**Exhibit 10.6**

 

CERTAIN CONFIDENTIAL PORTIONSOF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “***”. A COMPLETE VERSION OFTHIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES ANDEXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIALTREATMENT UNDER RULE 24B-2 OF THE EXCHANGE ACT OF 1934.

 

**LOAN AND SECURITY AGREEMENT**

 

**THIS LOANAND SECURITY AGREEMENT**,dated as of June 27, 2008 (as amended, restated, supplemented or otherwisemodified from time to time, this “Agreement”) is among GENERAL ELECTRICCAPITAL CORPORATION (“GECC”), in its capacity as agent forLenders (as defined below) (together with its successors and assigns in suchcapacity, “Agent”), OXFORD FINANCE CORPORATION (“Oxford”),the other financial institutions who are or hereafter become parties to thisAgreement as lenders (together with GECC and Oxford, collectively the “Lenders”, and each individually, a“Lender”), DEPOMED, INC.,a California corporation (“Borrower”),and the other entities or persons, if any, who are or hereafter become partiesto this Agreement as guarantors (each a “Guarantor” and collectively,the “Guarantors”, and together with Borrower, each a “Loan Party”and collectively, “Loan Parties”).

 

**RECITALS**

 

Borrower wishes to borrow funds from time to time from Lenders, andLenders desire to make loans, advances and other extensions of credit,severally and not jointly, to Borrower from time to time pursuant to the termsand conditions of this Agreement.

 

**AGREEMENT**

 

Loan Parties, Agent and Lenders agree as follows:

 

# **1.****             ****DEFINITIONS.**

 

As used in this Agreement,all capitalized terms shall have the definitions as provided herein.  Any accounting term used but not definedherein shall be construed in accordance with generally accepted accounting principlesin the United States of America, as in effect from time to time (“GAAP”) and all calculations shall bemade in accordance with GAAP.  The term “financialstatements” shall include the accompanying notes and schedules.  All other terms used but not defined hereinshall have the meaning given to such terms in the Uniform Commercial Code asadopted in the State of New York, as amended and supplemented from time to time(the “UCC”).

 

# **2.****             ****LOANS AND TERMS OF PAYMENT.**

 

## 2.1.     **Promise toPay.**  Borrower promises to pay Agent,for the ratable accounts of Lenders, when due pursuant to the terms hereof, theaggregate unpaid principal amount of all loans, advances and other extensionsof credit made severally by the Lenders to Borrower under this Agreement,together with interest on the unpaid principal amount of such loans, advancesand other extensions of credit at the interest rates set forth herein.

 

## 2.2.     **Term Loans.**

 

### (a)         Commitment.  Subject to the terms and conditions hereof,each Lender, severally, but not jointly, agrees to make the Term Loan A, TermLoan B and Term Loan C (each as 

 

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***Confidential Information, indicated by [***]has been omitted from this filing and filed separately with the SecuritiesExchange Commission***

 

### defined below and each sometimes individuallyreferred to as a “Term Loan” and collectively referred to as the “TermLoans”) to Borrower from time to time on any Business Day (as definedbelow) during the periods set forth below in an aggregate principal amount notto exceed such Lender’s “Term Loan A Commitment”, “Term Loan B Commitment” and “TermLoan C Commitment” as identified on Schedule A hereto (such commitmentof each Lender as it may be amended to reflect assignments made in accordance withthis Agreement or terminated or reduced in accordance with this Agreement, its “TermLoan A Commitment”, “Term Loan B Commitment” and “Term Loan CCommitment”, as applicable, and the aggregate of all such commitments, the “AggregateTerm Loan A Commitment”, “Aggregate Term Loan B Commitment” and “AggregateTerm Loan C Commitment”, as applicable, and each Term Loan A Commitment,Term Loan B Commitment and Term Loan C Commitment is sometimes individuallyreferred to herein as a “Commitment” and collectively as the “Commitments”).  Notwithstanding the foregoing, the aggregateprincipal amount of the Term Loans made hereunder shall not exceed $15,000,000(the “Total Commitment”).  EachLender’s obligation to fund a Term Loan shall be limited to such Lender’s ProRata Share (as defined below) of such Term Loan.  Subject to the terms and conditions hereof,the initial Term Loan (the “Term Loan A”) shall be made on the ClosingDate in an aggregate principal amount equal to $3,800,000.   After the Term Loan A, Borrower may request (i) asecond Term Loan (the “Term Loan B”) to be funded, subject to the termsand conditions hereof, on or prior to August 11, 2008 (the “Term Loan BCommitment Termination Date”) in the aggregate principal amount of$5,600,000 and (ii) a third Term Loan (the “Term Loan C”) to befunded, subject to the terms and conditions hereof, on or prior to September 30,2008 (the “Term Loan C Commitment Termination Date”) in the aggregateprincipal amount of $5,600,000.

 

### (b)         Method of Borrowing.  When Borrower desires a Term Loan, Borrowerwill notify Agent (which notice shall be irrevocable) by facsimile (or bytelephone, provided that such telephonic notice shall be promptly confirmed inwriting, but in any event on or before the following Business Day) on a datethat is ten (10) or more Business Days prior to the day the Term Loan isto be made (or such shorter period of time as Agent may agree). Agent andLenders may act without liability upon the basis of such written or telephonicnotice reasonably believed by Agent to be from any authorized officer ofBorrower.  Agent and Lenders shall haveno duty to verify the authenticity of the signature appearing on any suchwritten notice.

 

### (c)         Fundingof Term Loans.  Promptly after receiving a request for a TermLoan, Agent shall notify each Lender of the contents of such request and suchLender’s Pro Rata Share of the requested Term Loan.  Upon the terms and subject to the conditionsset forth herein, each Lender, severally and not jointly, shall make availableto Agent its Pro Rata Share of the requested Term Loan, in lawful money of theUnited States of America in immediately available funds, to the CollectionAccount (as defined below) prior to 11:00 a.m. (New York time) on thespecified date.  Agent shall, unless itshall have determined that one of the conditions set forth in Section 4.1,4.2 or 4.3, as applicable, has not been satisfied, by 4:00 p.m. (New Yorktime) on such day, credit the amounts received by it in like funds to Borrower by wire transferto, unless otherwise specified in a Disbursement Letter (as defined below), thefollowing deposit account of Borrower (or such other deposit account asspecified in writing by an authorized officer of Borrower and acceptable toAgent) (the “Designated Deposit Account”):

 

[***]

 

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### (d)         Notes.  The Term Loans of each Lender shall beevidenced by a promissory note substantially in the form of Exhibit Ahereto (each a “Note” and, collectively, the “Notes”), andBorrower shall execute and deliver a Note to each Lender.  Each Note shall represent the obligation ofBorrower to pay to such Lender the lesser of (a) the aggregate unpaidprincipal amount of all Term Loans made by such Lender to Borrower under thisAgreement or (b) the amount of such Lender’s Commitment, in each casetogether with interest thereon as prescribed in Section 2.3(a).

 

### (e)         Agent May Assume Funding.  Unless Agent shall have received notice froma Lender prior to the date of any particular Term Loan that such Lender willnot make available to Agent such Lender’s Pro Rata Share of such Term Loan,Agent may assume that such Lender has made such amount available to it on thedate of such Term Loan in accordance with subsection (c) of this Section 2.2,and may (but shall not be obligated to), in reliance upon such assumption, makeavailable a corresponding amount for the account of Borrower on such date.  If and to the extent that such Lender shallnot have so made such amount available to Agent, such Lender and Borrowerseverally agree to repay to Agent forthwith on demand such corresponding amounttogether with interest thereon, for each day from the day such amount is madeavailable to Borrower until the day such amount is repaid to Agent, at (i) inthe case of Borrower, a rate per annum equal to the interest rate applicablethereto pursuant to Section 2.3(a), and (ii) in the case of suchLender, a floating rate per annum equal to, for each day from the day suchamount is made available to Borrower until such amount is reimbursed to Agent,the weighted average of the rates on overnight federal funds transactions amongmembers of the Federal Reserve System, as determined by Agent in its solediscretion (the “Federal Funds Rate”) for the first Business Day andthereafter, at the interest rate applicable to such Term Loan.  If such Lender shall repay such correspondingamount to Agent, the amount so repaid shall constitute such Lender’s loanincluded in such Term Loan for purposes of this Agreement.

 

## 2.3.     **Interestand Repayment.**

 

### (a)         Interest.  Each Term Loan shall accrueinterest from the date made until such Term Loan is fully repaid at a fixed perannum rate of interest equal to the sum of (i) the greaterof (A) the Treasury Rate (as defined below) in effect on the day that isthree (3) Business Days prior to the making of such Term Loan asdetermined by Agent and (B) 3.22% plus (ii) 8.37%.   All computations of interest and feescalculated on a per annum basis shall be made by Agent on the basis of a 360-dayyear, in each case for the actual number of days occurring in the period forwhich such interest and fees are payable. Each determination of an interest rate or the amount of a fee hereundershall be made by Agent and shall be conclusive, binding and final for allpurposes, absent manifest error.  As used herein,the term “Treasury Rate” means a per annum rate of interest equal to the ratepublished by the Board of Governors of the Federal Reserve System in FederalReserve Statistical Release H.15 entitled “Selected Interest Rates” under theheading “U.S. Government Securities/Treasury Constant Maturities” as the threeyear treasuries constant maturities rate. In the event Release H.15 is no longer published, Agent shall select acomparable publication to determine the U.S. Treasury note yield to maturity.

 

### (b)         Payments of Principal andInterest.  Borrowershall pay to the Agent, for the ratable benefit of the Lenders, (i) withrespect to each Term Loan, one payment of interest only (payable in arrears)for the period from the date of funding of such Term Loan to and including thelast day of the month in which such Term Loan was funded at the rate ofinterest determined in accordance with Section 2.3(a), to be paid on thefirst day of the calendar month occurring after 

 

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### the month in which such Term Loan was funded, (ii) withrespect to the Term Loan A, (A) six (6) consecutive payments ofinterest only (payable in arrears) at the rate of interest determined inaccordance with Section 2.3(a) on the first day of each calendarmonth (a “Scheduled Payment Date”) commencing on the first dayof the second calendar month occurring after the month during which the TermLoan A was funded and (B) thirty (30) equal consecutive payments of principaland interest (payable in arrears) at the rate of interest determined inaccordance with Section 2.3(a) on each Scheduled Payment Date commencing onthe first day of the eighth calendar month occurring after the month duringwhich the Term Loan A was funded, (iii) with respect tothe Term Loan B, (A) monthly payments of interest only (payablein arrears) at the rate of interest determined in accordance with Section 2.3(a) oneach Scheduled Payment Date commencing on the first day of the secondcalendar month occurring after the month during which the Term Loan B was funded and (B) commencingon the earlier of (x) the first day of the eighth calendar month occurringafter the month during which the Term Loan B was funded and (b) January 1,2009, thirty (30) equal consecutive payments of principal and interest (payablein arrears) at the rate of interest determined in accordance with Section 2.3(a) oneach Scheduled Payment Date and (iv) with respect to the Term LoanC, (A) three (3) consecutive payments of interest only (payablein arrears) at the rate of interest determined in accordance with Section 2.3(a) oneach Scheduled Payment Date commencing on the first day of the secondcalendar month occurring after the month during which the Term Loan C was funded and (B) thirty-three(33) equal consecutive payments of principal and interest (payable in arrears)at the rate of interest determined in accordance with Section 2.3(a) oneach Scheduled Payment Date commencing on the first day of the fifthcalendar month occurring after the month during which the Term Loan C was funded.  The amount of each payment of principal andinterest under this Section 2.3(b) shall be calculated by the Agentand shall be sufficient to fully amortize the principal and interest due withrespect to the applicable Term Loan over such repayment period.  Each scheduled payment of interest only orinterest and principal hereunder is referred to herein as a “ScheduledPayment.”  Notwithstandingthe foregoing, all unpaid principal and accrued interest with respect to a TermLoan is due and payable in full to Agent, for the ratable benefit of Lenders,on the earlier of (A) the first day of the thirty-seventh****month following the date such Term Loanwas made or (B) the date that such Term Loan otherwise becomes due andpayable hereunder, whether by acceleration of the Obligations pursuant to Section 8.2or otherwise (the earlier of (A) or (B), the “Applicable Term LoanMaturity Date”). Each Scheduled Payment, when paid, shall be applied firstto the payment of accrued and unpaid interest on the applicable Term Loan andthen to unpaid principal balance of such Term Loan.  Without limiting the foregoing, allObligations shall be due and payable on the Applicable Term Loan Maturity Datefor the last Term Loan made.

 

### (c)         No Reborrowing.  Once a Term Loan is repaid or prepaid, itcannot be reborrowed.

 

### (d)         Payments.  All payments (including prepayments) to bemade by any Loan Party under any Debt Document shall be made in immediatelyavailable funds in U.S. dollars, without setoff or counterclaim to theCollection Account (as defined below) before 11:00 a.m. (New York time) onthe date when due.  All paymentsreceived by Agent after 11:00 a.m. (New York time) on any Business Day orat any time on a day that is not a Business Day shall be deemed to be receivedon the next Business Day.  Whenever anypayment required under this Agreement would otherwise be due on a date that isnot a Business Day, such payment shall instead be due on the next Business Day,and additional fees or interest, as the case may be, shall accrue and bepayable for the period of such extension. The payment of any Scheduled Payment prior to its due date shall bedeemed to have been received on such due date for purposes of calculatinginterest hereunder.  All ScheduledPayments due to Agent and Lenders under Section 2.3(b) shall beeffected by automatic debit of the appropriate funds from Borrower’s operatingaccount specified 

 

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***Confidential Information, indicated by [***]has been omitted from this filing and filed separately with the SecuritiesExchange Commission***

 

### on the EPS Setup Form (as definedbelow).****As used herein, the term “Collection Account”means the following account of Agent (or such other account as Agent shallidentify to Borrower in writing):

 

[***]

 

### (e)         Withholdings and IncreasedCosts.  All payments shall be madefree and clear of any taxes, withholdings, duties, impositions or other charges(other than taxes on the overall net income of any Lender and comparabletaxes), such that Agent and Lenders will receive the entire amount of anyObligations (as defined below), regardless of source of payment.  If Agent or any Lender shallhave reasonably determined that the introduction of or any change in, after thedate hereof, any law, treaty, governmental (or quasi-governmental) rule,regulation, guideline or order reduces the rate of return on Agent or suchLender’s capital as a consequence of its obligations hereunder or increases thecost to Agent or such Lender of agreeing to make or making, funding ormaintaining any Term Loan, then Borrower shall from time to time upon demand byAgent or such Lender (with a copy of such demand to Agent) promptly pay toAgent for its own account or for the account of such Lender, as the case maybe, additional amounts sufficient to compensate Agent or such Lender for suchreduction or for such increased cost.  Acertificate as to the amount of such reduction or such increased costdetermined and submitted by Agent or such Lender (with a copy to Agent) in goodfaith to Borrower shall be conclusive and binding on Borrower, absent manifesterror, provided that, neither Agent nor any Lender shall be entitled to paymentof any amounts under this Section 2.3(e) unless it has delivered suchcertificate to Borrower within 180 days after the occurrence of the changes orevents giving rise to the increased costs to, or reduction in the amountsreceived by, Agent or such Lender.  Thisprovision shall survive the termination of this Agreement.

 

### (f)          Loan Records.  Each Lender shall maintainin accordance with its usual practice accounts evidencing the Obligations ofBorrower to such Lender resulting from such Lender’s Pro Rata Share of eachTerm Loan, including the amounts of principal and interest payable and paid tosuch Lender from time to time under this Agreement.  Agent shall maintain in accordance with itsusual practice a loan account (the “Loan Account”) on its books torecord the Term Loans and any other extensions of credit made by Lendershereunder, and all payments thereon made by Borrower.  The entries made in such accounts shall, tothe extent permitted by applicable law, be prima facie evidence of the existenceand amounts of the Obligations recorded therein; provided, however,that no error in such account and no failure of any Lender or Agent to maintainany such account shall affect the obligations of Borrower to repay theObligations in accordance with their terms.

 

### (g)         Payment of Expenses.  Agent is authorized to, and at its soleelection may, debit funds from Borrower’s operating account specified on theEPS Setup Form (as defined below) to pay all fees, expenses, costs andinterest owing by Borrower under this Agreement or any of the other DebtDocuments if and to the extent Borrower fails to promptly pay any such amountsas

 

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### ***Confidential Information,indicated by [***], has been omitted from this filing and filed separately withthe Securities Exchange Commission***

 

### and when due; provided, however, that unlessa Default or Event of Default has occurred and is continuing, Agent may onlyexercise its rights under this Section 2.3(g) with respect to fees,expenses and costs (1) five days after Agent has delivered notice of suchfees, expenses and costs to Borrower and (2) [***].

 

### (h)         Application of Payments.  All payments and prepayments applied to aparticular Term Loan in accordance with this Agreement shall be applied ratablyto the portion thereof held by each Lender as determined by its Pro Rata Shareof such Term Loan.  As to all paymentsmade when an Event of Default has occurred and is continuing, Borrower herebyirrevocably waives the right to direct the application of any and all paymentsreceived from or on behalf of Borrower, and Borrower hereby irrevocably agreesthat Agent shall have the continuing exclusive right (in accordance with Section 8.4)to apply any and all such payments against the Obligations as Agent may deemadvisable notwithstanding any previous entry by Agent in the Loan Account orany other books and records.

 

## 2.4.     **Prepayments.**  Borrower can voluntarilyprepay, upon five (5) Business Days’ prior written notice to Agent, anyTerm Loan in full, but not in part.  Upon the date of (a) anyvoluntary prepayment of a Term Loan in accordance with the immediatelypreceding sentence or (b) any mandatory prepayment of a Term Loan requiredunder this Agreement (whether by acceleration of the Obligations pursuant to Section 8.2or otherwise), Borrower shall pay to Agent, for the ratable benefit of theLenders based on their respective Pro Rata Shares, a sum equal to (i) alloutstanding principal plus accrued interest with respect to such Term Loan, and(ii) a prepayment premium (as yield maintenance for theloss of a bargain and not as a penalty) equal to: (A) 5% on suchprepayment amount, if such prepayment is made before the first day of the 15th calendar month occurring after the monthduring which such Term Loan was funded, (B) 4%on such prepayment amount, if such prepayment is made on or after the first dayof the 15th calendar month occurring after the monthduring which such Term Loan was funded, but beforethe first day of the 30th calendar month occurring after the monthduring which such Term Loan was funded, and (C) 3%on such prepayment amount, if such prepayment is made on or after the first dayof the 30th calendar month occurring after the monthduring which such Term Loan was funded.

 

## 2.5.     **Late Fees.**  If Agent does not receive any ScheduledPayment or other payment under any Debt Document from any Loan Party within 3days after its due date, then, at Agent’s election, such Loan Party agrees topay to Agent for the ratable benefit of all Lenders, a late fee equal to (a) [***]%of the amount of such unpaid payment or (b) such lesser amount that, ifpaid, would not cause the interest and fees paid by such Loan Party under thisAgreement to exceed the Maximum Lawful Rate (as defined below) (the “LateFee”).

 

## 2.6.     **DefaultRate.**  All Term Loans and otherObligations shall bear interest, at the option of Agent or upon the request ofthe Requisite Lenders (as defined below), from and after the occurrence andduring the continuation of an Event of Default (as defined below), at a rateequal to the lesser of (a) [***]% above therate of interest applicable to such Obligations as set forth in Section 2.3(a)immediately prior to the occurrence of the Event of Default and (b) theMaximum Lawful Rate (the “Default Rate”).  The application of the Default Rate shall notbe interpreted or deemed to extend any cure period or waive any Default orEvent of Default or otherwise limit the Agent’s or any Lender’s right orremedies hereunder.  All interest payableat the Default Rate shall be payable on demand.

