Document:

Unassociated Document

    EXHIBIT
10.149

    

    Ferring
Pharmaceuticals, Inc.

    4
Gatehall Drive, 3rd
Floor

    Parsippany,
NJ  07054

     

    March 17,
2009                     

    

    Vyteris,
Inc.

    13-01
Pollit Drive

    Fair
Lawn, NJ   07410

    

    Ladies
and Gentlemen:

    

    Ferring
Pharmaceuticals, Inc., a Delaware corporation (“Ferring”), Vyteris,
Inc., a Delaware corporation (“Vyteris”), and
Vyteris, Inc., a Nevada corporation (“Parent”) hereby agree
as follows:

    

    1.           License
Agreement.   Reference is hereby made to the License and
Development Agreement dated as of September 27, 2004, as amended, between
Ferring and Vyteris (the “License
Agreement”).

     

    (a)           Attached
hereto as Schedule
1 is a draft of the calendar year 2009 “patch development budget”
provided by Vyteris to Ferring pursuant to Section 2.04 of the License Agreement
(the “2009 Patch
Development Budget”).  Promptly following the execution and
delivery of this letter agreement, Vyteris and Ferring shall agree upon a final
2009 Patch Development Budget.  The existing 50/50 sharing arrangement
with respect to annual development costs incurred to carry out the Development
Plan described in the License Agreement shall remain in
place.  However, solely with respect to up to $6,600,000 of the 2009
Patch Development Budget, Ferring agrees that, subject to adequate confirmation
and approval by Ferring, in its sole reasonable discretion, regarding the use of
such funds consistent with the Development Plan, Ferring shall pay half of such
budgeted amount ($3,300,000) in full first.  With respect to each such
payment made by Ferring with respect to calendar year 2009 (including, without
limitation, prior to the execution of this letter agreement) in excess of the
amounts due in accordance with the original 50/50 sharing arrangement (the
“Excess
Amounts”), Ferring shall be deemed to have paid such Excess Amounts on
account of and on behalf of Vyteris’s obligation under the existing 50/50
sharing arrangement; and such Excess Amounts shall be deemed loans by Ferring to
Vyteris (which loans Vyteris shall repay to Ferring (i) by making payment, on
account of and for the benefit of Ferring, of Ferring’s 50/50 sharing obligation
with respect to the second half of such $6,600,000 ($3,300,000) of such
Development Costs, but in any event, no later than December 31, 2009, or (ii) if
earlier, upon the termination of the License Agreement or the breach by Vyteris
or Parent of the License Agreement, the Supply Agreement (as defined below), the
Technical Agreement (as defined below), or any of the Transaction Documents (as
defined below).  In connection therewith, Vyteris shall invoice
Ferring on a semi-monthly basis based on actual costs incurred during the prior
semi-monthly period.  All such payments shall continue to be subject
to year-end reconciliation and the other provisions set forth in Section 2.04 of
the License Agreement.  With respect to any amounts in the final 2009
Development Patch Development Budget in excess of $6,600,000, such amounts shall
be paid after Ferring and Vyteris pay the amounts set forth in this paragraph
(and the original 50/50 sharing arrangement shall apply with respect
thereto).

    
      
         

      

      
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    (b)           Section
5.05(b) of the License Agreement is hereby amended and restated to read in its
entirety as follows:

     

    “In each
subsequent twelve month period, the revenue share percentage that shall be paid
by Ferring to Vyteris shall be as follows:

     

    
      	 
      	
              ·

            	
              5%
      of the first $100 million of Net Sales during such
  period;

            

    

    

    
      	 
      	
              ·

            	
              6.5%
      of Net Sales between $100-200 million during such period;
    and

            

    

     

    
      	 
      	
              ·

            	
              8%
      of Net Sales exceeding $200 million in each such
  period.”

            

    

     

    (c)           Except
as set forth above, the License Agreement shall remain in full force and
effect.

     

    2.           Supply
Agreement.  Reference is hereby made to the Supply Agreement
dated September 27, 2004, as amended, between Ferring and Vyteris the (“Supply Agreement”)
and the Technical Agreement entered into by and between Ferring and Vyteris in
connection with (the “Technical
Agreement”).

     

    (a)           The
following is hereby added as a new Section 8.5 of the Supply
Agreement:

     

    “At
Ferring's expense, Vyteris hereby agrees that it shall permit a Ferring
manufacturing/production employee or representative to be onsite at Vyteris’s
Fair Lawn, New Jersey facility during calendar year 2009, at such times as are
reasonably requested by Ferring, for observation and review purposes solely with
respect to activities related to Ferring.  With respect to such
observation and review, the provisions of Article 6 of this Agreement
(Confidentiality) shall apply.  During calendar years 2009 and 2010,
Ferring agrees that it shall not directly solicit for employment any employee of
Vyteris whom Ferring is first introduced to directly as a result of the exercise
by Ferring of such observation and review rights.”

     

    (b)           Except
as set forth above, the Supply Agreement and the Technical Agreement shall
remain in full force and effect.

     

    3.           PMK150.

     

    (a)           Attached
hereto as Schedule
2 is a description of machinery commonly referred to as PMK150 and used
by Vyteris in connection with its performance of its obligations pursuant to the
License Agreement and Supply Agreement (together with all replacement and spare
parts and accessories, the “PMK150”).  Vyteris
hereby represents and warrants to Ferring that there are no manufacturer or
other warranties in favor of Vyteris and/or its affiliates relating to the
PMK150.

    
      
         

      

      
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    (b)           Vyteris
and Parent hereby, jointly and severally,  represent and warrant to
Ferring that (i) Vyteris owns all good and marketable right, title and interest
in and to the PMK150, free and clear of any and all liens, security interests,
pledges, attachments, mortgages, charges, claims, conditions or other similar
encumbrances or restrictions of any kind, including, without limitation, any
conditional sale agreement or other title retention agreement (collectively,
“Liens”),
except for the Lien in favor of Spencer Trask Specialty Group (“Spencer Trask”); and
upon execution and delivery of the Bill of Sale (as defined below), Ferring
shall acquire all absolute unconditional right, title and interest in and to the
Purchased Assets (as defined below), free and clear of all Liens (i.e., Spencer
Trask shall release its Lien); (ii) the PMK150 conforms to the specifications
set forth on Schedule
2 hereto and is in good working order and operating condition, free of
any material defects (latent and otherwise); (iii) the PMK150 complies in all
material respects with all applicable requirements of all applicable and
relevant occupational safety and health laws and the regulations promulgated
thereunder; and (iv) the PMK150 is located at the facilities of Vyteris located
at 13-01 Pollit Drive, Fair Lawn, New Jersey.

     

    (c)           Vyteris
and Parent hereby, jointly and severally, represent and warrant to Ferring that
(i) Vyteris is a wholly-owned subsidiary of Parent, that Parent is a
holding-company without operations other than as relate to its ownership of
Vyteris, and that Parent’s only asset is its capital stock of Vyteris; and (ii)
except as set forth on Schedule 3, there is
no actual or threatened claim, lawsuit, action or proceeding against or
involving Vyteris or Parent.

    

    (d)           Simultaneously
with the execution and delivery of this letter agreement, Vyteris and Ferring
shall enter into an Assignment and Bill of Sale in the form attached hereto as
Exhibit A (the
“Bill of Sale”)
pursuant to which Vyteris shall sell and assign to Ferring, and Ferring shall
purchase from Vyteris, the PMK150 and all related records, documentation and
warranties (collectively, the “Purchased Assets”),
free and clear of all Liens.  The Bill of Sale is hereby incorporated
by reference into this Agreement as if fully set forth herein.

     

    (i)           The
purchase price to be paid by Ferring to Vyteris for the Purchased Assets is One
Million Dollars ($1,000,000) (the “Purchase Price”) and
shall be paid by Ferring to Vyteris as follows:

     

    (a)           credit
for the principal amounts owed by Vyteris to Ferring pursuant to (i) the
Promissory Note dated July 8, 2008 made by Parent, as nominee and agent for
Vyteris, to Ferring in the original principal amount of $50,000 (the "$50,000 Note") (which
principal amount equals $50,000), and (ii) the Promissory Note dated December
15, 2008 made by Parent, as nominee and agent for Vyteris, to Ferring in the
original principal amount of $200,000 (the "$200,000 Note")
(which principal amount equals $200,000) are hereby credited in full against the
Purchase Price;

     

    (b)           Ferring
shall make a payment to Vyteris in the amount of $250,000 on the date hereof;
and

    
      
         

      

      
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    (c)           On
April 30, 2009, Ferring shall make a payment to Vyteris in the amount of (i)
$500,000, less credit for (ii) interest payments owed by Vyteris to Ferring
pursuant to the (A) the $50,000 Note; (B) the $200,000 Note; and (C) the
Promissory Note dated July 8, 2008 made by Parent, as nominee and agent for
Vyteris, to Ferring in the original principal amount of $2,500,000 (the “$2,500,000
Note”).

     

    (ii)           The
parties hereby acknowledge and agree that the loans made by Ferring and
represented by the $50,000 Note, the $200,000 Note and the $2,500,000 Note were
each made by Ferring to Parent, as nominee and agent for Vyteris.  The
parties hereby acknowledge and agree that the Purchase Price constitutes the
Fair Market Value of the Purchased Assets.  As used in this letter
agreement, the “Fair Market Value” means the price determined by the parties to
be the price which a willing buyer would pay for assets in an arm’s length
transaction to a willing seller who is under no compulsion to sell such
assets.

     

    (iii)           The
Parties hereby acknowledge and agree that, in accordance with Section 4 of the
$2,500,000 Note, Ferring has elected to offset the principal amount due by
Ferring thereunder against the $2,500,000 payment due by Ferring pursuant to
Section 5.02(ii) of the License Agreement.

     

    (e)           Simultaneously
with the execution and delivery of this letter agreement, Vyteris and Ferring
shall enter into an Equipment Lease Agreement in the form attached hereto as
Exhibit B (the
“Equipment
Lease”) pursuant to which Ferring shall lease to Vyteris the Purchased
Assets.   As set forth in the Equipment Lease, in lieu of Vyteris
paying the lease payments to Ferring in cash, at Ferring’s option Ferring shall
receive a dollar-for-dollar credit against, at Ferring’s option, (i) the option
exercise price described below with respect to the PMK300, and/or (ii) amounts
due by Ferring to Vyteris pursuant to the License Agreement (e.g., milestone payments),
the Supply Agreement and/or any other agreement between the
parties.  The Equipment Lease is hereby incorporated by reference into
this Agreement as if fully set forth herein.  General terms shall
include, without limitation, lease payments of $1000 per month, a term of 10
years and covenants by Vyteris to maintain the Equipment in proper working
order.  Without otherwise limiting the provisions of the Section 6(b)
of the Equipment Lease, the insurance referred to in Section 6(b) of the
Equipment Lease shall include the insurance set forth on Schedule 3(a)
attached hereto.

     

    4.           PMK300.

    

    (a)           Attached
hereto as Schedule
4 is a description of a piece of machinery commonly referred to as PMK300
(together with all replacement and spare parts and accessories, the “PMK300”).  There
are no manufacturer and other warranties in favor of Vyteris and/or Parent
relating to the PMK300.

    
      
         

      

      
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    (b)           Vyteris
and Parent hereby, jointly and severally, represent and warrant to Ferring that
(i) Vyteris owns all good and marketable right, title and interest in and to the
PMK300, free and clear of any and all Liens; and upon consummation by Ferring of
the transactions contemplated by the Option (as defined below), Ferring shall
acquire all absolute unconditional right, title and interest in and to the
PMK300 Assets (as defined below), free and clear of all Liens; (ii) the PMK300
conforms to the specifications: set forth on Schedule 4 hereto and
is in good working order and operating condition, free of any material defects
(latent and otherwise); (iii) the PMK300 complies in all material respects with
all applicable requirements of all applicable and relevant occupational safety
and health laws and the regulations promulgated thereunder; and (iv) the PMK300
is located at the facilities of Herro Hoeflinger Harro Höfliger
Verpackungsmaschinen GmbH, Werk Satteldorf, Industriestraße 6, 74589 Satteldorf,
GERMANY.

     

    (c)           Vyteris
hereby grants to Ferring the right to purchase the PMK300 and all related
records, documentation and warranties (collectively, the “PMK300 Assets”), free
and clear of all Liens (the “Option”).   In
order to exercise the Option, Ferring shall notify Vyteris in writing, prior to
the expiration of the Option Period (as defined below), that Ferring desires to
exercise the Option, in which case the parties shall promptly negotiate and
enter into a purchase agreement and other related documents (including, without
limitation, transfer documents and a legal opinion in favor of Ferring) in
connection therewith.  As used herein, the “Option Period” means
the period of time beginning on the date of this letter agreement and ending on
the second anniversary of the letter agreement.

     

    (i)           The
option exercise price to be paid by Ferring to Vyteris shall be in an amount and
upon payment terms mutually agreed upon by the parties in good
faith.

     

    (ii)           Vyteris
hereby covenants and agrees that during the Option Period (and, if Ferring
exercises the Option, until such time as Ferring and Vyteris consummate the sale
by Vyteris to Ferring of the PMK300 Purchased Assets), the representations and
warranties set forth in paragraph 4(b) shall remain true and accurate in all
respects and Vyteris shall maintain the insurance listed on Schedule 5 attached
hereto.

     

    5.           Representations and
Warranties.  Vyteris and Parent, jointly and severally, hereby
represent and warrant to Ferring, and Ferring hereby represents and warrants to
Vyteris that:

     

    (a)           It
is duly and validly existing under the laws under which it was organized and is
qualified and in good standing in the State of New Jersey; except that, with
respect to Parent, Vyteris and Parent represent and warrant that Parent is not
in good standing in the State of New Jersey, that Parent is not “doing business”
in the State of New Jersey and that such failure of Parent to be in good
standing is not in violation or contrary to any law or regulation.  It has the
requisite power and authority to execute, deliver and perform this letter
agreement and all of the other documents and instruments executed and delivered
by it in accordance herewith (collectively with this letter agreement, the
“Transaction
Documents”).  It has obtained all necessary authorizations to
approve the execution, delivery and performance by it of each of the Transaction
Documents to which it is a party.  Each of the Transaction Documents
to which it is a party has been duly executed and delivered by
it.

    
      
         

      

      
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     (b)           Each
of the Transaction Documents to which it is a party is its legal, valid and
binding obligation, enforceable against it in accordance with its
terms.  The execution, delivery and performance of each of the
Transaction Documents to which it is a party does not and will not, under any
circumstance whatsoever: (i) conflict with, constitute a default, or result in a
default or other breach of or under the certificate of incorporation or bylaws
of such party or any agreement to which such party is a party or by which it or
its assets is bound; (ii) permit any entity or individual to either terminate or
to accelerate any liability or other obligation, or to impose any penalty under
or to otherwise modify, or exercise rights under, or cancel or require any
notice under, or otherwise violate any  agreement to which such party
is a party or by which it or its assets is bound; or (iii) otherwise result in a
Lien, except for Liens in favor of Ferring as contemplated by the Transaction
Documents.

     

    (c)           No
governmental or other authorization, approval or other consent of any kind or
nature by or on behalf of such party is required arising out of or otherwise
relating to the execution, delivery or performance of the Transaction Documents
to which it is a party and such party is not prohibited by any law from
consummating the transactions contemplated by any of the Transaction Documents
to which it is a party.  No litigation or other proceeding is pending
against it that questions the validity of any of the Transaction Documents or
any transaction contemplated thereby.

     

    6.           Indemnification; Security
Interests; Subordination; Additional Agreements.

     

    (a)           Vyteris
and Parent, jointly and severally, hereby agree to indemnify and hold harmless
(and at the request of Ferring, defend) Ferring and its parent and other
affiliates and their respective successors and permitted assigns, and the
officers, directors, managers, employees, members, partners, stockholders,
agents and representatives of each of the foregoing (collectively, the “Buyer Indemnitees”),
from and against, and shall pay to the Buyer Indemnitees the amount of, any and
all liabilities, losses, damages, expenses (including, without limitation,
reasonable attorneys’ fees), causes of action, suits, claims or judgments
arising from, resulting from or based upon (i) any breach of or inaccuracy in
the representations and warranties of Vyteris and/or Parent contained in any of
the Transaction Documents, the License Agreement, the Supply Agreement and/or
the Technical Agreement, (ii) any breach of the covenants or agreements of
Vyteris and/or Parent contained in any of the Transaction Documents, the License
Agreement, the Supply Agreement and/or the Technical Agreement, or (iii) the
actual or alleged use, operation, delivery or transportation of the Purchased
Assets (and, if Ferring exercises, the Option, the PMK300 Assets) prior to the
sale and assignment thereof to Ferring pursuant to the Transaction Documents or
while Vyteris and/or Parent otherwise has possession or control
thereof.

    
      
         

      

      
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    (b)           To
secure the obligations of Vyteris pursuant to the existing and new agreements
between the parties, Vyteris shall grant to Ferring a security interest in all
of the assets of Vyteris (including, without limitation, the PMK300 machinery
and the Product (as defined in the License Agreement), work in process supplies,
inventories, machinery and equipment); provided, however, that with respect to
patent rights, such collateral shall only include the patents and patent
applications (i) referred to in the License Agreement, (ii) made, created,
developed or reduced to practice in connection with the License Agreement, and
(iii) any other patents and patent applications owned or controlled by Vyteris
and necessary, useful or desirable to Ferring’s manufacture, marketing, sale
testing, development or use of the Product, including, without limitation the
patents and patent applications listed on Schedule 6 attached
hereto, together with certain other assets, all as more fully described in the
Vyteris Security Agreement (as defined below).  In furtherance
thereof, simultaneously with the execution and delivery of this letter
agreement, Vyteris shall execute and delivery to Ferring a Security Agreement in
the form attached hereto as Exhibit C (the “Vyteris Security
Agreement”) and any other UCC-1 statements, collateral assignments of
patents and other documents reasonably requested by Ferring.  The
Vyteris Security Agreement is hereby incorporated by reference into this
Agreement as if fully set forth herein.   Additionally, Vyteris
shall, upon the request of Ferring at any time on the date hereof or thereafter,
take all steps that Ferring deems advisable or necessary in order for Ferring to
obtain and/or perfect its security interest (including, at the request of
Ferring, that Vyteris shall execute appropriate German security documents, move
the PMK300 machinery to the United States and/or obtain a legal opinion, from a
law firm and in form satisfactory to Ferring, with respect to such
perfection).  The German security documents shall substantially
conform to the draft security transfer agreement (Sicherungsübereignungsvertrag)
attached hereto as Exhibit G and shall
be executed by the parties (including Spencer Trask) within twenty (20) bank
working days from the execution and delivery of this Letter
Agreement.  The German security documents shall form an integral part
of the Vyteris Security Agreement and their content shall be incorporated in
full into the Vyteris Security Agreement by way of reference.  Vyteris
shall pay all costs and expenses incurred by Ferring in connection with
perfecting its security interest (including, without limitation, all costs and
expenses of German legal counsel).   The Vyteris Security
Agreement shall terminate on the Security Interest Termination Date (as defined
in the Vyteris Security Agreement).

     

    (c)           To
secure the obligations of Parent pursuant to the existing and new agreements
between the parties, Parent shall grant to Ferring a security interest in all of
the assets of Parent.  In furtherance thereof, simultaneously with the
execution and delivery of this letter agreement, Parent shall execute and
delivery to Ferring a Parent Security Agreement in the form attached hereto as
Exhibit D (the
“Parent Security
Agreement”) and any other UCC-1 statements and other documents reasonably
requested by Ferring.  The Parent Security Agreement is hereby
incorporated by reference into this Agreement as if fully set forth
herein.   Additionally, Parent shall, upon the request of Ferring
at any time on the date hereof or thereafter, take all steps that Ferring deems
advisable or necessary in order for Ferring to obtain and/or perfect its
security interest.  Parent and/or Vyteris shall pay all costs and
expenses incurred by Ferring in connection with perfecting its security
interest.  The Parent Security interest shall terminate on the
Security Interest Termination Date.

