Document:

GUARANTY BY CORPORATION

            This Guaranty, dated as of February 9, 2006, is made by Interpharm
Holdings, Inc., a Delaware corporation (the "Guarantor"), for the benefit of
Wells Fargo Bank, National Association (with its participants, successors and
assigns, the "Lender"), acting through its Wells Fargo Business Credit operating
division.

            The Lender and Interpharm, Inc., a New York corporation (the
"Borrower"), are parties to a Credit and Security Agreement of even date
herewith (as the same may be amended, supplemented or restated from time to
time, the "Credit Agreement") pursuant to which the Lender may make advances and
extend other financial accommodations to the Borrower.

            As a condition to extending such credit to the Borrower, the Lender
has required the execution and delivery of this Guaranty.

            ACCORDINGLY, the Guarantor, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, hereby agrees as follows:

            1. Definitions. All terms defined in the Credit Agreement that are
not otherwise defined herein shall have the meanings given them in the Credit
Agreement.

            2. Indebtedness Guaranteed. The Guarantor hereby absolutely and
unconditionally guarantees to the Lender the full and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of (i)
the Obligations and (ii) each and every other sum now or hereafter owing to the
Lender by the Borrower, including but not limited to, debts, liabilities and
obligations arising out of loans, credit transactions, financial accommodations,
discounts, interest swap or other hedge products, purchases of property or other
transactions with the Borrower or for the Borrower's account or out of any other
transaction or event, owed to the Lender or owed to others by reason of
participations granted to or interests acquired or created for or sold to them
by the Lender, in each case whether now existing or hereafter arising, whether
arising directly in a transaction or event involving the Lender or acquired by
the Lender from another by purchase or assignment or as collateral security,
whether owed by the Borrower as drawer, maker, endorser, accommodation party,
guarantor, principal, surety or as a member of any partnership, syndicate,
association or group or in any other capacity, whether absolute or contingent,
direct or indirect, primary or secondary, sole, joint, several or joint and
several, secured or unsecured, due or not due, contractual, tortious or
statutory, liquidated or unliquidated, arising by agreement or imposed by law or
otherwise (all of said sums being hereinafter called the "Indebtedness").

            3. Guarantor's Representations and Warranties. The Guarantor
represents and warrants to the Lender that (i) the Guarantor is a corporation,
duly organized and existing in good standing and has full power and authority to
make and deliver this Guaranty; (ii) the execution, delivery and performance of
this Guaranty by the Guarantor have been duly authorized by all necessary action
of its directors and shareholders and do not and will not violate the provisions
of, or constitute a default under, any presently applicable law or its
Constituent Documents or any agreement presently binding on it; (iii) this

<PAGE>

Guaranty has been duly executed and delivered by the authorized Officers of the
Guarantor and constitutes its lawful, binding and legally enforceable
obligation; and (iv) the authorization, execution, delivery and performance of
this Guaranty do not require notification to, registration with, or consent or
approval by, any federal, state or local regulatory body or administrative
agency. The Guarantor represents and warrants to the Lender that the Guarantor
has a direct and substantial economic interest in the Borrower and expects to
derive substantial benefits therefrom and from any loans, credit transactions,
financial accommodations, discounts, purchases of property and other
transactions and events resulting in the creation of the Indebtedness guarantied
hereby, and that this Guaranty is given for a corporate purpose. The Guarantor
agrees to rely exclusively on the right to revoke this Guaranty prospectively as
to future transactions, in accordance with paragraph 4, if at any time, in the
opinion of the directors or officers, the benefits then being received by the
Guarantor in connection with this Guaranty are not sufficient to warrant the
continuance of this Guaranty as to the future Indebtedness of the Borrower.
Accordingly, so long as this Guaranty is not revoked prospectively in accordance
with paragraph 4, the Lender may rely conclusively on a continuing warranty,
hereby made, that the Guarantor continues to be benefited by this Guaranty and
the Lender shall have no duty to inquire into or confirm the receipt of any such
benefits, and this Guaranty shall be effective and enforceable by the Lender
without regard to the receipt, nature or value of any such benefits.

            4. Unconditional Nature. No act or thing need occur to establish the
Guarantor's liability hereunder, and no act or thing, except full payment and
discharge of all of the Indebtedness, shall in any way exonerate the Guarantor
hereunder or modify, reduce, limit or release the Guarantor's liability
hereunder. This is an absolute, unconditional and continuing guaranty of payment
of the Indebtedness and shall continue to be in force and be binding upon the
Guarantor, whether or not all of the Indebtedness is paid in full, until this
Guaranty is revoked prospectively as to future transactions, by written notice
actually received by the Lender, and such revocation shall not be effective as
to the amount of Indebtedness existing or committed for at the time of actual
receipt of such notice by the Lender, or as to any renewals, extensions,
refinancings or refundings thereof.

