Exhibit 10.57


 


TERM LOAN AGREEMENT


 


VIVUS, INC., a Delaware
Corporation and VIVUS REAL ESTATE LLC, a New Jersey Limited Liability Company
with a business address of 1172 Castro Street, Mountain View, CA 94040 (jointly
and severally if more than one, the “Borrower”) and Crown Bank, N.A., a banking
association created and existing under the laws of the United States of America
with a principal office located at 715 Route 70, Brick, NJ 08723 (the “Bank”),
for valuable consideration, the receipt of which is hereby acknowledged, agree
as follows:


 


I.              DEFINITIONS.


1.                             Each reference herein to:


 


a.                             “Accounts”, “Chattel Paper”,
“Consumer Goods”, “Documents”, “Equipment”, “Farm Products”, “Fixtures”, “General
Intangibles”, “Goods”, “Instruments”, “Inventory”, “Money”, and “Securities”
shall have the meaning assigned to each in the Uniform Commercial Code from
time to time in effect in the State (the “UCC”);


b.                            “Affiliates of Borrower” means any person or entity that, directly or
indirectly, controls, is controlled by or is under common control with the
Borrower or is an inside director or officer of the Borrower.  For purposes of this definition, the term “control”
(including the terms “controlling”, “controlled by” and “under common control
with”) means the possession, direct or indirect, of the power to vote five
percent (5%) or more of (i) the voting stock of a corporation, (ii) the
partnership interests of a partnership, or (iii) the membership interests
of a limited liability company, or to direct or cause the direction of the
management and policies of any such entity, whether through the ownership of
voting stock, partnership interests, membership interests, by contract or
otherwise;


c.                             “Books and Records” shall mean all books, correspondence, credit
files, records and other documents relating directly or indirectly to the
Obligations and the Collateral, including, without limitation, all tapes,
cards, runs, data bases, software programs, diskettes, and other papers and
documents in the possession or control of the Borrower, any computer service
bureau, or other agent or independent contractor:


d.                            “Loan Documents” shall mean this Agreement, the Note, any
Bank issued Commitment Letter and any amendments thereto, and any and all
mortgages, pledge agreements, security agreements, financing statements,
guaranties and other documents related to this Agreement and/or the Loan;


e.                             “Material Adverse Change” shall mean with respect to the Borrower and
any guarantors and any of their respective properties or revenues, an event,
action or condition that would or is reasonably likely to (i) adversely
affect the validity or enforceability of, or the authority of the Borrower
and/or any guarantor to perform their respective obligations under, the Loan
Documents, or (ii) materially adversely affect the business, operations,
assets or condition (financial or otherwise) of the Borrower and/or any
guarantor or the ability of the Borrower and/or any guarantor to perform their
respective obligations under any of the Loan Documents, or (iii) materially
adversely affect the value of any Collateral;


f.                               “Rate”  For
the first year of this Note, the interest rate will be fixed at eight and
one-quarter (8.25%) percent, which is equal to the Wall Street Journal Prime
Rate plus one (1%) percent and then adjusted annually to a fixed rate for the
year equal to the Wall Street Journal Prime Rate plus one (1%) percent, with a
floor rate of seven and one-half (7.50%) percent at all times, subject to Article V,
Section 8.


g.                            “State” shall mean the State of New Jersey.


 


II.             LOAN.


1.                              Term Loan; Purposes.  The Bank agrees on the terms and provisions of this Agreement to extend
a term loan for the account of the Borrower in the principal sum of Five
Million Three Hundred Seventy-Five Thousand and No/100 Dollars ($5,375,000.00)
(the “Loan”) for the following purpose(s): 
Purchase real estate


 


2.                              Note; Interest Calculation.  The
Loan shall be evidenced by the Borrower’s note of even date with this Agreement
(which note and all amendments thereto and any additional or supplementary
notes executed pursuant to this Agreement are herein referred to collectively
as the ‘‘Note’’).  The interest rate
initially set forth in the Note is a variable rate.  Interest shall be calculated on the basis of a
360-day year using the actual number of days elapsed.  On maturity, whether scheduled or otherwise,
both principal and all accrued and unpaid interest shall be immediately due and
payable.


 


3.                              Late Fee.  If
the entire amount of any required principal and/or interest is not paid in full
within (15) days after the same is due, the Borrower shall pay to the Bank a
late fee equal to five percent (5%) of the required payment.


