Document:

Exhibit 4.7

 

FACILITY AGREEMENT

 

FACILITY AGREEMENT
(this “Agreement”), dated as of December 31, 2012, between Flamel US Holdings Inc., a Delaware Corporation (the
“Borrower”), and the lenders set forth on Schedule 1 attached hereto (the “Lenders” and,
together with the Borrower, the “Parties”).

 

WITNESSETH:

 

WHEREAS, the Borrower
wishes to borrow from the Lenders fifteen million Dollars ($15,000,000) for the purpose described in Section 2.1; and

 

WHEREAS, the Lenders
desire to make, loans to the Borrower for such purpose,

 

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

 

ARTICLE 1

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	 

    	 

    

  

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

 

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

 

“Coreg Receivables”
has the meaning set forth in Exhibit B hereto.

 

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

 

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

 

“Disbursement”
and “Disbursement Date” have the meaning given to it in Section 2.2.

 

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

 

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

 

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

 

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

 

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

 

“Final Payment
Date” means the earlier of (i) the date on which the Borrower repays the Notes (together with any other amounts
accrued and unpaid under the Transaction Documents) and (ii) the fourth anniversary of the date hereof. 

 

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

 

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

 

“Guaranties”
means the Guaranty by SA and affiliates of Flamel US Holdings Inc. for the benefit of the (i) Lenders of the obligations of the
Borrower under this Agreement (the “FA Guaranty”)and (ii) Buyers (as defined in the Royalty Agreement)of the
obligations of the Payor under the Royalty Agreement (the “RA Guaranty”).

 

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

 

“Indebtedness”
means the following:

 

(i)          all
indebtedness for borrowed money;

 

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

 

(iii)        all
guarantees of Indebtedness;

 

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

 

(v)          all
capitalized lease obligations;

 

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

 

(vii)        all
Hedging Obligations; and 

 

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

 

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

 

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

 

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

 

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

 

“IP”
and “Intellectual Property” have the meaning given to it in Section 3.1(l).

 

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

 

“Loan”
means the loan made available by the Lenders to the Borrower pursuant to Section 2.2 in the amount of fifteen million Dollars
($15,000,000) or, as the context may require, the principal amount thereof from time to time outstanding.

 

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

 

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

 

“Notes”
means the Notes issued to the Lenders evidencing the Loan in the form attached hereto as Exhibit B.

 

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

 

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

 

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

 

“Permitted
Indebtedness” means:

 

(i)          The
Obligations;

 

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

 

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(iii)        Item
(v) under the definition of Indebtedness;

 

(iv)         Indebtedness
secured by purchase money Liens; provided that such Indebtedness when incurred by the Borrower or any of its Subsidiaries shall
not exceed the purchase price of the asset(s) financed;

 

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

 

(vi)         Indebtedness
existing as of the date hereof and set forth on Exhibit C attached hereto;

 

(vii)        [Reserved].

 

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

 

(ix)         Indebtedness
for borrowed money subordinated to the Notes by documentation that is reasonably acceptable to the Borrower in form and content;

 

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

 

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

 

(xii)        Guarantees
with respect to any Permitted Indebtedness;

 

(xiii)      [Reserved];

 

(xiv)        Indebtedness
in an aggregate amount outstanding at any time of not more than $15,000,000 that is subordinated in right of payment to the Notes
pursuant to a Subordination Agreement satisfactory in form and content to the Lenders;

 

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

 

(xvi)        Indebtedness
incurred to pay the promissory note provided for in Section 2(j) of the Warrants;

 

(xvii)      Indebtedness
incurred to purchase equipment; and 

 

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

 

“Permitted
Liens” means:

 

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

 

(ii)         Liens
in favor of the Lenders;

 

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

 

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

 

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

 

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

 

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

 

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

 

(ix)         Lessor
liens;

 

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

 

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

 

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

 

(xiii)      Leases,
licenses or subleases granted to others not interfering in any material respect with the business of the Borrower and its Subsidiaries;

 

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

 

(xv)         Licenses
of intellectual property granted by the Borrower or any of its Subsidiaries in the ordinary course of business and not interfering
in any material respect with the ordinary conduct of business of the Borrower and its Subsidiaries;

 

(xvi)        Good
faith deposits required in connection with any acquisition;

 

(xvii)      To
the extent constituting a Lien, escrow arrangements securing indemnification obligations associated with any acquisition;

 

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

 

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

 

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

 

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

 

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

 

“Royalty
Agreement” means that certain Royalty Agreement in the form attached hereto as Exhibit E.

 

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“SA”
means Flamel Technologies SA

 

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

 

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

 

“Security
Agreements” mean (A) agreements governed by the laws of France pursuant to which (i) SA grants to the Lenders a lien
on its property, plant and equipment located in Pessac, France to secure its obligations under its FA Guaranty and its RA Guaranty
(the “Flamel FA/RA Guaranties”)and (ii) SA grants to the Buyers a lien on the Coreg Receivables to secure its
obligations under the Flamel FA/RA Guaranties and (B) an agreement governed by the laws of New York pursuant to which Eclat Pharmaceuticals,
LLC grants to the Buyers (as defined in the Royalty Agreement) a lien on its Product Regulatory Rights and its Proprietary Rights
(as such terms are defined in the Royalty Agreement) to secure its obligations under the Royalty Agreement.

 

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

 

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

 

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

 

“Warrants”
mean the Warrants issued by the Borrower pursuant to that certain Membership Interest Purchase Agreement made and entered into
as of March 13, 2012, by and among Eclat Holdings, LLC, Eclat Pharmaceuticals, LLC, SA and the Borrower.

 

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

 

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

 

Section 1.4           

 

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

 

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

 

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

 

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

 

ARTICLE 2

AGREEMENT FOR THE LOAN

 

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

 

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Section
2.2           Disbursement. Subject to satisfaction of
the conditions contained in Article 4, the Loan shall be made (the “Disbursement”) on such date as the
Borrower and the Lenders shall determine (the “Disbursement Date”). The Lenders shall effect the Disbursement
on the Disbursement Date in accordance with their respective allocations set forth on Schedule 1. The Borrower’s wire instructions
for its account located in the United States are attached as Schedule 2.

 

Section
2.3           Payment. (a) The Borrower shall remit the
Final Payment to the Lenders on the earlier to occur of (i) the Final Payment Date and (ii)  the date the principal amount
of the Notes is declared to be or automatically becomes due and payable following an Event of Default. Purchaser shall remit to
the Lenders 10%, 20%, 30%, and 40%, respectively, of the original aggregate principal amount of the Notes on July 1, 2014 and the
second, third and fourth anniversaries, respectively, of the Disbursement Date.