            5. Dissolution or Insolvency of Guarantor. The dissolution or
adjudication of bankruptcy of the Guarantor shall not revoke this Guaranty,
except upon actual receipt of written notice thereof by the Lender and only
prospectively, as to future transactions, as herein set forth. If the Guarantor
shall be dissolved or shall be or become insolvent (however defined), then the
Lender shall have the right to declare immediately due and payable, and the
Guarantor will forthwith pay to the Lender, the full amount of all of the
Indebtedness whether due and payable or unmatured. If the Guarantor voluntarily
commences or there is commenced involuntarily against the Guarantor a case under
the United States Bankruptcy Code, the full amount of all Indebtedness, whether
due and payable or unmatured, shall be immediately due and payable without
demand or notice thereof.

            6. Intentionally Omitted.

            7. Subrogation, Etc. The Guarantor hereby waives all rights that the
Guarantor may now have or hereafter acquire, whether by subrogation,
contribution, reimbursement, recourse, exoneration, contract or otherwise, to
recover from the Borrower or from any property of the Borrower any sums paid

                                       2
<PAGE>

under this Guaranty. The Guarantor will not exercise or enforce any right of
contribution to recover any such sums from any person who is a co-obligor with
the Borrower or a guarantor or surety of the Indebtedness or from any property
of any such person until all of the Indebtedness shall have been fully paid and
discharged.

            8. Enforcement Expenses. The Guarantor will pay or reimburse the
Lender for all costs, expenses and attorneys' fees paid or incurred by the
Lender in endeavoring to collect and enforce the Indebtedness and in enforcing
this Guaranty.

            9. Lender's Rights. The Lender shall not be obligated by reason of
its acceptance of this Guaranty to engage in any transactions with or for the
Borrower. Whether or not any existing relationship between the Guarantor and the
Borrower has been changed or ended and whether or not this Guaranty has been
revoked, the Lender may enter into transactions resulting in the creation or
continuance of the Indebtedness and may otherwise agree, consent to or suffer
the creation or continuance of any of the Indebtedness, without any consent or
approval by the Guarantor and without any prior or subsequent notice to the
Guarantor. The Guarantor's liability shall not be affected or impaired by any of
the following acts or things (which the Lender is expressly authorized to do,
omit or suffer from time to time, both before and after revocation of this
Guaranty, without consent or approval by or notice to the Guarantor): (i) any
acceptance of collateral security, guarantors, accommodation parties or sureties
for any or all of the Indebtedness; (ii) one or more extensions or renewals of
the Indebtedness (whether or not for longer than the original period) or any
modification of the interest rates, maturities, if any, or other contractual
terms applicable to any of the Indebtedness or any amendment or modification of
any of the terms or provisions of any loan agreement or other agreement under
which the Indebtedness or any part thereof arose; (iii) any waiver or indulgence
granted to the Borrower, any delay or lack of diligence in the enforcement of
the Indebtedness or any failure to institute proceedings, file a claim, give any
required notices or otherwise protect any of the Indebtedness; (iv) any full or
partial release of, compromise or settlement with, or agreement not to sue, the
Borrower or any guarantor or other person liable in respect of any of the
Indebtedness; (v) any release, surrender, cancellation or other discharge of any
evidence of the Indebtedness or the acceptance of any instrument in renewal or
substitution therefor; (vi) any failure to obtain collateral security (including
rights of setoff) for the Indebtedness, or to see to the proper or sufficient
creation and perfection thereof, or to establish the priority thereof, or to
preserve, protect, insure, care for, exercise or enforce any collateral
security; or any modification, alteration, substitution, exchange, surrender,
cancellation, termination, release or other change, impairment, limitation, loss
or discharge of any collateral security; (vii) any collection, sale, lease or
disposition of, or any other foreclosure or enforcement of or realization on,
any collateral security; (viii) any assignment, pledge or other transfer of any
of the Indebtedness or any evidence thereof; (ix) any manner, order or method of
application of any payments or credits upon the Indebtedness; and (x) any
election by the Lender under Section 1111(b) of the United States Bankruptcy
Code. The Guarantor waives any and all defenses and discharges available to a
surety, guarantor or accommodation co-obligor.

            10. Waivers by Guarantor. The Guarantor waives any and all defenses,
claims, setoffs and discharges of the Borrower, or any other obligor, pertaining
to the Indebtedness, except the defense of discharge by payment in full. Without
limiting the generality of the foregoing, the Guarantor will not assert, plead
or enforce against the Lender any defense of waiver, release, discharge or
disallowance in bankruptcy, statute of limitations, res judicata, statute of

                                       3
<PAGE>

frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality
or unenforceability which may be available to the Borrower or any other person
liable in respect of any of the Indebtedness, or any setoff available against
the Lender to the Borrower or any other such person, whether or not on account
of a related transaction. The Guarantor expressly agrees that the Guarantor
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage or security interest securing the Indebtedness, whether or not the
liability of the Borrower or any other obligor for such deficiency is discharged
pursuant to statute or judicial decision. The liability of the Guarantor shall
not be affected or impaired by any voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar event or
proceeding affecting, the Borrower or any of its assets. The Guarantor will not
assert, plead or enforce against the Lender any claim, defense or setoff
available to the Guarantor against the Borrower. The Guarantor waives
presentment, demand for payment, notice of dishonor or nonpayment and protest of
any instrument evidencing the Indebtedness. The Lender shall not be required
first to resort for payment of the Indebtedness to the Borrower or other
persons, or their properties, or first to enforce, realize upon or exhaust any
collateral security for the Indebtedness, before enforcing this Guaranty.

