respect to the facts and circumstances then existing (except to
the extent that any such representation or warranty refers to a prior specific
date).


 


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ARTICLE IV


ASSIGNMENTS


 


Section 4.01.          Assignment.


 


(a)           At any time and from time to time,
any Note Purchaser may assign all or any portion of its interest in the Notes
(together with the related right, title and interest and obligations of such
Note Purchaser hereunder), and the assignor and assignee thereof shall evidence
and effect such assignment by executing and delivering to the Note Agent an
Assignment and Acceptance; provided, that (i) each such assignment
shall be made to an Eligible Assignee approved by the Note Agent, and (ii) the
Issuer’s written consent will be required for any assignment that is not to an
Affiliate of the Note Agent.


 


(b)           The Note Agent shall maintain at its
address referred to in Section 8.02 a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Note Purchasers and the Outstanding Principal Amount owing to
each Note Purchaser from time to time (the “Register”).  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the Issuer,
the Note Agent and the Note Purchasers may treat each Person whose name is
recorded in the Register as a Note Purchaser hereunder for all purposes of this
Agreement.  A Note Purchaser’s interest
in the Notes may be assigned in whole or in part only by registration of such
assignment in the Register.  Any
assignment of a Note Purchaser’s interest in the Notes shall be registered in
the Register only upon delivery to the Note Agent of the Assignment and
Acceptance duly executed by the assignor thereof.  No assignment of a Note Purchaser’s interest
in the Notes shall be effective unless such assignment shall have been recorded
in the Register by the Note Agent as provided in this Section 4.01.  The Register shall be available for
inspection by the Issuer or any Note Purchaser at any reasonable time and from
time to time upon reasonable prior notice.


 


Section 4.02.          Rights of Assignee.  Upon any assignment in accordance with this Article IV,
(a) the assignee receiving such assignment shall have all of the rights of
such assignor hereunder with respect to the applicable Note and rights
associated therewith being assigned, and (b) all references to such
assignor in the Agreement shall be deemed to apply to such assignee to the
extent of the interest assigned thereby.


 


Section 4.03.          Notice of Assignment.  Each assignor shall provide notice to the
Note Agent and the Issuer of any assignment of any interest in its related Note
or rights or obligations associated therewith by such assignor to any assignee.


 


ARTICLE V


REPRESENTATIONS AND WARRANTIES


 


Section 5.01.          Representations and Warranties of
Note Purchasers.  Each Note Purchaser
hereby represents and warrants that as of each date it shall acquire any  Note (including the date that such Note
Purchaser shall become a party hereto pursuant to an Assignment and
Acceptance):


 


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(a)           Transaction
Documents.  The Note Purchaser
has received all relevant information as it shall have deemed necessary or
desirable in order to make its investment decision.


 


(b)           Securities
Law: Limitations on Resale. 
The Note Purchaser understands that such Note is being offered only in a
transaction not involving any public offering in the United States within the
meaning of the Securities Act, such Note has not been and will not be
registered under the Securities Act, and, if in the future the Note Purchaser
decides to offer, resell, pledge or otherwise transfer the Note, such Note may
be offered, resold, pledged or otherwise transferred in accordance with the
Agreement and the applicable legend on such Note.


 


(c)           Accredited
Investor and Qualified Purchaser Status.  The Note Purchaser (1) is an Accredited
Investor and a Qualified Purchaser, (2) is acquiring its interest in such
Note for its own account and (3) in acquiring such Note, is not a bank
lending funds in the ordinary course of its trade or business.  The Note Purchaser has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment in such Note, and the Note Purchaser is able
to bear the economic risk of such investment.


 


(d)           Investment
Intent: Access to Information.  
The Note Purchaser is not purchasing such Note with a view to the
resale, distribution or other disposition thereof in violation of the
Securities Act.  The Note Purchaser understands
that an investment in such Note involves certain risks, including the risk of
loss of all or a substantial part of its investment under certain
circumstances.  The Note Purchaser has
had access to such financial and other information concerning the Issuer and
such Note as it deemed necessary or appropriate in order to make an informed
investment decision with respect to its purchase of its interest in such Note,
including an opportunity to ask questions of and request information from the
Note Agent and the Issuer.


 


Section 5.02.          Representations and Warranties of
the Issuer.  The Issuer represents
and warrants to the Note Agent and each Note Purchaser as follows:


 


(a)           Organization.  The Issuer is a corporation duly organized
and validly existing and in good standing under the laws of Delaware.


 


(b)           Authorization.  The Issuer has the power to execute and
deliver this Agreement and to perform its obligations under this Agreement and
has taken all necessary action to authorize such execution, delivery and
performance.


 


(c)           No
Conflict.  The execution,
delivery and performance of this Agreement by the Issuer do not violate or
conflict with any law applicable to the Issuer, any provision of the
organizational documents of the Issuer, any order or judgment of any court or
other governmental authority applicable to the Issuer or any of the Issuer’s
assets or any contractual restriction binding on or affecting the Issuer or any
of such assets.