 

(a)          The
Notes may be prepaid in whole or in part on any Interest Payment Date after the first anniversary of the date of this Agreement,
together with interest due on such date, without any premium or penalty and may not be prepaid prior to such date. Each prepayment
shall be applied first, to accrued and unpaid interest and second, to principal and shall be allocated among the Lenders in accordance
with their respective allocations set forth on Schedule 1.

 

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

 

Section
2.5           Taxes, Duties and Fees.

 

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

 

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(b)          In
addition, Borrower agrees to pay, and authorizes Lenders to pay in its name, all Other Taxes. Within 30 days after the date of
any payment of Other Taxes, Borrower shall furnish to Lenders the original or a certified copy of a receipt evidencing payment
thereof or other evidence of such payment reasonably satisfactory to Lenders.

 

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

 

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

 

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

 

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

 

Section
2.7           Interest. The outstanding principal amount
of the Notes shall bear interest at the Interest Rate (calculated on the basis of the actual number of days elapsed in each month).
Interest shall be paid quarterly in arrears commencing on April 1, 2013 and on the first Business Day of each July, October, January
and April thereafter (each, an “Interest Payment Date”).

 

Section
2.8           Interest on Late Payments. Without limiting
the remedies available to the Lenders under the Transaction Documents or otherwise, to the maximum extent permitted by applicable
law, if the Borrower fails to make a required payment of principal or interest with respect to the Loan when due the Borrower shall
pay, in respect of such principal and interest at the rate per annum equal to the Interest Rate plus ten percent (10%) for so long
as such payment remains outstanding. Such interest shall be payable on demand.

 

Section 2.9.          Fee
and Costs  On the Disbursement Date, the Borrower shall pay to such entity as the Lenders shall direct a fee of $112,500 for
entering into the transaction contemplated by the Transaction Documents and shall reimburse the Lenders of the legal costs and
expense it incurred in effecting such transaction.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

Section
3.1           Representations and Warranties of the Borrower.
The Borrower represents and warrants as of the date hereof that except as set forth in a Schedule to this Agreement or the SEC
Reports for the year ended December 31, 2011 or the quarterly periods ended March 31, 2012, June 30, 2012 and September 30, 2012:

 

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

 

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

 

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

 

    	12

    	 

    

  

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

 

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

 

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

 

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

 

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

 

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

  

    	13

    	 

    

 

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

 

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

 

(l)          The
Borrower owns or has the right to use pursuant to a valid and enforceable written license, implied license or other legally enforceable
right, all of the Intellectual Property (as defined below) that is necessary for the conduct of its business as currently conducted
(the “IP”). To the knowledge of the Borrower, the IP that is registered with or issued by a Governmental Authority
is valid and enforceable; there is no outstanding, pending, or, to the knowledge of the Borrower, threatened action, suit, other
proceeding or claim by any third person challenging or contesting the validity, scope, use, ownership, enforceability, or other
rights of the Borrower in or to any IP and the Borrower has not received any written notice regarding, any such action, suit, or
other proceeding. To the knowledge of the Borrower, the Borrower has not infringed or misappropriated any material rights of others.
To the knowledge of the Borrower, there is no pending or threatened action, suit, other proceeding or claim by others that the
Borrower infringes upon, violates or uses the Intellectual Property rights of others without authorization, and the Borrower has
not received any written notice regarding, any such action, suit, other proceeding or claim. The Borrower is not a party to or
bound by any options, licenses, or agreements with respect to IP. The term “Intellectual Property” as used herein
means (i) all patents, patent applications, patent disclosures and inventions (whether patentable or unpatentable and whether or
not reduced to practice), (ii) all trademarks, service marks, trade dress, trade names, slogans, logos, and corporate names and
Internet domain names, together with all of the goodwill associated with each of the foregoing, (iii) copyrights, copyrightable
works, and licenses, (iv) registrations and applications for registration for any of the foregoing, (v) computer software (including
but not limited to source code and object code), data, databases, and documentation thereof, (vi) trade secrets and other confidential
information, (vii) other intellectual property, and (viii) copies and tangible embodiments of the foregoing (in whatever form and
medium).

 

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

  

    	14

    	 

    

 

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

 

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

 

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

 

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

 

    	15

    	 

    

  

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

 

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

 

(t)          The
Borrower has no Subsidiaries other than Eclat Pharmaceuticals LLC and its subsidiary, Talec LLC, a Delaware limited liability company.

 

(u)          The
Supply Agreement and the License Agreement (as such terms are defined in Exhibit B hereto) are the only material contracts relating
to the subject matter of such agreements.

 

(v)          The
representations and warranties set forth in this Section 3.1 are applicable to the Borrower’s Subsidiaries.

 

Section
3.2           Borrower Acknowledgment. The Borrower acknowledges
that it has made the representations and warranties referred to in Section 3.1 with the intention of persuading the Lenders
to enter into the Transaction Documents and that the Lenders have entered into the Transaction Documents on the basis of, and in
full reliance on, each of such representations and warranties. The Borrower represents and warrants to the Lenders that none of
such representations and warranties omits any matter the omission of which makes any of such representations and warranties misleading.

 

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

 

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

 

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

 

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

 

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ARTICLE 4

CONDITIONS OF DISBURSEMENT

 

Section
4.1           Conditions to the Disbursement. The obligation
of the Lenders to make the Disbursement shall be subject to the fulfillment of the following conditions:

 

(a)          The
Lenders shall have received the payment contemplated by Section 2.9 and executed counterparts of the Guaranties, the Royalty Agreement
and the Security Agreements in form generally accepted in the commercial community for transaction comparable to those contemplated
by the Transaction Documents dated, except for this Agreement, the Disbursement Date, and as to the Borrower, a certificate as
to its Organizational Documents, and resolutions and incumbency; and

 

(b)          No
Default or Event of Default has occurred or would result from the Disbursement.

 

ARTICLE 5

PARTICULAR COVENANTS AND EVENTS OF DEFAULT

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
5.2           Negative Covenants.  Unless the Lenders
holding a majority in interest of the Notes shall otherwise agree:

 

(i)          The
Borrower shall not and shall not permit any Subsidiary to (a) liquidate (other than Flamel Technologies Inc. which shall be
promptly liquidated, and all proceeds thereof distributed to SA), provided that a Subsidiary may merge into the Borrower or any
other Subsidiary, or dissolve (unless such Subsidiary ceases to own any operating assets or conduct business), or (b) enter into
any merger, consolidation or reorganization, unless (x) the Borrower or a Subsidiary is the surviving corporation. The Borrower
shall not maintain or establish any Subsidiary in the United States unless such Subsidiary executes and delivers to the Lenders
a guarantee substantially in the form of the Guaranty if such Subsidiary is organized outside of the United States, in the form
of a guaranty to the same effect as the Guaranty customary in the jurisdiction in which such Subsidiary is organized.

