Document:

exv10w14

 

Exhibit 10.14

AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

(Quest Midstream Partners, L.P.)

     THIS AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (herein referred to as this “Security
Agreement”) is executed as of November 1, 2007, by QUEST MIDSTREAM PARTNERS, L.P. a Delaware
limited partnership (“Debtor”), whose address is 9520 N. May Avenue, Suite 300, Oklahoma City,
Oklahoma 73120, for the benefit of ROYAL BANK OF CANADA (in its capacity as “Administrative Agent”
and “Collateral Agent” for the Lenders (hereafter defined)), as “Secured Party,” whose address is
Royal Bank Plaza, P.O. Box 50, 200 Bay Street, 12th Floor, South Tower, Toronto, Ontario M5J 2W7.

RECITALS

     WHEREAS, pursuant to that certain Credit Agreement, dated as of January 31, 2007 (together
with all amendments, supplements, restatements and other modifications, if any, from time to time
thereafter made thereto, the “Existing Credit Agreement”), among Bluestem Pipeline, LLC, a Delaware
limited liability company, as borrower (“Bluestem”), the Debtor, as guarantor, the various
financial institutions parties thereto (the “Prior Lenders”) and Royal Bank of Canada, as
administrative agent and as collateral agent ( “RBC”), the Prior Lenders agreed to make loans for
the account of Bluestem; and

     WHEREAS, the indebtedness, obligations and liabilities under the Existing Credit Agreement are
secured in part by that certain Pledge and Security Agreement dated as of January 31, 2007 (the
“Existing Pledge and Security Agreement”) executed by Debtor, for the benefit of RBC, as collateral
agent, and the Prior Lenders; and

     WHEREAS, pursuant to that certain Amended and Restated Credit Agreement, dated of even date
herewith (as the same may hereafter be amended, supplemented and restated, the “Credit Agreement”),
among Bluestem and Debtor, as co-borrowers (Bluestem and Debtor, each a “Borrower” and collectively
the “Borrowers”), the various financial institutions that are, or may from time to time become,
parties thereto (individually a “Lender” and collectively the “Lenders”) and RBC, as administrative
agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the
“Collateral Agent”), the Lenders have agreed to make Loans for the account of the Borrowers; and

     WHEREAS, the Debtor has duly authorized the execution, delivery and performance of this
Security Agreement; and

     WHEREAS, this Security Agreement is integral to the transactions contemplated by the Loan
Documents, and the execution and delivery of this Security Agreement is a condition precedent to
the Lenders’ obligations to extend credit under the Loan Documents;

     ACCORDINGLY, for valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor and Secured Party hereby agree as follows:

	 	 	 	 	 
	 

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     1. REFERENCE TO CREDIT AGREEMENT. The terms, conditions, and provisions of the Credit
Agreement are incorporated herein by reference, the same as if set forth herein verbatim, which
terms, conditions, and provisions shall continue to be in full force and effect hereunder so long
as the Lenders are obligated to lend under the Credit Agreement and thereafter until the
Obligations are paid and performed in full (except as provided in Sections 10.01(d) and 10.01(e) of
the Credit Agreement).

     2. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context hereof otherwise
requires, each term defined in the Credit Agreement or in the UCC is used in this Security
Agreement with the same meaning; provided that, if the definition given to such term in the Credit
Agreement conflicts with the definition given to such term in the UCC, the definition in the Credit
Agreement shall control to the extent legally allowable; and if any definition given to such term
in Chapter 9 of the UCC conflicts with the definition given to such term in any other chapter of
the UCC, the Chapter 9 definition shall prevail. As used herein, the following terms have the
meanings indicated:

     Borrower or Borrowers has the meaning set forth in the third recital.

     Collateral has the meaning set forth in Paragraph 4 hereof.

     Collateral Note Security has the meaning set forth in Paragraph 4 hereof.

     Collateral Notes has the meaning set forth in Paragraph 4 hereof.

     Control Agreement means, with respect to any Collateral consisting of investment
property, Deposit Accounts, electronic chattel paper, and letter-of-credit rights, an
agreement evidencing that Secured Party has “control” (as defined in the UCC) of such
Collateral.

     Copyrights has the meaning set forth in Paragraph 4 hereof.

     Credit Agreement has the meaning set forth in the third recital.

     Deposit Accounts has the meaning set forth in Paragraph 4 hereof.

     Intellectual Property has the meaning set forth in Paragraph 4 hereof.

     Lender means, individually, or Lenders means, collectively, on any date of
determination, the Administrative Agent and Lenders, and their permitted successors and
assigns.

     Material Agreements has the meaning set forth in Paragraph 4 hereof.

     Obligations means, collectively, (a) the Obligations as such term is defined in the
Credit Agreement, and (b) all indebtedness, liabilities, and obligations of Debtor arising
under this
Security Agreement; it being the intention and contemplation of Debtor and Secured
Party that future advances will be made by one or more Lenders to the Debtor for a variety
of purposes.

     Obligor means any Person obligated with respect to any of the Collateral, whether as an
account debtor, obligor on an instrument, issuer of securities, or otherwise.

	 	 	 	 	 
	 

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     Partnerships/Limited Liability Companies shall mean: (a) those partnerships and limited
liability companies listed on Annex B-1 attached hereto and incorporated herein by
reference, as such partnerships or limited liability companies exist or may hereinafter be
restated, amended, or restructured; (b) any partnership, joint venture, or limited liability
company in which Debtor shall, at any time, become a limited or general partner, venturer,
or member; or (c) any partnership, joint venture, or corporation formed as a result of the
restructure, reorganization, or amendment of the Partnerships/Limited Liability Companies.

     Partnership/Limited Liability Company Agreements shall mean: (a) those agreements
listed on Annex B-1 attached hereto and incorporated herein by reference (together with any
modifications, amendments, or restatements thereof); and (b) partnership agreements, joint
venture agreements, or organizational agreements for any of the partnerships, joint
ventures, or limited liability companies described in clause (b) of the definition of
“Partnerships/Limited Liability Companies” above (together with any modifications,
amendments or restatements thereof), and “Partnership/Limited Liability Company Agreement”
means any one of the Partnership/Limited Liability Company Agreements.

     Partnership/Limited Liability Company Interests shall mean all of Debtor’s Rights,
title and interest now or hereafter accruing under the Partnership/Limited Liability Company
Agreements with respect to all distributions, allocations, proceeds, fees, preferences,
payments, or other benefits, which Debtor now is or may hereafter become entitled to receive
with respect to such interests in the Partnerships/Limited Liability Companies and with
respect to the repayment of all loans now or hereafter made by Debtor to the
Partnerships/Limited Liability Companies.

     Patents has the meaning set forth in Paragraph 4 hereof.

     Pledged Securities means, collectively, the Pledged Shares and any other Collateral
constituting securities.

     Pledged Shares has the meaning set forth in Paragraph 4 hereof.

     Rights means rights, remedies, powers, privileges and benefits.

     Security Interest means the security interest granted and the pledge and assignment
made under Paragraph 3 hereof.

     Trademarks has the meaning set forth in Paragraph 4 hereof.

     UCC means the Uniform Commercial Code, including each such provision as it may
subsequently be renumbered, as enacted in the State of New York or other applicable
jurisdiction, as amended at the time in question.

     3. SECURITY INTEREST. In order to secure the full and complete payment and performance of the
Obligations when due, Debtor hereby grants to Secured Party a Security Interest in all of Debtor’s
Rights, titles, and interests in and to the Collateral and pledges, collaterally transfers, and
assigns the Collateral to Secured Party, all upon and subject to the terms and conditions of this
Security

	 	 	 	 	 
	 

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	Agreement. Such Security Interest is granted and pledge and assignment are made as
security only and shall not subject Secured Party to, or transfer or in any way affect or modify,
any obligation of Debtor with respect to any of the Collateral or any transaction involving or
giving rise thereto. If the grant, pledge, or collateral transfer or assignment of any specific
item of the Collateral is expressly prohibited by any contract, license, law or regulation, then
the Security Interest created hereby nonetheless remains effective to the extent allowed by the UCC
or other applicable Law, but is otherwise limited by that prohibition.

     4. COLLATERAL. As used herein, the term “Collateral” means the following items and types of
property, wherever located, now owned or in the future existing or acquired by Debtor, and all
proceeds and products thereof, and any substitutes or replacements therefor:

     (a) all personal property and fixture property of every kind and nature including,
without limitation, all accounts, chattel paper (whether tangible or electronic), goods
(including inventory, equipment, and any accessions thereto), software, instruments,
investment property, documents, deposit accounts, money, commercial tort claims, letters of
credit and letter-of-credit rights, supporting obligations, Tax refunds, and general
intangibles (including payment intangibles);

     (b) all Rights, titles, and interests of Debtor in and to all outstanding stock,
equity, or other investment securities owned by Debtor, including, without limitation, all
capital stock of each Subsidiary of the Debtor set forth on Annex B-1 (“Pledged Shares”);

     (c) all Rights, titles, and interests of Debtor in and to all promissory notes and
other instruments payable to Debtor, including, without limitation, all inter-company notes
from Subsidiaries and those set forth on Annex B-1 (“Collateral Notes”) and all Rights,
titles, interests, and Liens Debtor may have, be, or become entitled to under all present
and future loan agreements, security agreements, pledge agreements, deeds of trust,
mortgages, guarantees, or other documents assuring or securing payment of or otherwise
evidencing the Collateral Notes, including, without limitation, those set forth on Annex B-1
(“Collateral Note Security”);

     (d) the Partnership/Limited Liability Company Interests and all Rights of Debtor with
respect thereto, including, without limitation, all Partnership/Limited Liability Company
Interests set forth on Annex B-1 and all of Debtor’s distribution rights, income rights,
liquidation interest, accounts, contract rights, general intangibles, notes, instruments,
drafts, and documents relating to the Partnership/Limited Liability Company Interests;

     (e) (i) all copyrights (whether statutory or common law, registered or unregistered),
works protectable by copyright, copyright registrations, copyright licenses, and copyright
applications of Debtor, including, without limitation, all of Debtor’s Right, title, and
interest in and to all copyrights registered in the United States Copyright Office or
anywhere else in the world and also including, without limitation, the copyrights set forth
on Annex B-2; (ii) all renewals, extensions, and modifications thereof, (iii) all income,
licenses, royalties, damages, profits, and payments relating to or payable under any of the
foregoing; (iv) the Right to sue for past, present, or future infringements of any of the
foregoing; and (v) all other rights and benefits

	 	 	 	 	 
	 

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	 	 	relating to any of the foregoing throughout
the world; in each case, whether now owned or hereafter acquired by Debtor (“Copyrights”);

     (f) (i) all patents, patent applications, patent licenses, and patentable inventions of
Debtor, including, without limitation, registrations, recordings, and applications thereof
in the United States Patent and Trademark Office or in any similar office or agency of the
United States of America, any state thereof or any other country or any political
subdivision thereof including, without limitation, those set forth on Annex B-2, and all of
the inventions and improvements described and claimed therein; (ii) all continuations,
divisions, renewals, extensions, modifications, substitutions, reexaminations,
continuations-in-part, or reissues of any of the foregoing; (iii) all income, royalties,
profits, damages, awards, and payments relating to or payable under any of the foregoing;
(iv) the right to sue for past, present, and future infringements of any of the foregoing;
and (v) all other rights and benefits relating to any of the foregoing throughout the world;
in each case, whether now owned or hereafter acquired by Debtor (“Patents”);

     (g) (i) all trademarks, trademark licenses, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks, certification
marks, collective marks, logos, other business identifiers, all registrations, recordings,
and applications thereof including, without limitation, registrations, recordings, and
applications in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any state thereof or any other country or any political
subdivision thereof including, without limitation, those set forth on Annex B-2; (ii) all
reissues, extensions, and renewals thereof; (iii) all income, royalties, damages, and
payments now or hereafter relating to or payable under any of the foregoing including,
without limitation, damages or payments for past or future infringements of any of the
foregoing; (iv) the right to sue for past, present, and future infringements of any of the
foregoing; (v) all rights corresponding to any of the foregoing throughout the world; and
(vi) all goodwill associated with and symbolized by any of the foregoing, in each case,
whether now owned or hereafter acquired by Debtor (“Trademarks”, and collectively with the
Copyrights and the Patents, the “Intellectual Property”);

     (h) (i) all of Debtor’s Rights, titles, and interests in, to, and under those contracts
pursuant to which a default in or breach of the performance or observance of any provision
could reasonably be expected to result in the opinion of the Secured Party in a Material
Adverse Effect (the “Material Agreements”) including, without limitation, all Rights of
Debtor to receive moneys due and to become due under or pursuant to the Material Agreements;
(ii) all rights of Debtor to receive proceeds of any insurance, indemnity, warranty, or
guaranty with respect to the Material Agreements; (iii) all claims of Debtor for damages
arising out of or for breach of or
default under the Material Agreements; and (iv) all rights of Debtor to compel
performance and otherwise exercise all rights and remedies under the Material Agreements;

     (i) all present and future automobiles, trucks, truck tractors, trailers,
semi-trailers, or other motor vehicles or rolling stock, now owned or hereafter acquired by
such Debtor (collectively, the “Vehicles”);

	 	 	 	 	 
	 

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     (j) any and all material deposit accounts, bank accounts, investment accounts, or
securities accounts, now owned or hereafter acquired or opened by Debtor including, without
limitation, any such accounts set forth on Annex B-1, and any account which is a replacement
or substitute for any of such accounts, together with all monies, instruments, certificates,
checks, drafts, wire transfer receipts, and other property deposited therein and all
balances therein (the “Deposit Accounts”);

     (k) all permits, licenses and other authorizations (“Authorizations”) issued by any
governmental authority, to the extent and only to the extent that the grant of a security
interest in any such Authorization does not result in the forfeiture of, or default under,
any such Authorization;

     (l) all present and future distributions, income, increases, profits, combinations,
reclassifications, improvements, and products of, accessions, attachments, and other
additions to, tools, parts, and equipment used in connection with, and substitutes and
replacements for, all or part of the Collateral described above;

     (m) all present and future accounts, contract rights, general intangibles, chattel
paper, documents, instruments, cash and noncash proceeds, and other Rights arising from or
by virtue of, or from the voluntary or involuntary sale or other disposition of, or
collections with respect to, or insurance proceeds payable with respect to, or proceeds
payable by virtue of warranty or other claims against the manufacturer of, or claims against
any other Person with respect to, all or any part of the Collateral heretofore described in
this clause or otherwise; and

     (n) all present and future security for the payment to Debtor or any Subsidiary of any
of the Collateral described above and goods which gave or will give rise to any such
Collateral or are evidenced, identified, or represented therein or thereby.

The description of the Collateral contained in this Paragraph 4 shall not be deemed to permit any
action prohibited by this Security Agreement or by the terms incorporated in this Security
Agreement.

     5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Secured Party that:

     (a) Credit Agreement. Certain representations and warranties in the Credit
Agreement are applicable to the Debtor or its assets or operations, and each such
representation is true and correct, in all material respects.

     (b) Binding Obligation/Perfection. This Security Agreement creates a legal,
valid, and binding Lien in and to the Collateral in favor of Secured Party and enforceable
against Debtor. For Collateral in which the Security Interest may be perfected by the filing
of Financing Statements pursuant to Article 9 of the UCC, once those Financing Statements
have been properly filed in the jurisdictions described on Annex A hereto, the Security
Interest in that Collateral will be fully perfected and the Security Interest will
constitute a first-priority Lien on such Collateral, subject only to Permitted Liens. With
respect to Collateral consisting of investment property (other than Pledged Securities
covered by Paragraph 5(j)), Deposit

	 	 	 	 	 
	 

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	 	 	Accounts, electronic chattel paper, letter-of-credit
rights, and instruments, upon the delivery of such Collateral to Secured Party or delivery
of an executed Control Agreement with respect to such Collateral, the Security Interest in
that Collateral will be fully perfected and the Security Interest will constitute a
first-priority Lien on such Collateral, subject only to Permitted Liens. None of the
Collateral has been delivered nor control with respect thereto given to any Person other
than the Administrative Agent. Other than the Financing Statements and Control Agreements
with respect to this Security Agreement, there are no other financing statements or control
agreements covering any Collateral, other than those evidencing Permitted Liens. The
creation of the Security Interest does not require the consent of any Person that has not
been obtained.

     (c) Debtor Information. Debtor’s exact legal name, mailing address,
jurisdiction of organization, type of entity, and state issued organizational identification
number are as set forth on Annex A hereto.

     (d) Location/Fixtures. (i) Debtor’s place of business and chief executive
office is where Debtor is entitled to receive notices hereunder; the present and foreseeable
location of debtor’s books and records concerning any of the Collateral that is accounts is
as set forth on Annex A hereto, and the location of all other Collateral, including, without
limitation, Debtor’s inventory and equipment (but excluding fixtures) is as set forth on
Annex A hereto; and, except as noted on Annex A hereto, all such books, records, and
Collateral are in Debtor’s possession, and (ii) substantially all the Collateral that is or
may be fixtures is located on or affixed to the real property described in deeds of trust or
mortgages executed by Debtor in favor of Secured Party pursuant to the Credit Agreement or
on Annex A hereto.

     (e) Governmental Authority. Other than the filing of Financing Statements
contemplated hereby, appropriate filings to perfect the Security Interest in the
Intellectual Property and the notation of a Lien in favor of the Secured Party on any motor
vehicle certificate of title, no Authorization, approval, or other action by, and no notice
to or filing with, any Governmental Authority is required either (i) for the pledge by
Debtor of the Collateral pursuant to this Security Agreement or for the execution, delivery,
or performance of this Security Agreement by Debtor, or (ii) for the exercise by Secured
Party of the voting or other Rights provided for in this Security Agreement or the remedies
in respect of the Collateral pursuant to this Security Agreement (except as may be required
in connection with the disposition of the Pledged Securities by Laws affecting the offering
and sale of securities generally).

     (f) Maintenance of Collateral. All tangible Collateral which is useful in and
necessary to Debtor’s business is in good repair and condition, ordinary wear and tear
excepted.

     (g) Liens. Debtor owns, leases or has valid rights to use all presently
existing Collateral, and will acquire or lease all hereafter-acquired Collateral, free and
clear of all Liens, except Permitted Liens.

     (h) Collateral. Annex B-1 accurately lists all Collateral Notes, Collateral
Note Security, Pledged Shares, Partnership/Limited Liability Company Interests, commercial
tort claims, and Deposit Accounts.

	 	 	 	 	 
	 

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     (i) Instruments, Chattel Paper, Collateral Notes, and Collateral Note Security.
All material instruments and chattel paper including, without limitation, the Collateral
Notes, have been delivered to Secured Party, together with corresponding endorsements duly
executed by Debtor in favor of Secured Party, and such endorsements have been duly and
validly executed and are binding and enforceable against Debtor in accordance with their
terms. Each material Collateral Note and the documents evidencing the Collateral Note
Security are in full force and effect; there have been no renewals or extensions of, or
amendments, modifications, or supplements which would materially adversely affect such
Collateral Notes or Collateral Note Security; and no “default” or “event of default” has
occurred and is continuing under any such Collateral Note or documents evidencing the
Collateral Note Security. Debtor has good title to the Collateral Notes and Collateral Note
Security, and such Collateral Notes and Collateral Note Security are free from any claim for
credit, deduction, or allowance of an Obligor and free from any defense, condition, dispute,
setoff, or counterclaim which could materially adversely affect the value thereof, and there
is no extension or indulgence with respect thereto.

     (j) Pledged Securities, Pledged Shares. All Collateral that is Pledged Shares
is duly authorized, validly issued, fully paid, and non-assessable (except to the extent
required by applicable Law), and the transfer thereof is not subject to any restrictions,
other than restrictions imposed hereunder and by applicable securities and corporate Laws or
Permitted Liens. The Pledged Securities securing the Obligations as defined in the Credit
Agreement include 100% of the issued and outstanding common stock or other equity interests
owned by the Debtor of each Subsidiary of the Debtor. Debtor has good title to the Pledged
Securities, free and clear of all Liens and encumbrances thereon (except for the Security
Interest created hereby or Permitted Liens), and has delivered to Secured Party (i) all
stock certificates, or other instruments or documents representing or evidencing the Pledged
Securities, together with corresponding assignment or transfer powers duly executed in blank
by Debtor, and such powers have been duly and validly executed and are binding and
enforceable against Debtor in accordance with their terms or (ii) to the extent such Pledged
Securities are uncertificated, an executed Acknowledgment of Pledge with respect to such
Pledged Securities. The pledge of the Pledged Securities in accordance with the terms hereof
creates a valid and perfected first priority security interest in the Pledged Securities
securing payment of the Obligations, subject to Permitted Liens.

     (k) Partnership/Limited Liability Company Interests. Each Partnership/Limited
Liability Company issuing a Partnership/Limited Liability Company Interest, is duly
organized, currently existing, and in good standing in the jurisdiction of its formation;
there have been no material amendments, modifications, or supplements to any agreement or
certificate creating any Partnership/Limited Liability Company or any material contract
relating to the Partnerships/Limited Liability Companies, of which Secured Party has not
been advised in
writing; no event of default, default, breach, or potential default has occurred and is
continuing under any Partnership/Limited Liability Company Agreement, except for such
defaults or breaches that would not reasonably be expected to result in a Material Adverse
Effect; and no approval or consent of the partners of any Partnership/Limited Liability
Company is required as a condition to the validity and enforceability of the Security
Interest created hereby or the consummation of the transactions contemplated hereby which
has not been duly obtained by Debtor. Debtor has good title to the Partnership/Limited
Liability Company Interests free and

	 	 	 	 	 
	 

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	 	 	clear of all Liens and encumbrances (except for the
Security Interest granted hereby or Permitted Liens). The Partnership/Limited Liability
Company Interests are validly issued, fully paid, and nonassessable (except to the extent
required by applicable Law) and are not subject to statutory, contractual, or other
restrictions governing their transfer, ownership, or control, except as set forth in the
applicable Partnership/Limited Liability Company Agreements or applicable securities Laws or
Permitted Liens. All capital contributions required to be made by the terms of the
Partnership/Limited Liability Company Agreements for each Partnership/Limited Liability
Company have been made. The limited liability company interests in Bluestem are evidenced by
certificates but no other limited liability company interests are evidenced by certificates.

     (1) Accounts. All Collateral that is accounts, contract rights, chattel paper,
instruments, payment intangibles, or general intangibles is free from any claim for credit,
deduction, or allowance of an Obligor, from any defense, condition, dispute, setoff, or
counterclaim (collectively “Deductions”), and there is no extension or indulgence with
respect thereto, except to the extent such Deductions, extensions and indulgences could not
reasonably be expected to have a Material Adverse Effect.

     (m) Deposit Accounts. With respect to the Deposit Accounts, (i) Debtor
maintains each Deposit Account with the banks listed on Annex B-1 hereto, (ii) upon request
by the Administrative Agent, Debtor shall use its reasonable efforts to, within thirty (30)
days of such request, cause each such bank to acknowledge to Secured Party that each such
Deposit Account is subject to the Security Interest and Liens herein created, that the
pledge of such Deposit Account has been recorded in the books and records of such bank, and
that Secured Party shall have “control” (as defined in the UCC) over such Deposit Account,
and (iii) Debtor has the legal Right to pledge and assign to Secured Party the funds
deposited and to be deposited in each such Deposit Account.

     (n) Intellectual Property.

     (i) All of the Intellectual Property is subsisting, valid, and enforceable
(except where any failure to be subsisting, valid and enforceable would not
reasonably be expected to have a Material Adverse Effect). The information
contained on Annex B-2 hereto is true, correct and complete. All issued Patents,
Patent applications, registered Trademarks, Trademark applications, registered
Copyrights, and Copyright applications of Debtor are identified on Annex B-2 hereto.

