Exhibit 10.25
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
Execution Copy
LICENSE AGREEMENT
This License Agreement (the “Agreement”), effective as of December 10, 2008
(“Effective Date”), between Cosmo Technologies Limited, a company duly
incorporated and existing under the laws of Ireland, with registered offices at
4243 Amiens Street, Dublin 1, Ireland (“Licensor”) and Santarus, Inc. a company
duly incorporated and existing under the Laws of Delaware, USA, with offices at
3721 Valley Centre Drive, Suite 400, San Diego, California 92130 USA
(“Licensee”).
WHEREAS, Licensor possesses certain intellectual property rights (the “Patents”,
“Know-How” and “Trademarks” as hereinafter defined) related to the Products (as
hereinafter defined);
WHEREAS, Licensee possesses capabilities in marketing, development and
commercialization of pharmaceutical products in the “Territory” (as hereinafter
defined);
WHEREAS, Licensee desires to engage in development, marketing and sale of the
Products;
WHEREAS, Licensee desires to acquire from Licensor, and Licensor is willing to
grant to Licensee, an Exclusive (as hereinafter defined) license under
Licensor’s Patents, Know-How and Trademarks relating to the Products in the
Territory (as hereinafter defined);
WHEREAS, Licensor is a fully owned subsidiary of Cosmo Pharmaceuticals S.p.A., a
company duly incorporated under the laws of Italy, with registered offices in
Lainate (Milan), Via Cristoforo Colombo 1 (“Cosmo”); and
WHEREAS, Licensee has conducted a due diligence procedure on the Patents.
NOW, THEREFORE, the Parties agree and stipulate as follows:

1   Definitions.

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  1.1   “Affiliate” means, with respect to each Party hereto, any corporation,
company, firm, partnership, joint venture and/or other entity that controls, or
is controlled by, or is under common control with, such Party. For purposes of
this Section 1.1, the term “control” means, in the case of corporate entities,
direct or indirect ownership of at least fifty percent (50%) of the stock or
shares having the right to vote for the election of directors (other than such
ownership by an employee benefit plan (or related trust) sponsored or maintained
by a Party) and, in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.     1.2  
“Agreement” means this license agreement.     1.3   “Applicable Laws” means any
and all federal, state or local law, statute or ordinance, or any rule,
regulation, or published guidelines promulgated by any governmental or
Regulatory Authority which are applicable to the use, manufacture, import,
export, marketing, distribution and/or sale of Products, including the United
States Food, Drug and Cosmetic Act and applicable regulations promulgated
thereunder, as they may be amended or supplemented from time to time, or any
equivalent successor or foreign laws or regulations.     1.4   “Exclusive” means
in respect of a right granted under this Agreement the grantor will not exercise
that right and has not and will not authorize others to exercise that right.    
1.5   “FDA” means the United States Food and Drug Administration or its
successor agencies in the Territory.     1.6   “First Commercial Sale” means the
date of the first commercial sale of a Product approved by a Regulatory
Authority in the Territory by Licensee or its Affiliate to a third party.    
1.7   “Improvements” means any invention, discovery, development, enhancement,
alteration or modification to the Product, whether or not patented or
patentable.     1.8   “GAAP” means generally accepted accounting principles in
the United States, consistently applied.

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  1.9   “Know-How” means any and all information, data and materials relating to
Products known by Licensor but not generally known or available, which
information, data and materials are necessary or useful in order to develop,
market, use, distribute, import, export, offer to sell or sell (but not produce
or manufacture) Products in accordance with this Agreement.     1.10   “LIBOR”
means the London Inter Bank Offered Rate as quoted each day at 1600 GMT.    
1.11   “Milestone Event” means the event that triggers the payment of a
milestone, according to section 3.     1.12   “NDA” means a new drug application
submitted to the FDA for approval to market, distribute and sell a
pharmaceutical product in the Territory.     1.13   “NDA Acceptance” means the
date on which the FDA or other Regulatory Authority accepts for filing
Licensee’s application for Regulatory Approval for the applicable Product.    
1.14   “Net Sales” means, with respect to the applicable period, the amount
billed or invoiced by Licensee or its Affiliates to customers or unrelated third
parties for each Product, less all allowances for discounts, rebates,
charge-backs, which are reasonable and in good commercial practice, allowances
for Product returns actually credited to third parties due to defective or
expired Product, taxes and similar customary deductions, as calculated in
accordance with Licensee’s standard accounting principles and GAAP and reported
in Licensee’s filings with the Securities and Exchange Commission.     1.15  
“Orange Book” means the listing published by the FDA that specifies patent
rights applicable to approved drug products, which is available electronically
at http://www.fda.gov/cder/ob/.     1.16   “Party” means either Licensor or
Licensee and “Parties” shall mean both Licensor and Licensee, collectively.    
1.17   “Patents” means:         as for Product A as hereinafter defined:
(a) International Application WO/2000/76478, US App. No. 10/009,532 titled

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      “Controlled Release And Taste Masking Oral Pharmaceutical Compositions”,
US App. No. 11, 268/500 titled “Controlled Release And Taste Masking Oral
Pharmaceutical Compositions”, and related applications thereof, including all
other provisional and other patent applications that Licensor, Cosmo
Pharmaceuticals SpA or respective Affiliates own or control, as of the Effective
Date, or at any time during the term of this Agreement in the Territory related
to making, using, or selling or offering to sell (but not, for the purpose of
this Agreement, producing or manufacturing), Product A, or that claim or cover
the Product, including the patents listed on Schedule A hereto; (b) all patent
applications filed either from such patent applications or provisional
applications or from an application claiming priority from either of these,
including divisionals, continuations, continuations-in-part, provisionals,
converted provisionals, continued prosecution applications including, but not
limited to, US App. No 12/210,969, (c) any and all patents that have issued or
in the future issue from the foregoing patent applications, including utility,
model and design patents and certificates of invention, including, but not
limited to, US Patent No. 7,410,651 titled “Controlled release and taste masking
oral pharmaceutical compositions”, US Patent No. 7.431,943 titled “Controlled
release and taste masking oral pharmaceutical compositions”, (d) any and all
extensions or restorations by existing or future extension or restoration
mechanisms, including substitutions, revalidations, reissues, renewals,
re-examinations, extensions (including any supplementary protection certificates
and the like), or any confirmation patent or registration patent or patent
additions to any such foregoing patent applications and patents and (e) the
inventions claimed or covered therein, for the sole part pertaining to Product
A. The patents and patent applications listed in Schedule A shall inter alia be
included in the term “Patents A”;         as for Product B as hereinafter
defined: (a) International Application WO/2000/76478, International Application
WO/2006/003043, US App. No. 10/009,532 titled “Controlled Release And Taste
Masking Oral Pharmaceutical Compositions”, US Patent Application No. 11/571,044
titled “Oral Antimicrobial Pharmaceutical Compositions”, and related
applications thereof, including provisional and other patent applications that
Licensor, Cosmo Pharmaceuticals SpA or their respective Affiliates, own or
control, as of the Effective Date, or at any time during the term of this
Agreement in the Territory related to making, using, or selling or offering to
sell (but not, for the purpose of this Agreement,

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      producing or manufacturing) Product B, or that claim or cover the Product,
including the patents listed on Schedule B hereto, (b) all patent applications
filed either from such patent applications or provisional applications or from
an application claiming priority from either of these, including divisionals,
continuations, continuations-in-part, provisionals, converted provisionals,
continued prosecution applications, (c) any and all patents that have issued or
in the future issue from the foregoing patent applications, including utility,
model and design patents and certificates of invention, including, but not
limited to, US Patent No. 7,431,943 titled “Controlled Release And Taste Masking
Oral Pharmaceutical Compositions”, (d) any and all extensions or restorations by
existing or future extension or restoration mechanisms, including substitutions,
revalidations, reissues, renewals, re-examinations, extensions (including any
supplementary protection certificates and the like), or any confirmation patent
or registration patent or patent additions to any such foregoing patent
applications and patents and (e) the inventions claimed or covered therein, for
the sole part pertaining to Products B. The patents and patent applications
listed in Schedule B shall inter alia be included in the term “Patents B”.