            11. If Payments Set Aside, Etc. If any payment applied by the Lender
to the Indebtedness is thereafter set aside, recovered, rescinded or required to
be returned for any reason (including, without limitation, the bankruptcy,
insolvency or reorganization of the Borrower or any other obligor), the
Indebtedness to which such payment was applied shall for the purpose of this
Guaranty be deemed to have continued in existence, notwithstanding such
application, and this Guaranty shall be enforceable as to such Indebtedness as
fully as if such application had never been made.

            12. Additional Obligation of Guarantor. The Guarantor's liability
under this Guaranty is in addition to and shall be cumulative with all other
liabilities of the Guarantor to the Lender as guarantor, surety, endorser,
accommodation co-obligor or otherwise of any of the Indebtedness or obligation
of the Borrower, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.

            13. Financial Information. The Guarantor will deliver to the Lender
all financial information concerning the Guarantor required to be delivered
under the Credit Agreement.

            14. No Duties Owed by Lender. The Guarantor acknowledges and agrees
that the Lender (i) has not made any representations or warranties with respect
to, (ii) does not assume any responsibility to the Guarantor for, and (iii) has
no duty to provide information to the Guarantor regarding, the enforceability of
any of the Indebtedness or the financial condition of the Borrower or any
guarantor. The Guarantor has independently determined the creditworthiness of
the Borrower and the enforceability of the Indebtedness and until the
Indebtedness is paid in full will independently and without reliance on the
Lender continue to make such determinations.

                                       4
<PAGE>

            15. Miscellaneous. This Guaranty shall be effective upon delivery to
the Lender, without further act, condition or acceptance by the Lender, shall be
binding upon the Guarantor and the successors and assigns of the Guarantor and
shall inure to the benefit of the Lender and its participants, successors and
assigns. Any invalidity or unenforceability of any provision or application of
this Guaranty shall not affect other lawful provisions and application thereof,
and to this end the provisions of this Guaranty are declared to be severable.
This Guaranty may not be waived, modified, amended, terminated, released or
otherwise changed except by a writing signed by the Guarantor and the Lender.
This Guaranty shall be governed by and construed in accordance with the
substantive laws (other than conflict laws) of the State of New York. The
Guarantor hereby (i) consents to the personal jurisdiction of the state and
federal courts located in the State of New York in connection with any
controversy related to this Guaranty; (ii) waives any argument that venue in any
such forum is not convenient, (iii) agrees that any litigation initiated by the
Lender or the Guarantor in connection with this Guaranty may be venued in either
the state or federal courts located in New York County, New York; and (iv)
agrees that a final judgment in any such suit, action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.

            16. Waiver of Jury Trial. THE GUARANTOR HEREBY IRREVOCABLY WAIVES
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF, BASED ON OR PERTAINING TO THIS GUARANTY.

            IN WITNESS WHEREOF, this Guaranty has been duly executed by the
Guarantor the date first written above.

                                          INTERPHARM HOLDINGS, INC.

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

                                          Address:    75 Adams Avenue
                                                      Hauppauge, New York  11788

                                          Employer ID No.: 13-3673965

                                       5
<PAGE>

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

            On the 9th day of February, in the year 2006, before me personally
came George Aronson, to me known, who, being by me duly sworn, did depose and
say that he resides in _________________________________________; that he is the
Chief Financial Officer of Interpharm, Inc., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
authority of the board of directors of said corporation.

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

                                       6SECURITY AGREEMENT

            THIS AGREEMENT, dated as of February 9, 2006, is made by and between
Interpharm Holdings, Inc., a Delaware corporation (the "Debtor"), and Wells
Fargo Bank, National Association (the "Secured Party"), acting through its Wells
Fargo Business Credit operating division.

            Pursuant to a Credit and Security Agreement of even date herewith
(as the same may be amended, supplemented or restated from time to time, the
"Credit Agreement"), the Secured Party may extend credit accommodations to
Interpharm, Inc., a New York corporation (the "Borrower").

            As a condition to extending credit to the Borrower, the Secured
Party has required the execution and delivery of the Debtor's Guaranty of even
date herewith, guaranteeing the payment and performance of all obligations of
the Borrower arising under or pursuant to the Credit Agreement (the "Guaranty").

            As a further condition to extending credit to the Borrower under the
Credit Agreement, the Secured Party has required the execution and delivery of
this Agreement by the Debtor.