 


4.                              Prepayment. 
During the term of the Loan, for the loss on income, there shall be a
premium for the prepayment of the Loan before its scheduled maturity.  (a)  Except as set forth in subsection (b) below,
if the Loan is prepaid, in whole or in part, within the first year of its term,
the premium shall be five (5%) percent of the prepaid amount.  If prepayment occurs in the second year of
its term, the premium shall be four (4%) percent.  If prepayment occurs in the third year the
prepayment shall be three


 


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(3%)
percent.  If prepayment occurs in the
fourth year the premium shall be two (2%) percent, and one (1%) percent if it
occurs in the fifth year.  At no time
shall the prepayment premium be less than one (1%) percent.  (b)  If the Borrower sells one of the
two buildings to an independent party at a later date, the Bank will assess a
one (1%) percent premium provided the Bank received a payment reducing the loan
in an amount equal to forty (40%) percent of the initial appraised value and
the remaining parcel has a loan to value not less than sixty (60%) percent of
the remaining balance of the loan.  In
addition, the Borrower must pay a Five Thousand ($5,000.00) and 00/100 Dollar
release fee for the release of the parcel.


 


III.           REPRESENTATIONS
AND WARRANTIES.


 


The
Borrower represents and warrants that:


 


1.                              Organization and Powers.  (a) If
a corporate, partnership, limited liability company or trust Borrower, it is
duly organized, validly existing and in good standing under the laws of the
state of its formation and in every other jurisdiction, except where the
failure to so qualify would not have a material adverse effect upon the
Borrower, its property, its financial condition, or otherwise, (b) it has
the power and authority to own its properties and to carry on its business as
now being conducted and, if a corporate, partnership, limited liability company
or trust Borrower, is qualified to do business in every jurisdiction where such
qualification is necessary, (c) it has the power to execute, deliver and
perform the Loan Documents, (d) the execution, delivery and performance of
the Loan Documents have been duly authorized by all requisite action, (e) the
execution, delivery and performance of the Loan Documents will not violate any
provision of law, any order of any court or other agency of government, the
Articles of Formation or By-laws of a corporate Borrower, the partnership
agreement of a partnership Borrower, the Articles of Incorporation or Operating
Agreement of a limited liability company Borrower, or the trust agreement of a
trust Borrower, or any indenture, agreement or other instrument to which it is
a party, or by which it is bound, or be in conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of the Borrower (other than in favor of the Bank) or
the acceleration of any of its outstanding indebtedness.


 


2.                              Financial Statements.  The Borrower has heretofore furnished to the Bank accurate and complete
financial data and other information based on its operations in previous years,
and said financial data fairly presents the financial position and the results
of operations for the periods indicated therein.  There has been no Material Adverse Change
since the date of the most recent financial statement.


 


3.                              Litigation.  There is no action, suit or proceeding at law or in equity or by or
before any governmental instrumentality or other agency now pending or
threatened against or affecting the Borrower.


 


4.                              No Conflict.  The Borrower is not a party to any agreement or instrument or subject
to any restriction materially or adversely affecting its business, properties
or assets, operations or condition, financial or otherwise.  The Borrower has no knowledge that it is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
to which it is a party.


 


5.                              Use of Proceeds.  No part of the proceeds of the Loan will be used for consumer purposes
or will be used, in whole or in part, to purchase or carry, directly or
indirectly, any margin stock or margin security (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any such
margin stock or margin security.  If requested
by the Bank, the Borrower will furnish in connection with this Agreement a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in said Regulation U.


 


IV.           CONDITIONS
OF LENDING.


 


1.        The
Bank shall be obligated to extend the credit and make the advances under this
Agreement only if on the date such advance is requested:


 


a.                             The Bank shall have received, to the extent
applicable (i) copies of the Articles of Incorporation, Certificate of
Incorporation, Certificate of Limited Partnership, or Certificate of a Limited
Liability Company or Partnership, each certified by the secretary of state of
the state of its formation, (ii) copies of partnership, trust, or
operating agreements, each certified to the Bank by a duly authorized
representative of such Borrower, (iii) Good Standing, Subsistence and/or
Existence Certificates of the state of formation of the Borrower if applicable,
and from all other states where such Borrower conducts its business or holds
property, (iv) duly adopted resolutions authorizing the execution,
delivery and performance under the Loan Documents certified by an officer of
the Borrower; (v) a title policy insuring that the Bank’s loan is a first
lien on the Property, (vi)  copy of the Certificate of Inspection from the
Department of Community Affairs, Bureau of Housing Inspection of the State of
New Jersey and a copy of the Certificate of Occupancy of both Properties;


b.                            The representations and warranties in Part III
hereof are true and correct;


c.                             No Event of Default shall have occurred;


 


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V.                                              COVENANTS.