  1.18   “Products” means the following Licensors’ proprietary pharmaceutical
products:         Product A: any oral formulation product containing Budesonide
or other anti-inflammatory corticosteroids as an active ingredient, formulated
with a multi-matrix (MMX) drug releasing technology, for the treatment of
patients with Ulcerative Colitis and all other human uses;         Product B:
any oral formulation product containing Rifamycin SV as an active ingredient,
formulated with a multi-matrix (MMX) drug releasing technology, for the
treatment of patients with Travellers Diarrhoea and all other human uses.    
1.19   “Promotional Costs” means all costs and expenditures associated with the
marketing, promotion and sale of the Products in the Territory, including,
without limitation, advertising, agency fees, materials, medical affairs,
meetings and, when not specifically excluded, allocated sales force costs.    
1.20   “Regulatory Approval” means with respect to a Product or any Improvements
thereto, any approval required under Applicable

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      Law in any jurisdiction in the Territory to exploit such Product or
Improvements thereto in accordance with the licenses granted to Licensee
hereunder.

  1.21   “Regulatory Authority” means the FDA and any similar governmental
authority, administrative agency or commission of any country, state, county,
city or other political subdivision in the Territory.     1.22   “Royalty Term”
means, on a Product by Product basis, the period of time from the Effective Date
through the date upon which the last Valid Claim for the applicable Product
expires.     1.23   “Share Price” shall mean the price equal to the average
daily closing price of Licensee’s common stock, reported by the NASDAQ Global
Market for the thirty consecutive trading days ending on the day immediately
prior to the achievement of the applicable Milestone Event.     1.24  
“Successful Conclusion” means: (a) with respect to Product A, [***] and (b) with
respect to Product B, [***].     1.25   “Territory” means the United States and
all of its territories and possessions, including, but not limited to, Puerto
Rico.     1.26   “Third Party Agreements” means the agreements Licensor has
currently entered into with ICON Clinical, NMB Limited and Datatrak
International Limited or any other such agreement Licensor and Licensee shall
mutually agree to enter into for the scope of Product Regulatory Approval.    
1.27   “Trademarks” means the trademarks listed in Schedule C.     1.28   “Valid
Claim” means either (a) a claim of an issued and unexpired patent or a
supplementary protection certificate within the Patents with respect to Product
A or Product B, as applicable, that has not been held permanently revoked,
unenforceable, or invalid by a decision of a court or other governmental
authority of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal and that is not admitted to be invalid or unenforceable

 

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      through reissue, disclaimer, or otherwise (i.e., only to the extent the
subject matter is disclaimed or is sought to be deleted or amended through
reissue), or (b) a claim of a pending patent application within the Patents with
respect to Product A or Product B, as applicable, that has not been abandoned,
finally rejected, or expired without the possibility of appeal or refiling;
provided, however, that “Valid Claim” shall exclude any such pending claim in an
application that has not been granted within [***] years following the earliest
priority filing date for such application (unless and until such claim is
granted).

2   License Grants.

  2.1   Licensor grants, and Licensee accepts, upon the terms set forth in this
Agreement, an Exclusive, irrevocable right and license in the Territory, under
the Patents and the Know-How, to develop, market, use, distribute, import,
export, offer to sell and sell (but not produce or manufacture) the Products and
any Improvements thereto.     2.2   Licensor grants, and Licensee accepts, upon
the terms set forth in this Agreement, an Exclusive, irrevocable license to use
the Trademarks to develop, market, use, distribute, import, export, offer to
sell and sell the Products and any Improvements in the Territory.     2.3  
Licensee is not entitled to sublicense the rights granted in this Section 2
without the prior written consent of Licensor.     2.4   The license is limited
to the oral formulations of:

a) as for what pertains Product A, product containing budesonide or other
anti-inflammatory corticosteroids as an active ingredient;
b) as for what pertains Product B, product containing Rifamycin SV as an active
ingredient.
 

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No license is given, neither express or implied, for the use of the Patents for,
or in connection with, any other active ingredient or for any other different
product other than the Products and any Improvements.

  2.5   Licensor, in addition, reserves the right to use the Patents for
research purposes, publish or otherwise disseminate any information about the
Patents, provided that any research of the Products in the Territory shall be
coordinated between the Parties. Diffusion of new information on the Products
(including research papers, scientific posters, clinical trial data) shall be
coordinated between the Parties.

3   Fees and Payments.

  3.1   In consideration for the rights and license granted by Licensor to
Licensee herein, Licensee agrees to make the following payments to Licensor:

  3.1.1   Up-front Payments at signing of this Agreement:

a) as for what pertains Product A, 5.000.000 (five million) newly issued shares
of Licensee’s common stock;
b) as for what pertains Product B, 1.000.000 (one million) newly issued shares
of Licensee’s common stock plus USD 2.500.000 (two million five hundred thousand
dollars);
Licensee shall be obliged to fully register the resale of such shares, deliver
them in physical form in the name of Licensor and have the registration
statement declared effective within 123 days from the Effective Date.
The payment of the amount of USD 2.500.000 (two million five hundred thousand
dollars) shall be executed by means of wire transfer within 3 working days from
the Effective Date to the account designated by Licensor.

  3.1.2   Regulatory Milestones

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as for what pertains Product A
[***]
as for what pertains Product B
[***]

  3.1.3   Commercial Milestones

as for what pertains Product A
[***]
as for what pertains Product B
[***]
These Commercial Milestones shall be added by Licensor to each royalty invoice
following overtaking of the threshold.

  3.1.4   At the election of Licensor (such election to be made within 30
(thirty) days from the receipt by Licensor of notice that a Milestone Event has
occurred), each Regulatory Milestone and Commercial Milestone shall be paid in
newly issued shares of Licensee’s common stock. Such shares shall be issued to
Licensor at the Share Price within the following 10 working days from Licensor’s
election. The amount of shares issued shall be calculated by dividing the
Regulatory Milestone or Commercial Milestone due by the Share Price and rounded
to the lower full share amount with the fraction paid in cash.