 

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***Confidential Information, indicated by [***], has been omitted fromthis filing and filed separately with the Securities Exchange Commission***

 

## 2.7.     **LenderFees.**

 

### (a)         Closing Fee.  Prior to the advance of the Term Loan A,Borrower has (i) paid to GECC, and GECC hereby acknowledges receipt of, apayment in the amount of $[***], (A) $[***] of whichpayment shall be retained by GECC in its capacity as Lender as a closing feethat shall be non-refundable and fully earned by GECC on the Closing Date(regardless of whether the Term Loan B or Term Loan C is requested by Borroweror authorized by Borrower’s board of directors after the Closing Date) and (B) $[***] of whichpayment shall be applied to any fees, costs and expenses (including reasonablecounsel fees) incurred by GECC in its capacity as Agent on or prior to theClosing Date in connection with the transactions contemplated hereunder (and tothe extent that such fees, costs and expenses are less than $[***], such excessshall be returned to Borrower within five Business Days after the ClosingDate), and (ii) paid to Oxford, and Oxford hereby acknowledges receipt of,a payment in the amount of $[***] which payment shall beretained by Oxford in its capacity as Lender as a closing fee that shall benon-refundable and fully earned by Oxford on the Closing Date (regardless ofwhether the Term Loan B or Term Loan C is requested by Borrower or authorizedby Borrower’s board of directors after the Closing Date).

 

### (b)         Unused Line Fee.   On the Term Loan CCommitment Termination Date, Borrower shall pay to Agent, for the ratablebenefit of Lenders holding a Commitment in accordance with their Pro RataShares of the Total Commitment, a non-refundable unused line fee (the “UnusedLine Fee”) equal to 2% of the undrawn amount of the Total Commitmentas of such date, which fee shall be fully earned on the Term Loan CCommitment Termination Date (regardless of whether the Borrower’s board ofdirectors elects to authorize the borrowing of the Term Loan B or Term Loan Cby Borrower). Notwithstanding the foregoing, a Lender shall not be entitled to receive(and Borrower shall not be obligated to pay) such Lender’s Pro Rata Share ofthe Unused Line Fee to the extent (i) Borrower satisfied all conditionsset forth in Section 4.2 and Section 4.3, as applicable, with respectto a requested Term Loan and (ii) such Lender failed to advance its ProRata Share of such Term Loan.

 

## 2.8.     **MaximumLawful Rate.**  Anythingherein, any Note or any other Debt Document (as defined below) to the contrarynotwithstanding, the obligations of Loan Parties hereunder and thereunder shallbe subject to the limitation that payments of interest shall not be required,for any period for which interest is computed hereunder, to the extent (butonly to the extent) that contracting for or receiving such payment by Agent andLenders would be contrary to the provisions of any law applicable to Agent and Lenderslimiting the highest rate of interest which may be lawfully contracted for,charged or received by Agent and Lenders, and in such event Loan Parties shallpay Agent and Lenders interest at the highest rate permitted by applicable law(“Maximum Lawful Rate”); provided, however, that if at anytime thereafter the rate of interest payable hereunder or thereunder is lessthan the Maximum Lawful Rate, Loan Parties shall continue to pay interesthereunder at the Maximum Lawful Rate until such time as the total interestreceived by Agent and Lenders is equal to the total interest that would havebeen received had the interest payable hereunder been (but for the operation ofthis paragraph) the interest rate payable since the making of the applicableTerm Loan as otherwise provided in this Agreement, any Note or any other DebtDocument.

 

# **3.****             ****CREATION OF SECURITY INTEREST.**

 

## 3.1.     **Grant ofSecurity Interest.**  As securityfor the prompt payment and performance, whether at the stated maturity, byacceleration or otherwise, of all Term Loans and other debt, obligations andliabilities of any kind whatsoever of Borrower to Agent and Lenders under theDebt Documents (whether 

 

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## for principal, interest, fees, expenses, prepayment premiums,indemnities, reimbursements or other sums, and whether or not such amountsaccrue after the filing of any petition in bankruptcy or after the commencementof any insolvency, reorganization or similar proceeding, and whether or notallowed in such case or proceeding), absolute or contingent, now existing orarising in the future, including but not limited to the payment and performanceof any outstanding Notes, and any renewals, extensions and modifications ofsuch Term Loans (such indebtedness under the Notes, Term Loans and other debt,obligations and liabilities in connection with the Debt Documents arecollectively called the “Obligations”), and as security for the promptpayment and performance by each Guarantor of its obligations under any guarantydelivered in connection with this Agreement, each Loan Party does hereby grantto Agent, for the benefit of Agent and Lenders, a security interest in theproperty listed below (all hereinafter collectively called the “Collateral”):

 

All of such Loan Party’s personal property of every kind and nature (except for Intellectual Property, asdefined in, and to the extent excluded pursuant to, Section 3.3) whethernow owned or hereafter acquired by, or arising in favor of, such Loan Party,and regardless of where located, including, without limitation, all accounts,chattel paper (whether tangible or electronic), commercial tort claims, depositaccounts, documents, equipment, financial assets, fixtures, goods, instruments,investment property (including, without limitation, all securities accounts),inventory, letter-of-credit or similar rights, letters of credit, securities,supporting obligations, cash, cash equivalents, any other contractual rights(including, without limitation, rights under any license agreements), or rightsto the payment of money, and general intangibles, and all books and records ofsuch Loan Party relating thereto, and in and against all additions,attachments, accessories and accessions to such property, all substitutions,replacements or exchanges therefor, all proceeds, insurance claims, products,profits and other rights to payments not otherwise included in the foregoing(with each of the foregoing terms that are defined in the UCC having themeaning set forth in the UCC).

 

Each Loan Party hereby represents and covenants thatsuch security interest constitutes a valid, first priority security interest inthe presently existing Collateral, and will constitute a valid, first prioritysecurity interest in Collateral acquired after the date hereof.  Each Loan Party hereby covenants that itshall give written notice to Agent promptly upon the acquisition by such LoanParty or creation in favor of such Loan Party of any commercial tort claimafter the Closing Date.

 

## 3.2.     **FinancingStatements.**  Each LoanParty hereby authorizes Agent to file UCC financing statements with allappropriate jurisdictions to perfect Agent’s security interest (for the benefitof itself and the Lenders) granted hereby.

 

## 3.3.     **Grant ofSecurity Interest in Proceeds of Intellectual Property. **Except as expressly providedin this Section 3.3,****theCollateral shall not include any Intellectual Property (as defined below) ofany Loan Party or any claims fordamages by way of any past, present or future infringement of any IntellectualProperty; provided**however,that the Collateral shall include all cash, royalty fees, other proceeds,accounts and general intangibles (including, without limitation, contractrights) that consist of rights of payment to or on behalf of a Loan Party orproceeds from the sale, licensing or other disposition of all or any part of,or rights in, the Intellectual Property by or on behalf of a Loan Party (“Rightsto Payment”).  Notwithstanding theforegoing, to the extent it is necessary under applicable law in any bankruptcyor insolvency proceeding involving a Loan Party for Agent (on behalf of itselfand Lenders) to have a security interest in the underlying IntellectualProperty in order for Agent to have (i) a security interest in the Rightsto Payment and (ii) a security interest in any payments with respect toRights to Payment that are received after the commencement of such bankruptcyor insolvency proceeding, then the Collateral shall automatically, andeffective as of the date hereof, include the Intellectual Property to theextent necessary to permit attachment and perfection of Agent’s securityinterest (on behalf of itself and 

 

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## Lenders) in the Rights to Payment and any payments in respect thereofthat are received after the commencement of any bankruptcy or insolvencyproceeding.  Agent hereby agrees onbehalf of itself and the Lenders that, if Agent obtains a security interest inthe Intellectual Property pursuant to the immediately preceding sentence, Agentwill not exercise any remedies (under the UCC or otherwise) with respect to theIntellectual Property (other than remedies with respect to Rights to Payment orany other proceeds of the Intellectual Property).  For purposes of this Agreement, “IntellectualProperty” shall mean (I) any and all copyrights, trademarks, servicemarks,patents, design rights, software, trade secrets, know-how, operating manuals, rights to unpatented inventions andintangible rights of a Loan Party, and the goodwill of the business of a LoanParty connected with and symbolized by any of the foregoing, (II) anylicense by a Loan Party of any and all copyrights, trademarks, servicemarks,patents, design rights, software, trade secrets  and intangible rights of a third party, (III) any clinical and clinical trial data or records,correspondence or similar documentation directly related thereto,****and (IV) any applications,registrations, claims, products, awards, judgments, amendments, renewals,extensions, reissues, continuations-in-part of the same, improvements andinsurance claims related thereto now owned, licensed or hereafter acquired.

 

## 3.4.     **Terminationof Security Interest.** Subject to Section 10.9, Agent’s lien on and security interests inthe Collateral (on behalf of itself and Lenders) shall continue until all ofthe Obligations are indefeasibly repaid in full in cash, all of the Commitmentshereunder are terminated, and this Agreement shall have been terminated (the “TerminationDate”).  Upon the Termination Date,Agent shall, at Loan Parties’ sole cost and expense and without any recourse,representation or warranty, release its liens in the Collateral and promptlyfile all documentation necessary to terminate any financing statements relatedthereto or otherwise evidence such release of liens (including, withoutlimitation, the termination of any Account Control Agreements, as definedbelow), and all rights remaining therein, if any, shall revert to Loan Parties.

 

# **4.****             ****CONDITIONS OF CREDIT EXTENSIONS**

 

## 4.1.     **ConditionsPrecedent to Term Loan A.**  NoLender shall be obligated to make the Term Loan A, or to take, fulfill, orperform any other action hereunder, until the following have been delivered tothe Agent (the date on which the Lenders make the Term Loan A after all suchconditions shall have been satisfied in a manner satisfactory to Agent andLenders or waived in accordance with this Agreement, the “Closing Date”):

 

### (a)         a counterpart of thisAgreement duly executed by each Loan Party;

 

### (b)         a certificate executed bythe Secretary of each Loan Party, the form of which is attached hereto as Exhibit B(the “Secretary’s Certificate”), providing verification of incumbencyand attaching (i) such Loan Party’s board resolutions approving thetransactions contemplated by this Agreement and the other Debt Documents and (ii) suchLoan Party’s governing documents;

 

### (c)         Notes duly executed byBorrower in favor of each applicable Lender in the appropriate amounts pursuantto this Agreement;

 

### (d)         filed copies of UCC financingstatements, collateral assignments, and terminations statements, with respectto the Collateral, as Agent shall request;

 

### (e)         certificates of insuranceevidencing the insurance coverage, and satisfactory additional insured andlender loss payable endorsements, in each case as required pursuant to Section 6.4herein;

 

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### (f)          current UCC lien, judgment,bankruptcy and tax lien search results demonstrating that there are no othersecurity interests or liens on the Collateral, other than Permitted Liens (asdefined below);

 

### (g)         a certificate of goodstanding of each Loan Party from the jurisdiction of such Loan Party’sorganization and a certificate of foreign qualification from each jurisdictionwhere such Loan Party’s failure to be so qualified could reasonably be expectedto have a Material Adverse Effect (as defined below), in each case as of arecent date acceptable to Agent;

 

### (h)         a landlord consent and/orbailee letter in favor of Agent executed by the landlord or bailee, asapplicable, for any third party location where (a) any Loan Party’sprincipal place of business, (b) any Loan Party’s books or records or (c) Collateralwith an aggregate value in excess of $50,000 is located, a form of which isattached hereto as Exhibit C-1 and Exhibit C-2, asapplicable (each an “Access Agreement”);

 

### (i)          a legal opinion of LoanParties’ counsel, in form and substance satisfactory to Agent;

 

### (j)          a completed EPS set-up form,a form of which is attached hereto as Exhibit E (the “EPS SetupForm”);

 

### (k)         a completed perfectioncertificate, duly executed by each Loan Party (the “Perfection Certificate”),a form of which Agent previously delivered to Borrower;

 

### (l)          one or more Account ControlAgreements (as defined below), in form and substance reasonably acceptable toAgent, duly executed by the applicable Loan Parties and the applicabledepository or financial institution, for each deposit and securities accountlisted on the Perfection Certificate;

 

### (m)        a disbursement instructionletter, in form and substance satisfactory to Agent, executed by each LoanParty, Agent and each Lender (the “Disbursement Letter”);

 

### (n)         all otherdocuments and instruments as Agent and Lenders may reasonably deem necessary toeffectuate the intent and purpose of this Agreement (together with theAgreement, Note, the Perfection Certificate, the Secretary’s Certificate andthe Disbursement Letter, any guaranty agreement from time to time delivered inconnection with this Agreement, and all other agreements, instruments,documents and certificates executed and/or delivered by a Loan Party to or infavor of Agent from time to time in connection with this Agreement or thetransactions contemplated hereby, the “Debt Documents”); and

 

### (o)         Agent and Lenders shall have received the fees required to be paid byBorrower, if any, in the respective amounts specified in Section 2.7, andBorrower shall have reimbursed Agent and Lenders for all fees, costs andexpenses of closing presented as of the date of this Agreement.

 

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## ***ConfidentialInformation, indicated by [***], has been omitted from this filing and filedseparately with the Securities Exchange Commission***

 

## 4.2.     **ConditionsPrecedent to All Term Loans.**  No Lender shall be obligated to make any TermLoan, including the Term Loan A, unless the following additional conditionshave been satisfied:

 

### (a)         (i) all representationsand warranties in Section 5 below shall be true as of the date of suchTerm Loan, except to the extent such representations and warranties expresslyrelate to an earlier date, in which case such representations and warrantieswere true and correct on and as of such earlier date; (ii) no Event ofDefault or any other event, which with the giving of notice or the passage oftime, or both, would constitute an Event of Default (such event, a “Default”)has occurred and is continuing or will result from the making of any Term Loan,and (iii) Agent shall have received a certificate from an authorizedofficer of each Loan Party confirming each of the foregoing;

 

### (b)         Agent shall have receivedthe redelivery or supplemental delivery of the items set forth in the followingsections only to the extent circumstances have changed since the funding of theTerm Loan A:  Sections 4.1(b), (e), (f),(g), (h), (i), (k) and (m); and

 

(c)         with respect to all Term Loans, Agent shall have received copies ofsuch other documents, agreements, instruments or information as Agent or anyLender shall reasonably request.

 

## 4.3.     **AdditionalConditions Precedent to Term Loan B and Term Loan C.**  No Lender shall be obligated to make the TermLoan B or the Term Loan C, respectively, unless the following additionalconditions have been satisfied:

 

### (a)         with respect to each of theTerm Loan B and the Term Loan C, (i) Agent shall have received, in formand substance satisfactory to Agent and Lenders, a legal opinion of LoanParties’ counsel, (ii) Agent shall have received, in form and substancesatisfactory to Agent and Lenders, a Secretary’s Certificate executed by theSecretary of Borrower providing verification of incumbency and attachingBorrower’s board resolutions authorizing the borrowing of the Term Loan B orthe Term Loan C, as applicable, and (iii) Lenders shall have receivedNotes duly executed by Borrower in favor of each applicable Lender in theappropriate Term Loan B amounts or Term Loan C amounts, as applicable;

 

### (b)         with respect to the TermLoan B, (i) Lenders shall have received evidence in form andsubstance reasonably satisfactory to Lenders that [***], and (ii) Borrowershall have, immediately before and immediately after [***], andLenders shall have received a certificate signed by the president, chiefexecutive officer or chief financial officer of Borrower certifying that [***],and attaching a [***], together with such other evidence as Lenders shallreasonably request; and

 

### (c)         with respect to the TermLoan C, in addition to the satisfaction of the conditions set forth in[***], (i) Lenders shall have received evidence in form andsubstance reasonably satisfactory to Lenders that [***], (ii) Lendersshall have received evidence in form and substancereasonably satisfactory to Lenders that [***], (iii) Borrower shallhave, immediately before and immediately after [***], and Lendersshall have received a certificate signed by the president, chief executiveofficer or chief financial officer of Borrower certifying that****[***], and attaching a [***], togetherwith such other evidence as Lenders shall reasonably request, and (iv) Lenders

 

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### ***Confidential Information,indicated by [***], has been omitted from this filing and filed separately withthe Securities Exchange Commission***

 

### shall have received evidence in form andsubstance reasonably satisfactory to Lenders that [***] under materiallysimilar terms and conditions as in effect on the Closing Date.

 

As used herein, the term “[***]” means, with respect to [***] most recently delivered to Agent and theLenders in accordance with this Agreement:

###  

### (a)                      (i) [***]

 

[***]

###  

### (b)**                    **[***].

 

As used herein, the term “[***]” means, with respect to [***] delivered to and approved by Agent and theLenders on or prior to the Closing Date:

 

(a)                      (i) [***]

 

[***]

 

(b)**                    **[***].

 

# **5.****       ****REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES.**

 

Each Loan Party, jointly andseverally, represents, warrants and covenants to Agent and each Lender that:

##  

## 5.1.     **DueOrganization and Authorization.**  Each Loan Party’s exact legal name is as setforth in the Perfection Certificate and each Loan Party is, and will remain,duly organized, existing and in good standing under the laws of the State ofits organization as specified in the Perfection Certificate, has its chiefexecutive office at the location specified in the Perfection Certificate, andis, and will remain, duly qualified and licensed in every jurisdiction wherevernecessary to carry on its business and operations, except where the failure tobe so qualified and licensed could not reasonably be expected to have aMaterial Adverse Effect.  This Agreementand the other Debt Documents have been duly authorized, executed and deliveredby each Loan Party and constitute legal, valid and binding agreementsenforceable in accordance with their terms; provided, however,that the resolutions of Borrower’s board of directors adopted on or about May 31,2008 require Borrower to obtain further authorization of the board of directorsto borrow any additional Term Loan after the Closing Date.  The execution, delivery and performance byeach Loan Party of each Debt Document executed or to be executed by it is ineach case within such Loan Party’s powers.

##  

## 5.2.     **RequiredConsents.**  No filing,registration, qualification with, or approval, consent or withholding ofobjections from, any governmental authority or instrumentality or any other entityor person is required with respect to the entry into, or performance by anyLoan Party of, any of the Debt Documents, except any already obtained.

##  

## 5.3.     **NoConflicts.**  The entryinto, and performance by each Loan Party of, the Debt Documents will not (a) violateany of the organizational documents of such Loan Party, (b) violate anylaw, rule, regulation, order, award or judgment applicable to such Loan Party,or (c) result in any breach of or 

 

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## constitute a default under, or result in the creation of any lien,claim or encumbrance on any of such Loan Party’s property (except for liens infavor of Agent, on behalf of itself and Lenders) pursuant to, any indenture,mortgage, deed of trust, bank loan, credit agreement, or other MaterialAgreement (as defined below) to which such Loan Party is a party.  As used herein, “Material Agreement”means (i) any agreement or contract to which such Loan Party is a partyand involving the receipt or payment of amounts in the aggregate exceeding $250,000 per year, (ii) any agreement or contract towhich such Loan Party is a party the termination of which could reasonably beexpected to have a Material Adverse Effect, (iii) the Azimuth Agreementand (iv) that certain Sublicense Agreement dated as of October 13,2006 (as amended, the “PharmaNova Agreement”) by and between PharmaNovaInc. and Borrower.  A list of allMaterial Agreements as of the Closing Date is set forth on Schedule Bhereto.