 


(d)           Consents.  All governmental and other third-party
consents that are required to have been obtained by the Issuer with respect to
the execution, delivery and


 


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performance of this
Agreement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with.


 


(e)           Enforceability.  This Agreement constitute legal, valid and
binding obligations of the Issuer, enforceable against the Issuer in accordance
with their respective terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors’ rights generally
and subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at law).


 


ARTICLE VI

THE NOTE AGENT


 


Section 6.01.          Authorization.  Each Note Purchaser appoints and authorizes
Deerfield Management Company, L.P., as the Note Agent, to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Note Agent by the terms hereof, together with such powers as
are reasonably incidental thereto.  The
Issuer appoints the Note Agent as its agent for maintenance of the Register. As
to any matters not expressly provided for by this Agreement, the Note Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the Majority Note
Purchaser Vote, and such instructions shall be binding upon all Note
Purchasers; provided,  that the Note Agent shall not be required to take any action that
exposes the Note Agent to personal liability or that is contrary to the terms
of this Agreement or contrary to applicable law.


 


Section 6.02.          Reliance, Etc.  None of the Note Agent nor any of its
respective directors, officers, agents, parties, attorneys or employees shall
be liable to any Note Purchaser for any action taken or omitted to be taken by
it or them under or in connection with this Agreement, except for its or their
own gross negligence or willful misconduct. 
Without limiting the generality of the foregoing, the Note Agent (i) may
consult with independent legal counsel (including counsel for the Issuer),
independent certified public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or experts, (ii) makes
no representation or warranty to any Note Purchaser and shall not be
responsible to any Note Purchaser for any statements, representations or
warranties made in or in connection with this Agreement, (iii) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement on the part of the
Issuer, (iv) shall not be responsible to any Note Purchaser for the due
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement (except for the execution by the Note Agent of, and the
legality, validity and enforceability against the Note Agent of its obligations
under, this Agreement), and (v) shall incur no liability under or in
respect of this Agreement by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be
by facsimile or telex) believed by it to be genuine and signed or sent by the
proper party or parties; except in each case for its gross negligence or
willful misconduct.


 


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Section 6.03.          Agents and Affiliates.  The Note Agent and its Affiliates may
generally engage in any kind of business with the Issuer, any of their
respective Affiliates and any Person who may do business with or own securities
of the Issuer or any of its respective Affiliates, all as if the Note Agent
were not the Note Agent, and without any duty to account therefor to any Note
Purchaser.


 


Section 6.04.          Credit Decision by Note Purchasers.  Each Note Purchaser acknowledges that it has,
independently and without reliance upon the Note Agent or any other Note
Purchaser and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Note Purchaser also
acknowledges that it will, independently and without reliance upon the Note
Agent or any other Note Purchaser and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.  Each Note Purchaser confirms that the
undertakings being entered into by such Note Purchaser herein have been duly
approved by it (through its regular approval process or otherwise) and it is
duly authorized to execute and deliver this Agreement as a result of such
approval.  Each Note Purchaser further
acknowledges that to the best knowledge, information and belief of its
officers, there is no regulatory or legal impediment to its entering into this
Agreement.


 


Section 6.05.          Indemnification.  The Note Purchasers agree to indemnify the
Note Agent ratably according to the ratio their respective Outstanding
Principal Amounts bear to the aggregate Outstanding Principal Amounts of all Series of
Notes, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Note Agent in any way relating to or arising out of this Agreement
or any action taken or omitted by the Note Agent under this Agreement; provided, that no Note Purchaser shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Note Agent’s gross negligence or willful misconduct.  Without limitation of the foregoing, each
Note Purchaser agrees to reimburse the Note Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including reasonable counsel fees)
incurred by the Note Agent in connection with the administration or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of, rights or responsibilities under, this Agreement, to the
extent that the Note Agent is not reimbursed for such expenses by the Issuer.


 


Section 6.06.          Successor Note Agent.  The Note Agent (i) may resign at any
time by giving written notice thereof to the Note Purchasers and the Issuer,
and (ii) may be removed at any time upon a material default by the Note
Agent by the Majority Note Purchaser Vote by written notice to the Note Agent,
the Note Purchasers and the Issuer, setting forth a brief description of the
grounds upon which such removal is based; provided,  that no such resignation or removal shall be
effective until a successor Note Agent shall have been appointed and accepted
such appointment pursuant to the terms of this Section 6.06.  Upon any such resignation or removal, the
Majority Note Purchaser Vote shall have the right to appoint a successor Note
Agent.  If no successor Note Agent shall
have been so appointed by the Majority Note Purchaser Vote, and shall have
accepted such appointment, within 30 days after the retiring Note Agent’s
giving of notice of resignation or the Majority Note Purchaser Vote’ removal of
the retiring Note


 


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Agent, then the retiring
Note Agent shall appoint a successor Note Agent.  Any such successor Note Agent shall be a commercial
bank having a combined capital and surplus of at least $500,000,000.  Upon the acceptance of any appointment as
Note Agent hereunder by a successor Note Agent, such successor Note Agent shall
execute and deliver to the Note Purchasers and the Issuer an agreement
accepting and agreeing to perform the duties of the Note Agent under this
Agreement, and shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Note Agent, and the
retiring Note Agent shall be discharged from its duties and obligations under
this Agreement.  After any retiring Note
Agent’s resignation or removal hereunder as Note Agent, the provisions of this Article VI
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Note Agent under this Agreement.