            ACCORDINGLY, in consideration of the mutual covenants contained in
the Credit Agreement and herein, the parties hereby agree as follows:

            1. Definitions. All terms defined in the recitals hereto and the
Credit Agreement that are not otherwise defined herein shall have the meanings
given them in the recitals and the Credit Agreement. All terms defined in the
UCC and not otherwise defined herein have the meanings assigned to them in the
UCC. In addition, the following terms have the meanings set forth below or in
the referenced Section of this Agreement:

            "Accounts" means all of the Debtor's accounts, as such term is
      defined in the UCC, including each and every right of the Debtor to the
      payment of money, whether such right to payment now exists or hereafter
      arises, whether such right to payment arises out of a sale, lease or other
      disposition of goods or other property, out of a rendering of services,
      out of a loan, out of the overpayment of taxes or other liabilities, or
      otherwise arises under any contract or agreement, whether such right to
      payment is created, generated or earned by the Debtor or by some other
      person who subsequently transfers such Person's interest to the Debtor,
      whether such right to payment is or is not already earned by performance,
      and howsoever such right to payment may be evidenced, together with all
      other rights and interests (including all Liens) which the Debtor may at
      any time have by law or agreement against any account debtor or other
      obligor obligated to make any such payment or against any property of such
      account debtor or other obligor; all including but not limited to all
      present and future accounts, contract rights, loans and obligations
      receivable, chattel papers, bonds, notes and other debt instruments, tax
      refunds and rights to payment in the nature of general intangibles.

<PAGE>

            "Collateral" means, whether now owned or existing or hereafter
      acquired or arising or in which the Debtor now has or hereafter acquires
      any rights, all of the Debtor's Accounts, chattel paper, deposit accounts,
      documents, Equipment, General Intangibles, goods, instruments, Inventory,
      Investment Property, letter-of-credit rights, letters of credit, all sums
      on deposit in any Collateral Account, and any items in any Lockbox;
      together with (i) all substitutions and replacements for and products of
      any of the foregoing; (ii) in the case of all goods, all accessions; (iii)
      all accessories, attachments, parts, equipment and repairs now or
      hereafter attached or affixed to or used in connection with any goods;
      (iv) all warehouse receipts, bills of lading and other documents of title
      now or hereafter covering such goods; (v) all collateral subject to the
      Lien of Secured Party; (vi) any money, or other assets of the Debtor that
      now or hereafter come into the possession, custody, or control of the
      Secured Party; and (vi) proceeds of any and all of the foregoing.

            "Equipment" means all of the Debtor's equipment, as such term is
      defined in the UCC, whether now owned or hereafter acquired, including but
      not limited to all present and future machinery, vehicles, furniture,
      fixtures, manufacturing equipment, shop equipment, office and
      recordkeeping equipment, parts, tools, supplies, and including
      specifically the goods described in any equipment schedule or list
      herewith or hereafter furnished to the Lender by the Debtor.

            "Event of Default" has the meaning given in Section 6.

            "General Intangibles" means all of the Debtor's general intangibles,
      as such term is defined in the UCC, whether now owned or hereafter
      acquired, including all present and future Intellectual Property Rights,
      customer or supplier lists and contracts, manuals, operating instructions,
      permits, franchises, the right to use the Debtor's name, and the goodwill
      of the Debtor's business.

            "Intellectual Property Rights" means all actual or prospective
      rights arising in connection with any intellectual property or other
      proprietary rights, including all rights arising in connection with
      copyrights, patents, service marks, trade dress, trade secrets,
      trademarks, trade names or mask works.

            "Inventory" means all of the Debtor's inventory, as such term is
      defined in the UCC, whether now owned or hereafter acquired, whether
      consisting of whole goods, spare parts or components, supplies or
      materials, whether acquired, held or furnished for sale, for lease or
      under service contracts or for manufacture or processing, and wherever
      located.

            "Investment Property" means all of the Debtor's investment property,
      as such term is defined in the UCC, whether now owned or hereafter
      acquired, including but not limited to all securities, security
      entitlements, securities accounts, commodity contracts, commodity
      accounts, stocks, bonds, mutual fund shares, money market shares and U.S.
      Government securities.

                                       2
<PAGE>

            "Lien" means any security interest, mortgage, deed of trust, pledge,
      lien, charge, encumbrance, title retention agreement or analogous
      instrument or device, including the interest of each lessor under any
      capitalized lease and the interest of any bondsman under any payment or
      performance bond, in, of or on any assets or properties of a Person,
      whether now owned or hereafter acquired and whether arising by agreement
      or operation of law.

            "Obligations" means each and every debt, liability and obligation of
      every type and description which the Debtor may now or at any time
      hereafter owe to the Secured Party, whether such debt, liability or
      obligation now exists or is hereafter created or incurred and whether it
      is or may be direct or indirect, due or to become due, or absolute or
      contingent, including without limitation all obligations under the
      Guaranty.

            "Permitted Liens" means (i) the Security Interest, (ii) covenants,
      restrictions, rights, easements and minor irregularities in title which do
      not materially interfere with the Debtor's business or operations as
      presently conducted, and (iii) Liens in existence on the date hereof and
      described on Exhibit C hereto.