 


The
Borrower covenants and agrees that it will:


 


1.                              a.  Legal Existence; Insurance; Etc.  Keep in full force and effect its legal
existence (if a corporation, partnership, limited liability company or trust),
authority, rights, licenses, permits and franchises and operate its business as
conducted prior to the date hereof; maintain all property used in the conduct
of its business and keep the same in good repair, working order and condition;
and maintain adequate insurance on its properties against fire, theft, and
extended coverage risks and against public liability and property damage and
products liability and such other risks as may be required by law or as may be
reasonably required by the Bank, in such form, for such periods, and written by
such companies as may be satisfactory to the Bank, such insurance in the case
of a secured loan to name the Bank as additional insured and/or mortgagee/loss
payee.  All policies of insurance shall
provide for at least thirty (30) days’ written notice to the Bank prior to
cancellation or change in the coverage, scope or amount of any such policy or
policies.  Borrower shall furnish the
Bank with certificates of compliance with the foregoing insurance provision.


b.  Compliance
with Laws.  Comply with all
present and future applicable laws, ordinances, rules, regulations, directives
and other requirements of all governmental instrumentalities, including without
limitation those relating to Hazardous Substances, within such time periods as
required thereby, with time being of the essence.


 


2.                              Operation of Business.  Maintain and operate its business in a proper and efficient manner.


 


3.                              Payment of Taxes.  Pay and discharge all taxes, assessments, and governmental charges
imposed upon Borrower, its income or its property before the same shall be in
default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might become a lien upon any such properties.


 


4.                              Financial Statements. 
Furnish to the Bank:


 


a.                             promptly, from time to time as requested by
the Bank, and in all events within one hundred twenty (120) days after the
close of each applicable party’s tax year, (i) with respect to the
Borrower and all corporate, partnership or trust guarantors, financial
statements (audited if requested), balance sheets, profit and loss statements,
together with supporting schedules, signed and in such form as may be
acceptable to the Bank; (ii) with respect to all individual guarantors,
signed personal financial statements; and (iii) with respect to all
entities and individuals referred to in (i) and (ii), current Federal
income tax returns (with all schedules and exhibits), or in the case of a
partnership, Form 1065 (with all schedules and exhibits).  In any event, all the documents referred to
in this subparagraph (a), regardless of when last submitted, must be submitted
to the Bank, as often as the Bank shall deem necessary, if there occurs a
Material Adverse Change;


b.                            promptly, from time to time, such other
information regarding the operations, assets, business, affairs and financial
condition of the Borrower and all guarantors, as the Bank may reasonably
request; and


c.                             with respect to all personal financial
statements submitted by individual guarantors, such statements shall be on
forms prescribed by the Bank.


 


5.                              Inspection.  Permit agents or representatives of the Bank, at reasonable hours and
upon reasonable notice, to inspect the Books and Records of the Borrower and to
make abstracts or reproductions thereof, all at the Borrower’s expense.


 


6.                              Adverse Changes.  Promptly advise the Bank of any Material Adverse Change.


 


7.                              Accounting System.  Maintain a standard system of accounting in accordance with generally
accepted accounting principles.


 


8.                              Depository.  Maintain the Bank as the Borrower’s depository and maintain in one or
more accounts at the Bank, a minimum collected balance of $100,000.00, to be
analyzed annually.  If the minimum
balance is not maintained the interest rate will be automatically increased by
one-half (.5%) percent.


 


9.                              Sales of Accounts and
Instruments.  Not sell, assign, discount or dispose of any
Accounts or Instruments held by the Borrower, with or without recourse, except
for collection (including endorsements) in the ordinary course of business.


 


10.                        Sales and Transfers.  Not sell, assign, lease, transfer, sell and leaseback, or otherwise
dispose of all or any material amount of its assets not in the ordinary course
of business to any person or entity or turn over the management of, or enter
into a management contract with respect to, such assets.


 


11.                        Valuation.  Not write up (by creating an appraisal surplus or otherwise) the value
of any capital assets above their cost less the depreciation regularly
allowable thereon.


 


12.                        Fundamental Changes.  Not
dissolve, liquidate, consolidate with or merge with any corporation, limited
liability company or other entity or agree to do any of the foregoing.


 


13.                        Additional Covenants. 
Comply special provisions with the additional covenants, if any, set
forth on affixed Exhibit A-1.


 


VI.                                          SECURITY AGREEMENT AND OTHER
SECURITY DOCUMENTS.


1.                              Security Interest;
Collateral; Obligations.  The Borrower hereby grants to the Bank, as
security for any and all obligations whatsoever of the Borrower to the Bank,
whether direct, indirect, absolute or contingent, due or to become due, and
whether


 


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now
existing or hereafter arising and howsoever evidenced or acquired, including
without limitation all indebtedness and liabilities evidenced by the Loan, this
Agreement, the other Loan Documents, checking account overdrafts, and letter of
credit reimbursement agreements, excluding, however, indebtedness incurred
primarily for personal, family or household purposes (collectively, the “Obligations”),
a first lien on, and a security interest in and agrees and acknowledges that
the Bank has and will continue to have a first lien on and a perfected security
interest in all of the Collateral described below, both presently owned and
after acquired, together with all proceeds and products thereof, additions and
accessions thereto, and all replacements and substitutions therefor
(collectively, the “Collateral”), including all such Collateral which
constitutes Fixtures attached to the Property as set forth on Exhibit A-4
and the Certificate of Deposit (as defined below).


