SECURITY AGREEMENT, dated , 2006 (as from time to time in effect the “Security Agreement”), between JUBILANT PHARMACEUTICALS INC., a corporation duly organized and existing under the laws of the State of Delaware, and having its principal place of business at 207 Kiley Road, Salisbury, Maryland (“Debtor”), STATE BANK OF INDIA, NEW YORK BRANCH having its offices at 460 Park Avenue, New York, N.Y. 10022 and BANK OF BARODA, having offices at 1 Park Avenue, New York NY 10016 (together, the “Secured Parties”, and each individually a Secured Party, and State Bank of India, in its capacity as Senior Lender, Administrative Agent and Facility Arranger, the “Agent”).

Pursuant to a Credit Agreement, and related documentation thereto, all dated the date hereof (the “Agreement”), between the Debtor and the Secured Parties, the Secured Parties are granting credit facilities to the Debtor in the amount of ELEVEN MILLION (U.S.$11,000,000.00) Dollars upon the terms and conditions set forth in the Agreement. State Bank of India, New York Branch, is acting as Facility Arranger, Administrative Agent, and Senior Lender, in that it is granting Debtor a term loan of $5,000,000.00 (“State Bank of India Term Loan”), and a Revolving Credit Working capital Facility of $3,000,000.00, and Bank of Baroda is granting Debtor a Term Loan of $3,000,000.00 (the “Bank of Baroda Term Loan,” and together with the State Bank of India Term Loan, the “Facility,” the notes evidencing such term loan Facility being referred to as the “Notes”). In order to induce the Secured Parties to grant the Facility, the Debtor has agreed to grant to the Secured Parties the security interests set forth below.

Section 1. Grant of Security Interest. As security for (i) the prompt payment of all indebtedness of the Debtor to the Secured Parties, due or to become due under the Facility, the Notes or indebtedness under this Security Agreement, whether at maturity, by acceleration or otherwise, including, but not limited to the principal of, and interest on the Notes, and all other amounts at any time payable by the Debtor under the Agreement relating to this Facility, the Notes, and the indebtedness under this Security Agreement; (ii) the due and prompt payment of any reasonable costs and expenses incurred by the Secured Parties in connection with the preparation, administration and enforcement of this Security Agreement and all expenses (including, without limitation, the fees and disbursements of legal counsel) incurred with respect to any action which may be instituted by the Secured Parties to obtain enforcement of this Security Agreement; and (iii) the punctual performance of the obligations of the Debtor to the Secured Parties hereunder, and of the Debtor under the Agreement with respect to the Facility (collectively the “Liabilities”), the Debtor hereby grants Secured Party State Bank of India, New York Branch, and Secured Party, Bank of Baroda, A CONTINUING, GENERAL, FIRST CHARGE AND SECURITY INTEREST IN THE AMOUNT OF $8,000,000.00, with interest thereon, to be shared on a PARI PASSU basis, in and upon and/or right of set-off in, (a) all fixed assets of the Debtor, now owned or hereafter acquired, including, without limitation, all equipment, machinery, vehicles, fixtures, improvements and furniture, and any items substituted therefor as replacement and any additions or accessories thereto; (b) general intangibles, including but not limited to, all inventions, processes, production methods, proprietary information, know-how and trade secrets of the Debtor, and any good will related thereto; (c) all other corporate property of the Debtor, expressly excluding the Excluded Collateral; (d) all insurance policies of any kind maintained in effect by the Debtor, now existing or hereafter acquired, under which any of the property referred to in (a) through (c) above is insured, and any proceeds payable to Debtor under such policies, and (e) whatever is received when all or any party of the property referred to in (a) through (c) above is sold, transferred, exchanged, leased, collected or otherwise disposed of, or whatever money is received as a consequence of possession thereof, including, without limitation, cash, negotiable instruments and other instruments for the payment of money, chattel paper, security agreements or other documents and insurance proceeds now or hereafter owned by the Debtor. The property set forth in (a) through (d) of the preceding sentence is referred to herein as the “Collateral.”