Licensee shall not be obliged to issue shares to Licensor at the occurrence of a
Milestone Event if either:
 

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a) the aggregate number of shares issued to Licensor (including the shares
issued as Up-front Payment), as a result of cumulative election by Licensor,
shall exceed 10.300.000 (ten million three hundred thousand) shares.
or
b) such issuance could reduce the amount of the Licensee’s accumulated net
operating losses deductible for tax purposes against future earnings (Internal
Revenue Code Section 382) in excess of USD [***] ([***] dollars) as determined
by Licensee. In order for such limitation to apply, Licensee shall share, upon
request by Licensor, relevant information on situation of net operating losses
deductible for tax purposes against future earnings. In the event Licensor
disagrees with Licensee’s assessment, Licensee shall engage an appropriate
outside auditor to conduct an assessment, the cost of which shall be shared
equally by the Parties.
The counter value of the shares which can not be issued due to either a) or b)
shall be paid in cash to Licensor within 10 (ten) working days after receipt by
Licensee of Licensor’s election. Licensee shall pay all its bank charges
resulting from the execution of such milestone payments.
All executional issues regarding issuance and registration of shares according
to this provision shall be governed by the Stock Issuance Agreement and
Registration Rights Agreement between the Parties annexed to the Agreement as
Schedule D and E.

  3.2   As additional consideration for the rights and licenses granted by
Licensor to Licensee herein, Licensee agrees:

As for Product A
 

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  3.2.1   to pay a portion (as hereinafter provided) of direct third party costs
of clinical trials and registration costs paid by Licensor (“Direct Costs”)
before or after the Effective Date under Third Party Agreements necessary to
achieve Regulatory Approval for Product A. Licensee in this respect acknowledges
that Licensor has already undertaken certain obligations under the Third Party
Agreements for phase III clinical trials of Product A and that such clinical
trials design assumes that the relevant data shall be collected both from
European and North-American countries, for the simultaneous use towards both FDA
and EMEA for the scope of Regulatory Approval for Product A. Licensee accepts
therefore under this section to reimburse Licensor 50% of all phase III clinical
trials Direct Costs. In this respect and additionally, on or before January 31,
2009 and subject to Licensee receiving an invoice therefore, Licensee shall
reimburse Licensor EUR 1.617.500 and USD 737.124 (equal to 50% of phase III
clinical trial Direct Costs already borne for the current phase III clinical
trials for Product A, amounting to, as of November 18, 2008, to EUR 3.235.000
and USD 1.474.248). Subsequent costs shall be reimbursed accordingly by Licensee
to Licensor in the same proportion on a monthly basis within 30 (thirty) days
following an invoice from Licensor, which shall be provided within 10 (ten) days
following month’s end. If clinical work is required to obtain Regulatory
Approval to market Product A in addition to that specifically contemplated in
the Third Party Agreements, the Parties shall agree on the additional work to be
performed and on an equitable division of the costs therefore, consistent with
the equal division of expenses set forth under this section 3.2.1.

As for Product B

  3.2.2   to pay the costs of one phase III clinical trial and registration
costs necessary to achieve Regulatory Approval for Product B, provided that
Licensor and/or its licensee in the EU shall be responsible for conducting a
second phase III clinical trial in the same indication. If clinical work is
required to obtain Regulatory Approval to market Product B in addition to the
two contemplated pivotal phase III clinical studies, the Parties shall agree on
the additional work to be performed and on an equitable division of the costs
therefore, consistent

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      with the division of expenses set forth under this section 3.2.2. If, for
whatever reason, additional pre-clinical studies should be required, Licensor
shall be in charge of them at its own expense.

      For clarity, for both Products Licensor shall be responsible for all costs
associated with manufacturing scale-up, stability studies and other Product
development activities required for filing of the Regulatory Approvals or
required by any Regulatory Authority.

  3.3   As additional consideration for the rights and licenses granted by
Licensor to Licensee herein, subject to Sections 3.4 and 3.5. during the Royalty
Term, Licensee agrees to pay to Licensor:

As for what pertains Product A:
(i) a royalty of 12% (twelve percent) on annual Net Sales in the Territory
[***]; and
(ii) a royalty of 14% (fourteen percent) on annual Net Sales in the Territory
[***].
As for what pertains Product B:
(i) a royalty of 12% (twelve percent) on annual Net Sales in the Territory
[***]; and
(ii) a royalty of 14% (fourteen percent) on annual Net Sales in the Territory
[***].

  3.4   The royalties may be reduced at any time prior to the expiry of the last
Valid Claim with respect to a Product in the Territory to account for any and
all royalties or other payments paid by Licensee to any third party, under
(a) any license that would be necessary for Licensee to resolve any claims that
the Product infringes or misappropriates the intellectual property rights of any
third party; or (b) any final judgment awarded against Licensee for damages for
infringement of third party intellectual property rights consistent with the
foregoing sub-section (a). Licensee shall

 

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      use commercially reasonable efforts to minimize any such royalties or
other payments to third parties on account of sales of Product hereunder. The
reduction shall not exceed an amount equal to 50% of the royalty payable to
Licensor according to section 3.3.

  3.5   If, at any time during the term of this Agreement, there is a
Competitive Product (as defined below) being sold in the Territory, then
beginning with the calendar quarter immediately following the calendar quarter
during which a product became a Competitive Product, the royalty rate shall be
set with respect to Net Sales of such Product in the Territory at fifty percent
(50%) of the applicable royalty rate set forth in Section 3.3 until such time as
there is no Competitive Product in the Territory. For purposes of this
Section 3.5, “Competitive Product” shall mean a product or products that are
AB-rated generic versions of a Product.     3.6   As additional consideration
for the rights and license granted by Licensor to Licensee herein, Licensee
agrees to enter into a supply agreement with Licensor and/or one of its
Affiliates, as Licensor shall designate, and/or third party supplier approved by
Licensee (the “Supplier”) for the manufacture and supply of the Products, which
shall include the terms and conditions set forth under section 5 of this
Agreement.

4   Reports, Records and Payments.

  4.1   After First Commercial Sale of each Product anywhere in the Territory,
Licensee shall submit to Licensor quarterly royalty reports for each Product on
or before 45 days after the end of each calendar quarter ending March 31,
June 30 and September 30 and 75 days after the end of last quarter of each year.
Each royalty report shall cover Licensee’s most recently completed calendar
quarter and shall show the gross sales, itemized deductions as provided in
Paragraph 1.14, and Net Sales of each Product during the most recently completed
calendar quarter and the royalties, in USD, payable with respect thereto. Each
such report shall be accompanied by a payment equal to the total royalties or
Commercial Milestones owed by Licensee with respect to such previous calendar
quarter in accordance with the terms of section 3.