 


ARTICLE VII 

EVENTS OF DEFAULT


 


Section 7.01.          “Event of Default”,
wherever used herein, means any one or more of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):


 


(a)           a default in the payment of interest
on any Note when the same becomes due and payable, in each case which default
continues for a period of five Business Days;


 


(b)           a default in the payment of principal
of any Note when the same becomes due and payable on the Maturity Date;


 


(c)           the Issuer becomes an investment
company required to be registered under the Investment Company Act;


 


(d)           a default in the performance, or
breach, of any other material covenant or other agreement of the Issuer under
this Agreement or any representation or warranty of the Issuer made in this
Agreement that proves to be incorrect in any material respect when made, and
the continuation of such default or breach for a period of 60 days after notice
thereof to the Issuer  by the Note Agent or
by the holders of at least 25% in aggregate Outstanding Principal Amount of all
Series of Notes;


 


(e)           an involuntary proceeding shall be
commenced or an involuntary petition shall be filed seeking (i) winding
up, liquidation, reorganization or other relief in respect of the Issuer or its
debts, or of a substantial part of its assets, under any bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, Note Agent, custodian, sequestrator, conservator or
similar official for the Issuer or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for 60
days; or an order or decree approving or ordering any of the foregoing shall be
entered;


 


(f)            the Issuer shall (i) voluntarily
commence any proceeding or file any petition seeking winding up, liquidation,
reorganization or other relief under any bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution


 


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of, or fail to contest in
a timely and appropriate manner, any proceeding or petition described in Section 7.01(e),
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for itself or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing; and


 


(g)           the Issuer shall issue any debt
having priority of payment senior to or pari passu with the Notes.


 


Section 7.02.          Acceleration of Maturity; Recession
and Annulment.


 


(a)           If an Event of Default occurs and is
continuing (other than an Event of Default specified in Section 7.01(e) or
(f)), (i) the Note Agent acting at the direction of  a Majority Note Purchaser Vote shall declare
the principal of all of the Notes to be immediately due and payable, and upon
any such declaration such principal, together with all accrued and unpaid
interest thereon, and other amounts payable hereunder in accordance with the
priority of payments, shall become immediately due and payable.  If an Event of Default specified in Section 7.01(e) or
(f) occurs, all unpaid principal, together with all accrued and unpaid
interest thereon, of all the Notes, and other amounts payable hereunder shall
automatically become due and payable without any declaration or other act on
the part of the Note Agent or any Note Purchaser.


 


(b)           At any time after such a declaration
of acceleration of maturity has been made and before a judgment or decree for
payment of the cash due has been obtained by the Note Agent as hereinafter
provided, the Note Purchasers may by a Majority Note Purchaser Vote, by written
notice to the Issuer and the Note Agent, rescind and annul such declaration and
its consequences  or waive the relevant
Event of Default as provided in Section 7.11.  No such rescission and annulment shall affect
any subsequent Event of Default or impair any right consequent thereon.


 


Section 7.03.          Collection of Indebtedness and
Suits for Enforcement by Note Agent. 
If an Event of Default shall occur in respect of the payment of any
principal of or interest on any Note, the Issuer will upon demand of the Note
Agent or any affected Note Purchaser, pay to the Note Purchaser the whole
amount, if any, then due and payable on such Note for principal and interest
with interest upon the overdue principal and, to the extent that payments of
such interest shall be legally enforceable, upon overdue installments of
interest at the applicable Interest Rate and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
such Note Purchaser and its respective agents and counsel.


 


If the Issuer fails to
pay such amounts forthwith upon such demand, the Note Agent, in its own name
and as Note Agent of an express trust, may institute a Proceeding for the
collection of the sums so due and unpaid, and shall, upon the direction by a
Majority Note Purchaser Vote, prosecute such Proceeding to judgment or final
decree, and may enforce the same against the Issuer and collect the cash from
the Issuer adjudged or decreed to be payable in the manner provided by law.


 


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If an Event of Default
occurs and is continuing, the Note Agent shall, upon written direction by a
Majority Note Purchaser Vote, proceed to protect and enforce any such rights,
whether for the specific enforcement of any agreement in this Agreement or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Note Agent by this Agreement
or by law as directed by such Majority Note Purchaser Vote.


