INTERPHARM HOLDINGS INC
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>10
<FILENAME>v035894_ex10-9.txt
<TEXT>
                             ANDA SECURITY AGREEMENT

            THIS ABBREVIATED NEW DRUG APPLICATION SECURITY AGREEMENT ("ANDA
Security Agreement"), dated as of February 9, 2006, between Interpharm, Inc., a
New York corporation (the "Debtor"), and Wells Fargo Bank, National Association,
acting through its Wells Fargo Business Credit operating division, (the "Secured
Party");

            WHEREAS, the Debtor and the Secured Party are parties to that
certain Credit and Security Agreement of even date herewith (herein, as at any
time amended, extended, restated, renewed or modified, the "Credit Agreement");
and

            WHEREAS, it is a condition to the willingness of the Secured Party
to enter into the Credit Agreement and make the loans evidenced thereby that the
Debtor enter into this Agreement and grant to the Secured Party the security
interest provided for herein; and

            WHEREAS, in order to induce the Secured Party to enter into the
Credit Agreement and make the loans evidenced thereby, Debtor has agreed to
grant to Secured Party a security interest in and to and mortgage on its now
owned or hereafter acquired Abbreviated New Drug Applications, Abbreviated New
Drug Approvals, Form 356Hs, generic drugs, patent certification information,
marketing exclusivity information, patent information and any data, instruments,
agreements, or documents related thereto (collectively, the "ANDAs"). This ANDAs
Security Agreement is being executed contemporaneous with the Credit Agreement
under which Secured Party is granted a lien on and security interest in and to,
among other things, accounts receivable, inventory, machinery, equipment, goods,
manufacturing procedures, deposits, contract rights, supporting obligations, and
general intangibles ("Other Assets") relating to the business of the Debtor,
whereby Secured Party shall have the right to foreclose on the ANDAs and the
Other Assets in the event Secured Party alleges the occurrence of an Event of
Default under the Credit Agreement. Terms not defined herein shall have the
meaning set forth in the Credit Agreement.

      NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration the sufficiency of which is hereby acknowledged, Debtor
hereby agrees with Secured Party as follows:

      1. To secure any and all obligations of the Debtor to the Secured Party,
including but not limited to, repayment of the obligations of the Debtor under
the Credit Agreement, Debtor hereby conveys, grants, assigns, pledges,
transfers, mortgages, and creates in favor of the Secured Party a security
interest in and to and mortgage on all of the Debtor's right, title and interest
in and to its now owned and hereafter acquired ANDAs including but not limited
to those ANDAs listed on Schedule A annexed hereto and incorporated herein by
reference (as the same may be amended pursuant hereto from time to time),
including without limitation any and all rights under any notices or agreements
related thereto, and all renewals thereof.

      2. Debtor represents, covenants and warrants that:

            (a) ANDAs are subsisting;

<PAGE>

            (b) Debtor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the ANDAs, free and
clear of any liens, charges and encumbrances, including without limitation
pledges, assignments, registered user agreements and covenants by Debtor not to
sue third persons;

            (c) Debtor has the unqualified right to enter into this Agreement
and perform its terms; and

            (d) All ANDAs on file with the Food and Drug Administration (the
"FDA") were prepared in accordance with applicable law.

      3. Debtor agrees that, until all of the obligations under the Credit
Agreement shall have been satisfied in full, the Debtor will not, without the
Secured Party's prior written consent, enter into any agreement regarding the
ANDAs. Notwithstanding the foregoing, the Debtor may enter into license
agreements and profit sharing agreements provided the proceeds of those
agreements are remitted to the Collateral Account.

      4. If, before the obligations under the Credit Agreement shall have been
satisfied in full, Debtor shall obtain rights to any new ANDAs, the provisions
of paragraph 1 shall automatically apply thereto and Debtor shall give Secured
Party prompt written notice thereof.

      5. Debtor authorizes Secured Party to modify this Agreement by amending
Schedule A to include any now owned or future ANDAs covered by paragraphs 1
through 4 hereof.

      6. If any Event of Default under the Credit Agreement or this Agreement
shall have occurred, Secured Party shall have, in addition to all other rights
and remedies given it by this Agreement, those allowed by law and the rights and
remedies of a Secured Party under the Uniform Commercial Code as enacted in any
jurisdiction in which the ANDAs may be deemed located and, without limiting the
generality of the foregoing, Secured Party may immediately, without demand of
performance and without notice or demand whatsoever to Debtor, all of which are
hereby expressly waived, and without advertisement, sell at public or private
sale or otherwise realize upon, assign, transfer, license or otherwise dispose
of, including but not limited to, transferring the ANDAs in New York or
elsewhere, all or from time to time any of the ANDAs, or any interest which the
Debtor may have therein, and after deducting from the proceeds of sale or other
disposition of any and all of the ANDAs all expenses (including all expenses for
broker's fees and legal services), apply the residue of such proceeds to the
Debtor's obligations to the Secured Party under the Credit Agreement and
otherwise owing to the Secured Party. Any remainder of the proceeds after
payment in full of the Debtor's obligations owing to Secured Party including but
not limited to the repayment in full of the Debtor's obligations to the Secured
Party under the Credit Agreement shall be paid over to the Debtor. Notice of any
sale or other disposition of the ANDAs shall be given to Debtor at least five
(5) days before the time of any intended public or private sale or other
disposition of the ANDAs is to be made, which Debtor hereby agrees shall be
reasonable notice of such sale or other disposition. At any such sale or other
disposition, the Secured Party or any holder of the Credit Agreement may, to the
extent permissible under applicable law, purchase the whole or any part of the
ANDAs free from any right of redemption on the part of Debtor, which right is
hereby waived and released.