 

## 5.4.     **Litigation.**  There are no actions, suits, proceedings orinvestigations pending against or affecting any Loan Party before any court,federal, state, provincial, municipal or other governmental department,commission, board, bureau, agency or instrumentality, domestic or foreign, orany basis thereof, which involves the possibility of any judgment or liabilitythat could reasonably be expected to have a Material Adverse Effect, or whichquestions the validity of the Debt Documents, or the other documents requiredthereby or any action to be taken pursuant to any of the foregoing, nor doesany Loan Party have reason to believe that any such actions, suits, proceedingsor investigations are threatened.  Asused in this Agreement, the term “Material Adverse Effect” means amaterial adverse effect on any of (a) the operations, business, assets,properties, or condition (financial or otherwise) of Borrower, individually, orthe Loan Parties, collectively, (b) the ability of a Loan Party to performany of its obligations under any Debt Document to which it is a party, (c) thelegality, validity or enforceability of any Debt Document, (d) the rightsand remedies of Agent or Lenders under any Debt Document or (e) thevalidity, perfection or priority of any lien in favor of Agent, on behalf ofitself and Lenders, on any of the Collateral.

 

## 5.5.     **FinancialStatements.**  Allfinancial statements delivered to Agent and Lenders pursuant to Section 6.3have been prepared in accordance with GAAP (subject, in the case of unauditedfinancial statements, to the absence of footnotes and normal year end auditadjustments), and since the date of the most recent audited financialstatement, no event has occurred which has had or could reasonably be expectedto have a Material Adverse Effect.  Therehas been no material adverse deviation from the most recent proposed annualoperating budget of Borrower delivered to Agent and Lenders in accordance with Section 6.3.

 

## 5.6.     **Use ofProceeds.**  The proceedsof the Term Loans shall be used for working capital and general corporatepurposes.

 

## 5.7.     **Collateral.**  Each Loan Party is, and will remain, the soleand lawful owner, and in possession of, the Collateral, and has the sole rightand lawful authority to grant the security interest described in thisAgreement.  The Collateral is, and willremain, free and clear of all liens, claims and encumbrances of any kindwhatsoever, except for (a) liens in favor of Agent, on behalf of itselfand Lenders, to secure the Obligations, (b) liens (i) with respect tothe payment of taxes, assessments or other governmental charges or (ii) ofsuppliers, carriers, materialmen, warehousemen, workmen or mechanics and othersimilar liens, in each case imposed by law and arising in the ordinary courseof business, and securing amounts that are not yet due or that are beingcontested in good faith by appropriate proceedings diligently conducted andwith respect to which adequate reserves or other appropriate provisions aremaintained on the books of the applicable Loan Party in accordance with GAAPand which do not involve, in the judgment of Agent, any risk of the sale,forfeiture or loss of any of the Collateral (a “Permitted Contest”), (c) liensexisting on the date hereof and set forth on Schedule B hereto, (d) lienssecuring Indebtedness (as defined in Section 7.2 below) permitted under Section 7.2(c) below,provided that (i) such liens exist prior to the acquisition of, or attachsubstantially simultaneous with, or within 20 

 

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## days after the, acquisition, repair, improvement or construction of,such property financed by such Indebtedness and (ii) such liens do notextend to any property of a Loan Party other than the property (and proceedsthereof) acquired or built, or the improvements or repairs, financed by suchIndebtedness, and (e) licenses described in Section 7.3(c) and (d) below(all of such liens described in the foregoing clauses (a) through (e) arecalled “Permitted Liens”).

 

## 5.8.     **Compliancewith Laws.**

 

### (a)         Each Loan Party is and willremain in compliance in all material respects with all laws, statutes,ordinances, rules and regulations applicable to it.

 

### (b)         Without limiting thegenerality of the immediately preceding clause (a), each Loan Party furtheragrees that it is and will remain in compliance in all material respects withall U.S. economic sanctions laws, Executive Orders and implementing regulationsas promulgated by the U.S. Treasury Department’s Office of Foreign AssetsControl (“OFAC”), and all applicable anti-money laundering andcounter-terrorism financing provisions of the Bank Secrecy Act and the USAPatriot Act and all regulations issued pursuant to it.  No Loan Party nor any of its subsidiaries,affiliates or joint ventures (A) is a person or entity designated by theU.S. Government on the list of the Specially Designated Nationals and BlockedPersons (the “SDN List”) with which a U.S. person or entity cannot dealwith or otherwise engage in business transactions, (B) is a person orentity who is otherwise the target of U.S. economic sanctions laws such that aU.S. person or entity cannot deal or otherwise engage in business transactionswith such person or entity; or (C) is controlled by (including withoutlimitation by virtue of such person being a director or owning voting shares orinterests), or acts, directly or indirectly, for or on behalf of, any person orentity on the SDN List or a foreign government that is the target of U.S.economic sanctions prohibitions such that the entry into, or performance under,this Agreement or any other Debt Document would be prohibited under U.S.law.  The SDN List is maintained by OFACand is available at: http://www.ustreas.gov/offices/enforcement/ofac/sdn/.

 

### (c)         Each Loan Party has met theminimum funding requirements of the United States Employee Retirement IncomeSecurity Act of 1974 (as amended, “ERISA”) with respect to any employeebenefit plans subject to ERISA.  No LoanParty is an “investment company” or a company “controlled” by an “investmentcompany” within the meaning of the Investment Company Act of 1940.  No Loan Party is engaged principally, or asone of the important activities, in the business of extending credit for thepurpose of purchasing or carrying margin stock (within the meaning ofRegulations T, U and X of the Board of Governors of the Federal Reserve System(the “Federal Reserve Board”).

 

## 5.9.     **IntellectualProperty.**  The Intellectual Property is free and clear ofall liens, claims and encumbrances of any kind whatsoever, except for PermittedLiens described in clauses (b)(i) and (e) of Section 5.7.  No Loan Party has entered into any otheragreement or financing arrangement in which a negative pledge in such LoanParty’s Intellectual Property is granted to any other party. As of the ClosingDate and each date a Term Loan is advanced to Borrower, no Loan Party has anyinterest in, or title to any Intellectual Property except as disclosed in thePerfection Certificate.  Each Loan Partyowns or has rights to use all Intellectual Property material to the conduct ofits business as now or heretofore conducted by it or proposed to be conductedby it, without any actual or claimed infringement upon the rights of thirdparties.

 

## 5.10.   **Solvency.**  Both before and after giving effect to eachTerm Loan, the transactions contemplated herein, and the payment and accrual ofall transaction costs in connection with the foregoing, each Loan Party is andwill be Solvent.  As used herein, “Solvent”means, with respect to a 

 

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## Loan Party on a particular date, that on such date (a) the fairvalue of the property of such Loan Party is greater than the total amount ofliabilities, including contingent liabilities, of such Loan Party; (b) thepresent fair salable value of the assets of such Loan Party is not less thanthe amount that will be required to pay the probable liability of such LoanParty on its debts as they become absolute and matured; (c) such LoanParty does not intend to, and does not believe that it will, incur debts orliabilities beyond such Loan Party’s ability to pay as such debts andliabilities mature; (d) such Loan Party is not engaged in a business ortransaction, and is not about to engage in a business or transaction, for whichsuch Loan Party’s property would constitute an unreasonably small capital; and (e) suchLoan Party is not “insolvent” within the meaning of Section 101(32) of theUnited States Bankruptcy Code (11 U.S.C. § 101, et. seq), as amended from timeto time.  The amount of contingentliabilities (such as litigation, guaranties and pension plan liabilities) atany time shall be computed as the amount that, in light of all the facts andcircumstances existing at the time, represents the amount that can bereasonably be expected to become an actual or matured liability.

 

## 5.11.   **Taxes;Pension.**  All taxreturns, reports and statements, including information returns, required by anygovernmental authority to be filed by each Loan Party and its Subsidiaries havebeen filed with the appropriate governmental authority and all taxes, levies,assessments and similar charges have been paid prior to the date on which anyfine, penalty, interest or late charge may be added thereto for nonpaymentthereof (or any such fine, penalty, interest, late charge or loss has beenpaid), excluding taxes, levies, assessments and similar charges or otheramounts which are the subject of a Permitted Contest.  Proper and accurate amounts have beenwithheld by each Loan Party from its respective employees for all periods incompliance with applicable laws and such withholdings have been timely paid tothe respective governmental authorities. Each Loan Party has paid all amounts necessary to fund all presentpension, profit sharing and deferred compensation plans in accordance withtheir terms, and no Loan Party has withdrawn fromparticipation in, or has permitted partial or complete termination of, orpermitted the occurrence of any other event with respect to, any such planwhich could reasonably be expected to result in any liability of a Loan Party, including anyliability to the Pension Benefit Guaranty Corporation or its successors or anyother governmental authority.

 

## 5.12.**  ****FullDisclosure.**  Loan Partieshereby confirm that all of the information disclosed on the Perfection Certificateis true, correct and complete as of the date of this Agreement and as of thedate of each Term Loan (as updated from time to time to reflect changes thereto(a) as a result of matters expressly permitted under this Agreement or (b) consentedto by the Lenders pursuant to Section 10.8).  No representation, warranty or other writtenstatement made by or on behalf of a Loan Party pursuant to the terms of thisAgreement contains any untrue statement of a material fact or omits to state amaterial fact necessary to make the statements contained therein notmisleading, it being recognized by Agent and Lenders that the projections andforecasts provided by Loan Parties in good faith and based upon reasonable andstated assumptions are not to be viewed as facts and that actual results duringthe period or periods covered by any such projections and forecasts may differfrom the projected or forecasted results.

#  

# **6.****       ****AFFIRMATIVE COVENANTS.**

 

## 6.1.     **GoodStanding.**  Each LoanParty shall maintain its and each of its Subsidiaries’ existence and goodstanding in its jurisdiction of organization and maintain qualification in eachjurisdiction in which the failure to so qualify could reasonably be expected tohave a Material Adverse Effect.  EachLoan Party shall maintain, and shall cause each of its Subsidiaries tomaintain, in full force all licenses, approvals and agreements, the loss ofwhich could reasonably be expected to have a Material Adverse Effect.  “Subsidiary” means, with respect to aLoan Party, any entity the management of which is, directly or indirectlycontrolled by, or of which an aggregate of more than 50% of the outstandingvoting capital stock (or other voting equity interest) is, at the time, ownedor controlled, directly or indirectly by, such 

 

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## Loan Party or one or more Subsidiaries of such Loan Party, and, unlessthe contest otherwise requires each reference to a Subsidiary herein shall be areference to a Subsidiary of Borrower.

 

## 6.2.     **Notice toAgent.**  Loan Parties shall provideAgent with (a) notice of any change in the accuracy of the PerfectionCertificate or any of the representations and warranties provided in Section 5above, immediately upon the occurrence of any such change, (b) notice ofthe occurrence of any Default or Event of Default, promptly (but in any eventwithin 5 days) after the date on which any officer of a Loan Party obtainsknowledge of the occurrence of any such event, (c) copies of allstatements, reports and notices made available generally by Borrower to itssecurityholders and all documents filed with the Securities and ExchangeCommission (“SEC”) or any securities exchange or governmental authorityexercising a similar function, promptly, but in any event within 3 days ofdelivering or receiving such information to or from such persons (provided thatto the extent the same are posted by Borrower on the internet, Borrower shallonly be obligated to give notice to Agent of such internet posting viaelectronic mail to an electronic mail address provided by Agent from time totime), (d) a report of any legal actions pending or threatened againstBorrower or any Subsidiary that could result in damages or costs to Borrower orany Subsidiary of $250,000 or more promptly, but in any event within 5 days,upon receipt of notice thereof, (e) at the time that Borrower deliverseach quarterly compliance certificate pursuant to Section 6.3, a summaryof any new applications or registrations that Borrower has made or filed inrespect of any Intellectual Property or any material adverse change in statusof any outstanding application or registration within 5 days of suchapplication, filing or adverse change in status, (f) notice of, and uponrequest, copies of all material statements, reports and notices delivered to orby a Loan Party in connection with any Material Agreement promptly (but in anyevent within 5 days) upon receipt thereof, (g) notice of the occurrence ofany default or event of default under any Lease Agreement (as defined below),promptly (but in any event within 3 Business Days) after the date on which anyofficer of a Loan Party obtains knowledge of the occurrence of any such eventand (h) upon Agent’s reasonable request, Borrower shall deliver to Agentwithin 5 days after such request a certification from an authorized officer ofthe applicable Loan Party that no default or event default exists under anyLease Agreement of such Loan Party.

 

## 6.3.     **FinancialStatements.**  If Borroweris a private company, it shall deliver to Agent and Lenders (a) unauditedconsolidated and, if available, consolidating balance sheets, statements ofoperations and cash flow statements within 30 days of each month end, in a formacceptable to Agent and certified by Borrower’s president, chief executiveofficer or chief financial officer, and (b) its complete annual auditedconsolidated and, if available, consolidating financial statements preparedunder GAAP and certified without qualification by an independent certifiedpublic accountant selected by Borrower and satisfactory to Agent within 120days of the fiscal year end or, if sooner, at such time as Borrower’s Board ofDirectors receives the certified audit. If Borrower is a publicly held company, Borrower shall (i) deliverto Agent and Lenders via electronic mail to electronic mail addresses providedby Agent and the Lenders from time to time notifying Agent and Lenders of theposting by Borrower on the internet of the Borrower’s quarterly unauditedconsolidated and, if available, consolidating balance sheets, statements ofoperations and cash flow statements and (ii) deliver to Agent and Lenderscopies of annual audited consolidated and, if available, consolidating balancesheets, statements of operations and cash flow statements, certified withoutqualification by a recognized firm of certified public accountants, within 5days after the statements are required to be provided to the SEC and Borrowershall deliver to Agent and Lenders within 30 days after the end of each monthreports of cash balances of the Loan Parties and monthly prescription numbersfor Glumetza****and****Proquin as compared to the currentbudget.  All such statements (other thanthe prescription numbers referenced in the immediately preceding sentence) areto be prepared using GAAP (subject, in the case of unaudited financialstatements, to the absence of footnotes and normal year end audit adjustments)and, if Borrower is a publicly held company, are to be in compliance withapplicable SEC requirements.  All annualand quarterly financial statements delivered pursuant to this Section 6.3shall be accompanied by a compliance certificate, signed by the chief 

 

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## financial officer or principal accounting officer of Borrower, in theform attached hereto as Exhibit D, and a management discussion andanalysis that includes a comparison to budget for the respective fiscal periodand a comparison of performance for such fiscal period to the correspondingperiod in the prior year.  Borrower shalldeliver to Agent and Lenders (i) as soon as available and in any event notlater than 60 days after the end ofeach fiscal year of Borrower, a proposed annual operating budget for Borrower,on a consolidated and, if available, consolidating basis, approved by the Boardof Directors of Borrower, for the current fiscal year,in form satisfactory to Agent and (ii) such budgets, sales projections, orother financial information as Agent or any Lender may reasonably request fromtime to time generally prepared by Borrower in the ordinary course of business.

 

## 6.4.     **Insurance.**  Borrower, at its expense, shall maintain, andshall cause each Subsidiary to maintain, insurance (including, withoutlimitation, comprehensive general liability, hazard, and business interruptioninsurance) with respect to all of its properties and businesses (including, theCollateral), in such amounts and covering such risks as is carried generally inaccordance with sound business practice by companies in similar businessessimilarly situated and in any event with deductible amounts, insurers andpolicies that shall be reasonably acceptable to Agent.  Borrower shall deliver to Agent certificatesof insurance evidencing such coverage, together with endorsements to suchpolicies naming Agent as a lender loss payee or additional insured, asappropriate, in form and substance reasonably satisfactory to Agent.  Each policy shall provide that coverage maynot be canceled or altered by the insurer except upon 30 days prior writtennotice to Agent and shall not be subject to co-insurance.  Borrower appoints Agent as itsattorney-in-fact to make, settle and adjust all claims under and decisions withrespect to Borrower’s policies of insurance, and to receive payment of andexecute or endorse all documents, checks or drafts in connection with insurancepayments. Agent shall not act as Borrower’s attorney-in-fact unless an Event ofDefault has occurred and is continuing. The appointment of Agent as Borrower’s attorney in fact is a powercoupled with an interest and is irrevocable until all of the Obligations areindefeasibly paid in full. Proceeds of insurance shall be applied, at theoption of Agent, to repair or replace the Collateral or to reduce any of theObligations.

 

## 6.5.     **Taxes.**  Borrower shall, and shall cause eachSubsidiary to, timely file all tax reports and pay and discharge all taxes,assessments and governmental charges or levies imposed upon it, or its incomeor profits or upon its properties or any part thereof, before the same shall bein default and before the date on which penalties attach thereto, except to theextent such taxes, assessments and governmental charges or levies are thesubject of a Permitted Contest.

 

## 6.6.     **Agreementwith Landlord/Bailee.** Unless otherwise agreed to by the Agent in writing, each Loan Partyshall obtain and maintain such Access Agreement(s) with respect to anyreal property on which (a) a Loan Party’s principal place of business, (b) aLoan Party’s books or records or (c) Collateral with an aggregate value inexcess of $50,000 is located (other than real property owned by such LoanParty) as Agent may require.  Within tenBusiness Days after the due date for any rental payments set forth in any leaseagreement with respect to any real property described in the immediatelypreceding sentence (each, a “Lease Agreement”), the Borrower shalldeliver to Agent evidence in form reasonably satisfactory to Agent that suchrental payment was made.

 

## 6.7.     **Protectionof Intellectual Property.**  EachLoan Party shall take all necessary actions to: (a) protect, defend andmaintain the validity and enforceability of its Intellectual Property to theextent material to the conduct of its business now or heretofore conducted byit or proposed to be conducted by it, (b) promptly advise Agent in writingof material infringements of its Intellectual Property that is material to suchLoan Party’s business (c) not allow any Intellectual Property material tosuch Loan Party’s business to be abandoned, forfeited or dedicated to thepublic without Agent’s written consent, and (d) notify Agent promptly, butin any event within 3 days, if it knows or has reason to know that anyapplication or registration relating to any patent, trademark or copyright (nowor hereafter existing) 

 

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## material to its business may become abandoned or dedicated, or if anyadverse determination or development (including the institution of, or any suchdetermination or development in, any proceeding in the United States Patent andTrademark Office, the United States Copyright Office or any court) regardingsuch Loan Party’s ownership of any Intellectual Property material to itsbusiness, its right to register the same, or to keep and maintain thesame.  Each Loan Party shall remainliable under each of its Intellectual Property licenses pursuant to which it isa licensee (“Licenses”) to observe and perform all of the conditions andobligations to be observed and performed by it thereunder, to the extent thatany such Licenses are material to the conduct of its business.  None of Agent or any Lender shall have anyobligation or liability under any such License by reason of or arising out ofthis Agreement, the granting of a lien, if any, in such License or the receiptby Agent (on behalf of itself and Lenders) of any payment relating to any suchLicense.  None of Agent or any Lendershall be required or obligated in any manner to perform or fulfill any of theobligations of any Loan Party under or pursuant to any License, or to make anypayment, or to make any inquiry as to the nature or the sufficiency of anypayment received by it or the sufficiency of any performance by any party underany License, or to present or file any claims, or to take any action to collector enforce any performance or the payment of any amounts which may have beenassigned to it or which it may be entitled at any time or times.

 

## 6.8.     **SpecialCollateral Covenants.**

 

### (a)         Each Loan Party shall remainin possession of its respective Collateral solely at the location(s) specifiedon the Perfection Certificate; except that Agent, on behalf of itself andLenders, shall have the right to possess (i) any chattel paper orinstrument that constitutes a part of the Collateral, (ii) any otherCollateral in which Agent’s security interest (on behalf of itself and Lenders)may be perfected only by possession and (iii) any Collateral after theoccurrence of an Event of Default in accordance with this Agreement and theother Debt Documents.