 


In case there shall be
pending Proceedings relative to the Issuer under the United States Bankruptcy
Code or any other applicable bankruptcy, insolvency or other similar law, or in
case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property, the Note Agent, regardless of
whether the principal of any Notes shall then be due and payable as therein
expressed or by declaration or otherwise and regardless of whether the Note
Agent shall have made any demand pursuant to the provisions of this Section 7.03,
shall be entitled and empowered, by intervention in such Proceedings or
otherwise:


 


(i)            to file and prove a claim or claims
for the whole amount of principal and interest owing and unpaid in respect of
the Notes upon direction by a Majority Note Purchaser Vote, and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Note Agent (including any claim for reasonable compensation to
the Note Agent and each predecessor Note Agent, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Note Agent and each predecessor Note
Agent) and of the Note Purchasers allowed in any Proceedings relative to the
Issuer or to the property of the Issuer;


 


(ii)           unless prohibited by applicable law
and regulations, to vote on behalf of the Note Purchasers upon their direction
by a Majority Note Purchaser Vote in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency Proceedings or person performing similar functions in comparable
Proceedings; and


 


(iii)          to collect and receive any cash or
other property payable to or deliverable on any such claims, and to distribute
all amounts received with respect to the claims of the Note Purchasers and of
the Note Agent on behalf of the Note Purchasers and the Note Agent; and any
trustee, receiver or liquidator, custodian or other similar official is hereby
authorized by each of the Note Purchasers to make payments to the Note Agent,
and, if of the Note Agent shall consent to the making of payments directly to
the Note Purchasers, to pay to the Note Agent such amounts as shall be
sufficient to cover reasonable compensation to the Note Agent, each predecessor
Note Agent and their respective agents, attorneys and counsel, and all other
reasonable expenses and liabilities incurred, and all advances made, by the
Note Agent and each predecessor Note Agent except as a result of negligence or
bad faith.


 


Nothing herein contained
shall be deemed to authorize the Note Agent to authorize or consent to or vote
for or accept or adopt on behalf of any Note Purchaser, any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Note Purchaser, or to authorize the Note Agent to vote in
respect of the claim of any Note Purchaser in any such Proceeding except, as
aforesaid, to vote for the election of a Note Agent in a bankruptcy or similar
proceeding.


 


All rights of action and
of asserting claims under this Agreement, or under any of the Notes, may be
enforced by the Note Agent without the possession of any of the Notes or the


 


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production
thereof in any trial or other Proceedings relative thereto, and any action or
Proceedings instituted by the Note Agent shall be brought in the name of the
Note Purchasers, and any recovery of judgment, subject to the payment of the
reasonable expenses, disbursements and compensation of the Note Agent, each
predecessor Note Agent and their respective agents and attorneys and counsel,
shall be for the benefit of the Note Purchasers and payable to the Note
Purchasers as set forth in Section 7.05.


 


Section 7.04.          Remedies.


 


(a)           If an Event of Default shall have
occurred and be continuing, and the Notes have been declared due and payable
and such declaration and its consequences have not been rescinded and annulled,
the Issuer agrees that the Note Agent shall, upon direction by a Majority Note
Purchaser Vote, to the extent permitted by applicable law, exercise one or more
of the following rights, privileges and remedies:


 


(i)            institute
Proceedings for the collection of all amounts then payable on the Notes or
otherwise payable under this Agreement, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer’s assets any cash
adjudged due;


 


(ii)           subject
to Section 7.05 hereof, sell all or a portion of the Issuer’s assets or
rights of interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; and


 


(iii)          exercise
any other rights and remedies that may be available at law or in equity.


 


The Note Agent may, but need not, obtain and
rely upon an opinion of an independent investment banking firm of national
reputation as to the feasibility of any action proposed to be taken in
accordance with this Section 7.04 and as to the sufficiency of the
proceeds and other amounts receivable with respect to the Collateral to make
the required payments of principal of and interest on the Notes, which opinion
shall be conclusive evidence as to such feasibility or sufficiency.


 


(b)           If an Event of Default as described
in Section 7.01(d) shall have occurred and be continuing, the
Note Agent shall, at the direction of a Majority Note Purchaser Vote, institute
a Proceeding solely to compel performance of the covenant or agreement or to
cure the representation or warranty, the breach of which gave rise to the Event
of Default under such Section, and enforce any equitable decree or order
arising from such proceeding.


 


(c)           Notwithstanding any other provision
of this Agreement, neither the Note Agent nor any Note Purchaser may, prior to
the date which is one year and one day, or if longer the applicable preference
period then in effect, after the payment in full of all Notes, institute
against, or join any other Person in instituting against, the Issuer any
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceedings, or other proceedings under Federal or state bankruptcy or similar
laws.  Nothing in this Section 7.04
shall preclude, or be deemed to stop, the Note Agent (i) from taking any
action prior to the expiration of the aforementioned one year and one day
period, or if longer the applicable preference period then in


 


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effect, in (A) any
case or proceeding voluntarily filed or commenced by the Issuer or (B) any
involuntary insolvency proceeding filed or commenced by a Person other than the
Note Agent, or (ii) from commencing against the Issuer or any of its
properties any legal action which is not a bankruptcy, reorganization,
arrangement, insolvency, moratorium, liquidation or similar proceeding.