 


2.                              Borrower hereby warrants, covenants and
agrees that:


 


a.                             Title; Adverse Liens. 
Except for prior security interests disclosed on Exhibit A-2
(if any) and except for the security interest granted hereby, the Borrower is
the owner of presently owned Collateral and will be the owner of Collateral
hereafter acquired free from any lien or encumbrance (other than those in favor
of the Bank), and Borrower will defend the Collateral against the claims and
demands of all persons at any time claiming the same or any interest therein.


b.                            Financing Statements. 
Except for financing statements evidencing the security interests which
may be listed on Exhibit A-2 (if any), no financing statements
covering any Collateral are on file in any public office.  At the request of the Bank, the Borrower will
execute one or more (i) financing statements pursuant to the UCC; (ii) title
certificate lien application forms; and (iii) other documents necessary or
advisable to perfect the security interests evidenced hereby, all in form
satisfactory to the Bank.  Where allowed
by law, the Borrower hereby irrevocably authorizes the Bank to file financing
statements and amendments without the signature of the Borrower.  The Borrower will pay the cost of filing the
aforesaid documents or filing or recording this Agreement in all public offices
wherever filing or recording is deemed by the Bank to be necessary or
desirable.


c.                             Adverse Liens.  The
Borrower will keep the Collateral free from any future adverse liens.


d.                            Mortgages; Fixtures; Farm
Products.  If the Borrower has granted a mortgage on
real property and a security interest in Fixtures and/or Farm Products, there
is affixed hereto as Exhibit A-4 a description of the mortgaged
property and/or applicable real estate and the name(s) of the record owner.


e.                             Certificate of Deposit.  The
Borrower has granted a security interest in a $700,000.00 Certificate of
Deposit to be opened at the Bank (the “Certificate of Deposit”).  Anything to the contrary herein,
notwithstanding, the Certificate of Deposit shall be used by the Bank only to
maintain current payments of interest in the event of a default.


f.                               Taxes.  The
Borrower will pay promptly when due all taxes and assessments upon the
Collateral or for its use or operation or upon this Agreement and any of the
other Loan Documents.


g.                            Insurance.  With
respect to all required insurance policies and coverage, the Bank may act
either in its name or as attorney for the Borrower (for that purpose by these
presents duly authorized and appointed with full power of substitution and
revocation) in obtaining, adjusting, settling and canceling such insurance and
endorsing any drafts in payment of any loss.


h.                            Preservation of Collateral.  The
Bank may, at its election, discharge taxes and liens levied or placed on the
Collateral, pay for insurance on the Collateral and pay for the maintenance and
preservation of the Collateral.  The
Borrower agrees to reimburse Bank on demand for any payment made, or any
expense incurred by the Bank pursuant to the foregoing authorization, and in
any event all such payments and expenses shall constitute an Obligation
hereunder.  If the Borrower fails to
insure Collateral as required by this Agreement or any of the Loan Documents,
the Borrower shall pay to the Bank on the date of such failure a nonrefundable
fee for each such failure equal to the sum of (i) $100 plus (ii) the
amount of the insurance premium cost incurred by the Bank.  Notwithstanding the foregoing, neither the
charging or payment of such fee nor this provision shall in any way be deemed
to waive or imply or constitute a basis for waiver of any default occasioned by
Borrower’s failure to comply with the insurance requirements of this Agreement
or any of the Loan Documents.


i.                                Possession and Use.  Other
than with respect to Collateral in which the Bank’s security interest is
perfected by the Bank’s possession thereof, such as instruments, documents,
cash, bank accounts, etc., which so long as any of the Obligations remain
outstanding and unpaid shall remain in the possession of the Bank, until an
Event of Default, the Borrower may have possession of the Collateral, provided
that the Borrower will not use the Collateral in any unlawful manner or in a
manner inconsistent with this Agreement, the Loan Documents, or any policy of
insurance thereon.


j.                                Power of Attorney.  The
Borrower irrevocably designates and appoints the Bank its true and lawful
attorney with full power of substitution and revocation to execute, deliver,
and record in the name of the Borrower all financing statements, amendments,
continuation statements, title certificate lien applications and other
documents deemed by the Bank to be necessary or advisable to perfect or to
continue the perfection of the security interests granted hereunder.