     (ii) Except for off-the-shelf software and other Intellectual Property of which
Debtor is a licensee (as to which this representation is inapplicable), the Debtor
is the sole and exclusive owner of, the entire and unencumbered Right, title, and
interest in and to
the Intellectual Property owned by Debtor free and clear of any Liens
including, without limitation, any pledges, assignments, licenses, user agreements,
and covenants by Debtor not to sue third Persons, other than Permitted Liens or
licenses permitted by Paragraph 8(c).

     (iii) As of the date hereof, to Debtor’s knowledge, no third party is
infringing any of Debtor’s Rights under the Intellectual Property.

	 	 	 	 	 
	 

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     (iv) Debtor has performed and will continue to perform all acts and has paid
and will continue to pay all required fees and Taxes to maintain each material item
of the Intellectual Property in full force and effect throughout the world, as
applicable.

     (v) Each of the Patents and Trademarks identified on Annex B-2 hereto, to the
extent required in Debtor’s reasonable business judgment, has been properly
registered with the United States Patent and Trademark Office and in corresponding
offices throughout the world (where appropriate) and each of the Copyrights
identified on Annex B-2 hereto has been properly registered with the United States
Copyright Office and in corresponding offices throughout the world (where
appropriate).

     (vi) As of the date hereof, to Debtor’s knowledge, no claims with respect to
the Intellectual Property have been asserted and are pending (i) to the effect that
the sale, licensing, pledge, or use of any of the products of Debtor’s business
infringes any other party’s valid copyright, trademark, service mark, trade secret,
or other intellectual property Right, (ii) against the use by Debtor of any
Intellectual Property used in the Debtor’s business as currently conducted, or (iii)
challenging the ownership or use by Debtor of any of the Intellectual Property that
Debtor purports to own or use.

The foregoing representations and warranties will be true and correct in all material respects with
respect to any additional Collateral or additional specific descriptions of certain Collateral
delivered to Secured Party in the future by Debtor. The failure of any of these representations or
warranties or any description of Collateral therein to be accurate or complete shall not impair the
Security Interest in any such Collateral.

     6. COVENANTS. So long as any Lenders are committed to make Credit Extensions under the Credit
Agreement, and until the Obligations are paid and performed in full (except as provided in Sections
10.01(d) and 10.01(e) of the Credit Agreement), Debtor covenants and agrees with Secured Party that
Debtor will:

     (a) Credit Agreement. (i) Comply with, perform, and be bound by all applicable
covenants and agreements in the Credit Agreement, each of which is hereby ratified and
confirmed.

     (b) Books and Records Concerning Collateral; Inspection Rights. Debtor shall
comply with the provisions of Section 6.09 and 6.10 regarding records concerning and
inspection rights relating to the Collateral. In addition, from time to time at the request
of Secured Party
deliver to Secured Party such information regarding Debtor that is in the possession of
Debtor as Secured Party may reasonably request.

     (c) Annexes. Together with the delivery of compliance certificates pursuant to
Section 6.02(a) of the Credit Agreement, update all annexes hereto if any information
therein shall become inaccurate or incomplete and such updated Annexes shall replace the
existing Annexes for all purposes of this Agreement. Notwithstanding any other provision
herein, Debtor’s failure to describe any Collateral required to be listed on any annex
hereto shall not impair Secured Party’s Security Interest in the Collateral.

	 	 	 	 	 
	 

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     (d) Perform Obligations. Perform all of Debtor’s duties under and in
connection with each transaction to which the Collateral, or any material part thereof,
relates, in the ordinary course of business except when in Debtor’s business judgment
non-performance is justified. Notwithstanding anything to the contrary contained herein,
(i) Debtor shall remain liable under the contracts, agreements, documents, and instruments
included in the Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Security Agreement had not been
executed, (ii) the exercise by Secured Party of any of its Rights or remedies hereunder
shall not release Debtor from any of its duties or obligations under the contracts,
agreements, documents, and instruments included in the Collateral, and (iii) Secured Party
shall not have any indebtedness, liability, or obligation under any of the contracts,
agreements, documents, and instruments included in the Collateral by reason of this Security
Agreement, and Secured Party shall not be obligated to perform any of the obligations or
duties of Debtor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

     (e) Intentionally Deleted.

     (f) Collateral in Trust. Hold in trust (and not commingle with other assets of
Debtor) for Secured Party all Collateral that is chattel paper, instruments, Collateral
Notes, Pledged Securities, or documents at any time received by Debtor, and promptly deliver
same to Secured Party, unless Secured Party at its option (which may be evidenced only by a
writing signed by Secured Party stating that Secured Party elects to permit Debtor to so
retain) permits Debtor to retain the same, but any chattel paper, instruments, Collateral
Notes, Pledged Securities, or documents so retained shall be marked to state that they are
assigned to Secured Party; each such instrument shall be endorsed to the order of Secured
Party (but the failure of same to be so marked or endorsed shall not impair the Security
Interest thereon).

     (g) Control. Execute all documents and take any action required by Secured
Party in order for Secured Party to obtain “control” (as defined in the UCC) with respect to
Collateral consisting of Deposit Accounts, investment property, uncertificated Pledged
Securities, and letter-of-credit rights. If Debtor at any time holds or acquires an interest
in any electronic chattel paper or any “transferable record, “ as that term is defined in
the federal Electronic Signatures in Global and National Commerce Act, or in the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction, promptly notify
Secured Party thereof and, at the request of Secured Party, take such action as Secured
Party may reasonably request to vest in Secured Party control under the UCC of such
electronic chattel paper or control under the federal Electronic Signatures
in Global and National Commerce Act or, as the case may be, the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable record.

     (h) Further Assurances. At Debtor’s expense and Secured Party’s request, before
or after a Default or Event of Default: (i) file or cause to be filed such applications and
take such other actions as Secured Party may request to obtain the consent or approval of
any Governmental Authority to Secured Party’s Rights hereunder including, without
limitation, the Right to sell all the Collateral upon an Event of Default without additional
consent or approval from such Governmental Authority (and, because Debtor agrees that
Secured Party’s remedies at Law for failure of Debtor to comply with this provision would be
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	 	 	would not be adequately compensable in damages, Debtor
agrees that its covenants in this provision may be specifically enforced); (ii) from time to
time promptly execute and deliver to Secured Party all such other assignments, certificates,
supplemental documents, and financing statements, and do all other acts or things as Secured
Party may reasonably request in order to more fully create, evidence, perfect, continue, and
preserve the priority of the Security Interest and to carry out the provisions of this
Security Agreement; and (iii) pay all filing fees in connection with any financing,
continuation, or termination statement or other instrument with respect to the Security
Interests.

     (i) Encumbrances. Not create, permit, or suffer to exist, and shall defend the
Collateral against, any Lien or other encumbrance on the Collateral, other than Permitted
Liens, and shall defend Debtor’s Rights in the Collateral and Secured Party’s Security
Interest in the Collateral against the claims and demands of all Persons except those
holding or claiming Permitted Liens. Debtor shall do nothing to impair the Rights of Secured
Party in the Collateral.

     (j) Estoppel and Other Agreements and Matters. Upon the reasonable request of
Secured Party, either (i) use commercially reasonable efforts to cause the landlord or
lessor for each location where any of its inventory or equipment is maintained to execute
and deliver to Secured Party an estoppel and subordination agreement in such form as may be
reasonably acceptable to Secured Party and its counsel, or (ii) deliver to Secured Party a
legal opinion or other evidence (in each case that is reasonably satisfactory to Secured
Party and it counsel) that neither the applicable lease nor the Laws of the jurisdiction in
which that location is situated provide for contractual, common Law, or statutory landlord’s
Liens that is senior to or pari passu with the Security Interest.

     (k) Fixtures. For any Collateral that is a fixture or an accession which has
been attached to real estate or other goods prior to the perfection of the Security
Interest, use commercially reasonable efforts to furnish to Secured Party, upon reasonable
demand, a disclaimer of interest in each such fixture or accession and a consent in writing
to the Security Interest of Secured Party therein, signed by all Persons having any interest
in such fixture or accession by virtue of any interest in the real estate or other goods to
which such fixture or accession has been attached.

     (l) Certificates of Title. Upon the request of Secured Party, if a certificate
of title is issued or outstanding with respect to any Vehicle or other Collateral with a
fair market value of at least $50,000, cause the Security Interest to be properly noted
thereon.

     (m) Warehouse Receipts Non-Negotiable. If any warehouse receipt or receipt in
the nature of a warehouse receipt is issued in respect of any of the Collateral, agree that
such warehouse receipt or receipt in the nature thereof shall not be “negotiable” (as such
term is used in Section 7-104 of the UCC) unless such warehouse receipt or receipt in the
nature thereof is delivered to Secured Party.

     (n) Impairment of Collateral. Not use any material portion of the Collateral,
or permit the same to be used, for any unlawful purpose, in any manner that is reasonably
likely to materially adversely impair the value or usefulness of the Collateral, or in any
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	 	 	inconsistent with the provisions or requirements of any policy of insurance thereon
nor affix or install any accessories, equipment, or device on the Collateral or on any
component thereof if such addition will materially impair the original intended function or
use of the Collateral or such component.

     (o) Collateral Notes and Collateral Note Security. Without the prior written
consent of Secured Party not (i) materially modify or substitute, or permit material
modification or substitution of, any Collateral Note or any document evidencing the
Collateral Note Security, if the effect thereof would be to materially adversely affect the
value of the Collateral Notes and Collateral Note Security taken as a whole, or (ii) release
any material portion of any Collateral Note Security unless paid in full or otherwise
specifically required by the terms thereof, except in the exercise of the Debtor’s
reasonable business judgment.

     (p) Securities. Except as permitted by the Credit Agreement, not sell,
exchange, or otherwise dispose of, or grant any option, warrant, or other Right with respect
to, any of the Pledged Securities; and take any action requested by Secured Party to allow
Secured Party to fully enforce its Security Interest in the Pledged Securities including,
without limitation, the filing of any claims with any court, liquidator, trustee, custodian,
receiver, or other like person or party.

     (q) Depository Bank. With respect to any Deposit Accounts, (i) maintain the
Deposit Accounts at the banks (a “Depository Bank”) described on Annex B-1 or such
additional depository banks as described in the notices given pursuant to clause (iv) of
this Section 6(q) as have complied with item (iv) hereof, (ii) upon request of the Secured
Party, deliver to each Depository Bank a letter in the form of Annex C hereto with respect
to Secured Party’s Rights in such Deposit Account (or such other reasonable form as may be
provided by the Depository Bank) and use commercially reasonable efforts to obtain the
execution of such letter by each Depository Bank that the pledge of such Deposit Account has
been recorded in the books and records of such bank and that Secured Party shall have
dominion and control over such Deposit Account; (iii) upon request of the Secured Party,
deliver to Secured Party all certificates or instruments, if any, now or hereafter
representing or evidencing the Deposit Accounts, accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably satisfactory to
Secured Party; and (iv) notify Secured Party upon establishing any additional Deposit
Accounts and, at the request of Secured Party, use commercially reasonable efforts to obtain
from such depository bank an executed letter substantially in the form of Annex C (or on
such other reasonable form as may be provided by the Depository Bank) and deliver the same
to Secured Party. Secured Party agrees not to exercise
control over such Deposit Account unless an Event of Default shall have occurred and be
continuing.

     (t) Marking of Chattel Paper. At the request of Secured Party, not create any
chattel paper without placing a legend on the chattel paper acceptable to Secured Party
indicating that Secured Party has a security interest in the chattel paper.

     (u) Modification of Accounts. In accordance with prudent business practices,
endeavor to collect or cause to be collected from each account debtor under its accounts, as
and when due, any and all amounts owing under such accounts. Except in the ordinary course
of

	 	 	 	 	 
	 

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	 	 	business consistent with prudent business practices and industry standards, without the
prior written consent of Secured Party, Debtor shall not (i) grant any extension of time for
any payment with respect to any of the accounts, (ii) compromise, compound, or settle any of
the accounts for less than the full amount thereof, (iii) release, in whole or in part, any
Person liable for payment of any of the accounts, (iv) allow any credit or discount for
payment with respect to any account other than trade discounts granted in the ordinary
course of business, (v) release any Lien or guaranty securing any account, or (vi) modify or
substitute, or permit the modification or substitution of, any contract to which any of the
Collateral which is accounts relates.

     (v) Intellectual Property.

     (i) Prosecute diligently all applications in respect of Intellectual Property,
now or hereafter pending;

     (ii) Except to the extent not required in Debtor’s reasonable business
judgment, make federal applications on all of its unpatented but patentable
inventions and all of its registrable but unregistered Copyrights and Trademarks;

     (iii) Preserve and maintain all of its material Rights in the Intellectual
Property and protect the Intellectual Property from infringement, unfair
competition, cancellation, or dilution by all appropriate action necessary in
Debtor’s reasonable business judgment including, without limitation, the
commencement and prosecution of legal proceedings to recover damages for
infringement and to defend and preserve its rights in the Intellectual Property;

     (iv) Not abandon any of the Intellectual Property necessary to the conduct of
its business in the exercise of Debtor’s reasonable business judgment;

     (v) Maintain the quality of any and all products and services with respect to
which the Intellectual Property is used;

     (vi) Not enter into any agreement including, but not limited to any licensing
agreement, that is or may be inconsistent with Debtor’s obligations under this
Security Agreement or any of the other Loan Documents;

     (vii) Give Secured Party prompt written notice if Debtor shall obtain Rights to
or become entitled to the benefit of any Intellectual Property not identified on
Annex B-2 hereto; and

     (viii) If a Default or Event of Default exists, use its reasonable efforts to
obtain any consents, waivers, or agreements necessary to enable Secured Party to
exercise its rights and remedies with respect to the Intellectual Property.

     7. DEFAULT; REMEDIES. If an Event of Default exists, Secured Party may, at its election (but
subject to the terms and conditions of the Credit Agreement), exercise any and all Rights available
to a secured party under the UCC and other applicable law, in addition to any and all other

	 	 	 	 	 
	 

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Rights
afforded by the Loan Documents, at law, in equity, or otherwise including, without limitation, (a)
requiring Debtor to assemble all or part of the Collateral and make it available to Secured Party
at a place to be designated by Secured Party which is reasonably convenient to Debtor and Secured
Party, (b) to the extent permitted by Debtor’s insurance carrier, surrendering any policies of
insurance on all or part of the Collateral and receiving and applying the unearned premiums as a
credit on the Obligations, (c) applying by appropriate judicial proceedings for appointment of a
receiver for all or part of the Collateral (and Debtor hereby consents to any such appointment),
and (d) applying to the Obligations any cash held by Secured Party under this Security Agreement,
including, without limitation, any cash in the Cash Collateral Account (defined in Section 8(h)).

     (a) Notice. Reasonable notification of the time and place of any public sale of
the Collateral, or reasonable notification of the time after which any private sale or other
intended disposition of the Collateral is to be made, shall be sent to Debtor and to any
other Person entitled to notice under the UCC; provided that, if any of the Collateral
threatens to decline speedily in value or is of the type customarily sold on a recognized
market, Secured Party may sell or otherwise dispose of the Collateral without notification,
advertisement, or other notice of any kind. It is agreed that notice sent or given not less
than ten Business Days prior to the taking of the action to which the notice relates is
reasonable notification and notice for the purposes of this subparagraph.

     (b) Condition of Collateral; Warranties. Secured Party has no obligation to
clean-up or otherwise prepare the Collateral for sale. Secured Party may sell the Collateral
without giving any warranties as to the Collateral. Secured Party may specifically disclaim
any warranties of title or the like. This procedure will not be considered to affect
adversely the commercial reasonableness of any sale of the Collateral.

     (c) Compliance with Other Laws. Secured Party may comply with any applicable
state or federal law requirements in connection with a disposition of the Collateral and
compliance will not be considered to adversely affect the commercial reasonableness of any
sale of the Collateral.

     (d) Sales of Pledged Securities.

     (i) Debtor agrees that, because of the Securities Act of 1933, as amended, or
the rules and regulations promulgated thereunder (collectively, the “Securities
Act”), or
any other Laws or regulations, and for other reasons, there may be legal or
practical restrictions or limitations affecting Secured Party in any attempts to
dispose of certain portions of the Pledged Securities and for the enforcement of its
Rights. For these reasons, Secured Party is hereby authorized by Debtor, but not
obligated, upon the occurrence and during the continuation of an Event of Default,
to sell all or any part of the Pledged Securities at private sale, subject to an
investment letter or in any other manner which will not require the Pledged
Securities, or any part thereof, to be registered in accordance with the Securities
Act or any other Laws or regulations, at a reasonable price at such private sale or
other distribution in the manner mentioned above. Debtor understands that Secured
Party may in its discretion approach a limited number of potential purchasers and
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the Pledged
Securities, or any part thereof, than would otherwise be obtainable if such
Collateral were either offered to a larger number of potential purchasers,
registered under the Securities Act, or sold in the open market. Debtor agrees that
any such private sale made under this Paragraph 7(d) shall be deemed to have been
made in a commercially reasonable manner, and that Secured Party has no obligation
to delay the sale of any Pledged Securities to permit the issuer thereof to register
it for public sale under any applicable federal or state securities Laws.

     (ii) Secured Party is authorized, in connection with any such sale, (A) to
restrict the prospective bidders on or purchasers of any of the Pledged Securities
to a limited number of sophisticated investors who will represent and agree that
they are purchasing for their own account for investment and not with a view to the
distribution or sale of any of such Pledged Securities, and (B) to impose such other
limitations or conditions in connection with any such sale as Secured Party
reasonably deems necessary in order to comply with applicable Law. Debtor covenants
and agrees that it will execute and deliver such documents and take such other
action as Secured Party reasonably deems necessary in order that any such sale may
be made in compliance with applicable Law. Upon any such sale, Secured Party shall
have the Right to deliver, assign, and transfer to the purchaser thereof the Pledged
Securities so sold. Each purchaser at any such sale shall hold the Pledged
Securities so sold absolutely free from any claim or Right of Debtor of whatsoever
kind, including any equity or Right of redemption of Debtor. Debtor, to the extent
permitted by applicable Law, hereby specifically waives all Rights of redemption,
stay, or appraisal which it has or may have under any Law now existing or hereafter
enacted.

     (iii) Debtor agrees that ten days’ written notice from Secured Party to Debtor
of Secured Party’s intention to make any such public or private sale or sale at a
broker’s board or on a securities exchange shall constitute reasonable notice under
the UCC. Such notice shall (A) in case of a public sale, state the time and place
fixed for such sale, (B) in case of sale at a broker’s board or on a securities
exchange, state the board or exchange at which such a sale is to be made and the day
on which the Pledged Securities, or the portion thereof so being sold, will first be
offered to sale at such board or exchange, and (C) in the case of a private sale,
state the day after which such sale may be consummated. Any such public sale shall
be held at such time or times within ordinary business hours
and at such place or places as Secured Party may fix in the notice of such
sale. At any such sale, the Pledged Securities may be sold in one lot as an entirety
or in separate parcels, as Secured Party may reasonably determine. Secured Party
shall not be obligated to make any such sale pursuant to any such notice. Secured
Party may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to which
the same may be so adjourned.

     (iv) In case of any sale of all or any part of the Pledged Securities on credit
or for future delivery, the Pledged Securities so sold may be retained by Secured
Party until the selling price is paid by the purchaser thereof, but Secured Party
shall not incur any liability in case of the failure of such purchaser to take up
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Securities so sold and in case of any such failure, such
Pledged Securities may again be sold upon like notice. Secured Party, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at Law or in equity to foreclose the Security Interests and sell the Pledged
Securities, or any portion thereof, under a judgment or decree of a court or courts
of competent jurisdiction.

     (v) Without limiting the foregoing, or imposing upon Secured Party any
obligations or duties not required by applicable Law, Debtor acknowledges and agrees
that, in foreclosing upon any of the Pledged Securities, or exercising any other
Rights or remedies provided Secured Party hereunder or under applicable Law, Secured
Party may, but shall not be required to, (A) qualify or restrict prospective
purchasers of the Pledged Securities by requiring evidence of sophistication or
creditworthiness, and requiring the execution and delivery of confidentiality
agreements or other documents and agreements as a condition to such prospective
purchasers’ receipt of information regarding the Pledged Securities or participation
in any public or private foreclosure sale process, (B) provide to prospective
purchasers business and financial information regarding Debtor and its Subsidiaries
available in the files of Secured Party at the time of commencing the foreclosure
process, without the requirement that Secured Party obtain, or seek to obtain, any
updated business or financial information or verify, or certify to prospective
purchasers, the accuracy of any such business or financial information, or (C) offer
for sale and sell the Pledged Securities with or without first employing an
appraiser, investment banker, or broker with respect to the evaluation of the
Pledged Securities, the solicitation of purchasers for Pledged Securities, or the
manner of sale of Pledged Securities.

     (e) Application of Proceeds. Secured Party shall apply the proceeds of any sale
or other disposition of the Collateral under this Paragraph 7 in the following order: first,
to the payment of all expenses incurred in retaking, holding, and preparing any of the
Collateral for sale(s) or other disposition, in arranging for such sale(s) or other
disposition, and in actually selling or disposing of the same (all of which are part of the
Obligations); second, toward repayment of amounts expended by Secured Party under Paragraph
8; and third, toward payment of the balance of the Obligations in the order and manner
specified in the Credit Agreement. Any surplus remaining shall be delivered to Debtor or as
a court of competent jurisdiction may direct.
If the proceeds are insufficient to pay the Obligations in full, Debtor shall remain
liable for any deficiency.

     (f) Sales on Credit. If Secured Party sells any of the Collateral upon credit,
Debtor will be credited only with payments actually made by the purchaser, received by the
Secured Party, and applied to the indebtedness of the purchaser. In the event the purchaser
fails to pay for the Collateral, Secured Party may resell the Collateral.

     8. OTHER RIGHTS OF SECURED PARTY.

     (a) Performance. If Debtor fails to keep the Collateral in good repair, working
order, and condition, as required by the Loan Documents, or fails to pay when due all Taxes
on any of the Collateral in the manner required by the Loan Documents, or fails to preserve
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	 	 	the Security Interest in any of the Collateral, or fails to keep the
Collateral insured as required by the Loan Documents, or otherwise fails to perform any of
its obligations under the Loan Documents with respect to the Collateral, then Secured Party
may, at its option, but without being required to do so, make such repairs, pay such Taxes,
prosecute or defend any suits in relation to the Collateral, or insure and keep insured the
Collateral in any amount deemed appropriate by Secured Party, or take all other action which
Debtor is required, but has failed or refused, to take under the Loan Documents. Any sum
which may be expended or paid by Secured Party under this subparagraph (including, without
limitation, court costs and reasonable attorneys’ fees) shall bear interest from the dates
of expenditure or payment at the Default Rate until paid and, together with such interest,
shall be payable by Debtor to Secured Party upon demand and shall be part of the
Obligations.