 


Section 7.05.          Application of Cash Collected.  Any cash collected by the Note Agent with
respect to the Notes pursuant to this Article VII and any cash that
may then be held or thereafter received by the Note Agent with respect to the
Notes hereunder shall be applied in payment of the indemnities and costs owed
to the Note Agent and the Note Purchasers hereunder and to the Outstanding
Principal Amount and all interest accrued thereon of all Series of
Notes.   Payments shall first be applied
first to indemnities and other costs of the Note Agent provided for under this
Agreement, then to indemnities and other costs of the Note Purchasers provided
for under this Agreement (pro rata in proportion to the amounts owed each Note
Purchaser).  Remaining amounts collected
by the Note Agent shall be allocated between the Series of Notes pro rata
in accordance with the sum of the accrued interest and Outstanding Principal
Amount of the Notes of the respective Series. Payments made with respect to any
Series of  Notes shall be made pro
rata among the Note Purchasers holding the Notes of such Series in
accordance the Outstanding Principal Amount of their Notes. Payments with
respect to each Note shall be applied first to accrued interest and then to
principal. No cash shall be released to the Issuer until payment in full of all
amounts dues under this Agreement.


 


Section 7.06.          Limitation on Suits.  No holder of any Note shall have any right to
institute any Proceedings, judicial or otherwise, with respect to this Agreement,
or for the appointment of a receiver or Note Agent, or for any other remedy
hereunder, unless:


 


(i)            such Note Purchaser has previously
given to the Note Agent written notice of an Event of Default;


 


(ii)           there has been a Majority Note
Purchaser Vote directing the Note Agent to institute Proceedings in respect of
such Event of Default in the name of the Note Purchasers;


 


(iii)          such Note Purchaser has provided to
the Note Agent reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request;


 


(iv)          the Note Agent for 60 days after its
receipt of such notice, request and provision of indemnity has failed to
institute any such Proceeding; and


 


(v)           no direction inconsistent with such
written request has been given to the Note Agent during such 60-day period by
Majority Note Purchaser Vote;


 


it being understood and intended that no one or
more Note Purchasers shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Agreement to affect, disturb or
prejudice the rights of any other Note Purchasers or to obtain or to seek to
obtain priority or preference over any other Note Purchasers or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal and ratable benefit of all the Note Purchasers.


 


Section 7.07.          Restoration of Rights and Remedies.  If the Note Agent or any Note Purchaser has
instituted any Proceeding to enforce any right or remedy under this


 


A-18

















 


Agreement and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Note Agent or to such Note Purchaser, then and in
every such case the Issuer, the Note Agent and the Note Purchaser shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Note Purchasers shall continue as though no such Proceeding had
been instituted.


 


Section 7.08.          Rights and Remedies Cumulative.  No right or remedy herein conferred upon or
reserved to the Note Agent or to the Note Purchasers is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing by law or in equity or
otherwise.  The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.


 


Section 7.09.          Delay or Omission Not Waiver.  No delay or omission of the Note Agent or of
any Note Purchaser to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein.  Every right and remedy given by this Article VII
or by law to the Note Agent or to the Note Purchasers may be exercised from
time to time, and as often as may be deemed expedient, by the Note Agent or by
the Note Purchasers, as the case may be.


 


Section 7.10.          Control by Note Purchasers.  Notwithstanding any other provision of this
Agreement, the Note Purchasers by a Majority Note Purchaser Vote shall have the
right to cause the institution of and direct the time, method and place of
conducting any Proceeding for any remedy available to the Note Agent or for
exercising any trust, right, remedy or power conferred on the Note Agent;
provided that:


 


(i)            such direction shall not conflict
with any rule of law or with this Agreement;


 


(ii)           the Note Agent may take any other
action deemed proper by the Note Agent that is not inconsistent with such
direction; provided that the Note Agent need not take any action that it
determines might involve it in liability (unless the Note Agent has received
satisfactory indemnity against such liability as set forth below); and


 


(iii)          the Note Agent shall have been
provided with indemnity satisfactory to it.


 


Section 7.11.          Waiver of Past Defaults.  Prior to the time a judgment or decree for
payment of the cash due has been obtained by the Note Agent, as provided in
this Article VII, the Note Purchasers by Majority Note Purchaser
Vote may on behalf of all the Note Purchasers waive any past Event of Default
and its consequences, except an Event of Default under Section 7.01(e) or
(f) .


 


In the case of any such
waiver, (i) the Issuer, the Note Agent and the Note Purchasers shall be
restored to their former positions and rights hereunder, respectively, but no
such waiver shall extend to any subsequent or other Event of Default or impair
any right consequent thereto, and (ii) the Note Agent shall promptly give
written notice of any such waiver to each Note Purchaser.


 


A-19

















 


Upon any such waiver,
such Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Agreement, but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.


 


Section 7.12.          Undertaking for Costs.  All parties to this Agreement agree that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Agreement, or in any suit against the Note Agent for
any action taken, or omitted by it as Note Agent, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys’ fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant.