k.                             Reproduction as Financing
Statement.  A carbon, photographic, or other reproduction
of a security agreement or a financing statement is sufficient as a financing
statement.


l.                                Remedies.  If an
Event of Default occurs, the Bank shall have the rights and remedies provided
in this Agreement, including without limitation in Part VII hereof.  In addition, the Bank may exercise and shall
have any and all rights and remedies accorded it by the UCC.  The Bank may require the Borrower to assemble
the Collateral and make it available to the Bank at a place to be designated by
the Bank which is reasonably convenient to both parties.  The requirement of reasonable notice shall be
met, if notice is mailed, postage prepaid, to the Borrower or other person
entitled thereto at least ten (10) days (including non-business days)
before the time of sale or disposition of the Collateral.  The Bank at its option may have a receiver
appointed to take possession of the Collateral, to use and operate the
Collateral, to collect the profits and proceeds


 


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therefrom,
and to apply the same as the court may direct. 
The Borrower agrees that the Bank’s legal remedies are inadequate and
that the Bank shall be entitled to obtain equitable relief upon the occurrence
of an Event of Default.  The Borrower
shall pay to the Bank on demand all expenses, including reasonable legal
expenses and attorney’s fees (which may include costs allocated by the Bank’s
internal legal department), incurred or paid by the Bank in protecting or
enforcing any rights of the Bank hereunder, including its right to take
possession of the Collateral, storing and disposing of the same or in
collecting the proceeds thereof.


m.                          Inspection and Appraisal.  The
Bank and its agents and representatives (including without limitation
appraisers, engineers, and other professionals) shall, upon reasonable advance
notice, have access to the Borrower’s premises for the purpose of inspecting
and appraising the Collateral and/or performing environmental site
assessments.  If an event of default has
occurred and is continuing, all fees and expenses incurred by the Bank in
connection with such inspections, appraisals and site assessments shall be
payable by the Borrower to the Bank upon demand, and until paid in full, shall
be secured by the Bank’s security interests.


 


VII.          EVENTS
OF DEFAULT.


1.        Listing of Events of Default.  The happening of any of the following events
or conditions with respect to the Borrower, individually and collectively,
shall constitute an “Event of Default”:


 


a.                             any representation or warranty made herein or
in any report, certificate, financial statement or other instrument furnished
in connection with this Agreement or the Loan shall prove to be false or
misleading in any material respect;


b.                            failure to pay the principal of, or interest
on, the Note or any other indebtedness of the Borrower to the Bank, within
fifteen (15) days from the date the same or any installment thereof shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment or by acceleration or otherwise;


c.                             default in the due observance or performance
of any other covenant, condition or agreement contained in this Agreement, any
of the other Loan Documents, or in any other agreement or document evidencing
or pertaining to Obligations, and such other default shall remain unremedied
for fifteen (15) days or, except for non-monetary default, if such compliance
cannot be effected within fifteen (15) days, Borrower commences such compliance
within the fifteen (15) days, and diligently and continuously pursues the same;


d.                            the acceleration of the maturity of any of
the Borrower’s indebtedness other than to the Bank;


e.                             involvement in financial difficulties as
evidenced by:


i.         an attachment
made on the Borrower’s property or assets seeking a sum in excess of
$100,000.00 which remains unreleased for a period in excess of sixty (60) days;
or


ii.        the inability to pay
its debts (including without limitation taxes) generally as they become due; or


iii.       the appointment or
authorization of a custodian as defined in the Bankruptcy Code; provided,
however, that in the case of the appointment of a receiver in an involuntary
proceeding such appointment continues in effect and undischarged for a period
of sixty (60) days; or


iv.       the entry of an order for
relief in a voluntary case under any chapter of the Bankruptcy Code; or


v.        the filing of an
involuntary petition under any chapter of the Bankruptcy Code, which petition
remains undismissed for a period of sixty (60) days; or


vi.       any other judicial
modification or adjustment of the rights of Borrower’s creditors;


f.                               final judgment for the payment in excess of
an aggregate of One Hundred Thousand Dollars ($100,000.00) shall be rendered
against the Borrower and the same shall remain undischarged for a period of
thirty (30) consecutive days during which execution shall not be effectively
stayed;


g.                            the suspension of business for cause, other
than strike, casualty or other cause beyond the Borrower’s control and in the
event of such suspension for cause beyond the Borrower’s control, failure to
resume operations as soon as possible;


h.                            dissolution or termination of the legal
existence of the Borrower;


i.                                seizure, forfeiture or confiscation by any
federal or state governmental instrumentality of a material portion of the assets
of Borrower which shall not have been stayed for a period of sixty (60) days;


j.                                if the Bank believes in good faith, at any
time, that either (a) the prospect of the Borrower’s (i) repayment of
the Loan or payment of any of its other obligations under the Loan Documents or
(ii) performance of its duties thereunder is impaired or (b) there is
any Material Adverse Change;