 

### (b)         Each Loan Party shall (i) usethe Collateral only in its trade or business, (ii) maintain all of theCollateral in good operating order and repair, normal wear and tear excepted,and (iii) use and maintain the Collateral only in material compliance withmanufacturers’ recommendations and all applicable laws.

 

### (c)         Agent and Lenders do notauthorize and each Loan Party agrees it shall not (i) part with possessionof any of the Collateral (except to Agent (on behalf of itself and Lenders),for maintenance and repair or for a Permitted Disposition), or (ii) removeany of the Collateral from the continental United States.

###  

### (d)         Each Loan Party shall paypromptly when due all taxes, license fees, assessments and public and privatecharges levied or assessed on any of the Collateral, on its use, or on thisAgreement or any of the other Debt Documents. In the event any Loan Party fails to pay any taxes, license fees,assessments and public and private charges levied or assessed on any of theCollateral when due, at its option, Agent may discharge taxes, liens, securityinterests or other encumbrances at any time levied or placed on the Collateraland may pay for the maintenance, insurance and preservation of the Collateraland effect compliance with the terms of this Agreement or any of the other DebtDocuments.  Each Loan Party agrees toreimburse Agent, on demand, all costs and expenses incurred by Agent inconnection with such payment or performance and agrees that such reimbursementobligation shall constitute Obligations.

 

### (e)         Each Loan Party shall, atall times, keep substantially accurate and complete records of the Collateral.

 

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### (f)          Each Loan Partyagrees and acknowledges that any third person who may at any time possess allor any portion of the Collateral shall be deemed to hold, and shall hold, theCollateral as the agent of, and as pledge holder for, Agent (on behalf of itselfand Lenders).  Upon the occurrence andduring the continuation of any Default, Agent may at any time give notice toany third person described in the preceding sentence that such third person isholding the Collateral as the agent of, and as pledge holder for, Agent (onbehalf of itself and Lenders).

 

### (g)         Each Loan Partyshall, during normal business hours, and in the absence of a Default or anEvent of Default, upon one Business Day’s prior notice, as frequently as Agentdetermines to be appropriate: (i) provide Agent (who may be accompanied byrepresentatives of any Lender) and any of its officers, employees and agentsaccess to the properties, facilities, advisors and employees (includingofficers) of each Loan Party and to the Collateral, (ii) permit Agent (whomay be accompanied by representatives of any Lender), and any of its officers,employees and agents, to inspect, audit and make extracts from any Loan Party’sbooks and records (or at the request of Agent, deliver true and correct copiesof such books and records to Agent), and (iii) permit Agent (who may beaccompanied by representatives of any Lender), and its officers, employees andagents, to inspect, review, evaluate and make test verifications and counts ofthe Collateral of any Loan Party.  IfAgent asks, each Loan Party will promptly notify Agent in writing of thelocation of any Collateral.  If a Defaultor Event of Default has occurred and is continuing or if access is necessary topreserve or protect the Collateral as determined by Agent or any Lender, eachsuch Loan Party shall provide such access to Agent and to each Lender at alltimes and without advance notice.  EachLoan Party shall make available to Agent and any Lender and their respective auditorsor counsel, as quickly as is possible under the circumstances, originals orcopies of all books and records that Agent or any Lender may reasonablyrequest.

 

## 6.9.     **FurtherAssurances.**  Each LoanParty shall, upon request of Agent, furnish to Agent such further information,execute and deliver to Agent such documents and instruments (including, withoutlimitation, UCC financing statements) and shall do such other acts and thingsas Agent may at any time reasonably request relating to the perfection orprotection of the security interest created by this Agreement or for thepurpose of carrying out the intent of this Agreement and the other DebtDocuments.

#  

# **7.****  ****NEGATIVE COVENANTS**

 

## 7.1.     **Liens.**  No Loan Party shall, and no Loan Party shallpermit any of its Subsidiaries to, create, incur, assume or permit to exist anylien, security interest, claim or encumbrance or grant any negative pledges onany Collateral or Intellectual Property, except Permitted Liens.

 

## 7.2.     **Indebtedness.**  No Loan Party shall, and no Loan Party shallpermit any of its Subsidiaries to, directly or indirectly create, incur,assume, permit to exist, guarantee or otherwise become or remain directly orindirectly liable with respect to, any Indebtedness (as hereinafter defined),except for (a) the Obligations, (b) Indebtedness existing on the datehereof and set forth on Schedule B to this Agreement, and (c) Indebtednessarising after the Closing Date and consisting of capitalized lease obligationsand purchase money Indebtedness, in each case incurred by Borrower or any ofits Subsidiaries to finance the acquisition, repair, improvement orconstruction of fixed or capital assets of such person, provided that (i) theaggregate outstanding principal amount of all such Indebtedness does not exceed$250,000 at any time and (ii) the principal amount of such Indebtednessdoes not exceed the lower of the cost or fair market value of the property soacquired or built or of such repairs or improvements financed with suchIndebtedness (each measured at the time of such acquisition, repair, improvementor construction is made).** **The term “Indebtedness”means, with respect to any person, at any date, without duplication, (i) allobligations of such person for borrowed money, (ii) all obligations ofsuch person evidenced by bonds, 

 

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## debentures, notes or other similar instruments, or upon which interestpayments are customarily made, (iii) all obligations of such person to paythe deferred purchase price of property or services, but excluding obligationsto trade creditors incurred in the ordinary course of business and not past dueby more than 90 days,  (iv) allcapital lease obligations of such person, (v) the principal balanceoutstanding under any synthetic lease, tax retention operating lease,off-balance sheet loan or similar off-balance sheet financing product, (vi) allobligations of such person to purchase securities (or other property) whicharise out of or in connection with the issuance or sale of the same orsubstantially similar securities (or property), (vii) all contingent ornon-contingent obligations of such person to reimburse any bank or other personin respect of amounts paid under a letter of credit or similar instrument, (viii) allequity securities of such person subject to repurchase or redemption otherwisethan at the sole option of such person, (ix) all “earnouts” and similarpayment obligations of such person, (x) all indebtedness secured by a lienon any asset of such person, whether or not such indebtedness is otherwise anobligation of such person, (xi) all obligations of such person under anyforeign exchange contract, currency swap agreement, interest rate swap, cap orcollar agreement or other similar agreement or arrangement designed to alterthe risks of that person arising from fluctuations in currency values orinterest rates, in each case whether contingent or matured, and (xii) allobligations or liabilities of others guaranteed by such person.

 

## 7.3.     **Dispositions.**  No Loan Party shall, and no Loan Party shallpermit any of its Subsidiaries to, convey, sell, rent, lease, sublease,mortgage, license, transfer or otherwise dispose of (collectively, “Transfer”)any of the Collateral or any Intellectual Property, except for the following(collectively, “Permitted Dispositions”): (a) sales of inventory inthe ordinary course of business, (b) dispositions by a Loan Party or anyof its Subsidiaries of tangible assets for cash and fair value that are nolonger used or useful in the business of such Loan Party or such Subsidiary solong as (i) no Default or Event of Default exists at the time of suchdisposition or would be caused after giving effect thereto and (ii) thefair market value of all such assets disposed of does not exceed $100,000 inthe aggregate in any calendar year, (c) non-exclusive licenses for the useof Borrower’s Intellectual Property in the ordinary course of business, and (d) exclusivelicenses for the use of Borrower’s Intellectual Property in the ordinary courseof business, so long as, with respect to each such exclusive license, (i) noDefault or Event of Default exists at the time of such Transfer, (ii) thelicense constitutes an arms-length transaction made in connection with a bonafide corporate collaboration in the ordinary course of business and the termsof which, on their face, do not provide for a sale or assignment of anyIntellectual Property, (iii) Borrower delivers 10 days’ prior writtennotice and a brief summary of the terms of the license to Agent, (iv) Borrowerdelivers to Agent copies of the final executed licensing documents inconnection with the license promptly upon consummation of the license, and (v) allroyalties, milestone payments or other proceeds arising from the licensingagreement are paid to a deposit account that is governed by an Account ControlAgreement.

 

## 7.4.     **Change inName, Location or Executive Office; Change in Business; Change in Fiscal Year.**  No Loan Party shall, and no Loan Party shallpermit any of its Subsidiaries to, (a) change its name or its state of organization,  (b) relocate its chief executive officewithout 30 days prior written notification to Agent, (c) engage in anybusiness other than or reasonably related or incidental to the businessescurrently engaged in by such Loan Party or Subsidiary, (d) cease toconduct business substantially in the manner conducted by such Loan Party orSubsidiary as of the date of this Agreement or (e) change its fiscal yearend.

 

## 7.5.     **Mergers orAcquisitions.**  No LoanParty shall merge or consolidate, and no Loan Party shall permit any of itsSubsidiaries to merge or consolidate, with or into any other person or entity(other than mergers of a Subsidiary into Borrower in which Borrower is thesurviving entity) or acquire, or permit any of its Subsidiaries to acquire, allor substantially all of the capital stock or property of another person orentity.  Notwithstanding the immediatelypreceding sentence, the Borrower may merge with or be acquired by anotherentity who assumes the Obligations under this Agreement and becomes a partyhereto if the Agent and each Lender consent in writing to such merger oracquisition in their sole 

 

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## discretion and pursuant to documentation acceptable to Agent andLenders in their sole discretion (it being understood that Agent and Lendersshall have no obligation to consent to such merger or acquisition).

 

## 7.6.     **RestrictedPayments.**  No LoanParty shall, and no Loan Party shall permit any of its Subsidiaries to, (a) declareor pay any dividends or make any other distribution or payment on account of orredeem, retire, defease or purchase any capital stock, including, withoutlimitation, any preferred stock (other than the payment of dividends toBorrower), (b) purchase, redeem, defease or prepay any principal of,premium, if any, interest or other amount payable in respect of anyIndebtedness prior to its scheduled maturity, (c) make any payment inrespect of management fees or consulting fees (or similar fees) to anyequityholder or other affiliate of Borrower that owns more than 1% of the stockof Borrower, or (d) be a party to or bound by an agreement that restrictsa Subsidiary from paying dividends or otherwise distributing property toBorrower.

 

## 7.7.     **Investments.**  No Loan Party shall, and no Loan Party shallpermit any of its Subsidiaries to, directly or indirectly (a) acquire orown, or make any loan, advance or capital contribution (an “Investment”)in or to any person or entity, (b) acquire or create any Subsidiary, or (c) engagein any joint venture or partnership with any other person or entity, otherthan: (i) Investments existing on the date hereof and set forth onSchedule B to this Agreement, (ii) Investments in cash and CashEquivalents (as defined below), and (iii) loans or advances to employeesof Borrower or any of its Subsidiaries to finance travel, entertainment andrelocation expenses and other ordinary business purposes in the ordinary courseof business as presently conducted, provided that the aggregate outstanding principalamount of all loans and advances permitted pursuant to this clause (iii) shallnot exceed $100,000 at any time (collectively, the “Permitted Investments”).  The term “Cash Equivalents” means (v) anyreadily-marketable securities (i) issued by, or directly, unconditionallyand fully guaranteed or insured by the United States federal government or (ii) issuedby any agency of the United States federal government the obligations of whichare fully backed by the full faith and credit of the United States federalgovernment, (w) any readily-marketable direct obligations issued by anyother agency of the United States federal government, any state of the UnitedStates or any political subdivision of any such state or any publicinstrumentality thereof, in each case having a rating of at least “A-1” fromS&P or at least “P-1” from Moody’s, (x) any commercial paper rated atleast “A-1” by S&P or “P-1” by Moody’s and issued by anyentity organized under the laws of any state of the United States, (y) anyU.S. dollar-denominated time deposit, insured certificate of deposit, overnightbank deposit or bankers’ acceptance issued or accepted by (i) Agent or (ii) anycommercial bank that is (A) organized under the laws of the United States,any state thereof or the District of Columbia, (B) “adequately capitalized”(as defined in the regulations of its primary federal banking regulators) and (C) hasTier 1 capital (as defined in such regulations) in excess of $250,000,000 or (z) sharesof any United States money market fund that (i) has substantially all ofits assets invested continuously in the types of investments referred to in clause(v), (w), (x) or (y) above with maturities as setforth in the proviso below, (ii) has net assets in excess of $500,000,000and (iii) has obtained from either S&P or Moody’s the highest ratingobtainable for money market funds in the United States; provided, however,that the maturities of all obligations specified in any of clauses (v), (w),(x) and (y) above shall not exceed 365 days.  For the avoidance of doubt, “Cash Equivalents”does not include (and each Loan Party is prohibited from purchasing orpurchasing participations in) any auction rate securities or other corporate ormunicipal bonds with a long-term nominal maturity for which the interest rateis reset through a Dutch auction.

##  

## 7.8.     **Transactionswith Affiliates.**  No LoanParty shall, and no Loan Party shall permit any of its Subsidiaries to,directly or indirectly enter into or permit to exist any transaction with anyAffiliate (as defined below) of a Loan Party or any Subsidiary of a Loan Partyexcept for transactions that are in the ordinary course of such Loan Party’s orsuch Subsidiary’s business, upon fair and reasonable terms that are no morefavorable to such Affiliate than would be obtained in an arm’s lengthtransaction.  As used 

 

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## herein, “Affiliate” means, with respect to a Loan Party or anySubsidiary of a Loan Party, (a) each person that, directly or indirectly,owns or controls 10% or more of the stock or membership interests havingordinary voting power in the election of directors or managers of such LoanParty or such Subsidiary, and (b) each person that controls, is controlledby or is under common control with such Loan Party or such Subsidiary.

##  

## 7.9.     **Compliance.**  No Loan Party shall, and no Loan Party shallpermit any of its Subsidiaries to, (a) fail to comply with the laws andregulations described in clauses (b) or (c) of Section 5.8herein, (b) use any portion of the Term Loans to purchase or carry marginstock (within the meaning of Regulation U of the Federal Reserve Board) or (c) failto comply in any material respect with, or violate in any material respect anyother law or regulation applicable to it.

##  

## 7.10.   **DepositAccounts and Securities Accounts.**  No Loan Party shall directly or indirectlymaintain or establish any deposit account or securities account, unless Agent,the applicable Loan Party or Loan Parties and the depository institution orsecurities intermediary at which the account is or will be maintained enterinto a deposit account control agreement or securities account controlagreement, as the case may be, in form and substance satisfactory to Agent (an “AccountControl Agreement”) (which agreement shall provide, among other things,that (i) such depository institution or securities intermediary has norights of setoff or recoupment or any other claim against such deposit orsecurities account (except as agreed to by Agent), other than for payment ofits service fees and other charges directly related to the administration ofsuch account and for returned checks or other items of payment, and (ii) suchdepository institution or securities intermediary shall comply with allinstructions of Agent without further consent of such Loan Party or LoanParties, as applicable, including, without limitation, an instruction by Agentto comply exclusively with instructions of the Agent with respect to suchaccount (such notice, a “Notice of Exclusive Control”)), prior to orconcurrently with the establishment of such deposit account or securitiesaccount (or in the case of any such deposit account or securities accountmaintained as of the date hereof, on or before the Closing Date.  Agent may only give a Notice of ExclusiveControl with respect to any deposit account or securities account at any timeat which an Event of Default has occurred and is continuing.  At the request of Agent, Borrower shallcreate or designate a dedicated deposit account or accounts to be usedexclusively for payroll or withholding tax purposes.

##  

## 7.11.   **Amendmentsto Other Agreements**.  No LoanParty shall amend, modify or waive any provision of (a) any MaterialAgreement (unless the net effect of such amendment, modification of waiver isnot adverse to any Loan Party, Agent or Lenders), or****(b) any of such Loan Party’s organizational documents,in each case, without the prior written consent of Agent and the RequisiteLenders.

##  

# **8.****  ****DEFAULT AND REMEDIES.**

#  

## 8.1.     **Events ofDefault.**  Loan Partiesshall be in default under this Agreement and each of the other Debt Documentsif (each of the following, an “Event of Default”):

##  

### (a)         Borrower shallfail to pay (i) any principal when due, or (ii) any interest, fees orother Obligations (other than as specified in clause (i)) within a period of 3Business Days after the due date thereof (other than on any Applicable TermLoan Maturity Date);

###  

### (b)         any Loan Partybreaches any of its obligations under Section 6.1 (solely as it relates tomaintaining its existence), Section 6.2, Section 6.3, Section 6.4or Article 7;

###  

### (c)         any Loan Partybreaches any of its other obligations under any of the Debt Documents and failsto cure such breach within 30 days after the earlier of (i) the date onwhich an officer of such Loan Party becomes aware, or through the exercise ofreasonable diligence 

 

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### shouldhave become aware, of such failure and (ii) the date on which notice shallhave been given to Borrower from Agent;

 

### (d)         any warranty,representation or statement made or deemed made by or on behalf of any LoanParty in any of the Debt Documents or otherwise in connection with any of theObligations shall be false or misleading in any material respect at the timesuch warranty, representations or statement was made or deemed to be made;

###  

### (e)         any of theCollateral with a value of more than $50,000 in theaggregate is subjected to attachment, execution, levy, seizure or confiscationin any legal proceeding or otherwise, or if any legal or administrativeproceeding is commenced against any Loan Party or any of the Collateral, which in the good faith judgment ofAgent subjects any of the Collateral with a value of more than $50,000 in the aggregate to a material risk of attachment,execution, levy, seizure or confiscation and no bond is posted or protectiveorder obtained to negate such risk;

###  

### (f)          one or morejudgments, orders or decrees shall be rendered against any Loan Party or anySubsidiary of a Loan Party that exceeds by more than $100,000 any insurancecoverage applicable thereto (to the extent the relevant insurer has beennotified of such claim and has not denied coverage therefor) and either (i) enforcementproceedings shall have been commenced by any creditor upon any such judgment,order or decree or (ii) such judgment, order or decree shall not have beenvacated or discharged for a period of 10 consecutive days and there shall notbe in effect (by reason of a pending appeal or otherwise) any stay ofenforcement thereof;

###  

### (g)         (i) anyLoan Party or any Subsidiary of a Loan Party shall generally not pay its debtsas such debts become due, shall admit in writing its inability to pay its debtsgenerally, shall make a general assignment for the benefit of creditors, or shallcease doing business as a going concern, (ii) any proceeding shall beinstituted by or against any Loan Party or any Subsidiary of a Loan Partyseeking to adjudicate it a bankrupt or insolvent or seeking liquidation,winding up, reorganization, arrangement, adjustment, protection, relief,composition of it or its debts or any similar order, in each case under any lawrelating to bankruptcy, insolvency or reorganization or relief of debtors orseeking the entry of an order for relief or the appointment of a custodian,receiver, trustee, conservator, liquidating agent, liquidator, other similarofficial or other official with similar powers, in each case for it or for anysubstantial part of its property and, in the case of any such proceedingsinstituted against (but not by or with the consent of) such Loan Party or suchSubsidiary, either such proceedings shall remain undismissed or unstayed for aperiod of 45 days or more or any action sought in such proceedings shalloccur or (iii) any Loan Party or any Subsidiary of a Loan Party shall takeany corporate or similar action or any other action to authorize any actiondescribed in clause (i) or (ii) above;

###  

### (h)         an event ordevelopment occurs which has had a Material Adverse Effect;

###  

### (i)          (i) anyprovision of any Debt Document shall fail to be valid and binding on, orenforceable against, a Loan Party party thereto, or (ii) any Debt Documentpurporting to grant a security interest to secure any Obligation shall fail tocreate a valid and enforceable security interest on any Collateral purported tobe covered thereby or such security interest shall fail or cease to be aperfected lien with the priority required in the relevant Debt Document, or anyLoan Party shall state in writing that any of the events described in clause(i) or (ii) above shall have occurred;

###  

### (j)          (i) anyLoan Party or any Subsidiary of a Loan Party defaults under any MaterialAgreement (after any applicable grace period contained therein) and the effectof such default is 

 

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***Confidential Information, indicated by [***],has been omitted from this filing and filed separately with the SecuritiesExchange Commission***

 

### topermit the counterparty thereto to terminate such Material Agreement, (ii) (A) anyLoan Party or any Subsidiary of a Loan Party fails to make (after anyapplicable grace period) any payment when due (whether due because ofscheduled maturity, required prepayment provisions, acceleration, demand orotherwise) on any Indebtedness (other than the Obligations) of such Loan Partyor such Subsidiary having an aggregate principal amount (includingundrawn committed or available amounts and including amounts owing to allcreditors under any combined or syndicated credit arrangement) of more than$250,000 (“Material Indebtedness”), (B) any other event shall occuror condition shall exist under any contractual obligation relating to any suchMaterial Indebtedness, if the effect of such event or condition is toaccelerate, or to permit the acceleration of (without regard to anysubordination terms with respect thereto), the maturity of suchMaterial Indebtedness or (C) any such Material Indebtedness shall becomeor be declared to be due and payable, or be required to be prepaid, redeemed,defeased or repurchased (other than by a regularly scheduled requiredprepayment), prior to the stated maturity thereof, or (iii) Borrower orany Subsidiary defaults (beyond any applicable grace period) under anyobligation for payments due or otherwise under any lease agreement that meetsthe criteria for the requirement of an Access Agreement under Section 6.6and the effect of such default is to permit the landlord to terminate suchlease; or

###  

### (k)          (i) theacquisition, directly or indirectly, by any person or group (as such term isused in Section 13(d)(3) of the Securities Exchange Act of 1934) of [***]of the voting power of the voting stock of Borrower by way of merger orconsolidation or otherwise, or (ii) Borrower ceases to own and control,directly or indirectly, all of the economic and voting rights associated withthe outstanding voting capital stock (or other voting equity interest) of eachof its Subsidiaries.