     

    (d)           Simultaneously
with the execution and delivery of this letter agreement, Spencer Trask shall
fully release and discharge all Liens with respect to the PMK150, and (ii) enter
into a Subordination and Agreement in the form attached hereto as Exhibit
E.  Additionally, immediately prior to consummation of the
transactions contemplated by exercise by Ferring of the Option, Spencer Trask
shall fully release and discharge all Liens with respect to the
PMK300.  In connection with the foregoing, Spencer Trask hereby shall
authorize Ferring to take any and all actions (including, as appropriate, filing
UCC-3 termination statements) necessary or desirable, as determined by Ferring
in good faith.

     

    (e)           Simultaneously
with the execution and delivery by the parties of this letter agreement, Vyteris
shall deliver to Ferring the legal opinion of Jolie Kahn, Esq., counsel to
Vyteris, in form and substance satisfactory to Ferring, in the form attached
hereto as Exhibit
F.

    
      
         

      

      
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    (f)           Until
the Security Interest Termination Date, Vyteris nor Parent may not make any
payments to any related party shareholders or entities controlled by related
party shareholders (“related party shareholder” is defined as those shareholders
listed on Schedule
8 attached hereto), except for (i) compensation under existing employment
agreements and consulting fees payable to officers and a certain corporate
director at rates no greater than the rates in effect on January 1, 2009 and
otherwise upon terms no more favorable to such officers and director than under
past practices, and compensation paid to Parent’s Board of Directors pursuant to
arrangements in effect either pursuant to the existing Board compensation plan
or otherwise as in effect on January 1, 2009, and (ii) amounts pre-approved by
Ferring in writing, in each instance, in Ferring’s sole discretion.

     

    (g)           
Notwithstanding anything contained in the Vyteris Security Agreement to the
contrary, Ferring hereby agrees that if, and only if, (i) Ferring has confirmed
in writing that neither Vyteris nor Parent has breached or defaulted under or
with respect to (nor has Ferring alleged in good faith that such breach or
default has occurred under or with respect to) any of the Transaction Documents,
the License Agreement, the Supply Agreement and/or the Technical Agreement, and
(ii) Spencer Trask has reaffirmed in writing (in form and substance reasonably
satisfactory to Ferring in its sole discretion) that the Subordination and
Agreement remains in full force and effect, Ferring shall (A) allow Vyteris to
grant or allow the imposition of a lien or security interest upon the Collateral
(as defined in the Vyteris Security Agreement) in connection with the making of
loans to Vyteris by one or more New Third Party Lenders, and (B) subordinate its
liens and security interests created by the Vyteris Security Agreement to such
New Third Party Lenders to the extent that the value of the Collateral (as
defined in the Vyteris Security Agreement) at the time or times that Ferring
exercises its rights and remedies pursuant to the Vyteris Security Agreement (as
determined by Ferring in its sole discretion good faith) exceeds $3,300,000; it
being understood and agreed that Ferring’s liens and security interests shall
remain senior to the New Third Party Lenders with respect to at least $3,300,000
of value of the Collateral.  In connection with the foregoing
subordination, Ferring agrees to execute a subordination agreement with New
Third Party Lenders in form and substance reasonably satisfactory to Ferring in
its sole discretion.  As used herein, a “New Third Party
Lender” means a third party accredited investor and/or financial
institution (but not Spencer Trask) that is not affiliated in any way with
Vyteris, Parent, Spencer Trask or any related party shareholders or entities
controlled by related party shareholders (as described in paragraph 6(f)
above).

     

    (h)           So
long the License Agreement and/or the Supply Agreement is in effect, Ferring
shall receive notice of all regularly scheduled and unscheduled meetings of the
Board of Directors of Vyteris and Parent, and subject to having designated an
observer (which may be only one person and not subject to change unless the
designated person is no longer employed or retained by Ferring), who has signed
Vyteris’s and Parent's standard nondisclosure agreement (of which Ferring shall
not be a third party beneficiary), such observer may attend Vyteris’s and
Parent's regularly scheduled and unscheduled meetings of its Board of Directors
and shall receive the materials distributed or made available to the voting
members of the Board in connection with such meetings; provided, however, that
such observer shall not have a right to vote or otherwise pass on any matters
brought to the attention of the Board at such meetings, and such observer shall
be excluded from any discussions regarding any matters related to
Ferring.

    
      
         

      

      
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    7.           Miscellaneous.

     

    (a)           Each
of the Transaction Documents shall be governed by and construed in accordance
with the laws of the State of New Jersey without giving effect to conflicts of
law principles.

     

    (b)           Each
of the Transaction Documents may be executed in counterparts and delivered by
facsimile, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.  The parties hereby
submit to the exclusive jurisdiction of the state and federal courts located in
the City of Newark, State of New Jersey for the sole purpose of the Transaction
Documents and any controversy arising thereunder. VYTERIS AND FERRING EACH WAIVE
THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING FROM THE
TRANSACTION DOCUMENTS.

     

    (c)           Vyteris
and Parent shall execute and deliver to Ferring, upon Ferring’s request, such
instruments and assurances as Ferring deems necessary or advisable in order to
consummate the transactions contemplated by the Transaction
Documents.  At request of Ferring, Vyteris shall execute, or join
Ferring in executing, financing statements pursuant to the Uniform Commercial
Code or comparable statute, rule or regulation.

     

    (d)           All
notices under any of the Transaction Documents shall be delivered by facsimile
(confirmed by overnight delivery) or by overnight delivery with a reputable
overnight delivery service, to the address of the respective parties set forth
above.  Notices shall be effective on the day following the date of
transmission if sent by facsimile, and on the business day following the date of
delivery to the overnight delivery service if sent by overnight
delivery.  A party may change its address listed above by notice to
the other party given in accordance with this section.

     

    (e)           The
parties hereto acknowledge that the Transaction Documents set forth the entire
agreement and understanding of the parties and supersedes all prior written or
oral agreements or understandings with respect to the subject matter
thereof.  No modification of any of the terms of any of the
Transaction Documents shall be deemed to be valid unless in writing and signed
by an authorized agent or representative of both parties hereto.  No
course of dealing or usage of trade shall be used to modify the terms and
conditions therein.  A waiver of a default shall not be a waiver of
any other or a subsequent default.

    

    (f)           Each
of the Transaction Documents is binding upon, and inures to the benefit of, the
parties hereto and their respective administrators, successors and
assigns.  Neither Vyteris nor Parent may assign or otherwise transfer
(by assignment, stock sale, merger or otherwise) any of the Transaction
Documents without the prior written consent of Ferring.  Each
provision of each of the Transaction Documents shall be considered separable;
and if, for any reason, any provision or provisions herein are determined to be
invalid and contrary to any existing or future law, such invalidity shall not
impair the operation of or affect those portions of the applicable Transaction
Documents which are valid.

     

    [Signature
Page Follows]

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    Please
confirm your agreement to the foregoing by executing the enclosed duplicate
original of this letter in the space provided below and returning it to
Ferring.

     

    
      
        	
                FERRING
      PHARMACEUTICALS, INC.

              
	 
      
	
                By:

              	 
      
	
                   

              
	 
      	
                Name:

              
	 
      	
                Title:

              

      

    

    

    
      
        	
                ACCEPTED
      AND

              
	
                AGREED
      TO:

              
	 
      
	
                VYTERIS,
      INC., a Delaware corporation

              
	 
      	 
      
	
                By:

              	
                   

              
	 
      	
                Name:

              
	 
      	
                Title:

              
	 
      
	
                ACCEPTED
      AND AGREED TO:

              
	 
      
	
                VYTERIS,
      INC., a Nevada corporation

              
	 
      
	
                By:

              	
                   

              
	 
      	
                Name:

              
	 
      	
                Title:

              

      

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    SCHEDULES AND
EXHIBITS

     

    
      	
              Schedule
      1

            	
              2009
      Patch Development Budget

            
	
              Schedule
      2

            	
              Description
      of PMK150

            
	
              Schedule
      3

            	
              Claims,
      Lawsuits, Actions

            
	
              Schedule
      3(a)

            	
              PMK150
      Insurance

            
	
              Schedule
      4

            	
              Description
      of PMK300

            
	
              Schedule
      5

            	
              PMK300
      Insurance

            
	
              Schedule
      6

            	
              Certain
      Patent Rights

            
	
              Schedule
      7

            	
              Materials
      and Supplies

            
	
              Schedule
      8

            	
              Related
      Parties

            
	 
      	 
      
	
              Exhibit
      A

            	
              Form
      of Bill of Sale

            
	
              Exhibit
      B

            	
              Form
      of Equipment Lease

            
	
              Exhibit
      C

            	
              Form
      of Vyteris Security Agreement

            
	
              Exhibit
      D

            	
              Form
      of Parent Security Agreement

            
	
              Exhibit
      E

            	
              Form
      of Subordination of Agreement

            
	
              Exhibit
      F

            	
              Form
      of Legal Opinion

            
	
              Exhibit
      G

            	
              Draft
      German Security Transfer
Agreement

            

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Schedule
1           Draft 2009
Patch Development Budget

    

    See
Attached

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    Schedule
2           Description
of PMK150

    

    See
attached

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    Schedule
3           Claims,
Lawsuits, Actions

    

    See
Attached

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    Schedule
3(a)    PMK150 Insurance

    

    See
Attached

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    Schedule
4           Description
of PMK300

    

    See
Attached

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    Schedule
5           PMK300
Insurance

    

    See
Attached

    

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

    

    Schedule
6           Certain
Patent Rights

    

    See
Attached

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    Schedule
7           Materials and
Supplies

    

    See
Attached

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    Schedule
8           Related
Parties

    

    See
Attached

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    Exhibit
A           Form of Bill
of Sale

    

    See
Attached

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    Exhibit
B           Form of
Equipment Lease

    

    See
Attached

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    Exhibit
C           Form of
Vyteris Security Agreement

    

    See
Attached

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    Exhibit
D           Form of
Parent Security Agreement

    

    See
Attached

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    

    Exhibit
E           Form of
Subordination and Agreement

    

    See
Attached

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    

    Exhibit
F           Form of Legal
Opinion

    

    See
Attached

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    

    Exhibit
G           Draft German
Security Transfer Agreement

    

    See
Attached (to be
finalized post-Closing)

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    Schedule
1 - 2009 Patch Development Budget

     

    
 

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
2

    Description of the PMK150
Patch Machine

    The
PMK150 machine was designed and manufactured by Harro Hofliger (Germany) to
manufacture Vyteris transdermal drug patches. The machine operates in a
continuous mode with the following input materials: PETG cover liner, non-woven
pads, anode and cathode solutions, hydrogel and electrode subassembly. The
electrode subassembly web width is 150mm (1-up lane configuration)

    The basic
operation is as follows. The PETG cover liner roll is unwound and cavities are
thermoformed. Pre-cut non-woven pads are positioned by hand in the cavities and
then ultrasonically welded to the PETG material. Anode and cathode solutions are
dispensed onto the non-woven pads. In parallel, the hydrogel roll is unwound and
die-cut to provide anode and cathode pucks on a carrier liner. These hydrogel
pucks are laminated in registration to the unwound electrode subassembly
material. The latter material is then laminated in registration to the dosed
PETG cover liner. Finally, the patch is die-cut from the web.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
3 – CLAIMS, LAWSUITS, ACTIONS

    1. 17-01 Pollitt Drive, Fair
Lawn, NJ lease = Litigation Initiated

    This is
the second building leased by Vyteris which was intended to be used for expanded
manufacturing space, which was not utilized due to the de-emphasis of the
LidoSite product. Vyteris vacated the space during the first quarter of 2008 and
consolidated operations at 13-01 Pollitt Drive. The present value of lease
payments through the end of the lease term is $2.0 million. Vyteris was working
with the landlord for the 17-01 Pollitt Drive space to reach a settlement;
however on or about February 25, 2009, Vyteris was served with a summons and
complaint by the Landlord, 17-01 Pollitt Drive Associates, L.L.C., seeking
compensatory damages and possession of the demised premises.

    2. Biovid v. Vyteris. =
Current Litigation

    Biovid
Corporation v Vyteris, Inc.et al. Docket No.: MER-L-1650-08

    Superior
Court of NJ, Mercer County Law Division

    Vyteris
was sued by a firm which wrote a report in conjunction with LidoSite. The suit
is to recoup fees of approximately $50,000 previously invoiced by Biovid.
Litigation counsel is preparing an answer to the complaint. Vyteris’ claims that
worked was performed without a contract and was not approved by Vyteris. Biovid
agrees that while a contract was not signed, there were verbal instructions from
management authorizing the work.

    3. Vyllo v. Vyteris. =
Potential Claim – Demand Letter sent but no litigation initiated

    Vyllo is
owed approximately $25,000 in consulting fees by Vyteris. The consultant
authorized fiber optic cable installation without Vyteris’ consent, so Vyteris
feels there is a valid counterclaim; however, due to the small dollar amount, it
is prudent to settle this matter. Vyteris’ claims Vyllo’s signing of a 5 year
lease agreement for a fiber optic 100 megabit line in the amount of $300,000 was
unauthorized and a breach of Vyteris’ contract which expressly states that Vyllo
cannot bind Vyteris to any contracts. See Fiber Optic Cable lines
below.

    4. Fiber Optic Cable
Lines. = Status Potential Litigation – Vyteris would be
plaintiff

    Vyllo
consultant authorized installation of lines and service at the 17-01 location
without the consent of the Vyteris Finance Department. Vyteris no longer needs
the full service due to decreased capacity needs. Remaining payments due total
$288K. Vyteris is in the process of securing an alternate phone system for the
13-01 location so that it can terminate this service based upon lack of
authority of the signator to bind Vyteris.

    5. Caswood Group (Contract
Sales Organization). = Demand Letter

    Effective
as of May 11, 2007, Vyteris entered into an agreement with Caswood Group, Inc.
for Caswood to provide marketing and promoting of Vyteris’s pharmaceutical
products to designated physicians and other health care accounts in the United
States. The Agreement expired in the fourth quarter of 2007. Vyteris still owes
Caswood $145K for services rendered, and Caswood has indicated that it is close
to taking collection action and is willing to work with Vyteris by offering
three payment settlement options.

    

    6. Lash
Group = Current Litigation $135K

    

    The Lash
Group, Inc. v Vyteris, Inc. Docket No.: L 9191-08

    Superior
Court of NJ Law Division: Bergen County

    Vyteris’
claims that Lash’s original suggestion / recommendation of CPT code was based on
flawed understanding of what Vyteris’ goals and that Lash’s preliminary research
did not mention “compete with a 10-cent shot of lidocaine” for other than
blenophobia. Vyteris is contesting Lash’s billing practices of coding nearly 95%
of the billing inquiries to the most expensive charge code. Vyteris is confident
that it has valid defenses to this matter.

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    

    7. Robert
Half = Current Litigation $15K - Vyteris will settle with payment
plan.

    

    Robert
Half vs Vyteris, Inc. Docket No.: MID L 008714-08

    Superior
Court of NJ Middlesex Law Division

    8. INC
Research v. Vyteris $35K – Collection action – Vyteris will settle with payment
plan.

    INC
Research vs Vyteris, Inc. Case Number: 09CV000052

    Superior
Court Division-State of North Carolina

    9. Marcom
International v. Vyteris: Litigation was settled in 2008 pursuant to a
settlement agreement. Vyteris is not current on its payments, and the balance
due is approximately $31,000. The agreement contains confession of judgment
provisions which can be triggered by the failure to make current payments.
Vyteris intends to become current and/or work out new payment arrangement with
Marcom.

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    SCHEDULE
3(A)

    

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    SCHEDULE
4

    

    Description of the PMK300
Machines

    The
PMK300 machine was designed and manufactured by Harro Hofliger (Germany) to
manufacture Vyteris transdermal drug patches. The machine operates in a
continuous mode with the following input materials: PETG cover liner, non-woven,
anode and cathode solutions, hydrogel and electrode subassembly. The subassembly
width is 300mm (2-up lane configuration).

    The basic
operation is as follows. The PETG cover liner roll is unwound and cavities are
thermoformed. Non-woven pads are cut and automatically placed in the cavities
and then ultrasonically welded to the PETG material. Anode and cathode solutions
are dispensed onto the non-woven pads. In parallel, the hydrogel roll is unwound
and die-cut to provide anode and cathode pucks on a carrier liner. These
hydrogel pucks are laminated in registration to the unwound electrode
subassembly material. The latter material is then laminated in registration to
the dosed PETG cover liner. Finally, the patch is die-cut from the
web.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
5

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
6

    

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    Schedule 7 Phase III Materials and
Supplies

    Phase III
Supplies

    Patches
67,000

    Controllers
4,800

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    SCHEDULE
8

    

    

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    ASSIGNMENT AND BILL OF
SALE

     

    Reference is hereby made to the letter
agreement dated the date hereof (the “Agreement”) among
Vyteris, Inc., a Delaware corporation ("Vyteris"), Vyteris,
Inc., a Nevada corporation and Ferring Pharmaceuticals, Inc., a Delaware
corporation (“Ferring”).  Each
capitalized term used herein and not defined herein shall have the meaning
ascribed to it in the Agreement.

     

    Vyteris, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
does hereby grant, sell, assign, transfer, set over, deliver and convey unto
Ferring the Purchased Assets, including, without limitation, the assets
described in Schedule
1 attached hereto.

     

    TO HAVE AND TO HOLD the same unto the
said Ferring, its successors and assigns, forever.

     

    Vyteris hereby agrees to execute and
deliver such further instruments of conveyance, transfer and assignment and to
take such other and further action as Ferring may reasonably request more
effectively to sell, assign, transfer, set over, deliver and convey any of the
Purchased Assets hereunder and to confirm title thereto to Ferring, and to
assist in the collection or reduction to possession thereof and to exercise
rights with respect thereto.

     

    Vyteris hereby constitutes and appoints
Ferring and its successors and assigns as Vyteris' true and lawful attorney,
with full power of substitution, in Vyteris' name and stead, but on behalf and
for the benefit of Ferring and its successors and assigns, to demand and receive
any and all of the Purchased Assets and to give receipts and releases for and in
respect of the same, and any part thereof, and from time to time to institute
and prosecute in Vyteris' name, or otherwise, for the benefit of Ferring and its
successors and assigns, any and all proceedings at law, in equity or otherwise,
which Ferring and its successors or assigns may deem proper for the collection
or reduction to possession of any of the Purchased Assets or for the collection
and enforcement of any claim or right of any kind hereby granted, sold,
assigned, transferred, set over, delivered and conveyed, or intended to be, and
to do all acts and things in relation to the Purchased Assets which Ferring and
its successors and assigns shall deem desirable, Vyteris hereby declaring that
the foregoing powers are coupled with an interest and are and shall be
irrevocable by Vyteris or by its dissolution or in any manner or for any reason
whatsoever.

     

    The representations, warranties and
covenants of Vyteris contained in the Agreement shall not merge into but shall
survive this Assignment and Bill of Sale and become a part hereof and shall
continue in full force and effect from and after the date
hereof.

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, Vyteris
has caused this Assignment and Bill of Sale to be executed and delivered by its
duly authorized officers as of the ______ day of March, 2009.