k.                             with respect to any guaranty and/or
subordination agreement included in the Loan Documents, the failure of the same
to remain in full force and effect until the Loan is paid in full and this
Agreement is terminated;


l.                                the existence of any liens for taxes due with
respect to the Property unless the liens are being contested in good faith and
adequate reserves have been deposited with the Bank, or construction lien
claims which have not been dismissed for 30 days or for which escrows,
satisfactory in amount to the Bank, have not been established by the Borrower;
or


m.                          the default of the Borrower or any Guarantor
under any other obligation owed to the Bank, or any third party, now existing
or arising after the date of this Note.


 


2.                              Certain Cross-Defaults.  The happening of any event or
condition set forth in Article VII subsection 1(c), (e), (f), (l), or
(m) above, by the Borrower or any guarantor of the Loan shall likewise
constitute an Event of Default.


 


3.                              Acceleration.  If an Event of Default occurs, the Bank may declare all Obligations to
be immediately due and payable.


 


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VIII.                                  MISCELLANEOUS.


1.                              Waiver of Event of Default.  No
delay in accelerating the maturity of any Obligation shall affect the rights of
the Bank later to take such action with respect thereto, and no waiver as to
one Event of Default shall affect rights as to any other default.


 


2.                              Notices.  Except as otherwise specifically provided for herein, any notice,
demand or communication hereunder shall be given in writing (including
facsimile transmission or telex) and mailed or delivered to each party at its
address set forth below, or, as to each party, at such other address as shall
be designated by such party by a prior notice to the other party in accordance
with the terms of this provision.  Any
notice to the Borrower shall be sent as follows:   VIVUS, INC. AND VIVUS REAL ESTATE, LLC, 1172
Castro Street, Mountain View, CA 94040. 
All notices hereunder shall be effective upon the earliest to occur of (i) five
(5) business days after such notice is mailed, by registered or certified
mail, postage prepaid (return receipt requested), (ii) upon delivery by
hand, (iii) upon delivery if delivered by overnight courier (such delivery
to be evidenced by the courier’s records), and (iv) in the case of any
notice or communication by telex or telecopy, on the date when sent.


 


3.                              Survival.  This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive any making by the Bank of the Loan and the execution and delivery of
any Loan Documents and shall continue in full force and effect until this
Agreement is terminated and all the Obligations are paid in full.


 


4.                              Legal Fees and Expenses;
Additional Fees and Charges.
The Borrower will pay all reasonable expenses incurred by the Bank in
connection with the preparation of the Loan Documents, the making of the Loan,
and the enforcement of the rights of the Bank in connection with this
Agreement, any of the other Loan Documents and the Loan, including, but not
limited to, the reasonable fees of its counsel (which may include costs
allocated by the Bank’s internal legal department), plus the disbursements of
said counsel.  Borrower further agrees to
pay to the Bank on demand all reasonable fees, costs and expenses incurred by
the Bank in connection with the administration of the Loan, including, without
limitation, overnight courier fees, lien search fees, and filing and recording
fees.


 


5.                              Choice of Law.  This Agreement and all the other Loan Documents shall be construed in
accordance with and governed by the local laws (excluding the conflict of laws
rules, so-called) of the State.


 


6.                              Written Modification and
Waiver.  No modification or waiver of any provision of
this Agreement or of any of the other Loan Documents nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in writing, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.  No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in the
same, similar or other circumstances.


 


7.                              Accounting Practice.  All matters involving accounting practice are to be determined both as
to classification of items and amounts in accordance with generally accepted
principles of accounting practice consistently applied by the Borrower’s
accountants in the preparation of its previous annual financial statements.


 


8.                              Documentation.  All documents required hereunder shall be in form and substance
reasonably satisfactory to the Bank.


 


9.                              Replacement Documents.  Upon
receipt of an affidavit of an officer of the Bank as to the loss, theft,
destruction or mutilation of the Note or any security document which is not of
public record, and, in the case of any such loss, theft, destruction,
mutilation, upon cancellation of such Note or other security document, the
Borrower will issue, in lieu thereof, a replacement note or other security
document in the same principal amount thereof and otherwise of like tenor.


 


10.                        Joint and Several
Obligations.  If this Agreement is signed by more than one
Borrower, all obligations of the Borrowers are their joint and several
obligations, and all references to the Borrower herein shall be deemed to refer
to each of them, either of them, and all of them.


 


11.                        Unenforceability.  In the event any term or provision of this Agreement or the application
thereof to any person or circumstance shall, to any extent, be held invalid or
unenforceable, the remainder of this Agreement or the application of such term
or provision to persons or circumstances other than those to which it is held
invalid or unenforceable, shall be valid and enforceable to the fullest extent
permitted by law.