 

(ii)         The
Borrower shall not and shall not permit any Subsidiary to (i) enter into any partnership, joint venture, syndicate, pool, profit-sharing
or royalty agreement or other combination, or engage in any transaction with an Affiliate, whereby its income or profits are, or
might be, shared with another Person, (ii) enter into any management contract or similar arrangement whereby a substantial part
of its business is managed by another Person, or (iii) distribute, or permit the distribution of, any of its assets, including
its intangibles, to any shareholder of the Borrower or an Affiliate of such shareholder.

 

(iii)        The
Borrower shall not and shall not permit any Subsidiary to (a) create, incur or suffer any Lien upon any of its assets, now owned
or hereafter acquired, except Permitted Liens or (b) assign, sell, transfer or otherwise dispose of, any Purchase Document, or
the rights and obligations thereunder.

 

(iv)         The
Borrower shall not and shall not permit any Subsidiary to create, incur, assume, guarantee or remain liable with respect to any
Indebtedness, other than Permitted Indebtedness. 

 

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(v)          The
Borrower shall not and shall not permit any Subsidiary to acquire any assets (other than assets acquired in the ordinary course
of business consistent with past practices), directly or indirectly, in one or more related transaction, for a consideration, in
cash or other property (valued at its fair market value) greater than $500,000.

 

No provision of this
Agreement or any other Transaction Document shall be construed to prohibit the Borrower (or otherwise require the consent of the
Lenders) from entering into bona fide business development transactions with Persons who are not Affiliates of the Borrower, which
transactions may include exclusive licenses of Borrower’s Intellectual Property to third party strategic partners.

 

Section
5.3           Major Transaction. The Borrower shall give
the Lenders notice of the consummation of a Major Transaction involving SA (as such term is defined in the Warrants) on the shorter
of 30 days prior to such consummation or 2 days following the public announcement thereof. Within 5 days after the receipt of such
notice, the Lenders, in the exercise of their sole discretion, may deliver a notice to the Borrower (the “Put Notice”),
that the Final Payment shall be due and payable upon consummation of such Major Transaction. If the Lenders deliver a Put Notice,
then simultaneously with consummation of such Major Transaction, the Borrower shall make or cause to be made the Final Payment
to the Lenders and upon the Lenders receipt of the Final Payment, the Obligations under this Agreement and the Notes. The Borrower
shall take such steps as may be required to ensure that SA shall not consummate any Major Transaction until the Borrower complies
with the provisions of this Section 5.3.

 

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

 

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

 

(b)          The
Borrower shall have failed to comply with the due observance or performance of any covenant contained in any Transaction Document
(other than the covenants described in (a) above), which failure shall have a Material Adverse Effect on the Borrower and such
failure shall not have been cured by the Borrower within 30 days after receiving written notice of such failure from the Lenders.

 

(c)          Any
representation or warranty made by the Borrower in any Transaction Document which would have a Material Adverse Effect shall have
been incorrect, false or misleading as of the date it was made. 

 

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(d)          (i) 
The Borrower shall generally be unable to pay its debts as such debts become due, or shall admit in writing its inability to pay
its debts as they come due or shall make a general assignment for the benefit of creditors; (ii) the Borrower shall declare
a moratorium on the payment of its debts; (iii) the commencement by the Borrower of proceedings to be adjudicated bankrupt
or insolvent, or the consent by it to the commencement of bankruptcy or insolvency proceedings against it, or the filing by it
of a petition or answer or consent seeking reorganization, intervention or other similar relief under any applicable law, or the
consent by it to the filing of any such petition or to the appointment of an intervenor, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of all or substantially all of its assets; (iv) the commencement against the Borrower
of a proceeding in any court of competent jurisdiction under any bankruptcy or other applicable law (as now or hereafter in effect)
seeking its liquidation, winding up, dissolution, reorganization, arrangement, adjustment, or the appointment of an intervenor,
receiver, liquidator, assignee, trustee, sequestrator (or other similar official), and any such proceeding shall continue undismissed,
or any order, judgment or decree approving or ordering any of the foregoing shall continue unstayed or otherwise in effect, for
a period of ninety (90) days; (v) the making by the Borrower of an assignment for the benefit of creditors, or the admission
by it in writing of its inability to pay its debt generally as they become due; or (vi) any other event shall have occurred
which under any applicable law would have an effect analogous to any of those events listed above in this subsection.

 

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

 

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

 

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

 

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

 

(i)          SA
has failed to comply in any material respect with the reporting requirements of the Exchange Act, if applicable.

 

(j)          There
is a failure to perform in any agreement to which the Borrower or any Subsidiary is a party with a third party or parties resulting
in a right by such third party or parties to accelerate the maturity of any Indebtedness for borrowed money in an amount in excess
of $50,000.. 

 

    	20

    	 

    

 

(k)          If
an Event of Default pursuant to Section 11(a) of the Warrants (as such term is defined in the Warrants) shall have occurred.

 

(l)          If
an Event of Default under the Installment Sale Note dated March 12, 2012 from the Borrower to Eclat Holdings LLC in the principal
amount of $12 million shall have occurred and such Note shall have been accelerated as a result thereof.

 

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

 

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

 

ARTICLE 6

MISCELLANEOUS

 

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

 

If to the Borrower:

 

Flamel US Holdings Inc.

699 Trade Center Blvd.

Chesterfield MO 63005

Phone: 636-449-1830

With copy to:

Stephen H. Willard, Esq.

2 West Newlands Street

Chevy Chase, MD 20815

Email: willardmd@aol.com

 

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If to the Lenders:

Deerfield Management Company, L.P.

780 Third Avenue, 37th Floor

New York, NY 10017

Fax: 212-599-3075

Email: dclark@deerfield.com

Attn: David J. Clark

 

With a copy to:

 

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, New York 10022

Fax: (212) 940-8776

Email: mark.fisher@kattenlaw.com

Attn: Mark I. Fisher, Esq.

 

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

 

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

 

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

 

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Section
6.5           Successors and Assigns. This Agreement shall
bind and inure to the respective successors and assigns of the Parties, except that Borrower may not assign or otherwise transfer
all or any part of its rights under this Agreement or the Obligations without the prior written consent of the Lenders.

 

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

 

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

 

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

 

Section
6.9           Survival.

 

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

 

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

 

    	23

    	 

    

  

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

 

Section
6.11         Indemnity.