     

    
      
        	
                Attest:

              	 
      	
                VYTERIS,
      INC., a Delaware corporation

              
	 
      	 
      	 
      
	
                By:

              	
                  

              	 
      	
                By:

              	
                  

              
	
                Name:

              	 
      	
                Name:

              
	
                Title:

              	 
      	
                Title:

              
	 
      	 
      	 
      
	
                Acknowledged
      and Agreed by:

              	 
      	 
      
	 
      	 
      	 
      
	
                VYTERIS,
      INC., a Nevada Corporation

              	 
      	 
      
	 
      	 
      	 
      
	
                By:

              	
                  

              	 
      	 
      
	
                Name:

              	 
      	 
      
	
                Title:

              	
                  

              	 
      

      

    

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    SCHEDULE
1

     

    The
Purchased Assets include the following:

     

    See
Schedule 2 to Letter Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
B

     

    EQUIPMENT
LEASE

     

    This
EQUIPMENT LEASE (this "Equipment Lease") is
made and entered into as of the ______ day of March, 2009, by and between
Ferring Pharmaceuticals, Inc., a Delaware corporation, with a principal place of
business at 4 Gatehall Drive, 3rd Floor,
Parsippany, NJ 07054 (the "Lessor"), and
Vyteris, Inc., a Delaware corporation, with a principal place of business at
13-01 Pollit Drive, Fair Lawn, NJ ("Lessee").  Lessor
and Lessee are each referred to herein as a "Party" and together
as the "Parties".

     

    PRELIMINARY
STATEMENT

     

    Simultaneously
with the execution and delivery of this Equipment Lease, the Parties have
entered into a letter agreement (the "Letter Agreement")
pursuant to which, among other things, Lessor has agreed to lease to Lessee the
personal property described on Schedule A attached
hereto (the "Equipment"), and
Lessee has agreed to lease from the Lessor the Equipment, on the terms and
subject to the conditions contained in this Equipment Lease.

     

    AGREEMENT:

     

    1.           Equipment
Lease.       Subject to the terms and
conditions of this Equipment Lease, Lessor hereby leases to Lessee, and Lessee
hereby leases from Lessor, the Equipment.

     

    2.           Term.    The
term of this Equipment Lease is for the period commencing on the date hereof and
ending on the tenth anniversary of the date hereof (the "Term"); provided that Lessor
may terminate this Equipment Lease at any time upon written notice to
Lessee.

     

    3.           Lease
Payments.  Lessee hereby agrees to pay to Lessor monthly lease
payments in the amount of One Thousand Dollars ($1,000.00) per month payable in
advance on the first day of each month during the Term (collectively, the “Lease Payments”);
provided, however, that the Lease Payment for February 2009 shall be prorated
from the date hereof and be paid on the date hereof and the Lease Payment for
February 2019 shall be prorated for the number of days from February 1, 2019
until the end of the Term.  Lease Payments shall be made by wire
transfer of immediately available funds to a bank account designated by Lessor
(or such other form of payment acceptable to Lessor, in its sole
discretion).  Notwithstanding the foregoing, in lieu of Lessee paying
one or more of the Lease Payments to Lessor in cash, at Lessor’s option Lessor
shall receive a dollar-for-dollar credit against (a) the option exercise price
described in the Letter Agreement with respect to the PMK300 (as defined
therein), and/or (b) amounts due by Lessor to Lessee pursuant to the License and
Development Agreement dated as of September 27, 2004, as amended from time to
time, between Lessor and Lessee (e.g., milestone payments,
royalties), the Supply Agreement dated September 27, 2004, as amended from time
to time, between Lessor and Lessee (including the Technical Agreement entered
into in connection therewith), and/or any other agreement between the
Parties.

     

    4.           Representations and
Warranties of Each Party.  Each Party hereby represents and
warrants to the other Party as follows:

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (a)           It
is duly and validly existing under the laws of the State of Delaware and is
authorized to transact business and is in “good standing” in the State of New
Jersey.  It has the requisite power and authority to execute, deliver
and perform this Equipment Lease.  It has obtained all necessary
authorizations to approve the execution, delivery and performance by it of this
Equipment Lease.  This Equipment Lease has been duly executed and
delivered by it.

     

    (b)           This
Equipment Lease is its legal, valid and binding obligation, enforceable against
it in accordance with its terms.  The execution, delivery and
performance by it of this Equipment Lease does not and will not, under any
circumstance whatsoever: (i) conflict with, constitute a default, or result in a
default or other breach of or under the certificate of incorporation or bylaws
of such Party or any agreement to which such Party is a party or by which it or
its assets is bound; (ii) permit any person or entity to either terminate or to
accelerate any liability or other obligation, or to impose any penalty under or
to otherwise modify, or exercise rights under, or cancel or require any notice
under, or otherwise violate any  agreement to which such Party is a
party or by which it or its assets is bound; or (iii) otherwise result in any
liens, security interests, pledges, attachments, mortgages, charges, claims,
conditions or other similar encumbrances or restrictions of any kind, including,
without limitation, any conditional sale agreement or other title retention
agreement (collectively, “Liens”).

     

    (c)           No
governmental or other authorization, approval or other consent of any kind or
nature by or on behalf of such Party is required arising out of or otherwise
relating to the execution, delivery or performance of this Equipment Lease by
such Party and such Party is not prohibited by any law from consummating the
transactions contemplated by this Equipment Lease.  No litigation or
other proceeding is pending or threatened against it that questions the validity
of this Equipment Lease or any transaction contemplated thereby.

     

    5.           Certain Representations,
Warranties and Covenants of Lessee. Lessee
hereby represents, warrants and covenants to Lessor that (a) Lessee shall comply
with all laws, ordinances, regulations, requirements and rules with respect to
the use, maintenance and operation of the Equipment, (b) Lessee shall not permit
any Lien to be made on the Equipment, and (c) except as specifically
contemplated by this Equipment Lease for the benefit of Lessor, Lessee shall not
use the Equipment for the benefit of any person or entity (including Lessee)
without the prior written consent of Lessor, in its sole discretion, in each
instance.  Notwithstanding clause (c), Lessee may use the Equipment
for the benefit of its other customers so long as such use does not, in the sole
discretion of Lessor, (i) interfere with Lessee’s performance of services and
supply of products for the benefit of Lessor or (ii) otherwise adversely effect
Lessor.

     

    6.           Maintenance and Repairs;
Insurance.

     

    (a)           Lessee
shall be solely responsible for any and all costs and expenses arising in
connection with the routine maintenance and repair of the
Equipment.  At Lessee’s expense, in accordance with Lessor's
specifications, Lessee shall keep the Equipment in a suitable environment
located at the facilities of Lessee located at 13-01 Pollit Drive, Fair Lawn,
New Jersey.  Any replacement or substitution made on the Equipment
shall automatically become the property of Lessor, without charge and free and
clear of all Liens.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (b)           Until
Lessee returns the Equipment to Lessor and for a period of two (2) years
thereafter, Lessee shall have and maintain public liability and property damage
insurance at all times with respect to all Equipment against such risks,
including fire (including so-called extended coverage), theft, sprinkler leakage
and other risks as Lessor may require, in such form, in such amount, for such
period and written by such companies as may be satisfactory to Lessor in its
sole discretion.  Each such casualty insurance policy shall contain a
standard Loss Payable Clause issued in favor of Lessor under which all losses
thereunder shall be paid to Lessor as Lessor's interests may
appear.  Each public liability policy shall name Lessor as an
additional insured.  Such policies shall expressly provide that the
requisite insurance cannot be altered or canceled without at least thirty (30)
days prior written notice to Lessor and shall insure Lessor notwithstanding the
act or neglect of Lessee.  Upon Lessor's demand, Lessee shall furnish
Lessor with duplicate original policies of insurance or such other evidence of
insurance as Lessor may require.  In the event of failure to provide
insurance as herein provided, Lessor may, at its option, obtain such insurance
and Lessee shall pay to Lessor, on demand, the cost thereof.  Proceeds
of insurance may be applied by Lessor to reduce any obligations of Lessee to
Lessor (pursuant to this Equipment Lease or otherwise) and/or to repair or
replace Collateral, all in Lessor's sole discretion.

     

    (c)           Lessor
makes no representation or warranty with respect to the
Equipment.  Lessee hereby accepts the Equipment
“AS-IS.”  LESSOR DISCLAIMS, AND LESSEE HEREBY WAIVES, ANY AND ALL
EXPRESS OR IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE OR MERCHANTABILITY AS TO THE EQUIPMENT.  LESSOR,
DOES NOT WARRANT THAT THE EQUIPMENT WILL OPERATE UNINTERRUPTED OR
ERROR-FREE.

     

    7.           Risk of Loss. Lessee assumes and
agrees to bear the entire risk of loss and damage to the
Equipment.  If any item of Equipment is lost, damaged, destroyed or
stolen (a "Loss"), then Lessee
shall have the obligation to pay Lessor the remaining rent set forth in Section
2 above.  Lessee shall notify Lessor immediately if the Equipment
becomes subject to a Loss event. If the Equipment becomes subject to a Loss
event, then, at the option of Lessor and without otherwise limiting Lessor's
rights hereunder, Lessee shall pay to Lessor on demand an amount equal to the
higher of (a) the fair market value of the Equipment, or (b) the fair market
value of replacement Equipment.  If Lessor has not received full
payment of any amount due under this Section 7 within five (5) days after
demand, Lessee agrees to pay Lessor interest thereon at a rate equal to the
lesser of (i) the prime rate (as published in the Wall Street Journal on the
payment date) plus two percent, or (ii) the highest rate permitted by applicable
law.  Anytime upon the request of Lessor, Lessee shall make the
Equipment and all related records available for inspection by Lessor during
Lessee’s normal business hours.  Lessee shall affix to the Equipment
any labels supplied by Lessor indicating the ownership of the Equipment by
Lessor.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    8.           Ownership of Equipment by
Lessor.  The Equipment shall remain at all times the property
of Lessor.  Except as provided in this Equipment Lease, Lessee shall
not acquire any right, title or interest in or to the
Equipment.  Lessee shall not sell, lease, transfer or otherwise
dispose of the Equipment (or any part thereof) to any person or
entity.  Any sale, lease, transfer or other disposition of the
Equipment in violation of the immediately preceding transfer restrictions shall
be void.  Lessee shall take all such actions reasonably requested by
Lessor to prevent any person or entity other than Lessor from acquiring any
right, title or interest in or to the Equipment, including (a) the filing of
financing statements or similar public filings, and (b) the obtaining of
consents or waivers from landlords or lenders. Lessee promptly shall notify
Lessor of any circumstances that may permit any person or entity other than
Lessor to acquire any right, title or interest in or to the
Equipment.  During the Term, Lessee shall at all times protect and
defend, at its own cost and expense, the ownership of Lessor against all claims,
liens and legal processes of creditors of Lessee, and keep the Equipment free
and clear from all such claims, liens and processes.  Lessee agrees to
give Lessor prompt written notice of any such claim, lien or
process.  The Equipment is and shall remain personal property and not
part of any real estate.

     

    9.           Indemnification.  Lessee
hereby agrees to indemnify and hold harmless (and at the request of Lessor
defend) Lessor and its parent and other affiliates and their respective
successors and permitted assigns, and the officers, directors, managers,
employees, members, partners, stockholders, agents and representatives of each
of the foregoing (collectively, the “Lessor Indemnitees”),
from and against, and shall pay to the Lessor Indemnitees the amount of, any and
all liabilities, losses, damages, expenses (including, without limitation,
reasonable attorneys’ fees), causes of action, suits, claims or judgments
arising from, resulting from or based upon (a) any breach of or inaccuracy in
the representations and warranties of Lessee contained in this Equipment Leas;
(b) any breach of the covenants or agreements of Lessee contained in this
Equipment Lease; and/or (c) the actual or alleged use, operation, delivery or
transportation of the Equipment during the Term or while Lessee otherwise has
possession or control thereof.

     

    10.           Event of
Default.   "Event of Default"
means (a) failure by Lessee to make any payment of rent or other amount owing
hereunder  when the same is due; (b) any breach of any representation
or warranty made by Lessee herein; (c) failure by Lessee to perform or observe
any other covenant or agreement hereunder and the failure to cure the same
within five calendar days after receipt of notice from Lessor; and (d) the
insolvency of Lessee or the making an assignment for the benefit of creditors by
Lessee or consent by Lessee to the appointment of a trustee or receiver, or the
reorganization, arrangement, insolvency, dissolution, or liquidation by or
against Lessee.  On the occurrence and continuance of any Event of
Default, Lessor may, at its option, exercise one or more of the following
remedies: (i) sue for and recover all unpaid Lease Payments and other amounts
due hereunder; (ii) terminate this Equipment Lease and take possession of the
Equipment, without demand or notice, wherever same may be located, without any
court order or other process of law and without liability for any damages
occasioned by such taking of possession; and/or (iii) utilize any other remedy
available to Lessor at law or in equity.

     

    11.           Limitation of Liability;
Limitation on Claims.  Should Lessee be entitled to recover
damages from Lessor arising from or relating to this Equipment Lease, the
Equipment and/or any of the transactions contemplated by this Equipment Lease,
Lessor shall be liable only for (a) damages for bodily injury (including death)
and damage to real property or tangible personal property, and (b) the amount of
any other actual direct damages or loss.  THE MAXIMUM AGGREGATE LIABILITY OF
LESSOR ARISING FROM OR RELATING TO THIS EQUIPMENT LEASE, THE EQUIPMENT AND/OR
ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS EQUIPMENT LEASE SHALL NOT EXCEED
$100,000.  NEITHER LESSOR NOR ITS AFFILIATES NOR ANY OTHER LESSOR
INDEMNITIES SHALL BE LIABLE TO LESSEE OR ANY OF ITS AFFILIATES FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE OF ANY KIND OR NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOSS OF RECORDS OR
DATA), REGARDLESS OF WHETHER ARISING FROM BREACH OF CONTRACT, WARRANTY, TORT,
STRICT LIABILITY OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF THE LOSS OR
DAMAGE OR IF THE LOSS OR DAMAGE COULD HAVE BEEN REASONABLY
FORESEEN.  LESSOR AND LESSEE AGREE THAT NO ACTION ARISING OUT OF THIS
EQUIPMENT LEASE, THE EQUIPMENT AND/OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS EQUIPMENT LEASE MAY BE BROUGHT MORE THAT ONE YEAR AFTER THE CAUSE OF ACTION
HAS ACCRUED.

    
      
         

      

      
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    12.         Miscellaneous.

     

    (a)           This
Equipment Lease shall be governed by and construed in accordance with the laws
of the State of New Jersey without giving effect to conflicts of law
principles.

     

    (b)           This
Equipment Lease may be executed in counterparts and delivered by facsimile, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.  Each of the Parties hereby submits to
the exclusive jurisdiction of the state and federal courts located in the City
of Newark, State of New Jersey for the sole purpose of this Equipment Lease and
any controversy arising thereunder. THE PARTIES EACH WAIVE THEIR RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING FROM THIS EQUIPMENT
LEASE.

     

    (c)           Lessee
shall execute and deliver to Lessor, upon Lessor’s request, such instruments and
assurances as Lessor deems necessary or advisable in order to consummate the
transactions contemplated by this Equipment Lease.  At request of
Lessor, Lessee shall execute, or join Lessor in executing, financing statements
pursuant to the Uniform Commercial Code or comparable statute, rule or
regulation.

     

    (d)           All
notices under this Equipment Lease shall be delivered by facsimile (confirmed by
overnight delivery) or by overnight delivery with a reputable overnight delivery
service, to the address of the respective Parties set forth
above.  Notices shall be effective on the day following the date of
transmission if sent by facsimile, and on the business day following the date of
delivery to the overnight delivery service if sent by overnight
delivery.  A Party may change its address listed above by notice to
the other Party given in accordance with this section.

     

    (e)           The
Parties hereto acknowledge that this Equipment Lease and the Letter Agreement
and other documents referred to or entered into in connection herewith and
therewith set forth the entire agreement and understanding of the Parties and
supersedes all prior written or oral agreements or understandings with respect
to the subject matter thereof.  No modification of any of the terms of
this Equipment Lease shall be deemed to be valid unless in writing and signed by
an authorized agent or representative of both Parties hereto.  No
course of dealing or usage of trade shall be used to modify the terms and
conditions therein.  A waiver of a default shall not be a waiver of
any other or a subsequent default.

    
      
         

      

      
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    (f)           This
Equipment Lease is binding upon, and inures to the benefit of, the parties
hereto and their respective administrators, successors and
assigns.  Lessee may not assign or otherwise transfer (by assignment,
stock sale, merger or otherwise) this Equipment Lease without the prior written
consent of Lessor.  Each provision of this Equipment Lease shall be
considered separable; and if, for any reason, any provision or provisions herein
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of this
Equipment Lease which are valid.

     

    [signature
page follows]

     

    
      
        
        

      

      
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    EXECUTED
by the undersigned parties to this Equipment Lease as of the date first above
written.

     

    
      
        	
                LESSOR:

              
	 
      
	
                FERRING
      PHARMACEUTICALS, INC.

              
	 
      
	
                By:

              	
                  

              
	
                Name:

              
	
                Title:

              
	 
      
	
                LESSEE:

              
	 
      
	
                VYTERIS,
      INC.

              
	 
      
	
                By:

              	
                  

              
	
                Name:

              
	
                Title

              

      

    

    
      
         

      

      
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    Schedule
A

     

    See
Schedule 2 to Letter Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
C

     

    SECURITY
AGREEMENT

     

    THIS
SECURITY AGREEMENT (this "Agreement"), dated as
of this ____ day of March, 2009, is made by and between Vyteris, Inc., a
Delaware corporation (“Vyteris”), and
Ferring Pharmaceuticals, Inc., a Delaware corporation (the "Ferring”).

     

    Recitals

     

    A.           Reference
is hereby made to (a) the Letter Agreement dated the date hereof by and among
Vyteris, Vyteris, Inc., a Nevada corporation (“Parent”), and Ferring
(the “Letter
Agreement”); (b) the License and Development Agreement dated as of
September 27, 2004, as amended prior to the date hereof and pursuant to the
Letter Agreement, by and between Ferring and Vyteris (the “License Agreement”);
and (c) the Supply Agreement dated September 27, 2004, as amended prior to the
date hereof and pursuant to the Letter Agreement, by and between Ferring and
Vyteris (together with the related Technical Agreement by and between Ferring
and Vyteris, the “Supply Agreement”)
(all of the foregoing, together with the Transaction Documents (as defined in
the Letter Agreement), the “Underlying
Agreements”).

    

    B.           In
order to induce Ferring to enter into the Letter Agreement and the other
Transactions Documents (as defined therein) and for other good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged, and as
security for the performance by Vyteris of the Obligations (as hereinafter
defined), Vyteris has agreed to grant to Ferring, for the benefit of Ferring, a
security interest in the Collateral (as hereinafter defined) on the terms and
conditions hereinafter set forth.

    

    NOW,
THEREFORE, Vyteris and Ferring, intending to be legally bound, hereby agree as
follows:

    

    1.      
     Definitions.

     

     (a)          "Collateral" shall
mean all personal property of Vyteris, wherever located, and whether now owned
or hereafter acquired or arising, including, without limitation,
all:

     

    (i)          Accounts;

     

    (ii)         Chattel
paper, including Electronic Chattel Paper;

     

    (iii)        Goods,
including all Inventory and Equipment and any accessions thereto;

     

    (iv)        Instruments,
including Promissory Notes;

     

    (v)         Investment
Property;

     

    (vi)        Documents;

    
      
         

      

      
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    (vii)       Deposit
Accounts;

     

    (viii)  
    Commercial Tort Claims, if any, identified on Schedule A
annexed hereto;

     

    (ix)         Letter-of-Credit
Rights;

     

    (x)          General
Intangibles, including Payment Intangibles and Software;

     

    (xi)         Supporting
Obligations; and

     

    (xii)        to
the extent not listed above as original collateral proceeds and products of the
foregoing.