“Excluded Collateral” means (a) all goods and inventory of the Debtor, now owned or hereafter acquired, intended for sale or lease in the ordinary course of business, or to be consumed in the Debtor’s business, including, without limitation, raw materials, stocks and works in progress, stock in transit, packaging materials, finished, goods, all documents of title, chattel paper and other instruments covering the same, and all present and future substitutions thereof and additions thereto; (b) all of its present and future accounts receivables, contract rights and rights to payment, and those evidencing or representing indebtedness due the debtor on account of goods sold, leased, or services rendered, claims instruments and other general intangibles (including but not limited to tax refunds, royalties, and all other rights to the payment of every nature and description); (c) all insurance policies of any kind maintained in effect by the Debtor, now existing or hereafter acquired under which any of the property referred to in (a) above is insured, and any proceeds payable to Debtor under such policies; and (d) whatever is received when all or any part of the property referred to in (a) through (c) above is sold, transferred, exchanged, leased, collected, or otherwise disposed of, or whatever money is received as a consequence of possession thereof, including, without limitation, cash, negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, or other documents or insurance proceeds, now or hereafter owned by the Debtor.

The Debtor agrees that it shall at all times keep accurate and complete records with respect to the Collateral, including, but not limited to, a record of all payments and proceeds received in connection therewith or as a result of the sale thereof and of all loans granted, and agrees that the Secured Parties or their representatives shall have the right at any reasonable time, and from time to time, upon prior notice and during regular business hours to call at the Debtor’s place or places of business to inspect the Collateral and to examine or cause to be examined all of the books, records, journals and other data relating to the Collateral and to make extracts therefrom or copies thereof. Until payment in full of all of the Liabilities, the security interest granted in the Collateral hereby shall continue in full force and effect. The inclusion of proceeds of the Collateral does not authorize the Debtor to sell, dispose of or otherwise use the Collateral other than in the ordinary course of business, in a manner that is not specifically authorized by this Security Agreement or by the Credit Agreement.

Section 2. Representations, Warranties and Agreements. The Debtor represents, warrants and agrees that (a) there is no financing statement, security agreement, mortgage or similar document covering any of the Collateral on file in any public office evidencing a security interest in the Collateral; (b) the Debtor owns all the Collateral, free and clear of any other lien, security interest, charge, encumbrance or mortgage of any nature whatsoever, (c) the Debtor has all necessary legal authority to enter into and execute this Security Agreement, and has authorized the execution, delivery and performance of this Security Agreement and the filing of any financing statements or other documents necessary to assure and preserve the security interest created hereby, the Secured Parties shall have a valid, prior, perfected and enforceable lien on and security interest in the Collateral; (d) the Debtor shall pay promptly, when due, all taxes, fees, assessments and other charges now or hereafter imposed upon the Collateral; and (e) the Secured Parties may, in their sole discretion and at any time, upon the occurrence and continuance of an Event of Default (as hereinafter defined) and thereafter, in their name or the Debtor’s name or otherwise, notify any obligor of the Debtor with respect to any of the Collateral to make payment or delivery to the Secured Parties.

Section 3. Covenants. The Debtor hereby covenants and agrees with the Secured Parties that (a) it will promptly notify the Secured Parties in writing of any compromise, settlement or adjustment with respect to any account receivable in excess of $50,000.00; (b) it will keep its inventory and equipment in good condition, and will maintain, preserve and protect its property, used or useful in the conduct of its business and keep the same in good repair, working order and condition and from time to time make, or cause to be made, all needful repairs, renewals and replacements thereto, and (c) at its sole expense, it will discharge any past due taxes, liens, security interests or other encumbrances at any time levied or placed on the Collateral and pay for the maintenance and preservation thereof.