 

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

 

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

 

    	24

    	 

    

  

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

 

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

 

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

 

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

 

Section
6.14         Action by the Lenders. Any consent, exercise of remedies
or other action permitted to be taken by any Lender or the Lenders under this Agreement may be taken by the Required Lenders on
behalf of such Lender or Lenders.

 

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

 

    	25

    	 

    

  

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

 

Section
6.17         Judgment Currency.

 

(i)          If,
for the purpose of obtaining or enforcing judgment against the Borrower in any court in any jurisdiction with respect to any Transaction
Document, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 6.17 referred
to as the “Judgment Currency”) an amount due in United States dollars, the conversion shall be made at the last
exchange rate published in the Wall Street Journal on the business day immediately preceding (the “Exchange Rate”):

 

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

 

(b)          the
date on which the French or any other non U.S. court determines, in the case of any proceeding in the courts of any other jurisdiction
(the date as of which such payment is made pursuant to this Section 6.17 being hereinafter referred to as the “Judgment
Payment Date”).

 

(ii)         If
in the case of any proceeding in the court of any jurisdiction referred to in Section 6.17(i)(b) above, there is a change in the
Exchange Rate on the date of calculation prevailing between the Judgment Payment Date and the date of actual payment of the amount
due, the Borrower shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce the amount of United States dollars which could
have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing
on the Judgment Payment Date.

 

(iii)        Any
amount due from the Borrower under this Section 6.15 shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amount due under or in respect of this Agreement and/or the Note.

 

[SIGNATURE PAGE FOLLOWS]

 

    	26

    	 

    

  

IN WITNESS WHEREOF,
the Lenders and the Borrower have caused this Agreement to be duly executed as of the 31st day of December 2012.

  

	BORROWER:	 
	 	 
	FLAMEL US HOLDINGS INC.	 
	 	 
	By:  	/s/ Michael S. Anderson	 
	Name:  Michael S. Anderson	 
	Title:    CEO	 
	 	 
	LENDERS:	 
	 	 
	DEERFIELD PRIVATE DESIGN FUND II, L.P.	 
	By:  Deerfield Mgmt, L.P., its General Partner	 
	By:  J. E. Flynn Capital, LLC, its General Partner	 
	 	 
	By:	/s/ James E.Flynn	 
	Name: James E. Flynn	 
	Title:   President	 
	 	 
	DEERFIELD PRIVATE DESIGN INTERNATIONAL II, L.P.	 
	By:  Deerfield Mgmt, L.P., its General Partner	 
	By:  J. E. Flynn Capital, LLC, its General Partner	 
	 	 
	By:	/s/ James E.Flynn	 
	Name: James E. Flynn	 
	Title:   President	 

 

    	27

    	 

    

 

SCHEDULE 1

 

	LENDER	 	ALLOCATION OF DISBURSEMENT
 AND PREPAYMENTS	 
	 	 	 	 
	Deerfield Private Design Fund II, L.P.	 	 	46.6	%
	 	 	 	 	 
	Deerfield Private Design International II, L.P.	 	 	53.4	%

  

    	28

    	 

    

  

Exhibit A

 

OID LEGEND

 

PROMISSORY NOTE

 

January [        ], 2013

 

FOR VALUE RECEIVED,
Flamel US Holdings Inc., a Delaware corporation (the “Maker”), by means of this Promissory Note (this “Note”),
hereby unconditionally promises to [      ] (the “Payee”), a principal amount equal to [            ], in lawful money of the
United States of America and in immediately available funds, on the dates provided in the Facility Agreement.

 

This Note is a “Note”
referred to in the Facility Agreement dated as of December 31, 2012 between the Maker, the Payee and the other parties thereto
(as modified and supplemented and in effect from time to time, the “Facility Agreement”), with respect to the
Loan made by the Payee thereunder. Capitalized terms used herein and not expressly defined in this Note shall have the respective
meanings assigned to them in the Facility Agreement.

 

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

 

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

 

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

 

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

 

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

 

    	A-1

    	 

    

 

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

 

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

 

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

 

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

 

[Signature page follows]

 

    	A-2

    	 

    

 

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

 

	 	FLAMEL US HOLDINGS INC.
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

 

    	A-3

    	 

    

  

Exhibit B

 

(i) amounts receivable
or received under Section 9 of the Supply Agreement for Commercial Supply entered into on September 30, 2011 by and between GSK
(as defined therein) and Flamel Technologies SA (the “Supply Agreement”) and

 

(ii) amounts received
or receivable under Article 3 of the License Agreement dated March 26, 2003 by and between GSK (as defined therein) and Flamel
Technologies SA (the “License Agreement”)

  

    	B-1Exhibit 4.8

CONFIDENTIAL
TREATMENT REQUESTED

 

[***] –
CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN

REDACTED ARE
MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS

BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE

COMMISSION.

 

ROYALTY AGREEMENT

 

THIS ROYALTY AGREEMENT (this “Agreement”)
is dated as of December 31, 2012, by and among ÉCLAT PHARMACEUTICALS, LLC (the “Payor”),
and DEERFIELD PRIVATE DESIGN FUND II, L.P. and HORIZON SANTÉ FLML, SARL (the “Buyers”).

 

Whereas, the Payor desires to sell, and
the Buyers desire to purchase, a royalty on the net sales of certain products now or hereafter sold by the Payor for the consideration
and on the terms set forth herein, the Parties to this Agreement, intending to be legally bound, agree as follows:

 

1.          Definitions.         Certain
capitalized terms used in this Agreement are defined in Exhibit A.

 

2.          Royalty.

 

(a)          Royalty
Amount. The Payor shall pay 1.75% of Net Sales of Products (the “Royalty”) to the Buyers.

 

(b)          Payment
of the Royalty. The Royalty shall accrue daily and shall be paid quarterly in arrears for each calendar quarter from and after
the date hereof until the expiration of the quarter ending December 31, 2024 (the “Royalty Term”).
No later than two Business Days following the date Flamel Technologies SA (“Flamel”) files its Earnings
Report for each calendar quarter or if Flamel is not obligated to file reports under the Securities Exchange Act of l934, following
its preparation of its internal financial statements (but in no event later than sixty days following the last day of each of the
first three quarters and one hundred twenty days following the last day of the fourth quarter of each calendar year), the Payor
shall pay or cause to be paid to Buyers the Royalty for such quarter (each, a “Royalty Payment”), together
with a statement showing all Net Sales of Products and the computation of the Royalty for such quarter (each a “Royalty
Calculation”). All Royalty Payments shall be made by wire transfer of immediately available funds to the account(s)
designated in writing by the Buyers no later than five Business Days prior to the date such Royalty Payment shall be due.