            "Security Interest" has the meaning given in Section 2.

            "UCC" means Uniform Commercial Code as in effect from time to time
      in the State of New York.

            2. Security Interest. The Debtor hereby grants the Secured Party a
security interest (the "Security Interest") in the Collateral to secure payment
of the Obligations.

            3. Representations, Warranties and Agreements. The Debtor hereby
represents, warrants and agrees as follows:

            (a) Title. The Debtor (i) has absolute title to each item of
      Collateral in existence on the date hereof, free and clear of all Liens
      except the Permitted Liens, (ii) will have, at the time the Debtor
      acquires any rights in Collateral hereafter arising, absolute title to
      each such item of Collateral free and clear of all Liens except Permitted
      Liens, (iii) will keep all Collateral free and clear of all Liens except
      Permitted Liens, and (iv) will defend the Collateral against all claims or
      demands of all Persons other than the Secured Party and the holders of
      Permitted Liens. The Debtor will not sell or otherwise dispose of the
      Collateral or any interest therein, outside the ordinary course of
      business, without the prior written consent of the Secured Party.

            (b) Chief Executive Office; Identification Number. The Debtor's
      chief executive office and principal place of business is located at the
      address set forth under its signature below. The Debtor's federal employer
      identification number and organization identification number is correctly
      set forth under its signature below.

            (c) Location of Collateral. As of the date hereof, the tangible
      Collateral is located only in the states and at the address, as identified
      on Exhibit A attached hereto. The Debtor will not permit any tangible
      Collateral to be located in any state (and, if county filing is required,
      in any county) in which a financing statement covering such Collateral is
      required to be, but has not in fact been, filed in order to perfect the
      Security Interest.

                                       3
<PAGE>

            (d) Changes in Name, Constituent Documents, Location. The Debtor
      will not change its name, business address, or jurisdiction of
      organization, without the prior written consent of the Secured Party. The
      Debtor will not amend its Constituent Documents in a manner that would
      cause a Material Adverse Effect (as such term is defined in the Credit
      Agreement) on the Debtor.

            (e) Fixtures. The Debtor will not permit any tangible Collateral to
      become part of or to be affixed to any real property without first
      assuring to the reasonable satisfaction of the Secured Party that the
      Security Interest will be prior and senior to any Lien then held or
      thereafter acquired by any mortgagee of such real property or the owner or
      purchaser of any interest therein. If any part or all of the tangible
      Collateral is now or will become so related to particular real estate as
      to be a fixture, the real estate concerned and the name of the record
      owner are accurately set forth in Exhibit B hereto.

            (f) Rights to Payment. Each right to payment and each instrument,
      document, chattel paper and other agreement constituting or evidencing
      Collateral is (or will be when arising, issued or assigned to the Secured
      Party) the valid, genuine and legally enforceable obligation, subject to
      no defense, setoff or counterclaim (other than those arising in the
      ordinary course of business), of the account debtor or other obligor named
      therein or in the Debtor's records pertaining thereto as being obligated
      to pay such obligation. The Debtor will neither agree to any material
      modification or amendment nor agree to any forbearance, release or
      cancellation of any such obligation, and will not subordinate any such
      right to payment to claims of other creditors of such account debtor or
      other obligor.

            (g) Commercial Tort Claims. Promptly upon knowledge thereof, the
      Debtor will deliver to the Secured Party notice of any commercial tort
      claims it may bring against any Person, including the name and address of
      each defendant, a summary of the facts, an estimate of the Debtor's
      damages, copies of any complaint or demand letter submitted by the Debtor,
      and such other information as the Secured Party may request. Upon request
      by the Secured Party, the Debtor will grant the Secured Party a security
      interest in all commercial tort claims it may have against any Person.

            (h) Miscellaneous Covenants. The Debtor will:

                  (i) keep all tangible Collateral in good repair, working order
            and condition, normal depreciation excepted, and will, from time to
            time, replace any worn, broken or defective parts thereof;

                  (ii) promptly pay all taxes and other governmental charges
            levied or assessed upon or against any Collateral or upon or against
            the creation, perfection or continuance of the Security Interest;

                                       4
<PAGE>

                  (iii) at all reasonable times during ordinary business hours,
            permit the Secured Party or its representatives to examine or
            inspect any Collateral, wherever located, and to examine, inspect
            and copy the Debtor's books and records pertaining to the Collateral
            and its business and financial condition and to send and discuss
            with account debtors and other obligors requests for verifications
            of amounts owed to the Debtor;

                  (iv) keep accurate and complete records pertaining to the
            Collateral and pertaining to the Debtor's business and financial
            condition and submit to the Secured Party such periodic reports
            concerning the Collateral and the Debtor's business and financial
            condition as the Secured Party may from time to time reasonably
            request;