     (b) Collection. If an Event of Default exists and upon notice from Secured
Party, each Obligor with respect to any payments on any of the Collateral (including,
without limitation, dividends and other distributions with respect to the Pledged Securities
and Partnership/Limited Liability Company Interests, payments on Collateral Notes, insurance
proceeds payable by reason of loss or damage to any of the Collateral, or payments or
distributions with respect to Deposit Accounts) is hereby authorized and directed by Debtor
to make payment directly to Secured Party, regardless of whether Debtor was previously
making collections thereon. Subject to Paragraph 8(f) hereof, until such notice is given,
Debtor is authorized to retain and expend all payments made on Collateral. If an Event of
Default exists, Secured Party shall have the Right in its own name or in the name of Debtor
to compromise or extend time of payment with respect to all or any portion of the Collateral
for such amounts and upon such terms as Secured Party may determine; to demand, collect,
receive, receipt for, sue for, compound, and give acquittances for any and all amounts due
or to become due with respect to Collateral; to take control of cash and other proceeds of
any Collateral; to endorse the name of Debtor on any notes, acceptances, checks, drafts,
money orders, or other evidences of payment on Collateral that may come into the possession
of Secured Party; to sign the name of Debtor on any invoice or bill of lading relating to
any Collateral, on any drafts against Obligors or other Persons making payment with respect
to Collateral, on assignments and verifications of accounts or other Collateral and on
notices to Obligors making payment with respect to Collateral; to send requests for
verification of obligations to any Obligor; and to do all other acts and things necessary to
carry out the intent of this Security Agreement. If an Event of Default exists and any
Obligor fails or refuses to make
payment on any Collateral when due, Secured Party is authorized, in its sole
discretion, either in its own name or in the name of Debtor, to take such action as Secured
Party shall deem appropriate for the collection of any amounts owed with respect to
Collateral or upon which a delinquency exists. Regardless of any other provision hereof,
however, Secured Party shall never be liable for its failure to collect, or for its failure
to exercise diligence in the collection of, any amounts owed with respect to Collateral, nor
shall it be under any duty whatsoever to anyone except Debtor to account for funds that it
shall actually receive hereunder. Without limiting the generality of the foregoing, Secured
Party shall have no responsibility for ascertaining any maturities, calls, conversions,
exchanges, offers, tenders, or similar matters relating to any Collateral, or for informing
Debtor with respect to any of such matters (irrespective of whether Secured Party actually
has, or may be deemed to have, knowledge thereof). The receipt of

	 	 	 	 	 
	 

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	 	 	Secured Party to any
Obligor shall be a full and complete release, discharge, and acquittance to such Obligor, to
the extent of any amount so paid to Secured Party.

     (c) Intellectual Property. For purposes of enabling Secured Party to exercise
its Rights and remedies under this Security Agreement and enabling Secured Party and its
successors and assigns to enjoy the full benefits of the Collateral, Debtor hereby grants to
Secured Party an irrevocable, nonexclusive license (exercisable without payment of royalty
or other compensation to Debtor) to use, license, or sublicense any of the Intellectual
Property. Debtor shall provide Secured Party with reasonable access to all media in which
any of the Intellectual Property may be recorded or stored and all computer programs used
for the completion or printout thereof. This license shall also inure to the benefit of all
successors, assigns, and transferees of Secured Party. If an Event of Default exists,
Secured Party may require that Debtor assign all of its Right, title, and interest in and to
the Intellectual Property or any part thereof to Secured Party or such other Person as
Secured Party may designate pursuant to documents satisfactory to Secured Party. If no
Default or Event of Default exists, Debtor shall have the exclusive, non-transferable Right
and license to use the Intellectual Property in the ordinary course of business and the
exclusive Right to grant to other Persons licenses and sublicenses with respect to the
Intellectual Property for full and fair consideration.

     (d) Record Ownership of Securities. If an Event of Default exists, Secured
Party at any time may have any Collateral that is Pledged Securities and that is in the
possession of Secured Party, or its nominee or nominees, registered in its name, or in the
name of its nominee or nominees, as Secured Party; and, as to any Collateral that is Pledged
Securities so registered, Secured Party shall execute and deliver (or cause to be executed
and delivered) to Debtor all such proxies, powers of attorney, dividend coupons or orders,
and other documents as Debtor may reasonably request for the purpose of enabling Debtor to
exercise the voting Rights and powers which it is entitled to exercise under this Security
Agreement or to receive the dividends and other distributions and payments in respect of
such Collateral that is Pledged Securities or proceeds thereof which it is authorized to
receive and retain under this Security Agreement.

     (e) Voting of Securities. As long as no Event of Default exists, Debtor is
entitled to exercise all voting Rights pertaining to any Pledged Securities and
Partnership/Limited Liability Company Interests; provided however, that no vote shall be
cast or consent, waiver, or ratification given or action taken without the prior written
consent of Secured Party which would be inconsistent with or violate any provision of this
Security Agreement or any other Loan
Document; and provided further that Debtor shall give Secured Party at least five
Business Days’ prior written notice in the form of an officers’ certificate of the manner in
which it intends to exercise, or the reasons for refraining from exercising, any voting or
other consensual Rights pertaining to the Collateral or any part thereof which might have a
Material Adverse Effect on the value of the Collateral or any part thereof. If an Event of
Default exists and if Secured Party elects to exercise such Right, the Right to vote any
Pledged Securities shall be vested exclusively in Secured Party. To this end, Debtor hereby
irrevocably constitutes and appoints Secured Party the proxy and attorney-in-fact of Debtor,
with full power of substitution, to vote, and to act with respect to, any and all Collateral
that is Pledged Securities standing in the name of Debtor or with respect to which Debtor is
entitled to vote and act, subject to the understanding that such proxy may not be exercised
unless an Event of Default exists. The proxy herein granted is coupled with

	 	 	 	 	 
	 

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	 	 	an interest, is
irrevocable, and shall continue until the Obligations have been paid and performed in full.

     (f) Certain Proceeds. Notwithstanding any contrary provision herein, any and
all

     (i) dividends, interest, or other distributions paid or payable other than in
cash in respect of, and instruments and other property received, receivable, or
otherwise distributed in respect of, or in exchange for, any Collateral;

     (ii) dividends, interest, or other distributions hereafter paid or payable in
cash in respect of any Collateral in connection with a partial or total liquidation
or dissolution, or in connection with a reduction of capital, capital surplus, or
paid-in-surplus;

     (iii) cash paid, payable, or otherwise distributed in redemption of, or in
exchange for, any Collateral; and

     (iv) dividends, interest, or other distributions paid or payable in violation
of the Loan Documents,

	 	 	shall be part of the Collateral hereunder, and shall, if received by Debtor, be held in
trust for the benefit of Secured Party, and shall forthwith be delivered to Secured Party
(accompanied by proper instruments of assignment and/or stock and/or bond powers executed by
Debtor in accordance with Secured Party’s instructions) to be held subject to the terms of
this Security Agreement. Any cash proceeds of Collateral which come into the possession of
Secured Party during the continuance of an Event of Default (including, without limitation,
insurance proceeds) may, at Secured Party’s option, be applied in whole or in part to the
Obligations (to the extent then due), be released in whole or in part to or on the written
instructions of Debtor for any general or specific purpose, or be retained in whole or in
part by Secured Party as additional Collateral. Any cash Collateral in the possession of
Secured Party may be invested by Secured Party in certificates of deposit issued by Secured
Party (if Secured Party issues such certificates) or by any state or national bank having
combined capital and surplus greater than $100,000,000 with a short term rating from Moody’s
and S&P of P-1 and A-1+, respectively, or in securities issued or guaranteed by the United
States or any agency thereof. Secured Party shall never be obligated to make any such
investment and shall never have any liability to Debtor for any loss
which may result therefrom. All interest and other amounts earned from any investment of
Collateral may be dealt with by Secured Party in the same manner as other cash Collateral.
Except as specifically provided herein, the provisions of this subparagraph are applicable
whether or not a Default or Event of Default exists.

     (g) Use and Operation of Collateral. Should any Collateral come into the
possession of Secured Party, Secured Party may use or operate such Collateral for the
purpose of preserving it or its value pursuant to the order of a court of appropriate
jurisdiction or in accordance with any other Rights held by Secured Party in respect of such
Collateral. Debtor covenants to promptly reimburse and pay to Secured Party, at Secured
Party’s request, the amount of all reasonable expenses (including, without limitation, the
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	 	 	charges) incurred by Secured Party in
connection with its custody and preservation of Collateral, and all such expenses, costs,
Taxes, and other charges shall bear interest at the Default Rate until repaid and, together
with such interest, shall be payable by Debtor to Secured Party upon demand and shall become
part of the Obligations. However, the risk of accidental loss or damage to, or diminution in
value of, Collateral is on Debtor, and Secured Party shall have no liability whatever for
failure to obtain or maintain insurance, nor to determine whether any insurance ever in
force is adequate as to amount or as to the risks insured. With respect to Collateral that
is in the possession of Secured Party, Secured Party shall have no duty to fix or preserve
Rights against prior parties to such Collateral and shall never be liable for any failure to
use diligence to collect any amount payable in respect of such Collateral, but shall be
liable only to account to Debtor for what it may actually collect or receive thereon. The
provisions of this subparagraph are applicable whether or not an Event of Default exists.

     (h) Cash Collateral Account. If an Event of Default exists and is continuing,
Secured Party shall have, and Debtor hereby grants to Secured Party, the Right and authority
to transfer all funds on deposit in the Deposit Accounts to a Cash Collateral Account
(herein so called) maintained with a depository institution acceptable to Secured Party and
subject to the exclusive direction, domain, and control of Secured Party, and no
disbursements or withdrawals shall be permitted to be made by Debtor from such Cash
Collateral Account. Such Cash Collateral Account shall be subject to the Security Interest
and Liens in favor of Secured Party herein created, and Debtor hereby grants a security
interest to Secured Party on behalf of Lenders in and to, such Cash Collateral Account and
all checks, drafts, and other items ever received by Debtor for deposit therein.
Furthermore, if an Event of Default exists, Secured Party shall have the Right, at any time
in its discretion without notice to Debtor, (i) to transfer to or to register in the name of
Secured Party or any Lender or nominee any certificates of deposit or deposit instruments
constituting Deposit Accounts and shall have the Right to exchange such certificates or
instruments representing Deposit Accounts for certificates or instruments of smaller or
larger denominations and (ii) to take and apply against the Obligations any and all funds
then or thereafter on deposit in the Cash Collateral Account or otherwise constituting
Deposit Accounts.

     (i) Power of Attorney. Debtor hereby irrevocably constitutes and appoints
Secured Party and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the name of Debtor
or in its own name, to take after the occurrence and during the continuance of an Event of
Default any and all action and to execute any and all documents and instruments which
Secured Party at any time and
from time to time deems necessary or desirable to accomplish the purposes of this
Security Agreement and, without limiting the generality of the foregoing, Debtor hereby
gives Secured Party the power and Right on behalf of Debtor and in its own name to do any of
the following from time to time after the occurrence and during the continuance of an Event
of Default without notice to or the consent of Debtor:

     (i) to transfer any and all funds on deposit in the Deposit Accounts to the
Cash Collateral Account as set forth in herein;

     (ii) to receive, endorse, and collect any drafts or other instruments or
documents in connection with clause (b) above and this clause (i);

	 	 	 	 	 
	 

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     (iii) to use the Intellectual Property or to grant or issue any exclusive (if
Debtor has exclusive rights to such Intellectual Property) or non-exclusive license
under the Intellectual Property to anyone else, and to perform any act necessary for
the Secured Party to assign, pledge, convey, or otherwise transfer title in or
dispose of the Intellectual Property to any other Person;

     (iv) to demand, sue for, collect, or receive, in the name of Debtor or in its
own name, any money or property at any time payable or receivable on account of or
in exchange for any of the Collateral and, in connection therewith, endorse checks,
notes, drafts, acceptances, money orders, documents of title or any other
instruments for the payment of money under the Collateral or any policy of
insurance;

     (v) to pay or discharge taxes, Liens, or other encumbrances levied or placed on
or threatened against the Collateral;

     (vi) to notify post office authorities to change the address for delivery of
mail to Debtor to an address designated by Secured Party and to receive, open, and
dispose of mail addressed to Debtor; and

     (vii) (A) to direct account debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all monies due and to
become due thereunder directly to Secured Party or as Secured Party shall direct;
(B) to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Collateral; (C) to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments, proxies,
stock powers, verifications, and notices in connection with accounts and other
documents relating to the Collateral; (D) to commence and prosecute any suit,
action, or proceeding at Law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other Right in respect
of any Collateral; (E) to defend any suit, action, or proceeding brought against
Debtor with respect to any Collateral; (F) to settle, compromise, or adjust any
suit, action, or proceeding described above and, in connection therewith, to give
such discharges or releases as Secured Party may deem appropriate; (G) to exchange
any of the Collateral for other property upon any merger, consolidation,
reorganization,
recapitalization, or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Collateral with any committee, depositary,
transfer agent, registrar, or other designated agency upon such terms as Secured
Party may determine; (H) to add or release any guarantor, endorser, surety, or other
party to any of the Collateral; (I) to renew, extend, or otherwise change the terms
and conditions of any of the Collateral; (J) to endorse Debtor’s name on all
applications, documents, papers, and instruments necessary or desirable in order for
Secured Party to use or maintain any of the Intellectual Property; (K) to make,
settle, compromise or adjust any claims under or pertaining to any of the Collateral
(including claims under any policy of insurance); (L) to execute on behalf of Debtor
any financing statements or continuation statements with respect to the Security
Interests created hereby, and to do any and all acts and things to protect and
preserve the Collateral including, without limitation, the protection and
prosecution of all

	 	 	 	 	 
	 

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Rights included in the Collateral; and (M) to sell, transfer,
pledge, convey, make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Secured Party were the absolute owner
thereof for all purposes, and to do, at Secured Parry’s option and Debtor’s expense,
at any time, or from time to time, all acts and things which Secured Party deems
necessary to protect, preserve, maintain, or realize upon the Collateral and Secured
Party’s security interest therein.

	 	 	This power of attorney is a power coupled with an interest and shall be irrevocable. Secured
Party shall be under no duty to exercise or withhold the exercise of any of the Rights,
powers, privileges, and options expressly or implicitly granted to Secured Party in this
Security Agreement, and shall not be liable for any failure to do so or any delay in doing
so. Neither Secured Party nor any Person designated by Secured Party shall be liable for any
act or omission or for any error of judgment or any mistake of fact or Law. This power of
attorney is conferred on Secured Party solely to protect, preserve, maintain, and realize
upon its Security Interest in the Collateral. Secured Party shall not be responsible for any
decline in the value of the Collateral and shall not be required to take any steps to
preserve rights against prior parties or to protect, preserve, or maintain any Lien given to
secure the Collateral.

     (j) Purchase Money Collateral. To the extent that Secured Party or any Lender
has advanced or will advance funds to or for the account of Debtor to enable Debtor to
purchase or otherwise acquire Rights in Collateral, Secured Party or such Lender, at its
option, may pay such funds (i) directly to the Person from whom Debtor will make such
purchase or acquire such Rights, or (ii) to Debtor, in which case Debtor covenants to
promptly pay the same to such Person, and forthwith furnish to Secured Party evidence
satisfactory to Secured Party that such payment has been made from the funds so provided.

     (k) Subrogation. If any of the Obligations are given in renewal or extension or
applied toward the payment of indebtedness secured by any Lien, Secured Party shall be, and
is hereby, subrogated to all of the Rights, titles, interests, and Liens securing the
indebtedness so renewed, extended, or paid.

     (1) Indemnification. Debtor hereby assumes all liability for the Collateral,
for the Security Interest, and for any use, possession, maintenance, and management of, all
or any of the Collateral including, without limitation, any Taxes arising as a result of, or
in connection with,
the transactions contemplated herein, and agrees to assume liability for, and to
indemnify and hold Secured Party and each Lender harmless from and against, any and all
claims, causes of action, or liability, for injuries to or deaths of Persons and damage to
property, howsoever arising from or incident to such use, possession, maintenance, and
management, whether such Persons be agents or employees of Debtor or of third parties, or
such damage be to property of Debtor or of others. Debtor agrees to indemnify, save, and
hold Secured Party and each Lender harmless from and against, and covenants to defend
Secured Party and each Lender against, any and all losses, damages, claims, costs,
penalties, liabilities, and expenses (collectively, “Claims”), including, without
limitation, court costs and attorneys’ fees, and any of the foregoing arising from the
negligence of Secured Party or any Lender, or any of their respective officers, employees,
agents, advisors, employees, or representatives, howsoever arising or incurred because of,
incident to, or with respect to Collateral or any use, possession, maintenance, or
management

	 	 	 	 	 
	 

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	 	 	thereof; provided however, that the indemnity set forth in this Paragraph 8(l)
will not apply to Claims caused by the gross negligence or willful misconduct of Secured
Party or any Lender.

     9. MISCELLANEOUS.

     (a) Continuing Security Interest. This Security Agreement creates a continuing
security interest in the Collateral and shall (i) remain in full force and effect until the
termination of the obligations of Lenders to make Credit Extensions under the Loan Documents
and the payment in full of the Obligations (other than any contingent indemnity obligations
or, in the case of L/C Obligations, Cash Collateralized) and compliance with Section
10.01(e) of the Credit Agreement with respect to Outstanding Swap Contracts secured by any
Loan Document; and (ii) inure to the benefit of and be enforceable by Secured Party,
Lenders, and their respective successors, transferees, and assigns. Without limiting the
generality of the foregoing clause (ii), Secured Party and Lenders may assign or otherwise
transfer any of their respective Rights under this Security Agreement to any other Person in
accordance with the terms and provisions of Section 10.07 of the Credit Agreement, and to
the extent of such assignment or transfer such Person shall thereupon become vested with all
the Rights and benefits in respect thereof granted herein or otherwise to Secured Party or
Lenders, as the case may be. Upon payment in full of the Obligations (other than any
contingent indemnity obligations or, in the case of L/C Obligation, Cash Collateralized) and
compliance with Section 10.01(e) of the Credit Agreement with respect to Outstanding Swap
Contracts secured by any Loan Document, Debtor shall be entitled to the return, upon its
request and at its expense, of such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.

     (b) Reference to Miscellaneous Provisions. This Security Agreement is one of
the “Loan Documents” referred to in the Credit Agreement, and all provisions relating to
Loan Documents set forth in Article X of the Credit Agreement are incorporated herein by
reference, the same as if set forth herein verbatim.

     (c) Term; Release of Liens. The Administrative Agent shall release the Liens
created by this Security Agreement in accordance with Section 10.01 of the Credit Agreement;
provided that no Obligor, if any, on any of the Collateral shall ever be obligated to make
inquiry as to the termination of this Security Agreement, but shall be fully protected in
making payment directly to Secured Party until actual notice of such total payment of the
Obligations is received by such
Obligor. At such time as the Liens created by this Security Agreement are to be
released pursuant to this paragraph, Secured Party shall, at the request and expense of the
Debtor following such termination, promptly deliver to the Debtor any Collateral held by the
Secured Party hereunder, and promptly execute and deliver to such Debtor such documents and
instruments as the Debtor shall reasonably request to evidence such termination and release
as provided in the Credit Agreement. In addition, if any of the Collateral shall be sold,
transferred, assigned or otherwise disposed of by the Debtor in a transaction permitted by
the Credit Agreement, then the Secured Party, at the request and expense of the Debtor,
shall promptly execute and deliver releases as provided in the Credit Agreement.

     (d) Actions Not Releases. The Security Interest and Debtor’s obligations and
Secured Party’s Rights hereunder shall not be released, diminished, impaired, or adversely
affected by the

	 	 	 	 	 
	 

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		 	occurrence of any one or more of the following events: (i) the taking or
accepting of any other security or assurance for any or all of the Obligations; (ii) any
release, surrender, exchange, subordination, or loss of any security or assurance at any
time existing in connection with any or all of the Obligations; (iii) the modification of,
amendment to, or waiver of compliance with any terms of any of the other Loan Documents
without the notification or consent of Debtor, except as required therein (the Right to such
notification or consent being herein specifically waived by Debtor); (iv) the insolvency,
bankruptcy, or lack of corporate or trust power of any party at any time liable for the
payment of any or all of the Obligations, whether now existing or hereafter occurring; (v)
any renewal, extension, or rearrangement of the payment of any or all of the Obligations,
either with or without notice to or consent of debtor, or any adjustment, indulgence,
forbearance, or compromise that may be granted or given by Secured Party or any Lender to
Debtor; (vi) any neglect, delay, omission, failure, or refusal of Secured Party or any
Lender to take or prosecute any action in connection with any other agreement, document,
guaranty, or instrument evidencing, securing, or assuring the payment of all or any of the
Obligations; (vii) any failure of Secured Party or any Lender to notify Debtor of any
renewal, extension, or assignment of the Obligations or any part thereof, or the release of
any Collateral or other security, or of any other action taken or refrained from being taken
by Secured Party or any Lender against Debtor or any new agreement between or among Secured
Party or one or more Lenders and Debtor, it being understood that except as expressly
provided herein, neither Secured Party nor any Lender shall be required to give Debtor any
notice of any kind under any circumstances whatsoever with respect to or in connection with
the Obligations including, without limitation, notice of acceptance of this Security
Agreement or any Collateral ever delivered to or for the account of Secured Party hereunder;
(viii) the illegality, invalidity, or unenforceability of all or any part of the Obligations
against any party obligated with respect thereto by reason of the fact that the Obligations,
or the interest paid or payable with respect thereto, exceeds the amount permitted by Law,
the act of creating the Obligations, or any part thereof, is ultra vires, or the officers,
partners, or trustees creating same acted in excess of their authority, or for any other
reason; or (ix) if any payment by any party obligated with respect thereto is held to
constitute a preference under applicable Laws or for any other reason Secured Party or any
Lender is required to refund such payment or pay the amount thereof to someone else.

     (e) Waivers. Except to the extent expressly otherwise provided herein or in
other Loan Documents and to the fullest extent permitted by applicable Law, Debtor waives
(i) any Right to require Secured Party or any Lender to proceed against any other Person, to
exhaust its Rights in Collateral, or to pursue any other Right which Secured Party or any
Lender may have; (ii) with respect to the Obligations, presentment and demand for payment,
protest, notice of protest and nonpayment, and notice of the intention to accelerate; and
(iii) all Rights of marshaling in respect of any and all of the Collateral.

     (f) Financing Statement; Authorization. Secured Party shall be entitled at any
time to file this Security Agreement or a carbon, photographic, or other reproduction of
this Security Agreement, as a financing statement, but the failure of Secured Party to do so
shall not impair the validity or enforceability of this Security Agreement. Debtor hereby
irrevocably authorizes Secured Party at any time and from time to time to file in any UCC
jurisdiction any initial or

	 	 	 	 	 
	 

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		 	other financing statements and amendments thereto that (i)
indicate the Collateral (A) as “all assets of Debtor” or words of similar effect, regardless
of whether any particular asset comprised in the Collateral falls within the scope of
Article 9 of the UCC of the state or such jurisdiction or whether such assets are included
in the Collateral hereunder, or (B) as being of an equal or lesser scope or with greater
detail, and (ii) contain any other information required by Article 9 of the UCC of the state
or such jurisdiction for the sufficiency or filing office acceptance of any financing
statement or amendment, including (A) whether the Debtor is an organization, the type of
organization, and any organization identification number issued to Debtor and, (B) in the
case of a financing statement filed as a fixture filing or indicating Collateral that is
as-extracted collateral or timber to be cut, a sufficient description of real property to
which the Collateral relates. Debtor agrees to furnish any such information to Secured Party
promptly upon request.

     (g) Amendments. This Security Agreement may be amended only by an instrument in
writing executed jointly by Debtor and Secured Party, and supplemented only by documents
delivered or to be delivered in accordance with the express terms hereof.

     (h) Multiple Counterparts. This Security Agreement has been executed in a
number of identical counterparts, each of which shall be deemed an original for all purposes
and all of which constitute, collectively, one agreement; but, in making proof of this
Security Agreement, it shall not be necessary to produce or account for more than one such
counterpart.

     (i) Parties Bound; Assignment. This Security Agreement shall be binding on
Debtor and Debtor’s legal representatives, successors, and assigns and shall inure to the
benefit of Secured Party and Secured Party’s successors and assigns.