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  4.2   Licensee shall keep accurate and correct records of all Products sold.
Such records shall be retained by Licensee for at least 5 (five) years following
a given reporting period.     4.3   All relevant records shall be available
during normal business hours for inspection at the expense of Licensor by a
certified public accountant selected by Licensor and in compliance with the
other terms of this Agreement for the sole purpose of verifying reports and
payments. Such inspections shall occur no more than once per calendar year and
Licensor shall provide at least thirty (30) days written notice prior to such an
inspection. Such inspector shall not disclose to Licensor any information other
than information relating to the accuracy of reports and payments made under
this Agreement or other compliance issues. In the event that any such inspection
shows an under reporting and underpayment in excess of five percent (5%) for any
twelve (12) month period, then Licensee shall pay the cost of the audit as well
as any additional sum that would have been payable to Licensor had the Licensee
reported correctly, plus an interest charge at a rate of LIBOR [***]. Such
interest shall be calculated from the date the correct payment was due to
Licensor up to the date when such payment is actually made by Licensee. For an
underpayment not in excess of five percent (5%) for any twelve (12) month
period, Licensee shall pay the difference within thirty (30) days without
inspection cost charge but with interest charge of LIBOR [***]. With respect to
any overpayment, Licensor shall credit the amount of such overpayment against
any future amounts owed by Licensee pursuant to this Agreement, or if no further
payments are due by Licensee hereunder, Licensor shall promptly refund the full
amount of the overpayment to Licensee.     4.4   All cash fees and royalties due
to Licensor shall be paid in USD. All payments due to Licensor shall be made by
electronic transfer (wire-transfer) to the account that Licensor shall timely
communicate to Licensee.

  4.5   Royalties earned on sales occurring pursuant to this Agreement shall not
be reduced by Licensee for any taxes, fees, or other charges imposed by the
government on the payment of fee and royalty income, except that all payments
made by Licensee in

 

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      fulfilment of Licensor’s tax liability in any particular country may be
credited against earned royalties or fees due to Licensor for that country. For
the avoidance of doubt, if there is a royalty paid to Licensor subject to a
withholding tax imposed on Licensor, Licensee is entitled to reduce royalties by
such amount required to be remitted to a government on behalf of Licensor.
Licensee shall pay all its bank charges resulting from the execution of such
royalty payments.     4.6   In the event royalty, reimbursement and/or fee
payments are not received by Licensor when due, Licensee shall pay to Licensor
interest charges at a rate of LIBOR [***]. Such interest shall be calculated
from the date payment was due until actually received by Licensor.

5   Supply.

  5.1   Following Effective Date and no later than the date of the first NDA
submission, the Parties shall enter into a definitive manufacturing and supply
agreement containing the terms set forth in this section 5, together with all
other customary and reasonable terms, pursuant to which Supplier shall
manufacture and supply for and on behalf of Licensee, and Licensee shall
purchase supplies of Products (the “Supply Agreement”). In the event the Parties
do not finalize such Supply Agreement, the supply of Products between the
Parties shall be governed by the following sections.     5.2   During the term
of this Agreement, Licensee shall purchase its requirements of Products
exclusively from Supplier and Supplier shall manufacture and supply Licensee’s
needs of Products exclusively to Licensee in the Territory.     5.3   All
deliveries of Products shall be made to Licensee EXW Cosmo SpA, via Colombo 1,
20020 Lainate (MI) Italy (Incoterms 2000) in bulk form. Risk in and
responsibility for any consignment of Products shall pass on to Licensee once
such consignment has been loaded on Licensee’s vehicle at Cosmo SpA storage (or
at such other location as Licensor may notify in advance to Licensee).

 

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  5.4   Licensee shall obtain any necessary import licenses, certificates of
origin or other requisite documents, and pay all applicable customs, duties and
taxes in respect of the importation of the Products into the Territory and their
sale in the Territory.     5.5   Licensor represents and warrants that all
Products manufactured and supplied to Licensee under the Supply Agreement:
(a) shall have been manufactured, packaged, tested and stored in compliance with
the specifications, cGMP, Applicable Laws and the terms and conditions of the
Supply Agreement; (b) shall not be adulterated, or misbranded, as defined under
Applicable Laws, as of the time that the Product is delivered to Licensee in
accordance with the terms of the Supply Agreement; and (c) shall have a to-be
agreed minimum shelf life at the time of delivery. Licensee’s prior written
consent shall be required in connection with any proposed change to the
specifications or manufacturing process.     5.6   Licensor shall take and store
samples from each production batch of the Product for the period of time
required by Applicable Laws.     5.7   Licensor warrants that, on the date of
shipment, the Products will conform to the specifications in this Agreement set
forth in Schedule F. Licensee shall notify Licensor of any alleged
non-conforming Product or quantity discrepancies within thirty (30) days of its
receipt thereof, except that notification of latent defects shall be within
thirty (30) days of their discovery by Licensee. Licensor shall replace any
non-conforming Product, without cost to Licensee.

  5.8   Licensee shall provide Supplier an 18-month rolling forecast for each
Product and the first three months of such forecast shall be binding on Licensee
and cannot be amended by greater than [***]% ([***] percent) without the consent
of Supplier. Licensee shall update the 18-month forecast monthly. Licensee shall
issue to Supplier orders for Products at least ninety (90) days before the
requested delivery date, which order shall be consistent with the binding
portion of the 18-month forecast as described above,

 

***   Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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      unless otherwise agreed by the Parties. For orders in excess of the
18-month rolling forecast as described above, Supplier shall make reasonable
efforts to supply such excess amount.

  5.9   The Parties agree that Licensee shall purchase Products from Supplier
[***]. Price shall include the cost for the Active Pharmaceutical Ingredient
(API), which shall be borne by Licensor. The Parties agree that this price is
set with reference to Products in a fully finished and packaged form. Should
Licensee opt to take responsibility for packaging from bulk form to fully
finished and packaged form, the associated costs reasonably borne by Licensee
shall be deducted from the price. Samples required for commercialisation shall
be supplied by Supplier at actual cost of goods.     5.10   [***] Reasonably in
advance of First Commercial Sale, and reasonably in advance of each year ending
December 31 thereafter, Licensee and Supplier shall agree on a price per tablet
of Product which, upon the available information at that point in time, shall
reflect the principles set forth in Section 5.9.     5.11   Prior to the initial
shipment of Product under the Supply Agreement, the Parties shall negotiate in
good faith and enter into a quality agreement to further define the roles and
responsibilities for the manufacture (including the packaging), quality control,
release, and shipment of the Product.     5.12   The Parties will co-operate in
relation to any voluntary or involuntary recall or other withdrawal of a
Product. When either Party anticipates that a recall or other withdrawal may be
necessary, such Party shall notify and consult with the other as soon as it has
notice of the reasons for such recall, such notification to be given within 24
hours, provided that Licensee shall have the ultimate decision-making authority
with respect to all matters relating to the recall of any Product. Supplier
shall be liable for and shall indemnify Licensee against all reasonable costs
incurred by Licensee in implementing a recall of a Product where and to the
extent such recall is caused by a breach by Licensor of any representation,
warranty or covenant of the Supply Agreement, and further, at Licensee’s
election, Supplier shall

 

***   Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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      either (i) replace the volume of recalled Product as soon as reasonably
practicable, but in no event later than ninety (90) days after the date of the
recall, or (ii) reimburse Licensee in an amount equal to the amount paid by
Licensee for the recalled Product, together with all out-of-pocket expenses
related thereto.     5.13   Supplier agrees to provide access to back-up
suppliers for Licensee in the event of a supply failure.