 

(c)          Delinquent
Royalty Payments. Any Royalty Payment not paid when due shall bear interest at the Default Rate, compounded daily, or the
highest rate then permitted by applicable law, whichever is less. 

 

    	1

    	 

    

 

(d)          Audit
Right. Upon not less than ten Business Days notice (the “Audit Notice”), the Buyers may audit the
books and records of the Payor once every calendar year to determine the computation of any Royalty Payment for up to three years
prior to the date of the Audit Notice, provided that no audit for a given year shall be repeated pursuant to this provision, but
shall be final in all respects for the period reviewed upon completion of the audit. Such audit shall be conducted during normal
business hours at the Buyers’ cost, provided that any Representative involved enters into a reasonable confidentiality agreement
with the Payor (to be approved by the Payor in its sole reasonable discretion) prior to commencing any such audit. The Payor shall
provide the Buyers and their Representatives with reasonable access to all such books and records and shall reasonably cooperate
with the Buyers’ and their Representatives’ efforts to conduct such audits. The Buyers may
object to any Royalty Calculation by delivering a notice of objection (a “Royalty Objection Notice”),
which shall specify the disputed items in the Royalty Calculation and shall describe in reasonable detail the basis for such objection,
as well as the amount in dispute. If the Buyers deliver Payor such Notice, Payor and Buyers shall negotiate in good faith for up
to ten Business Days to resolve the disputed items and agree upon the resulting amount of the disputed Royalty Payment.
If Payor and Buyers are unable to reach such agreement, all unresolved disputed items shall be promptly referred to the Reviewing
Accountant. The Reviewing Accountant shall render a written report on only such items as promptly as practicable, but in no event
greater than 30 days after such referral. If disputed items are submitted to the Reviewing Accountant, Payor and Buyers shall furnish
to the Reviewing Accountant such work papers, schedules and other documents and information relating to the items as the Reviewing
Accountant may reasonably request. The Reviewing Accountant shall resolve the disputed items based solely on the provisions of
this Agreement and the presentations by Payor and Buyers, and not by independent review. The Reviewing Accountant will not
have the power to amend this Agreement. The resolution of the dispute and the calculation of the Royalty
Payment by the Reviewing Accountant shall be final and binding on the Payor and the Buyers. If
there has been an underpayment of the Royalty Payment due for the period being audited of more than five percent (5%) of the amount
due for the period, the Payor shall reimburse the Buyers for the reasonable out-of-pocket costs (including the Reviewing Accountants’
fees) incurred by the Buyers pursuant to this Section 2(d).

 

(e)          Sale
of Products; Assignment or Sublicenses. The Payor shall pay the Royalty Payments on all Product sales by Flamel and its Affiliates
and all direct or indirect licensees and assignees or successive licensee and assignees of any rights to sell, market or otherwise
distribute Products, and the provisions of this Section 2 shall apply to all such sales as if made directly by the Payor.

 

3.          Purchase
Price. In consideration of the sale and payment of the Royalty, each Buyer shall pay to the Payor the amount set forth next
to such Buyer’s name on Exhibit B hereto in such manner as the Payor shall direct.

 

 

 

    	2

    	 

    

 

4.          Covenants
of the Payor

 

(a)          
Regulatory Approvals. The Payor shall use all commercially reasonable efforts to obtain approval of each NDA necessary
to sell each Product in the United States of America. Without limiting the foregoing, the Payor shall (A) initiate development
and manufacturing of all Products through a third-party (if this has not already occurred as of date of this Agreement) and (B)
pursue a pre-IND/pre-NDA meeting with the FDA for each Product (if this has not already occurred as of the date of this Agreement).
The Payor shall also use commercially reasonable efforts to (x) cause registration batches of each Product to be manufactured and
(y) cause stability testing to be completed for each Product, in each case unless the FDA states in such meeting that such Product
would not be approved without clinical trials or other unexpected conditions to approval that would make continued efforts to obtain
the NDA necessary to commercialize the Product not commercially viable.

 

(b)          Marketing
of Products. Upon approval to market any Product, the Payor shall take all commercially reasonable and appropriate actions
to manufacture or have manufactured, package, label, distribute, offer for sale and sell such Product.

 

(c)          Credit
Facility Restrictions. The Payor represents and warrants that there are no restrictions or limitations on its ability to make
the payments that are or may be required to be paid to the Buyers under this Agreement in any Contract. The Payor shall not enter
into, or amend, any Contract of it or its Affiliates after the date hereof the effect of which is to place any restrictions or
limitations on the Payor’s ability to make the payments that are required to be paid to the Buyers under this Agreement.

 

(d)          No
Transfer Without Consent. The Payor shall not transfer (whether by sale, assignment, merger, change of control, conveyance
of rights, deed of trust, lien, license, sublicense, seizure or other transfer of any sort, voluntary or involuntary, including
by operation of law) any of its right, title or interest in or to the Product Intellectual Property or Product Regulatory Rights
unless the assignee/transferee agrees in writing to assume (in addition to the Payor) all of the Payor’s obligations under
this Agreement; provided, however, that such requirement shall not apply to (i) the direct or indirect license of
Product Intellectual Property or Product Regulatory Rights to make, have made, use, promote, import, offer to sell or sell Products
solely on behalf of, or for the benefit of, the Payor or (ii) the direct or indirect license of Product Intellectual Property or
Product Regulatory Rights for any other reason.

 

(e)          Acceleration.
Notwithstanding anything to the contrary contained in this Agreement, upon and at any time after the occurrence of any Acceleration
Trigger Event, (x) an amount equal to the Accelerated Value shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process of any kind, all of which are hereby knowingly
and expressly waived by the Payor, and (y) the Buyers may exercise any and all other rights and remedies available to them under
this Agreement and applicable law. At least once per year, the Payor will update in good faith its sales projections for the Products
for such period as the Buyers shall reasonably request..

 

5.          Representations
and Warranties of the Payor. The Payor represents and warrants to the Buyers as follows as of the date of this Agreement:

 

(a)          Organization;
Good Standing. The Payor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its
formation. The Payor has the requisite power and authority to own, lease or use its properties and assets and to conduct its business
as presently conducted.

  

    	3

    	 

    

  

[***] –
CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN

REDACTED ARE
MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS

BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE

COMMISSION.