     (i) Secured Party is the agent for each Lender under the Credit Agreement and
each Affiliate of a Lender party to any Lender Hedging Agreement, the Security
Interest and all Rights granted to Secured Party hereunder or in connection herewith
are for the ratable benefit of each Lender and each such Affiliate, and Secured
Party may, without the joinder of any Lender or any such Affiliate, exercise any and
all Rights in favor of Secured Party or Lenders or any such Affiliates hereunder,
including, without limitation, conducting any foreclosure sales hereunder, and
executing full or partial releases hereof, amendments or modifications hereto, or
consents or waivers hereunder.
The Rights of each Lender or any such Affiliate vis-à-vis Secured Party and
each other Lender or any such Affiliate may be subject to one or more separate
agreements between or among such parties, but Debtor need not inquire about any such
agreement or be subject to any terms thereof unless Debtor specifically joins
therein; and consequently, neither Debtor nor Debtor’s legal representatives,
successors, and assigns shall be entitled to any benefits or provisions of any such
separate agreements or be entitled to rely upon or raise as a defense, in any manner
whatsoever, the failure or refusal of any party thereto to comply with the
provisions thereof.

     (ii) Debtor may not, without the prior written consent of Secured Party, assign
any Rights, duties, or obligations hereunder.

	 	 	 	 	 
	 

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     (j) Governing Law. The substantive laws of the State of New York, except to
the extent the laws of another jurisdiction govern the creation, perfection, validity, or
enforcement of liens under this Security Agreement, and the applicable federal laws of the
United States, shall govern the validity, construction, enforcement and interpretation of
this security agreement and all of the other loan documents.

     (k) The provisions of Section 10.10 of the Credit Agreement are incorporated herein as
if set forth herein.

     (1) All notices given pursuant hereto shall be given in the manner set forth in the
Credit Agreement, if to Secured Party, to the address of Secured Party therein set forth and
if to Debtor, to the following address:

               9520 N. May Avenue

                Suite 300

               Oklahoma City, Oklahoma 73120

                Beginning November 9, 2007:

                210 Park Avenue, Suite 2750

                Oklahoma City, Oklahoma 73102

               Facsimile: (405) 840-9897

               Telephone: (405) 488-1304

     (m) Debtor and the Secured Party acknowledge that this Agreement amends and restates
the Existing Security Agreement, and all liens, claims, rights, titles, interests and
benefits created and granted by the Prior Security Agreement shall continue to exist, remain
valid and subsisting, shall not be impaired or released hereby, shall remain in full force
and effect and are hereby renewed, extended, carried forward and conveyed as security for
the Obligations.

     THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

	 	 	 	 	 
	 

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     IN WITNESS WHEREOF, the Debtor has caused this Security Agreement to be duly executed and
delivered by an officer duly authorized as of the date first above written.

	 	 	 	 	 
	 	QUEST MIDSTREAM PARTNERS, L.P.,

a Delaware limited partnership
	 
	 	By:	Quest Midstream GP, LLC

its General Partner

	 
	 	By:  	/s/ Michael A. Forbau	 
	 	 	Michael A. Forbau 	 
	 	 	Vice President-Commercial 	 
	 

	 	 	 	 	 
	 

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ANNEX A TO SECURITY AGREEMENT

DEBTOR INFORMATION AND LOCATION OF COLLATERAL

	 	 	 	 	 	 	 
	A.

	 	Exact Legal Name of Debtor:
	 	Quest Midstream Partners, L.P.

	 
	 	 	 	 	 	 
	B.

	 	Mailing Address of Debtor:
	 	9520 N. May Avenue

	 

	 	 	 	Suite 300

	 

	 	 	 	Oklahoma City, Oklahoma 73120

	 
	 	 	 	 	 	 
	 

	 	 	 	Beginning November 9, 2007:

	 

	 	 	 	210 Park Avenue, Suite 2750

	 

	 	 	 	Oklahoma City, Oklahoma 73102

	 
	C.

	 	Type of Entity:
	 	limited partnership

	 
	 	 	 	 	 	 
	D.

	 	Jurisdiction of Organization:
	 	Delaware

	 
	 	 	 	 	 	 
	E.

	 	State Issued Organizational

Identification Number:
	 	4266820	 
	 
	 	 	 	 	 	 
	F.

	 	Tax ID Number:
	 	20-8056691	 
	 
	 	 	 	 	 	 
	G.

	 	Location of Books and Records:
	 	9520 N. May Avenue

	 

	 	 	 	Suite 300

	 

	 	 	 	Oklahoma City, Oklahoma 73120, which is changed to,

	 

	 	 	 	beginning November 9, 2007:

	 

	 	 	 	210 Park Avenue, Suite 2750

	 

	 	 	 	Oklahoma City, Oklahoma 73102

	 
	 	 	 	 	 	 
	 

	 	 	 	and

	 
	 	 	 	 	 	 
	 

	 	 	 	3 Allen Center

	 

	 	 	 	333 Clay Street, Suite 3650

	 

	 	 	 	Houston, Texas 77002

	 
	 	 	 	 	 	 
	H.

	 	Location of Collateral:
	 	9520 N. May Avenue

	 

	 	 	 	Suite 300

	 

	 	 	 	Oklahoma City, Oklahoma 73120, which is changed to,

	 

	 	 	 	beginning November 9, 2007:

	 

	 	 	 	210 Park Avenue, Suite 2750

	 

	 	 	 	Oklahoma City, Oklahoma 73102

	 
	 	 	 	 	 	 
	 

	 	 	 	and

	 
	 	 	 	 	 	 
	 

	 	 	 	3 Allen Center

	 

	 	 	 	333 Clay Street, Suite 3650

	 

	 	 	 	Houston, Texas 77002

	 	 	 	 	 
	 

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	I.

	 	Location of Real Property:
	 	None
	 
	 	 	 	 
	J.

	 	Jurisdiction(s) for Filing	 	 
	 

	 	Financing Statements:
	 	Delaware
	 
	 	 	 	 
	 

	 	Fixture filings in the relevant counties
in which the properties are located:
	 	None

	 	 	 	 	 
	 

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ANNEX B-1 TO SECURITY AGREEMENT

COLLATERAL DESCRIPTIONS

	A.	 	Collateral Notes and Collateral Note Security:
	 
	 	 	None.
	 
	B.	 	Pledged Shares:
	 
	 	 	None.
	 
	C.	 	Partnership/Limited Liability Company Interests:
	 
	 	 	100% of the limited liability company membership interest in Bluestem Pipeline, LLC, a
Delaware limited liability company
	 
	 	 	100% of the limited liability company membership interest in Quest Kansas Pipeline, L.L.C.,
a Delaware limited liability company
	 
	 	 	100% of the limited liability company interest in Quest Kansas General Partner, L.L.C., a
Delaware limited liability company
	 
	D.	 	Agreements:
	 
	 	 	Bluestem Partners, LLC Limited Liability Company Agreement
	 
	 	 	Quest Kansas Pipeline, L.L.C Limited Liability Company Agreement
	 
	 	 	Quest Kansas General Partner, L.L.C. Limited Liability Company Agreement
	 
	E.	 	Commercial Tort Claims:
	 
	 	 	None.
	 
	F.	 	Deposit Accounts (including name of bank address and account number).
	 
	 	 	Account no. 805481093 at Bank of Oklahoma.

	 	 	 	 	 
	 

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ANNEX B-2 TO SECURITY AGREEMENT

INTELLECTUAL PROPERTY

	1.	 	Registered Copyrights and Copyright Applications: None.
	 
	2.	 	Issued Patents and Patent Applications: None.
	 
	3.	 	Registered Trademarks and Trademark Applications: None.

	 	 	 	 	 
	 

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ANNEX C TO SECURITY AGREEMENT

DEPOSIT ACCOUNT CONTROL AGREEMENT

_______________, 20__

_____________________________

_____________________________

_____________________________

Ladies and Gentlemen:

This letter is to notify you (the “Depository Bank”) that, pursuant to that certain Pledge and
Security Agreement dated as of ______, 200__ (as amended, modified, supplemented, or restated
from time to time, the “Security Agreement”), ____________, a company organized under the
laws of ______ (the “Pledgor”), has granted to Royal Bank of Canada as Administrative Agent
and Collateral Agent (“Pledgee”) a first priority security interest in and lien upon, (a) Account
No. ______ (the “Account”) maintained by Pledgor with you, (b) any extensions or renewals of
the Account if the Account is one which may be extended or renewed, and (c) all of Pledgor’s right,
title, and interest (whether now existing or hereafter created or arising) in and to the Account,
all sums from time to time on deposit therein, credited thereto, or payable thereon, all
instruments, documents, certificates, and other writings evidencing the Account, and any and all
proceeds of any thereof (the items described in clauses (a), (b) and (c) being herein collectively
called the “Collateral”),

In connection therewith, the parties hereto agree (which agreement by Pledgor will be construed as
instructions to the Depository Bank):

	1.	 	The Depository Bank is instructed to register the pledge on its books and hold the Collateral
in a pledged status account.
	 
	2.	 	The Depository Bank is instructed to deliver to Pledgee copies of monthly statements on the
account(s) identified below:
	 
	3.	 	The Account will be styled:
	 
	4.	 	All dividends, interest, gains, and other profits on the Collateral will be reported in the
name and tax identification number of Pledgor.
	 
	5.	 	If so notified by Pledgee, the Depository Bank will not, without the prior written consent of
Pledgee, allow any of the Collateral or any interest therein to be sold, transferred, or
withdrawn by or for the benefit of Pledgor.
	 
	6.	 	This letter agreement gives Pledgee “control” of the Account and the Collateral. The
Depository Bank agrees to comply with any order or instruction from Pledgee as to the
withdrawal or disposition of any funds from time to time credited to the Account, or as to any
other matters 

	 	 	 	 	 
	 

	 	Annex C — Page 1
	 	MLP Pledge and

Security Agreement

 

 

	 	 	relating to the Collateral, without the further consent of Pledgor. The
Depository Bank shall be fully entitled to rely upon such instructions from Pledgee even if such instructions are
contrary to any instructions or demands that Pledgor may give to the Depository Bank.

	7.	 	Pledgee agrees to indemnify and hold the Depository Bank, its officers and employees,
harmless from and against any and all claims, causes of action, liabilities, lawsuits,
demands, and/or damages, including, without limitation any and all costs, including court
costs and reasonable attorneys’ fees, that may arise or result from the Depository Bank
complying with the instructions and orders of Pledgee given in connection with Pledgee’s
exercise of its control over and secured rights in the Account and the Collateral except to
the extent that such claims, causes of action, liabilities, lawsuits, demands, and/or damages
are found in a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Depository Bank.
	 
	8.	 	Pledgor agrees to indemnify and hold the Depository Bank, its officers and employees,
harmless from and against any and all claims, causes of action, liabilities, lawsuits,
demands, and/or damages, including, without limitation, any and all costs, including court
costs and reasonable attorneys’ fees, that may arise or result from the Depository Bank
entering into and performing its obligations under this letter agreement except to the extent
that such claims, causes of action, liabilities, lawsuits, demands, and/or damages are found
in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of the Depository Bank.
	 
	9.	 	The Depository Bank represents that it has not received notice regarding any lien,
encumbrance, or other claim to the Account or the Collateral from any person other than
pursuant to this letter agreement and has not entered into another agreement with any other
party to act on such party’s instructions with respect to the Account. The Depository Bank
further agrees not to enter into any such agreement with any other party.
	 
	10.	 	The Depository Bank subordinates’ to the security interest of Pledgee any right of recoupment
or set-off, or to assert any security interest or other lien, that it may at any time have
against or in any of the Collateral on account of any credit or other obligations owed to the
Depository Bank by Pledgor or any other person. The Depository Bank may, however, from time to
time debit the Account for any of its customary charges in maintaining the Account or for
reimbursement for the reversal of any provisional credits granted by the Depository Bank to
the Account, to the extent, in each case, that Pledgor has not separately paid or reimbursed
Depository Bank therefor.
	 
	11.	 	To the extent a conflict exists between the terms of this letter agreement and any account
agreement between Pledgor and the Depository Bank, the terms of this letter agreement will
control.
	 
	12.	 	The terms of this letter agreement will in no way be modified except by a writing signed by
all parties hereto.

	 	 	 	 	 
	 

	 	Annex C — Page 2
	 	MLP Pledge and

Security Agreement

 

 

	13.	 	Each of the parties executing this letter agreement represents that he has the proper
authority to execute this letter agreement.

	 	 	 	 	 
	 

	 	Annex C — Page 3
	 	MLP Pledge and

Security Agreement

 

 

IN WITNESS WHEREOF, Pledgor and Pledgee have agreed to the terms of this letter agreement as
of the date first indicated above.

	 	 	 	 	 	 	 
	Pledgor:

[NAME OF ENTITY]

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	 
	Pledgee:

ROYAL BANK OF CANADA,

as Administrative Agent

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 
	Acknowledged and Agreed on ______, 200_:

Depository Bank:

[NAME OF ENTITY]

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

	 	 	 	 	 
	 

	 	Annex C — Page 4
	 	MLP Pledge and

Security Agreement

 

 

ANNEX D TO SECURITY AGREEMENT

ACKNOWLEDGMENT OF PLEDGE

PARTNERSHIP/LIMITED LIABILITY COMPANY: _____________________

INTEREST OWNER: _____________________________

     BY THIS ACKNOWLEDGMENT OF PLEDGE, dated as of _________, 200_,
_________ (the “Partnership/Limited Liability Company”) hereby acknowledges the
pledge in favor of Royal Bank of Canada (“Pledgee”), in its capacity as Administrative Agent and
Collateral Agent for certain Lenders and as Secured Party under that certain Pledge and Security
Agreement dated as of _________, 200__ (as amended, modified, supplemented, or restated from time
to time, the “Security Agreement”), against, and a security interest in favor of Pledgee in, all of
_________’s (the “Interest Owner”) Rights in connection with any partnership
interest in the Partnership/Limited Liability Company now and hereafter owned by the Interest Owner
(“Partnership/Limited Liability Company Interest”).

     A. Pledge Records. The Partnership/Limited Liability Company has identified Pledgee’s
interest in all of the Interest Owner’s Right, title, and interest in and to all of the Interest
Owner’s Partnership/Limited Liability Company Interest as subject to a pledge and security interest
in favor of Pledgee in the Partnership/Limited Liability Company records.

     B. Partnership/Limited Liability Company Distributions, Accounts, and Correspondence.
The Partnership/Limited Liability Company hereby acknowledges that (i) all proceeds, distributions,
and other amounts payable to the Interest Owner, including, without limitation, upon the
termination, liquidation, and dissolution of the Partnership/Limited Liability Company shall be
paid and remitted to the Pledgee upon demand, (ii) all funds in deposit accounts shall be held for
the benefit of Pledgee, and (iii) all future correspondence, accountings of distributions, and tax
returns of the Partnership/Limited Liability Company shall be provided to the Pledgee. The
Partnership/Limited Liability Company acknowledges and accepts such direction and hereby agrees
that it shall, upon the written demand by the Administrative Agent, pay directly to the
Administrative Agent at its offices at Royal Bank Plaza, P.O. Box 50, 200 Bay Street,
12th Floor, South Tower, Toronto, Ontario M5J 2W7 any and all distributions, income, and
cash flow arising from the Partnership/Limited Liability Company Interests whether payable in cash,
property or otherwise, subject to and in accordance with the terms and conditions of the
Partnership/Limited Liability Company Agreement. The Pledgee may from time to time notify the
Partnership/Limited Liability Company of any change of address to which such amounts are to be
paid.

Remainder of Page Intentionally Blank.

Signature Page to Follow.

Annex D — Page 1

 

 

     EXECUTED as of the date first stated in this Acknowledgment of Pledge.

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 
	 
	 	[PARTNERSHIP/LIMITED LIABILITY
COMPANY]
	
 	 
	 
	 	By:  	
 	 
	 	 	as [General Partner] [Manager]	 
	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 

Annex D — Page 2exv10w1

 

Confidential
Materials omitted and filed separately

with the Securities and Exchange Commission. Asterisks denote
omission.

Exhibit 10.1

Execution Copy

MANUFACTURING AND SUPPLY AGREEMENT

This MANUFACTURING & SUPPLY AGREEMENT (this “Agreement”), dated as of August 20, 2007 by and among
(i) Critical Therapeutics, Inc. , a Delaware corporation having a place of business at 60 Westview
Street, Lexington, MA 02421, USA (“CRTX”), (ii) Jagotec AG, a Swiss company having a place of
business at Eptingerstrasse 51, CH-4132 Muttenz, Switzerland (“Jagotec”) and (iii) for the purposes
of clause 20 only, SkyePharma PLC, an English company having a place of business at 105
Piccadilly, London W1J 7NJ (Jagotec and CRTX individually referred to as a “Party” and together as
the “Parties”).

WITNESSETH:

WHEREAS, by an agreement dated 3 October 1996 (the “Abbott Licence”) Jagotec granted Abbott
Laboratories (“Abbott”) an exclusive, worldwide right and licence under certain patents and
know-how to make, have made, import, use, offer for sale, market, distribute and sell the Product
(as defined below) with the right, subject to Jagotec’s consent, to sub-licence such rights.

WHEREAS, Abbott has granted CRTX a licence (the “CRTX Licence”) to develop and commercialise the
Product under intellectual property owned by or licensed to Abbott including intellectual property
licensed to Abbott under the Abbott Licence.

WHEREAS, Jagotec consented to the CRTX Licence and agreed to provide certain services to CRTX in
connection with obtaining registrations for products and the manufacture of clinical supplies and
samples of Product on the terms of an agreement dated December 3, 2003 (the “Support Agreement”).

WHEREAS, in the Support Agreement, CRTX and Jagotec agreed to enter into a manufacturing agreement
for the manufacture and supply of commercial supplies of the Product.

WHEREAS, this Agreement is the manufacturing agreement referred to in the Support Agreement.

NOW, THEREFORE, for and in consideration of the premises, mutual covenants and agreements contained
herein, and intending to be legally bound hereby, the Parties hereby agree as follows:

 

 

	1.	 	Definitions
	 
	1.1	 	For purposes of this Agreement, the following terms shall have the following meanings:
	 
	 	 	“Act” means the US Federal Food, Drug and Cosmetic Act of 1938, the Public Health Service
Act of 1944 and the regulations promulgated under those Acts, as may be amended from time to
time.
	 
	 	 	“Active Material Cost” means the value to be attributed to the API for the purposes of
Schedule 3 (line item G) of this Agreement, as set forth in Schedule 4 hereto.
	 
	 	 	“API” means the active pharmaceutical ingredient, zileuton.
	 
	 	 	“Affiliate” means any entity in which a Party has a direct or indirect equity or income
interest ownership of at least fifty percent (50%) or more, or any entity which, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under
common control with that Party. For the purpose of this definition, “control” means the
possession, directly or indirectly, of the power to direct the management or policies of an
entity, whether through the ownership of voting securities, by contract relating to voting
rights or corporate governance, or otherwise and the terms “controlled by” and “under common
control with” have corresponding meanings. The term Affiliate shall include in particular
with respect to Jagotec AG, its manufacturing affiliate Skye-SAS.
	 
	 	 	“Agency” means any applicable supra-national, federal, national, regional, state, provincial
or local regulatory agencies, departments, bureaus, commissions, councils or other
government entities regulating or otherwise exercising authority with respect to the
manufacture or distribution, use or sale of the Product, including the FDA.
	 
	 	 	“Applicable Laws” means the Act and other laws, rules and regulations, (including any rules,
regulations, guidelines or other requirements of any Agency) applicable to the manufacture
of pharmaceutical products, as may be in effect from time to time in the US and in such
other countries for which CRTX has (i) obtained a Registration for the Product and (ii)
provided Jagotec with not less than nine months written notice that the Product must be
manufactured in accordance with the Applicable Laws in that country.
	 
	 	 	“Auxiliary Materials” means any and all material, ingredients and components required and/or
necessary for the manufacture and bulk packaging of Product by Jagotec hereunder, except
API.

2

 

“Batch” means a specific quantity of the Product (batch target size of approximately [**]
tablets, or such other target batch size as approved in writing by the Parties) that is
intended to be of uniform character and quality, within specified limits, and is produced
during the same cycle of manufacture and is designated by a batch number.

“Complete Batch Documentation” shall have the same meaning as set forth in the Quality
Agreement.

“Batch Instructions” shall have the meaning as set forth in the Quality Agreement.

“cGMP” means the Current Good Manufacturing Practices as defined from time to time under the
Act and other Applicable Laws including the Current Good Manufacturing Practices set forth
in 21 C.F.R. 210 and 21 C.F.R. 211 and relevant FDA guidance documents; and to the extent
applicable European Community Directive 91/356/EEC, Directive 2001/83/EC and all relevant
implementations of such directives and relevant guidelines including the EC Guidelines.

“Confidential Information” in relation to a party, means any and all technical and
commercial materials and information and know-how, which is proprietary or confidential or
non-public in nature including, without limitation, know how, trade secrets, specifications,
Batch Instructions, products, processes, services, contracts, business methods or practices,
pricing techniques and information, financial information, intellectual property and ideas
which, at the time or times concerned, are not generally known to third persons and or is
identified by that party as confidential.

“Contract Vendor” means a company or facility which is contracted by Skye-SAS or Jagotec to
supply Auxiliary Materials or to manufacture or test the Product, other than Skye-SAS or
CRTX. For the avoidance of doubt, the [**], would be considered a Contract Vendor.

“Critical Batch Documentation” shall have the same meaning as set forth in the Quality
Agreement.

“Defect” means (a) the failure of a Product to comply in any material respect with the
Specifications, cGMP and Applicable Laws (to the extent that such failure to comply with
Applicable Laws results in the Product being unable to sold in the relevant part of the
Territory for which it was manufactured), or (b) a manufacturing defect which would be
discoverable upon reasonable physical inspection or testing performed within customary
timelines upon receipt of a shipment of Product.

3

 

“EC Guidelines” means Volume 4 of the Rules Governing Medicinal Products in the
European Union: Medicinal Products for Human and Veterinary Use: Good Manufacturing
Practices.

“Effective Date” means May 22, 2007.

“Executed Batch Record” shall have the same meaning as set forth in the Quality Agreement.

“Facility” means Skye-SAS’s manufacturing facilities in St-Quentin-Fallavier, France.

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

“Finished Product” means Product further worked, labelled and packaged by or on behalf of
CRTX for commercial supply.

“Fully Allocated” means the fully-burdened cost of manufacturing the Product, including the
cost of (i) raw materials other than API used in the actual production, bulk labelling and
bulk packaging of Product, (ii) direct labour of Jagotec employees or its Affiliate’s
employees (including basic wages, labour and related payroll taxes and benefits) incurred or
spent in the actual production, bulk labelling and bulk packaging of Product, including
without limitation for quality assurance and manufacturing facility operations, and (iii)
overhead of Jagotec and its Affiliates (including operating expenses, indirect labour and
related payroll taxes and benefits, depreciation, applicable taxes, insurance, repairs and
maintenance, supplies) incurred or spent in support of the actual production, bulk packaging
and bulk labelling of Product, but not for cost of any unused manufacturing capacities that
Jagotec may have in excess of the requirements contained in the forecasts provided by CRTX,
and, in the case of (ii) and (iii) above, excluding taxable benefits, remuneration based on
profitability or bonuses, and (iv) (without prejudice to delivery being Ex Works hereunder)
any transportation, storage, non-reimbursable import or export taxes of or for Product as
may be incurred or spent by Jagotec or its Affiliates in connection with the supply of
Product pursuant to the terms of this Agreement, all as determined in accordance with
generally accepted accounting principles consistently applied; provided, however, any
increase in the overhead of Jagotec and its Affiliates shall not exceed [**]% of their
overhead of the previous Year.

“Geomatrix System” has the meaning ascribed to such term in the Support Agreement.

4

 

“Latent Defect” means a Defect which would not be discoverable upon reasonable physical
inspection of a shipment of the Product when testing is performed.

“Launch Phase” means the period of time immediately before and immediately following receipt
of a Marketing Approval in the US, whereupon the supply of the Product by Jagotec to CRTX is
ramped-up with a view to ensuring the commercial availability of the Finished Product and
during which time the shelf-life of the Product will be less than [**] months but more than
[**] months from date of manufacture by Jagotec.