 


12.                        Cumulative Remedies; Setoff.
The rights and remedies
provided the Bank in this Agreement and in the other Loan Documents shall be
cumulative and shall be in addition to and not in derogation of any rights or
remedies provided the Bank in any other document, instrument or agreement or
under applicable law or otherwise, and may be exercised concurrently or
successively. The Borrower hereby grants to the Bank, a continuing lien,
security interest and right of setoff as security for all liabilities and
obligations to the Bank, whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of the Bank.  Except for the Certificate of Deposit, at any
time, without demand or notice (any such notice being expressly waived by the
Borrower), the Bank may setoff the same or any part thereof and apply the same
to any liability or obligation of the Borrower and any guarantor even though
unmatured and regardless of the adequacy of any other collateral securing the
Loan. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER


 


6





















 


PROPERTY
OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.


 


13.                        Special Provisions. 
A)  the Borrower shall pay to the
Bank, each month, together with its monthly payment of principal and interest,
an amount equal to one twelfth (1/12) of the annual property taxes on the
Properties set forth on Exhibit A-4, attached hereto.  No interest shall be paid on the amount held
in escrow for the property taxes. 
Furthermore, an amount equal to two (2) months of the annual
property taxes is due at closing.  B) The
Borrower may, in its sole discretion, release certain of the collateral,
provided, that the Borrower pay a one (1%) percent prepayment premium and the
Bank receives a payment reducing the loan in an amount equal to forty (40%)
percent of the initial appraised value and the remaining parcel has a loan to
value not less than sixty (60%) percent of the remaining balance of the loan.
C)  At the time the Bank provides each
individual release of mortgage, the Borrower shall pay a fee in an amount equal
to $5,000.00 per release.


 


14.                        Assignments and
Participations; Credit Reporting.  The Borrower agrees that the Bank shall have
the right at all times to sell all or any portion of the Loan and all Loan
Documents, and to grant one or more participations in the Loan and in all Loan
Documents.  In connection therewith, the
Borrower hereby irrevocably authorizes the Bank to deliver to each such
purchaser, participant and prospective purchaser and prospective participant
originals and copies of all Loan Documents and all financial statements and
other credit and factual data from time to time in the Bank’s possession which
relate to the Borrower and/or all guarantors, if any, of the Loan.  The Borrower further agrees that the Bank
shall have the right at all times to disclose and report to credit reporting
agencies and credit rating agencies such information pertaining to the Borrower
and/or all guarantors, if any, as is consistent with the Bank’s policies and
practices from time to time in effect.


 


15.                        Maximum Rate of
Interest.  All provisions of this Agreement are
expressly subject to the condition that in no event , whether by reason of
acceleration of the maturity of the Loan or otherwise, shall the amount paid or
agreed to be paid to the Bank hereunder and deemed interest under applicable
law exceed the maximum rate of interest on the unpaid principal balance of the
Loan allowed by applicable law (the “Maximum Allowable Rate”), which shall mean
the law in effect on the date of this Agreement, except that if there is a
change in such law which results in a higher Maximum Allowable Rate being
applicable to this Agreement, then this Agreement shall be governed by such
amended law from and after its effective date. 
In the event that fulfillment of any provision of this Agreement results
in the interest rate hereunder being in excess of the Maximum Allowable Rate,
the obligation to be fulfilled shall automatically be reduced to eliminate such
excess.  If, notwithstanding the
foregoing, the Bank receives an amount which under applicable law would cause
the interest rate set forth in this Agreement to exceed the Maximum Allowable
Rate, the portion thereof which would be excessive shall automatically be applied
to and deemed a prepayment of the unpaid principal balance of the Loan and not
a payment of interest.


 


16.                        Pledge to Federal Reserve. The Bank may at any time pledge or assign
all or any portion of its rights under the Loan Documents [including any portion
of the promissory note] to any of the twelve (12) Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or assignment or enforcement
thereof shall release the Bank from its obligations under any of the Loan
Documents.


 


17.                        WAIVER OF JURY TRIAL.  THE BORROWER WAIVES ANY RIGHTS IT MAY HAVE
TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT
AND ANY OF THE OTHER LOAN DOCUMENTS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.


 


18.                        Jurisdiction and Venue.  The
Borrower irrevocably consents that any legal action or proceeding against it or
any of its property with respect to any matter arising under or relating to
this Agreement and the other Loan Documents may be brought in any court of the
State, or any Federal Court of the United States of America located in the
State, as the Bank may elect, and by execution and delivery of this Agreement
the Borrower hereby submits to and accepts with regard to any such action or
proceeding, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.  The Borrower further irrevocably consents to
the service of process in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the
Borrower at its address set forth herein. 
The foregoing, however, shall not limit the Bank’s rights to serve
process in any other manner permitted by law or to bring any legal action or
proceeding or to obtain execution of judgment in any other jurisdiction.  The Borrower irrevocably waives any objection
which it may now or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Agreement and the other
Loan Documents, and further irrevocably waives any claim that the State is not
a convenient forum for any such suit, action or proceeding.