###  

## 8.2.     **LenderRemedies.**  Upon theoccurrence of any Event of Default, Agent shall, at the written request of theRequisite Lenders, terminate the Commitments with respect to further Term Loansand declare any or all of the Obligations to be immediately due and payable,without demand or notice to any Loan Party and the accelerated Obligationsshall bear interest at the Default Rate pursuant to Section 2.6, providedthat, upon the occurrence of any Event of Default specified in Section 8.1(g) above,the Commitments shall be automatically terminated and the Obligations shall beautomatically accelerated.  Upon theoccurrence of an Event of Default, Agent shall have (on behalf of itself andLenders) all of the rights and remedies of a secured party under the UCC, andunder any other applicable law; provided, however, that Agent shall notcommence the exercise of such rights and remedies without the prior writtenrequest of Requisite Lenders.  Withoutlimiting the foregoing, Agent shall have the right to, and at the writtenrequest of the Required Lenders shall,  (a) notifyany account debtor of any Loan Party or any obligor on any instrument whichconstitutes part of the Collateral to make payments to Agent (for the benefitof itself and Lenders), (b) with or without legal process, enter anypremises where the Collateral may be and take possession of and remove theCollateral from the premises or store it on the premises, (c) sell theCollateral at public or private sale, in whole or in part, and have the rightto bid and purchase at such sale, or (d) lease or otherwise dispose of allor part of the Collateral, applying proceeds from such disposition to theObligations in accordance with Section 8.4.  If requested by Agent, Loan Parties shallpromptly assemble the Collateral and make it available to Agent at a place tobe designated by Agent.  Agent may also renderany or all of the Collateral unusable at a Loan Party’s premises and maydispose of such Collateral on such premises without liability for rent orcosts.  Any notice that Agent is requiredto give to a Loan Party under the UCC of the time and place of any public saleor the time after which any private sale or other intended disposition of theCollateral is to be made shall be deemed to constitute reasonable notice ifsuch notice is given in accordance with this Agreement at least 5 days prior tosuch action.  Effective only upon theoccurrence and during the continuance of an Event of Default, each Loan Partyhereby irrevocably appoints Agent (and any of Agent’s designated officers oremployees) as such Loan Party’s true and lawful attorney to: (i) take anyof the actions specified above in this paragraph; 

 

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## (ii) endorse such Loan Party’s name on any checks or other formsof payment or security that may come into Agent’s possession; (iii) settleand adjust disputes and claims respecting the accounts directly with accountdebtors, for amounts and upon terms which Agent determines to be reasonable;and (iv) do such other and further acts and deeds in the name of such LoanParty that Agent may deem necessary or desirable to enforce its rights in or toany of the Collateral or to perfect or better perfect Agent’s security interest(on behalf of itself and Lenders) in any of the Collateral.  The appointment of Agent as each Loan Party’sattorney in fact is a power coupled with an interest and is irrevocable untilthe Termination Date. Notwithstanding any provision of this Section 8.2to the contrary, upon the occurrence of any Event of Default, Agent shall havethe right to exercise any and all remedies referenced in this Section 8.2without the written consent of Requisite Lenders following the occurrence of anExigent Circumstance.  As used in theimmediately preceding sentence, “Exigent Circumstance” meansany event or circumstance that, in the reasonable judgment of Agent, imminentlythreatens the ability of Agent to realize upon all or any material portion ofthe Collateral, such as, without limitation, fraudulent removal, concealment,or abscondment thereof, destruction or material waste thereof, or failure ofany Loan Party after reasonable demand to maintain or reinstate adequatecasualty insurance coverage, or which, in the judgment of Agent, could resultin a material diminution in value of the Collateral.

##  

## 8.3.     **AdditionalRemedies.** In addition to the remedies provided in Section 8.2above, each Loan Party hereby grants to Agent (on behalf of itself and Lenders)and any transferee of Collateral, for the sole purpose of exercising itsremedies as provided herein, an irrevocable, nonexclusive license (exercisablewithout payment of royalty or other compensation to any Loan Party) to use,license or sublicense any Intellectual Property now owned or hereafter acquiredby such Loan Party, and wherever the same may be located, and including in suchlicense access to all media in which any of the licensed items may be recordedor stored and to all computer software and programs used for the compilation orprintout thereof.

##  

## 8.4.     **Applicationof Proceeds.**  Proceedsfrom any Transfer of the Collateral or the Intellectual Property (other thanPermitted Dispositions) and all payments made to or proceeds of Collateralreceived by Agent during the continuance of an Event of Default shall beapplied as follows: (a) first, to pay all fees, costs, indemnities,reimbursements and expenses then due to Agent under the Debt Documents in itscapacity as Agent under the Debt Documents, (b) second, to pay all fees,costs, indemnities, reimbursements and expenses then due to Lenders under theDebt Documents in accordance with their respective Pro Rata Shares of the TotalCommitment, until paid in full, (c) third, to pay all interest on the TermLoans then due to Lenders in accordance with their respective Pro Rata Sharesof the Term Loans, until paid in full (other than interest accrued after thecommencement of any proceeding referred to in Section 8.1(g) if aclaim for such interest is not allowable in such proceeding), (d) fourth,to pay all principal on the Term Loans then due to Lenders in accordance withtheir respective Pro Rata Shares of the Term Loans, until paid in full, (e) fifth,to pay all other Obligations then due to Lenders in accordance with theirrespective Pro Rata Shares of the Total Commitment, until paid in full(including, without limitation, all interest accrued after the commencement ofany proceeding referred to in Section 8.1(g) whether or not a claimfor such interest is allowable in such proceeding), and (f) sixth, toBorrower or as otherwise required by law. Borrower shall remain fully liable for any deficiency.

##  

# **9.****  ****THE AGENT.**

#  

## 9.1.     **Appointmentof Agent**.

##  

### (a)          Each Lenderhereby appoints GECC (together with any successor Agent pursuant to Section 9.9)as Agent under the Debt Documents and authorizes the Agent to (a) executeand deliver the Debt Documents and accept delivery thereof on its behalf fromLoan Parties, (b) take such action on its behalf and to exercise allrights, powers and remedies and perform the duties as are expressly delegatedto the Agent under such Debt Documents and (c) exercise such powers as 

 

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### arereasonably incidental thereto.  Theprovisions of this Article 9 are solely for the benefit of Agent andLenders and none of Loan Parties nor any other person shall have any rights asa third party beneficiary of any of the provisions hereof.  In performing its functions and duties underthis Agreement and the other Debt Documents, Agent shall act solely as an agentof Lenders and does not assume and shall not be deemed to have assumed any obligationtoward or relationship of agency or trust with or for any Loan Party or anyother person.  Agent shall have no dutiesor responsibilities except for those expressly set forth in this Agreement andthe other Debt Documents.  The duties ofAgent shall be mechanical and administrative in nature and Agent shall nothave, or be deemed to have, by reason of this Agreement, any other DebtDocument or otherwise a fiduciary or trustee relationship in respect of anyLender.  Except as expressly set forth inthis Agreement and the other Debt Documents, Agent shall not have any duty todisclose, and shall not be liable for failure to disclose, any informationrelating to Borrower or any of its Subsidiaries that is communicated to orobtained by GECC or any of its affiliates in any capacity.

###  

### (b)         Withoutlimiting the generality of clause (a) above, Agent shall have the sole andexclusive right and authority (to the exclusion of the Lenders), and is herebyauthorized, to (i) act as the disbursing and collecting agent for theLenders with respect to all payments and collections arising in connection withthe Debt Documents (including in any other bankruptcy, insolvency or similarproceeding), and each person making any payment in connection with any DebtDocument to any Lender is hereby authorized to make such payment to Agent, (ii) subjectto Section 8.2 hereof, file and prove claims and file other documentsnecessary or desirable to allow the claims of Agent and Lenders with respect toany Obligation in any proceeding described in any bankruptcy, insolvency orsimilar proceeding (but not to vote, consent or otherwise act on behalf of suchLender), (iii) act as collateral agent for Agent and each Lender forpurposes of the perfection of all liens created by the Debt Documents and allother purposes stated therein, (iv) subject to Section 8.2 hereof,manage, supervise and otherwise deal with the Collateral, other than any release of a security interest in theCollateral requiring the consent of Requisite Lenders or all Lenders underSections 10.8(b) or 10.8(c) (provided that Agent may so release suchsecurity interest if such consent is obtained), (v) take such otheraction as is necessary or desirable to maintain the perfection and priority ofthe liens created or purported to be created by the Debt Documents, (vi) exceptas may be otherwise specified in any Debt Document (including where the consentor approval of all Lenders or the Requisite Lenders is required by the termsthereof) and subject to Sections 8.2 and 10.8 hereof, exercise all remediesgiven to Agent and the other Lenders with respect to the Collateral, whetherunder the Debt Documents, applicable law or otherwise and (vii) executeany amendment, consent or waiver under the Debt Documents on behalf of any Lenderthat has consented in writing to such amendment, consent or waiver; provided,however, that Agent hereby appoints, authorizes and directs each Lenderto act as collateral sub-agent for Agent and the Lenders for purposes of theperfection of all liens with respect to the Collateral, including any depositaccount maintained by a Loan Party with, and cash and cash equivalents held by,such Lender, and may further authorize and direct the Lenders to take furtheractions as collateral sub-agents for purposes of enforcing such liens orotherwise to transfer the Collateral subject thereto to Agent, and each Lenderhereby agrees to take such further actions to the extent, and only to theextent, so authorized and directed. Agent may, upon any term or condition it specifies, delegate or exerciseany of its rights, powers and remedies under, and delegate or perform any ofits duties or any other action with respect to, any Debt Document by or throughany trustee, co-agent, employee, attorney-in-fact and any other person(including any Lender).  Any such personshall benefit from this Article 9 to the extent provided by Agent.

###  

### (c)          If Agent shallrequest instructions from Requisite Lenders or all affected Lenders withrespect to any act or action (including failure to act) in connection with thisAgreement or 

 

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### anyother Debt Document, then Agent shall be entitled to refrain from such act ortaking such action unless and until Agent shall have received instructions fromRequisite Lenders or all affected Lenders, as the case may be, and Agent shallnot incur liability to any person by reason of so refraining.  Agent shall be fully justified in failing orrefusing to take any action hereunder or under any other Debt Document (a) ifsuch action would, in the opinion of Agent, be contrary to law or any DebtDocument, (b) if such action would, in the opinion of Agent, expose Agentto any potential liability under any law, statute or regulation or (c) ifAgent shall not first be indemnified to its satisfaction against any and allliability and expense which may be incurred by it by reason of taking orcontinuing to take any such action. Without limiting the foregoing, no Lender shall have any right of actionwhatsoever against Agent as a result of Agent acting or refraining from actinghereunder or under any other Debt Document in accordance with the instructionsof Requisite Lenders or all affected Lenders, as applicable.

###  

## 9.2.     **Agent’sReliance, Etc**.  NeitherAgent nor any of its affiliates nor any of their respective directors,officers, agents, employees or representatives shall be liable for any actiontaken or omitted to be taken by it or them hereunder or under any other DebtDocuments, or in connection herewith or therewith, except for damages caused byits or their own gross negligence or willful misconduct as finally determinedby a court of competent jurisdiction. Without limiting the generality of the foregoing, Agent:  (a) may treat the payee of any Note asthe holder thereof until such Note has been assigned in accordance with Section 10.1;(b) may consult with legal counsel, independent public accountants andother experts, whether or not selected by it, and shall not be liable for anyaction taken or omitted to be taken by it in good faith in accordance with theadvice of such counsel, accountants or experts; (c) shall not beresponsible or otherwise incur liability for any action or omission taken inreliance upon the instructions of the Requisite Lenders, (d) makesno warranty or representation to any Lender and shall not be responsible to anyLender for any statements, warranties or representations made in or inconnection with this Agreement or the other Debt Documents; (e) shall not haveany duty to inspect the Collateral (including the books and records) or toascertain or to inquire as to the performance or observance of any provision ofany Debt Document, whether any condition set forth in any Debt Document issatisfied or waived, as to the financial condition of any Loan Party or as tothe existence or continuation or possible occurrence or continuation of anyDefault or Event of Default and shall not be deemed to have notice or knowledgeof such occurrence or continuation unless it has received a notice fromBorrower or any Lender describing such Default or Event of Default clearlylabeled “notice of default”; (f) shall not be responsible to anyLender for the due execution, legality, validity, enforceability,effectiveness, genuineness, sufficiency or value of, or the attachment,perfection or priority of any lien created or purported to be created under orin connection with, any Debt Document or any other instrument or documentfurnished pursuant hereto or thereto; and (g) shall incur no liabilityunder or in respect of this Agreement or the other Debt Documents by actingupon any notice, consent, certificate or other instrument or writing (which maybe by telecopy, telegram, cable or telex) believed by it to be genuine andsigned or sent or otherwise authenticated by the proper party or parties.

##  

## 9.3.     **GECC andAffiliates.**  GECC shallhave the same rights and powers under this Agreement and the other DebtDocuments as any other Lender and may exercise the same as though it were notAgent; and the term “Lender” or “Lenders” shall, unless otherwise expresslyindicated, include GECC in its individual capacity.  GECC and its affiliates may lend money to,invest in, and generally engage in any kind of business with, Borrower, any ofBorrower’s Subsidiaries, any of their Affiliates and any person who may dobusiness with or own securities of Borrower, any of Borrower’s Subsidiaries orany such Affiliate, all as if GECC were not Agent and without any duty toaccount therefor to Lenders.  GECC andits affiliates may accept fees and other consideration from Borrower forservices in connection with this Agreement or otherwise without having toaccount for the same to Lenders.  EachLender acknowledges the potential conflict of interest between GECC as a Lenderholding disproportionate interests in the Term 

 

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## Loans and GECC as Agent, and expressly consents to, and waives, anyclaim based upon, such conflict of interest.

##  

## 9.4.     **LenderCredit Decision**.  Each Lenderacknowledges that it has, independently and without reliance upon Agent or anyother Lender and based on the financial statements referred to in Section 6.3and such other documents and information as it has deemed appropriate, made itsown credit and financial analysis of each Loan Party and its own decision toenter into this Agreement.  Each Lenderalso acknowledges that it will, independently and without reliance upon Agentor any other Lender and based on such documents and information as it shalldeem appropriate at the time, continue to make its own credit decisions intaking or not taking action under this Agreement.  Each Lender acknowledges the potentialconflict of interest of each other Lender as a result of Lenders holdingdisproportionate interests in the Term Loans, and expressly consents to, andwaives, any claim based upon, such conflict of interest.

##  

## 9.5.     **Indemnification**.  Lenders shall and do hereby indemnify Agent(to the extent not reimbursed by Loan Parties and without limiting theobligations of Loan Parties hereunder), ratably according to their respectivePro Rata Shares of the Total Commitment from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses or disbursements of any kind or nature whatsoever thatmay be imposed on, incurred by, or asserted against Agent in any way relatingto or arising out of this Agreement or any other Debt Document or any actiontaken or omitted to be taken by Agent in connection therewith; providedthat no Lender shall be liable for any portion of such liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs,expenses or disbursements resulting from Agent’s gross negligence or willfulmisconduct as finally determined by a court of competent jurisdiction. Withoutlimiting the foregoing, each Lender agrees to reimburse Agent promptly upondemand for its Pro Rata Share of the Total Commitment of any out-of-pocketexpenses (including reasonable counsel fees) incurred by Agent in connectionwith the preparation, execution, delivery, administration, modification,amendment or enforcement (whether through negotiations, legal proceedings orotherwise) of, or legal advice in respect of rights or responsibilities under,this Agreement and each other Debt Document, to the extent that Agent is notreimbursed for such expenses by Loan Parties. The provisions of this Section 9.5 shall survive the termination ofthis Agreement.

##  

## 9.6.     **SuccessorAgent**.  Agent may resign at any timeby giving not less than 30 days’ prior written notice thereof to Lenders andBorrower.  Upon any such resignation, theRequisite Lenders shall have the right to appoint a successor Agent.  If no successor Agent shall have been soappointed by the Requisite Lenders and shall have accepted such appointmentwithin 30 days after the resigning Agent’s giving notice of resignation, thenthe resigning Agent may, on behalf of Lenders, appoint a successor Agent, whichshall be a Lender, if a Lender is willing to accept such appointment, orotherwise shall be a commercial bank or financial institution or a subsidiaryof a commercial bank or financial institution if such commercial bank orfinancial institution is organized under the laws of the United States ofAmerica or of any State thereof and has a combined capital and surplus of atleast $300,000,000.  If no successorAgent has been appointed pursuant to the foregoing, within 30 days after thedate such notice of resignation was given by the resigning Agent, such resignationshall become effective and the Requisite Lenders shall thereafter perform allthe duties of Agent hereunder until such time, if any, as the Requisite Lendersappoint a successor Agent as provided above. Upon the acceptance of any appointment as Agent hereunder by a successorAgent, such successor Agent shall succeed to and become vested with all therights, powers, privileges and duties of the resigning Agent.  Upon the earlier of the acceptance of anyappointment as Agent hereunder by a successor Agent or the effective date ofthe resigning Agent’s resignation, the resigning Agent shall be discharged fromits duties and obligations under this Agreement and the other Debt Documents,except that any indemnity rights or other rights in favor of such resigningAgent shall continue.  After anyresigning Agent’s resignation hereunder, the provisions of this Section 9 

 

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## shall inure to its benefit as to any actions taken or omitted to betaken by it while it was acting as Agent under this Agreement and the otherDebt Documents.