 

(b)          Consents
and Approvals; No Violation. Neither the execution and delivery of this Agreement by the Payor nor the performance of its obligations
hereunder nor the consummation by the Payor of the transactions contemplated hereby will: (i) conflict with or result in a breach,
violation, or default of or under the organizational document of the Payor, (ii) require the consent
of, or notice to, any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with
or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party
the right to accelerate, terminate, modify or cancel any Contract to which the Payor is a party or by which the Payor is bound
or to which any of its properties and assets are subject or any Governmental Authorization affecting the properties, assets or
business of the Payor, (iii) result in the creation of any Encumbrance (other than Permitted Encumbrances) on the assets
of the Payor, or (iv) conflict with or result in a violation or breach of any provision of any Legal
Requirement applicable to the Payor.

 

(c)          Absence
of Changes. Since March 13, 2012:

 

(i)          There
has been no transfer, assignment, sale, distribution, or Encumbrance of any Product or of any Product Intellectual Property or
Product Regulatory Rights, and there has been no agreement to do so;

 

(ii)         The
Payor has not adopted any plan of consolidation, reorganization, liquidation or dissolution or filed a petition in bankruptcy under
any provisions of federal or state bankruptcy law or consented to the filing of any bankruptcy petition against it under any similar
law;

 

(iii)        The
Payor has not formed any Affiliates, or made any capital investment in or acquired any equity interest in any other Entity;

 

(iv)         To
the knowledge of the Payor, no Person other than the Payor has submitted a product containing the same active pharmaceutical ingredient
for approval by the FDA other than with respect to [***] for a product that is described on an exhibit to this Agreement;

 

(v)          As
of the date hereof, the FDA has not expressed any disapproval, formally or informally, orally or in writing, of the development
program proposed by the Payor for any of the Products.

 

(vi)         As
of the date hereof, the FDA has not formally or informally, orally or in writing, advised the Payor that it does not intend to
approve any Product in the manner proposed by the Payor or based upon the information provided or to be provided by the Payor. 

 

    	4

    	 

    

  

(d)          Compliance
with Laws.

 

The Payor is in compliance with
all Legal Requirements applicable to it or its business, properties or assets. The Payor has not received any written notice from
any Governmental Body or any other Person regarding (i) any actual, alleged or potential material violation of or material liability
under any Legal Requirement, or (ii) any actual, alleged, or potential material obligation of the Payor to undertake or pay for
any response action required by any Legal Requirement.

 

(e)          Regulatory
Compliance.

 

(i)          The
Payor has not received any notices or correspondence from the FDA or any other Governmental Body exercising comparable authority
requiring the recall, termination or suspension of sale of any Product or otherwise alleging that the Payor is not in compliance
in all material respects with all applicable Legal Requirements.

 

(ii)         Neither
the Payor, nor any officer or employee of the Payor, nor, to the Payor’s knowledge, any agents or contractor of the Payor
is the subject of any pending or threatened investigation by the FDA pursuant to its “Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities” Final Policy set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments
thereto, or by any other comparable Governmental Body to invoke any similar policy. None of the Payor nor any officer or employee
of the Payor, nor, to the Payor’s knowledge, any agent or contractor of the Payor has (A) made any untrue statement of material
fact or fraudulent statement to the FDA, DEA, or any other Governmental Body; (B) failed to disclose a material fact required to
be disclosed to the FDA, DEA, or any other Governmental Body, or (C) committed an act, made a statement, or failed to make a statement
that would reasonably be expected to provide the basis for the FDA or any other Governmental Body to invoke the FDA’s “Fraud,
Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” Final Policy.

 

(iii)        Neither
the Payor nor any officer or employee of the Payor has been debarred or been convicted of any crime or engaged in any conduct
that did or could result in debarment under 21 U.S.C. § 335a, exclusion from federal healthcare programs under 42 U.S.C.
§ 1320a-7, disqualification as a clinical investigator under 21 C.F.R. § 312.70 or any similar Legal Requirements,
and none of the Payor or any officer or employee of the Payor has engaged in any conduct that would reasonably be expected to
result in debarment, exclusion, or disqualification from U.S. federal health care programs.

 

    	5

    	 

    

 

(iv)         Neither
the Payor, nor any officer of the Payor has received any written notice or communication from the FDA, DEA, or other Governmental
Body requiring termination or suspension of sale of any of Product or alleging noncompliance with any applicable FDA Law, DEA Law,
or other applicable Legal Requirements with regard to any Product. Neither the Payor nor any officer of the Payor has been or is
subject to any enforcement proceedings by the FDA, DEA, or other Governmental Body and, to the Payor’s knowledge, no such
proceedings have been threatened.

 

6.          [Reserved]

  

7.          Miscellaneous
Provisions. 

 

(a)          Further
Assurances. Each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional
documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to give effect to
the transactions contemplated by this Agreement.

 

(b)          Survival
of Representations and Warranties. The representations and warranties of the parties contained in this Agreement shall survive
and remain in full force and effect through the expiration of the Royalty Term.

 

(c)          Amendment.
This Agreement may not be amended except by an instrument in writing signed by the Payor and the Buyers.

 

(d)          Waiver.
No failure on the part of any Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the
part of any Party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power,
right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any
other or further exercise thereof or of any other power, right, privilege or remedy.

 

No Party shall be deemed to have
waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver
of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on
behalf of such Party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it
is given.

 

(e)          Entire
Agreement; Counterparts; Exchanges by Facsimile. This Agreement, and the other agreements referred to in this Agreement constitute
the entire agreement and supersede all prior agreements and understandings, both written and oral, among or between any of the
Parties with respect to the subject matter hereof and thereof; provided, however, that any existing confidentiality
agreements shall not be superseded and shall remain in full force and effect in accordance with its terms. This Agreement may
be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same
instrument. The exchange of a fully executed Agreement (in counterparts or otherwise) by all Parties by facsimile or portable
document format (PDF) shall be sufficient to bind the Parties to the terms and conditions of this Agreement. 

  

    	6

    	 

    

 

(f)          Applicable
Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New york, regardless of the laws that might otherwise govern under applicable principles of conflicts
of laws.  Each of the Parties to this Agreement (a) consents to submit itself to
the personal jurisdiction of the federal and state Courts of the state of new york in any action or proceeding arising out of or
relating to this Agreement or any of the Transactions Contemplated HEREUNDER, (b) agrees that all claims in respect of such action
or proceeding may be heard and determined in such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such courts, and (d) agrees not to bring any action or proceeding (including counter-claims)
arising out of or relating to this Agreement or any of the Transactions Contemplated HEREUNDER in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond,
surety or other security that might be required of any other Party with respect thereto. Any Party may make service on another
Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the
giving of notices herein. Nothing in this Section 7(f),
however, shall affect the right of any Party to serve legal process in any other manner permitted by law.

