Document:

CONSOLIDATED REAL ESTATE TERM NOTE

Date of Note:           February 9, 2006

Principal Amount: $12,000,000.00

Maturity Date:    March 1, 2021

Interest Rate:    A fluctuating interest rate from time to time in effect under
                  the Credit and Security Agreement of even date herewith (as
                  the same may be hereafter amended, modified, extended,
                  supplemented or restated from time to time, the "Credit
                  Agreement"). The Interest Rate shall be computed on an
                  actual/360 day basis (i.e., interest for each day during which
                  the Principal Amount, or any part thereof, is outstanding
                  shall be computed at the Interest Rate divided by 360).

Business Day:     Any day on which Lender is open for business.

            FOR VALUE RECEIVED, Interpharm, Inc., a New York corporation (the
"Borrower"), having an address as indicated below, HEREBY PROMISES TO PAY to the
order of Wells Fargo Bank, National Association, acting through its Wells Fargo
Business Credit operating division (hereinafter, together with its successors
and assigns, referred to as the "Lender") at its main office in Minneapolis,
Minnesota, or at such other place as the holder hereof may from time to time
designate in writing, in immediately available federal funds, the Principal
Amount, together with interest on the outstanding Principal Amount from time to
time at the Interest Rate from the date hereof until the Note is fully paid, in
accordance with the terms of the Credit Agreement.

            This Note is issued pursuant to, and is subject to, the Credit
Agreement, which provides, among other things, for acceleration hereof. This
Note is the Real Estate Term Note referred to in the Credit Agreement.

            This Note is secured by those certain mortgages in the aggregate
principal sum of this Note listed and described on Schedule A attached hereto
(said mortgages as spread, consolidated and modified by the Agreement
(hereinafter defined) together with all extensions, renewals or modifications
thereof are herein collectively referred to as the "Mortgage") described in, and
consolidated, combined and modified by, that certain Mortgage Consolidation,
Modification and Extension Agreement, dated the date hereof, between Borrower,
as mortgagor, and Lender, as mortgagee (the "Agreement"), encumbering the fee
estate of Borrower in the real property located at 50 Horseblock Road, Yaphank,
New York, the buildings, structures, fixtures, additions, enlargements,
extensions, modifications, repairs, replacements and improvements now or
hereafter located thereon and all other property described in the Mortgage
(collectively, the "Mortgaged Property").

            Borrower agrees that if it fails to timely make any payment due
under this Note or upon the happening of any Event of Default under the
Mortgage, the outstanding Principal Amount, together with accrued interest and
all other expenses, including, reasonable attorneys' fees for legal services
incurred by the holder hereof in collecting or enforcing payment hereof whether
or not suit is brought, and if suit is brought, then through all appellate
actions, shall immediately become due and payable at the option of the holder of
this Note, notwithstanding the Maturity Date. From and after any Event of
Default under the Mortgage, the interest rate of this Note shall be the Default
Rate (as defined in the Credit Agreement).

<PAGE>

            In no event shall the total of all charges payable under this Note,
the Mortgage and any other documents executed and delivered in connection
herewith and therewith which are or could be held to be in the nature of
interest exceed the maximum rate permitted to be charged by applicable law.
Should the Lender receive any payment which is or would be in excess of that
permitted to be charged under any such applicable law, such payment shall have
been, and shall be deemed to have been, made in error and shall thereupon be
applied to reduce the principal balance outstanding on this Note.

            Borrower waives demand, presentment for payment, notice of dishonor,
protest and notice of protest of this Note.

            Any notice, demand or request relating to any matter set forth in
this Note shall be given in the manner provided for in the Mortgage.

            Time is of the essence as to all dates set forth herein, provided,
however, that whenever any payment to be made under this Note shall be stated to
be due on a Saturday, Sunday or a public holiday or the equivalent for banks
generally under the laws of the State of New York such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computations of payment of interest.

            This Note may not be waived, changed, modified, terminated or
discharged orally, but only by an agreement in writing signed by the party
against whom enforcement of any such waiver, change, modification, termination
or discharge is sought.

            This Note may be prepaid only in accordance with the Credit
Agreement.

            BORROWER, AND BY ITS ACCEPTANCE HEREOF, LENDER, EACH HEREBY AGREE
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE
ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THIS NOTE, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. BORROWER AND LENDER ARE EACH HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER.

            BORROWER HEREBY EXPRESSLY AND UNCONDITIONALLY WAIVES, IN CONNECTION
WITH ANY SUIT, ACTION OR PROCEEDING BROUGHT BY OR ON BEHALF OF LENDER ON THIS
NOTE, ANY AND EVERY RIGHT BORROWER MAY HAVE TO (I) INJUNCTIVE RELIEF, (II)
INTERPOSE ANY COUNTERCLAIM THEREIN (OTHER THAN COMPULSORY COUNTERCLAIMS), AND
(III) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. NOTHING HEREIN CONTAINED SHALL PREVENT OR PROHIBIT BORROWER FROM
INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST LENDER WITH RESPECT TO ANY
ASSERTED CLAIM.