Section 4. Powers of Attorney. Upon the occurrence and continuance of an Event of Default, the Debtor hereby irrevocably appoints the STATE BANK OF INDIA, AS ADMINISTRATIVE AGENT AND FACILITY ARRANGER, its true and lawful attorney-in-fact, with power of substitution for and in the name of the Secured Parties: (a) to endorse the name of the Debtor upon any Notes, acceptances, checks, drafts, money orders or other evidences of payment that may come into the possession of the Secured Parties with respect to the Collateral; (b) to cause the Debtor’s mail to be transferred to State Bank of India, New York Branch, for the purpose of removing any such Notes, acceptances, checks, drafts, money orders or other evidences of payment; (c) to demand, collect and receive payment in respect of the Collateral and to apply any such payments directly to the payment of the Liabilities; (d) to receive and give discharges and releases of all or any of the Collateral; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any part of the Collateral or to enforce any rights in respect thereof; (f) to settle, compromise, compound, adjust or defend any actions, suits, or proceedings relating to or pertaining to all or any of the Collateral; (g) to enforce all of the Debtor’s rights and powers under and pursuant to any and all agreements with respect to the Collateral, and to do all other acts and things necessary to carry out this Security Agreement, as fully and completely as though the Secured Parties were the absolute owner of the Collateral for all purposes.

The Secured Parties shall not, under any circumstances or in any event whatsoever, have any liability for any shortage, damage, loss or destruction of any part of the Collateral, nor shall the Secured Parties have any liability for any error or omission or delivery of any kind incurred in the good faith settlement, collection or payment of any of the Collateral or of any monies received in payment therefor or for any damages resulting therefrom, other than for gross negligence or willful malfeasance. The reasonable costs of collection, notification and enforcement, including, but not limited to, reasonable counsel fees and reasonable out-of-pocket expenses, shall be borne solely by the Debtor, whether the same are incurred by the Secured Parties of the Debtor. The Debtor agrees to indemnify and hold the Secured Parties harmless from and against any and all other claims, demands, losses, judgments and liabilities (including, without limitation, liabilities for penalties) of any nature, and to reimburse the Secured Parties for all reasonable costs and expenses, including, without limitation, reasonable counsel fees, arising from this Security Agreement or the exercise of any right or remedy granted to the Secured Parties hereunder. In no event shall the Secured Parties or either of them, be liable for any matter or thing in connection with this Security Agreement other than to account for monies actually received in accordance with the terms hereof, their gross negligence or willful malfeasance.

Section 5. Collection. Upon the occurrence and continuance of an Event of Default, the Secured Parties, through STATE BANK OF INDIA, NEW YORK BRANCH, AS FACILITY ARRANGER AND ADMINISTRATIVE AGENT, may, in its sole discretion, in its name or in the name of the Debtor, or otherwise (a) demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable with respect to any of the Collateral, but shall be under no obligation to do so, or (b) extend the time of payment, arrange for payment in installments, or otherwise modify the term of, or release, any of he Collateral, without thereby incurring responsibility to, or discharging or otherwise affecting any liability of the Debtor, other than to discharge the Debtor in so doing with respect to the Liabilities to the extent that the Liabilities are paid or repaid. Upon the occurrence and continuance of an Event of Default, if Agent, on behalf of the said Secured Parties, in its sole discretion, deems necessary to protect its security interest in the Collateral and/or the value thereof, and is hereby unconditionally and irrevocably authorized (without limiting the general nature of the authority hereinabove conferred) to pay, purchase, contest or compromise any encumbrances, charges or liens which in the judgment of the Agent appear to be equal to, prior to, or superior to its security interest in the Collateral and any encumbrances, charges or liens not expressly permitted by this Security Agreement or the Notes.