##  

## 9.7.     **Setoff andSharing of Payments**.  In additionto any rights now or hereafter granted under applicable law and not by way oflimitation of any such rights, upon the occurrence and during the continuanceof any Event of Default and subject to Section 9.8(e), each Lender ishereby authorized at any time or from time to time upon the direction of Agent,without notice to Borrower or any other person, any such notice being herebyexpressly waived, to offset and to appropriate and to apply any and allbalances held by it at any of its offices for the account of Borrower(regardless of whether such balances are then due to Borrower) and any otherproperties or assets at any time held or owing by that Lender or that holder toor for the credit or for the account of Borrower against and on account of anyof the Obligations that are not paid when due. Any Lender exercising a right of setoff or otherwise receiving anypayment on account of the Obligations in excess of its Pro Rata Share thereofshall purchase for cash (and the other Lenders or holders shall sell) suchparticipations in each such other Lender’s or holder’s Pro Rata Share of theObligations as would be necessary to cause such Lender to share the amount sooffset or otherwise received with each other Lender or holder in accordancewith their respective Pro Rata Shares of the Obligations.  Borrower agrees, to the fullest extentpermitted by law, that (a) any Lender may exercise its right to offsetwith respect to amounts in excess of its Pro Rata Share of the Obligations andmay sell participations in such amounts so offset to other Lenders and holdersand (b) any Lender so purchasing a participation in the Term Loans made orother Obligations held by other Lenders or holders may exercise all rights ofoffset, bankers’ lien, counterclaim or similar rights with respect to suchparticipation as fully as if such Lender or holder were a direct holder of theTerm Loans and the other Obligations in the amount of such participation.  Notwithstanding the foregoing, if all or anyportion of the offset amount or payment otherwise received is thereafterrecovered from the Lender that has exercised the right of offset, the purchaseof participations by that Lender shall be rescinded and the purchase pricerestored without interest.  The term “ProRata Share” means, (i) with respect to the Term Loan ACommitment, Term Loan B Commitment or Term Loan C Commitment of any Lender atany time, the percentage obtained by dividing (x) the Term Loan ACommitment, Term Loan B Commitment or Term Loan C Commitment, as applicable, ofsuch Lender then in effect (or, if Term Loan A Commitment, Term Loan BCommitment or Term Loan C Commitment is terminated, the aggregate outstandingprincipal amount of the applicable Term Loan A, Term Loan B or Term Loan C, asapplicable, owing to such Lender) by (y) the Aggregate Term Loan ACommitment, Aggregate Term Loan B Commitment or Aggregate Term Loan CCommitment, as applicable, then in effect (or, if the Aggregate Term Loan ACommitment, Aggregate Term Loan B Commitment or Aggregate Term Loan CCommitment is terminated, the outstanding principal amount of the Term Loan A,Term Loan B or Term Loan C, as applicable, owing to all Lenders) and (ii) withrespect to all Commitments of the Lenders, the percentage obtained by dividing (x) allCommitments of such Lender then in effect (or, if a Commitment is terminated,the aggregate outstanding principal amount of the Term Loan advanced under suchCommitment owing to such Lender) by (y) the Total Commitment then ineffect (or, if a Commitment is terminated, the outstanding principal amount ofthe applicable Term Loan advanced under such Commitment owing to all Lenders).

##  

## 9.8.     **Advances;Payments; Non-Funding Lenders; Information; Actions in Concert.**

##  

### (a)          Advances;Payments.  If Agentreceives any payment for the account of Lenders on or prior to 11:00 a.m.(New York time) on any Business Day, Agent shall pay to each applicable Lendersuch Lender’s Pro Rata Share of such payment on such Business Day. If Agentreceives any payment for the account of Lenders after 11:00 a.m. (NewYork time) on any Business Day, Agent shall pay to each applicable Lender suchLender’s Pro Rata Share of such payment on the next Business Day. To the extentthat any Lender has failed to fund any such payments and Term 

 

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### Loans(a “Non-Funding Lender”), Agent shall be entitled to set off the fundingshort-fall against that Non-Funding Lender’s Pro Rata Share of allpayments received from Borrower.

###  

### (b)         Return ofPayments.

###  

#### (i)                    If Agent paysan amount to a Lender under this Agreement in the belief or expectation that arelated payment has been or will be received by Agent from a Loan Party andsuch related payment is not received by Agent, then Agent will be entitled torecover such amount (including interest accruing on such amount at the FederalFunds Rate for the first Business Day and thereafter, at the rate otherwiseapplicable to such Obligation) from such Lender on demand without setoff,counterclaim or deduction of any kind.

####  

#### (ii)                   If Agentdetermines at any time that any amount received by Agent under this Agreementmust be returned to a Loan Party or paid to any other person pursuant to anyinsolvency law or otherwise, then, notwithstanding any other term or conditionof this Agreement or any other Debt Document, Agent will not be required todistribute any portion thereof to any Lender. In addition, each Lender will repay to Agent on demand any portion ofsuch amount that Agent has distributed to such Lender, together with interestat such rate, if any, as Agent is required to pay to a Loan Party or such otherperson, without setoff, counterclaim or deduction of any kind.

####  

### (c)          Non-FundingLenders.  The failure of any Non-FundingLender to make any Term Loan or any payment required by it hereunder shall notrelieve any other Lender (each such other Lender, an “Other Lender”) ofits obligations to make such Term Loan, but neither any Other Lender nor Agentshall be responsible for the failure of any Non-Funding Lender to make a TermLoan or make any other payment required hereunder.  Notwithstanding anything set forth herein tothe contrary, a Non-Funding Lender shall not have any voting or consent rightsunder or with respect to any Debt Document or constitute a “Lender” (or beincluded in the calculation of “Requisite Lender” hereunder) for any voting orconsent rights under or with respect to any Debt Document.  At Borrower’s request, Agent or a personreasonably acceptable to Agent shall have the right with Agent’s consent and inAgent’s sole discretion (but shall have no obligation) to purchase from anyNon-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent’srequest, sell and assign to Agent or such person, all of the Commitments andall of the outstanding Term Loans of that Non-Funding Lender for an amountequal to the principal balance of all Term Loans held by such Non-Funding Lenderand all accrued interest and fees with respect thereto through the date ofsale, such purchase and sale to be consummated pursuant to an executedAssignment Agreement (as defined below).

###  

### (d)         Disseminationof Information.  Agent shalluse reasonable efforts to provide Lenders with any notice of Default or Eventof Default received by Agent from, or delivered by Agent to Borrower, withnotice of any Event of Default of which Agent has actually become aware andwith notice of any action taken by Agent following any Event of Default; providedthat Agent shall not be liable to any Lender for any failure to do so, exceptto the extent that such failure is attributable to Agent’s gross negligence orwillful misconduct as finally determined by a court of competentjurisdiction.  Lenders acknowledge thatBorrower is required to provide financial statements to Lenders in accordancewith Section 6.3****hereto andagree that Agent shall have no duty to provide the same to Lenders.

###  

### (e)          Actions inConcert.  Anything in this Agreement tothe contrary notwithstanding, each Lender hereby agrees with each other Lenderthat no Lender shall take any action to protect 

 

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### orenforce its rights arising out of this Agreement, the Notes or any other DebtDocuments (including exercising any rights of setoff) without first obtainingthe prior written consent of Agent and Requisite Lenders, it being the intentof Lenders that any such action to protect or enforce rights under this Agreementand the Notes shall be taken in concert and at the direction or with theconsent of Agent and Requisite Lenders.

###  

# **10.****       ****MISCELLANEOUS.**

#  

## 10.1.   **Assignment.**  Subject to the terms of this Section 10.1,any Lender may make an assignment to an assignee of, or sell participations in,at any time or times, the Debt Documents, its Commitment, Term Loans or anyportion thereof or interest therein, including any Lender’s rights, title,interests, remedies, powers or duties thereunder.  Any assignment by a Lender shall: (i) exceptin the case of an assignment to a Qualified Assignee (as defined below),require the consent of each Lender (which consent shall not be unreasonablywithheld, conditioned or delayed), (ii) require the execution of anassignment agreement in form and substance reasonably satisfactory to, andacknowledged by, Agent (an “Assignment Agreement”); (iii) beconditioned on such assignee Lender representing to the assigning Lender andAgent that it is purchasing the applicable Commitment and/or Term Loans to beassigned to it for its own account, for investment purposes and not with a viewto the distribution thereof; (iv) be in an aggregate amount of not lessthan $1,000,000, unless such assignment is made to an existing Lender or anaffiliate of an existing Lender or is of the assignor’s (together with itsaffiliates’) entire interest of the Term Loans or is made with the priorwritten consent of Agent; and (v) include a payment to Agent of anassignment fee of $3,500.  In the case ofan assignment by a Lender under this Section 10.1, the assignee shallhave, to the extent of such assignment, the same rights, benefits andobligations as all other Lenders hereunder. The assigning Lender shall be relieved of its obligations hereunder withrespect to its Commitment and Term Loans, as applicable, or assigned portionthereof from and after the date of such assignment.  Borrower hereby acknowledges and agrees thatany assignment shall give rise to a direct obligation of Borrower to theassignee and that the assignee shall be considered to be a “Lender”.  In the event any Lender assigns or otherwisetransfers all or any part of the Commitments and Obligations, Agent shall sonotify Borrower and Borrower shall, upon the request of Agent, execute newNotes in exchange for the Notes, if any, being assigned.  Agent may amend Schedule A to this Agreementto reflect assignments made in accordance with this Section.

##  

Asused herein, “Qualified Assignee” means (a) any Lender and anyaffiliate of any Lender and (b) any commercial bank, savings and loanassociation or savings bank or any other entity which is an “accreditedinvestor” (as defined in Regulation D under the Securities Act) which extendscredit or buys loans as one of its businesses, including insurance companies,mutual funds, lease financing companies and commercial finance companies, ineach case, which has a rating of BBB or higher from S&P and a rating ofBaa2 or higher from Moody’s at the date that it becomes a Lender and in eachcase of clauses (a) and (b), which, through its applicable lending office,is capable of lending to Borrower without the imposition of any withholding orsimilar taxes; provided that no person proposed to become a Lender afterthe Closing Date and determined by Agent to be acting in the capacity of avulture fund or distressed debt purchaser shall be a Qualified Assignee, and noperson or Affiliate of such person proposed to become a Lender after theClosing Date and that holds any subordinated debt or stock issued by Borrower shall be a Qualified Assignee.

 

## 10.2.   **Notices.**  All notices, requests or other communicationsgiven in connection with this Agreement shall be in writing, shall be addressedto the parties at their respective addresses set forth on the signature pages heretobelow such parties’ name or in the most recent Assignment Agreement executed byany Lender (unless and until a different address may be specified in a writtennotice to the other party delivered in accordance with this Section), and shallbe deemed given (a) on the date of receipt if delivered by hand, (b) onthe date of sender’s receipt of confirmation of proper transmission if 

 

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## sent by facsimile transmission, (c) on the next Business Day afterbeing sent by a nationally-recognized overnight courier, and (d) on thefourth Business Day after being sent by registered or certified mail, postageprepaid.  As used herein, the term “BusinessDay” means and includes any day other than Saturdays, Sundays, or otherdays on which commercial banks in New York, New York are required or authorizedto be closed.

##  

## 10.3.   **Correctionof Debt Documents.**  Agent maycorrect patent errors and fill in all blanks in this Agreement or the DebtDocuments consistent with the agreement of the parties.

##  

## 10.4.   **Performance.**  Time is of the essence of thisAgreement.  This Agreement shall bebinding, jointly and severally, upon all parties described as the “Borrower”and their respective successors and assigns, and shall inure to the benefit ofAgent, Lenders, and their respective successors and assigns.

##  

## 10.5.   **Payment ofFees and Expenses.**  Loan Partiesagree, jointly and severally, to pay or reimburse upon demand for allreasonable fees, costs and expenses incurred by Agent and Lenders in connectionwith (a) the investigation, preparation, negotiation, execution,administration of, or any amendment, modification, waiver or termination of,this Agreement or any other Debt Document, (b) the administration of theLoans and the facilities hereunder and any other transaction contemplatedhereby or under the Debt Documents and (c) the enforcement, assertion,defense or preservation of Agent’s and Lenders’ rights and remedies under thisAgreement or any other Debt Document, in each case of clauses (a) through(c), including, without limitation, reasonable attorney’s fees and expenses,the allocated cost of in-house legal counsel, reasonable fees and expenses ofconsultants, auditors and appraisers and UCC and other corporate search andfiling fees and wire transfer fees. Borrower further agrees that such fees, costs and expenses shallconstitute Obligations.  This provisionshall survive the termination of this Agreement.  Notwithstanding the foregoing, the first$50,000 of the fees, costs and expenses described in this Section shall bepaid from the $50,000 payment described in Section 2.7(a)(i)(B).

##  

## 10.6.   **Indemnity.** Each LoanParty shall and does hereby jointly and severally indemnify and defend Agent,Lenders, and their respective successors and assigns, and their respectivedirectors, officers, employees, consultants, attorneys, agents and affiliates(each an “Indemnitee”) from and against all liabilities, losses,damages, expenses, penalties, claims, actions and suits (including, withoutlimitation, related reasonable attorneys’ fees and the allocated costs ofin-house legal counsel) of any kind whatsoever arising, directly or indirectly,which may be imposed on, incurred by or asserted against such Indemnitee as aresult of or in connection with this Agreement, the other Debt Documents or anyof the transactions contemplated hereby or thereby (the “IndemnifiedLiabilities”); provided that, no Loan Party shall have any obligation toany Indemnitiee with respect to any Indemnified Liabilities to the extent suchIndemnified Liabilities arise from the gross negligence or willful misconductof such Indemnitee as determined by a final non-appealable judgment of a courtof competent jurisdiction.  Thisprovision shall survive the termination of this Agreement.

##  

## 10.7.   **RightsCumulative.**  Agent’s andLenders’ rights and remedies under this Agreement or otherwise arising arecumulative and may be exercised singularly or concurrently.  Neither the failure nor any delay on the partof Agent or any Lender to exercise any right, power or privilege under thisAgreement shall operate as a waiver, nor shall any single or partial exerciseof any right, power or privilege preclude any other or further exercise of thator any other right, power or privilege. NONE OF AGENT OR ANY LENDER SHALL BE DEEMED TO HAVE WAIVED ANY OF ITSRESPECTIVE RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENTOR PAPER SIGNED BY BORROWER UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNEDBY AGENT, REQUISITE LENDERS OR ALL LENDERS, AS APPLICABLE.  A waiver on any one occasion shall not beconstrued as a bar to or waiver of any right or remedy on any future occasion.

 

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## 10.8.**       ****EntireAgreement; Amendments, Waivers.**

##  

### (a)         This Agreementand the other Debt Documents constitute the entire agreement between theparties with respect to the subject matter hereof and thereof and supersede allprior understandings (whether written, verbal or implied) with respect to suchsubject matter.  Section headingscontained in this Agreement have been included for convenience only, and shallnot affect the construction or interpretation of this Agreement.

###  

### (b)         No amendment,modification, termination or waiver of any provision of this Agreement or anyother Debt Document, or any consent to any departure by Borrower therefrom,shall in any event be effective unless the same shall be in writing and signedby Agent, Borrower and Lenders having more than (x) 60% of the aggregateCommitments of all Lenders or (y) if such Commitments have expired or beenterminated, 60% of the aggregate outstanding principal amount of the Term Loans(the “Requisite Lenders”);provided, however, that so long as a party that is a Lender hereunder on theClosing Date does not assign any portion of its Commitment or Term Loan, the “RequisiteLenders” shall include such Lender.  Except as set forth in clause (c) below,all such amendments, modifications, terminations or waivers requiring theconsent of any Lenders shall require the written consent of Requisite Lenders.

###  

### (c)         No amendment,modification, termination or waiver of any provision of this Agreement or anyother Debt Document shall, unless in writing and signed by Agent and eachLender directly affected thereby: (i) increase or decrease any Commitmentof any Lender or increase or decrease the Total Commitment (which shall bedeemed to affect all Lenders), (ii) reduce the principal of or rate ofinterest on any Obligation or the amount of any fees payable hereunder (other thanwaiving the imposition of the Default Rate), (iii) postpone thedate fixed for or waive any payment of principal of or interest on any TermLoan, or any fees hereunder, (iv) release all or substantially all of theCollateral, or consent to a transfer of all or substantially all of theIntellectual Property, in each case, except as otherwise expressly permitted inthe Debt Documents (which shall be deemed to affect all Lenders), (v) subordinatethe lien granted in favor of the Agent securing the Obligations (which shall bedeemed to affect all Lenders), (vi) release a Loan Party****from, or consent to a Loan Party’sassignment or delegation of, such Loan Party’s obligations hereunder and underthe other Debt Documents****or anyGuarantor from its guaranty of the Obligations****(which shall be deemed to affect all Lenders) or (vii) amend,modify, terminate or waive Section 8.4, 9.7 or 10.8(b) or (c).

###  

### (d)         Notwithstandingany provision in this Section 10.8 to the contrary, no amendment,modification, termination or waiver affecting or modifying the rights orobligations of Agent hereunder shall be effective unless signed by Borrower,Agent and Requisite Lenders.

###  

## 10.9.**  ****BindingEffect.**  This Agreement shall continuein full force and effect until theTermination Date; provided,however, that the provisions of Sections 2.3(e), 9.5, 10.5 and 10.6 and theother indemnities contained in the Debt Documents shall survive the TerminationDate.  The surrender, upon payment orotherwise, of any Note or any of the other Debt Documents evidencing any of theObligations shall not affect the right of Agent to retain the Collateral forsuch other Obligations as may then exist or as it may be reasonablycontemplated will exist in the future. This Agreement and the grant of the security interest in the Collateralpursuant to Section 3.1 shall automatically be reinstated if Agent or anyLender is ever required to return or restore the payment of all or any portionof the Obligations (all as though such payment had never been made).

##  

## 10.10.      **Use of Logo.**  Each Loan Party authorizes Agent to use itsname, logo and/or trademark without notice to or consent by such Loan Party, inconnection with certain promotional materials that 

 

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## Agentmay disseminate to the public.  Thepromotional materials may include, but are not limited to, brochures, videotape, internet website, press releases, advertising in newspaper and/or otherperiodicals, lucites, and any other materials relating the fact that Agent hasa financing relationship with Borrower and such materials may be developed,disseminated and used without Loan Parties’ review.  Nothing herein obligates Agent to use a LoanParty’s name, logo and/or trademark, in any promotional materials ofAgent.  Loan Parties shall not, and shallnot permit any of its respective Affiliates to, issue any press release orother public disclosure (other than any document filed with any governmentalauthority relating to a public offering of the securities of Borrower) usingthe name, logo or otherwise referring to General Electric Capital Corporation,GE Healthcare Financial Services, Inc. or of any of their affiliates, theDebt Documents or any transaction contemplated herein or therein without atleast two (2) Business Days prior written notice to and the prior writtenconsent of Agent unless, and only to the extent that, Loan Parties or suchAffiliate is required to do so under applicable law and then, only afterconsulting with Agent prior thereto.

##  

## 10.11.      **Waiver of Jury Trial.**  EACH OF LOAN PARTIES, AGENT AND LENDERSUNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSEOF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBTDOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS AMONG LOANPARTIES, AGENT AND/OR LENDERS RELATING TO THE SUBJECT MATTER OF THISTRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEINGESTABLISHED AMONG LOAN PARTIES, AGENT AND/OR LENDERS.  THE SCOPE OF THIS WAIVER IS INTENDED TO BEALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT.THIS WAIVER IS IRREVOCABLE.  THIS WAIVER MAY NOTBE MODIFIED EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TOANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATEDTRANSACTION.  THIS AGREEMENT MAY BEFILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

##  

## 10.12.      **Governing Law.**  THIS AGREEMENT, THE OTHER DEBT DOCUMENTS ANDTHE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALLRESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OFTHE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OFSUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,REGARDLESS OF THE LOCATION OF THE COLLATERAL. IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR ANY OTHER DEBT DOCUMENTIS COMMENCED BY AGENT IN THE STATE COURTS OF THE STATE OF NEW YORK IN THECOUNTY OF NEW YORK OR IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OFNEW YORK, EACH LOAN PARTY HEREBY CONSENTS TO THE JURISDICTION OF ANY SUCH COURTIN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN THE STATE OF NEW YORK.  ANY PROCESS IN ANY SUCH ACTION SHALL BE DULYSERVED IF MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO LOAN PARTIES AT THEIRADDRESS DESCRIBED IN SECTION 10.2, OR IF SERVED BY ANY OTHER MEANSPERMITTED BY APPLICABLE LAW.