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<PAGE>

            This Note is given in substitution for, and consolidates, modifies,
amends and restates, and as consolidated, modified, amended and restated
replaces, the certain notes, bonds and other agreements (collectively, the
"Original Notes") evidencing the debt secured by the mortgages listed and
described on Schedule A attached hereto. The Original Notes and the respective
debts evidenced thereby are hereby combined and coordinated to constitute one
joint indebtedness in the outstanding principal sum of $12,000,000.00.

            This Note is not in payment, satisfaction or cancellation of the
Original Notes, or of the indebtedness evidenced and secured thereby, and such
indebtedness is hereby ratified and confirmed by the Borrower and Borrower
represents, warrants and covenants that there are no offsets, counterclaims or
defenses against the indebtedness or this Note. It is expressly understood and
agreed that (i) this Note is given in replacement of the Original Notes, and
that no part of the indebtedness evidenced by the Original Notes shall be
discharged, cancelled or impaired by the execution and delivery of this Note and
(ii) the execution and delivery of this Note shall not create any new or
additional principal indebtedness.

            This Note and the rights and obligations of the parties hereunder
shall in all respects be governed by, and construed and enforced in accordance
with, the laws of the State of New York (without giving effect to New York's
principles of conflicts of law).

            IN WITNESS WHEREOF, the Borrower has executed and delivered this
Note on the Date of Note.

Address:                               BORROWER:

75 Adams Avenue                        Interpharm, Inc.
Commack, New York 11725

                                       By: /s/ George Aronson
                                          -------------------------------------
                                             George Aronson, Chief Financial
                                             Officer

                                       3
<PAGE>

STATE OF NEW YORK )
                  ) ss.:
COUNTY OF NASSAU  )

      On the 9th day of February, in the year 2006, before me, the undersigned,
a Notary Public in and for said State, personally appeared George Aronson,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

                                          -------------------------------------
                                          Notary Public

                                       4
<PAGE>

                                   SCHEDULE A

                              Schedule of Mortgages

      1.    Mortgage dated April 11, 2005 made by Interpharm, Inc. to HSBC Bank
            in the principal sum of $7,000,000.00 and recorded on May 10, 2005
            in Liber 21043, Page 932 in the office of the Suffolk County Clerk.

      2.    Assignment of Mortgage by HSBC Bank to Wells Fargo Bank, National
            Association, acting through its Wells Fargo Business Credit
            operating division, and to be recorded simultaneously herewith in
            the office of the Suffolk County Clerk.

      3.    Demand Mortgage and Security Agreement dated February 9, 2006 made
            by Interpharm, Inc. to Wells Fargo Bank, National Association,
            acting through its Wells Fargo Business Credit operating division,
            in the principal sum of $5,154,999.94 and to be recorded
            simultaneously herewith in the office of the Suffolk County Clerk.REAL ESTATE DEMAND NOTE

$5,154,999.94                                                Uniondale, New York
                                                                February 9, 2006

       FOR VALUE RECEIVED, INTERPHARM, INC., a New York corporation, having an
address at 75 Adams Avenue, Commack, New York 11725 (herein referred to as
"Maker"), promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION, acting through its Wells Fargo Business Credit operating division,
having an address at 119 West 40th Street, New York, New York 10018 (herein
referred to as "Payee"), at its main offices in Minneapolis, Minnesota, or at
such other place as the holder hereof may from time to time designate in
writing, the principal sum of Five Million One Hundred Fifty Four Thousand Nine
Hundred Ninety Nine and 94/100 Dollars ($5,154,999.94), in lawful money of the
United States of America, ON DEMAND by Payee, together with interest thereon at
the rate of ten percent (10%) per annum, to be computed from the date hereof to
and including the date that said principal sum and all other amounts due and
payable hereunder are paid in full.

       IT IS HEREBY EXPRESSLY AGREED, that the principal sum of this Note shall
become due on demand by Payee or at the option of Payee on the happening of any
default or event by which, under the terms of the Mortgage, said principal sum
may or shall become due and payable. All of the terms, covenants and conditions
contained in the Mortgage are hereby made part of this Note to the same extent
and with the same force as if they were fully set forth herein.

       Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.

       This Note is secured by a certain Demand Mortgage and Security Agreement,
dated the date hereof, between Maker, as mortgagor, and Payee, as mortgagee, on
certain premises located at 50 Horseblock Road, Yaphank, New York 11980 (the
"Mortgage").

       In the event that it should become necessary to employ counsel to collect
the principal sum of this Note or any other amounts due and payable hereunder,
to protect or foreclose the security hereof or to otherwise enforce the
provisions of this Note or the Mortgage, Maker also agrees to pay attorneys'
fees and disbursements for the services of such counsel whether or not suit is
brought, and if suit is brought, then through all appellate actions.

       This Note may not be changed or terminated orally.

       IN WITNESS WHEREOF, Maker has duly executed this Note the day and year
first above written.

                                    INTERPHARM, INC.

                                    By: /s/ George Aronson
                                       ---------------------------------------
                                       George Aronson, Chief Financial Officer

<PAGE>

STATE OF NEW YORK   )
                    ) ss.:
COUNTY OF NASSAU    )

      On the 9th day of February, in the year 2006, before me, the undersigned,
a Notary Public in and for said State, personally appeared George Aronson,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

                                               --------------------------------
                                                 Notary Public

                                       2

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