     

    Notwithstanding
the foregoing, with respect to Collateral constituting patents, the foregoing
shall only include all of Vyteris’s right, title and interest in and to (A)
Vyteris’s now owned or otherwise existing and hereafter acquired or arising (i)
patents and patent applications referred to in the License Agreement (including
the “Vyteris Patents” referred to therein), (ii) patents and patent applications
relating to inventions or technology made, created, developed or reduced to
practice in connection with the License Agreement, and (iii) any other patents
and patent applications owned or controlled by Vyteris and necessary, useful or
desirable to Ferring’s manufacture, marketing, sale testing, development or use
of the Product (as defined in the License Agreement), including, without
limitation the patents and patent applications listed on Schedule 1 attached
hereto; (B) (i) all renewals thereof, (ii) all income, royalties, damages and
payments now and hereafter due and/or payable under or with respect to any of
the foregoing, including, without limitation, payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iii)  the right to sue for past,
present and future infringements or dilutions thereof, (iv) the goodwill of
Vyteris’s business symbolized by the foregoing and connected therewith, and (v)
all of the Vyteris’s rights corresponding thereto throughout the world; and (C)
all proceeds and products of any and all of the foregoing, including, without
limitation, license royalties and proceeds of the infringement
suits.  Vyteris hereby agrees that promptly after it becomes aware of
the existence of any Collateral described in this paragraph, it shall notify
Ferring in writing thereof.

     

               (b)           “Obligations" shall
mean all obligations, liabilities and indebtedness of Vyteris to Ferring,
whether now existing or hereafter created, absolute or contingent, direct or
indirect, due or not, whether created directly or acquired by assignment or
otherwise, including, without limitation, arising under or relating to any of
the Underlying Agreements; all fees, costs, expenses and indemnity obligations
of Vyteris to Ferring hereunder or thereunder; any amendments, extensions,
renewals  and increases of or to any of the foregoing; and all costs
and expenses of Ferring incurred in the modification, enforcement, collection
and otherwise in connection with any of the foregoing, including reasonable
attorneys' fees and expenses.

     

    (c)           "UCC" shall mean the
Uniform Commercial Code, as adopted and enacted and as in effect from time to
time in the State whose law governs pursuant to the Section 22 of this Agreement
entitled "Governing
Law and Jurisdiction”.  Terms used herein which are defined in
the UCC and not otherwise defined herein shall have the respective meanings
ascribed to such terms in the UCC.  To the extent the definition of
any category or type of collateral is modified by any amendment, modification or
revision to the UCC, such modified definition will apply automatically as of the
date of such amendment, modification or revision.

    
      
         

      

      
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    2.         Grant of
Security Interest.   To secure the Obligations, Vyteris
hereby assigns and grants to Ferring, as secured party, a continuing first
priority lien on and a security interest in the Collateral.

     

    3.         Change in
Name or Locations.   Vyteris hereby agrees that if the
location of the Collateral changes from the locations listed on Exhibit "A"
hereto and made part hereof (other than transport to its headquarter in Fair
Lawn, New Jersey), or if Vyteris changes its name, its type of organization, its
state of organization or its chief executive office or establishes a name under
which it may do business that is not listed as a tradename on Exhibit "A"
hereto, Vyteris will immediately notify Ferring in writing of the additions or
changes.

     

    4.         Representations
and Warranties.   Vyteris represents, warrants and
covenants to Ferring that: (a) all information, including its type of
organization, jurisdiction of organization and chief executive office, are as
set forth on Exhibit "A" hereto and are true and correct on the date hereof;
(b) Vyteris has paid to the manufacturer(s) and all supplier(s) of the
Collateral the entire purchase payable therefor, and no amounts remain to be
paid to any such manufacturer or supplier for or in connection with the
acquisition by Vyteris of the Collateral; (c) as of date hereof, the Collateral
is located at the locations listed on Exhibit “A” hereto; (d) Vyteris has good,
marketable and indefeasible title to the Collateral, has not made any prior
sale, pledge, encumbrance, assignment or other disposition of any of the
Collateral, and the Collateral is free from all encumbrances and rights of
setoff of any kind except the lien in favor of Ferring created by this
Agreement; and any liens or security interests of Spencer Trask Specialty Group,
LLC (the “Subordinate
Lienholder”), which are
subject, junior and subordinate to the lien and security interest granted to
Ferring hereunder pursuant to a Subordination Agreement dated as of the date
hereof among the Subordinate Lienholder and Ferring; (e) except as herein
provided, Vyteris will not hereafter without Ferring's prior written consent
sell, pledge, encumber, assign or otherwise dispose of any of the Collateral or
permit any right of setoff, lien or security interest to exist thereon except to
Ferring; (f) Vyteris will defend the Collateral against all claims and
demands of all persons and entities at any time claiming the same or any
interest therein; (g) Ferring's security interest in the Collateral constitutes
and will continue to constitute a perfected first priority security interest in
favor of Ferring; and (h) each of this Agreement and the other Underlying
Agreements has been duly authorized, executed and delivered by Vyteris and
constitutes its legal, valid and binding obligations, enforceable in accordance
with their respective terms. With the prior written consent of Ferring in each
instance, Vyteris may (i) grant liens to trade creditors in the ordinary course
of business on machinery, supplies and other materials purchased for which a
purchase money security interest is generally granted, and (ii) enter into other
ordinary course transactions for the lease purchase of machinery and equipment
and the like.

    
      
         

      

      
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    5.        Personal
Property.  The
Collateral shall remain personal property at all times. Vyteris shall not affix
any of the Collateral to real property in any manner which would change its
nature from that of personal property to real property or to a
fixture.

     

    6.        Enforceability
of Security Interests.  Upon the execution of
this Agreement by Vyteris and the filing of financing statements properly
describing the Collateral and identifying Vyteris, as the grantor and Ferring,
as the secured party, in the applicable jurisdiction required pursuant to the
UCC, security interests and liens granted to the Ferring, as the secured party
under Section 2 hereof shall constitute valid, perfected and first priority
security interests and liens in and to the Collateral of Vyteris, other than
Collateral which may not be perfected by filing under the UCC, in each case
enforceable against all third parties and securing the payment of the
Obligations.

     

    7.     
  Vyteris's
Covenants.   Vyteris covenants that it
shall:

     

    (a)           from
time to time and at all reasonable times allow Ferring, by or through any of its
officers, agents, attorneys, or accountants, to examine or inspect the
Collateral, wherever located.  Vyteris shall do, obtain, make, execute
and deliver all such additional and further acts, things, deeds, assurances and
instruments as Ferring may require to vest in and assure to Ferring its rights
hereunder and in or to the Collateral, and the proceeds thereof, including
waivers from landlords, warehousemen and mortgagees.  Vyteris agrees
that Ferring has full power and authority to collect, compromise, endorse, sell
or otherwise deal with the Collateral in its own name or that of Vyteris at any
time upon an Event of Default (as defined below);

     

    (b)           keep
the Collateral in good order and repair at all times and immediately notify
Ferring of any event causing a material loss or decline in value of the
Collateral, whether or not covered by insurance, and the amount of such loss or
depreciation;

     

    (c)           only
use or permit the Collateral to be used in accordance with all applicable
federal, state, county and municipal laws and regulations; and

     

    (d)           have
and maintain public liability and property damage insurance at all times with
respect to all Collateral against such risks, including fire (including
so-called extended coverage), theft, sprinkler leakage, and other risks
(including risk of flood if any Collateral is maintained at a location in a
flood hazard zone and, for the period that the Collateral is being transported
to Vyteris’s headquarters located in Fair Lawn, New Jersey, risks of loss during
transportation) as Ferring may require, in such form, in such amount, for such
period and written by such companies as may be satisfactory to Ferring in its
sole discretion.  Each such casualty insurance policy shall contain a
standard Loss Payable Clause issued in favor of Ferring under which all losses
thereunder shall be paid to Ferring as Ferring's interests may
appear.  Each public liability policy shall name Ferring as an
additional insured.  Such policies shall expressly provide that the
requisite insurance cannot be altered or canceled without at least thirty (30)
days prior written notice to Ferring and shall insure Ferring notwithstanding
the act or neglect of Vyteris.  Upon Ferring's demand, Vyteris shall
furnish Ferring with duplicate original policies of insurance or such other
evidence of insurance as Ferring may require.  In the event of failure
to provide insurance as herein provided, Ferring may, at its option, obtain such
insurance and Vyteris shall pay to Ferring, on demand, the cost
thereof.  Proceeds of insurance may be applied by Ferring to reduce
the Obligations or to repair or replace Collateral, all in Ferring's sole
discretion.

    
      
         

      

      
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    8.           Negative
Pledge; No Transfer.  Vyteris will not sell or offer to
sell or otherwise transfer or grant or allow the imposition of a lien or
security interest upon the Collateral except for the existing subordinate
security interest in favor of the Subordinate Lienholder, will not allow any
third party to gain control of all or any part of the Collateral, and will not
use any portion thereof in any manner inconsistent with this Agreement or with
the terms and conditions of any policy of insurance thereon.

     

    9.           Further
Assurances.  By its signature hereon, Vyteris
hereby irrevocably authorizes Ferring to execute (on behalf of Vyteris) and file
against Vyteris one or more financing, continuation or amendment statements
pursuant to the UCC in form satisfactory to Ferring in all jurisdictions in
which such filing is deemed by Ferring to be necessary or desirable in order to
perfect, preserve and protect its security interests.  If required by
Ferring, Vyteris will execute all documentation necessary for Ferring to obtain
and maintain perfection of its security interests in the
Collateral.

     

    10.           Events of
Default; Remedies.  Upon the occurrence of any breach or
default by Vyteris or Parent of any of the Underlying Agreements or the
Obligations (an "Event of
Default") and at any
time thereafter, Ferring may declare all Obligations secured hereby immediately
due and payable and shall have, in addition to any remedies provided herein or
by any applicable law or in equity, all the remedies of a secured party under
the UCC. Ferring's remedies include, but are not limited to, the right to (a)
peaceably by its own means or with judicial assistance enter Vyteris’s premises
and take possession of the Collateral without prior notice to Vyteris or the
opportunity for a hearing; (b) render the Collateral unusable; (c) dispose of
the Collateral on Vyteris’s premises; and (d) require Vyteris to assemble the
Collateral and make it available to Ferring at a place designated by
Ferring.  Ferring will give Vyteris reasonable notice of the time and
place of any public sale thereof or of the time after which any private sale or
any other intended disposition thereof is to be made.  The
requirements of commercially reasonable notice shall be met if such notice is
sent to Vyteris at least five (5) days before the time of the intended sale or
disposition.  Expenses of retaking, holding, preparing for
disposition, disposing or the like shall include Ferring's reasonable attorneys'
fees and legal expenses, incurred or expended by Ferring to enforce any payment
due it under this Agreement either as against Vyteris, or in the prosecution or
defense of any action, or concerning any matter growing out of or connection
with the subject matter of this Agreement and the Collateral pledged hereunder.
Vyteris waives all relief from all appraisement or exemption laws now in force
or hereafter enacted.

     

    11.           Indemnification.  Vyteris agrees to
indemnify the Ferring and hold it harmless from and against any and all
injuries, claims, damages, judgments, liabilities, costs and expenses
(including, without limitation, reasonable fees and disbursements of counsel),
charges and encumbrances which may be incurred by or asserted against Ferring in
connection with or arising out of any assertion, declaration or defense of the
Ferring's rights or security interest under the provisions of this Agreement,
permitting it to collect, settle or adjust Accounts or to deal with account
debtors in any way or in connection with the realization, repossession,
safeguarding, insuring or other protection of the Collateral or in connection
with the collecting, perfecting or protecting the Ferring's liens and security
interests hereunder.

    
      
         

      

      
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    12.           Power of
Attorney.  Vyteris does hereby make, constitute
and appoint any officer or agent of Ferring as Vyteris’s true and lawful
attorney-in-fact, with power to (a) endorse the name of Vyteris or any of
Vyteris’s officers or agents upon any notes, checks, drafts, money orders, or
other instruments of payment or Collateral that may come into Ferring's
possession in full or part payment of any Obligations; (b) sue for, compromise,
settle and release all claims and disputes with respect to, the Collateral; and
(c) sign, for Vyteris, such documentation required by the UCC, or supplemental
intellectual property security agreements; granting to Vyteris’s said attorney
full power to do any and all things necessary to be done in and about the
premises as fully and effectually as Vyteris might or could
do.  Vyteris hereby ratifies all that said attorney shall lawfully do
or cause to be done by virtue hereof.  This power of attorney is
coupled with an interest and is irrevocable.

     

    13.           Payment
of Expenses.  At its option, Ferring may discharge
taxes, liens, security interests or such other encumbrances as may attach to the
Collateral, may pay for required insurance on the Collateral and may pay for the
maintenance, appraisal or reappraisal, and preservation of the Collateral, as
determined by Ferring to be necessary. Vyteris will reimburse Ferring on demand
for any payment so made or any expense incurred by Ferring pursuant to the
foregoing authorization, and the Collateral also will secure any advances or
payments so made or expenses so incurred by Ferring.

     

    14.           Notices.  All notices, demands, requests,
consents, approvals and other communications required or permitted hereunder
("Notices") must be in writing and will be
effective upon receipt.  Notices may be given in any manner to which
the parties may separately agree, including electronic mail.  Without
limiting the foregoing, first-class mail, facsimile transmission and commercial
courier service are hereby agreed to as acceptable methods for giving Notices.
Regardless of the manner in which provided, Notices may be sent to a party's
address as set forth above or to such other address as any party may give to the
other for such purpose in accordance with this section.

     

    15.           Preservation
of Rights.  No
delay or omission on Ferring's part to exercise any right or power arising
hereunder will impair any such right or power or be considered a waiver of any
such right or power, nor will Ferring's action or inaction impair any such right
or power.  Ferring's rights and remedies hereunder are cumulative and
not exclusive of any other rights or remedies which Ferring may have under other
agreements, at law or in equity.

     

    16.           Illegality.  If any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, it shall
not affect or impair the validity, legality and enforceability of the remaining
provisions of this Agreement.

     

    17.           Changes
in Writing.  No modification, amendment or waiver
of, or consent to any departure by Vyteris from, any provision of this Agreement
will be effective unless made in a writing signed by Ferring, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.  No notice to or demand on Vyteris will
entitle Vyteris to any other or further notice or demand in the same, similar or
other circumstance.

    
      
         

      

      
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    18.           Entire
Agreement.  This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter
hereof.

     

    19.           Counterparts.  This Agreement may be signed in any
number of counterpart copies and by the parties hereto on separate counterparts,
but all such copies shall constitute one and the same
instrument.  Delivery of an executed counterpart of signature page to
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart.  Any party so executing this Agreement
by facsimile transmission shall promptly deliver a manually executed
counterpart, provided that any failure to do so shall not affect the validity of
the counterpart executed by facsimile transmission.

     

    20.           Successors
and Assigns.  This Agreement will be binding upon
and inure to the benefit of Vyteris and Ferring and their respective successors
and assigns; provided, however, that Vyteris may not assign this Agreement in
whole or in part without Ferring's prior written consent and Ferring at any time
may assign this Agreement in whole or in part.

     

    21.           Interpretation.  In this Agreement, unless Ferring and
Vyteris otherwise agree in writing, the singular includes the plural and the
plural the singular; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute referred
to; the word "or" shall be deemed to include "and/or", the words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to articles, sections (or subdivisions of sections) or
exhibits are to those of this Agreement; and references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments and
other modifications to such instruments, but only to the extent such amendments
and other modifications are not prohibited by the terms of this
Agreement.  Section headings in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

     

    22.           Governing
Law and Jurisdiction.  This Agreement will be interpreted
and the rights and liabilities of the parties hereto determined in accordance
with the laws of the State of New Jersey, except that the laws of the State of
Delaware shall govern the creation, perfection and foreclosure of the liens
created hereunder on such property or any interest therein.  Vyteris
hereby irrevocably consents to the exclusive jurisdiction of any state or
federal court in the City of Newark, State of New Jersey; provided that nothing
contained in this Agreement will prevent Ferring from bringing any action,
enforcing any award or judgment or exercising any rights against Vyteris
individually, against any security or against any property of Vyteris within any
other county, state or other foreign or domestic
jurisdiction.  Ferring and Vyteris agree that the venue provided above
is the most convenient forum for both Ferring and Vyteris.  Vyteris
waives any objection to venue and any objection based on a more convenient forum
in any action instituted under this Agreement.

    
      
         

      

      
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    23.           WAIVER OF
JURY TRIAL.  EACH OF VYTERIS AND FERRING
IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY
DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS.  VYTERIS AND FERRING
ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.

     

    24.           Survival.  The representations and
warranties of Vyteris made or deemed made herein and Sections 11 and 13 hereof
shall survive the execution and delivery of this Agreement.

     

    25.           Termination;
Release.  This
Agreement shall
terminate ninety-one (91) days following satisfaction of both of the following
(the “Product
Delivery”):

     

    (a)           the
receipt by Ferring from Vyteris of the materials and supplies specified on Schedule 2 attached
hereto (with respect to which the design scope (the "Design") and budget
have been already agreed by the Joint Development Team (as defined in the
License Agreement)) sufficient for Ferring, in its discretion, to commence Phase
III clinical trials in the United States with respect to the Product (as defined
in the License Agreement), and

     

    (b)           the
confirmation by Ferring to Vyteris, in writing, that (i) such materials and
supplies conform with the terms and conditions of the License Agreement, the
Supply Agreement, the Design and the other applicable specifications, and (ii)
neither Vyteris nor Parent has breached or defaulted under (nor has Ferring
alleged in good faith that such breach or default has occurred) any of the
Underlying Agreements.

     

    Notwithstanding
the foregoing, this Agreement shall terminate on May 31, 2010 even if Product
Delivery has not occurred if, and only if, (a) Vyteris and Ferring agree in
writing in good faith that the cause of such failure of Product Delivery was
caused by a Force Majeure Event, and (b) Ferring has confirmed in writing that
neither Vyteris nor Parent has breached or defaulted under or with respect to
(nor has Ferring alleged in good faith that such breach or default has occurred
under or with respect to) any of the Underlying Agreements.  As used
herein, a “Force
Majeure Event” means a significant unexpected event which is beyond the
reasonable control of Vyteris and Parent with respect to which neither Vyteris
nor Parent could reasonably be expected to have taken account and which could
not have been prevented by good industry practice.  It is understood
and agreed that if Ferring requests that Vyteris perform additional Phase II
tests (outside the current scope of work) in connection with Phase II activities
related to the Product (as defined in the License Agreement), and Vyteris’s
performance of such tests causes a delay in Product Delivery past May 31, 2010,
then such delay shall be deemed “caused by a Force Majeure Event” so long as the
delay was not caused by a breach or default by Vyteris or Parent under or with
respect to (and Ferring has not alleged in good faith that such breach or
default has occurred under or with respect to)  any of the Underlying
Agreements.

    
      
         

      

      
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    Vyteris
acknowledges that it has read and understood all the provisions of this
Agreement, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.

     

    [signatures
on next page]

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN
WITNESS the due execution hereof as a document under seal, as of the date first
written above.

     

    
      
        	
                ATTEST:

              	 
      	
                VYTERIS,
      INC., a Delaware corporation

              
	 
      	 
      	 
      	 
      
	
                  

              	 
      	
                By:

              	
                  

              
	
                Name:

              	 
      	 
      	
                Name:

              
	
                 Title:

              	 
      	 
      	
                Title:

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                FERRING
      PHARMACEUTICALS, INC.

              
	 
      	 
      	 
      	 
      
	
                  

              	 
      	
                By:

              	
                  

              
	
                Name:

              	 
      	 
      	
                Name:

              
	
                 Title:

              	
                  

              	 
      	
                Title:

              

      

    

    
      
         

      

      
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    EXHIBIT
A

    TO
SECURITY AGREEMENT

     

    
      	
              1.

            	
              Vyteris’s
      form of organization: corporation

            

    

     

    
      	
              2.

            	
              Vyteris’s
      State of organization: Delaware.

            

    

     

    
      
        	
                3.