 

(g)          Assignability;
No Third Party Beneficiaries. This Agreement shall be binding upon, and shall be enforceable by and inure solely to the benefit
of, the Parties and their respective successors and assigns. No Party may assign any of its rights or obligations hereunder without
the prior written consent of the other Party, and any attempted assignment or delegation of this Agreement or any of such rights
or obligations by such Party without the other Party’s prior written consent shall be void and of no effect; provided that
a Buyer may assign its rights to payments under this Agreement to any other Person without the prior written consent of the Payor
or any other Person. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.

 

(h)          Notices.
Any notice or other communication required or permitted to be delivered to a Party under this Agreement shall be in writing and
shall be deemed properly delivered, given and received when delivered by hand, by registered mail, by courier or express delivery
service or by facsimile to such address or facsimile telephone number as each Party shall have specified in a written notice given
to the other Party.

 

    	7

    	 

    

  

(i)          Severability.
Any provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining provisions of this Agreement or the validity or enforceability of the offending provision in
any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any provision
of this Agreement is invalid or unenforceable, the Parties agree that the court making such determination shall have the power
to limit such provision, to delete specific words or phrases or to replace such provision with a provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid or unenforceable provision, and this Agreement shall be valid
and enforceable as so modified. If such court does not exercise the power granted to it in the prior sentence, the Parties agree
to replace such invalid or unenforceable provision with a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such invalid or unenforceable provision.

 

(j)          Other
Remedies; Specific Performance. Any and all remedies herein expressly conferred upon a Party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any
one remedy will not preclude the exercise of any other remedy. The Parties agree that irreparable damage would occur in the event
that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the provisions hereof, this being in addition to any other remedy to which they are entitled at law
or in equity.

 

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

 

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

 

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

 

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

 

Any amount due from the Payor
under this Section 7(k) shall be due as a separate debt and shall not be affected by judgment being obtained for any other
amount due under or in respect of this Agreement. 

 

    	8

    	 

    

 

(l)          Construction.
For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; and
any gender shall include all genders.

 

The Parties agree that any rule of construction
to the effect that ambiguities are to be resolved against the drafting Party shall not be applied in the construction or interpretation
of this Agreement.

 

As used in this Agreement, the words “include”
and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed
to be followed by the words “without limitation.”

 

Except as otherwise indicated, all references
in this Agreement to “Sections,” “Exhibits” and “Schedules” are intended to refer to Sections
of this Agreement and Exhibits and Schedules to this Agreement.

 

The headings contained in this
Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to
in connection with the construction or interpretation of this Agreement.

 

[Remainder of page intentionally left
blank; signature pages follow.]

 

    	9

    	 

    

  

IN WITNESS WHEREOF, the Parties have
caused this Agreement to be executed as of the date first above written.

 

	ÉCLAT PHARMACEUTICALS, LLC	 
	 	 
	By:	/s/ Michael S. Anderson	 
	Name: Michael S. Anderson	 
	Title: CEO	 

  

	DEERFIELD PRIVATE DESIGN FUND II, L.P.	 
	By: Deerfield Mgmt L.P., its General Partner	 
	 	 
	By: J.E. Flynn Capital, LLC, its General Partner	 
	 	 
	By:	/s/ James E. Flynn	 
	Name: James E. Flynn	 
	Title: President	 

  

	HORIZON SANTÉ FLML, SÀRL	 	 
	 	 	 
	By:  	/s/ Alexis Cazé	 	By: 	 /s/ Florence Gerardy
	Name: Alexis Cazé	 	Name: Florence Gerardy
	Title: Manager A	 	Title: Manager B

 

SIGNATURE PAGE TO ROYALTY PURCHASE AGREEMENT

 

    	 

    	 

    

 

EXHIBIT A

 

CAPITALIZED TERMS

 

“Accelerated Value” shall
mean as of any date of determination, the amount of future Royalty Payments would be paid to Buyers using the Payor’s good
faith projections of future sales of the Products at the time of the Acceleration Trigger Event, discounted to present value as
of the date of the Acceleration Trigger Event using quarterly compounding and a discount rate of 4%.

 

“Acceleration Trigger Event”
shall mean the occurrence of any one or more of the following events:

 

(a)          The
Payor shall (i) file a voluntary petition or commence a voluntary case seeking liquidation, winding-up, reorganization, dissolution,
arrangement, readjustment of debts or any other relief under any applicable bankruptcy, insolvency or similar law now or hereafter
in effect, (ii) apply for or consent to the appointment of or taking possession by a custodian, trustee, receiver or similar official
for or of itself or all or a substantial part of its properties or assets, (iii) fail generally, or admit in writing its inability,
to pay its debts generally as they become due, (iv) make a general assignment for the benefit of creditors or (v) take any action
to authorize or approve any of the foregoing; or

 

(b)          Any
involuntary petition or case shall be filed or commenced against the Payor seeking liquidation, winding-up, reorganization, dissolution,
arrangement, readjustment of debts, the appointment of a custodian, trustee, receiver or similar official for it or all or a substantial
part of its properties or any other relief under any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, and such petition or case shall continue undismissed and unstayed for a period of 60 days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such proceeding.

 

“Affiliate”. An
Entity shall be deemed to be a “Affiliate” of another Person if such Person directly or indirectly owns
or purports to own, beneficially or of record, (a) an amount of voting securities of other interests in such Entity that is sufficient
to enable such Person to elect at least a majority of the members of such Entity’s board of directors or other governing
body, or (b) at least 50% of the outstanding equity, voting, beneficial or financial interests in such Entity.

 

“ANDA” means Abbreviated
New Drug Application.

 

“Business Day”
shall mean any day other than a day on which banks in New York, NY or Paris, France are authorized or obligated to be closed. 

 

    	A-1

    	 

    

  

“Contract” shall,
with respect to any Person, mean any written, oral or other agreement, contract, subcontract, lease (whether real or personal property),
mortgage, understanding, arrangement, instrument, note, option, warranty, purchase order, license, sublicense, insurance policy,
benefit plan or legally binding commitment or undertaking of any nature to which such Person is a party or by which such Person
or any of its assets are bound or affected under applicable law.

 

“Copyright” means
all copyrights and moral rights, including the legal right provided by the Copyright Act of 1976, as amended, to the expression
contained in any work of authorship fixed in any tangible medium of expression together with any similar rights arising in any
other country as a result of statute or treaty, and all registrations, applications, renewals, extensions and reversions thereof.

 

“DEA” means the
United States Drug Enforcement Administration or any successor agency thereto.

 

“Default Rate”
shall mean 15% per annum or such lesser rate as shall be allowable by law.

 

“Earnings Report”
means during any period when Flamel is obligated to file reports under the provisions of the Securities Exchange Act of 1934, the
Form 6-K filed by Flamel containing its financial information for such quarter.