                  (v) promptly notify the Secured Party of any loss of or
            material damage to any Collateral or of any adverse change, known to
            the Debtor, in the prospect of payment of any sums due on or under
            any instrument, chattel paper, or account constituting Collateral;

                  (vi) if the Secured Party at any time so requests (after the
            occurrence of an Event of Default), promptly deliver to the Secured
            Party any instrument, document or chattel paper constituting
            Collateral, duly endorsed or assigned by the Debtor;

                  (vii) at all times keep all tangible Collateral insured
            against risks of fire (including so-called extended coverage),
            theft, collision (in case of Collateral consisting of motor
            vehicles) and such other risks and in such amounts as the Secured
            Party may reasonably request, with any such policies containing a
            lender loss payable endorsement acceptable to the Secured Party;

                  (viii) from time to time authorize or execute such financing
            statements as the Secured Party may reasonably require in order to
            perfect the Security Interest and, if any Collateral consists of a
            motor vehicle, execute such documents as may be required to have the
            Security Interest properly noted on a certificate of title;

                  (ix) pay when due or reimburse the Secured Party on demand for
            all costs of collection of any of the Obligations and all other
            out-of-pocket expenses (including in each case all reasonable
            attorneys' fees) incurred by the Secured Party in connection with
            the creation, perfection, satisfaction, protection, defense or
            enforcement of the Security Interest or the creation, continuance,
            protection, defense or enforcement of this Agreement or any or all
            of the Obligations, including expenses incurred in any litigation or
            bankruptcy or insolvency proceedings;

                  (x) authorize, execute, deliver or endorse any and all
            instruments, documents, assignments, security agreements and other
            agreements and writings which the Secured Party may at any time
            reasonably request in order to secure, protect, perfect or enforce
            the Security Interest and the Secured Party's rights under this
            Agreement; and

                                       5
<PAGE>

                  (xi) not use or keep any Collateral, or permit it to be used
            or kept, for any unlawful purpose or in violation of any federal,
            state or local law, statute or ordinance.

            (i) Secured Party's Right to Take Action. The Debtor authorizes the
      Secured Party to file from time to time where permitted by law, such
      financing statements against collateral described as "all personal
      property" as the Secured Party deems necessary or useful to perfect the
      Security Interest. The Debtor will not amend any financing statements in
      favor of the Secured Party except as permitted by law. Further, if the
      Debtor at any time fails to perform or observe any agreement contained in
      Section 3(h), and if such failure continues for a period of ten (10) days
      after the Secured Party gives the Debtor written notice thereof (or, in
      the case of the agreements contained in clauses (vii) and (viii) of
      Section 3(h), immediately upon the occurrence of such failure, without
      notice or lapse of time), the Secured Party may (but need not) perform or
      observe such agreement on behalf and in the name, place and stead of the
      Debtor (or, at the Secured Party's option, in the Secured Party's own
      name) and may (but need not) take any and all other actions which the
      Secured Party may reasonably deem necessary to cure or correct such
      failure (including, without limitation the payment of taxes, the
      satisfaction of security interests, liens, or encumbrances, the
      performance of obligations under contracts or agreements with account
      debtors or other obligors, the procurement and maintenance of insurance,
      the execution of financing statements, the endorsement of instruments, the
      qualification and licensing of the Debtor to do business in any
      jurisdiction, and the procurement of repairs or transportation); and,
      except to the extent that the effect of such payment would be to render
      any loan or forbearance of money usurious or otherwise illegal under any
      applicable law, the Debtor shall thereupon pay the Secured Party on demand
      the amount of all moneys expended and all costs and expenses (including
      reasonable attorneys' fees) incurred by the Secured Party in connection
      with or as a result of the Secured Party's performing or observing such
      agreements or taking such actions, together with interest thereon from the
      date expended or incurred by the Secured Party at the highest rate then
      applicable to any of the Obligations. To facilitate the performance or
      observance by the Secured Party of such agreements of the Debtor, the
      Debtor hereby irrevocably appoints (which appointment is coupled with an
      interest) the Secured Party, or its delegate, as the attorney-in-fact of
      the Debtor with the right (but not the duty) from time to time to create,
      prepare, complete, execute, deliver, endorse or file, in the name and on
      behalf of the Debtor, any and all instruments, documents, financing
      statements, applications for insurance and other agreements and writings
      required to be obtained, executed, delivered or endorsed by the Debtor
      under this Section 3 and Section 4.

            4. Rights of Secured Party. At any time and from time to time, after
alleging the occurrence of an Event of Default, the Secured Party may take any
or all of the following actions:

                                       6
<PAGE>

            (a) Account Verification. The Secured Party may at any time and from
      time to time send or require the Debtor to send requests for verification
      of accounts or notices of assignment to account debtors and other
      obligors. The Secured Party may also at any time and from time to time
      telephone account debtors and other obligors to verify accounts.