6   Licensee’s Marketing Efforts.

  6.1   Licensee shall use commercially reasonable efforts to market, promote
and sell the Products in the Territory at its own cost. At least one year prior
to the initial launch of each Product in the Territory, the DMC described in
Section 6.7 shall meet to share marketing and promotional information on the
launch. For the sake of this section, “commercially reasonable efforts” shall be
evaluated with reference to the class of products to which each Product pertains
and shall mean a level of effort consistent with that applied by Licensee, or
comparable peer companies, for other products with similar potential and
sufficient to meet the target timelines specified in section 6.3, subject to the
assumptions set out therein. In any case, Licensee shall expend or commit to
expend [***]:         As for Product A

  a)   [***]     b)   [***]     c)   [***]

      As for Product B

  a)   [***]     b)   [***]     c)   [***]

      Licensee further undertakes to utilize at least [***] sales
representatives to promote each Product (which may be the same [***]) during the
first year of sales of each Product and a

 

***   Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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      commercially reasonable number of sales representatives thereafter.

  6.2   Licensee shall use commercially reasonable efforts to obtain
reimbursement for each of the Products in the Territory at its own cost.     6.3
  Licensee shall launch and market each Product in the Territory within 12
(twelve) months of Licensee receiving Regulatory Approval to market such product
in the Territory, subject at all times to Supplier’s timely performance of its
obligations under the Supply Agreement.     6.4   Without the other Party’s
prior written consent, neither Party shall have the right, directly or
indirectly, to develop, promote or market, or appoint or grant the right to any
third party to promote or market in the Territory other products which contain
as an active ingredient:         As for Product A         anti-inflammatory
corticosteroids for Ulcerative Colitis and such other indications as may be
approved for Product A; and         As for Product B         antibiotics
belonging to the ansamycin family for Travellers Diarrhoea and such other
indications as may be approved for Product B.     6.5   Licensee shall use
commercially reasonable efforts to fill market demand for each Product following
commencement of marketing at any time during the term of this Agreement, subject
at all times to Supplier’s timely performance of its obligations under the
Supply Agreement.     6.6   Licensee agrees to include on both the outer
packaging and on the package insert of any Product an acknowledgement of the
grant of rights by Licensor herein in the following terms: “By license of Cosmo
Technologies Ltd., Dublin, Ireland”.     6.7   The Parties shall establish a
Development and Marketing Committee (“DMC”) consisting of four (4) individuals
(“Committee Members”), two (2) of whom shall be nominated by

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      Licensee and two (2) of whom shall be nominated by Licensor. Committee
members may be replaced by notice to the other Party and shall be appropriately
qualified and experienced in order to make a meaningful contribution to DMC
meetings. The purpose of the DMC is to provide a forum for the Parties to share
information and knowledge on the development and marketing of each Product,
including, but not limited to, proposed pre-marketing, marketing and promotional
plans, reviewing competitor activity, and discussing any regulatory, technical,
quality assurance or safety issues in relation to each Product. The DMC shall
conduct its discussions in good faith with a view to operating to the mutual
benefit of the Parties and in furtherance of the successful development and
marketing of the Products in the Territory. The DMC shall meet as often as the
committee members may determine but in any event not less than two (2) times per
year. The DMC may invite individuals with special skills to attend such meetings
where considered to be relevant and appropriate.

7   Development and Regulatory Matters.

      As for Product A:     7.1   Licensee acknowledges that Licensor has
completed a phase II clinical trial for the scope of Regulatory Approval for
Product A both in the US and Europe for induction of remission of mild to
moderate Ulcerative Colitis. Licensee acknowledges that it has been provided
data on the outcome of such phase II clinical trials.     7.2   Licensee
acknowledges that Licensor has currently phase III clinical trials ongoing in
Europe and US for the scope of Regulatory Approval for Product A in such
territories and that it has been provided with information on clinical trials
design and accepts such design.     7.3   Licensor shall be in charge of
conducting such US phase III clinical trial for induction of remission of mild
to moderate Ulcerative Colitis including the conduct of any extension trial, but
Licensee shall have a right to supervise and manage all the activities related
to the US phase III clinical trial. Licensee acknowledges that management of the
phase III clinical trial in Europe and US could be optimized in the interest of
both Parties, through the supervision by the Steering Committee (SC) set forth
by Section 7.13. The SC shall be in charge of setting such

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      optimization process with the objective to speed up Regulatory Approval.
Independently from this optimization, however, Licensor and Licensee undertake
to provide each other at no charge with all information that each one possesses
or to which each one has access that is related to the Product and is reasonably
necessary to support Licensor or Licensee’s application for Regulatory Approvals
including: as for what pertains Licensor (or its licensees in other
territories), all information and data related to the EU phase III clinical
trial; as for what pertains Licensee, all information and data related to the US
phase III clinical trial; and agree that each Party shall have a right of mutual
reference at no-cost to the data the other Party shall gather for the purpose of
Product A Regulatory Approval.

  7.4   As soon as practically possible following completion of the ongoing
phase III clinical trial, Licensor shall transfer to Licensee all regulatory
materials (and all rights thereto, including the right to reference any drug
master file) to allow Licensee to file an NDA for the Territory. Notwithstanding
the foregoing, Licensor shall promptly share any development and/or regulatory
data and information generated in connection with Product A from time to time so
as not to delay Licensee in filing and obtaining necessary Regulatory Approvals.
    7.5   Licensee shall be the primary Party responsible for regulatory matters
in the Territory. Licensee shall use commercially reasonable efforts to obtain
and maintain all Regulatory Approvals in the Territory. Licensee will ensure
that such Regulatory Approvals are kept in force at its own expense during the
term of the Agreement, and will notify Licensor of any material change in the
status of Regulatory Approvals and any extension thereof.         As for Product
B     7.6   Licensee acknowledges that Licensor has completed a phase II
clinical trial for the scope of Product B Regulatory Approval both in the US and
Europe for Traveller’s Diarrhoea. Licensee acknowledges that it has been
provided data on the outcome of such phase II clinical trials.     7.7  
Licensee acknowledges that, to complete development of Product B in order to
file for Product B Regulatory Approval for

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      Traveller’s Diarrhoea in the Territory, a US phase III clinical trial
shall be required.