              	
                Address
      of Vyteris’s chief executive office, including the County: 13-01
      Poilitt Drive, Fair Lawn, Bergen County, NJ
  07410

              

      

    

     

    
      	
              4.

            	
              Vyteris’s
      EIN:  84-1394211

            

    

     

    
      	
              5.

            	
              Vyteris’s
      organizational ID# (if any exists):

            	
              None

            

    

     

    
      	
              6.

            	
              Address
      for books and records, if different:

            	
              None

            

    

     

    
      	
              7.

            	
              Address
      of Collateral location as of date of this Agreement: 13-01 Poilitt Drive,
      Fair Lawn, Bergen County, NJ 07410 and (solely with respect to certain
      equipment known as PMK300 (which is a web concerting machine manufactured
      in Germany by Harro Hofliger) and all accessories thereto, Helmholtzstrabe
      4, D-71571 Allmersbach i.T.,
Germany.

            

    

     

    
      	
              8.

            	
              Address
      of location of Vyteris’s facility in Fair Lawn, New Jersey, including
      County and name and address of landlord or owner if location is not owned
      by Vyteris:  13-01 Poilitt Drive, Fair Lawn, Bergen County, NJ
      07410. Landlord is Lincoln Fair Lawn Associates, with offices c/o Marcus
      Associates Property Management, Inc., 90 Main Street, Suite 301,
      Hackensack, NJ 07001.

            

    

     

    
      	
              9.

            	
              Other
      names or tradenames now or formerly used by Vyteris:  Drug
      Delivery Technologies, Inc. (former
name).

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Schedule
1

    TO
SECURITY AGREEMENT

     

    Patents

     

    See Schedule 6 to Letter
Agreement

    
      
         

      

      
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    Schedule
2

    TO
SECURITY AGREEMENT

     

    
      Materials and
Supplies

    

     

    
      See Schedule 7 to Letter
Agreement

    

    
      
         

      

      
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    EXHIBIT
D

     

    SECURITY
AGREEMENT

     

    (PARENT)

     

    THIS
SECURITY AGREEMENT (this "Agreement"), dated as
of this ____ day of March, 2009, is made by and between Vyteris, Inc., a Nevada
corporation (“Parent” ), and
Ferring Pharmaceuticals, Inc., a Delaware corporation (the "Ferring”).

     

    Recitals

     

    A.           Reference
is hereby made to (a) the Letter Agreement dated the date hereof by and among
Parent, Vyteris, Inc, a Delaware corporation and Parent’s wholly-owned
subsidiary (“Vyteris”), and
Ferring (the “Letter
Agreement”); (b) the License and Development Agreement dated as of
September 27, 2004, as amended prior to the date hereof and pursuant to the
Letter Agreement, by and between Ferring and Vyteris (the “License Agreement”);
and (c) the Supply Agreement dated September 27, 2004, as amended prior to the
date hereof and pursuant to the Letter Agreement, by and between Ferring and
Vyteris (together with the related Technical Agreement by and between Ferring
and Vyteris, the “Supply Agreement”)
(all of the foregoing, together with the Transaction Documents (as defined in
the Letter Agreement), the “Underlying
Agreements”).

    

    B.           In
order to induce Ferring to enter into the Letter Agreement and the other
Transactions Documents (as defined therein) and for other good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged, and as
security for the performance by Parent of the Obligations (as hereinafter
defined), Parent has agreed to grant to Ferring, for the benefit of Ferring, a
security interest in the Collateral (as hereinafter defined) on the terms and
conditions hereinafter set forth.

    

    NOW,
THEREFORE, Parent and Ferring, intending to be legally bound, hereby agree as
follows:

    

    1.      
     Definitions.

     

     (a)           "Collateral" shall
mean all personal property of Parent, wherever located, and whether now owned or
hereafter acquired or arising, including, without limitation, all:

     

    (xiii)       Accounts;

     

    (xiv)       Chattel
paper, including Electronic Chattel Paper;

     

    (xv)        Goods,
including all Inventory and Equipment and any accessions thereto;

     

    (xvi)       Instruments,
including Promissory Notes;

    
      
         

      

      
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    (xvii)  
    Investment Property;

     

    (xviii)
     Documents;

     

    (xix)        Deposit
Accounts;

     

    (xx)         Commercial
Tort Claims, if any, identified on Schedule A annexed hereto;

     

    (xxi)        Letter-of-Credit
Rights;

     

    (xxii)       General
Intangibles, including Payment Intangibles and Software;

     

    (xxiii)      Supporting
Obligations; and

     

    (xxiv)      to
the extent not listed above as original collateral proceeds and products of the
foregoing.

     

    (b)           “Obligations" shall
mean all obligations, liabilities and indebtedness of Parent to Ferring, whether
now existing or hereafter created, absolute or contingent, direct or indirect,
due or not, whether created directly or acquired by assignment or otherwise,
including, without limitation, arising under or relating to any of the
Underlying Agreements; all fees, costs, expenses and indemnity obligations of
Parent to Ferring hereunder or thereunder; any amendments, extensions,
renewals  and increases of or to any of the foregoing; and all costs
and expenses of Ferring incurred in the modification, enforcement, collection
and otherwise in connection with any of the foregoing, including reasonable
attorneys' fees and expenses.

     

    (c)           "UCC" shall mean the
Uniform Commercial Code, as adopted and enacted and as in effect from time to
time in the State whose law governs pursuant to the Section 22 of this Agreement
entitled "Governing
Law and Jurisdiction.  Terms used herein which are defined in
the UCC and not otherwise defined herein shall have the respective meanings
ascribed to such terms in the UCC. To the extent the definition of any category
or type of collateral is modified by any amendment, modification or revision to
the UCC, such modified definition will apply automatically as of the date of
such amendment, modification or revision.

     

    2.         Grant of
Security Interest.   To secure the Obligations, Parent
hereby assigns and grants to Ferring, as secured party, a continuing first
priority lien on and a security interest in the Collateral.

     

    3.         Change in
Name or Locations.   Parent hereby agrees that if the
location of the Collateral changes from the locations listed on Exhibit "A"
hereto and made part hereof (other than transport to its headquarter in Fair
Lawn, New Jersey), or if Parent changes its name, its type of organization, its
state of organization or its chief executive office or establishes a name under
which it may do business that is not listed as a tradename on Exhibit "A"
hereto, Parent will immediately notify Ferring in writing of the additions or
changes.

    
      
         

      

      
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    4.        Representations
and Warranties.   Parent represents, warrants and
covenants to Ferring that: (a) all information, including its type of
organization, jurisdiction of organization and chief executive office, are as
set forth on Exhibit "A" hereto and are true and correct on the date hereof;
(b) Parent has paid to the manufacturer(s) and all supplier(s) of the
Collateral the entire purchase payable therefor, and no amounts remain to be
paid to any such manufacturer or supplier for or in connection with the
acquisition by Parent of the Collateral; (c) as of date hereof, the Collateral
is located at the locations listed on Exhibit “A” hereto; (d) Parent has good,
marketable and indefeasible title to the Collateral, has not made any prior
sale, pledge, encumbrance, assignment or other disposition of any of the
Collateral, and the Collateral is free from all encumbrances and rights of
setoff of any kind except the lien in favor of Ferring created by this
Agreement; and any liens or security interests of Spencer Trask Specialty Group,
LLC (the “Subordinate
Lienholder”), which are
subject, junior and subordinate to the lien and security interest granted to
Ferring hereunder pursuant to a Subordination Agreement dated as of the date
hereof among the Subordinate Lienholder and Ferring; (e) except as herein
provided, Parent will not hereafter without Ferring's prior written consent
sell, pledge, encumber, assign or otherwise dispose of any of the Collateral or
permit any right of setoff, lien or security interest to exist thereon except to
Ferring; (f) Parent will defend the Collateral against all claims and
demands of all persons and entities at any time claiming the same or any
interest therein; (g) Ferring's security interest in the Collateral constitutes
and will continue to constitute a perfected first priority security interest in
favor of Ferring; and (h) each of this Agreement and the other Underlying
Agreements has been duly authorized, executed and delivered by Parent and
constitutes its legal, valid and binding obligations, enforceable in accordance
with their respective terms.

     

    5.        Personal
Property.  The
Collateral shall remain personal property at all times. Parent shall not affix
any of the Collateral to real property in any manner which would change its
nature from that of personal property to real property or to a
fixture.

     

    6.        Enforceability
of Security Interests.  Upon the execution of
this Agreement by Parent and the filing of financing statements properly
describing the Collateral and identifying Parent, as the grantor and Ferring, as
the secured party, in the applicable jurisdiction required pursuant to the UCC,
security interests and liens granted to the Ferring, as the secured party under
Section 2 hereof shall constitute valid, perfected and first priority security
interests and liens in and to the Collateral of Parent, other than Collateral
which may not be perfected by filing under the UCC, in each case enforceable
against all third parties and securing the payment of the
Obligations.

     

    7.        Parent's
Covenants.   Parent covenants that it
shall:

     

    (a)           from
time to time and at all reasonable times allow Ferring, by or through any of its
officers, agents, attorneys, or accountants, to examine or inspect the
Collateral, wherever located.  Parent shall do, obtain, make, execute
and deliver all such additional and further acts, things, deeds, assurances and
instruments as Ferring may require to vest in and assure to Ferring its rights
hereunder and in or to the Collateral, and the proceeds thereof, including
waivers from landlords, warehousemen and mortgagees.  Parent agrees
that Ferring has full power and authority to collect, compromise, endorse, sell
or otherwise deal with the Collateral in its own name or that of Parent at any
time upon an Event of Default (as defined below);

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (b)           keep
the Collateral in good order and repair at all times and immediately notify
Ferring of any event causing a material loss or decline in value of the
Collateral, whether or not covered by insurance, and the amount of such loss or
depreciation;

     

    (c)           only
use or permit the Collateral to be used in accordance with all applicable
federal, state, county and municipal laws and regulations; and

     

    (d)           have
and maintain public liability and property damage insurance at all times with
respect to all Collateral against such risks, including fire (including
so-called extended coverage), theft, sprinkler leakage, and other risks
(including risk of flood if any Collateral is maintained at a location in a
flood hazard zone and, for the period that the Collateral is being transported
to Parent’s headquarters located in Fair Lawn, New Jersey, risks of loss during
transportation) as Ferring may require, in such form, in such amount, for such
period and written by such companies as may be satisfactory to Ferring in its
sole discretion.  Each such casualty insurance policy shall contain a
standard Loss Payable Clause issued in favor of Ferring under which all losses
thereunder shall be paid to Ferring as Ferring's interests may
appear.  Each public liability policy shall name Ferring as an
additional insured.  Such policies shall expressly provide that the
requisite insurance cannot be altered or canceled without at least thirty (30)
days prior written notice to Ferring and shall insure Ferring notwithstanding
the act or neglect of Parent.  Upon Ferring's demand, Parent shall
furnish Ferring with duplicate original policies of insurance or such other
evidence of insurance as Ferring may require.  In the event of failure
to provide insurance as herein provided, Ferring may, at its option, obtain such
insurance and Parent shall pay to Ferring, on demand, the cost
thereof.  Proceeds of insurance may be applied by Ferring to reduce
the Obligations or to repair or replace Collateral, all in Ferring's sole
discretion.

     

    8.           Negative
Pledge; No Transfer.  Parent will not sell or offer to sell
or otherwise transfer or grant or allow the imposition of a lien or security
interest upon the Collateral except for the existing subordinate security
interest in favor of the Subordinate Lienholder, will not allow any third party
to gain control of all or any part of the Collateral, and will not use any
portion thereof in any manner inconsistent with this Agreement or with the terms
and conditions of any policy of insurance thereon.

     

    9.           Further
Assurances.  By its signature hereon, Parent
hereby irrevocably authorizes Ferring to execute (on behalf of Parent) and file
against Parent one or more financing, continuation or amendment statements
pursuant to the UCC in form satisfactory to Ferring in all jurisdictions in
which such filing is deemed by Ferring to be necessary or desirable in order to
perfect, preserve and protect its security interests.  If required by
Ferring, Parent will execute all documentation necessary for Ferring to obtain
and maintain perfection of its security interests in the
Collateral.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    10.           Events of
Default; Remedies.  Upon the occurrence of any breach or
default by Parent or Vyteris of any of the Underlying Agreements or the
Obligations (an "Event of
Default") and at any
time thereafter, Ferring may declare all Obligations secured hereby immediately
due and payable and shall have, in addition to any remedies provided herein or
by any applicable law or in equity, all the remedies of a secured party under
the UCC. Ferring's remedies include, but are not limited to, the right to (a)
peaceably by its own means or with judicial assistance enter Parent’s premises
and take possession of the Collateral without prior notice to Parent or the
opportunity for a hearing; (b) render the Collateral unusable; (c) dispose of
the Collateral on Parent’s premises; and (d) require Parent to assemble the
Collateral and make it available to Ferring at a place designated by
Ferring.  Ferring will give Parent reasonable notice of the time and
place of any public sale thereof or of the time after which any private sale or
any other intended disposition thereof is to be made.  The
requirements of commercially reasonable notice shall be met if such notice is
sent to Parent at least five (5) days before the time of the intended sale or
disposition.  Expenses of retaking, holding, preparing for
disposition, disposing or the like shall include Ferring's reasonable attorneys'
fees and legal expenses, incurred or expended by Ferring to enforce any payment
due it under this Agreement either as against Parent, or in the prosecution or
defense of any action, or concerning any matter growing out of or connection
with the subject matter of this Agreement and the Collateral pledged hereunder.
Parent waives all relief from all appraisement or exemption laws now in force or
hereafter enacted.

     

    11.           Indemnification.  Parent agrees to
indemnify the Ferring and hold it harmless from and against any and all
injuries, claims, damages, judgments, liabilities, costs and expenses
(including, without limitation, reasonable fees and disbursements of counsel),
charges and encumbrances which may be incurred by or asserted against Ferring in
connection with or arising out of any assertion, declaration or defense of the
Ferring's rights or security interest under the provisions of this Agreement,
permitting it to collect, settle or adjust Accounts or to deal with account
debtors in any way or in connection with the realization, repossession,
safeguarding, insuring or other protection of the Collateral or in connection
with the collecting, perfecting or protecting the Ferring's liens and security
interests hereunder.

     

    12.           Power of
Attorney.  Parent does hereby make, constitute
and appoint any officer or agent of Ferring as Parent’s true and lawful
attorney-in-fact, with power to (a) endorse the name of Parent or any of
Parent’s officers or agents upon any notes, checks, drafts, money orders, or
other instruments of payment or Collateral that may come into Ferring's
possession in full or part payment of any Obligations; (b) sue for, compromise,
settle and release all claims and disputes with respect to, the Collateral; and
(c) sign, for Parent, such documentation required by the UCC, or supplemental
intellectual property security agreements; granting to Parent’s said attorney
full power to do any and all things necessary to be done in and about the
premises as fully and effectually as Parent might or could do.  Parent
hereby ratifies all that said attorney shall lawfully do or cause to be done by
virtue hereof.  This power of attorney is coupled with an interest and
is irrevocable.

     

    13.           Payment
of Expenses.  At its option, Ferring may discharge
taxes, liens, security interests or such other encumbrances as may attach to the
Collateral, may pay for required insurance on the Collateral and may pay for the
maintenance, appraisal or reappraisal, and preservation of the Collateral, as
determined by Ferring to be necessary. Parent will reimburse Ferring on demand
for any payment so made or any expense incurred by Ferring pursuant to the
foregoing authorization, and the Collateral also will secure any advances or
payments so made or expenses so incurred by Ferring.

    
      
         

      

      
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    14.           Notices.  All notices, demands, requests,
consents, approvals and other communications required or permitted hereunder
("Notices") must be in writing and will be
effective upon receipt.  Notices may be given in any manner to which
the parties may separately agree, including electronic mail.  Without
limiting the foregoing, first-class mail, facsimile transmission and commercial
courier service are hereby agreed to as acceptable methods for giving Notices.
Regardless of the manner in which provided, Notices may be sent to a party's
address as set forth above or to such other address as any party may give to the
other for such purpose in accordance with this section.

     

    15.           Preservation
of Rights.  No
delay or omission on Ferring's part to exercise any right or power arising
hereunder will impair any such right or power or be considered a waiver of any
such right or power, nor will Ferring's action or inaction impair any such right
or power.  Ferring's rights and remedies hereunder are cumulative and
not exclusive of any other rights or remedies which Ferring may have under other
agreements, at law or in equity.

     

    16.           Illegality.  If any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, it shall
not affect or impair the validity, legality and enforceability of the remaining
provisions of this Agreement.

     

    17.           Changes
in Writing.  No modification, amendment or waiver
of, or consent to any departure by Parent from, any provision of this Agreement
will be effective unless made in a writing signed by Ferring, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.  No notice to or demand on Parent will
entitle Parent to any other or further notice or demand in the same, similar or
other circumstance.

     

    18.           Entire
Agreement.  This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter
hereof.

     

    19.           Counterparts.  This Agreement may be signed in any
number of counterpart copies and by the parties hereto on separate counterparts,
but all such copies shall constitute one and the same
instrument.  Delivery of an executed counterpart of signature page to
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart.  Any party so executing this Agreement
by facsimile transmission shall promptly deliver a manually executed
counterpart, provided that any failure to do so shall not affect the validity of
the counterpart executed by facsimile transmission.

     

    20.           Successors
and Assigns.  This Agreement will be binding upon
and inure to the benefit of Parent and Ferring and their respective successors
and assigns; provided, however, that Parent may not assign this Agreement in
whole or in part without Ferring's prior written consent and Ferring at any time
may assign this Agreement in whole or in part.

    
      
         

      

      
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    21.           Interpretation.  In this Agreement, unless Ferring and
Parent otherwise agree in writing, the singular includes the plural and the
plural the singular; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute referred
to; the word "or" shall be deemed to include "and/or", the words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to articles, sections (or subdivisions of sections) or
exhibits are to those of this Agreement; and references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments and
other modifications to such instruments, but only to the extent such amendments
and other modifications are not prohibited by the terms of this
Agreement.  Section headings in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

     

    22.           Governing
Law and Jurisdiction.  This Agreement will be interpreted
and the rights and liabilities of the parties hereto determined in accordance
with the laws of the State of New Jersey, except that the laws of the State of
Nevada shall govern the creation, perfection and foreclosure of the liens
created hereunder on such property or any interest therein.  Parent
hereby irrevocably consents to the exclusive jurisdiction of any state or
federal court in the City of Newark, State of New Jersey; provided that nothing
contained in this Agreement will prevent Ferring from bringing any action,
enforcing any award or judgment or exercising any rights against Parent
individually, against any security or against any property of Parent within any
other county, state or other foreign or domestic
jurisdiction.  Ferring and Parent agree that the venue provided above
is the most convenient forum for both Ferring and Parent.  Parent
waives any objection to venue and any objection based on a more convenient forum
in any action instituted under this Agreement.

     

    23.           WAIVER OF
JURY TRIAL.  EACH OF VYTERIS AND FERRING
IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY
DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS.  VYTERIS AND FERRING
ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.

     

    24.           Survival.  The representations and
warranties of Parent made or deemed made herein and Sections 11 and 13 hereof
shall survive the execution and delivery of this Agreement.

     

    25.           Termination;
Release.  This
Agreement shall
terminate ninety-one (91) days following satisfaction of both of the following
(the “Product
Delivery”):

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (a)           the
receipt by Ferring from Vyteris of the materials and supplies specified on Schedule 2 attached
hereto (with respect to which the design scope (the "Design") and budget
have been already agreed by the Joint Development Team(as defined in the License
Agreement)) sufficient for Ferring, in its discretion, to commence Phase III
clinical trials in the United States with respect to the Product (as defined in
the License Agreement), and

     

    (b)           the
confirmation by Ferring to Vyteris, in writing, that (i) such materials and
supplies conform with the terms and conditions of the License Agreement, the
Supply Agreement, the Design and the other applicable specifications, and (ii)
neither Vyteris nor Parent has breached or defaulted under (nor has Ferring
alleged in good faith that such breach or default has occurred) any of the
Underlying Agreements.