“Manufacturing Sub-License” means a sub-license under the Support Agreement and the Abbott
Licence, subject to the prior written consent of Jagotec which shall not be unreasonably
withheld or delayed, from CRTX to a manufacturer other than Jagotec (such third party
manufacturer, a “Manufacturing Sub-Licensee”) to manufacture the Product on the terms
hereof. As of the Effective Date, the only Manufacturing Sub-License has been granted to
Patheon Pharmaceuticals Inc. to which Jagotec has consented by letter dated 19 July 2005 in
respect of quantities set out therein.

“Marketing Approvals” means the approvals issued by any Agency in accordance with any
procedures as may be required by Applicable Law to market the Finished Product in the
relevant country.

“Price” means the price expressed in U.S. dollars of Product supplied by Jagotec hereunder
calculated in accordance with Schedule 1, excluding VAT (or similar taxes) where applicable.

“Product” means the bulk packaged uncoated tablets for a finished product containing API as
the sole therapeutic or prophylactic active ingredient, in a controlled release tablet using
the Geomatrix System supplied by Jagotec to CRTX hereunder.

“Quality Agreement” means that certain Technical and Quality Assurance Agreement by and
among Skye-SAS, Jagotec and CRTX dated June 29, 2007, describing the obligations of the
Parties with regards to compliance, quality systems, and testing and release of Product as
may be required by Applicable Laws and as agreed upon in writing by the Parties; the Quality
Agreement is incorporated into and made a part of this Agreement.

“Quarter” means a period of 3 months starting on a Quarter Day.

“Quarter Day” means each of 1 January, 1 April, 1 July and 1 October in each Year.

5

 

	 	 	“Recall” shall have the meaning as set forth in the Quality Agreement and “Recalled” shall
be construed accordingly.
	 
	 	 	“Registrations” means any and all technical, medical and scientific licences, registrations,
authorisations and/or approvals of the Product or Finished Product (including clinical
research authorization, manufacturing approvals and authorisations, Marketing Approvals,
manufacturing facility approvals or authorizations, and pricing, third party reimbursement
and labelling approvals) that are required by any Agency for the manufacture, distribution,
use or sale of the Product or Finished Product in any country, as amended or supplemented
from time to time.
	 
	 	 	”Release” shall have the same meaning as set forth in the Quality Agreement.
	 
	 	 	“SEC” means the U.S. Securities and Exchange Commission.
	 
	 	 	“Skye-SAS” means SkyePharma Production S.A.S.
	 
	 	 	“Specifications” shall have the same meaning as set forth in the Quality Agreement.
	 
	 	 	“Territory” means all countries of the world.
	 
	 	 	“US” means the United States of America.
	 
	 	 	“$” and “US$” shall mean United States Dollars.
	 
	 	 	“Working Day” means Monday to Friday of each week excluding public holidays in France,
Switzerland or the US.
	 
	 	 	“Year” means a calendar year running from 1 January to 31 December.
	 
	1.2	 	Unless otherwise expressly stated, reference to, a Section, Schedule or Exhibit is to a
Section of, or a Schedule or Exhibit to, this Agreement and references in any Schedule to a
Paragraph is to a paragraph in that Schedule.
	 
	1.3	 	The Recitals, Schedules and Quality Agreement form part of this Agreement and will have the
same force and effect as if expressly set out in the body of this Agreement and any reference
to this Agreement will include the Recitals, Schedules and Quality Agreement.
	 
	1.4	 	The Section headings are for convenience only and will not affect the interpretation of this
Agreement.

6

 

	1.5	 	In this Agreement, any phrase introduced by the terms include, including, in particular or
any similar expression will be construed as illustrative and will not limit the sense of the
words proceeding them.
	 
	1.6	 	In this Agreement, unless the context otherwise requires:
	 
		 	a)use of the singular is deemed to include the plural and vice versa;
	 
		 	b) use of any gender is deemed to include every gender; and
	 
		 	c) reference to a person includes a natural person, a firm, a corporation, a partnership, a
trust, an association, an organisation and any other body or entity whether or not having
separate legal personality.
	 
	1.7	 	Any undertaking by any of the parties not to do any act or thing shall be deemed to include
an undertaking not to permit or suffer or assist the doing of that act or thing.
	 
	2.	 	Subject Matter and Grant of License
	 
	2.1.	 	CRTX hereby appoints Jagotec with effect from the Effective Date, and Jagotec hereby accepts
such appointment under the terms and conditions contained in this Agreement, to manufacture
only for CRTX the Product in bulk and to deliver and/or sell such Product only to CRTX.
	 
	2.2.	 	CRTX hereby grants to Jagotec with effect from the Effective Date the royalty-free right and
sub-license under the CRTX Licence, without the right to grant sublicenses (except to
Skye-SAS, to which CRTX hereby consents for so long as Jagotec uses Skye-SAS to manufacture
Product for CRTX hereunder), solely to manufacture Product for, and supply Product to, CRTX
all in accordance with the provisions contained in this Agreement. The terms and conditions
of this Agreement shall apply to all Batches manufactured from the Effective Date.
	 
	2.3.	 	Nothing herein shall confer upon Jagotec any authority to sell or distribute the Product on
its own account or for any other person or entity other than CRTX, but authorises Jagotec only
to manufacture the Product in accordance with the terms hereof. During the Term Jagotec shall
not, and shall procure that its Affiliates do not, either directly or indirectly, market, sell
or distribute the Product, or sell the Product to any person who it believes or ought
reasonably to know intends to sell the Product. During the Term and for a period of [**]
years after the Term, Jagotec shall not, and shall procure that Jagotec’s Affiliates do not,
use any CRTX Intellectual Property, CRTX Product Developments or Confidential Information
provided by CRTX to manufacture, produce, market or sell any product containing zileuton for
any company or person other than CRTX.

7

 

	3.	 	Obligations of Jagotec
	 
	3.1.	 	Jagotec will manufacture Product and perform quality control testing in compliance with:
	 
	 	 	a) the Specifications;
	 
	 	 	b) the Quality Agreement; and
	 
	 	 	c) cGMP and all other Applicable Laws.
	 
	3.2.	 	Jagotec will maintain all records, including Complete Batch Documentation, required by the
Specifications, Applicable Laws and the Quality Agreement which are to be maintained in
connection with the manufacture of Product.
	 
	3.3	 	Without prejudice to its obligations under Sections 3.10 and 3.11, Jagotec makes no warranty
as to compliance with Specifications, Applicable Laws and the Quality Agreement regarding or
with respect to Auxiliary Materials or API furnished to it by CRTX or by any third party
instructed by CRTX to supply such materials to Jagotec.
	 
	3.4	 	Jagotec is responsible for obtaining all Registrations necessary to manufacture Product under
this Agreement.
	 
	3.5	 	Jagotec is responsible for conducting all manufacturing and testing related to the Product
and Auxiliary Materials in compliance with the Specifications, the Quality Agreement,
Applicable Laws and cGMP. Jagotec warrants that any Auxiliary Materials supplied by Jagotec
or any Contract Vendor, and all manufacturing and testing processes used by Jagotec or any
Contract Vendor complies with all relevant Specifications, Applicable Laws and the Quality
Agreement.
	 
	3.6	 	Jagotec will notify CRTX of any deviations that may occur relating to the Product as defined
in the Quality Agreement upon becoming aware thereof.
	 
	3.7	 	Jagotec will notify CRTX of any Agency audit or inspections in respect of any part of the
Facility used to manufacture the Product within [**] Working Days of receipt of notice by
Skye-SAS thereof, to allow CRTX to be present at any audit that deals specifically with the
Product and promptly make available any comments from such audit or inspection as they relate
to the Jagotec’s compliance with the Specifications, any applicable Quality Agreement,
Applicable Laws, cGMP or any other regulatory requirements. Jagotec will promptly inform CRTX
of any other material communications to or from an Agency relating to the Product. The
Parties will consult with each other regarding any issues raised in

8

 

	 	 	such communications and will attempt in good faith to agree upon any action to be taken or
response to be made in connection with such communications.
	 
	3.8	 	Jagotec shall maintain accurate records of all API supplied by CRTX for use in the
manufacture of the Product and records of work-in-process and finished Product. Accurate
records of any losses of API supplied by CRTX shall be documented for each lot. Such records
shall be accessible to CRTX for inspection during regular business hours on CRTX giving
Jagotec not less than [**] Working Days notice of such inspection.
	 
	3.9	 	Without prejudice to Section 3.7 above, Jagotec shall permit duly authorized representatives
of CRTX or its third party designees, [**] every Year (or more frequently if an audit reveals
significant concerns from the perspective of CRTX, acting reasonably, that require appropriate
additional audit follow-up) during normal business hours and upon reasonable prior written
notice, and in any event on not less than [**] Working Days notice, to conduct general cGMP
audits. At such audits CRTX can inspect the formulation processes and work practices relating
to the Product and inventory of Auxiliary Materials, API, and Product, all Registrations
necessary for Jagotec to manufacture the Product, the Complete Batch Documentation and/or
Facility, including the equipment used in the manufacturing and testing of Product, and
inspect and take reasonable quantities of Product manufactured by Jagotec for examination
purposes to verify Jagotec’s compliance with the Specifications, Applicable Laws, cGMP and the
Quality Agreement.
	 
	3.10.	 	Jagotec shall use any and all API supplied by CRTX under Section 4.3 exclusively for the
performance of its obligations under this Agreement, and Jagotec shall, upon receipt of any
supply of API, perform the quality control procedures as provided for in the Quality
Agreement. In the event that any supply of API received from CRTX, or any part thereof, does
not meet the requirements set forth in the Specifications, the applicable Quality Agreement or
Applicable Laws, then Jagotec shall promptly notify CRTX thereof in writing and CRTX will
promptly supply replacement API that does comply with such requirements. Notwithstanding the
foregoing or any contrary provision of the Quality Agreement, the provisions of Schedule 6
hereto shall apply in the circumstances set out therein.
	 
	3.11	 	Jagotec shall store all API received from CRTX, all Auxiliary Materials and all Product
manufactured hereunder, in a suitable warehouse in accordance with cGMP, the Specifications,
the Quality Agreement or Applicable Laws and shall use commercially reasonable endeavours to
prevent the deterioration, theft or damage of API, all Auxiliary Materials and Product until
delivered to CRTX in accordance with Section 7. Jagotec shall insure all API delivered by
CRTX until delivery of Product containing such API to CRTX in accordance with Section 7

9

 

	 	 	below, against such risks provided
the insurable value thereof shall
be the Active Material Cost.
	 
	3.12	 	API Yield.
	 
		 	(a) Reporting. Within [**] Working Days after the end of each Quarter, Jagotec
shall provide CRTX with a Quarterly inventory report of the API held by Jagotec in
accordance with the inventory report form annexed hereto as Schedule 2, which shall contain
the following information for such month:
	 
	 	 	Quantity Received: “Quantity Received” shall mean the total quantity of API that is
received at the Facility during the applicable period, which complies with such part of the
Specifications applying thereto, which has been tested by Jagotec in accordance with clause
3.10 and which Jagotec has not provided a notice in accordance with clause 3.10.
	 
	 	 	Quantity Dispensed: The Quantity Dispensed is calculated by adding the Quantity Received to
the inventory of API that complies with such part of the Specifications applying thereto and
is held at the beginning of the applicable period, less the inventory of API that complies
with such part of the Specifications applying thereto and is held at the end of such period.
The Quantity Dispensed shall only include Quantity Received in connection with commercial
manufacturing of Product and, for certainty, shall not include any Quantity Received in
connection with technical transfer activities or development activities during the
applicable period, including, without limitation, any regulatory, stability, validation or
test batches manufactured during the applicable period.
	 
	 	 	Quantity Converted: Quantity Converted shall mean the total amount of API contained in the
Products produced with the Quantity Dispensed (including any additional Product produced in
accordance with Section 7.9), delivered by Jagotec, and not rejected, recalled or returned
in accordance with Section 6.8 as a result of a failure by Jagotec to provide the Product in
accordance with Specifications, Quality Agreement and cGMP. Furthermore Quantity Converted
shall include any quantities of API contained in Product retained as samples pursuant to the
Quality Agreement and also for compliance with cGMP.
	 
	 	 	Within [**] days after the end of each Year, Jagotec shall prepare an annual reconciliation
of API in accordance with the reconciliation report form annexed hereto as Schedule 3
including the calculation of the “Actual Annual Yield” or “AAY” for the Product at the
Facility during the Year, which AAY is the percentage of the Quantity Dispensed that was
converted to Product and is calculated as follows, expressed as a percentage:

Quantity Converted during the Year

Quantity Dispensed during the Year

10

 

	 	 	After Jagotec has produced a minimum of [**] commercial production Batches of Product and
has produced commercial production Batches for at least [**] months at the Facility
(collectively, the “Target Yield Determination Batches”) pursuant to this Agreement, the
Parties will reasonably agree on the target yield in respect of such Product at the Facility
(each, a “Target Yield”); provided, however, that the Target Yield Determination Batches
shall not include any Batches that, in Jagotec’s reasonable judgment, were produced in
production runs involving technical difficulties or involving an extraordinary loss of API.
Thereafter, Jagotec shall use commercially reasonable efforts to maintain Actual Annual
Yield levels for each Product at or above the applicable Target Yield.
	 
		 	(b) Shortfall Calculation. If the Actual Annual Yield falls more than [**]
percent below the applicable respective Target Yield in a Year, then the shortfall for such
Year (the “Shortfall”) shall be determined based on the following calculation:
	 
	 	 	[**]
	 
	 	 	The Shortfall shall be disclosed by Jagotec on the reconciliation report prepared in the
form annexed hereto as Schedule 3.
	 
		 	(c) Shortfall Reimbursement. Jagotec shall reimburse CRTX for any Shortfall of
API as calculated in Section 3.12 (b) provided however, (i) Jagotec’s entire liability for
Shortfall shall not exceed $[**] in any single Year and (ii) and such reimbursement is not
eligible for reimbursement under Section 3.12(d). Each payment under this Section 3.12 (c)
shall be summarized on the reconciliation report prepared in the form attached hereto as
Schedule 3 and shall be made [**] days following the end of each Year.
	 
		 	(d) Batch Failure Reimbursement: Jagotec shall promptly issue to CRTX a credit
in the amount of (i) the cost of Active Material Cost of the API and (ii) the full amount of
the Price for Batches which fail to meet the Specifications, Batch Instructions, cGMP,
Applicable Laws, and the Quality Agreement, and which are reasonably rejected, recalled or
returned by CRTX, but only to the extent that (i) such failure is due to any act or omission
of Jagotec, and Jagotec’s Affiliates, agents, employees, or assigns, which is not in
accordance with this Agreement and (ii) such reimbursement has not already been made under
Section 3.12(c).
	 
		 	(e) No Material Breach. It shall not constitute a material breach of this
Agreement by Jagotec, for the purposes of Section 10.2, if the Actual Annual Yield is less
that the Target Yield; provided that Jagotec has used commercially reasonable efforts to
maintain Actual Annual Yield levels for the Product above the applicable Target Yield.
	 
	3.13	 	Cost Accounting. Jagotec shall keep a full accounting of how the Fully Allocated
cost is calculated and shall maintain such accounting and all of the records upon which it is
based for no less than [**] years after the Year to which the Fully

11

 

	 	 	Allocated cost relates. Within [**] Working Days after the end of each Year from the Year
ending December 31, [**] onwards, Jagotec shall provide such accounting to CRTX and any
increase in Price shall be implemented only after [**] Working Days after such accounting is
delivered to CRTX but shall be backdated once implemented to the beginning of the current
Year.
	 
	3.14	 	Inspection. CRTX may itself inspect [**] in any one Year (or more frequently if an
audit reveals a material deficiency or quantitative error that is in CRTX’s reasonable opinion
is unresolved after such annual visit from the perspective of CRTX and requires appropriate
additional audit follow-up) Jagotec Product-specific reports, records, and API and Product
inventory (excluding financial data not attributable to the pricing of the Product and subject
to third party confidentiality obligations) relating to this Agreement, during normal business
hours and with reasonable advance notice and in any event on not less than [**] Working Days
notice. A Jagotec representative shall be present during any such inspection. Notwithstanding
any other provision of this Agreement, from the Year ended December 31, [**] onwards, CRTX may
appoint an independent auditor to review the calculation of the Fully Allocated cost and the
records upon which the Fully Allocated cost is based, during normal business hours and with
reasonable advance notice. A Jagotec representative shall be present during any such
inspection.
	 
	3.15	 	Jagotec will be responsible for handling and disposing of any and all wastes generated as a
result of the manufacturing of the Product or any cleaning of any equipment involved, in
compliance with Applicable Laws, rules and regulations, including environmental laws and
regulations relating to such handling and disposal.
	 
	3.16	 	Save as set out hereafter, Jagotec shall use reasonable commercial efforts to maintain an
annual average inventory of Auxiliary Materials required to manufacture [**] months supply of
Product quantities or such lower quantity as the Parties may agree. The Parties shall
separately agree upon the amount of inventory to be held during the Launch Phase.
	 
	3.17	 	Jagotec shall notify CRTX within [**] Working Days of Jagotec determining that they cannot or
will not (i) manufacture according to the Firm Order delivery schedule or the Pro Forma
delivery schedule or (ii) meet the annual requirements set forth in Section 7.2 of the
Agreement.
	 
	3.18	 	During the Launch Phase, Jagotec shall permit CRTX or representatives of CRTX with not less
than [**] Working Days notice to conduct review of original Complete Batch Documentation held
by Jagotec. From time to time after the Launch Phase, Jagotec shall permit CRTX or CRTX
representatives with not less than [**] Working Days notice to conduct on-site “for cause”
technical and/or

12

 

	 	 	cGMP reviews and/or audits if the issues leading to the need to conduct the “for cause”
review and/or audit cannot be resolved without such an on-site meeting.
	 
	3.19	 	If CRTX requests on-site reviews, audits, inspections or meetings other than or in addition
to those referred to under Sections 3.9, 3.14, 3.18 or 5.1, Jagotec reserves the right to
charge CRTX $[**] for each day (to be pro rated for part of a day).
	 
	3.20	 	From [**] and for until expiration or termination of this Agreement, Jagotec shall use
commercially reasonable efforts to maintain manufacturing capacity capable of delivering at
least [**] tablets of the Product per Year (at a rate of no more than [**] tablets per
Quarter). CRTX has a right to request additional capacity for the Product and Jagotec may
agree thereto in its absolute discretion if it has additional capacity in its current
production line or if it decides to add a second line.
	 
	4.	 	Obligations of CRTX
	 
	4.1.	 	CRTX shall promptly provide to Jagotec all and any information in CRTX’s possession
reasonably required by or necessary for Jagotec to perform its obligations hereunder that is
not already in the possession of Jagotec.
	 
	4.2	 	In the event that CRTX proposes or intends to amend, alter or change the Specification as is
agreed at the Effective Date (an “Amendment”), CRTX shall duly notify Jagotec thereof in
writing and the date by which the Amendment is to be implemented. CRTX shall allow sufficient
time for Jagotec’s due implementation of any Amendment which, unless otherwise agreed by
Jagotec in writing shall be not less than [**] days prior to the anticipated delivery date of
Product manufactured in accordance with such amended Specification; provided however, that, in
the case of Amendments required by the FDA or other Agency (“Agency Imposed Amendments”),
Jagotec shall use commercially reasonable efforts to implement such Agency Imposed Amendment
immediately or within any timeframe allotted by the FDA or such Agency, whichever is longer.
Any such proposed Amendment, so notified by CRTX, shall become binding upon Jagotec on the
date specified by CRTX in accordance with the foregoing unless Jagotec notifies CRTX within
[**] Working Days of its receipt of CRTX’s proposal of its decision not to approve the
Amendment which approval shall not unreasonably be withheld; provided however, that, in the
case of Agency Imposed Amendments, Jagotec shall not have the right to reject such amendment.
Any and all reasonable costs and expenses incurred by Jagotec in connection with the
implementation of any Amendment submitted by CRTX shall be borne exclusively by CRTX. Unless
otherwise agreed to in writing by Jagotec and CRTX, if any Agency Imposed Amendment results in
a greater likelihood of Batch recall, rejection or return by CRTX than would be associated
with the

13

 

	 	 	Specification agreed at the Effective Date, (i) CRTX shall bear the cost of such recall,
rejection or return and (ii) CRTX shall waive any rights in relation to Jagotec’s failure to
comply with the Specification from the date of such Agency Imposed Amendment, each except to
the extent that such recall, rejection or return is due to any proven negligence or any
wilful misconduct of Jagotec, its Affiliates, or their agents in the performance of their
activities under this Agreement or any breach by Jagotec of its representations, warranties
or obligations pursuant to this Agreement or the Quality Agreement. Any change to the
manufacturing process to take account of such Amendment shall be reflected in the Fully
Allocated manufacturing cost.
	 
	4.3.	 	CRTX undertakes to supply to Jagotec [**] (a) in the Year during which the Marketing Approval
for the Finished Product is received from the FDA, a minimum of [**] months supply, and (b) in
each Year thereafter a minimum of [**] months supply of API as required by Jagotec to
manufacture quantities of Product, including samples for testing and retains. Any and all
supply of API shall be in strict compliance with the requirements set forth in the
Specifications, any applicable Quality Agreement and Applicable Laws, and shall be delivered
DDP (Incoterms 2000) to the Facility.
	 
	 	 	The supply of API referred to in this Section will take into account the following: The
production loss is to be determined by the first [**] full-scale Batches
(validation/commercial but excluding any Batches with an atypical yield caused by a
deviation documented in accordance with the Quality Agreement) and the percentage agreed by
both parties, however, CRTX anticipation is that, and, unless otherwise agreed upon by the
parties, the production loss should not be greater than [**]% of the Quantity Dispensed
after the first [**] full-scale Batches.
	 
	4.4.	 	All supply of API by CRTX hereunder shall be received by Jagotec sufficiently in advance of
the expected delivery date for the supply of Product ordered by CRTX in accordance with
Section 7.1(b). CRTX shall use commercially reasonable efforts to deliver such API not later
than [**] months prior to such expected delivery date. In the event that any such supply of
API is received by Jagotec less than such [**] months prior to any requested delivery date,
Jagotec shall have no obligation to deliver the Product ordered at such delivery date, but
shall nevertheless use commercially reasonable efforts to supply such Product on or as soon
after such delivery date as available manufacturing and personnel capacities allow taking into
account its other manufacturing commitments.
	 
	4.5	 	CRTX shall, with each order of API supplied to Jagotec, provide Jagotec with a certificate
indicating release of API for use in manufacturing of the Product.
	 
	 	 	CRTX shall procure that the manufacturer of the API obtains and maintains all permits,
licenses or approvals necessary to manufacture the API.

14

 

	4.6	 	CRTX shall permit duly authorized representatives of Jagotec [**] every Year during normal
business hours and upon reasonable prior written notice, and in any event or not less than
[**] Working Days notice, to conduct general cGMP audits of quality systems relating to the
release for use of API for production of the Product.
	 
	5.	 	Cooperation
	 
	5.1	 	Each of CRTX and Jagotec hereby appoint [**] and [**] respectively to be their relationship
managers responsible for liaison between the parties. The identity of a Party’s relationship
managers may be changed upon notice to the other Party made in accordance with Section 14.3 of
this Agreement. The relationship managers, or their designated deputies, shall meet not less
than [**] per Quarter to review the current status of the business relationship and manage any
issues that have arisen; provided that, at least [**] of such meetings shall be “face-to-face”
and each of the parties shall have the right to choose the venue for [**] such face-to-face
meeting.
	 
	5.2	 	Subject to Jagotec’s obligations under Section 3.4, CRTX shall have the sole responsibility
for filing all documents with the FDA or other Agency and taking any other actions that may be
required to maintain FDA or other Registration for the commercial manufacture of the Product.
Jagotec shall reasonably assist CRTX. CRTX shall provide Jagotec with copies of relevant
chemistry, manufacturing and controls (CMC) information regarding the Product and all FDA or
other Agency submissions after the filing of such documents.
	 