  7.8   Licensee shall be in charge of conducting the second of two pivotal
phase III clinical studies for Traveller’s Diarrhoea necessary to achieve
Product B Regulatory Approval. All costs pertaining to such phase III clinical
study shall be borne by Licensee. In this respect, Licensee acknowledges that Dr
Falk Pharma GmbH (“Falk”) is the Licensee of Product B and related patents for
the EU territory plus Australia and that, as such, it shall be in charge of
conducting the first pivotal phase III clinical study for Traveller’s Diarrhoea
and whatever other clinical phase and/or studies may be necessary to achieve
Product B Regulatory Approval in its territory. Licensee acknowledges that
design and management of the phase III clinical trials for Traveler’s Diarrhoea
in Europe and US could be optimized in the interest of both Parties, through the
supervision by the Steering Committee (SC) set forth by Section 7.13 and mutual
access to trial data and mutual right of reference. Licensee shall initiate such
second pivotal phase III study promptly following receipt of necessary guidance
from the FDA. The SC shall be in charge of setting such optimization process,
including assuming decisions on strategic protocol design, with the objective to
speed up Product Regulatory Approval. Independently from this optimization,
however, Licensor and Licensee undertake to provide each other at no charge with
all information that each one possesses or to which each one has access that is
related to the Product and is reasonably necessary to support Licensor or
Licensee’s application for Regulatory Approval including: as for what pertains
Licensor (or its licensees in other territories), all information and data
related to the EU phase III clinical trial; as for what pertains Licensee, all
information and data related to the US phase III clinical trial; and agree that
each Party shall have a right of mutual reference at no-cost to the data the
other Party shall gather for the purpose of Product B Regulatory Approval.    
7.9   As soon as practically possible following the pre-IND meeting with FDA,
Licensor shall transfer to Licensee all regulatory materials (and all rights
thereto, including the right to reference any drug master file) to allow
Licensee to file the IND for the Territory. Notwithstanding the foregoing,
Licensor shall promptly share any development and/or regulatory data and
information generated in connection with Product B from time to time so as

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      not to delay Licensee in filing and obtaining necessary Regulatory
Approvals.

  7.10   Licensee shall be the primary Party responsible for regulatory matters
in the Territory. Licensee shall therefore obtain and maintain all Regulatory
Approvals in the Territory. Licensee will ensure that such Regulatory Approvals
are kept in force at its own expense during the term of the Agreement, and will
notify Licensor of any material change in the status of the Regulatory Approvals
and any extension thereof.         As for both Products     7.11   Each Party
shall adhere to all requirements of Applicable Laws, rules and regulations,
including those which relate to reporting and investigation of adverse events
for the Products and shall be responsible for reporting all safety information,
including adverse events, to regulatory authorities in the Territory in
compliance with such requirements. For this purpose the Parties shall enter into
pharmaco-vigilance agreement, reasonably in advance of First Commercial Sale.
The Parties shall report promptly to each other any adverse event reports it
receives related to the Products.     7.12   The Parties shall promptly notify
each other in writing of the receipt or sending of any correspondence from or to
any Regulatory Authority in connection with safety or quality issues concerning
the Product. The Party with the most current filing with the Regulatory
Authority (an IND or filing for Regulatory Approval) for a Product shall be
responsible for responding to any correspondence or inquiry from any Regulatory
Authority in the Territory relating to such Product, provided that such Party
shall keep the other Party reasonably informed with respect to all such
correspondence and inquiries, and its responses thereto, and provided further
that the other Party shall provide the responsible Party with any reasonable
assistance in responding to any such correspondence or inquiry. Whenever there
are FDA meetings, the Party receiving notice or initiating the meeting shall
provide appropriate notice to the other Party, in order to enable it to
participate.     7.13   The Parties shall establish a Steering Committee (“SC”)
consisting of four (4) individuals (“Committee Members”), two (2) of whom shall
be nominated by Licensee and two (2) of whom shall be nominated by Licensor.
Committee members may be replaced by

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      notice to the other Party and shall be appropriately qualified and
experienced in order to make a meaningful contribution to Steering Committee
meetings. The purpose of the Steering Committee is to provide a forum for the
Parties to share information and knowledge on the development for the sake of
most efficient Products Regulatory Approval, including coordination with other
licensees of the same Products. The hosting Party shall prepare and distribute
meeting minutes. If no unanimous decision is taken, the issue shall be referred
to both Licensor’s and Licensee’s CEOs. In case of disagreement between CEOs,
Licensee shall have the final say for the Territory.

8   Intellectual Property.

  8.1   Licensor has registered the Trademark in the countries listed in
Schedule C. Licensee recognizes the exclusive legal ownership by Licensor of the
Trademarks in the Territory and Licensee agrees it will not at any time either
during the term of this Agreement or thereafter use the Trademarks in any manner
that might infringe upon Licensor’s ownership rights to the Trademarks directly
or indirectly.     8.2   Licensee may use its own trademark(s) for making,
using, and selling the Products in the Territory in accordance with this
Agreement. Licensor recognizes the exclusive legal ownership by Licensee of such
trademarks in the Territory and Licensor agrees it will not at any time either
during the term of this Agreement or thereafter use the Licensee’s trademarks in
any manner that might infringe upon Licensee’s ownership rights to the such
trademarks directly or indirectly. Nonetheless, Licensee shall use the Trademark
jointly with its own trademark(s) in all advertisements, promotions, press
releases and all kind of communications and the Products label, as submitted for
approval with FDA, shall be branded also with Licensor’s Trademark, unless
otherwise required by Applicable Laws.     8.3   Title to all inventions and
other intellectual property related to the Products, including any Improvements,
made solely by Licensor or jointly by the Parties during the term of this
Agreement shall be owned by Licensor or jointly, as the case may be, and an
Exclusive license to such inventions and other intellectual property has been
granted to Licensee pursuant to sections 2.1 and 2.2 herein. Title to all
inventions and other intellectual property related to the Products, including
any Improvements,

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      made solely by Licensee during the term of this Agreement shall be owned
by Licensee.

  8.4   Licensor represents and warrants that it is the rightful and sole owner
of all of the Patents, Know-How and the Trademarks free and clear of all
security interests and other encumbrances and it has full right to license same
to Licensee.     8.5   Licensor represents and warrants that:

  8.5.1   It is unaware of any actual or threatened claim or action brought
alleging that the Patents, Know-How, Products or Trademarks, or their use,
violate any intellectual property rights of third parties or challenging the
validity, enforceability or scope of such Patents, Know-How or Trademarks;    
8.5.2   To the knowledge of Licensor or its Affiliates, the marketing, use,
distribution, or sale of Products in the Territory does not and shall not
infringe or otherwise conflict with any intellectual property rights of third
parties;     8.5.3   It is unaware of any third parties infringing on the
Patents, Know-How, or Trademark;     8.5.4   It will, at its own cost, use its
best efforts to maintain the Patents and prosecute any pending patent
applications, to achieve patent granting, provided that Licensee shall have the
right to step-in to maintain and prosecute the Patents in the Territory if
Licensor fails to do so;     8.5.5   Products A and B are covered by the
Patents, including at least one issued Patent, and the Products, and their
formulation and coating, are as described in the materials provided to Licensee;
    8.5.6   it holds, and is operating in compliance with, such permits,
licenses, authorizations and clearances of any Regulatory Authority required in
connection with the development to date of Products. Licensor further represents
and warrants to Licensee that it has not received any warning letters or written
correspondence from any Regulatory Authority or other governmental entity
requiring the termination, suspension or modification of any clinical or
pre-clinical studies or tests with respect to Products;

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  8.5.7   to the knowledge of Licensor, none of the Patents are invalid or
unenforceable.