 


Section 7.13.          Action on the Notes.  The Note Agent’s right to seek and recover
judgment on the Notes on behalf of the Note Purchasers shall not be affected by
the seeking or obtaining of or application for any other relief under or with
respect to this Agreement.  No rights or
remedies of the Note Purchasers shall be impaired by the recovery of any
judgment by the Note Agent against the Issuer or by the levy of any execution
under such judgment upon any portion of the assets of the Issuer.


 


ARTICLE VIII

MISCELLANEOUS


 


Section 8.01.          Amendments, Etc.


 


(a)           No amendment of any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by each of the parties hereto. 
Any waiver or consent shall be effective only if signed by the party
waiving any right, in the specific instance and for the specific purpose for
which given.


 


Section 8.02.          Notices, Etc.  All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, or overnight courier or facsimile, to the intended party
at the address or facsimile number of such party set forth below, or at such
other address or facsimile number as shall be designated by such party in a
written notice to the other parties hereto.


 


If to the Issuer:


 


780 Third
Avenue


New York, New
York  10017


Attention:   James E. Flynn


 


If to the Note
Agent  and Deerfield Private Design Fund
LP:


 


780 Third
Avenue


New York, New
York  10017


Attention:   James E. Flynn


 


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If to Deerfield PDI Financing LP:


 


c/o Citi Hedge
Fund Services, Ltd.


Hemisphere
House


9 Church
Street


Hamilton HM 11


Bermuda


 


All such
notices and communications shall be deemed effective: (i) if in writing
and delivered in person or by overnight courier service, on the date it is
delivered; (ii) if sent by facsimile transmission, on the date that
transmission is received by the recipient in legible form (it being agreed that
the burden of proving receipt will be on the sender and will not be met by a
transmission report generated by the sender’s facsimile machine); and (iii) if
sent by mail, on the date that mail is delivered or its delivery is attempted;
in each case, unless the date of that delivery (or attempted delivery) or that
receipt, as applicable, is not a Business Day or that communication is
delivered (or attempted) or received, as applicable, after the close of
business on a Business Day, in which case that communication shall be deemed
given and effective on the first following day that is a Business Day.


 


Section 8.03.          No Waiver, Remedies.  No failure on the part of the Note Agent or
any Note Purchaser to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.  The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.


 


Section 8.04.          Binding Effect; Survival.


 


(a)           This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.  Nothing in this
Agreement, express or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns) any
legal or equitable right, remedy or claim under or by reason of this Agreement;
provided, however, that VIVUS, Inc. shall be a third party beneficiary of
the obligations of the Note Purchasers under Articles II and III of this
Agreement.  This Agreement shall create
and constitute the continuing obligation of the parties hereto in accordance
with its terms.


 


(b)           The Issuer may not assign or delegate
any of its rights or obligations under this Agreement without the prior consent
of each Note Purchaser and the Note Agent.


 


Section 8.05.          Captions and Cross References.  The various captions in this Agreement are
provided solely for convenience of reference and shall not affect the meaning
or interpretation of any provision of this Agreement.


 


Section 8.06.          Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW


 


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YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.


 


Section 8.07.          Submission to Jurisdiction.  Each of the parties hereto hereby irrevocably
and unconditionally submits to the nonexclusive jurisdiction of any New York
State court or federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, and each of the
parties hereto hereby irrevocably and unconditionally (i) agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, such federal court
and (ii) waives the defense of an inconvenient forum.  Each of the parties hereto agrees that a
final non-appealable judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.


 


Section 8.08.          Consent to Service of Process.  Each party to this Agreement irrevocably
consents to service of process by personal delivery, certified mail, postage
prepaid or overnight courier.  Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.


 


Section 8.09.          Waiver of Jury Trial.  EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR
RELATING TO THIS AGREEMENT.


 


Section 8.10.          Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same Agreement.


 


Section 8.11.          Indemnities by Issuer.  Without limiting any other rights that the
Note Purchasers, the Note Agent and any successors and permitted assigns and
their respective officers, directors, employees, counsel and agents
(collectively, the “Indemnified
Parties”) may have hereunder or under applicable law, the
Issuer hereby agrees to indemnify each Indemnified Party from and against any
and all damages, losses, claims, liabilities, reasonable costs and expenses,
including, without limitation, reasonable attorney’s fees and disbursements
(all of the foregoing being collectively referred to as “Indemnified Amounts”)
awarded against or incurred by any of them in any action or proceeding between
the Issuer and any of the Indemnified Parties as a result of the inaccuracy of
any representation or warranty made by the Issuer under this Agreement or the
failure of the Issuer to comply with any term or provision of this
Agreement,  excluding, however,
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of an Indemnified Party.