	5.3	 	Each party may communicate with any governmental agency, including but not limited to
Agencies, regarding the Product if in the opinion of that party’s counsel, such communication
is necessary to comply with the terms of this Agreement or the requirements of any law,
governmental order or regulation; provided, however, that unless in the reasonable opinion of
its counsel there is a legal prohibition against doing so, such party shall in addition give
notice of such communication to the other party and Jagotec shall permit CRTX to accompany and
take part in any communications with the Agency, and to receive copies of all such
communications to and/or from the Agency as relates to the Product.
	 
	5.4	 	CRTX is solely responsible for obtaining and maintaining any Marketing Approvals. CRTX shall
promptly inform Jagotec of any and all regulatory requirements relating to Jagotec’s
manufacturing activities hereunder or amendments or changes thereto and undertakes to provide
to Jagotec such information as Jagotec may reasonably require to support any Registration
requirements relating to the manufacturing of Product. Jagotec undertakes to provide CRTX
such information as CRTX may reasonably require to support any Marketing Approval(s).

15

 

	5.5	 	Jagotec shall keep records of the manufacture, testing and shipping of each Batch, and each
batch of Auxiliary Materials and API used to manufacture the Product. Copies of such records
shall be retained as set out in the Quality Agreement.
	 
	5.6	 	Jagotec shall keep retain samples of the Product, Auxiliary Materials and API as set out in
the Quality Agreement.
	 
	5.7	 	Jagotec will supply all Product data, including master documentation, specifications and
monographs, release test results, complaint test results, all investigations and deviations
(in manufacturing, testing and storage), in English that CRTX reasonably requires in order to
complete any FDA or other Agency filing under any applicable regulatory regime, [**] days
prior to the due date for such report or filing. CRTX shall provide as much notice as
possible to Jagotec of the filing dates. Jagotec will prepare annual Product reviews for the
Product, [**] before the anniversary date of May 30, 2007 as set forth in the Quality
Agreement and will provide any additional information that CRTX is required to file with the
FDA (or other Agency) Annual Report, that is related to Jagotec’s manufacturing of the
Product.
	 
	5.8	 	Jagotec shall promptly report to CRTX any information that it has knowledge of concerning any
adverse drug experience in connection with the use of the Finished Product, including the
incidence or severity thereof, associated with non-clinical toxicity studies, clinical uses,
studies, investigations or tests, whether or not determined to be attributable to the Product.
Reports of serious adverse drug experiences shall be made available to CRTX within [**]
Working Days after Jagotec becomes aware of such adverse drug experience, or [**] hours if the
adverse drug experience will require a field alert be submitted to the FDA or any Agency.
Upon receipt of any such report of serious adverse drug experience by either Party, the
Parties shall make commercially reasonable efforts to take mutually agreed actions as
appropriate or required under the circumstances; provided, however, that nothing contained
herein shall be construed as restricting the right or duty of either Party to make a required
report or submission to the FDA or any Agency, or take any other action that it reasonably
deems to be appropriate or required by Applicable Law. In any event, the responsibility of
making any reports of adverse drug experience or other required reports to the FDA or any
Agency will be upon CRTX (or its licensees) as holder of the Marketing Approval for the
Finished Product.
	 
	5.9	 	Jagotec shall provide CRTX with reasonable assistance in the investigation of any adverse
drug experience when same is believed to be attributable to the Product. In such event, CRTX
shall be responsible to ensure that Jagotec receives samples of the Finished Product to be
investigated. The involvement of Jagotec will be limited to the evaluation of manufacturing
process activities undertaken by Jagotec and its impact on identified Product quality matters.

16

 

	 	 	Jagotec shall use commercially reasonable efforts to provide a written report of its
determination within [**] days of receipt of CRTX’s written request and samples of the
involved Finished Product. CRTX shall be responsible for the costs of any such evaluations
conducted by Jagotec, as requested by CRTX. As between CRTX and Jagotec, CRTX shall
correspond with the subjects of adverse drug experiences on all adverse drug experiences and
Jagotec shall not correspond with such subjects.
	 
	6.	 	Title
	 
	6.1	 	Notwithstanding anything to the contrary herein, CRTX shall retain title to all materials
supplied by it to Jagotec pursuant to this Agreement. Jagotec agrees that any API received by
it shall only be used by Jagotec to manufacture the Product. Under no circumstances shall
this Agreement vest any rights in Jagotec with respect to API supplied by CRTX and Jagotec
shall not remove, alter or obscure any proprietary notices from materials supplied by CRTX.
Jagotec shall promptly point out to any third party who obtains access to its premises under a
court order or any order to seize property, or who acts as a receiver in bankruptcy
proceedings, that API supplied by CRTX is owned solely by CRTX.
	 
	6.2	 	Jagotec shall invoice CRTX for the Price upon Shipment of each Batch of Product. Payment
Terms shall be [**] days from the date of receipt of an electronic copy of invoice (with a
paper confirmatory copy of said invoice being sent by post).
	 
	7.	 	Order and Supply of Product
	 
	7.1	 	(a) Within [**] days of the Effective Date, CRTX shall provide Jagotec with a written
non-binding [**] month forecast of the volume of each Product that CRTX then anticipates will
be required to be produced by Jagotec and shipped to CRTX during each month of the first [**]
months and each [**] thereafter of that [**] month period. The first [**] months of such
forecast shall be binding and shall consist of [**] months of Firm Orders (as defined below),
the next [**] months shall consist of a non-binding forecast of amounts of Product for such
period and the remaining [**] months shall consist of planning horizon. Such forecast will be
updated by CRTX monthly on or before the [**] day of each calendar month on a rolling [**]
month basis.
	 
	(b)	 	Firm Orders. On or before the [**] day of each calendar month in conjunction with the
provision of the rolling forecast outlined in Section 7.1(a), CRTX shall issue firm written
orders (“Firm Orders”) for the Product to be produced and delivered to CRTX on a date not
less than [**] days from the first day of the calendar month immediately following the date
that the Firm Order is submitted. Such Firm Orders submitted to Jagotec shall specify
CRTX’s purchase order number, monthly delivery schedule, campaign size, and any other
elements

17

 

	 	 	necessary to ensure the timely production and delivery of the Product. The quantities of
Product ordered in such written orders shall be firm and binding on CRTX and shall not be
subject to reduction by CRTX and the quantity of Product so ordered shall not exceed [**]
percent ([**]%) ([**] percent ([**]%) in the twelve months following the Marketing Approval
for the Finished Product is received from the FDA) or fall short of [**] percent ([**]%) of
the applicable binding forecast for that period provided by CRTX under Section 7.1(a) above.
Jagotec shall have [**] days to object (to the extent that such objection is reasonable or
is because of a breach of the foregoing sentence) in writing to CRTX to any element of a
Firm Order. If Jagotec does not object, then such Firm Order shall be binding on Jagotec
and no part shall be subject to change by Jagotec.
	 
	7.2	 	(a) CRTX shall purchase a minimum of [**] tablets of Product to be delivered from May 30,
2007 (the date of Marketing Approval for the Finished Product received from FDA) to May 29,
2008, and CRTX shall purchase a minimum of [**] tablets of Product from Jagotec in each of the
subsequent four twelve (12) month periods. If CRTX does not place orders to purchase the
relevant minimum order quantity in the applicable twelve month period, it shall in addition to
paying the Price for Product purchased, pay Jagotec an amount equal to the result of the
following calculation: [**]% of the Price payable for [**] tablets or [**] tablets (as the
case may be) less [**]% of the Price paid by CRTX to Jagotec for Product ordered and purchased
in such twelve month period.
	 
		 	(b) For the duration hereof, CRTX shall purchase the first [**] tablets of its requirement
for Product in any twelve month period following May 30, 2007 from Jagotec provided,
however, in the event that Jagotec cannot or will not supply such Product within the
timelines set out in Section 7.7(a), CRTX shall have the right, after considering (but not
being bound by) whether (a) the likelihood that such delivery delay or variation in quantity
will adversely affect its inventory situation and (b) a new delivery date that has been
proposed by Jagotec, to purchase the amount that Jagotec cannot or will not supply from
Patheon Pharmaceuticals Inc., any other Manufacturing Sub-Licensee, or their successors or
assigns (and the minimum purchase obligation under Section 7.2(a) shall be reduced for each
such twelve month period in which Jagotec cannot or will not supply the Product by such
amount as Jagotec cannot or will not supply in such twelve month period). This right shall
not apply where such inability to supply such Product needs results from a failure of CRTX
to comply with Sections 4.3 and 4.4 or CRTX’s failure to complete Complete and/or Critical
Batch Documentation review in a timely manner.
	 
		 	(c) Jagotec shall have the right to supply at least [**]% of CRTX’s remaining requirements
for Product (over and above the twelve month period requirement set forth in Section 7.2(b))
in such twelve month period. CRTX shall have the right to have the other [**]% of its
remaining requirements (over and above the twelve month period minimum quantities set forth
in Sections 7.2(a) and 7.2(b)) in

18

 

	 	 	such twelve month period supplied by either Jagotec or Patheon Pharmaceuticals Inc., or any
other Manufacturing Sub-Licensee in CRTX’s sole discretion.
	 
		 	(d) Should CRTX elect to use Patheon Pharmaceuticals, Inc. or any other Manufacturing
Sub-Licensee, for manufacture of up to [**]% of its remaining twelve month period
requirements (over and above the twelve month period requirement set forth in Section
7.2(b)) and shall procure that such Manufacturing Sub-Licensee shall permit Jagotec, on
reasonable notice and during normal working hours, at CRTX only, to inspect the financial
records of firm orders relating to purchase of the Product from such Manufacturing
Sub-Licensee by CRTX in order to confirm CRTX has complied with the [**]% limit.
	 
		 	(e) Jagotec shall use commercially reasonable efforts to, promptly after request by CRTX,
transfer to the Manufacturing Sub-Licensee(s) the manufacturing processes for the Product,
at CRTX’s sole expense.
	 
	7.3	 	If after placing a Firm Order CRTX requests an increase to the quantity of Product specified
in such Firm Order, Jagotec will exercise commercially reasonable efforts to meet the
requirement but does not guarantee delivery of the additional quantity. If Jagotec cannot or
will not be able to supply Product in excess of the Firm Order, Jagotec shall so inform CRTX
within [**] Working Days of the request from CRTX and, in such event, such failure to supply
such increase shall not constitute a material breach by Jagotec, for the purposes of Section
10.2, provided that Jagotec used commercially reasonable efforts to do so.
	 
	7.4	 	Jagotec shall use commercially reasonable efforts to supply Product specified in a Firm Order
by CRTX in accordance with Section 7.1(b) above on the delivery date requested in the Firm
Order. However, dates specified for delivery of Product are intended to be an estimate and
time for delivery shall not be made of the essence by notice. All such supply shall be made
in bulk, and shall be delivered to CRTX EXW (Incoterms 2000) the Facility. Risk of loss or
damage to Product supplied, and title, shall pass to CRTX, once it is made available for
collection by the designated carrier at the Facility pursuant to EXW (Incoterms 2000).
	 
	7.5	 	Prior to each shipment of the Product Jagotec shall provide CRTX with Batch information in
accordance with this Section and the obligations under the Quality Agreement. At a minimum,
Jagotec shall provide a Critical Batch Documentation as defined in the Quality Agreement. If
requested by CRTX or otherwise specified in the Quality Agreement, Jagotec shall also provide
Complete Batch Documentation to CRTX according to the Quality Agreement. Documentation and
resolution of all issues and errors shall be provided to CRTX by Jagotec

19

 

	 	 	within a period of time which will allow for shipment of Product to meet the delivery date.
During the Launch Phase and subject to reaching mutual agreement on this topic, Jagotec will
endeavour to conduct documentation review on a rolling basis, and provide documentation for
review to CRTX on a rolling basis, in order to minimize cycle times.
	 
	7.6	 	Claims for shortages in the amount of Product shipped by Jagotec shall be dealt with as may
reasonably be agreed to by the parties; provided, however, in the event that a shipment of
Product delivered by Jagotec is less than [**]% of the amount ordered by CRTX pursuant to
Section 7.1(b) hereof (“Shortage Amount”), upon receipt of written request by CRTX, Jagotec
shall use commercially reasonable efforts to manufacture additional Product to replace the
Shortage Amount.
	 
	7.7	 	Late Delivery and Shelf Life
	 
		 	(a) In the event that any Products are delivered to CRTX or CRTX’s Manufacturing
Sub-Licensee more than [**] days after the agreed upon date (for reasons other than CRTX’s
failure to deliver API required to manufacture such Product to Jagotec within the time
frames requested, or CRTX’s failure to complete Complete and/or Critical Batch Documentation
review in a timely manner), such late delivery shall not constitute a material breach under
Section 10.2 and the parties shall meet as necessary in order to try to resolve the reasons,
if any for the late delivery, amicably; provided however, [**] or more deliveries more than
[**] days within any twelve (12) consecutive month period (for reasons other than CRTX’s
failure to deliver API required to manufacture such Product to Jagotec within the time
frames requested, or CRTX’s failure to complete Complete and/or Critical Batch Documentation
review in a timely manner) shall constitute a material breach under Section 10.2.
	 
		 	(b) Unless otherwise mutually agreed in writing, provided that the Product has at least [**]
month’s expiry dating the Product shall be delivered to CRTX, with no less than [**] percent
([**]%) of its shelf life remaining. In the event that the Product has less than [**]
month’s expiry dating but more than [**] month’s expiry dating the Product shall be
delivered to CRTX with no less than [**] percent ([**]%) of its shelf life remaining.
Notwithstanding the foregoing, Jagotec shall use commercially reasonable efforts to minimize
the manufacturing and release cycle time. CRTX shall have the right in accordance with
Section 7.8 hereof to reject any shipment of Product (other than Products that were the
subject of an out-of-specification or significant Batch deviation investigation), with less
than the applicable percent of its shelf life remaining.
	 
	7.8	 	If any Batch of Product or any portion delivered in accordance with Section 7.4 above has a
Defect, then CRTX shall have the right to reject such Batch by

20

 

	 	 	giving written notice to Jagotec thereof within [**] days following the delivery of such
Batch, or, in the case of any Latent Defects within [**] days after discovery thereof by the
CRTX up to [**] months after shipment thereof, specifying the Defect or Latent Defect in
sufficient detail. Jagotec shall use commercially reasonable efforts to promptly replace
such rejected Product and CRTX shall pay Jagotec the Price for such replacement Product in
accordance with Section 6.2, if payment for the rejected batch has not been made. However,
if it is determined, pursuant to Section 7.9, that CRTX, its suppliers or vendors (not
including for this purpose, Jagotec, Skye-SAS and their Affiliates) are responsible for the
Defect or Latent Defect in the rejected Batch, then CRTX shall, within [**] days after such
determination, pay the Price of such rejected Batch.
	 
	7.9	 	In case of dispute about the existence of a Defect or a Latent Defect or a dispute about
whether Jagotec, its suppliers or vendors are responsible for a Defect or Latent Defect, then
the following provisions shall apply, provided that the estimated costs of carrying out the
exercise is significantly less than the amount in dispute. If the estimated costs are not
significantly less than the amount in dispute, such amount in dispute shall be borne equally
by the Parties.
	 
	 	 	At either Party’s request an independent testing laboratory or other appropriately
qualified expert of recognized repute and credentials, mutually agreeable to the Parties and
subject to appropriate confidentiality provisions and agreement as to the appropriate
procedures and tests to be conducted, shall be sent a copy of the Release (as such term is
defined in the Quality Agreement) applicable to such Product and shall analyze a sample of
the allegedly defective Product and any shipment as necessary to determine, as the case may
be, whether the rejected Product is defective and/or which Party(ies) is(are) responsible
for such Defect or Latent Defect. The parties hereby approve each of (a) the laboratory of
[**] (in respect of disputes for which analytical testing is required) and (b) [**](in
respect of disputes which originate from the findings of Patheon Pharmaceuticals, Inc. and
any disputes for which analytical testing is not required).
	 
	 	 	Both Parties agree to cooperate with the independent laboratory’s or expert’s
reasonable requests for assistance in connection with its analysis hereunder. Both Parties
shall be bound by the laboratory’s or expert’s results of analysis, which, in the absence of
manifest error, shall be deemed final as to any dispute over the allegedly defective
Product.
	 
	 	 	The costs of the laboratory or expert together with any reasonable costs incurred by
the Parties shall be borne by the non-prevailing Party, or if the laboratory or expert
cannot place the fault noticed and complained about, then the Parties shall share equally
the expenses in connection with such laboratory or expert and bear their own costs.

21

 

	7.10	 	Notwithstanding any other provision hereof, in the event that Jagotec is unable to
manufacture Product in accordance with Specifications, Applicable Laws and cGMP (except as a
result of CRTX’s failure to comply with Sections 4.3 or 4.4 or CRTX’s failure to complete
Complete and/or Critical Batch Documentation review in a timely manner or an event of Force
Majeure (as defined below)), CRTX shall be entitled to have the Product manufactured by a
Manufacturing Sub-Licensee until such time as Jagotec is able to so manufacture the Product
and at which point the minimum purchase obligations provided for under Section 7.2(a) of this
Agreement and the exclusivity provided for under Section 7.2(b) and 7.2(c) of this Agreement
shall once again apply and CRTX shall obtain all of its requirements of the Product from
Jagotec subject only to Sections 7.2(b), 7.2(c) and 7.2(d), provided however, that the
exclusivity and minimum purchase obligations provided for in Sections 7.2(a), 7.2(b) and
7.2(c) of this Agreement shall be reduced on a pro rata basis for the period of time in the
applicable twelve month period Jagotec is unable to so manufacture Product (by way of example
only, if Jagotec is unable to so manufacture Product for a period of [**] months in an
applicable twelve month period the exclusivity and minimum purchase obligations would be
reduced by [**]). Notification of such inability, with an estimated duration of such
inability, will be made in writing by Jagotec to CRTX within [**] weeks after determination
that such a inability will occur or has occurred; provided however, prior to any planned
period of time during which Jagotec will be unable to manufacture the Product, Jagotec shall
manufacture that quantity of Product requested by CRTX so that the Parties minimize the
adverse effect that said halt in production would have on CRTX’s inventory situation. During
any period of time that Jagotec is the sole manufacturer of the Product for CRTX, Jagotec
shall not have a planned delay in the manufacture of the Product for greater than [**] months
in duration unless otherwise agreed by CRTX in advance. If Jagotec has provided notice to
CRTX that it is unable or will be unable to manufacture the Product, Jagotec shall provide
CRTX four months written notice prior to the date on which Jagotec intends to resume the
manufacture the Product.
	 
	 	 	Notwithstanding any other provision of this Agreement, if Jagotec is unable to manufacture
Product in accordance with Specification, Applicable Laws and cGMP for a period of [**]
months or longer (except in the case of a planned halt in production for the specific period
agreed in advance by CRTX or as a result of CRTX’s failure to comply with Sections 4.3 or
4.4 or CRTX’s failure to complete Complete and/or Critical Batch Documentation review in a
timely manner or an event of Force Majeure), CRTX shall have the right to terminate this
Agreement upon 30 days’ prior written notice.
	 
	8.	 	Product Recalls, Returns, and Complaints
	 
	8.1	 	In the event (i) any governmental or regulatory authority issues a directive, order or,
following the issuance of a safety warning or alert with respect to a product, a

22

 

	 	 	written request that any Finished Product be Recalled, (ii) a court of competent
jurisdiction orders such a Recall, or (iii) CRTX determines that any Finished Product should
be Recalled or that a “dear doctor” letter is required relating to the restrictions on the
use of the Finished Product, Jagotec will co-operate with those activities relating to the
Finished Product as reasonably required by CRTX, having regard to all applicable laws and
regulations. In the event of a recall of the Finished Product, CRTX will notify Jagotec in
accordance with the Quality Agreement, and Jagotec will cooperate with those recall
activities relating to the Finished Product as reasonably required by CRTX.
	 
	8.2	 	CRTX or its designated agent shall have the responsibility for handling customer returns of
the Finished Products. Jagotec shall provide CRTX or its designated agent with such
assistance as CRTX may reasonably require to handle such Finished Product returns.
	 
	8.3	 	To the extent that a Recall or return results from, or arises out of, a failure by Jagotec to
manufacture the Products in accordance with the Specifications, Applicable Laws and/or cGMP,
at CRTX’s option, Jagotec shall be responsible for the documented out-of-pocket expenses of
such Recall or return and shall either (i) reimburse CRTX for the price that CRTX paid to
Jagotec for manufacturing the Products comprised in the Finished Products which are the
subject of the Recall or (ii) use its commercially reasonable efforts to replace the Recalled
or returned Finished Products with new Products at no charge to CRTX, contingent upon the
receipt from CRTX of all API required for the manufacture of such replacement Products.
Payment terms shall be [**] days from the date of receipt of an electronic copy of invoice
(with a paper confirmatory copy of said invoice being sent by post). In all other
circumstances, Recalls, returns or other corrective actions shall be made at CRTX’s cost and
expense. The parties shall use commercially reasonable efforts to comply with their
obligations under this Section 8.3 in a timely manner.
	 
	8.4	 	CRTX shall not dispose of any damaged, defective, returned or Recalled Finished Products in
relation to which it intends to assert a claim against Jagotec without Jagotec’s prior written
authorization to do so. Alternatively, Jagotec may instruct CRTX to return such Finished
Products to Jagotec. Jagotec shall bear the cost of disposition with respect to any damaged,
defective, returned or Recalled Finished Products in relation to which it bears responsibility
under Section 7.8, 7.9 or 8.3 hereof. In all other circumstances, CRTX shall bear the cost
of disposition with respect to any damaged, defective, returned or Recalled Finished Products.
	 
	8.5	 	CRTX or its designated agent shall have the full responsibility for responding to questions
and complaints from CRTX’s Finished Product customers. Responsibilities and activities
relating to complaints and questions are defined in

23

 

	 	 	the Quality Agreement. Unless it is determined that the cause of any customer complaint
resulted from a failure by Jagotec to provide manufacturing services in accordance with the
Specifications, Applicable Laws or cGMP, all costs incurred in respect of this Section 8.5
shall be borne by CRTX.
	 
	9.	 	Price
	 
	9.1.	 	The Price for the Product shall be calculated in accordance with Schedule 1.
	 
	9.2	 	The Parties agree to pursue a mutual continuous improvement strategy to seek ways of
improving the manufacturing performance, and reducing the manufacturing and materials costs,
including benchmarking the price. In this regard, the Parties will meet, at least annually, to
discuss and mutually agree upon:
	 
		 	a) annual continuous improvement goals in terms of total manufacturing costs, at an agreed
upon value; and
	 
		 	b) allocation of costs required in implementing such continuous improvement projects.
	 
	10.	 	Term and Termination
	 
	10.1.	 	This Agreement shall enter into force as of the Effective Date and shall remain in force and
effect for a minimum period of five years and thereafter unless and until terminated by
Jagotec by giving no less than thirty-six (36) months prior written notice to that effect to
CRTX, or unless and until terminated by CRTX by giving no less than twenty-four (24) months
prior written notice to that effect to Jagotec, such notice in either case not to expire
before the fifth anniversary of the Effective Date.
	 
	10.2.	 	Notwithstanding anything contained in Section 10.1 above, and except as otherwise explicitly
provided in this Agreement, this Agreement may be terminated at any time by either Party (the
“Terminating Party”) giving written notice to the other (the “Defaulting Party”) if:
	 
		 	a) the Defaulting Party is in material breach of a term or provision hereof and in the case
of a material breach capable of remedy such material breach continues and is not remedied
within [**] days of the Terminating Party’s written notice specifying the breach and
requiring its remedy; or
	 
		 	b) the Defaulting Party becomes insolvent or goes into liquidation, voluntarily or
otherwise, other than for the sole purpose of reorganisation, or goes into bankruptcy
or liquidation, or becomes subject to any involuntary bankruptcy or

24

 

	 	 	insolvency proceedings, or makes an assignment for the benefit of creditors, or in the event
of a receiver, trustee or administrator being appointed over the Defaulting Party’s property
or parts thereof or anything analogous occurs in relation to the Defaulting Party under the
law of any relevant jurisdiction.
	 