  8.6   Except as stated in sections 8.4 and 8.5 of this Agreement, the license
granted herein with regard to the Products is provided “as is” and without
warranty of merchantability or warranty of fitness for a particular purpose.
Therefore, in no event shall Licensor be liable for any incidental, special or
consequential damages resulting from exercise of the license granted herein with
regard to the Products; provided that this limitation of liability shall not
apply to such damages resulting from manufacturing or handling of the products
by Licensor or the other responsibilities of the Licensor under this Agreement,
the Supply Agreement or Applicable Laws.     8.7   Licensor hereby agrees to
indemnify and hold Licensee, its successors and assignees, harmless from and
against any and all liabilities, demands, suits, losses, claims of action,
damages, costs and expenses which Licensee may incur, suffer or be required to
pay only by reason of violation of the representations and warranties set above
in 8.4 and 8.5.     8.8   Licensor shall have the primary right and
responsibility, at its sole cost and expense, to conduct and control prosecution
and maintenance with respect to the Patents and Trademarks, provided that
Licensee shall reasonably co-operate and assist Licensor in connection with such
activities in the Territory. Licensor shall keep Licensee reasonably informed as
to the status of any of the Patents and Trademarks in the Territory, and shall
consider in good faith the reasonable requests and suggestions of Licensee with
respect to the prosecution and maintenance of the Patents and Trademarks in the
Territory. Licensor shall not abandon any of the Patents or Trademarks in the
Territory without providing reasonable prior written notice to Licensee of such
intention to surrender (which notice shall, in any event, be given no later than
sixty (60) days prior to the next deadline for any action that would result in
such surrender that may be taken with respect to such Patent or Trademark with
the relevant patent and trademark office) and providing Licensee an opportunity
to assume responsibility for such Patent or Trademark. In the event of
surrender, if Licensee elects to assume responsibility for any Patent or
Trademark, Licensor shall, at Licensee’s expense, assign all right, title and
interest in such Patent or Trademark to Licensee, and Licensor shall promptly
take all actions reasonably

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      necessary or desirable to perfect such interest in Licensee; provided that
Licensor will retain all rights and obligations with respect to such Patent or
Trademark before the date of such assignment.

  8.9   Each Party shall notify the other if it becomes aware of any
infringement or potential infringement of the Patents or the infringement or
potential infringement of third party patent rights by exercise of the making,
use, or sale of the Products, whether in the Territory or elsewhere. If a Party
learns of any such infringement, such Party shall so inform the other Party and
provide it with reasonable evidence of such infringement.     8.10   Each Party
shall notify and provide the other Party with copies of any allegations of
alleged patent invalidity, unenforceability or non-infringement of any Patent
pursuant to a Paragraph IV Patent Certification by a third party filing an
Abbreviated New Drug Application, an application under §505(b)(2), or other
similar patent certification by a third party (“Paragraph IV Claim”). Such
notification and copies shall be provided as soon as practicable, and at least
within five (5) working days after the Party receives such certification, and
shall be sent by facsimile and overnight courier to the other Party.     8.11  
Licensee shall have the right to notify a third party of the infringement of
Patent or Trademark rights or enforce the Patents or Trademarks against a third
party without the consent of Licensor if the infringement has occurred within
the Territory or pursuant to a Paragraph IV Claim. Both Parties shall use
reasonable efforts and cooperation to terminate infringement without litigation.
However, in the event of litigation, Licensee shall have sole right to
institute, prosecute, and control such litigation at its own expense. Licensor
shall cooperate fully in such litigation, and in the case where Licensee desires
to bring such litigation, at Licensee’s request, Licensor agrees to join any
such litigation and proceed as sole plaintiff if necessary to enforce such
Patent(s) against the third party(ies), at Licensee’s own expense. Licensor
shall have the right to approve any settlement that would adversely affect the
Patents or Licensor’s rights under this Agreement or result in any liability or
admission on behalf of Licensor, such approval not to be unreasonably withheld,
conditioned, or delayed. Licensor may appoint its own attorneys at its own
expense. In the event Licensee does not elect to

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      institute, prosecute or control such litigation, Licensor shall have the
right to do so at its own expense.

  8.12   If a third party commences legal action against Licensee claiming the
exercise of the license rights by Licensee granted hereunder infringes a third
party’s intellectual property rights, Licensee shall defend such litigation at
its own expense (subject to Licensor’s indemnification obligation, if any).
Licensor shall cooperate fully in such litigation and, at Licensee’s request,
Licensor agrees to join any such litigation at Licensee’s own expense.     8.13
  All monetary recoveries from any action brought by a Party pursuant to
Sections 8.9 — 8.12 shall belong to the Party bringing suit, after reimbursement
of reasonable legal expenses pursuant to said Sections.     8.14   Licensee
shall mark all packaging of Products under the terms of this Agreement, or their
containers, with the licensed Trademark in accordance with the Applicable Laws.
    8.15   The Parties acknowledge that Licensee, as designated holder of any
NDA pursuant to this Agreement for all Products, may refer to applicable Patents
in the listings for Products in the Orange Book. At Licensee’s request, Licensor
and its Affiliates shall support Licensee in listing the applicable Patents,
such support not to be unreasonably withheld, conditioned, or delayed. In the
event that any Patent is listed in the Orange Book, Licensee shall use
commercially reasonable efforts to ensure that Licensor shall be listed as the
assignee of such Patent and Licensee or its Affiliate shall be identified as the
point of contact for any Paragraph IV Claims. Licensor and Licensee shall
co-operate with respect to data exclusivity periods (such as those periods
listed in the FDA’s Orange Book including any available paediatric extensions)
at Licensee’s expense.

9   Confidentiality.

      Each Party agrees to maintain in confidence and not to use except for the
purpose of this Agreement any information of a confidential nature such as
technical information and data, commercial information and know-how, price
structures, administrative and operational costs, or other information relating
to each other’s business operations or in the case of Licensee to the Products,
whether disclosed prior to the Effective Date or thereafter. Each Party’s
obligation of

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      confidence and limitation upon use shall not apply to any information to
the extent that the receiving Party can show that such information:

  (a)   is or became generally available to the public otherwise than by reason
of breach by the receiving Party of the provisions of this Agreement;     (b)  
was known to the receiving Party prior to the date of the Agreement provided
that documentary evidence of such knowledge is provided to the disclosing Party
on request;     (c)   was subsequently disclosed to the receiving Party without
obligation of confidence by a third party owing no such obligations to the
disclosing Party in respect of such information;     (d)   is required by law to
be disclosed but then only when, to the extent reasonably practicable, prompt
notice of this requirement has been given to the original disclosing Party so
that it may seek appropriate relief to prevent or limit such disclosure.

      Except as required by Applicable Laws or court order or as otherwise
permitted under this Agreement, all publicity, press releases and public
announcements, in each case relating to Products in the Territory and/or the
transactions contemplated hereby shall be reviewed in advance by, and shall be
subject to the written approval (such approval not to be unreasonably withheld)
of both Parties. Either Party may disclose the existence of this Agreement and
the terms and conditions hereof, without the prior written consent of the other
Party, as may be required by Applicable Laws (including the disclosure
requirements of any stock exchange in the Territory), in which case the Party
seeking to disclose the information shall give the other Party reasonable
advance notice and review of any such disclosure and shall seek confidential
treatment of such information to the extent possible under Applicable Law.      
  Parties also agree that, whenever possible, they will try to coordinate in
advance diffusion of information on Products with other licensees of Products in
other territories.         This clause shall remain in force for five years
following the expiry or termination of this Agreement.

