Capital Expenditure and Equipment Agreement, dates as of December 19, 2011, by and between POZEN Inc. and Patheon Pharmaceuticals, Inc

POZEN INC., a corporation existing under the laws of the State of Delaware, located at 1414 Raleigh Road, Suite 400, Chapel Hill, NC 27517 ("Pozen")

Patheon has reviewed the capacity of its existing ***, which will be used for Pozen and also for other Patheon clients, to determine if additional *** will be required to perform the Services for Pozen. Based on the current long range forecasts for the Product and for third party products, Patheon anticipates being able to support most, if not all of the Pozen’s projected forecast for the Product using the existing *** If an additional *** is required to perform the Services, the cost for this ***, associated engineering and the Facility Modifications shown in Schedule A will be provided by Pozen.  If for some unforeseen reason, additional capacity beyond *** is required, the Parties will negotiate responsibility for the additional capital in good faith.

Subject to these limitations, Patheon will inform Pozen in writing when the purchase of the Pozen Funded Capital is necessary and Pozen will give written notice to Patheon to incur, on its behalf, pre-approved direct out of pocket costs for the Pozen Funded Capital as set forth in Schedule A.  Patheon will give Pozen copies of third party invoices for these items (where applicable) within 30 days after Patheon’s receipt thereof and will issue its invoice with respect to the items set forth in Schedule A to Pozen.  Pozen will pay all amounts owing to Patheon within 30 days of the date of the Patheon invoice to enable Patheon to pay all amounts owed under the third party invoices.

Patheon may use the Non-Dedicated Equipment and Facility Modifications to manufacture products for third parties without any compensation for this use owed to Pozen.  Patheon will indemnify and hold Pozen, its affiliates and the directors, officers and employees of these entities and their successors and assigns harmless from any claims, actions, suits or proceedings brought by a third party which arise out of or in connection with the use of the Non-Dedicated Equipment and Facility Modifications to manufacture third party product.

The Dedicated Equipment will be owned by Pozen, which will be the sole legal and beneficial owner thereof.  Title and risk of loss to the Non-Dedicated Equipment and Facility Modifications will be with Patheon, which will be the sole legal and beneficial owner thereof.  Patheon will at all time keep the Dedicated Equipment, Non-Dedicated Equipment and Facility Modifications insured at replacement cost, and Patheon will replace any of these items that are lost, damaged or destroyed.

(i) This Agreement will commence on the Effective Date and, unless earlier terminated as set forth in this Section 6, will continue in effect until the expiration or termination of the MSA, including any extensions thereof.

(iii) This Agreement will terminate automatically if the parties have not executed all of the documents comprising the MSA by December 31, 2011, unless this date is extended by written agreement of the parties.

If this Agreement or the MSA is terminated by Pozen, Pozen’s obligation to further fund expenditures toward the Pozen Funded Capital set forth in Schedule A of this Agreement will cease upon Patheon’s receipt of the notice of termination of this Agreement or the MSA, except for the cost of non-cancellable commitments toward the Pozen Funded Capital set forth in Schedule A of this Agreement that are made by Patheon prior to receiving written notice of the termination.

If this Agreement or the MSA is terminated by Patheon, Pozen’s obligation to further fund expenditures toward the Pozen Funded Capital set forth in Schedule A of this Agreement will cease upon receipt by Pozen of the notice of termination of this Agreement or the MSA except for the cost of non-cancellable commitments toward the Pozen Funded Capital set forth in Schedule A of this Agreement that are made by Patheon prior to providing written notice of the termination.

If this Agreement terminates automatically due to failure of the parties to enter into the MSA as set forth above in Section 6(a), Pozen’s obligation to fund expenditures toward the Pozen Funded Capital set forth in Schedule A of this Agreement will cease as of the automatic termination date except for the cost of non-cancellable commitments toward the Pozen Funded Capital set forth in Schedule A of this Agreement that are made by Patheon under this Agreement prior to the automatic termination date.

If this Agreement expires or is terminated for any reason, within 30 days of termination, Pozen will remove, or arrange to remove, from the Facility at its expense all Dedicated Equipment.