Section 6. Possession, Sale of Collateral. Upon the occurrence and continuance of an Event of Default, the Secured Parties, through STATE BANK OF INDIA, NEW YORK BRANCH, AS FACILITY ARRANGER AND ADMINISTRATIVE AGENT, may (a) require the Debtor to assemble the tangible assets which comprise part of the Collateral and make it available to the Secured Parties at a place designated by the Secured Parties; (b) with or without notice or demand for performance, enter any premises where the Collateral may be located and take possession of the same, and may demand and receive such possession from any person who has possession thereof, and may take such measures as it may deem necessary or proper for the care or protection thereof, including, without limitation, the right to remove all or any portion of the Collateral; and (c) with or without taking such possession, may sell or cause to be sold, in one or more sales or parcels, for cash, on credit or for future delivery, without assumption of any risk, all or any portion of the Collateral, at public or private sale or at any broker’s board, without demand of performance or notice of intention to sell or of time or place of sale (except ten days’ written notice to the Debtor of the time and place of such sale or sales, and advertisement in a newspaper of general circulation in New York, NY ten days prior to such sale, and such other notices as may be required by applicable statute and cannot be waived), which the Debtor hereby expressly acknowledges is commercially reasonable. The Secured Parties, or any other person may be the purchaser of all or any portion of the Collateral so sold and thereafter hold the same absolutely, free from any claim or right of the Debtor of whatever kind, any such claim or right being hereby expressly waived to the fullest extent permitted by applicable law. In any action hereunder the Agent shall be entitled to the appointment of a receiver without notice, to take possession of all or any portion of the Collateral and to exercise such powers as the court shall confer upon the receiver. Notwithstanding the foregoing, if an Event of Default shall occur and be continuing, the Agent on behalf of the Secured Parties shall be entitled to apply, without notice to the Debtor, any cash or cash items constituting Collateral in the possession of the Secured Party to payment of the Liabilities.

Section 8. Application of Proceeds. The Secured Parties shall apply the proceeds of any public or private sale of all or any portion of the Collateral as follows: first, to the payment of all reasonable costs and expenses of the Secured Parties incurred in connection with such sale or otherwise in connection with this Security Agreement or any of the Liabilities, including, but not limited to, the reasonable fees and expenses of their agents and counsel; second, to the ratable payment or reduction of any principal of, or interest on, the Notes then due and payable, whether at the stated maturity thereof, or by acceleration or otherwise; and third, to the payment in full of all other Liabilities. Any amounts remaining after such applications shall be remitted to the Debtor, its successors or assigns, or as a court of competent jurisdiction might otherwise direct. The Secured Parties shall have the absolute discretion as to the time of application of any proceeds in accordance with this Security Agreement.

Section 10. Waiver. The Secured Parties shall not be deemed to have waived any rights hereunder or under any other agreement, instrument or paper signed by the Debtor unless such waiver is in writing and signed by each of the Secured Parties. No delay or omission on the part of the Secured Party in exercising any right or remedy hereunder shall operate as a waiver thereof or of any other right or remedy under law. A waiver upon any one occasion shall not be construed as a bar or a waiver of any right or remedy on any future occasion. All the rights and remedies of the Secured Parties, whether evidenced hereby, by any other agreement, instrument or paper, or available under law shall be cumulative and may be exercised singly or concurrently.

Section 11. Debtor not Discharged. The obligations of the Debtor under this Security Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by: (a) any amendment or modification of the credit facility granted hereunder, including, without limitation, any change in the rate of interest thereon; (b) any exercise or non-exercise of any right, remedy, power or privilege under or in respect of the Security Agreement or under or in respect of any applicable law or statute or in equity, including, without limitation, any failure by the Secured Party to set off or release, in whole or in part, any balance of any deposit account or credit on its books in favor of the Debtor or any other person or any waiver, consent, extension, indulgence or other action or inaction in respect of any thereof; (c) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceedings of, or affecting the Debtor. Each and every remedy of the Secured Parties shall, to the extent permitted by applicable law, be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute.

Section 12. Governing Law: This Security Agreement shall be construed in accordance with and governed by the laws of the State of New York, applicable to contracts made and to be performed in the State of New York, and shall be enforced in the Courts of the State of New York, and/or any other Court of competent jurisdiction, at Lenders’ discretion, where the Collateral or parts thereof, may be located. Debtor waives any defenses based on lack of personal jurisdiction, improper venue, and/or forum nonconveniens. In an action to enforce Secured Parties’ rights herein, Debtor waives any counterclaims, defenses, setoffs, etc. All parties irrevocably WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIMS, DISPUTES, ETC. ARISING HEREIN, AFTER BEING FULLY APPRISED OF THE CONSEQUENCES OF SUCH WAIVER.