 


In order for an Indemnified Party to be entitled to
any indemnification provided for under this Agreement in respect of, arising
out of, or involving a claim made by any Person against the Indemnified Party
(a “Third Party Claim”), such
Indemnified Party must notify the Issuer in writing of the Third Party Claim
within fifteen days of receipt of a summons, complaint or other notice of the
commencement of litigation and within thirty days after receipt by such
Indemnified Party of any other written notice of the Third Party Claim.  Thereafter, the


 


A-22

















 


Indemnified Party shall deliver to the Issuer within a
reasonable time after the Indemnified Party’s receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified
Party relating to the Third Party Claim.


 


If a Third Party Claim is made against an Indemnified
Party, the Issuer will be entitled (x) to participate in the defense
thereof and, (y) if it so chooses, to assume the defense thereof with
counsel selected by the Issuer provided that in connection with such assumption
such counsel is not reasonably objected to by the Indemnified Party.  Should the Issuer so elect to assume the
defense of a Third Party Claim, the Issuer will not be liable to the
Indemnified Party for any legal expenses subsequently incurred by the Indemnified
Party in connection with such defense thereof. 
If the Issuer elects to assume the defense of a Third Party Claim, the
Indemnified Party will (i) cooperate in all reasonable respects with the
Issuer in connection with such defense and (ii) not admit any liability
with respect to, or settle, compromise or discharge, such Third Party Claim
without the Issuer’s prior written consent, as the case may be.  If the Issuer shall assume the defense of any
Third Party Claim, the Indemnified Party shall be entitled to participate in
(but not control) such defense with its own counsel at its own expense.  If the Issuer does not assume the defense of
any such Third Party Claim, the Indemnified Party may defend the same in such
manner as it may deem appropriate, including settling such claim or litigation
after giving notice to the Issuer of such terms and the Issuer will promptly
reimburse the Indemnified Party upon written request.  Anything contained in this Agreement to the
contrary notwithstanding, the Issuer shall not be entitled to assume the defense
of any part of a Third Party Claim that seeks an order, injunction or other
equitable relief or relief for other than money damages against the Indemnified
Party.


 


[Remainder of page intentionally
blank.]


 


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IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective officers thereunto duly authorized as of the date first above
written.


 


	
   

  	
  DEERFIELD ED
  CORPORATION, as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEERFIELD
  MANAGEMENT COMPANY, L.P., as Note Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: James Flynn

  
	
   

  	
   

  	
  Title:  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEERFIELD
  PDI FINANCING LP, as initial Note Purchaser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  DEERFIELD
  CAPITAL, L.P., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEERFIELD
  PRIVATE DESIGN FUND LP, as initial Note Purchaser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				



 


A-24






 












 


EXHIBIT A


 


FORM OF ASSIGNMENT AND ACCEPTANCE


 


Reference is hereby made to the Note Purchase
Agreement, dated as of March        ,
2009, as it may be amended or otherwise modified from time to time (as so
amended or modified, the “Agreement”),
by an among Deerfield ED Corporation, Deerfield PDI Financing LP, as initial
Note Purchaser, Deerfield Private Design Fund LP and Deerfield Management
Company, L.P., as Note Agent.  Terms
defined in the Agreement are used herein with the same meaning.


 


[                       ], in its
capacity as Note Purchaser under the Agreement (the “Assignor”) and [                                           ]
(the “Assignee”) agree as follows:


 


1.             Assignor
hereby sells and assigns, without recourse, to Assignee, and Assignee hereby
purchases and assumes, without recourse to or representation or warranty of any
kind (except as set forth below) from Assignor, effective as of the Effective
Date (as defined below), a           %
interest (the “Assigned Interest”)
in all of Assignor’s rights and obligations under the Agreement, and all of
Assignor’s interest in $                       
original principal amount of the                        Note
Series, together with the rights of Assignor to payment in respect of
outstanding principal and accrued and unpaid interest relating to such Assigned
Interest, and the amount of any accrued and unpaid fees payable to Assignor
under the Agreement.


 


2.             The
Assignor (i) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any lien created by it; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement or
any other instrument or document furnished pursuant thereto or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Agreement, the Notes or any other instrument or document furnished pursuant thereto;
and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Issuer or the
performance or observance by the Issuer of any of its obligations under the
Agreement or any instrument or document furnished pursuant thereto.


 


3.             The
Assignee (i) confirms that it has received a copy of the Agreement and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance
and purchase such interest in the Assignor’s rights and obligations under the
Agreement; (ii) agrees that it will, independently and without reliance
upon the Note Agent or any of its Affiliates, the Assignor or any other Note
Purchaser and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Agreement; (iii) appoints and authorizes the
Note Agent to take such action as agent on its behalf and to exercise such
power under the Agreement as are delegated to the Note Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (iv) appoints
the Note Agent to enforce its respective rights and interests in and under the
Agreement in accordance with the Agreement; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of the Agreement are required to be performed by it as a Note Purchaser; (vi) specifies
as its address for notices and its account for payments the office and 


 


A-25

















 


account set forth beneath its name on the signature pages hereof;
(vii) represents that it is an Eligible Assignee; and (viii) attaches
the forms prescribed by the Internal Revenue Service of the United States of
America certifying as to the Assignee’s status for purposes of determining its
complete exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Agreement.