            (b) Collateral Account. The Secured Party may establish a collateral
      account for the deposit of checks, drafts and cash payments made by the
      Debtor's account debtors. If a collateral account is so established, the
      Debtor shall promptly deliver to the Secured Party, for deposit into said
      collateral account, all payments on Accounts and chattel paper received by
      it. All such payments shall be delivered to the Secured Party in the form
      received (except for the Debtor's endorsement where necessary). Until so
      deposited, all payments on Accounts and chattel paper received by the
      Debtor shall be held in trust by the Debtor for and as the property of the
      Secured Party and shall not be commingled with any funds or property of
      the Debtor. All deposits in said collateral account shall constitute
      proceeds of Collateral and shall not constitute payment of any Obligation.
      Unless otherwise agreed in writing, the Debtor shall have no right to
      withdraw amounts on deposit in any collateral account.

            (c) Lockbox. The Secured Party may, by notice to the Debtor, require
      the Debtor to direct each of its account debtors to make payment directly
      to a special lockbox to be under the control of the Secured Party. The
      Debtor hereby authorizes and directs the Secured Party to deposit all
      checks, drafts and cash payments received in said lockbox into the
      collateral account established as set forth above.

            (d) Direct Collection. The Secured Party may notify any account
      debtor, or any other Person obligated to pay any amount due, that such
      chattel paper, Account, or other right to payment has been assigned or
      transferred to the Secured Party for security and shall be paid directly
      to the Secured Party. At any time after the Secured Party or the Debtor
      gives such notice to an account debtor or other obligor, the Secured Party
      may (but need not), in its own name or in the Debtor's name, demand, sue
      for, collect or receive any money or property at any time payable or
      receivable on account of, or securing, any such chattel paper, Account, or
      other right to payment, or grant any extension to, make any compromise or
      settlement with or otherwise agree to waive, modify, amend or change the
      obligations (including collateral obligations) of any such account debtor
      or other obligor.

            5. Assignment of Insurance. The Debtor hereby assigns to the Secured
Party, as additional security for the payment of the Obligations, any and all
moneys (including but not limited to proceeds of insurance and refunds of
unearned premiums) due or to become due under, and all other rights of the
Debtor under or with respect to, any and all policies of insurance covering the
Collateral, and the Debtor hereby directs the issuer of any such policy to pay
any such moneys directly to the Secured Party. After the occurrence of an Event
of Default, the Secured Party may (but need not), in its own name or in the
Debtor's name, execute and deliver proofs of claim, receive all such moneys,
endorse checks and other instruments representing payment of such moneys, and
adjust, litigate, compromise or release any claim against the issuer of any such
policy.

                                       7
<PAGE>

            6. Events of Default. Each of the following occurrences shall
constitute an event of default under this Agreement (herein called "Event of
Default"): (i) an Event of Default shall occur under the Credit Agreement; or
(ii) the Debtor shall fail to pay any or all of the Obligations when due or (if
payable on demand) on demand; or (iii) the Debtor shall fail to observe or
perform any covenant or agreement herein binding on it.

            7. Remedies upon Event of Default. Upon the occurrence of an Event
of Default and at any time thereafter, the Secured Party may exercise any one or
more of the following rights and remedies: (i) by notice to the Debtor, declare
all unmatured Obligations to be immediately due and payable, and the same shall
thereupon be immediately due and payable, without presentment or other notice or
demand; (ii) exercise and enforce any or all rights and remedies available upon
default to a secured party under the UCC, including but not limited to the right
to take possession of any Collateral, proceeding without judicial process or by
judicial process (without a prior hearing or notice thereof, which the Debtor
hereby expressly waives), and the right to sell, lease or otherwise dispose of
any or all of the Collateral, and in connection therewith, the Secured Party may
require the Debtor to make the Collateral available to the Secured Party at a
place to be designated by the Secured Party which is reasonably convenient to
both parties, and if notice to the Debtor of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in the
manner specified in Section 9) at least ten (10) days prior to the date of
intended disposition or other action; (iii) exercise or enforce any or all other
rights or remedies available to the Secured Party by law or agreement against
the Collateral, against the Debtor or against any other Person or property. The
Secured Party is hereby granted a nonexclusive, worldwide and royalty-free
license to use or otherwise exploit all Intellectual Property Rights owned by or
licensed to the Debtor that the Secured Party deems necessary or appropriate to
the disposition of any Collateral.

            8. Other Personal Property. Unless at the time the Secured Party
takes possession of any tangible Collateral, or within seven days thereafter,
the Debtor gives written notice to the Secured Party of the existence of any
goods, papers or other property of the Debtor, not affixed to or constituting a
part of such Collateral, but which are located or found upon or within such
Collateral, describing such property, the Secured Party shall not be responsible
or liable to the Debtor for any action taken or omitted by or on behalf of the
Secured Party with respect to such property.