                                       2
<PAGE>

      7. At such time as Debtor shall completely satisfy all of the Debtor's
obligations to Secured Party including but not limited to repayment of the
obligations of the Debtor under the Credit Agreement, this Agreement and the
Credit Agreement shall terminate and Secured Party shall execute and deliver to
Debtor all documents and other instruments as may be necessary or proper to
terminate this Agreement and re-vest in Debtor the ANDAs, subject to any
disposition thereof which may have been made by Secured Party pursuant hereto.

      8. Any and all fees, costs and expenses, of whatever kind or nature,
including attorney's fees and legal expenses incurred by Secured Party in
connection with the preparation of this Agreement and all other documents
relating hereto and the consummation of this transaction, the filing or
recording of any documents (including all taxes in connection therewith) in
public offices, the payment or discharge of any taxes, counsel fees, maintenance
fees, encumbrances or otherwise protecting, maintaining or preserving the ANDAs,
or in defending or prosecuting any actions or proceedings arising out of or
related to the ANDAs, shall be borne and paid by Debtor on demand by Secured
Party and until so paid shall become part of the Debtor's obligations under the
Credit Agreement. Debtor hereby agrees to execute and deliver to Secured Party
any and all additional documents requested by the Secured Party regarding the
ANDAs at any time and from time to time in its discretion to carry out and
enforce the terms and conditions of this Agreement.

      9. Debtor shall have the duty, through counsel acceptable to Secured
Party, to complete the approval process of the ANDAs, pending as of the date of
this Agreement or thereafter until all of the Debtor's obligations under the
Credit Agreement shall have been paid in full, to file and provide further
information and documentation and to do any and all acts which are necessary or
desirable to seek approval of the ANDAs and to preserve and maintain all rights
to the ANDAs. Any expenses incurred in connection with the ANDAs shall be borne
by Debtor. The Debtor shall not abandon any ANDAs without the consent of Secured
Party, which consent shall not be unreasonably withheld.

      10. If Debtor breaches or fails to comply with any of the terms and
conditions of this Agreement or upon the occurrence of an Event of Default under
the Credit Agreement or any other agreements between Debtor and Secured Party,
Debtor hereby authorizes and empowers Secured Party to make, constitute and
appoint any officer or agent of Secured Party as Secured Party may select, in
its exclusive discretion, as Debtor's true and lawful attorney-in-fact, with the
power to endorse Debtor's name on all applications, documents, papers and
instruments of every kind and nature necessary or desirable for Secured Party to
approve, use, own, transfer, assign, license or dispose of the ANDAs, including
without limitation, documents, papers, applications and instruments necessary or
desirable for the Secured Party to approve, own, use, transfer, assign, license
or dispose of the ANDAs, or necessary or desirable for Secured Party to assign,
pledge, convey or otherwise transfer title in or dispose of the ANDAs to Secured
Party or anyone else, including without limitation any and all Forms 356H,
and/or such other forms as the FDA shall require. Debtor hereby ratifies all
that such attorney shall lawfully do or cause to be done by virtue hereof. This
power of attorney shall be irrevocable for the life of this Agreement. The
Secured Party, or its designee, as attorney-in-fact, will not be liable for any
acts or omissions, or for any error of judgment or mistake of fact or law,
except for gross negligence, or willful misconduct. This power, being coupled
with an interest, is irrevocable until all obligations of Debtor to Secured
Party have been indefeasibly paid in full and performed and satisfied.


                                       3
<PAGE>

      12. If Debtor fails to comply with any of its obligations hereunder,
Secured Party may do so in Debtor's name or in Secured Party's name, but at
Debtor's expense, and Debtor hereby agrees to reimburse Secured Party in full
for all expenses, including attorney's fees, incurred by Secured Party in
approving, protecting, defending and maintaining the ANDAs.

      13. No course of dealing between Debtor and Secured Party, nor any failure
to exercise, nor any delay in exercising, on the part of Secured Party, any
right power or privilege hereunder or under the Credit Agreement, including but
not limited to the failure of Secured Party to sue under any guaranties, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

      14. All of Secured Party's rights and remedies with respect to the ANDAs,
whether established hereby or by the Credit Agreement, or by any other
agreements or by law shall be cumulative and may be exercised singularly or
concurrently.