     

    Notwithstanding
the foregoing, this Agreement shall terminate on May 31, 2010 even if Product
Delivery has not occurred if, and only if, (a) Vyteris and Ferring agree in
writing in good faith that the cause of such failure of Product Delivery was
caused by a Force Majeure Event, and (b) Ferring has confirmed in writing that
neither Vyteris nor Parent has breached or defaulted under or with respect to
(nor has Ferring alleged in good faith that such breach or default has occurred
under or with respect to) any of the Underlying Agreements.  As used
herein, a “Force
Majeure Event” means a significant unexpected event which is beyond the
reasonable control of Vyteris and Parent with respect to which neither Vyteris
nor Parent could reasonably be expected to have taken account and which could
not have been prevented by good industry practice.  It is understood
and agreed that if Ferring requests that Vyteris perform additional Phase II
tests (outside the current scope of work) in connection with Phase II activities
related to the Product (as defined in the License Agreement), and Vyteris’s
performance of such tests causes a delay in Product Delivery past May 31, 2010,
then such delay shall be deemed “caused by a Force Majeure Event” so long as the
delay was not caused by a breach or default by Vyteris or Parent under or with
respect to (and Ferring has not alleged in good faith that such breach or
default has occurred under or with respect to) any of the Underlying
Agreements.

     

    Parent
acknowledges that it has read and understood all the provisions of this
Agreement, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.

     

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        11

        
          

        

      

      
         

      

    

    IN
WITNESS the due execution hereof as a document under seal, as of the date first
written above.

     

    
      
        	
                ATTEST:

              	 
      	
                VYTERIS,
      INC., a Nevada corporation

              
	 
      	 
      	 
      	 
      
	
                  

              	 
      	
                By:

              	
                  

              
	
                Name:

              	 
      	 
      	
                Name:

              
	
                 Title:

              	 
      	 
      	
                Title:

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                FERRING
      PHARMACEUTICALS, INC.

              
	 
      	 
      	 
      	 
      
	
                  

              	 
      	
                By:

              	
                  

              
	
                Name:

              	 
      	 
      	
                Name:

              
	
                 Title:

              	
                  

              	 
      	
                Title:

              

      

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    EXHIBIT
"A"

    TO
SECURITY AGREEMENT

     

    
      	
              9.

            	
              Parent’s
      form of organization: corporation

            

    

     

    
      	
              10.

            	
              Parent’s
      State of organization: Nevada.

            

    

     

    
      
        	
                11.

              	
                Address
      of Parent’s chief executive office, including the County: 13-01
      Poilitt Drive, Fair Lawn, Bergen County, NJ
  07410

              

      

    

     

    
      	
              12.

            	
              Parent’s
      EIN:  __________

            

    

     

    
      	
              13.

            	
              Parent’s
      organizational ID# (if any exists):

            	
              None

            

    

     

    
      	
              14.

            	
              Address
      for books and records, if different:

            	
              None

            

    

     

    
      	
              15.

            	
              Address
      of Collateral location as of date of this Agreement: 13-01 Poilitt Drive,
      Fair Lawn, Bergen County, NJ 07410.

            

    

     

    
      	
              16.

            	
              Address
      of location of Parent’s facility in Fair Lawn, New Jersey, including
      County and name and address of landlord or owner if location is not owned
      by Parent:  13-01 Poilitt Drive, Fair Lawn, Bergen County, NJ
      07410. Landlord is Lincoln Fair Lawn Associates, with offices c/o Marcus
      Associates Property Management, Inc., 90 Main Street, Suite 301,
      Hackensack, NJ 07001.

            

    

     

    9.           Other
names or tradenames now or formerly used by Parent:  Vyteris Holdings
(Nevada), Inc. (former name).

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Schedule
1

     

    Materials
and Supplies

     

    See
Schedule 7 to Letter Agreement

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      EXHIBIT
E

    

     

    SUBORDINATION AND
AGREEMENT

    

    This
Subordination and Agreement (this "Agreement"), dated as
of the ____ day of March, 2009, is between Spencer Trask Specialty Group, LLC
("Creditor"),
and Ferring Pharmaceuticals, Inc. ("Ferring").

     

    Recitals

     

    A.           Reference
is hereby made to the letter agreement dated the date hereof (the “Letter Agreement”) among
Vyteris, Inc., a Delaware corporation (“Vyteris”), Vyteris,
Inc., a Nevada corporation (“Parent”), and
Ferring.  (Vyteris and Parent are each referred to herein as an “Obligor” and together
as “Obligors”).  In
connection with the transactions contemplated by the Letter Agreement, each
Obligor has entered into a Security Agreement with Ferring dated the date hereof
(together, the “Security Agreements”)
pursuant to which, among other things, each Obligor granted to Ferring a
security interest in certain assets of such Obligor, as described
therein.

     

    B.           Creditor
has extended credit to Obligors and/or may later extend other credit to
Obligors.

     

    C.           In
order to induce Ferring to enter into the Letter Agreement and the other
Transaction Documents (as defined in the Letter Agreement), Creditor will
subordinate Creditor’s security interests, if any, securing all indebtedness and
other amounts owed by either Obligor to Creditor ("Subordinated Debt"),
to all of Ferring’s security interests in the Collateral, as defined in each
Obligor’s respective Security Agreement (hereinafter referred to collectively as
the “Collateral”).

     

    NOW
THEREFORE, the parties hereto, intending to be legally bound, hereby agree as
follows:

    

    26.           Until
such time as neither Obligor has any further Obligations, as defined in each
Obligor’s respective Security Agreement (hereinafter referred to collectively as
the “Obligations”) to
Ferring, any lien, security interest, claim or other right which Creditor may
have or hereafter obtain with respect to the Collateral and proceeds arising
from the casualty, loss, sale or lease thereof shall be subject, junior and
subordinate to any security interest, lien, claim or right Ferring may have or
hereafter acquire with respect to the Collateral and proceeds arising from the
casualty, loss, sale or lease thereof.

     

    27.           This
Agreement shall be effective from and after the date hereof and while either
Obligor has any Obligations to Ferring.  If, after neither Obligor has
any Obligations to Ferring, Ferring must disgorge any payments made on or with
respect to the Obligations for any reason (including, without limitation, the
bankruptcy of an Obligor) or any Obligations exist, this Agreement and the
relative rights and priorities provided herein, will be reinstated as to all
disgorged payments as though the payments had not been made and/or such
Obligations exist, as applicable. At any time without notice to Creditor,
Ferring may take actions it considers appropriate on the Obligations and any
Collateral, and enforcing or failing to enforce any rights against either
Obligor or any other person.  No action or inaction will impair or
otherwise affect Ferring's rights under this Agreement.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    28.           In
the event of any bankruptcy, reorganization, liquidation, execution sale,
receivership or similar proceedings involving one or both Obligors, Creditor
shall not contest, object or interfere with Ferring’s assertion and voting of a
first priority security claim with respect to the Collateral and proceeds
arising from the casualty, loss, sale or lease thereof.

     

    29.           Creditor
shall not, and shall not permit its affiliates to, acquire any security
interests or other rights with respect to the Collateral, except for the liens
and security interests which are approved by Ferring in writing and are
subordinated to the liens and security interests with respect to the Collateral
securing the Obligations, and shall not otherwise take or permit to be taken any
action against Ferring or the Collateral adverse to the interests of Ferring;
and, in the event that Creditor receives any distribution or payment in respect
of the Collateral, Creditor and its affiliates shall hold the same in trust for
Ferring and promptly pay over and remit the same to Ferring.

     

    30.           Creditor
hereby acknowledges and agrees that it has received a copy of, and hereby
approves, the Letter Agreement.  Creditor hereby fully releases and
discharges all Liens (as defined in the Letter Agreement) with respect to the
PMK150 (as defined in the Letter Agreement).  Additionally,
immediately prior to consummation of the transactions contemplated by exercise
by Ferring of the Option (as defined in the Letter Agreement), Creditor shall
fully release and discharge all Liens with respect to the PMK300 (as defined in
the Letter Agreement).  In connection with the foregoing provisions,
Creditor hereby authorizes Ferring to take any and all actions (including, as
appropriate, filing UCC-3 termination or partial termination statements)
necessary or desirable, as determined by Ferring in good
faith.  Further, Creditor does hereby make, constitute and appoint any
officer or agent of Ferring as Creditor’s true and lawful attorney-in-fact, with
power to sign, for Creditor, such documentation required by the Uniform
Commercial Code or otherwise deemed necessary or desirable to Ferring in
furtherance of the transactions contemplated by the Transaction Documents (as
defined in the Letter Agreement).  Creditor hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue
hereof.  This power of attorney is coupled with an interest and is
irrevocable.

     

    31.           In
order to give effect to the terms of this Agreement and to reach the purpose
hereof, Creditor herewith for the sake of precaution authorizes Vyteris to enter
into a Security Transfer Agreement under German law
(Sicherungsübereignungsvertrag) with respect to the PMK300 (as defined in the
letter Agreement) machine and to transfer for security purposes title
(Sicherungseigentum) to the PMK300 machine to Ferring under the terms of such
agreement (the "German
Security Agreement"). Creditor herewith in advance grants its consent to
such transaction.  During the term of the German Security Agreement,
Creditor waives the exercise of any rights and remedies associated with its
position as holder of a security interest or other Lien (as defined in the
Letter Agreement) according to Article 9 of the Uniform Commercial Code with
respect to the PMK300.  Upon the request of Ferring, Creditor shall
take all steps that Ferring deems advisable or necessary in order for Ferring to
obtain and/or perfect its security interest (including, at the request of
Ferring, that Creditor shall execute the German Security
Agreement).

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    32.           This
Agreement shall be binding on Creditor, and its successors or assigns, and shall
inure to the benefit of Ferring and its successors or assigns. This Agreement is
for Creditor’s and Ferring’s benefit and not for the benefit of Obligors or any
other party.

     

    33.           This
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey without giving effect to conflicts of laws
principles.  Creditor and Ferring hereby submit to the exclusive
jurisdiction of the state and federal courts located in the City of Newark,
State of New Jersey for the sole purpose of this Agreement and any controversy
arising hereunder. CREDITOR AND FERRING EACH WAIVE THEIR RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION ARISING FROM THIS AGREEMENT.

     

    34.           This
Agreement represents is the entire agreement of the parties hereto with respect
to the subject matter hereof, and supersedes all prior negotiations or
agreements. Creditor is not relying on any representations by Ferring or
Obligors in entering into this Agreement. Creditor will keep itself informed of
each Obligor's financial and other conditions.  This Agreement may be
amended only by written instrument signed by Creditor and Ferring.

     

    35.           This
Agreement may be executed in counterparts and delivered by facsimile, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

     

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        17

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties have executed this Subordination Agreement as of the date first written
above.

     

    SPENCER
TRASK SPECIALTY GROUP, LLC

     

    
      
        
          
            	
                    By: 

                  	
                      

                  
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  
	 
	
                    Accepted
      and agreed:

                  
	 
      
	
                    FERRING
      PHARMACEUTICALS, INC.

                  
	 
      	 
      
	
                    By:

                  	
                      

                  
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  
	 
      
	
                    Obligors
      approve the terms of this Agreement:

                  
	 
	
                    VYTERIS,
      INC., a Delaware corporation

                  
	 
      	 
      
	
                    By:

                  	
                      

                  
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  
	 
      	 
      
	
                    VYTERIS,
      INC., a Nevada corporation

                  
	 
      
	
                    By:

                  	
                      

                  
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  

          

        

      

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    
      EXHIBIT
F

    

    

    Ferring
Pharmaceuticals, Inc.

    4
Gatehall Drive, 3rd
Floor

    Parsippany,
NJ  07054

    

    Ladies
and Gentlemen:

    

    I have
acted as counsel to Vyteris, Inc., a Delaware corporation (the "Company") and
its parent company, Vyteris, Inc., a Nevada corporation (“Parent”) in connection
with the transactions contemplated by the Letter Agreement, of even date
herewith, between you and the Company (the “Agreement”).  The
Agreement, and the agreements described below are sometimes hereinafter referred
to collectively as the "Documents".

    

    In
connection with the opinions expressed herein, I have made such examination of
law as I considered appropriate or advisable for purposes hereof.  As
to matters of fact material to the opinions expressed herein, I have relied,
with your permission, upon the representations and warranties as to factual
matters contained in and made by the Company and the Purchaser pursuant to the
Documents and upon certificates and statements of certain government officials
and of officers of the Company as described below.  I have also
examined originals or copies of certain corporate documents or records of the
Company as described below (which are collectively referred to as the
“Documents”):

    

    
      	 	
              (a)

            	
              Form
      of Agreement

            

    

    
      	 	
              (b)

            	
              Form
      of Security Agreement, between the Company and you, of even date herewith
      (“Agreement”)

            

    

    
      	 	
              (c)

            	
              Form
      of Equipment Lease, between the Company and you, of even date herewith
      (“Equipment Lease”)

            

    

    
      	 	
              (d)

            	
              Assignment
      and Bill of Sale, between the Company and you, of even date
      herewith

            

    

    
      	 	
              (e)

            	
              Certificate
      of Incorporation of the Company

            

    

    
      	 	
              (f)

            	
              Bylaws
      of the Company

            

    

    
      	 	
              
                (g)

              

            	
              
                Unanimous
      Written Consent of the Company’s Board of Directors, evidencing approval
      of the Documents and the transactions described therein, a copy of which
      is annexed hereto

              

            

    

    
      	
               
      

            	
              (h)

            	
              Good
      Standing Certificates of the Company from Delaware and New
      Jersey

            

    

    
      	
               
      

            	
              (i)

            	
              Certificate
      of Incorporation of Parent

            

    

    
      	
               
      

            	
              (j)

            	
              Bylaws
      of Parent

            

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    In
rendering this opinion, I have, with your permission, assumed: (a) the
authenticity of all documents submitted to us as originals; (b) the conformity
to the originals of all documents submitted to us as copies; (c) the genuiness
of all signatures; (d) the legal capacity of natural persons; (e) the truth,
accuracy and completeness of the information, factual matters, representations
and warranties contained in all of such documents; (f) the due authorization,
execution and delivery of all such documents by the signatories thereof, and the
legal, valid and binding effect thereof on the signatories; (g) that the
signatories will act in accordance with their respective representations and
warranties as set forth in the Documents, (h) that all conditions precedent to
the effectiveness of the Documents have been satisfied or waived, (h) that the
Financing Statements contains the current address of Ferring from which
information concerning Ferring’s security interest in the Collateral, as such
term is defined in the Security Agreement (hereinafter, the “Collateral”) can be
obtained, (i) that the
Company has rights in the Collateral (although no facts have been disclosed to
us that have caused us to conclude that the opinions expressed are factually
incorrect except as disclosed in the Schedules to the Transaction
Agreements),(j) that the Company is engaged
in the business described in the Company’s 10-KSB filed with the Securities and
Exchange Commission for the year ended December 31, 2007, (k) the due
authorization, execution and delivery of the Documents by the parties thereto
other than the Company and Parent, (l) that the Documents constitute the valid,
binding and enforceable obligations of the parties thereto other than the
Company and Parent and (m) that Ferring has filed any required state franchise,
income or similar tax returns and have paid any required state franchise, income
or similar taxes.

     

    In rendering such opinions, I have not
conducted any independent investigation.  Specifically, but without
limitation, I have not searched the dockets of any courts and I have made no
inquiries of securities holders or employees of the Company or the Parent, other
than certain of the Company’s and the Parent’s officers.  No inference
as to my knowledge with respect to such matters should be drawn from the fact of
my representation of the Company or the Parent or the rendering of the opinions
set forth below.

     

    I am a
member of the bar of the State of New York. I express no opinion as to the laws
of any jurisdiction other than corporate laws of the State of Delaware, New
York, and the federal laws of the United States of America.  I express
no opinion with respect to the effect or application of any other
laws.  Special rulings of authorities administering any of such laws
or opinions of other counsel have not been sought or obtained by us in
connection with rendering the opinions expressed herein.

     

    1.           The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power and authority to
execute, deliver and perform all of its obligations under the Documents to which
it is a party and to consummate the transactions contemplated
thereby.  The Company is authorized to transact business and is in
good standing in the State of New Jersey.

     

    2.           Parent
is a Nevada corporation.  Company is a wholly-owned subsidiary of
Parent and Parent’s only asset is its ownership of the capital stock of
Company.  Parent has the power and authority to execute, deliver and
perform all of its obligations under the Documents to which it is a party and to
consummate the transactions contemplated thereby.

     

    3.           The
execution and delivery by Company of such of the Documents to which it is a
party, and the performance by Company of its obligations thereunder, have been
duly authorized by all necessary corporate action on the part of
Company.  The execution and delivery by Parent of such of the
Documents to which it is a party, and the performance by Parent of its
obligations thereunder, have been duly authorized by all necessary corporate
action on the part of Parent.

     

    4.           Each
of the Documents to which Company is a party has been duly executed and
delivered by Company and constitutes the legal, valid and binding obligation of
Company, enforceable against Company in accordance with its respective
terms.  Each of the Documents to which Parent is a party has been duly
executed and delivered by Parent and constitutes the legal, valid and binding
obligation of Parent, enforceable against Parent in accordance with its
respective terms.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

     

    5.           The
execution and delivery by each of Company and Parent of such of the Documents to
which it is a party, and the consummation by it of the transactions contemplated
thereby, will not violate any existing statute, regulation or other
law.

     

    6.           The
execution and delivery by each of Company and Parent of such of the Documents to
which it is a party does not, and the consummation by it of the transactions
contemplated thereby will not, require any consent, authorization or approval
of, the giving of notice to or registration with any governmental
authority.

     

    7.           The
execution and delivery by Company of such of the Documents to which it is a
party do not, and the consummation by Company of the transactions contemplated
thereby will not, in either case in any material respect, violate or contravene,
or constitute a default under, any term or provision of Company’s certificate of
incorporation, bylaws or other governing documents or, to my knowledge, any
contract or agreement to which Company is a party or pursuant to which its
assets are bound.   The execution and delivery by Company of such
of the Documents to which it is a party do not, and the consummation by Parent
of the transactions contemplated thereby will not, in either case in any
material respect, violate or contravene, or constitute a default under, any term
or provision of Parent’s certificate of incorporation, bylaws or other governing
documents or, to my knowledge, any contract or agreement to which Parent is a
party or pursuant to which its assets are bound.

     

    8.           To
my knowledge, Company owns all good and marketable right, title and interest in
and to the PMK150, free and clear of any and all Liens, except as set forth on
Exhibit __ to the Security Agreement.  Upon execution and delivery by
Company of the Bill of Sale, Ferring shall acquire all absolute unconditional
right, title and interest in and to the Purchased Assets, free and clear of all
Liens.  None of the transactions contemplated by the Transaction
Documents constitutes a “bulk sale” or similar transfer.  The sale by
Vyteris and the purchase by Ferring of the Purchased Assets do not constitute a
fraudulent conveyance (or similar transfer) or preference under the U.S.
Bankruptcy Code and/or other applicable law.  Assuming that (i) the
payment amounts by lessee to lessor are not considered to be “nominal payments”
and (ii) at the end of the Lease term, the leased property will still be
considered to have a useful life, the transactions contemplated by the Equipment
Lease constitute a true lease and not a disguised sale.