 


19.                        Presentment; Etc. The Borrower waives presentment, notice of
dishonor, protest, notice of non-payment, demand and other notice of any kind.


 


20.                        Debit.  The
Borrower hereby irrevocably authorizes the Bank and any subsequent holder of
the Note, both before and after demand, to debit any of the Borrower’s business
accounts maintained with the Bank (or subsequent holder) for all sums
(including without limitation principal, interest, late fees, and other fees)
payable from time to time under this Agreement and the other Loan
Documents.  In addition, if the Borrower
has signed a separate authorization, the Bank is authorized to initiate ACH
debit transfers for the Loan payments and on the business account(s) specified
in the authorization.  These provisions


 


7





















 


shall
not obligate the Bank to create or allow any overdraft, and such authority
shall not relieve the Borrower of the obligation to assure that payments are
made when due.


 


21.                        Integration.  The
Loan Documents supersede all prior agreements between the parties with respect
to the Loan, whether oral or written, including, without limitation, all
correspondence between counsel for the respective parties.  The Loan Documents constitute the entire
agreements between the parties with respect to the Loan, and the rights,
duties, and obligations of the parties with respect thereto.


 


22.                        Lender Liability.  The
Bank shall not be liable for any loss sustained by any party resulting from any
action, omission, or failure to act by the Bank, whether with respect to the
exercise or enforcement of the Bank’s rights or remedies under the Loan
Documents, the Loan, or otherwise, unless such loss is caused by the actual
willful misconduct of the Bank conducted in bad faith.  IN NO EVENT
SHALL THE BANK EVER BE LIABLE FOR CONSEQUENTIAL OR PUNITIVE DAMAGES, ANY RIGHT
OR CLAIM THERETO  BEING EXPRESSLY
AND UNCONDITIONALLY WAIVED.


 


23.                        Bank’s Decisional Standards.  To the extent that applicable laws require
the Bank’s actions or decisions under the Loan Documents to be conducted in
good faith, the term “good faith” shall be defined (using a subjective
standard) as honesty in fact with regard to the conduct or transaction
concerned based upon the facts and circumstances actually known to the
individual(s) acting for the Bank, and such requirement may be satisfied by
reliance upon the advice of attorneys, accountants, appraisers, architects,
engineers, or other qualified professionals.


 


24.                        Descriptive Headings;
Context.  The captions in this Agreement are for
convenience of reference only and shall not define or limit any provision.  Whenever the context requires, reference in
this Agreement to the neuter gender shall include the masculine and/or feminine
gender, and the singular number shall include the plural, and, in each case,
vice versa.


 


25.                        Acknowledgment of Copy.  The Borrower acknowledges that it has received a fully executed copy of
this Agreement.


 


IN WITNESS WHEREOF, the
Borrower and the Bank, by persons duly authorized, have executed this Agreement
as of January 4, 2006.


 


	
  ATTEST OR
  WITNESSED BY:

  	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Vivus, Inc.,
  a Delaware Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jay Samuels

  	
   

  	
  By:

  	
  /s/ Timothy
  E. Morris

  	
   

  
	
  Jay Samuels, Esq.

  	
  Timothy E. Morris, Vice
  President Finance

  
	
   

  	
  and Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Vivus
  Real Estate, LLC,

  
	
   

  	
  a New
  Jersey Limited Liability Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jay Samuels

  	
   

  	
  By:

  	
  /s/ Timothy
  E. Morris

  	
   

  
	
  Jay Samuels, Esq.

  	
  Vivus, Inc., a Delaware Corporation, Sole Member

  Timothy E. Morris, Vice President Finance

  and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Crown
  Bank, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Patricia J. Downs

  
	
   

  	
  Title:

  	
  Vice President

  
									



 


8





















 


EXHIBIT A-1


 


Additional Covenants


 


None


 


EXHIBIT A-2


 


Prior Security Interests in Collateral


 


None


 


EXHIBIT A-3


 


Location of Equipment


 


None


 


Location of Inventory


 


None


 


Offices Containing Records of Accounts


 


None


 


EXHIBIT A-4


 


Description of Real Estate


 


735 and 745 Airport Road, , Block 1160.01, Lots 229 and 232, Lakewood,
Ocean County, NJ


 


Name(s) of Record Owner


 


VIVUS REAL ESTATE LLC


 


9