 

“Encumbrance”
shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, easement, condition, preemptive right,
community property interest, right of first refusal or right of first offer, or similar restriction of any kind, including any
restriction on the voting of any security or equity interest, any restriction on the transfer of any security, equity interest
or other asset, and any restriction on the receipt of any income or exercise of any other attribute of ownership, under any Legal
Requirement.

 

“Entity” shall
mean any corporation (including any non-profit corporation), partnership (including any general partnership, limited partnership
or limited liability partnership), joint venture, estate, trust, company (including any company limited by shares, limited liability
company or joint stock company), firm, society or other enterprise, association, organization or entity.

 

“FDA” means the
United States Food and Drug Administration or any successor agency thereto.

 

“Governmental Authorization”
shall mean any: (a) permit, license, certificate, franchise, permission, variance, exceptions, orders, clearance, registration,
qualification or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement; or (b) right under any Contract with any Governmental Body.

 

    	A-2

    	 

    

 

“Governmental Body”
shall mean any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of
any nature (including any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation,
center, organization, unit, body or other Entity and any court or other tribunal, and for the avoidance of doubt, any Taxing authority);
or (d) self-regulatory organization (including the NASDAQ Global Market).

 

“Know-How” means
ideas, designs, concepts, compilations of information methods, techniques, methodologies, procedures and processes, compositions,
specifications, techniques, technical data and information, designs, drawings, customer lists, supplier lists, pricing and financial
information, plans and proposals, algorithms and formulas, whether or not patentable.

 

“Legal Requirement”
shall mean any federal, state, foreign, local or municipal or other law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, judgment, ruling or requirement issued, enacted, adopted, promulgated, implemented
or otherwise put into effect by or under the authority of any Governmental Body.

 

“Mark” means any
word, name, symbol, logos or device used by a Person to identify its goods or services, whether or not registered, all goodwill
associated therewith, and any right that may exist to obtain a registration with respect thereto from any Governmental Body and
any rights arising under any such application, together with all registrations, renewals, extensions and reversions thereof. As
used in this Agreement, the term “Mark” includes all of the foregoing, including trademarks and service marks.

 

“Net Sales” shall
mean, without duplication, the gross amount invoiced for Products sold globally in bona fide, arm’s length transactions,
less customary deductions determined without duplication in accordance with the selling Person’s customary accounting methods
as generally and consistently applied for: (i) cash or terms discounts, (ii) sales, use and value added taxes (if and only to the
extent included in the gross invoice amount), (iii) reasonable and customary accruals for third party rebates and chargebacks,
(iv) returns and (v) recalls.

 

“Party” or “Parties”
shall mean the Buyers and the Payor.

 

“Patent” means
any patent granted by the United States Patent and Trademark Office or by the comparable agency of any other country, and any renewal,
thereof, and any rights arising under any patent application filed with the United States Patent and Trademark Office or the comparable
agency of any other country and any rights that may exist to file any such application, including all continuations, divisional,
continuations-in-part and provisionals and patents issuing thereon, and all reissues, reexaminations, substitutions,
renewals and extensions thereof.

  

    	A-3

    	 

    

 

[***] –
CONFIDENTIAL PORTIONS OF THIS AGREEMENT WHICH HAVE BEEN

REDACTED ARE
MARKED WITH BRACKETS (“[***]”). THE OMITTED MATERIAL HAS

BEEN FILED SEPARATELY
WITH THE UNITED STATES SECURITIES AND EXCHANGE

COMMISSION.

   

“Permitted Encumbrances”
means (a) statutory liens for Taxes that are not yet due and payable or Taxes that are being contested in good faith by appropriate
proceedings; (b) statutory, common law or civil law liens to secure obligations to landlords, lessors or renters under leases or
rental agreements confined to the premises rented pursuant to and which are not, individually or in
the aggregate, material to the business of the Payor; (c) deposits or pledges made in connection with, or to secure payment
of, workers’ compensation, unemployment insurance, old age pension or other social security programs mandated under Legal
Requirements, which are not, individually or in the aggregate, material to the business of the Payor;
(d) statutory, common or civil law liens in favor of carriers, warehousemen, mechanics and materialmen to secure claims for labor,
materials or supplies and other like liens with respect to amounts not yet due and payable, which are
not, individually or in the aggregate, material to the business of the Payor.

 

“Person” shall
mean any individual, Entity or Governmental Body.

 

“Product Intellectual Property”
shall mean all Proprietary Rights held or licensed by the Payor and Flamel and their Affiliates that is, or may hereafter be, necessary
to develop, make, have made, promote, market or sell the Products in the United States.

 

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

 

“Products” shall
mean (i) the drugs [***], [***], [***] and [***], and (ii) [***].

 

“Proprietary Rights”
means, with respect to a Person, all Copyrights, Marks, Trade Names, Trade Secrets, Patents, intellectual property rights in inventions
and discoveries, intellectual property rights in internet web sites and internet domain names and subdomain names and intellectual
property rights in Know-How, owned or used by such Person.

 

“Representatives”
shall mean directors, officers, other employees, agents, attorneys, accountants, advisors and representatives.

 

    	A-4

    	 

    

 

“Reviewing Accountant”
means Grant Thornton or such other accounting firm designated by the Buyers.

 

“Tax” shall mean
any federal, state, local, foreign or other taxes, levies, charges and fees or other similar assessments or liabilities in the
nature of a tax, including, without limitation, any income tax, franchise tax, capital gains tax, gross receipts tax, value-added
tax, surtax, estimated tax, unemployment tax, national health insurance tax, excise tax, ad valorem tax, transfer tax, stamp tax,
sales tax, use tax, property tax, business tax, withholding tax, payroll tax, customs duty, alternative or add-on minimum or other
tax of any kind whatsoever, and including any fine, penalty, assessment, addition to tax or interest, whether disputed or not.

 

“Trade Names”
means any words, name or symbol used by a Person to identify its business.

 

“Trade Secrets”
means business or technical information of any Person including, but not limited to, customer lists, marketing data and Know-How,
that is not generally known to other Persons who are not subject to an obligation of nondisclosure and that derives actual or
potential commercial value from not being generally known to other Persons. 

 

    	A-5

    	 

    

 

EXHIBIT B

 

ALLOCATION OF PURCHASE PRICE

 

	Buyers	 	Purchase Price	 
	Deerfield Private Design Fund II, L.P.	 	$	1,211,600	 
	Horizon Santé FLML Sarl	 	$	1,388,400	 
	Total:	 	$	2,600,000	 

 

    	B-1

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