 


4.             The
effective date for this Assignment and Acceptance shall be the date on which
the Note Agent receives this Assignment and Acceptance executed by the parties
hereto, and consents to and acknowledges this Assignment and Acceptance (the “Effective Date”).  Following the execution of this Assignment
and Acceptance, this Assignment and Acceptance will be delivered to the Note
Agent for acceptance and registration.


 


5.             Upon
such acceptance and recording, from and after the Effective Date, (i) Assignee
shall be a party to and be bound by the provisions of the Agreement and, to the
extent of the interests assigned pursuant to this Assignment and Acceptance,
have the rights and obligations of a Note Purchaser thereunder, and (ii) to
the extent of the interests assigned by this Assignment and Acceptance,
Assignor shall relinquish its rights and be released from its obligations under
the Agreement.


 


6.             Assignor
and Assignee shall make all appropriate adjustments in payments under the
Agreement and the Assigned Interests for periods prior to the Effective Date
directly between themselves.


 


7.             THIS AGREEMENT, INCLUDING THE
RIGHTS AND DUTIES OF THE PARTIES HERETO, 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.


 


8.             This
agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof superseding all prior oral or written understandings.


 


9.             If
any one or more of the covenants, agreements, provisions or terms of this
agreement shall for any reason whatsoever be held invalid, then such covenants,
agreements, provisions, or terms shall be deemed severable from the remaining
covenants, agreements, provisions, or terms of this agreement and shall in no
way affect the validity or enforceability of the other provisions of this
agreement.


 


10.           This
agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same agreement. Delivery by facsimile of an executed
signature page of this agreement shall be effective as delivery of an
executed counterpart hereof.


 


11.           This
agreement shall be binding on the parties hereto and their respective
successors and assigns.


 


[Remainder of page intentionally
left blank.]


 


A-26

















 


IN
WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance
to be executed by their respective officers thereunto duly authorized as of the
day of                       ,
                  .


 


	
   

  	
  [ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				



 


A-27

















 


Address for notices and account for payments of Assignee:


 


 


[NAME]


 


 


Attn:


Telephone:


Facsimile:


 


 


Account for Payments:


 


NAME


 


 


ABA Number:


Account Number:


Attn:


Re:


 


 


Consented to and Accepted this [                 ]
day of


[                                                ], 20[        ]


 


DEERFIELD ED CORPORATION, as
Issuer


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


A-28
















 


EXHIBIT B


 


FORM OF NOTE PURCHASE REQUEST


 


[Date]


 


Deerfield  Management Company,
L.P., as Note Agent


 


Ladies and Gentlemen:


 


Deerfield ED Corporation (the “Issuer”) hereby provides a Note Purchase
Request pursuant to Section 2.02(b) of
the Note Purchase Agreement, dated as of 
March                ,
2009 (the “Agreement”) by and among the
Issuer, Deerfield PDI Financing L.P. as initial Note Purchaser, Deerfield
Private Design fund LP, as initial Note Purchaser and Deerfield  Management Company, L.P. as Note Agent.  Terms used herein but not otherwise defined
herein shall have the meanings assigned to such terms in the Agreement.


 


1.            Issuer
hereby confirms: (i) The amount of Notes to be purchased under the
Agreement is $[                                 ];
(ii) the Series designation of the Notes is [                                ];
the Interest Rate for the Series is [                        ];
and the date of the requested purchase is [                             ],
20    .


 


2.            The
Issuer hereby certifies that each of the conditions precedent set forth in Article III
of the Agreement applicable to the issuance of the Series have been
satisfied as of the date of the issuance.


 


A-29

















 


The foregoing is provided to the Note Agent with
respect to the Note Purchasers under the Agreement.


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  Deerfield ED
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


A-30
















 


EXHIBIT C


 


FORM OF CERTIFICATE RE PORTFOLIO INTEREST EXEMPTION


PORTFOLIO INTEREST EXEMPTION CERTIFICATE


 


Reference is hereby made to the Note Purchase
Agreement, dated as of March_, 2009, between, among others, Deerfield ED
Corporation, as Issuer and the undersigned, as a Note Purchaser.  Pursuant to the provisions of Section 2.05(d) of
the Note Purchase Agreement, the undersigned hereby certifies that: it is not a
United States Person;  it is classified
as a partnership for U.S. federal income tax purposes; and no Person which is a
partner in the undersigned is (i) a “bank” as such term is used in Section 881(c)(3)(A) of
the Internal Revenue Code of 1986, as amended (“Code”), (ii) a 10%
shareholder of the Issuer within the meaning of Section 881(c)(3)(B) of
the Code, or (iii) a controlled foreign corporation described in Section 881(c)(3)(C) of
the Code.


 


 


	
   

  	
  DEERFIELD PDI FINANCING LP

  
	
   

  	
   

  
	
   

  	
  By Deerfield Capital, L.P., its general
  partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Date:

  



 


A-31