Section 14. Severability. If any of this Security Agreement is contrary to, prohibited by, or deemed invalid under applicable law or regulation, it shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder of this Security Agreement shall not be invalidated thereby and shall be given full effect as far as possible. If any part of this Security Agreement is contrary to, prohibited by or deemed invalid under applicable law or regulation of one jurisdiction, it shall not thereby be rendered invalid in any other jurisdiction.

Section 17. Further Assurances. The Debtor agrees to do such further acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, at its own expense, as the Secured Parties may at any time reasonably request in connection with the administration or enforcement of this Security Agreement, or relative to the Collateral or any part thereof, or in order to better assure and confirm unto the Secured Parties, their rights and remedies hereunder, and their lien and security interest in the Collateral. In particular, the Debtor agrees that it shall, at its own expense, if the Secured Parties so request, assist the Secured Parties in executing, filing or recording such notices, financing statements and other documents as may be considered necessary by the Secured Parties hereunder, and as the Secured Parties or their counsel may reasonably request, such instruments to be in form and substance satisfactory to such counsel. The Debtor also agrees that it shall send to the Secured Parties copies of any franchise or lease agreements to which it now or hereafter become a party.

Section 18. Reimbursement of Secured Parties. In connection with the Collateral, this Security Agreement and the administration and enforcement or exercise of any right or remedy granted to the Secured Parties hereunder, the Debtor agrees (a) to indemnify and hold harmless the Secured Parties (to the fullest extent permitted by law) from and against any and all claims, demands, losses, judgments and liabilities (including, without limitation, liabilities for penalties) of whatever nature, relating thereto or resulting therefrom, and (b) to reimburse the Secured Party for all reasonable costs and expenses, including, without limitation, reasonable legal fees and disbursements, relating thereto or resulting therefrom. The foregoing indemnity agreement includes any reasonable costs incurred by the Secured Parties in connection with any litigation relating to the Collateral whether or not the Secured Parties shall be parties to such litigation, including, but not limited to, the reasonable fees and disbursements of counsel to the Secured Parties, and any out-of-pocket costs incurred by the Secured Parties in appearing as a witness or in otherwise complying with legal process served upon it. All indemnities contained in this Section 18 shall survive the expiration of earlier termination of this Security Agreement.

DEBTOR:

JUBILANT PHARMACEUTICALS INC.

By:
Name: Christopher Worrell
Title: President/ CEO

By:	/s/ Kamal Mandan
Name: Kamal Mandan
Title: CFO

SECURED PARTY:		SECURED PARTY:

STATE BANK OF INDIA		BANK OF BARODA
NEW YORK BRANCH

By:	/s/ R. Chandra	By:	/s/ Jatin J. Vyas
Name: R. Chandra		Name: Jatin J. Vyas
Title: Senior Vice President		Title: Chief Manager (CR & TF)
and Head (Credit)

DEBTOR:

JUBILANT PHARMACEUTICALS INC.

By:	/s/ Christopher Worrell
Name: Christopher Worrell
Title: President/ CEO

By:
Name: Kamal Mandan
Title: CFO

SECURED PARTY:			SECURED PARTY:

STATE BANK OF INDIA			BANK OF BARODA
NEW YORK BRANCH

By:			By:
Name: R. Chandra			Name:
Title: Senior Vice President			Title:
and Head (Credit)

		RICHARD S. LAST
		Notary Public, State of New York
		No. 31-4761834
		Qualified in Westchester County
		Certificate filed in New York County
		Term Expires Dec. 31, 2006

	/s/ Richard S. Last
	Notary Public

	/s/ Richard S. Last
	Notary Public

	/s/ Richard S. Last
	Notary Public