##  

## 10.13.      **Confidentiality**.  Agent and each Lenderagrees, as to itself, to use commercially reasonable efforts (equivalent to theefforts Agent or such Lender, as the case may be, applies to maintaining the confidentialityof its own confidential information) to maintain as confidential allconfidential information provided to it by Borrower and designated asconfidential, except that Agent and Lenders may disclose such information (a) topersons employed or engaged by Agent or a Lender; (b) to 

 

34

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## anybona fide assignee or participant or potential assignee or participant that hasagreed to comply with the covenant contained in this Section 10.13 (andany such bona fide assignee or participant or potential assignee or participantmay disclose such information to persons employed or engaged by them asdescribed in clause (a) above); (c) as required or requestedby any governmental authority or reasonably believed by Agent or any Lender tobe compelled by any court decree, subpoena or legal or administrative order orprocess; (d) as, on the advice of Agent’s or such Lender’s counsel,required by law; (e) in connection with the exercise of any right orremedy under the Debt Documents or in connection with any litigation to whichAgent or such Lender is a party or bound; or (f) that ceases to beconfidential through no fault of Agent or such Lender.

##  

## 10.14.      **Counterparts.**  This Agreement may be executed in any numberof counterparts and by different parties in separate counterparts, each ofwhich when so executed shall be deemed to be an original and all of which whentaken together shall constitute one and the same agreement.  Delivery of an executed signature page ofthis Agreement by facsimile transmission or electronic transmission shall be aseffective as delivery of a manually executed counterpart hereof.

 

***[****SignaturePage Follows**]***

 

35

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**IN WITNESSWHEREOF,** each LoanParty, Agent and Lenders, intending to be legally bound hereby, have dulyexecuted this Agreement in one or more counterparts, each of which shall bedeemed to be an original, as of the day and year first aforesaid.

 

**BORROWER:**

 

DEPOMED,INC.

 
| By:    |   /s/ Carl A. Pelzel             |   |
|--------|-----------------------------------------------------------|--------|
|   |   Name:  Carl A. Pelzel                         |   |
|   |   Title:  President and Chief Executive Officer |   |

 

 

AddressFor Notices For All Loan Parties:

 

Depomed, Inc.

1360O’Brien Drive

MenloPark, CA 94025

Attention:President

Phone:(650) 462-5900

Facsimile:  (650) 462-9993

 

LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

1

----

 

**AGENT AND LENDER:**

 

**GENERAL ELECTRIC CAPITAL CORPORATION**

 
| By:    |   /s/ Scott  Towers |   |
|--------|------------------------------------|--------|
|   | Name:  Scott Towers                |   |
|   | Title:  Duly Authorized Signatory  |   |

 

AddressFor Notices:

 

GeneralElectric Capital Corporation

c/oGE Healthcare Financial Services, Inc., LSF

83Wooster Heights Road, Fifth Floor

Danbury,Connecticut 06810

Attention:Senior Vice President of RiskPhone: (203) 205-5200

Facsimile:(203) 205-2192

 

Witha copy to:

 

GeneralElectric Capital Corporation

c/oGE Healthcare Financial Services, Inc.

TwoBethesda Metro Center, Suite 600

Bethesda,  Maryland 20814

Attention:General CounselPhone: (301) 961-1640

Facsimile: (301) 664-9866

 

2

----

 

**LENDER:**

 

**OXFORD FINANCE CORPORATION**

 

 
| By:    |   /s/  T.A. Lex |   |
|--------|---------------------------|--------|
|   | Name:  T.A. Lex           |   |
|   | Title:  COO               |   |

 

AddressFor Notices:

 

Oxford Finance Corporation

133 North Fairfax Street

Alexandria, VA  22314

Attention:  Timothy A. Lex

ExecutiveVice President & Chief Operating Officer

Phone:  (703)519-4900

Facsimile: (703) 519-6010

 

3

----

 

**SCHEDULEA**

**COMMITMENTS**

 
| **Name of Lender**                    | ** ** | **Commitment of such Lender** | ** **  | **Pro Rata Share** | ** ** |
|---------------------------------------|------------|-------------------------------|-------------|--------------------|------------|
| ** **                            | ** ** | ** **                    | ** **  | ** **         | ** ** |
| General  Electric Capital Corporation |       | Term  Loan A Commitment:      | $1,266,666  |               | 33.333333  | % |
|                                  |       | Term  Loan B Commitment:      | $1,866,667  |               | 33.333333  | % |
|                                  |       | Term  Loan C Commitment:      | $1,866,667  |               | 33.333333  | % |
|                                  |       |                          |        |               |       |   |
|                                  |       | SUBTOTAL:                     | $5,000,000  |               |       |   |
|                                  |       |                          |        |               |       |   |
| Oxford Finance Corporation            |       | Term  Loan A Commitment:      | $2,533,334  |               | 66.666667  | % |
|                                  |       | Term  Loan B Commitment:      | $3,733,333  |               | 66.666667  | % |
|                                  |       | Term  Loan C Commitment:      | $3,733,333  |               | 66.666667  | % |
|                                  |       |                          |        |               |       |   |
|                                  |       | SUBTOTAL:                     | $10,000,000 |               |       |   |
|                                  |       |                          |        |               |       |   |
|                                  |       | TOTAL:                        | $15,000,000 |               | 100        | % |

 

----

 

**SCHEDULEB**

**DISCLOSURES**

 

**[**Tobe completed by Borrower**]**

 

Existing Liens

 
| **Debtor** | ** ** | **Secured Party** | ** ** | **Collateral** | ** ** | **State and  Jurisdiction** | ** ** | **Filing Date and  Number (include  original file date and  continuations,  amendments, etc.)** | ** ** |
|------------|------------|------------------------|------------|----------------|------------|----------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------|------------|
|       |       |                   |       |           |       |                             |       |                                                                                                                               |       |
|       |       |                   |       |           |       |                             |       |                                                                                                                               |       |
|       |       |                   |       |           |       |                             |       |                                                                                                                               |       |

 

Existing Indebtedness

 
| **Debtor** | ** ** | **Creditor** | ** ** | **Amount of Indebtedness  outstanding as of               ,            ** | ** ** | **Maturity Date** | ** ** |
|------------|------------|--------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|
|       |       |         |       |                                                                                                                                                                                                                       |       |                   |       |
|       |       |         |       |                                                                                                                                                                                                                       |       |                   |       |
|       |       |         |       |                                                                                                                                                                                                                       |       |                   |       |

 

Existing Investments

 
| **Debtor** | ** ** | **Type of Investment** | ** ** | **Date** | ** ** | **Amount Outstanding as  of           ** | ** ** |
|------------|------------|----------------------------------|------------|----------|------------|-----------------------------------------------------------------------------------------------------------|------------|
|       |       |                             |       |     |       |                                                                                                      |       |
|       |       |                             |       |     |       |                                                                                                      |       |
|       |       |                             |       |     |       |                                                                                                      |       |

 

Material Agreements

 

1.

 

2.

 

3.

 

----

 

**EXHIBIT A**

 

FORM OF PROMISSORY NOTE

 

 **[                   **, 2008**]**

 

FOR VALUE RECEIVED, DEPOMED,INC., a California corporation located at the address stated below (“Borrower”), promises to pay tothe order of **[**Lender**]**or any subsequent holder hereof (each, a “Lender”), the principal sum of                      and       /100 Dollars ($                       )or, if less, the aggregate unpaid principal amount of all Term Loans made byLender to or on behalf of Borrower pursuant to the Agreement (as hereinafterdefined).  All capitalized terms, unlessotherwise defined herein, shall have the respective meanings assigned to suchterms in the Agreement.

 

This Promissory Note isissued pursuant to that certain Loan and Security Agreement, dated as of June 27,2008, among Borrower, the guarantors from time to time party thereto, GeneralElectric Capital Corporation, as agent, **[**the otherlenders signatory thereto**]**, and Lender(as amended, restated, supplemented or otherwise modified from time to time,the “Agreement”), is one of the Notes referred to therein, and isentitled to the benefit and security of the Debt Documents referred to therein,to which Agreement reference is hereby made for a statement of all of the termsand conditions under which the loans evidenced hereby were made.

 

The principal amount of theindebtedness evidenced hereby shall be payable in the amounts and on the datesspecified in the Agreement.  Interestthereon shall be paid until such principal amount is paid in full at suchinterest rates and at such times as are specified in the Agreement.  The terms of the Agreement are herebyincorporated herein by reference.

 

All payments shall beapplied in accordance with the Agreement. The acceptance by Lender of any payment which is less than payment infull of all amounts due and owing at such time shall not constitute a waiver ofLender’s right to receive payment in full at such time or at any prior orsubsequent time.

 

All amounts due hereunderand under the other Debt Documents are payable in the lawful currency of theUnited States of America.  Borrowerhereby expressly authorizes Lender to insert the date value as is actuallygiven in the blank space on the face hereof and on all related documentspertaining hereto.

 

This Note is secured asprovided in the Agreement and the other Debt Documents.  Reference is hereby made to the Agreement andthe other Debt Documents for a description of the properties and assets inwhich a security interest has been granted, the nature and extent of thesecurity interest, the terms and conditions upon which the security interestwas granted and the rights of the holder of the Note in respect thereof.

 

Time is of the essencehereof.  If Lender does not receive fromBorrower payment in full of any Scheduled Payment or any other sum due underthis Note or any other Debt Document within 3 days after its due date, Borroweragrees to pay the Late Fee in accordance with the Agreement.  Such Late Fee will be immediately due andpayable, and is in addition to any other costs, fees and expenses that Borrowermay owe as a result of such late payment.

 

This Note may be voluntarilyprepaid only as permitted under Section 2.4 of the Agreement.  After an Event of Default, this Note shallbear interest at a rate per annum equal to the Default Rate pursuant to Section 2.6of the Agreement.

 

----

 

Borrower and all parties nowor hereafter liable with respect to this Note, hereby waive presentment, demandfor payment, notice of nonpayment, protest, notice of protest, notice ofdishonor, and all other notices in connection herewith, as well as filing ofsuit (if permitted by law) and diligence in collecting this Note or enforcingany of the security hereof, and agree to pay (if permitted by law) all expensesincurred in collection, including reasonable attorneys’ fees and expenses,including without limitation, the allocated costs of in-house counsel.

 

**THIS NOTESHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OFNEW YORK.**

 

No variation or modificationof this Note, or any waiver of any of its provisions or conditions, shall bevalid unless such variation or modification is made in accordance with Section 10.8of the Agreement.   Any such waiver,consent, modification or change shall be effective only in the specificinstance and for the specific purpose given.

 

**IN WITNESSWHEREOF**, Borrower has dulyexecuted this Note as of the date first above written.

 
|   | **DEPOMED,  INC.**                |
|--------|-----------------------------------|
|   |                              |
|   | By:                               |   |
|   | Name:                             |   |
|   | Title:                            |   |
|   | Federal Tax ID#:                  |   |
|   | Address:  1360 O’Brien Drive |
|   | Menlo  Park, CA 94025             |
|        |                                   |  |  |  |  |

 

----

 

**EXHIBIT B**

 

**SECRETARY’S CERTIFICATE OF AUTHORITY**

 

**[DATE]**

 

Reference is made to theLoan and Security Agreement, dated as of June 27, 2008 (as amended, restated, supplemented orotherwise modified from time to time, the “Agreement”), among Depomed, Inc., a Californiacorporation**]** (the “Borrower”),the guarantors from time to time party thereto, General Electric CapitalCorporation, a Delaware corporation (“GECC”), as a lender and as agent(in such capacity, together with its successors and assigns in such capacity, “Agent”),and the other lenders signatory thereto from time to time (GECC and such otherlenders, the “Lenders”). Capitalized terms used but not defined herein are used with the meaningsassigned to such terms in the Agreement.

 

I, **[                                          ]**,do hereby certify that:

 

(i)            I am the duly elected, qualified and acting **[**Assistant**]**Secretary of **[INSERT NAME OF LOAN PARTY]** (the “Company”);

 

(ii)           attached hereto as Exhibit A is a true, complete andcorrect copies of the Company’s **[**Certificate/Articlesof Incorporation or Articles of Organization/Certificate of Formation**]** and the **[**Bylaws/LLCAgreement/Partnership Agreement**]**,each of which is in full force and effect on and as of the date hereof;

 

(iii)          each of the following named individuals is a duly elected or appointed,qualified and acting officer of the Company who holds the offices set oppositesuch individual’s name, and such individual is authorized to sign the DebtDocuments to which the Company is a party and all other notices, documents,instruments and certificates to be delivered pursuant thereto, and thesignature written opposite the name and title of such officer is such officer’sgenuine signature:

 
| **Name** | ** ** | **Title** | ** ** | **Signature** | ** ** |
|----------|------------|-----------|------------|---------------|------------|
|     |       |      |       |          |       |
|     |       |      |       |          |       |
|     |       |      |       |          |       |

 

(iv)          attached hereto as Exhibit B are true, complete and correctcopies of resolutions adopted by the Board of Directors/Members of the Company(the “Board”) authorizing the execution, delivery and performance of theDebt Documents to which the Company is a party, which resolutions were dulyadopted by the Board on **[**DATE**]** and all such resolutions are in fullforce and effect on the date hereof in the form in which adopted withoutamendment, modification, rescission or revocation;

 

(v)           the foregoing authority shall remain in full force and effect, andAgent and each Lender shall be entitled to rely upon same, until written noticeof the modification, rescission or revocation of same, in whole or in part, hasbeen delivered to Agent and each Lender, but no such modification, rescissionor revocation shall, in any event, be effective with respect to any documentsexecuted or actions taken in 

 

----

 

reliance upon the foregoingauthority before said written notice is delivered to Agent and each Lender; and

 

(vi)          no Default or Event of Default exists under the Agreement, and allrepresentations and warranties of the Company in the Debt Documents are trueand correct in all respects on and as of the date hereof, except to the extentsuch representations and warranties expressly relate to an earlier date, inwhich case such representations and warranties were true and correct in allrespects on and as of such earlier date. **[Note: this paragraph (vi) may be set forthin a separate officer’s certificate at the option of Borrower]**

 

*[Signature Page Follows]*

 

----

 

**IN WITNESSWHEREOF**, I havehereunto set my hand as of the first date written above

 
|   |   |
|--------|--------|
|   | Name:  |   |
|   | Title: | **[**Assistant**]**  Secretary |

 

The undersigned does herebycertify on behalf of the Company that he/she is the duly elected or appointed,qualified and acting **[**TITLE**]** of the Company and that **[**NAME FROM ABOVE**]** is the duly elected or appointed, qualified and acting **[**Assistant**]**Secretary of the Company, and that the signature set forth immediately above ishis/her genuine signature.

 
|   |   |
|--------|--------|
|   | Name:  |   |
|   | Title: |   |

 

----

 

**EXHIBIT B TO SECRETARY’S CERTIFICATE OFAUTHORITY**

** **

**FORM OF RESOLUTIONS**

** **

**BOARD RESOLUTIONS**

                     , 200  

 

**WHEREAS**, Depomed, Inc.,****a****California corporation(“Borrower”)has requested that General Electric Capital Corporation, a Delaware corporation(“GECC”), as agent (in such capacity, the “Agent”) and lender,and certain other lenders (GECC and such other lenders, collectively, the “Lenders”)provide a credit facility in an original principal amount not to exceed$15,000,000 (the “Credit Facility”); and

 

**WHEREAS**, the terms of the Credit Facility are setforth in a loan and security agreement by and among Borrower, the guarantorsfrom time to time party thereto, Agent, and the Lenders and certain relatedagreements, documents and instruments described in detail below; and

 

**[WHEREAS**, **as a subsidiary ofBorrower,               ,the “Company”) will benefit from the making of the loan(s) to Borrowerunder the Credit Facility; and]**

 

**WHEREAS**, the Board of Directors of **[Borrower]****[Company]** (the “Directors”)deems it advisable and in the best interests of **[Borrower]****[Company]** to execute, deliver andperform its obligations under those transaction documents described andreferred to below.

 

**NOW,THEREFORE**, be it

 

**RESOLVED**, that the Credit Facility be, and it herebyis, approved; and further

 

**RESOLVED**, that the form of Loan and SecurityAgreement (the “Loan and Security Agreement”), by and among **[**Borrower**]**, **[**Company,**]** the **[**other**]** guarantorsfrom time to time party thereto, Agent and the Lenders, as presented to theDirectors, be and it hereby is, approved and the **[**President,the Chief Executive Officer, Chief Financial Officer, the Vice President orTreasurer**]** of **[**Borrower**]****[**Company**]** (collectively, the “Proper Officers”) be, and eachof them hereby is, authorized and directed on behalf of **[**Borrower**]****[**Company**]** to execute and deliver to Agent the Loan and SecurityAgreement, in substantially the form as presented to the Directors, with suchchanges as the Proper Officers may approve, such approval to be conclusivelyevidenced by execution and delivery thereof; and further

 

**[RESOLVED**, that the form of Promissory Note (the “Note”),as presented to the Directors, be, and it hereby is, approved and the ProperOfficers be, and each of them hereby is, authorized and directed on behalf ofBorrower to execute and deliver to Lender one or more promissory Notes, insubstantially the form as presented to the Directors, with such changes as theProper Officers may approve, such approval to be conclusively evidenced by executionand delivery thereof; and further**]**

 

**[RESOLVED**, that the form(s) of Account ControlAgreement **[**(the “SecurityDocument”)**]****[**DisbursementLetter,**]****[INCLUDE OTHER DOCUMENTS AS APPROPRIATE]** (togetherwith the Security Document, the “Ancillary Documents”), each aspresented to the Directors, be, and each of them hereby is, approved and theProper Officers be, and each of them hereby is, authorized and directed onbehalf of Borrower to execute and deliver to Agent each of the AncillaryDocuments, in substantially the form as presented to the Directors, with suchchanges as the Proper Officers may approve, such approval to be conclusivelyevidenced by execution and delivery thereof; and further**]**

 

**RESOLVED**, that the Proper Officers be, and each ofthem hereby is, authorized and directed to execute and deliver any and allother agreements, certificates, security agreements, financing statements, 

 

----

 

indemnificationagreements, instruments and documents (together with the Loan and SecurityAgreement, **[**and**]** the Notes **[**, and theAncillary Documents**]**, the “DebtDocuments”) and take any and all other further action, in each case, as maybe required or which they may deem appropriate, on behalf of **[**Borrower**] [**Company**]**, in connection with the Credit Facility and carrying intoeffect the foregoing resolutions, transactions and matters contemplatedthereby; and further

 

**RESOLVED**, that**[**Borrower**] [**Company**]** is herebyauthorized to perform its obligations under the Debt Documents, **[**including, without limitation, theborrowing of any advances made under the Credit Facility and**]** the granting of any security interest in **[**Borrower’s**] [**Company’s**]** assetscontemplated thereby to secure **[**Borrower’s**] [**Company’s**]**obligations in connection therewith; andfurther

 

**RESOLVED**, that in addition to executing any documentsapproved in the preceding resolutions, the Secretary or any Assistant Secretaryof **[**Borrower**] [**Company**]** may attest to such Debt Documents, the signature thereonor the corporate seal of **[**Borrower**] [**Company**]** thereon; andfurther

 

**RESOLVED**, that any actions taken by the ProperOfficers prior to the date of these resolutions in connection with thetransactions contemplated by these resolutions are hereby ratified andapproved; and further

 

**RESOLVED**, that these resolutions shall be valid andbinding upon **[**Borrower**] [**Company**]**.

 

----

 

**EXHIBIT C-1**

 

**FORM OF LANDLORD CONSENT**

 

**[**Landlord**]**

**[**Address**]**

 

**[**                 ,         **]**

 

Ladies and Gentlemen:

 

General Electric CapitalCorporation (togetherwith its successors and assigns, if any, “Agent”) and certain other lenders (the “Lenders”)have entered into, or is about to enter into, a Loan and Security Agreement,dated as of June 27, 2008(as amended, restated, supplemented or otherwise modified from time to time,the “Agreement”) with Depomed, Inc., (“Borrower”) **[**and                     (“Company”)**]**, pursuant towhich **[**Borrower**] [**Company**]** has granted, or will grant, to Agent, on behalf of itselfand the Lenders, a security interest in certain assets of **[**Borrower**] [**Company**]**, including,without limitation, all of **[**Borrower’s**] [**Company’s**]** cash, cashequivalents, accounts, books and records, goods, inventory, machinery,equipment, furniture and trade fixtures (such as equipment bolted to floors),together with all addition, substitutions, replacements and improvements to,and proceeds, including, insurance proceeds, of the foregoing, but excludingbuilding fixtures (such as plumbing, lighting and HVAC systems (collectively,the “Collateral”).  Some or all of the Collateral is, or will be,located at certain premises known as **[**                                    **]** in the City or Town of **[**                          ,County of                                                   and State of               **]** (“Premises”), and **[**Borrower**] [**Company**]** occupies thePremises pursuant to a lease, dated as of **[**DATE**]**, between **[**Borrower**] [**Company**]**, as tenant,and you, **[**NAME**]**, as **[**owner/landlord/mortgagee/realtymanager**]** (as amended, restated,supplemented or otherwise modified from time to time, the “Lease”).