	10.3	 	Notwithstanding anything contained in Section 10.1 above, CRTX may terminate this Agreement
upon 30 days’ prior written notice in the event that any governmental agency takes any action,
or raises any objection, that prevents CRTX from importing, exporting, or selling the Finished
Product. CRTX shall not thereafter be obliged to purchase any Product other than that
contained in binding forecasts pursuant to Section 7.1(a) that have been submitted by the date
of the notice given.
	 
	10.4	 	Notwithstanding anything contained in Section 10.1 above, CRTX may terminate this Agreement
on at least twelve months’ advance notice if it intends to no longer order the Product due to
(a) the Finished Product’s discontinuance in the market or (b) CRTX’s decision to permanently
cease commercialisation of the Product. Upon such notice in either case, CRTX shall not be
obliged to purchase any Product other than that contained in binding forecasts pursuant to
Section 7.1(a) that have been submitted by the date of the notice given.
	 
	10.5	 	Notwithstanding anything contained in Section 10.1 above, CRTX may terminate this Agreement
upon six (6) months’ advance notice in the event that both of the following occur: (i) any
AB-rated generic pharmaceutical product containing zileuton is introduced in the U.S. and (ii)
CRTX decides to permanently cease commercialisation of the Product. Upon such notice, CRTX
shall not thereafter be obliged to purchase any Product other than that contained in binding
forecasts pursuant to Section 7.1(a) that have been submitted by the date of the notice given.
	 
	10.6	 	Notwithstanding anything contained in Section 10.1 above, CRTX may terminate this Agreement
upon written notice pursuant to Section 7.10. Upon such notice, CRTX shall not thereafter be
obliged to purchase any Product other than that contained in binding forecasts pursuant to
Section 7.1(a) that have been submitted by the date of the notice given.
	 
	11.	 	Effects of Termination
	 
	11.1	 	In the event of termination of this Agreement by either Party in accordance with Section 10
above, no compensation or indemnity shall be payable to or may be claimed by either Party from
the other Party solely as a result of such termination save that this Section 11.1 shall not
preclude any party that terminates for the breach of the other seeking damages.

25

 

	11.2.	 	Termination of this Agreement by either Party shall not relieve the Parties of any
obligation accruing prior to the effective date of such termination, and it is hereby
explicitly agreed that (i) Sections 2.3 (with respect to last sentence), 3.2, 3.8, 3.15, 5.5,
5.6, 5.8, 5.9, 6, 8, 11, 12.2 to 12.5, 13, 14, 15, 16, 17, 19 and 20 shall survive any such
termination and (ii) Sections 3.1 to 3.19, 4.3, 4.4, 4.5, 4.6, 5.7, 7.3, 7.4, 7.5, 7.6, 7.7,
7.8, 7.9, 7.10, 9, and 12.1 to 12.3 and the Quality Agreement shall also remain in effect and
survive any such termination as appropriate with respect to Product delivered or, pursuant to
this Section 11, to be delivered by Jagotec to CRTX.
	 
	11.3.	 	In the event of termination of this Agreement, the Manufacturing Sub-License shall terminate
unless this Agreement is terminated by CRTX under Sections 10.2 or 10.6 in which case the
Manufacturing Sub-License shall remain in full force and effect as will Section 5
(Consideration) of the Support Agreement. Upon termination of this Agreement by CRTX under
Sections 10.2 or 10.6, Jagotec shall, and hereby does, consent to grant Manufacturing
Sub-Licenses to any manufacturer or manufacturers selected by CRTX without further
consideration and with no limits on quantities of manufacturing of Product.
	 
	11.4	 	In the event of termination of this Agreement, the rights granted to Jagotec under this
Agreement shall revert to CRTX. Jagotec shall forthwith cease to manufacture Product, subject
to any binding forecast and/or pending Firm Order placed by CRTX pursuant to Section 7.1(b)
above, and shall, if requested by CRTX and at CRTX’s expense, return any API held by Jagotec
to CRTX or as it may direct.
	 
	11.5.	 	Except as otherwise explicitly provided in this Agreement, nothing contained in Sections
11.2, 11.3 and 11.4 above shall in any way limit, and shall be without any prejudice to, any
other rights or remedies which may be available to either Party.
	 
	11.6.	 	In the event of termination of this Agreement each party shall, at the option of the other
either:
	 
		 	a) return the other party’s Confidential Information and any copies and extracts relating to
it to the other party, or
	 
		 	b) destroy or delete that Confidential Information and any copies and extracts and certify
to the other party in writing that it has done the same
	 
	 	 	save that each Party shall be entitled to retain such documentation for such periods of time
as required by law. Jagotec shall notify CRTX [**] days prior to destruction of batch
documentation, and if requested by CRTX shall provide this documentation to CRTX subject to
re-imbursement of associated costs.

26

 

	11.7	 	In the event that (i) Jagotec terminates this Agreement under Section 10.1 or (ii) CRTX
terminates this Agreement pursuant to Section 10.1, Jagotec agrees to use commercially
reasonable efforts to promptly transfer the manufacturing processes for the Product to a
Manufacturing Sub-Licensee(s) at CRTX sole expense.
	 
	11.8	 	In the event that CRTX terminates this Agreement under Section 10.2 or 10.6, Jagotec agrees
to use commercially reasonable efforts to promptly transfer the manufacturing processes for
the Product to a Manufacturing Sub-Licensee(s) at CRTX’s sole expense save that Jagotec shall
bear the reasonably incurred costs of producing three process validation batches (or such
other quantity of batches as may be specified by the FDA) for the purposes of approving one
such Manufacturing Sub-Licensee(s)’ site).
	 
	11.9	 	In the event that either party terminates this Agreement, CRTX shall not be obligated to
purchase any Product other than that contained in binding forecasts and shall not have any
obligations under Section 7.2(b) and (c).
	 
	12.	 	Warranty, Indemnity and Insurance
	 
	12.1.	 	Jagotec represents and warrants to manufacture or have manufactured Product in compliance in
all material respects with the Specifications, the Quality Agreement and Applicable Laws, and
to use only equipment, facilities and personnel suitable for the performance of its
obligations hereunder. Jagotec represents and warrants that it has engaged all staff
necessary to comply with cGMP, including, those personnel required by 21 CFR 211 and where
applicable the Qualified Person as required by European Commission Directives 2001/83/EC and
91/356/EEC and all other Applicable Laws.
	 
	12.2.	 	Jagotec does not assume any liability or give any representation or warranty, whether
express nor implied, for the completeness or accuracy of the Specifications provided by CRTX,
nor for the merchantability or fitness for a particular purpose of Product manufactured and/or
supplied hereunder.
	 
	12.3.	 	CRTX assumes full liability, including product liability, with respect to any and all
Product or Finished Product marketed, distributed, sold or used and the API contained in any
such Product or Finished Product other than any liability within the scope of the
indemnification obligation of Jagotec under this Section 12.3. CRTX shall defend, indemnify
and hold Jagotec, its Affiliates and its and their directors, officers, employees, agents and
consultants (collectively the “Jagotec Indemnified Parties”) harmless from and against any and
all losses, liabilities, damages and expenses (including reasonable attorney’s fees and other
costs of defense) that any of the Jagotec Indemnified Parties may suffer as a result of any
claim, demand, action or other proceeding by any third party arising from or

27

 

	 	 	relating to the manufacturing, marketing, distribution, sale or use of Product or Finished
Product and/or the API, except to the extent that any such losses, liabilities, damages and
expenses arise out of (a) a claim of infringement of a third party’s patent rights by the
Geomatrix System, (b) any proven negligence or any wilful misconduct of Jagotec, its
Affiliates or their agents in the performance of their activities under this Agreement, or
(c) any breach by Jagotec of its representations, warranties or obligations pursuant to this
Agreement or the Quality Agreement, in which case (referring to clauses (a), (b) and (c)),
Jagotec and its Affiliates shall jointly and severally defend, indemnify and hold harmless
from and against any and all losses, liabilities, damages and expenses (including reasonable
attorney’s fees and other costs of defense), CRTX, its Affiliates, and their respective
principals, officers, directors, agents/or employees may suffer as a result of any claim,
demand, action, order or other proceeding by any third party resulting therefrom whether the
same occurs prior to or after the termination of this Agreement. Each party agrees to give
the other party prompt written notice of any claims made for which the other party might be
liable under this Section 12.3. The indemnifying party shall have the opportunity to
defend, negotiate, and settle such claims; provided, that the indemnified party will be
entitled to participate in the defence of such matter and to engage at its expense
independent counsel but may not settle or compromise any claim without the consent of the
indemnifying party, which consent shall not be unreasonably withheld or delayed. The party
seeking indemnification will provide the indemnifying party with such information and
assistance as the indemnifying party may reasonably request, at the expense of the
indemnifying party.
	 
	12.4	 	NO PARTY SHALL BE LIABLE TO THE OTHER UNDER THIS AGREEMENT, WHETHER BASED UPON WARRANTY,
CONTRACT, TORT OR OTHERWISE, FOR SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE, MULTIPLE, INDIRECT
OR CONSEQUENTIAL LOSSES OR DAMAGES INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, LOSS OF
CONTRACTS AND LOSS OF BUSINESS, AND NO PARTY’S LIABILITY TO THE OTHER SHALL EXCEED THE SUM OF
US $5,000,000. NOTHING HEREIN SHALL LIMIT A PARTY’S LIABILITY FOR DEATH OR PERSONAL INJURY OF
A THIRD PARTY DUE TO THAT PARTY’S NEGLIGENCE.
	 
	12.5.	 	CRTX and Jagotec shall maintain, during the term of this Agreement and for a period of not
less than five (5) years after its termination for whatever reason, liability insurance, (and
in respect of CRTX including product liability insurance), in such amounts as are customary
for pharmaceutical or biopharmaceutical companies of a similar size and situation undertaking
activities with products similar to the Product or Finished Product as the case may be.

28

 

	13.	 	Confidential information
	 
	13.1	 	Each party undertakes that it will:
	 
		 	a) keep the existence of and the terms of this Agreement strictly confidential;
	 
		 	b) keep all Confidential Information of the other Party which may be within or come into its
possession in connection with or arising from this Agreement or which it may generate in
reliance on any Confidential Information so disclosed, secret and confidential and it will
not at any time for any reason whatsoever disclose or permit the same to be disclosed to any
third party except as expressly provided in Sections 13.3, 13.4, 13.6, or 13.7;
	 
		 	c) use the other Party’s Confidential Information only as required to perform its
obligations under this Agreement or as agreed in writing with the disclosing Party and for
no other purpose whatsoever. In particular, Jagotec shall not, and shall procure that
Jagotec’s Affiliates (including Skye-SAS) do not, use after the date of termination for any
purpose including for the manufacture of products (i) Confidential Information disclosed to
it by CRTX, (ii) CRTX Intellectual Property or (iii) CRTX Product Developments.
	 
	13.2.	 	The obligations of confidentiality contained in this Section 13 will not apply to any part
of the Confidential Information of the disclosing Party (the “Disclosing Party”) which the
recipient Party (the “Receiving Party”) can show by documentary evidence:
	 
		 	a) was legally in the Receiving Party’s possession or control prior to the date on which it
was received from the Disclosing Party free of any obligation of confidentiality; or
	 
		 	b) has come into the public domain, is generally known to the public or was obtained from a
third party, other than by breach of this Section 13 or any other duty of confidence.
	 
	13.3.	 	The Receiving Party may disclose the Disclosing Party’s Confidential Information:

	 	a)	 	if and to the extent that any part of that Confidential Information is required to be
disclosed by a regulatory or government body or court of competent jurisdiction with power
to compel the disclosure provided the Receiving Party notifies the Disclosing Party of such
requirement, and to the extent possible uses reasonable endeavours to keep such Confidential
Information confidential notwithstanding any such requirement; and
	 
	 	b)	 	to its agents, representatives, employees, and consultants to the extent necessary to
facilitate the performance of its obligations under this Agreement provided that any such
disclosure will be limited to what is absolutely necessary

29

 

	 	 	 	in order to facilitate the performance of this Agreement and the disclosing party procures
that such third parties are bound by obligations of confidentiality substantially similar to
the provisions of this Section 13 and the Receiving Party shall be liable to the Disclosing
Party for a breach thereof by such third parties; and
	 
	 	c)	 	to Manufacturing Sub-licensee (as of the Effective Date only Patheon Pharmaceuticals,
Inc. is approved) to the extent necessary to facilitate the performance of its obligations
under its Manufacturing Sub-license, provided that such disclosure will be limited to what
is absolutely necessary in order to facilitate that agreement and that the Receiving Party
procures that such Manufacturing Sub-licensee is bound by obligations of confidentiality
substantially similar to the provisions of this Section 13 and the Receiving Party shall be
liable to the Disclosing Party for a breach thereof by the Manufacturing Sub-licensee.

	13.4.	 	Notwithstanding Section 13.1(a), either Party may (a) disclose the existence of and terms of
this Agreement including Price (but in no event any individual components contributing to
price, including manufacturing costs or other financial information in connection herewith)
and excluding the Quality Agreement to (i) investors and potential investors (where such
investors or potential investors have invested or intend to invest at least $[**] in CRTX) if
and to the extent reasonably required by those investors provided that such investors are
bound by obligations of confidentiality substantially similar to the provisions of this
Section 13 and the Party disclosing such information shall be liable to the other Party for a
breach thereof by an investor or potential investor; (b) file a redacted version of the
Agreement with the SEC after the Agreement is executed; provided that CRTX shall provide
Jagotec with a copy of its proposed filing prior to making it and provided that CRTX shall
make a confidential treatment request to the SEC after considering in good faith any comments
or suggestions made by Jagotec within three Working Days of receipt by Jagotec of such
proposed filing; or (c) provide a copy of this Agreement and the Quality Agreement to the FDA
or other Agency upon the request thereof.
	 
	13.5	 	Without prejudice to any other rights or remedies that the Disclosing Party may have, the
Receiving Party acknowledges and agrees that if the Confidential Information is used or
disclosed other than in accordance with the terms of this Agreement, the Disclosing Party
shall, without proof of special damage, be entitled to seek an injunction or other equitable
relief for any threatened or actual breach of the provisions of this Section 13, in addition
to any damages or other remedy to which it may be entitled.
	 
	13.6.	 	Neither Party shall issue a press release or make any other announcement relating to this
Agreement or its terms without the prior written consent of the other Party.

30

 

	13.7	 	Notwithstanding anything to the contrary in this Agreement, nothing shall prohibit a Party
from making such disclosures to the extent deemed necessary under applicable national, federal
or state securities laws or any rule or regulation of any nationally recognized securities
exchange; in such event, however, the disclosing Party shall use good faith efforts to obtain
confidential treatment to the extent available.
	 
	13.8	 	Jagotec acknowledges and agrees that (i) CRTX is a publicly-held company and (ii) Jagotec is
aware and has advised its employees, directors, officers and agents involved in the evaluation
and negotiation of the transaction contemplated by this Agreement that applicable securities
laws prohibit any person who is aware of material, non-public information about a company
obtained directly or indirectly from that company from purchasing or selling securities of
such company or from communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or sell such
securities.
	 
	13.9	 	CRTX acknowledges and agrees that (i) SkyePharma PLC is a publicly-held company and (ii) CRTX
is aware and has advised its employees, directors, officers and agents involved in the
evaluation and negotiation of the transaction contemplated by this Agreement that applicable
securities laws prohibit any person who is aware of material, non-public information about a
company obtained directly or indirectly from that company from purchasing or selling
securities of such company or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
	 
	14.	 	Miscellaneous Provisions
	 
	14.1.	 	Entire Agreement: The terms, covenants, conditions and provisions contained in this
Agreement, the documents referred to in it, the Support Agreement and the Quality Agreement
constitute the total and complete agreement of the Parties regarding the subject matter hereof
and supersede all prior understandings and agreements hereto made, and there are no other
representations, understandings or agreements relating to the subject matter hereof provided
that nothing in this Agreement shall exclude or limit liability for fraud. Except as otherwise
explicitly provided in this Agreement, the provisions of this Agreement may not be waived,
altered, amended or repealed in whole or in part except by the written consent of both of the
Parties to this Agreement. All conditions, warranties and other terms implied by statute or
common law are hereby excluded to the fullest extent permitted by law.
	 
	14.2	 	Assignment: Other than to an Affiliate of either Party, this Agreement may not be assigned or
otherwise transferred, nor may any right or obligation hereunder be assigned or transferred by
either Party without the prior written consent of the other Party; provided, however, that (i)
either Party may assign or otherwise

31

 

	 	 	transfer the Agreement to a third-party without such consent in connection with one or a
series of transactions whereby, directly or indirectly, control of that Party or control of
more than 50% of the voting power of that Party and/or all or a substantial portion of the
assets of that Party are acquired by, transferred to or combined with that of any person or
one or more persons formed by, affiliated with or that are shareholders of such person,
including, without limitation, a disposition or exchange of capital stock or assets, a
merger, consolidation or other business combination, a tender or exchange offer or a
leveraged buyout; (ii) CRTX may assign or otherwise transfer the Agreement to a third-party
without such consent in connection with a business development transaction related to CRTX’s
programs, technology or intellectual property related to the Product; or (iii) Jagotec may
assign or otherwise transfer the Agreement to a third party without such consent in
connection with one or a series of transactions whereby, directly or indirectly, control of
Skye-SAS or control of more than 50% of the voting power of Skye-SAS and/or all or a
substantial portion of the assets of Skye-SAS are acquired by, transferred to or combined
with that of any person or one or more persons formed by, affiliated with or that are
shareholders of such person, including, without limitation, a disposition or exchange of
capital stock or assets, a merger, consolidation or other business combination, a tender or
exchange offer or a leveraged buyout.
	 
	 	 	Any permitted assignee shall assume all obligations of its assignor under this Agreement or
under the respective rights or obligations actually assigned. CRTX understands and agrees
that Jagotec intends to have manufactured Product under this Agreement by its Affiliate
Skye-SAS at the Facility and CRTX explicitly agrees thereto. In any event either Party
assigning this Agreement or any rights or obligations hereunder to any Affiliate or other
third party shall be responsible for any and all acts, deeds and omissions of its Affiliate
or such third party and shall continue to be bound by all terms and provisions under this
Agreement through its term.
	 
	14.3.	 	Notices: Any consent, notice or report required or permitted to be given or made under this
Agreement by one Party to the other shall be in English and in writing, delivered personally
or by registered mail, courier service or facsimile (promptly confirmed by personal delivery,
registered mail or courier service) addressed to the other Party at its address indicated
below, or to such other address as shall have been notified in writing to the sending Party by
the receiving Party from time to time, and shall take effect upon receipt by the addressee.

	 	 	 	 	 
	 

	 	If to Critical Therapeutics:
	 	Critical Therapeutics, Inc.
	 

	 	 	 	60 Westview Street
	 

	 	 	 	Lexington, MA 02421
	 

	 	 	 	USA
	 

	 	 	 	Attn.: Chief Operating Officer
	 

	 	 	 	Fax No: +1 781 862 5691

32

 

	 	 	 	 	 
	 

	 	With a copy to:
	 	Critical Therapeutics Inc.
	 

	 	 	 	60 Westview Street
	 

	 	 	 	Lexington, MA 02421
	 

	 	 	 	USA
	 

	 	 	 	Attn: Senior Vice President of Legal Affairs
	 

	 	 	 	Fax No: +1 781 862 5691
	 
	 	 	 	 
	 

	 	If to Jagotec:
	 	Jagotec AG
	 

	 	 	 	Eptingerstrasse 51
	 

	 	 	 	CH-4132 Muttenz, Switzerland
	 

	 	 	 	att.: Managing Director
	 

	 	 	 	Fax No: ++41 467 5574
	 
	 	 	 	 
	 

	 	with a copy to:
	 	SkyePharma Production SAS
	 

	 	 	 	ZA de Chesnes Ouest
	 

	 	 	 	55 rue du Montmurier
	 

	 	 	 	BP 45
	 

	 	 	 	F-38291 St-Quentin-Fallavier, France
	 

	 	 	 	attn.: President
	 

	 	 	 	Fax No: ++33 4 74 95 2165
	 
	 	 	 	 
	 

	 	with a copy to:
	 	SkyePharma PLC
	 

	 	 	 	105 Piccadilly
	 

	 	 	 	London W1J 7NJ
	 

	 	 	 	attn: Group Counsel
	 

	 	 	 	Fax No: +44 20 7491 3338

	14.4.	 	Independent Contractors: It is expressly agreed that the Parties shall be independent
contractors and that the relationship between the Parties shall not constitute a partnership,
joint venture or agency. Neither Party shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall be binding on
the other Party, without the prior written consent of the other Party to do so.
	 
	14.5.	 	Severability: Each Party hereby acknowledges that it does not intend to violate any public
policy, statutory or common laws, rules, regulations, treaty or decision of any government
agency or executive body thereof of any country or community or association of countries.
Should one or more provisions of this Agreement be or become invalid, this Agreement shall
endure except for such invalid provisions and the Parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be reasonably

33

 

	 	 	assumed that the Parties would have entered into this Agreement with such valid provisions.
	 
	14.6.	 	Force Majeure: Neither Party hereto shall be held liable or responsible to the other Party
nor be deemed to have defaulted under or breached this Agreement for failure or delay in
fulfilling or performing any term of this Agreement when and only to the extent that such
failure or delay is caused by or results from causes beyond the reasonable control of the
affected Party, potentially including but not limited to fire, floods, embargoes, acts of war
(whether war be declared or not), terrorism, insurrections, riots, civil commotions, strikes,
lockouts or other labour disturbances, acts of God or acts, omissions or delays in acting by
any governmental authority or the other Party hereto (“Force Majeure”). Either Party upon
prompt, written notice to the other, shall be excused from performance hereunder to the extent
of such prevention or restriction. In the event that the performance of the obligations of
either party is prevented, restricted or hindered by any event of Force Majeure such party (a)
shall immediately serve notice in writing on the other party specifying the nature of the
Force Majeure, its effect upon the performance of this Agreement and the period of time in
which it anticipated to apply; and (b) shall use its reasonable endeavours to overcome the
Force Majeure and resume its proper performance of its obligations under this Agreement.
	 
	14.7.	 	Interest: In the event any undisputed amount due and payable under this Agreement is not
paid by the date that is thirty days from the date of actual receipt of the invoice, then the
Party owing such amount shall pay to the other Party for the period from the due date until
actual payment is effected, without being requested, interest on the total outstanding amount
at the rate equal to the London Interbank Offered Rate (“LIBOR”), as published by the Wall
Street Journal Europe on the date that such payment falls due, increased by [**] percent ([**]
%), in U.S. dollars and adjusted on the first day of every Quarter.
	 
	14.8.	 	Headings: The titles and headings used in this Agreement are intended for convenience only
and shall not in any way affect the meaning or construction of any provision of this
Agreement.
	 
	14.9.	 	Waiver: The waiver by either Party hereto of any right hereunder or the failure to perform
or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or
of any other breach or failure by said other Party whether of a similar nature or otherwise.
	 
	14.10.	 	Cumulative Rights: The rights and remedies provided by this Agreement are cumulative and
(subject as otherwise provided in this Agreement) are not exclusive of any rights or remedies
provided by law.

34

 

	14.11.	 	Counterparts and Facsimile: This Agreement may be executed in any number of counterparts
and all the counterparts when taken together will constitute one agreement. Each party may
enter into this Agreement by executing a counterpart. This Agreement may be executed by
facsimile.
	 