      15. The provisions of this Agreement are severable, and if any clause or
provision shall be held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision of this Agreement in any jurisdiction.

      16. This Agreement is subject to modification only by a writing signed by
the parties, except as provided in paragraph 5.

      17. The benefits and burdens of this Agreement shall inure to the benefit
of and be binding upon the respective successors and permitted assigns of the
parties.

      18. The validity and interpretation of this Agreement and the rights and
obligations of the parties shall be governed by the laws of the State of New
York.

      IN WITNESS WHEREOF, the execution hereof as of the day and year first
above written.

                                    INTERPHARM, INC.
                                    Debtor

                                    75 Adams Avenue
                                    Hauppauge, New York 11788

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


                                       4
<PAGE>

                                    WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                    acting through its Wells Fargo Business
                                    Credit operating division Secured Party 119
                                    West 40th Street, 16th Floor New York, New
                                    York 10018

                                    By:/s/ Richard Mahtani
                                       ----------------------------------------
                                       Richard Mahtani, Assistant Vice
                                       President

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

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


      On the 9th day of February, in the year 2006, before me personally came
Richard Mahtani , to me known, who, being by me duly sworn, did depose and say
that he resides in _________________________________________; that he is an
Assistant Vice President of Wells Fargo Bank, National Association, acting
through its Wells Fargo Business Credit operating division, 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


                                       5
<PAGE>

          Schedule A to ANDA Security Agreement dated February 9, 2006
                                     Between
                         Interpharm, Inc., (Debtor) and

     Wells Fargo Bank, National Association, acting through its Wells Fargo
              Business Credit operating division, (Secured Party).

Application
   Number      Active Ingredient    Dosage       Strength     Proprietary Name
   ------      -----------------    ------       --------     ----------------

              Hydrocodone                                    Hydrocodone
076642        Bitartrate;         Tablet;     5MG; 200MG     Bitartrate and
              Ibuprofen           Oral                       Ibuprofen

              Hydrocodone                                    Hydrocodone
076642        Bitartrate;         Tablet;     7.5MG; 200MG   Bitartrate and
              Ibuprofen           Oral                       Ibuprofen

071334        Ibuprofen           Tablet;     400MG          Ibuprofen
                                  Oral

071335        Ibuprofen           Tablet;     600MG          Ibuprofen
                                  Oral

071935        Ibuprofen           Tablet;     800MG          Ibuprofen
                                  Oral

075927        Naproxen            Tablet;     250MG          Naproxen
                                  Oral

075927        Naproxen            Tablet;     375MG          Naproxen
                                  Oral

075927        Naproxen            Tablet;     500MG          Naproxen
                                  Oral

              Sulfamethoxazole;                              Sulfamethoxazole
076899        Trimethoprim        Tablet Oral 400MG; 80MG    and Trimethoprim

              Sulfamethoxazole;                              Sulfamethoxazole;
076899        Trimethoprim        Tablet;     800MG;160MG    Trimethoprim
                                  Oral


                                       6
<PAGE>

                            SPECIAL POWER OF ATTORNEY

STATE OF   )
           : ss.:
COUNTY OF  )


      KNOW ALL MEN BY THESE PRESENTS, that Interpharm, Inc., a New York
corporation, having an address at 75 Adams Avenue, Hauppauge, NY 11788
("Debtor"), pursuant and subject to the terms and conditions contained in an
Abbreviated New Drug Application Security Agreement dated as of the date hereof
(as amended, modified, restated or supplemented from time to time, the "Security
Agreement"), hereby appoints and constitutes Well Fargo Bank, National
Association, acting through its Wells Fargo Business Credit operating division,
with an address at 119 West 40th Street, New York, NY 10018 ("Secured Party"),
its true and lawful attorney, with full power of substitution, and with full
power and authority to perform the following acts on behalf of Debtor:

      1.    Assigning, selling, transferring, or otherwise disposing of all
            right, title and interest of Debtor in and to all Abbreviated New
            Drug Applications ("ANDA") of the Debtor, including but not limited
            to those listed on Schedule A of the Security Agreement, and
            including those ANDAs which are added to the same subsequent hereto,
            and all registrations and recordings thereof, and all pending
            applications therefor, and for the purpose of the recording,
            registering and filing of, or accomplishing any other formality with
            respect to, the foregoing, and to execute and deliver any and all
            agreements, documents, instruments of assignment or other writings
            necessary or advisable to effect such purpose;

      2.    To execute any and all documents, statements, certificates or other
            writings necessary or advisable in order to effect the purposes
            described above as Secured Party may in its sole discretion
            determine including without limitation any and all Forms 356H and/or
            such other forms as the FDA may require.

      This power of attorney is made pursuant to the Security Agreement, dated
the date hereof, between Debtor and Secured Party and may not be revoked until
the payment in full of all Debtor's obligations under the Security Agreement.

ATTEST:                                   INTERPHARM, INC.
                                          Debtor

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


                                       7
<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


                                       8
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</DOCUMENT>