 

By your signature below, you hereby agree (and weshall rely on your agreement) that: (i) the Lease is in full force andeffect and you are not aware of any existing defaults thereunder, (ii) theCollateral is, and shall remain, personal property regardless of the method bywhich it may be, or become, affixed to the Premises; (iii) you agree touse your best efforts to provide Agent with written notice of any default by **[**Borrower**] [**Company**]** under the Lease resulting in a termination of the Lease (“DefaultNotice”) and Agent shall have the right, but not the obligation to curesuch default within 15 days following Agent’s receipt of such Default Notice, (iv) yourinterest in the Collateral and any proceeds thereof (including, withoutlimitation, proceeds of any insurance therefor) shall be, and remain, subjectand subordinate to the interests of Agent and you agree not to levy upon anyCollateral or to assert any landlord lien, right of distraint or other claimagainst the Collateral for any reason; (v) Agent, and its employees andagents, shall have the right, from time to time, to enter into the Premises forthe purpose of inspecting the Collateral; and (vi) Agent, and itsemployees and agents, shall have the right, upon any default by **[**Borrower**] [**Company**]** under the Agreement, to enter into the Premises and toremove or otherwise deal with the Collateral, including, without limitation, byway of public auction or private sale (provided that, if Agent conducts apublic auction or private sale of the Collateral at the Premises, Agent shalluse reasonable efforts to notify Landlord first and to hold such auction orsale in a manner that would not unduly disrupt Landlord’s or any other tenant’suse of the Premises).  Agent agrees torepair or reimburse you for any physical damage actually caused to the Premisesby Agent, or its employees or agents, during any such removal or inspection(other than ordinary wear and tear), provided that it is understood by theparties hereto that Agent shall not be liable for any diminution in value ofthe Premises caused by the removal or absence of the Collateral therefrom.  You hereby acknowledge that Agent shall haveno obligation to remove or dispose of the Collateral from the Premises and noaction by Agent pursuant to this Consent shall be deemed to be an assumption byAgent of any obligation under the Lease and, except as provided in theimmediately preceding sentence, Agent shall not have any obligation to you.

 

----

 

You hereby acknowledge and agree that **[**Borrower’s**] [**Company’s**]** granting of a security interest in the Collateral in favorof Agent, on behalf of itself and the Lenders, shall not constitute a defaultunder the Lease nor permit you to terminate the Lease or re-enter or repossessthe Premises or otherwise be the basis for the exercise of any remedy availableto you.

 

This Consent and the agreements contained hereinshall be binding upon, and shall inure to the benefit of, any successors andassigns of the parties hereto (including any transferees of the Premises).  This Consent shall terminate upon theindefeasible payment of Borrower’s indebtedness in full in immediatelyavailable funds and the satisfaction in full of Borrower’s **[**andCompany’s**]** performance of its obligations underthe Agreement and the related documents.

 

This Consent and any amendments, waivers, consentsor supplements hereto or in connection herewith may be executed in any numberof counterparts and by different parties hereto in separate counterparts, eachof which when so executed and delivered shall be deemed an original, but allsuch counterparts together shall constitute but one and the same instrument;signature pages may be detached from multiple separate counterparts andattached to a single counterpart so that all signature pages arephysically attached to the same document. Delivery of an executed signature page of this Consent or anydelivery contemplated hereby by facsimile or electronic transmission shall beas effective as delivery of a manually executed counterpart thereof.

 

----

 

We appreciate your cooperation in this matter ofmutual interest.

 
|   | GENERAL  ELECTRIC CAPITAL CORPORATION,                |
|--------|-------------------------------------------------------|
|   | as  Agent                                             |
|   |                                                  |
|   | By:                                                   |   |
|   | Name:                                                 |   |
|   | Title:                                                |   |
|   |                                                  |
|   | General  Electric Capital Corporation                 |
|   | c/o  GE Healthcare Financial Services, Inc., LSF |
|   | 83  Wooster Heights Road, Fifth Floor                 |
|   | Danbury,  Connecticut 06810                           |
|   | Attention:  Senior Vice President of Risk             |
|   | Phone:  (203) 205-5200                                |
|   | Facsimile:  (203) 205-2192                            |
|   |                                                  |
|   | With  a copy to:                                      |
|   | General  Electric Capital Corporation                 |
|   | c/o  GE Healthcare Financial Services, Inc.      |
|   | Two  Bethesda Metro Center, Suite 600            |
|   | Bethesda,  Maryland 20814                             |
|   | Attention:  General Counsel                           |
|   | Phone:  (301) 961-1640                                |
|   | Facsimile: (301) 664-9866                             |

 
| AGREED TO AND ACCEPTED BY:                                            |            |
|-----------------------------------------------------------------------|-----------------|
|                                                                  |            |
| **[**NAME**]**, as **[**owner/landlord/mortgagee/realty  manager**]** |            |
|                                                                  |            |
| By:                                                                   |            |   |
| Name:                                                                 |            |   |
| Title:                                                                |            |   |
|                                                                  |            |
| Address:                                                              |            |
|                                                                  |            |
| AGREED TO AND ACCEPTED BY:                                            |            |
|                                                                  |            |
| **[**NAME OF LOAN  PARTY**]**                                         |            |
|                                                                  |            |
| By:                                                                   |            |   |
| Name:                                                                 |            |   |
| Title:                                                                |            |   |
|                                                                  |            |
| Interest in the Premises  (check applicable box)                      |            |
|                                                                  |            |
| ·                                                                | Owner           |
| ·                                                                | Mortgagee       |
| ·                                                                | Landlord        |
| ·                                                                | Realty  Manager |
|                                                                       |                 |  |  |  |  |  |

 

Address:

 

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**EXHIBIT C-2**

 

**FORM OF BAILEE CONSENT**

 

[Letterhead of GE Capital]

 

                 ,200    

 

[NAME OFBAILEE]

                                

                                

Dear Sirs:

 

**Re:  [Name of the Loan Party] (the “Company”)**

 

Please accept this letter asnotice that we have entered into or may enter into financing arrangements withthe Company under which the Company has granted to us continuing securityinterests in substantially all personal property and assets of the Company andthe proceeds thereof, including, without limitation, certain equipment owned bythe Company held by you at the manufacturing facility (the “Premises”)owned by you and located at [                            ](the“Personal Property”).

 

Please acknowledge that as aresult of such arrangements, you are holding all of the Personal Propertysolely for our benefit and subject only to the terms of this letter and ourinstructions; provided, however, that until further written notice fromus, you are authorized to use and/or release any and all of the PersonalProperty in your possession as directed by the Company in the ordinary courseof business. The foregoing instructions shall continue in effect until we modifythem in writing, which we may unilaterally do without any consent or approvalfrom the Company.  Upon receipt of ourinstructions, you agree that (a) you will release the Personal Propertyonly to us or our designee; (b) you will cooperate with us in our effortsto assemble, sell (whether by public or private sale), take possession of, andremove all of the Personal Property located at the Premises; (c) you willpermit the Personal Property to remain on the Premises for forty-five (45) daysafter your receipt of our instructions or at our option, to have the PersonalProperty removed from the Premises within a reasonable time, not to exceedforty-five (45) days after your receipt of our instructions; (d) you willnot hinder our actions in enforcing our liens on the Personal Property; and (e) afterreceipt of our instructions, you will abide solely by our instructions withrespect to the Personal Property, and not those of the Company.

 

You hereby waive and release in our favor: (a) anycontractual lien, security interest, charge or interest and any other lienwhich you may be entitled to whether by contract, or arising at law or inequity against any Personal Property; (b) any and all rights granted underany present or future laws to levy or distrain for rent or any other chargeswhich may be due to you against the Personal Property; and (c) any and allother claims, liens, rights of offset, deduction, counterclaim and demands ofevery kind which you have or may hereafter have against the Personal Property.

 

 You agree that (i) you have not and willnot commingle the Personal Property with any other property of a similar kindowned or held by you in any manner such that the Personal Property is notreadily identifiable, (ii) you have not and will not issue any negotiableor non-negotiable documents or instruments relating to the Personal Property,and (iii) the Personal Property is not and will not be deemed to befixtures.

 

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Notwithstanding the foregoing,all of your charges of any nature whatsoever shall continue to be charged toand paid by the Company and we shall not be liable for such charges.

 

You herebyauthorize us to file at any time such financing statements naming you as thedebtor/bailee, Company as the secured party/bailor, and us as the Company’sassignee, indicating as the collateral goods of the Company now or hereafter inyour custody, control or possession and proceeds thereof, and including anyother information with respect to the Company required under the UniformCommercial Code for the sufficiency of such financing statement or for it to beaccepted by the filing office of any applicable jurisdiction (and anyamendments or continuations with respect thereto).

 

The arrangement as outlinedherein is to continue without modification, until we have given you writtennotice to the contrary.

 

EACH OF THE PARTIES HERETOHEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASEDUPON OR ARISING OUT OF THIS LETTER.

 

Any notice(s) requiredor desired to be given hereunder shall be directed to the party to be notifiedat the address stated herein.

 

The terms and conditions contained herein are to be construed andenforced in accordance with the laws of the State of New York.

 

This terms and conditionscontained herein shall inure to the benefit of and be binding upon the partieshereto and their respective successors and permitted assigns.

 

----

 

The Company has signed below to indicate its consent to and agreementwith the foregoing arrangements, terms and conditions.  By your signature below, you hereby agree tobe bound by the terms and conditions of this letter.

 
|                  | Very truly  yours,                                    |
|-----------------------|-------------------------------------------------------|
|                  |                                                  |
|                  | GENERAL  ELECTRIC CAPITAL CORPORATION                 |
|                  |                                                  |
|                  | By:                                                   |   |
|                  | Name:                                                 |   |
|                  | Title: Duly  Authorized Signatory                     |
|                  |                                                  |
|                  | General  Electric Capital Corporation                 |
|                  | c/o  GE Healthcare Financial Services, Inc., LSF |
|                  | 83  Wooster Heights Road, Fifth Floor                 |
|                  | Danbury,  Connecticut 06810                           |
|                  | Attention:  Senior Vice President of Risk             |
|                  | Phone:  (203) 205-5200                                |
|                  | Facsimile:  (203) 205-2192                            |
|                  |                                                  |
|                  | With  a copy to:                                      |
|                  |                                                  |
|                  | General  Electric Capital Corporation                 |
|                  | c/o  GE Healthcare Financial Services, Inc.      |
|                  | Two  Bethesda Metro Center, Suite 600            |
|                  | Bethesda,  Maryland 20814                             |
|                  | Attention:  General Counsel                           |
|                  | Phone:  (301) 961-1640                                |
|                  | Facsimile: (301) 664-9866                             |
|                  |                                                  |
| Agreed to:            |                                                  |
|                  |                                                  |
| [NAME OF  LOAN PARTY] |                                                  |
|                  |                                                  |
| By:                   |                                                  |   |
| Name:                 |                                                  |   |
| Title:                |                                                  |   |
| Address:              |                                                  |
|                  |                                                  |
|                  |                                                  |
|                  |                                                  |
|                  |                                                  |
| [NAME OF  BAILEE]     |                                                  |
|                  |                                                  |
| By:                   |                                                  |   |
| Name:                 |                                                  |   |
| Title:                |                                                  |   |
| Address:              |                                                  |
|                  |                                                  |
|                  |                                                  |
|                       |                                                       |  |  |  |  |  |  |  |

 

----

 

**EXHIBIT D**

 

**COMPLIANCE CERTIFICATE**

 

**[DATE]**

 

Reference is made to theLoan and Security Agreement, dated as of June 27, 2008 (as amended, restated, supplemented orotherwise modified from time to time, the “Agreement”), among, a California****corporation(the “Borrower”), the guarantors from time to time party thereto,General Electric Capital Corporation, a Delaware corporation (“GECC”),in its capacity as agent (in such capacity, together with its successors andassigns, in such capacity, the “Agent”) and lender, and the otherlenders signatory thereto (GECC and such other lenders, the “Lenders”).  Capitalized terms used but not defined hereinare used with the meanings assigned to such terms in the Agreement.

 

I, **[**                                                  **]**, do hereby certify that:

 

(i)                                     I am the duly elected, qualified and acting **[**TITLE**]**of Borrower;

 

(ii)                                  attached hereto as Exhibit A are **[**annual audited financial statements**]**/**[**quarterlyfinancial statements**]** as requiredunder Section 6.3 of the Agreement and that such financial statements areprepared in accordance with GAAP and are consistently applied from one periodto the next except as explained in an accompanying letter or footnotes;

 

(iii)                               no Default or Event of Default has occurredunder the Agreement which has not been previously disclosed, in writing, toLender;

 

(iv)                              all representations and warranties of theLoan Parties stated in the Debt Documents are true and correct in all respectson and as of the date hereof, except to the extent such representations andwarranties expressly relate to an earlier date, in which case suchrepresentations and warranties were true and correct in all respects on and asof such earlier date; and

 

(v)                                 no default or event of default exists underany Lease Agreement.

 

**IN WITNESSWHEREOF**, I havehereunto set my hand as of the first date written above

 
|   |   |   |
|--------|--------|--------|
|   | Name:  |   |
|   | Title: |   |

 

----

 

**EXHIBIT E**

 

o

 
| **EPS Setup  Form** | **Submit Via Fax:**

**ATTN: EPS Facilitator**

**(203)  205-2193** | GE Healthcare Financial  Services

Phone: (800) 426-6346

Fax: Fax: (203) 205-2193 |
|---------------------|---------------------------------------------------------------------|------------------------------------------------------------------------------------|

 

1. **Sender Information:**                                                                                                                                                                                                                                           **Instructions To Enroll In EPSPlan:**

 
| ** Sender Name:**         | A. | Complete sections 1 - 7   (signature and all other information is required)               |
|--------------------------------|----|-------------------------------------------------------------------------------------------|
| ** Sender Phone Number:** | B. | Include a copy of a voided  check, on which is noted your bank, branch and account number |
|                           | C. | **Please  submit via Fax to: (203) 205-2193**                                             |

 

**2.  Authorization Agreement for Pre-ArrangedPayment Plan:**

 

(a)                      Depomed, Inc., (“Borrower”)authorizes General Electric Capital Corporation (“Agent”) to initiate debit entries for payment becoming duepursuant to the terms and conditions set forth in the Loan and SecurityAgreement, dated as of June 27,2008 (as amended, restated, supplemented or otherwise modified from timeto time, the “Agreement”),among Borrower, the guarantors form time to time party thereto, Agent and thelenders signatory thereto.

 

(b)                     Borrower understands that the basic term loanpayment and all applicable taxes are solely its responsibility.  If payment is not satisfied due to accountclosure, insufficient funds, or cancellation of any required automated paymentservices, Borrower agrees to remit payment plus any applicable late charges, asset forth in the Agreement.

 

(c)                      It is incumbent upon Borrower to give writtennotice to Agent of any changes to this authorization or the below referencedbank account information 10 days prior to payment date; Borrower may revokethis authorization by giving 10 days written notice to Agent unless otherwisestipulated in the Agreement.

 

(d)                     If a deduction is made in error, Borrower has the right to be paidwithin five business days by Agent the amount of the erroneous deduction,provided Agent is notified in writing of such error.

 

(e)                      Cosigner must also sign if the account is ajoint account.

 

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3.  **Agent Account Number(s):** (Invoice **BillingID**, 10-digit number formatted: 1234567-001)

 
| **Account:**                                     | **Account:**        | **Account:** | **Account:** |
|--------------------------------------------------|---------------------|--------------|--------------|
| **Account:**                                     | **Account:**        | **Account:** | **Account:** |
|                                             |                |         |         |
| **4.  First Payment Debit Date (mm/dd/yy)** | **First  Payment:** |
|                                                  |                     |              |              |  |

 

**5.  Complete ALL Bank an****d****Borrower Information:**

 
| **BANK**   | **Name of  Bank or Financial Institution:**    |       | **Bank  Account Number:** | ** ** | **ABA  Routing Number  (9-digit number)**                                                                                           | ** ** |
|------------|------------------------------------------------|------------|---------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** ** | ** **                                     | ** ** | ** **                | ** ** | ** **                                                                                                                          | ** ** |
| **INFO**   | **Address  of Bank or Financial Institution:** |       | **City:**                 | ** ** | **State:**                  **Zip Code:** | ** ** |

 
| ** **   | **Signatures**                                        | ** ** | **Company**           | ** ** | **Contact**                | ** ** |
|--------------|-------------------------------------------------------|------------|-----------------------|------------|----------------------------|------------|
| ** **   | **Signature  of Authorized Signer: Date:**            |       | **Company  Name:**    |       | **Contact  Name:**         |       |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| **BORROWER** | **Name of  Joint Account Holder:****(Please  Print)** |       | **Company  Address:** |       | **Contact  Phone Number:** |       |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| **INFO**     | **Signature  of Joint Account Holder:  Date:**        |       | **City:**             |       | **Contact  Fax Number:**   |       |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| ** **   | ** **                                            | ** ** | ** **            | ** ** | ** **                 | ** ** |
| ** **   | **Name of  Authorized Signer:**(Please  Print)        |       | **State: Zip  Code:** |       | Contact  email address:    |       |

 

6.  Would you like to have property taxes paidvia EPS on above accounts?

**Check****x****: ****YES:**o******                                  ****NO:**o

 

7.  Would you like to receive a complimentaryinvoice?

**Check****x****: ****YES:**o**                                  ****NO:**o

 

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