     

    9.           The
provisions of the Security Agreement are effective to create in favor of Ferring
a security interest in the collateral described therein, to the extent such
collateral consists of personal property in which a security interest may be
created under Article 9 of the Delaware Uniform Commercial Code (the “Article 9
Collateral”) and do not constitute a fraudulent conveyance (or similar
transfer) or preference under the U.S. Bankruptcy Code and/or other applicable
law.  The presentment of the Financing Statement naming Company as the
debtor, together with the payment of any required filing fees, in the office of
the Secretary of State of the State of Delaware, is sufficient to perfect the
security interests created by the Transaction Documents in that portion of the
Article 9 Collateral in which Company has an interest and in which a security
interest may be perfected by filing a financing statement under the Delaware
Uniform Commercial Code.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    10.           Neither
the execution and delivery by each of Company and Parent of the Transaction
Documents to which it is a party, nor the consummation by it of the transactions
contemplated therein nor the fulfillment of the terms thereof by it will, to my
knowledge (a) result in the creation or imposition of any security interest or
other lien upon any property of such party, except for any security interest or
lien created in favor of Ferring pursuant to the Security Agreement, or (b)
result in the violation of or contravene the terms of any order of any
governmental authority having jurisdiction over such party.

     

    11.           To
my knowledge, there are no actions, proceedings or investigations pending or
threatened against Company or Parent before or by any governmental authority
that might have an effect upon the validity or enforceability of the Transaction
Documents or which, if determined adversely to Company or Parent, would
materially affect the business, financial condition, property or operations of
Company or Parent.

     

    The
opinions expressed above are specifically subject to the following limitations,
exceptions, qualifications and assumptions:

     

    A.           My
opinions are subject to the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent transfer, statutes of limitation, or other
similar laws and judicial decisions affecting or relating to the rights of
creditors generally, and are further subject to the effect of general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, estoppel, election of remedies and
other similar doctrines affecting the enforcement of agreements generally
(regardless of whether enforcement is considered in a proceeding at law or in
equity).  In addition, the availability of specific performance,
injunctive relief, the appointment of a receiver or other equitable remedies is
subject to the discretion of the tribunal before which any proceeding therefor
may be brought.

     

    B.  My opinions are further
subject to other laws and judicial decisions affecting the rights of creditors
and secured creditors generally, including, without limitation, the
following:

     

    I express
no opinion as to the enforceability of provisions of the Documents to the extent
they contain:

     

    (a)           choice
of law or forum selection provisions,

     

    (b)           waivers
by the Company or Parent of any statutory or constitutional rights or
remedies,

     

    (c)           grants
of powers of attorney,

     

    (d)           cumulative
remedies to the extent such cumulative remedies purport to compensate, or would
have the effect of compensating, the party entitled to the benefits thereof in
an amount in excess of the actual loss suffered by such party and provisions to
the effect that rights or remedies may be exercised without notice, that failure
to exercise or delay in exercising rights or remedies will not operate as a
waiver of any such right or remedy, that rights or remedies are not exclusive,
that every right or remedy is cumulative and may be exercised in addition to or
with any other right or remedy, or that election of a particular remedy or
remedies does not preclude recourse to one or more remedies,

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    (e)          provisions
purporting to establish evidentiary standards,

     

    (f)          provisions
prohibiting waivers of any terms of the Transaction Agreements or the
Subordinated Debt Documents other than in writing, or prohibiting oral
modifications thereof or modification by course of dealing,

     

    (g)          provisions
indemnifying a party against, or requiring contributions toward, that party’s
liability for its own wrongful or negligent acts, or where indemnification or
contribution is contrary to public policy or prohibited by law,

     

    (h)          provisions
expressly or by implication waiving broadly or vaguely stated rights, unknown
future rights, or defenses to obligations or rights granted by law, when such
waivers are against public policy or prohibited by law,

     

    (i)           terms
to the effect that provisions in the Transaction Agreements or the Subordinated
Debt Documents may not be waived or modified except in writing may be limited
under certain circumstances; and

     

    (j)           Limitations
imposed by state law, federal law or general equitable principles upon the
specific enforceability of any of the remedies, covenants or other provisions of
any applicable agreement and upon the availability of injunctive relief or other
equitable remedies, regardless of whether enforcement of any such agreement is
considered in a proceeding in equity or at law.

     

    C.           This
opinion letter is governed by, and shall be interpreted in accordance with, the
Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991) as
updated by the Committee on Legal Opinions, Legal
Opinion Principles (1998) at 53 Bus. Law. 831, and the TriBar Opinion
Committee, Third Party
“Closing” Opinions (1998), commonly known as “TriBar II” (collectively,
the “Accords”). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accords, including the General Qualifications
and the Equitable Principles Limitations, and this opinion letter should be read
in conjunction therewith.

     

    D.           My
opinion in paragraph 9 above, as to perfection of the security interest of
Ferring in the Collateral are further subject to the following additional
qualifications:

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    (1) I express no opinion as to
Collateral which consists of or will consist of consumer goods or accounts
resulting from the sale thereof, beneficial interests in a trust or decedent’s
estate, deposit accounts, commercial tort claims, letters of credit or letter of
credit rights, goods subject to certificates of title (including, without
limitation, motor vehicles), fixtures, equipment to be used in farming
operations, farm products, agricultural or farm property, accounts or general
intangibles arising from or relating to the sale of farm products, crops,
timber, minerals, oil, gas or the like, or items which are subject to a statute
or treaty of the United States which provides for a national or international
certificate of title for the perfection of a security interest therein or which
specifies a place of filing different from that specified in the Delaware UCC
for filing to perfect such security interest, or in the case of the sale of any
of the foregoing, accounts, promissory notes or general intangibles arising with
respect thereto;

     

    (2) I express no opinion as to matters
excluded from Article 9 of the Delaware UCC by Section 9-109 of the Delaware UCC
;

     

    (3) I express no opinion as to the
effect of Section 9-315 of the Delaware UCC as to proceeds of Collateral and
Sections 9-320 and 9-330 of the Delaware UCC as to buyers and purchasers of
Collateral in certain circumstances;

     

    (4) I express no opinion as to the
requirement that continuation statements with respect to a Financing Statement
be filed within six months prior to the fifth, tenth, fifteenth, etc.
anniversaries of the original filing of such Financing Statement and assume that
all continuation statements will be properly filed;

     

    (5) the security interest of Ferring in
the Collateral may become unperfected if the Company or Parent, a the case may
be, changes its name, jurisdiction of formation or its status therein, or
identity or entity structure;

     

    (6) I express no opinion as to the
validity or perfection of any security interest purported to be granted in that
portion of the Collateral that constitutes an interest or claim in or under a
policy of insurance (except as provided in Section 9-315 of the Delaware UCC
with respect to proceeds), a right represented by a judgment, a right of setoff,
a claim arising out of tort or an interest in any deposit account (except as
provided in Section 9-315 of the Delaware UCC with respect to
proceeds);

     

    (7) In the case of Collateral
consisting of money or instruments (as such term is defined in the Delaware UCC)
not constituting part of a chattel paper (as such term is defined in the
Delaware UCC), the security interest granted pursuant to the Security Agreement
cannot be perfected by filing a Financing Statement but can only be perfected if
possession thereof is obtained;

     

    (8) I express no opinion with respect
to the perfection of Ferring’s security interest in any patents, patent
application, patents pending, copyrights, trademarks, trade names trademark
registrations or other interests subject to federal patent, trademark or
copyright laws, except to the extent that any such security interests may be
perfected by filing of a Financing Statement in Delaware and I do not express as
an opinion as to whether any such security may be perfected by filing a
Financing Statement; and

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

    (9) I express no opinion concerning the
Company’s or Parent’s rights in or title to, or the priority of any security
interest, pledge, lien, or other similar interest in, any personal property, or
the creation, perfection or priority of any lien, mortgage or other similar
interest in any real property.

     

    E.  I express no opinion as
to compliance or the effect of noncompliance by Ferring with any state or
federal laws or regulations applicable to Ferring in connection with the
transactions described in the Documents.

     

    F.  I express no opinion as
to the Company’s or this transaction’s compliance or noncompliance with
applicable federal or state antifraud or antitrust statutes, laws, rules and
regulations or Section 721 (as amended by Section 5021) of the Omnibus Trade and
Competitiveness Act of 1988: the so-called “Exon-Florio” proviso of the Defense
Production Act of 1950 and the regulations thereunder.

     

    G.  My opinions are subject
to the effect of judicial decisions which may permit the introduction of
extrinsic evidence to interpret the terms of written contracts such as the
Documents.

     

    H.  I express no opinion
herein with respect to the effect of any land use, safety, hazardous material,
environmental or similar law, or any local or regional law.  Further,
I express no opinion as to the effect of or compliance with any state or federal
laws or regulations applicable to the transactions contemplated by the Documents
because of the nature of the business of any party thereto other than the
Company or Parent.

     

    I.  I have assumed that the
approval by the Company’s and Parent’s Board of Directors of the Documents and
the transactions contemplated thereby did not violate the business judgment rule
and I further assume that the Documents and the transactions contemplated
thereby were entirely fair to the Company and Parent as of the time the
Company’s and Parent’s Board of Directors approved them.

     

    J.           With
regard to the opinion set forth in paragraph 8. above, my knowledge is limited
to the facts set forth on a certificate provided to me by Parent’s Chief
Financial Officer, of even date herewith.

     

    K.          In
rendering the opinions set forth herein, I am assuming that the law and
regulation of each jurisdiction in question is the same as the applicable laws
and regulations in the State of New York.

     

    L.           In
rendering the opinions set forth herein, I am assuming the proper completion of
any and all forms, proper filing of such forms and the proper payment of all
applicable fees.

     

    M.         I
am specifically not rendering any opinion on any Collateral not physically
situated at Company’s headquarters at 13-01 Pollitt Drive, Fair Lawn,
NJ.

     

    N.          The
opinion set forth in the last sentence of paragraph 8 above specifically
excludes the applicability and any opinion with respect to Statement of
Financial Accounting Standards No. 13.

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    This
opinion is rendered as of the date first written above, is solely for your
benefit in connection with the Agreement and may not be relief upon or used by,
circulated, quoted, or referred to nor may any copies hereof by delivered to any
other person without my prior written consent.  I disclaim any
obligation to update this opinion letter or to advise you of facts,
circumstances, events or developments which hereafter may be brought to my
attention and which may alter, affect or modify the opinions expressed
herein.

     

    Very
truly yours,

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    
      EXHIBIT
G

    

     

    Security
Transfer of Moveable Assets

    

    by and
between

    

    Vyteris,
Inc.

     

    and

     

    Ferring
Pharmaceuticals, Inc.

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    

    First
draft, February 11, 2009

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    CONTENTS

     

    
      
        
          	
                  CLAUSE

                	
                  PAGE

                
	
                  1.

                	
                  DEFINITIONS

                	
                  32

                
	
                  2.

                	
                  TRANSFER
      OF TITLE FOR SECURITY PURPOSES "SICHERUNGSÜBEREIGNUNG"

                	
                  32

                
	
                  3.

                	
                  SECURED
      OBLIGATIONS

                	
                  32

                
	
                  4.

                	
                  USE
      OF COLLATERAL

                	
                  33

                
	
                  5.

                	
                  UNDERTAKINGS

                	
                  33

                
	
                  6.

                	
                  OTHER
      RIGHTS OF TRANSFEREE

                	
                  35

                
	
                  7.

                	
                  REALISATION
      OF GERMAN COLLATERAL

                	
                  36

                
	
                  8.

                	
                  TERMINATION;
      RELEASE

                	
                  36

                
	
                  9.

                	
                  NOTIFICATIONS

                	
                  37

                
	
                  10.

                	
                  MISCELLANEOUS

                	
                  38

                
	
                  SCHEDULE
      1

                	
                  40

                
	
                  Details
      on PMK300

                	
                  40

                
	
                  SCHEDULE
      2

                	
                  41

                
	
                  Site
      map

                	
                  41

                

        

      

    

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    THIS SECURITY TRANSFER
AGREEMENT (the "Agreement") is
made

     

    BETWEEN:

    

    
      	
              (1)

            	
              Vyteris, Inc., a US
      corporation, incorporated and validly existing under the laws of
      [Delaware], with its principal place of business at 13-01 Pollit Drive,
      Fair Lawn, NJ 07410, United States of America (the "Transferor");
      and

            

    

     

    
      	
              (2)

            	
              Ferring Pharmaceuticals,
      Inc., a US corporation, incorporated and validly existing under the
      laws of Delaware, with its principal place of business at 4 Gatehall
      Drive, 3rd
      Floor, Parsipanny, NJ 07054, United States of Amercia (the "Transferee").

            

    

     

    The
Transferor and the Transferee are collectively referred to as the "Parties" and each a "Party".

     

    RECITALS:

    

    
      	
              (A)

            	
              Whereas,
      the Parties have a business relationship based upon certain commercial
      agreements entered into between them including [without limitation] (a) a
      Letter Agreement [dated as of the same date hereof] (the “Letter Agreement”); (b)
      a License and Development Agreement dated as of September 27, 2004, as
      amended prior to the date hereof and pursuant to the Letter Agreement (the
      “License
      Agreement”); and (c) a Supply Agreement dated September 27, 2004,
      as amended prior to the date hereof and pursuant to the Letter Agreement
      (the “Supply
      Agreement”) (all of the foregoing, the “Underlying Agreements”).
      Reference is made to the Underlying Agreements, the content of which is
      fully known to the Parties.

            

    

     

    
      	
              (B)

            	
              Clause
      6. c) of the Letter Agreement provides inter alia that in
      order to secure the obligations of Transferor pursuant to the Underlying
      Agreements, Transferor shall grant Transferee a security interest in all
      of the assets of Transferor (including, without limitation, the Product
      (as defined in the License Agreement), work in process, supplies,
      inventories, machinery and equipment, together the “Collateral”). In
      furtherance thereof, simultaneously with the execution and delivery of the
      Letter Agreement, Transferor shall execute and deliver to Transferee a
      Security Agreement in the form attached to the Letter Agreement as Exhibit
      C (the “Security
      Agreement”) and any other UCC-1 statements and other documents
      reasonably requested by Transferee. Reference is made to Clause 6. c) and
      the Security Agreement.

            

    

     

    
      	
              (C)

            	
              Transferor
      owns a certain piece of machinery known as “PMK300” (a web concerting
      machine), which is currently located not at the premises of Transferor in
      the US, but at the facilities of Harro Hoeflinger Verpackungsmaschinen
      GmbH, Werk Satteldorf, Industriestraße 6, 74589 Satteldorf, Germany. A
      detailed description of the PMK300 machine is set forth on schedule 1. The
      Parties are in agreement that the PMK300 machine shall serve as, and be
      part of the Collateral (as defined in the immediately preceding
      paragraph), and that a security interest in the PMK300 machine shall be
      established in favour of
Transferee.

            

    

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    
      	
              (D)

            	
              Since
      the PMK300 machine is currently located in Germany, due to applicable
      German conflicts of laws regulations, the creation of a security interest
      in a movable asset (including the transfer of title for security purposes)
      is mandatorily governed by German law. The Parties have therefore decided
      to enter into a separate security agreement governed by German law
      specifically for the creation of a security interest in the PMK300
      machine. With the present agreement, they are entering into a security
      transfer agreement (Sicherungsübereignungsvertrag), a
      security transaction under German law involving movable assets as
      collateral, by which title (Eigentum) to the PMK300
      machine will be transferred as collateral to the Transferee. The Parties
      wish to incorporate this Agreement in its entirety into the Security
      Agreement by way of reference.

            

    

     

    
      	
              (E)

            	
              According
      to clause 4. b) of the Letter Agreement, Transferor has granted Transferee
      the right to purchase the PMK300, the PMK300 Equipment Warranties and all
      related records, documentation and warranties (collectively referred to in
      the Letter Agreement as the “PMK300 Assets”), free
      and clear of all Liens for a period of one (1) year from the date of the
      Letter Agreement (the “Option”). It is
      understood that this Agreement and the security transfer contemplated
      hereby shall cease to be in effect upon completion of the purchase by
      Transferee of the PMK300 by way of exercising the
  Option.

            

    

     

    
      	
              (F)

            	
              The
      Parties are aware that the PMK300 currently is subject to a security
      interest [lien] according to Art. 9 UCC [to be confirmed] in
      favor of Spencer Trask Speciality Group, LLC (“Spencer Trask”), which is
      another creditor of Transferor. However, according to a Subordination
      Agreement entered into between Spencer Trask and Transferee as of the same
      date hereof, Spencer Trask has subordinated its existing security
      interests in the Transferor’s assets (including the PMK300) to all of
      Transferee’s security interests in such assets, subject to the terms and
      conditions of the Subordination Agreement. According to clause 6 c) of the
      Letter Agreement, Spencer Trask will fully release all liens and
      encumbrances with respect to the PMK300 immediately prior to consummation
      of the transactions contemplated by the exercise of the
      Option.

            

    

     

    
      	
              (G)

            	
              In
      order to give effect to the terms of the Subordination Agreement and to
      reach the purpose thereof, Spencer Trask herewith for the sake of
      precaution authorizes Transferor to enter into this Agreement and to
      transfer title (Eigentum) to the PMK300
      to the Transferee as set forth in clause 2.1 below and consents to the
      transactions contemplated hereby. During the term of this Agreement,
      Spencer Trask waives the exercise of any rights and remedies associated
      with its position as holder of a security interest [lien] according to
      Art. 9 UCC with respect to the
PMK300.

            

    

     

    
      	
              (H)

            	
              References
      in this Agreement to the Underlying Agreements will be deemed to include
      references to those agreements as they may be amended, modified, varied or
      restated from time to time. Similarly, references in this Agreement to
      secured Obligations of Transferor (as defined in the Underlying
      Agreements) will be deemed to include any and all obligations which the
      Transferor may have under or in connection with the Underlying Agreements
      as the same may be so amended, modified, varied or restated from time to
      time.

            

    

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    THE
PARTIES AGREE AS FOLLOWS:

    

    
      	
              1.

            	
              DEFINITIONS

            

    

     

    Terms
used but not otherwise defined herein shall have the meanings ascribed thereto
in the Underlying Agreements, the Security Agreement and the Subordination
Agreement.

     

    
      	
              2.

            	
              TRANSFER
      OF TITLE FOR SECURITY PURPOSES "SICHERUNGSÜBEREIGNUNG"

            

    

     

    
      	
              2.1.

            	
              The
      Transferor hereby transfers to the
Transferee:

            

    

     

    Title
(Sicherungseigentum gem.
§ 931 of the German
Civil Code, Bürgerliches
Gesetzbuch – BGB) to the PMK300
machine including all its present and future movable inventory (Zubehör), replacements and spare
parts and accessories, located now and in future at the premises redlined on the
map enclosed as schedule
2.

     

    The
schedules form an integral part of this Agreement. The premises specified
pursuant to this clause 2.1 are hereinafter referred to as the "Premises" and the transferred
assets as the "German
Collateral".

     

    
      	
              2.2.

            	
              To
      the extent that the Transferor has ownership or co-ownership (Miteigentum) of the
      German Collateral or acquires such rights in the future the Transferor
      hereby transfers to the Transferee the ownership or co-ownership. To the
      extent that the Transferor has any inchoate rights (Anwartschaftsrechte) in
      respect of the German Collateral the Transferor hereby transfers to the
      Transferee such inchoate rights.

            

    

     

    
      	
              2.3.

            	
              Delivery
      of possession of the Collateral to the Transferee is hereby replaced by
      the agreement that the Transferor assigns its claim for repossession
      (Herausgabeanspruch)
      against [Harro Hoeflinger Verpackungsmaschinen GmbH] according to sections
      931, 870 of the German Civil Code (Bürgerliches
      Gesetzbuch – BGB) to
      the effect that the Transferee becomes indirect possessor (mittelbarer Besitzer)
      as defined in section 868 of the German Civil Code (Bürgerliches
      Gesetzbuch – BGB) with respect to the
      German Collateral. The Transferor hereby further assigns all present and
      future claims against third parties obtaining actual possession of the
      German Collateral to the Transferee. The Transferee
      hereby accepts such
assignment.

            

    

     

    
      	
              2.4.