            9. Notices; Requests for Accounting. All notices and other
communications hereunder shall be in writing and shall be (a) personally
delivered, (b) sent by first class United States mail, (c) sent by overnight
courier of national reputation, or (d) transmitted by telecopy, in each case
addressed or telecopied to the party to whom notice is being given at its
address or telecopier number as set forth below its signature or, as to each
party, at such other address or telecopier number as may hereafter be designated
by such party in a written notice to the other party complying as to delivery
with the terms of this Section. All such notices, requests, demands and other
communications shall be deemed to have been given on (i) the date received if
personally delivered, (ii) when deposited in the mail if delivered by mail,
(iii) the date sent if sent by overnight courier, or (iv) the date of
transmission if delivered by telecopy. All requests under Section 9-210 of the
UCC (i) shall be made in a writing signed by an authorized Person, (ii) shall be
personally delivered, sent by registered or certified mail, return receipt
requested, or by overnight courier of national reputation (iii) shall be deemed
to be sent when received by the Secured Party and (iv) shall otherwise comply
with the requirements of Section 9-210. The Debtor requests that the Secured
Party respond to all such requests which on their face appear to come from an
authorized individual and releases the Secured Party from any liability for so
responding. The Debtor shall pay Secured Party the maximum amount allowed by law
for responding to such requests.

                                       8
<PAGE>

            10. Miscellaneous. This Agreement has been duly and validly
authorized by all necessary corporate action. This Agreement does not
contemplate a sale of accounts, or chattel paper. This Agreement can be waived,
modified, amended, terminated or discharged, and the Security Interest can be
released, only explicitly in a writing signed by the Secured Party, and, in the
case of amendment or modification, in a writing signed by the Debtor. A waiver
signed by the Secured Party shall be effective only in the specific instance and
for the specific purpose given. Mere delay or failure to act shall not preclude
the exercise or enforcement of any of the Secured Party's rights or remedies.
All rights and remedies of the Secured Party shall be cumulative and may be
exercised singularly or concurrently, at the Secured Party's option, and the
exercise or enforcement of any one such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other. The Secured
Party's duty of care with respect to Collateral in its possession (as imposed by
law) shall be deemed fulfilled if the Secured Party exercises reasonable care in
physically safekeeping such Collateral or, in the case of Collateral in the
custody or possession of a bailee or other third person, exercises reasonable
care in the selection of the bailee or other third person, and the Secured Party
need not otherwise preserve, protect, insure or care for any Collateral. The
Secured Party shall not be obligated to preserve any rights the Debtor may have
against prior parties, to realize on the Collateral at all or in any particular
manner or order, or to apply any cash proceeds of Collateral in any particular
order of application. This Agreement shall be binding upon and inure to the
benefit of the Debtor and the Secured Party and their respective successors and
assigns and shall take effect when signed by the Debtor and delivered to the
Secured Party, and the Debtor waives notice of the Secured Party's acceptance
hereof. The Secured Party may execute this Agreement if appropriate for the
purpose of filing, but the failure of the Secured Party to execute this
Agreement shall not affect or impair the validity or effectiveness of this
Agreement. A carbon, photographic or other reproduction of this Agreement or of
any financing statement signed by the Debtor shall have the same force and
effect as the original for all purposes of a financing statement. This Agreement
shall be governed by and construed in accordance with the substantive laws
(other than conflict laws) of the State of New York. If any provision or
application of this Agreement is held unlawful or unenforceable in any respect,
such illegality or unenforceability shall not affect other provisions or
applications which can be given effect and this Agreement shall be construed as
if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the Obligations.
The parties hereto hereby (i) consent to the personal jurisdiction of the state
and federal courts located in the State of New York in connection with any
controversy related to this Agreement; (ii) waive any argument that venue in any
such forum is not convenient, (iii) agree that any litigation initiated by the
Secured Party or the Debtor in connection with this Agreement or the other Loan
Documents may be venued in either the state or federal courts located in New
York, New York; and (iv) agree that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

                                       9
<PAGE>

            11. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.

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

WELLS FARGO BANK, NATIONAL ASSOCIATION,  INTERPHARM HOLDINGS, INC.
acting through its Wells Fargo Business
Credit operating division

By: /s/ Richard Mahtani                  By: /s/ George Aronson
   ----------------------------------       ----------------------------------
    Richard Mahtani, Assistant Vice          George  Aronson,  Chief  Financial
    President                                Officer

                                         Address: Address:
                                         75 Adams Avenue
119 West 40th Street                     Hauppauge, New York  11788
New York, NY  10018                      Attention:  ___________________________
Attention:  Portfolio Manager for        Employer identification number:
            Interpharm, Inc.             13-3673965
Employer identification number:
94-1347393

                                       10
<PAGE>

                                    EXHIBIT A

                             LOCATION OF COLLATERAL

                                 75 Adams Avenue

                            Hauppauge, New York 11788

                               50 Horseblock Road

                             Yaphank, New York 11980

<PAGE>

                                    EXHIBIT B

                                LEGAL DESCRIPTION

                               50 Horseblock Road

                             Yaphank, New York 11980

                      (owned by Interpharm Holdings, Inc.)

<PAGE>

                                    EXHIBIT C

                                 PERMITTED LIENS

                                      None

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]