	14.12.	 	English: This Agreement is drawn up and executed in the English language. If there is any
conflict between this Agreement and any translation of this Agreement, the original English
language version of this Agreement will prevail.
	 
	14.13.	 	Authorization: Each party to this Agreement warrants and represents that such party has
full authority and corporate power to enter into this Agreement, is aware of no legal,
contractual or other restriction, limitation or condition that might affect adversely its
ability to perform hereunder, and is in good standing under the laws of each jurisdiction in
which it is incorporated or engages in business activities.
	 
	15.	 	Dispute Resolution and Jurisdiction
	 
	15.1.	 	In the event of any dispute arising between the Parties concerning this Agreement, CRTX and
Jagotec agree that in the first place their chief executive officers shall meet for good faith
discussions in an attempt to negotiate an amicable solution and either party may demand such a
meeting by notifying the other in writing. Such notice will set out the nature of the dispute
and the Party’s position (“Notice”). The other Party will within 10 Working Days of receipt of
the Notice, submit a statement to the other setting out its position in relation to the
dispute (the “Response”). The negotiations shall take place within 30 Working Days of the
Response being served. If a dispute cannot be resolved within 10 Working Days of the Response
being served or the second Party fails to serve a Response either party may instigate
arbitration in accordance with Section 15.2. The Notice and the Response shall be without
prejudice.
	 
	15.2.	 	Any dispute arising between the Parties out of or in connection with this Agreement, or the
interpretation, breach or enforcement thereof, which cannot be amicably resolved pursuant to
Section 15.1 above, shall be referred and finally (in the absence of substantial irregularity)
resolved by arbitration, to take place in London England, under the London Court of
International Arbitration (“LCIA”) Rules (the “Rules”), which Rules are hereby incorporated
into this section by reference. The arbitration tribunal shall consist of three (3)
arbitrators, one to be appointed by each of the Parties and the third arbitrator (who shall be
the chairman of the arbitral proceedings) being appointed in accordance with the Rules, and
the language of the arbitration proceedings shall be English.
	 
	 	 	The Parties shall cooperate in good faith to expedite (to the maximum extent practicable)
the conduct of any arbitral proceedings commenced under this

35

 

	 	 	Agreement. Any award shall be final and binding on the Parties and shall be the exclusive
remedy between the Parties regarding any claims, counterclaims, issues, disputes or
accountings presented to the arbitral tribunal.
	 
	15.3.	 	Notwithstanding anything contained in this Section 15, either Party may seek preliminary or
injunctive measures or relief in any competent court having jurisdiction.
	 
	16.	 	Applicable Law
	 
	 	 	The Parties hereto agree that this Agreement, all transactions executed hereunder and all
relationships between the Parties in connection therewith shall be construed under and be
governed by the laws of England without reference to the principles of conflict of laws
thereof, and shall not be governed by the United Nations Convention on Contracts for the
International Sale of Goods (the Vienna Convention of April 11, 1980) the 1974 Convention on
the Limitation Period in the International Sale of Goods (the “1974 Convention”) nor the
Protocol amending the 1974 Convention, done at Vienna April 11, 1980.
	 
	17.	 	Third Party Rights
	 
	17.1	 	This Agreement does not create any right enforceable by any person who is not a party,
whether pursuant to the Contracts (Rights of Third Parties) Act 1999 or otherwise, except that
(a) the rights under Section 12.3 may be enforced by Indemnified Parties referred to in that
Section; and
	 
		 	(b) a person who is the permitted successor to or assignee of the rights of a party is
deemed to be a party to this Agreement and the rights of such successor or assignee shall,
subject to and upon any succession or assignment permitted by this Agreement, be regulated
by the terms of this Agreement.
	 
	17.2	 	Notwithstanding that any term of this Agreement may be or become enforceable by a person who
is not a party to it, the terms of this Agreement or any of them may be varied, amended or
modified or this Agreement may be suspended, cancelled or terminated by agreement in writing
between the parties or this Agreement may be rescinded, (in each case) without the consent of
any such third party.
	 
	18.	 	Debarred Persons. Jagotec covenants that it will not in the performance of its obligations
under this Agreement use the services of any person debarred or suspended under 21 U.S.C.
§335(a) or 335(b). Jagotec represents that it does not currently have, and covenants that it
will not hire, as an officer or an employee any person who has been convicted of a felony
under the laws of the United States for conduct relating to the regulation of any drug product
under the United States Federal Food, Drug and Cosmetic Act.

36

 

	19	 	Intellectual Property
	 
	19.1	 	“Intellectual Property” means all domestic or foreign inventions, patents and applications
therefor, trademarks, works of authorship, copyright, trade secrets, and all other
intellectual property or proprietary rights.
	 
	19.2	 	“CRTX Intellectual Property” means any and all Intellectual Property relating to the Product
or its manufacture by Jagotec that is (i) owned by CRTX at the Effective Date (including but
not limited to pursuant to the Development and Scale-Up Agreement dated 5 May 2004 between the
Parties) or (ii) developed or acquired by CRTX after the Effective Date provided that such
Intellectual Property does not utilize nor is based on any Jagotec Intellectual Property or
Jagotec Product Developments
	 
	19.3	 	“Jagotec Intellectual Property” means (i) all Intellectual Property owned by Jagotec as of
the Effective Date, including that related to the Geomatrix System; (ii) all Intellectual
Property developed or acquired by Jagotec after the Effective Date independent of the
performance of its obligations under this Agreement, provided that such Intellectual Property
does not utilize nor is based on any CRTX Intellectual Property or CRTX Product Developments.
	 
	19.4	 	Ownership
	 
		 	(a) CRTX Rights. Jagotec acknowledges that CRTX is the sole owner of CRTX Intellectual
Property and of all data and information relating to the Product, including the
Specifications, owned by and delivered by CRTX to Jagotec under this Agreement, except to
the extent such information is in the public domain.
	 
		 	(b) Jagotec Rights. CRTX acknowledges that Jagotec is the sole owner of the Jagotec
Intellectual Property, except to the extent such information is in the public domain.
	 
		 	(c) Product Developments. All Intellectual Property relating to the Product conceived,
reduced to practice, authored or otherwise generated or developed in the course of
activities under this Agreement or the Development and Scale Up Agreement dated 05 May 2004,
either by or on behalf of Jagotec, except if it has general applicability to the manufacture
of pharmaceutical products, shall be “CRTX Product Developments”. CRTX shall own all right,
title and interest in and to all CRTX Product Developments, whether made, conceived, reduced
to practice, authored or otherwise generated or developed solely by Jagotec personnel, or
jointly by CRTX and Jagotec personnel, and all rights to Intellectual Property arising
therefrom. Jagotec will, and hereby does, assign to CRTX all of its rights, title and
interest in and to CRTX Product Developments and rights to Intellectual Property arising
therefrom. Jagotec will provide reasonable assistance to CRTX, at CRTX’s expense, in
obtaining and enforcing CRTX’s ownership of the CRTX Product Developments, including as
applicable the

37

 

	 	 	assignment to CRTX of the right, title and interest of Jagotec’s employees or independent
contractors in and to such CRTX Product Developments. All Intellectual Property relating to
the Product that has general applicability to the manufacture of pharmaceutical products
(and therefore does not constitute CRTX Product Developments) and/or any developments to the
Jagotec Intellectual Property resulting from the work conducted by Jagotec hereunder shall
be “Jagotec Product Developments”. Jagotec shall own all right, title and interest in and
to all Jagotec Product Developments, whether made, conceived, reduced to practice, authored
or otherwise generated or developed solely by Jagotec personnel, or jointly by CRTX and
Jagotec personnel, and all rights to Intellectual Property arising therefrom. CRTX will,
and hereby does, assign to Jagotec all of its rights, title and interest in and to Jagotec
Product Developments and rights to Intellectual Property arising therefrom. CRTX will
provide reasonable assistance to Jagotec, at Jagotec’s expense, in obtaining and enforcing
Jagotec’s ownership of the Jagotec Product Developments, including as applicable the
assignment to Jagotec of any right, title and interest of CRTX’s employees or independent
contractors in and to such Jagotec Product Developments.
	 
		 	(d) Patents. As soon as practicable after creation, development, conception or reduction to
practice by Jagotec of any CRTX Product Development, Jagotec shall inform CRTX in writing of
such CRTX Product Development. Upon CRTX’s reasonable request and at CRTX’s expense,
Jagotec shall take such reasonable actions as CRTX deems necessary or appropriate to assist
CRTX in obtaining patent or other proprietary protection in CRTX’s name with respect to all
CRTX Product Developments.
	 
		 	(e) License. Under the terms and subject to the conditions of this Agreement, CRTX hereby
grants Jagotec a non-exclusive, royalty-free license to use the CRTX Intellectual Property
and the CRTX Product Developments during the Term solely for the purposes of performing its
obligations hereunder. Jagotec shall have no right to make, use, manufacture, supply,
distribute, offer to sell, import or sell the Product or use any CRTX Intellectual Property
or CRTX Product Developments for any other purpose.
	 
	20	 	Guarantee
	 
	 	 	SkyePharma PLC absolutely unconditionally and irrevocably guarantees that Jagotec shall
perform all of its obligations contained in this Agreement. If Jagotec shall in any
respect fail to perform its obligations under and pursuant to the terms of this Agreement,
SkyePharma PLC undertakes, on demand by CRTX, to indemnify CRTX against any loss, damages,
claims, costs and expenses which may be incurred by CRTX by reason of any such failure on
the part of Jagotec subject to the limitations set out in clause 12.4 of this Agreement.

38

 

[Remainder of this page is intentionally left blank]

39

 

SIGNATURE PAGE TO

MANUFACTURING AND SUPPLY AGREEMENT

IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 
	Jagotec AG	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Francesco Patalano
 

	 	 	 	By:
	 	/s/ Susanne Halbeisen
 

	 	 
	Name: Dr. Francesco Patalano	 	 	 	Name: Dr. Susanne Halbeisen	 	 
	Title: Managing Director	 	 	 	Title: Director	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date: August 20, 2007	 	 	 	Date: August 20, 2007	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Critical Therapeutics, Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Trevor Phillips	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Name: Trevor Phillips, Ph.D.	 	 	 	 	 	 	 	 
	Title: Chief Operating Officer	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date: August 20, 2007	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SkyePharma PLC	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ KT Cunningham
	 	 	 	By:
	 	/s/ Peter Grant	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name: KT Cunningham	 	 	 	Name: Peter Grant	 	 
	Title: Chief Operating Officer	 	 	 	Title: Finance Director	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date: August 20, 2007	 	 	 	Date: August 20, 2007	 	 

40

 

SCHEDULE 1

PRICE

2007

The Price shall be $[**] per [**] tablets of Product delivered in 2007.

2008

If Jagotec meets the 2007 Performance Criteria (as set out below), then CRTX will pay $[**] per
[**] tablets delivered in [**]. If Jagotec does not meet the 2007 Performance Criteria, then CRTX
will continue to pay $[**] per [**] tablets delivered in [**].

Whether or not the 2007 Performance Criteria are met, CRTX will pay $[**] per [**] tablets for
Product delivered in [**].

Within [**] days of the end of each Quarter, beginning with [**], CRTX and Jagotec shall meet in
person or via teleconference to discuss whether Jagotec has met the 2008 Performance Criteria (as
set out below). If the parties agree that Jagotec has met the 2008 Performance Criteria, CRTX will
pay a success fee retrospectively for the previous Quarter of $[**] per [**] tablets.

2009

From the beginning of 2009 onwards, the Price will be $[**] per [**] tablets.

Thereafter Jagotec shall notify CRTX by [**] of the Price for Product to be delivered in the
following Year; provided however, the increase in the Price in the following Year shall not be more
than [**]% of the Price in the previous year.

General

Jagotec shall use commercially reasonable efforts to acquire any and all Auxiliary Materials at
commercially competitive prices. In the event that the price of any Auxiliary Material increases
more than [**] percent ([**]%) in a [**] month period, Jagotec shall have the right to raise the
Price to reflect that incremental increase upon written notice to CRTX.

Any duty, sales, use or excise or other taxes that apply to the purchase of Product shall be for
the account of CRTX.

Prices shall be pro-rated for any supplies of Product in less than multiples of [**].

41

 

2007 Performance Criteria: 

	1.	 	Jagotec delivers by [**], 2007 the Batch scheduled at the date hereof for shipment under
quarantine at the end of September to be shipped under quarantine (reference the [**]-batch
campaign under [**]);

	2.	 	Jagotec delivers Batches according to the agreed delivery schedule in 2007 attached at
Schedule 5 on the dates set out therein and (a) according to the Specifications relating to
release and (b) in accordance with the other provisions of this Agreement.

2008 Performance Criteria: 

	 	1.	 	Jagotec delivers Batches according to the delivery schedule to be agreed for 2008 on
the dates set out therein within the tolerances of and subject to clause 7.7(a) and (a)
according to the Specifications relating to release in accordance with the provisions
agreed in the MSA.
	 
	 	2.	 	Jagotec maintains manufacturing capacity capable of delivering at least [**] tablets
(at a rate of no more than [**] tablets per Quarter) of Product during 2008 (including [**]
tablets in Q1 2008).

The above criteria are for the sole purpose of calculating Price in accordance with this Schedule 1
and any failure to comply with such criteria shall not constitute a breach of this Agreement.

42

 

Schedule 2

QUARTERLY ACTIVE MATERIAL INVENTORY REPORT

	 	 	 
	TO:

	 	CRITICAL THERAPEUTICS, INC
	 

	 	Attn: [Name of Relationship Manager]
	 

	 	With Copy to: Chief Operating Officer and VP of Finance
	 
	 	 
	FROM:

	 	JAGOTEC AG
	 
	 	 
	DATE:
	 	 
	 
	 	 
	RE:

	 	Active Material1 quarterly inventory report pursuant to
Section 3.12(a) of the Manufacturing and Supply Agreement dated
August 20, 2007 (the “Agreement”)

	 	 	 	 	 	 	 	 	 
	Reporting Quarter:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Active Material on hand
at beginning of Quarter:
	 	 	 	 	 	kg (A)
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Active Material on hand
at end of Quarter:
	 	 	 	 	 	kg (B)
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Quantity Received during Quarter:
	 	 	 	 	 	kg (C)
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Quantity Dispensed2 during Quarter:
	 	 	 	 	 	kg
	 
	 	 	 	 	 	 	 
	(A + C – B)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Quantity Converted during Quarter:
	 	 	 	 	 	kg
	 
	 	 	 	 	 	 	 
	(total Active Material in Products produced)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Credit Received3 during Quarter:
	$	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 

 

			
	1	 	Active Material means “API” as defined in the Agreement
	 
	2	 	Excludes any Active Materials received or consumed in
connection with release activities, technical transfer activities or
development activities, including, without limitation, any regulatory,
stability, validation or test batches manufactured during the month.
	 
	3	 	Amounts paid by Jagotec during the quarter for Active
Materials in respect of Product deficiencies in accordance with Section 3.12
and Product Recalls in accordance with Section 8 of the Agreement.

43

 

Capitalized terms used in this report have the meanings given to such terms in the Agreement.

DATE:                      

JAGOTEC AG

Per:                
      Name:                 
                
           Title:        
                 
                 

44

 

SCHEDULE 3 

REPORT OF ANNUAL ACTIVE MATERIAL INVENTORY RECONCILIATION AND 

CALCULATION OF ACTUAL ANNUAL YIELD

	 	 	 
	TO:

	 	CRITICAL THERAPEUTICS, INC.
	 

	 	Attn: [Name of Relationship Manager]
	 

	 	With Copy to: Chief Operating Officer and VP of Finance
	 
	 	 
	FROM:

	 	JAGOTEC AG
	 
	 	 
	DATE:
	 	 
	 
	 	 
	RE:

	 	Active Material4 annual inventory reconciliation report and calculation of Actual Annual
Yield pursuant to Section 3.12 of the Agreement

	 	 	 	 	 	 	 	 	 
	Reporting Year ending:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Active Material on hand
at beginning of Year:
	 	 	 	 	 	kg (A)
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Active Material on hand
at end of Year:
	 	 	 	 	 	kg (B)
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Quantity Received during Year:
	 	 	 	 	 	kg (C)
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Quantity Dispensed5 during Year:
	 	 	 	 	 	kg (D)
	 
	 	 	 	 	 	 	 
	(A + C — B)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Quantity Converted during Year:
	 	 	 	 	 	kg (E)
	 
	 	 	 	 	 	 	 
	(total Active Material in Product produced)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Credit Received6 during Year:
	$	 	 	 	 	 	 (F)
	 
	 	 	 	 	 	 	 

 

			
	4	 	Active Material means “API” as defined in the Agreement
	 
	5	 	Excludes any Active Materials received or consumed in
connection with release activities, technical transfer activities or
development activities, including, without limitation, any regulatory,
stability, validation or test batches manufactured during the Year.

45

 

	 	 	 	 	 	 	 	 	 
	Active Material Cost:
	$	 	 	 	 	/ kg (G)
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Target Yield:
	 	 	 	 	 	 	%	(H)
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Actual Annual Yield:
	 	 	 	 	 	 	%	(I)
	 
	 	 	 	 	 	 	 
	(( E / D) * 100)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Shortfall:
	$	 	 	 	 	 	  	(J)
	 
	 	 	 	 	 	 	 

	 	 	 
	[**]	 	(if a negative number, insert zero)

     Reimbursement calculation:

	 	 	 	 	 
	 	 	reimbursement to	 	reimbursement to
	test(s)	 	CRTX	 	Jagotec
	J = zero
	 	Nil	 	$ F
	J 1 zero, and
	 	Nil	 	Nil
	J = F
	 	 	 	 
	J 1 zero, and
	 	$(J – F)	 	Nil
	J is greater than F
	 	 	 	 
	J 1 zero, and
	 	Nil	 	$(F – J)
	F is greater than J
	 	 	 	 

Based on the foregoing reimbursement calculation                      will reimburse                     
the amount of $                     .

Capitalized terms used in this report have the meanings given to such terms in the Agreement.

DATE:                     

JAGOTEC AG

 

			
	6	 	Amounts paid by Jagotec during the Year for Active Material in respect of Product deficiencies in
accordance with Section 3.12 and Recalls in accordance with Section 8 of the Agreement.

46

 

	 	 	 	 	 
	Per: 

Name:

	 	 
 

	 	 

47

 

SCHEDULE 4

ZILEUTON ACTIVE MATERIAL COST

For the purposes of the Agreement, and subject to the following, the parties agree that the Active
Material Cost shall be as follows:

	 	 	 	 	 
	PRODUCT	 	ACTIVE MATERIAL	 	ACTIVE MATERIAL COST
	Zyflo XR

	 	Zileuton
	 	$ [**] / kg

On each anniversary of the Effective Date, CRTX shall carry out a reconciliation of the average
Active Material Cost in the previous twelve month period based on the actual amount of any increase
or decrease from the above amount on a batch by batch basis in that twelve month period, and shall
notify Jagotec in writing of the same. Such changes shall be evidenced by open book calculations.
Jagotec shall upon receipt of such reconciliation either (a) be entitled to a repayment of sums
paid hereunder in respect of API or (b) pay to CRTX an amount equal to any underpayment in respect
thereof, all in accordance with the terms hereof.

48

 

SCHEDULE 5

DELIVERY SCHEDULE

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Purchase	 	Requested Ship	 	Requested	 	 	 	#	 	 
	 	 	Order	 	Date to Patheon	 	Release	 	Batch	 	Batches	 	 
	Order Date	 	Number	 	under Quarantine	 	Date	 	Size	 	Ordered	 	Tablets (ea)
	[**]

	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	[**]

	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	[**]

	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]

49

 

SCHEDULE 6

API Testing – Schedule to Manufacturing and Supply Agreement

Notwithstanding any contrary provision in the Manufacturing and Supply Agreement between Critical
Therapeutics Inc, Jagotec AG and SkyePharma PLC (“Agreement”) and the Quality Agreement, the
Parties agree as follows in relation to quality control procedures in respect of the API for Assay
(provided that the U.S. Food & Drug Administration have not objected to CRTX’s CBE30 dated August
8, 2007) :

	 	1	 	CRTX agrees to Jagotec using Patheon Pharmaceuticals Inc (“Patheon”) as contract
test lab to perform the quality control procedures in respect of the API for Assay. In
connection therewith, Jagotec shall rely on CRTX’s Supplier Qualification of Patheon (and
it is hereby acknowledged that the Agreement gives Jagotec the right to audit CRTX in
regards to such Supplier Qualification). The costs of such testing shall be borne by
Jagotec.
	 
	 	2	 	In respect of API for the period from the [**] until [**], the following provisions
shall apply:

	 	a.	 	CRTX shall review copies of selected raw data for the procedures and analyses
conducted by Patheon on Jagotec’s behalf prior to submission to Jagotec and
confirm its agreement thereto to Jagotec following such review;
	 
	 	b.	 	Notwithstanding that Jagotec has sub-contracted testing of API to Patheon upon the
terms hereof, Jagotec retains the responsibility and rights, as between it and
CRTX, of API release for use in manufacture of the Product in accordance with
clause 3.10 of the Agreement subject to the following; and
	 
	 	c.	 	If Jagotec releases a batch of API based on Patheon’s Assay test results and
processes said batch in tablet production, and it is subsequently proven that the
Assay test results produced by Patheon were erroneous due in any way to a fault of
Patheon, then CRTX agrees to share the risk of the API consumed in the batch in
question and Jagotec therefore agrees to promptly (a) credit CRTX for [**]%) of
the Active Material Cost in respect of such consumed API and (b) credit [**]%) of
the Price for such failed batches, or if the Price has not been invoiced at the
time of discovering the fault, not invoice CRTX for the Price. CRTX agrees that
such credits shall be in full and final settlement of any liability, claims,
rights or remedies, including damages and legal costs, that CRTX may have against
Jagotec, SkyePharma PLC and/or Skye-SAS in respect of and in any way relating
directly or indirectly to such erroneous results of Patheon including any losses,
direct or indirect, monetary or otherwise, relating thereto or arising therefrom.

50

 

	 	3	 	Further CRTX consents to Jagotec using Patheon as contract test lab to perform the
quality control procedures in the Quality Agreement in respect of the API for Assay from
[**] as required by Jagotec, in which case the provisions of this letter, except clause
2c, shall continue to apply in respect of such API from that date.
	 
	 	4	 	The parties shall work to agree a mechanism to retain samples for retesting in case
of dispute.
	 
	 	5	 	This letter shall not apply to particle size by sieve.
	 
	 	6	 	The terms of this letter shall prevail over any inconsistent term of the Agreement or
Quality Agreement. All capitalized terms used herein but not otherwise defined shall have
the meaning set forth in the Agreement.

Sincerely,

	 	 	 	 	 
	CRITICAL THERAPEUTICS, INC.	 	 
	 
	 	 	 	 
	By: 

Name:

	 	Trevor Phillips
 

Trevor Phillips, Ph.D.
	 	 

Title: Chief Operating Officer

51

 

ACKNOWLEDGED AND AGREED

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Jagotec AG	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ F. Patalano
 

	 	 	 	By:
	 	/s/ S. Halbeisen
 

	 	 
	 	 	Name: F. Patalano	 	 	 	Name: S. Halbeisen	 	 
	 	 	Title: Director	 	 	 	Title: Director	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Date: August 20, 2007	 	 	 	Date: August 20, 2007	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	SkyePharma SAS	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ KT Cunningham	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name: KT Cunningham	 	 	 	 	 	 	 	 
	 	 	Title: President of SAS	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Date: August 20, 2007	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	SkyePharma PLC	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Peter Grant	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name: Peter Grant	 	 	 	 	 	 	 	 
	 	 	Title: Finance Director	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Date: August 20, 2007	 	 	 	 	 	 	 	 

52

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