            	
              The
      Transferee
      hereby accepts the transfer of the German Collateral and the transfer of
      the inchoate rights.

            

    

     

    
      	
              3.

            	
              SECURED
      OBLIGATIONS

            

    

     

    The
transfer of title hereunder is constituted in order to secure the prompt and
complete satisfaction of any and all obligations (present and future, actual and
contingent) which are (or are expressed to be) or become owing by the Transferor
to the Transferee under
the Underlying Agreements, in particular, the Letter Agreement. For the
avoidance of doubt these shall include any claims arising out of unjust
enrichment "ungerechtfertigte
Bereicherung" (together referred to as the "Obligations").

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     

    
      	
              4.

            	
              USE
      OF COLLATERAL

            

    

     

    
      	
              4.1.

            	
              The
      Transferor is authorised in accordance with the terms and conditions of
      the Underlying Agreements to continue the use of the German Collateral on
      its own behalf in the ordinary course of business as long as such
      authorisation has not been revoked by the Transferee.
      Any sale or disposition of the German Collateral is strictly
      prohibited.

            

    

     

    
      	
              4.2.

            	
              The
      Transferee is
      entitled to revoke the aforementioned authorisation and claim delivery of
      the German Collateral at any time in order to protect the legitimate
      interests of the Transferee or
      upon an Event of Default (as defined in the Security
      Agreement).

            

    

     

    
      	
              4.3.

            	
              Upon
      expiry of the Transferor's authorisation to continue the use of the German
      Collateral the Transferee is
      entitled to claim delivery of all documents pertaining to the German
      Collateral.

            

    

     

    
      	
              5.

            	
              UNDERTAKINGS

            

    

     

    In
addition to Transferor’s undertakings, covenants and assurances set forth in the
Security Agreement and those in clause 4. b) of the Letter Agreement, all of
which are incorporated into this Agreement by way of reference, the Transferor
undertakes towards the Transferee as
follows:

     

    
      	
              5.1.

            	
              Principal
      Undertakings

            

    

     

    
      	
               
      

            	
              (a)

            	
              to
      execute without undue delay all documents and do all things as the Transferee
      may require to perfect and protect the security created by a security
      transfer or to facilitate the enforcement or realisation of the security
      created by such security transfer;

            

    

     

    
      	
               
      

            	
              (b)

            	
              not
      to do or cause or permit to be done anything which will, or could be
      reasonably expected to, materially adversely affect the security or the
      rights of the Transferee
      under this Agreement or which in any way materially depreciates,
      jeopardises or otherwise prejudices the security created under this
      Agreement; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              to
      ensure that all rights granted to the Transferee
      are prior in ranking to any rights of third parties;
  and

            

    

     

    
      	
               
      

            	
              (d)

            	
              that
      all information with respect to the German Collateral set forth in the
      Recitals to this Agreement are complete, true and accurate in all
      respects; and

            

    

     

    
      	
               
      

            	
              (e)

            	
              that
      Transferor has the claim for repossession (Herausgabeanspruch)
      against [Harro Hoeflinger Verpackungsmaschinen GmbH] as set forth in
      clause 2.3 above.

            

    

     

    
      	
              5.2.

            	
              Reporting
      Obligations

            

    

     

    
      	
               
      

            	
              (a)

            	
              In
      the event that the value of the German Collateral transferred to the
      Transferee is subsequently affected because of complaints or for other
      reasons the Transferor shall immediately notify the Transferee thereof,
      and he will act in accordance with the instructions given by the
      Transferee. The Transferor's obligation to notify pursuant to this clause
      5.3 (a) only exists if the value of the security granted by this Agreement
      is substantially affected.

            

    

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              (b)

            	
              In the event that
      the Transferee's entitlement to the transferred German Collateral
      is impaired or jeopardised by attachment (Pfändung), transfer order
      (Überweisung) or
      otherwise the Transferor shall immediately notify the Transferee
      thereof. In case of an attachment the Transferor shall deliver to the
      Transferee a
      copy of the attachment and transfer order (Pfändungs- und Überweisungsbeschluss)
      and all other documents necessary to object against the attachment and he
      shall notify the attaching creditor immediately of the Transferee's
      security interest.

            

    

     

    
      	
              5.3.

            	
              Right
      of Inspection

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Transferee has the right to inspect or have inspected by authorised
      personnel the Transferor's documents in order to evaluate and enforce the
      German Collateral, however, as long as no right of realisation exists only
      upon reasonable advance notification and during normal business
      hours.

            

    

     

    
      	
               
      

            	
              (b)

            	
              To
      the extent that the German Collateral has been recorded in EDP systems,
      the Transferor shall allow the Transferee, upon the latter's first demand,
      to use the EDP system, including the periphery, with the data stored in
      respect of all bookings relating to the assignment, and the Transferor
      shall further make available the operators and the necessary programs
      (software) required in connection therewith, and shall do whatever is
      necessary to put the EDP system into operation and repair the same or
      otherwise.

            

    

     

    
      	
              5.4.

            	
              Labeling
      of the German Collateral, Third Parties'
Rights

            

    

     

    
      	
               
      

            	
              (a)

            	
              Without
      prejudice to the right of use pursuant to clause 4 the Transferor will use
      reasonable endeavours to ensure the German Collateral does not leave the
      Premises and that it is handled properly. Upon request of the Transferee
      the Transferor will label the German Collateral in a way whereby it is
      obvious that the German Collateral has been transferred to the Transferee
      for security purposes. Upon request of the Transferee the Transferor will
      make a note of such labeling in his
records.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      Transferor shall immediately notify the Transferee of any change of the
      location of the German Collateral.

            

    

     

    
      	
               
      

            	
              (c)

            	
              The
      Transferor shall where appropriate in the ordinary course of business
      terminate any person's extended retention of title arrangements ("Eigentumsvorbehalt") in
      respect of the German Collateral by paying the purchase price
      thereof.

            

    

     

    
      	
               
      

            	
              (d)

            	
              So
      far as there may be statutory liens of third parties (e.g. landlord,
      lessor, stockkeeper, work contractor) to the German Collateral the
      Transferor shall, on the Transferee's request, from the date on which the
      rent, storage charges or remuneration for contracts for work and services
      had been due, furnish proof to the Transferee of such
    payment.

            

    

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

     

    
      	
              5.5.

            	
              Insurance
      of the Collateral

            

    

     

    
      	
               
      

            	
              (a)

            	
              During
      the term of the transfer the Transferor shall provide the German
      Collateral with full and reasonable insurance cover against the usual
      risks and in particular in accordance with the provisions of the Security
      Agreement.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      Transferor shall notify the respective insurer immediately
      that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Transferee holds the title of the German
  Collateral;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Transferee holds all rights arising from the insurance agreement to the
      extent they relate to the German
Collateral;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      payments under the insurance agreements relating to damages during the
      term of the transfer are to be performed directly to the Transferee;
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      Transferee assumes only the rights and not the obligations arising from
      the insurance agreement, with the further limitation that, without the
      Transferee's consent, the Transferor is not entitled to cancellation of
      the insurance agreement.

            

    

     

    Each
public liability policy shall name the Transferee as additional
insured.

     

    The
Transferor procures that the insurer submits an insurance certificate (Versicherungsschein) to the
Transferee.

     

    
      	
               
      

            	
              (c)

            	
              Upon
      the Transferee's request the Transferor shall immediately submit to the
      Transferee duplicate original copies of each insurance policy, or such
      other evidence of insurance as Transferee may require, together with a
      premium receipt or other proof of payment and, upon the Transferee's
      reasonable request, an esteemed insurance broker's report regarding such
      insurance policy.

            

    

     

    
      	
              6.

            	
              OTHER
      RIGHTS OF TRANSFEREE

            

    

     

    
      	
              6.1.

            	
              If,
      and to the extent, documents required for the evaluation or realisation of
      the German Collateral have been delivered by the Transferor to a third
      party (especially to an accountant or tax advisor) the Transferor hereby
      assigns to the Transferee its claims against such third party for
      providing information and for delivering such documents and hereby
      authorises the third party to provide the Transferee with such information
      and documents required to evaluate and realise the
      Collateral.

            

    

     

    
      	
              6.2.

            	
              In
      so far as the electronic data processing is executed by third parties the
      Transferor hereby assigns to the Transferee all its claims for performance
      and authorises these third parties to execute the electronic data
      processing on behalf of the Transferee in the same manner as they were
      obliged to towards the Transferor, provided that the Transferee requests
      them to do so.

            

    

     

    
      	
              6.3.

            	
              In
      order to protect its legitimate interests the Transferee is entitled to
      revoke the authorisation to continue the use of and to request delivery of
      the German Collateral, in particular if the Transferor is in a material
      breach of its duty to handle the German Collateral with care or if it
      disposes of the German Collateral without the prior written consent of
      Transferee.

            

    

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

     

    
      	
              6.4.

            	
              If
      no proof is furnished that mature claims for rent, storage charges or
      remuneration for contracts for work and services have been satisfied by
      the Transferor the Transferee will be entitled to effect payment at the
      Transferor's expense in order to avert such third parties'
      liens.

            

    

     

    
      	
              6.5.

            	
              In
      case the Transferor has not or not sufficiently provided for insurance
      cover the Transferee is entitled to enter into an appropriate insurance
      agreement for the German Collateral at the Transferor's
      expense.

            

    

     

    
      	
              6.6.

            	
              The
      Transferor hereby assigns to the Transferee all present and future claims
      against the insurance companies for the security purpose set out in clause
      3 of this Agreement.

            

    

     

    
      	
              6.7.

            	
              The
      Transferee hereby accepts such
assignment.

            

    

     

    
      	
              7.

            	
              REALISATION
      OF GERMAN COLLATERAL

            

    

     

    
      	
              7.1.

            	
              Upon
      the occurrence of an Event of Default (as defined in the Security
      Agreement), in particular in case (i) the Transferor is in delay (Verzug) with payment of
      the Obligations when they fall due respectively and (ii) such delay has
      not been cured by Transferor within a time period of [__] days set by
      Transferee, and notwithstanding the provisions in clause 4 of this
      Agreement the Transferee is entitled to revoke the right to continue the
      use of the German Collateral as described in clause 4 above, to request
      delivery of the German Collateral, to realise the German Collateral and
      enforce all other rights arising from this
  Agreement.

            

    

     

    
      	
              7.2.

            	
              Upon
      the occurrence of an Event of Default the Transferee shall be authorised
      to terminate retention of title arrangements "Eigentumsvorbehalt" by
      paying the purchase price thereof or part thereof on behalf and at the
      expense of the Transferor. The Transferor hereby waives its right to
      object against such performance by the
  Transferee.

            

    

     

    
      	
              7.3.

            	
              In
      the event of a realisation the Transferor shall immediately submit to the
      Transferee all documents relating to the German Collateral (and other
      documents required).

            

    

     

    
      	
              7.4.

            	
              Before
      realisation the Transferee shall give written warning to the Transferor in
      accordance with clause 10. of the Security Agreement. Advance warning is
      not required if the Transferor has ceased payment or has been subject to
      insolvency proceedings.

            

    

     

    
      	
              7.5.

            	
              The Transferee is
      entitled to realise the German Collateral also by public sale
      (freihändiger Verkauf) on its
      own behalf or on the Transferor's behalf. The Transferee
      shall use its best endeavours to achieve the best obtainable price. At the
      Transferee’s request the
      Transferor will assist in the realisation or, according to the
      instructions of the Transferee,
      sell the German Collateral at best offer. The Transferor will pass any
      payment or any other benefit obtained from the realisation on to the Transferee.

            

    

     

    
      	
              8.

            	
              TERMINATION;
      RELEASE

            

    

     

    
      	
              8.1.

            	
              The
      release of the German Collateral shall occur upon complete satisfaction of
      the secured Obligations in accordance with clause 24 of the Security
      Agreement. The termination of this Agreement shall also be in accordance
      with clause 24 of the Security
Agreement.

            

    

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

     

    
      	
              8.2.

            	
              This
      Agreement and the security transfer contemplated hereby shall cease to be
      in effect upon completion of the purchase by Transferee of the PMK300 by
      way of exercising the Option.

            

    

     

    
      	
              9.

            	
              NOTIFICATIONS

            

    

     

    Any
notice or other communication under or in connection with this Agreement shall
be in writing and shall be delivered personally, or sent by post, courier or by
facsimile transmission:

     

    
      	
              9.1.

            	
              In
      the case of the Transferee, to:

            

    

     

    __________________________

    __________________________

    __________________________

    __________________________

     

    For the
attention of:      
  __________

     

    Phone
No.:  __________________

    Fax
No.:  ______________________

     

    
      	
              9.2.

            	
              In
      the case of the Transferor, to:

            

    

     

    __________________________

    __________________________

    __________________________

    __________________________

     

    For the
attention
of:         ___________

     

    Phone
No.:______________________

    Fax No.:
_______________________

    

    or to the
address notified at the point of closing or any other address later notified in
writing to the other Party at least 15 days in advance.

     

    Communications
shall be in the English language or, if in any other language, accompanied by a
translation into English. In the event of any conflict between the English text
and the text in any other language, the English text shall prevail. Any changes
in the authority to represent the Transferor shall be notified to the Transferee
without undue delay.

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

     

    
      	
              10.

            	
              MISCELLANEOUS

            

    

     

    
      	
              10.1.

            	
              Conflict
      between this Agreement and the Security
  Agreement

            

    

     

    Unless
otherwise provided for herein, all provisions of the Security Agreement shall
apply also with respect to the German Collateral and in addition to the
provisions of this Agreement, and such provisions of the Security Agreement are
incorporated herein by way of reference.

     

    If there
is a conflict between this Agreement and the Security Agreement, which cannot be
resolved by way of interpretation, then (to the extent permitted by law) the
provisions of the Security Agreement shall take priority over the provisions of
this Agreement.

     

    
      	
              10.2.

            	
              Liability
      and Indemnity

            

    

     

    The
Transferee shall not be liable for any loss or damage suffered by the Transferor
save in respect of such loss or damage which is suffered as a result of the
wilful misconduct or gross negligence of the Transferee. The Transferor will
indemnify the Transferee and keep the Transferee indemnified against any and all
damages, losses, actions, claims, expenses, demands and liabilities which may be
incurred by or made against each of the Transferee for anything done or omitted
in the exercise or purported exercise of the powers contained herein and
occasioned by any breach of the Transferor of any of its obligations or
undertakings herein contained other than to the extent that such damages,
losses, actions, claims, expenses, demands and liabilities are incurred or made
against any of the Transferee as a result of the gross negligence or wilful
misconduct of the Transferee. To the extent an aforementioned person might for
any reason become liable vis-à-vis the Transferor as a
result of this Agreement, its liability shall be several but not
joint.

     

    
      	
              10.3.

            	
              Costs
      and Fees

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Transferor will pay all costs, expenses and fees (including legal costs)
      in each case plus VAT, if applicable, accruing thereon, reasonably
      incurred in connection with the preparation, execution and administration
      of this Agreement, including all lawyers'
fees.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      Transferor will pay all costs, expenses and fees (including legal costs)
      in each case plus VAT, if applicable, accruing thereon, incurred in
      connection with the realisation of this Agreement, in particular in
      connection with the public auction of the German Collateral, including all
      court fees and lawyers' fees.

            

    

     

    
      	
              10.4.

            	
              Waivers

            

    

     

    No
failure to exercise, nor any delay in exercising, on the part of the Transferee,
any right or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy prevent any further or other
exercise thereof or the exercise of any other right or remedy. Any statutory
legal remedies shall not be limited or excluded by this Agreement, the Security
Agreement or by the Underlying Agreements.

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    
      	
              10.5.

            	
              Amendments

            

    

     

    Unless
notarial form is required, any changes, amendments and waivers of any provision
of this Agreement - including this clause 10.5 - require written form in order
to become valid. No oral supplements to this Agreement have been
made.

     

    
      	
              10.6.

            	
              Partial
      Invalidity

            

    

     

    If any of
the provisions of this Agreement should be or become invalid, unenforceable or
impractical in whole or in part, the validity of the other provisions hereof
shall not be affected. In that case the invalid, unenforceable or impractical
provision is deemed to be replaced by such valid and enforceable provision or
arrangement, which corresponds as closely as possible to the invalid,
unenforceable or impractical provision and to the parties' economic aims
pursued by and reflected in this Agreement. The same applies in the event that
this Agreement does not contain a provision which it needs to contain in order
to achieve the economic purpose as expressed herein (Regelungslücke).

     

    
      	
              10.7.

            	
              Choice
      of Law

            

    

     

    This
Agreement shall be governed by and construed in accordance with the laws of the
Federal Republic of Germany.

     

    
      	
              10.8.

            	
              Place
      of Jurisdiction

            

    

     

    Any legal
action or proceedings arising out of or in connection with this Agreement shall
be brought in the courts in [Frankfurt am Main]. The foregoing shall, however,
not limit the right of the Transferee to bring any legal action against the
Transferor in any other court of competent jurisdiction.

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    SCHEDULE
1

    

    Details
on PMK300

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    SCHEDULE
2

    

    Site
map

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    SIGNATURE PAGE

     

    This
Agreement is signed in on ___ March 2009 as follows:

     

    TRANSFEROR:

     

    Name:

    Title:

     

    TRANSFEREE:

     

    Name:

    Title:

     

    Approved and
countersigned:

     

    SPENCER
TRASK:

     

    Name:

    Title:

    
      
         

      

      
        42Unassociated Document

    Exhibit
4.1

     

    FIRST
AMENDMENT TO RIGHTS AGREEMENT

     

    THIS FIRST AMENDMENT (“First Amendment”) is dated as
of May 7, 2010, and amends that certain Rights Agreement dated as of May 18,
2009 (the “Rights
Agreement”), between Houston Wire & Cable Company, a Delaware
corporation (the “Company”), and American Stock
Transfer & Trust Company, LLC, a New York limited liability trust company,
as Rights Agent (the “Rights
Agent”).

     

    W
I T N E S S E T H

     

    WHEREAS, the Company and the
Rights Agent entered into the Rights Agreement;

     

    WHEREAS, under Section 27 of
the Rights Agreement, for so long as the Rights are redeemable, the Company may
supplement or amend the Rights Agreement without the approval of any holders of
certificates representing Common Stock and Rights (as defined in the Rights
Agreement);

     

    WHEREAS, the Rights are still
redeemable; and

     

    WHEREAS, the Company desires
to amend, and directs the Rights Agent to amend, the Rights Agreement as
provided in this First Amendment.

     

    NOW, THEREFORE, in
consideration of the promises and the mutual agreements set forth in this First
Amendment, the parties hereto agree as follows:

     

    SECTION 1. Amendment to
Definitions.  The definition of “Final Expiration Date”
contained in Section 1 of the Rights Agreement is amended in its entirety to
read as follows:

     

    “Final Expiration Date” means
the close of business on May 7, 2010.

     

    SECTION 2.  Effectiveness.  The
First Amendment shall be effective as of May 7, 2010.

     

    SECTION 3.  Counterparts.  This
First Amendment may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.

     

    

     

    [Remainder of page intentionally left
blank]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly
executed by their respective authorized officers as of the day and year first
above written.

     

    
      
        	 
      	 
      	
                HOUSTON
      WIRE & CABLE COMPANY

              
	 
      	 
      	
                By:

              	
                 

                /s/ Nicol G. Graham

              
	 
      	 
      	 
      	
                Name:  Nicol
      G. Graham

                Title:  Vice
      President and Chief Financial Officer

                 

              
	 
      	 
      	 
      
	 
      	 
      	
                AMERICAN
      STOCK TRANSFER & TRUST COMPANY, LLC, as Rights
Agent

              
	 	 	 
	 
      	 
      	
                By:

              	
                /s/ Herbert J. Lemmer

              
	 
      	 
      	 
      	
                Name:  Herbert
      J. Lemmer

                Title:  Vice
      President

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