10   Termination

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  10.1   Subject to the provisions contained herein which provide for earlier
termination, this Agreement shall commence on the Effective Date and shall
remain in effect for 50 (fifty) years following the Royalty Term.     10.2  
Following the Royalty Term with respect to each Product, the Parties shall
negotiate in good faith towards establishing a reduced royalty arrangement under
the Know-How and Trademarks license. If the Parties are unable to reach an
agreement, they shall engage an appropriate third party expert to establish the
reduced royalty rate arrangement.     10.3   If either Licensor or Licensee
breaches any of the terms and conditions of this Agreement, the other Party may
give notice of the breach to the Party in default. If the defaulting Party does
not rectify the breach within 60 (sixty) days after receipt of the notice, the
Party who gave notice may terminate this Agreement upon the expiration of the 60
(sixty) day period without prejudice to such Party’s claims for damages or
indemnification for the losses incurred by reason of such termination or breach
of the Agreement.     10.4   Licensee may withdraw from this Agreement without
penalty or further obligation to Licensor on a Product by Product basis upon 60
(sixty) days written notice to Licensor if such Product (i) fails to achieve the
primary end points in the applicable phase III clinical trial to support
Regulatory Approval with statistical significance, or (ii) the clinical trials
conducted with respect to such Product are not sufficient to enable Licensee to
obtain all necessary Regulatory Approvals for such Product, in each case within
5 (five) years after the Effective Date. Payments made by Licensee to Licensor
until the moment such notice of withdrawal is sent shall not be reimbursed.    
10.5   Upon termination of this Agreement, Licensee may dispose of all Products
on hand within a period of one hundred and twenty (120) days of the effective
date of such termination provided that the sale of such Products by Licensee or
Affiliates shall be subject to the terms of this Agreement, including but not
limited to the rendering of reports and payment of royalties required under this
Agreement.     10.6   In the event Licensor terminates this Agreement according
to section 10.3 or Licensee withdraws according to section 10.4, then

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      Licensee shall transfer or assign all Regulatory Approvals to Licensor.

11   Miscellaneous

  11.1   Each Party represents and warrants to the other that:

  11.1.1   It is a company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation;     11.1.2   it has the
power and authority to enter into and be bound by the terms of this Agreement
and to perform its obligations hereunder;     11.1.3   it has taken all
necessary action on its part to authorize the execution and delivery of this
Agreement and this Agreement has been duly executed and delivered on its behalf
and constitutes a legal, valid and binding obligation enforceable against it in
accordance with its terms; and     11.1.4   it is subject to no legal,
contractual or other restrictions, limitations or conditions which conflict with
its rights and obligations under this Agreement or which might affect adversely
its ability to perform hereunder.

  11.2   Neither Party to this Agreement shall be liable for failure to perform
if the failure is attributable to any cause which is reasonably beyond the
Party’s control, including:

  11.2.1   war (declared or undeclared), riot, political insurrection,
rebellion, revolution, act of terrorism;     11.2.2   acts or orders of or
expropriation by any government (whether de facto or de jure) prohibiting the
import or export of the goods covered hereby or imposing rationing;     11.2.3  
strike, lockout, or other labor troubles which interfere with the manufacture,
sale or transportation of the goods covered hereby or with the supply of raw
materials necessary for their production;     11.2.4   fire, flood, explosion,
earthquake, tornadoes, disease outbreaks or other natural events.

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  11.3   Each Party will indemnify and hold the other Party and their Affiliates
harmless from and against any and all claims, judgements, costs, awards,
expenses (including reasonable attorneys’ fees) and liabilities of every kind
arising out of any breach by such Party of its warranties and covenants or other
obligations contained herein; provided that, with respect to product liability,
Licensor will be liable for claims arising from its fault or negligence in
manufacturing the Products and Licensee will be liable for claims arising from
its fault or negligence in selling and distributing the Products.     11.4  
Each Party shall be solely responsible for its accounting and tax reporting
obligations related to this Agreement and shall indemnify and hold the other
Party and their Affiliates harmless from and against any and all claims,
judgements, costs, awards, expenses (including reasonable attorneys’ fees) and
liabilities of every kind arising out of the accounting or tax activities of the
indemnifying Party.     11.5   Nothing in this Agreement or in the activities
engaged in by the Parties hereunder shall create an agency, partnership,
employment or joint venture relationship between the Parties.     11.6   Any
notice authorized or required to be given under the terms of this Agreement
shall be given by facsimile transmission or international courier sent to:

If to Licensor:
Cosmo Technologies Limited
4243 Amiens Street
Dublin 1
Ireland
Fax n. +353 1 8230718
To the attention of Office Manager
With copy to:
Cosmo Pharmaceuticals S.p.A.
Via Cristoforo Colombo 1,
20020 LAINATE (Mi)
Italy
Fax n. +39 02 93337663

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To the attention of Mr. Giuseppe Cipriano
To Licensee
Santarus, Inc.
3721 Valley Centre Drive, Suite 400
San Diego, California 92130
Attention: Legal Affairs Department
Fax: + 01 (858) 314-5702

      (or such other address as the addressee may previously by notice to the
other Party have stipulated). Notices shall be deemed to be given in the case of
a facsimile transmission when sent provided it is confirmed by international
courier sent not later than the next business day and in the case of
international courier upon the receipt by the other Party.     11.7   In the
event one or more terms of this Agreement are found to violate the provisions of
any applicable statute, law or regulation, the Parties hereto shall negotiate in
good faith to modify this Agreement, but only to the extent necessary to make
the terms of this Agreement valid and enforceable, having full regard for all
applicable laws and the intent and purposes of the Parties entering into this
Agreement.     11.8   Neither this Agreement nor any interest hereunder shall be
assignable or otherwise transferable by operation of law by either Party without
the prior written consent of the other Party hereto. No consent shall be
required and an assignment shall be permitted to an Affiliate or an acquirer of
all or substantially all of the assigning Party’s assets to which this Agreement
relates, or upon a merger, change of control or to a successor in business which
agrees to be bound by all terms and conditions of this Agreement. Any attempted
assignment in contravention of this Section 11.8 shall be void and without any
force or effect. This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the Parties hereto and their respective successors and
assigns.     11.9   The failure of either Party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not be construed as a waiver or relinquishment, to any extent,
of the right to assert or rely upon any such terms or conditions on any future
occasion.

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  11.10   This Agreement and its Schedules constitutes the definitive agreement
of the Parties on the subject matter hereof and supersedes, cancels and annuls
all prior agreements, understandings and undertakings relating to the subject
matter hereof. This Agreement shall not be modified or amended except by a
written document signed by a duly authorized officer of the Parties. There are
no verbal agreements, warranties, representations or understandings affecting
this Agreement and all previous or other negotiations, representations, and
understandings between the Parties are merged herein.     11.11   This Agreement
shall be governed by and construed in accordance with the laws of Italy without
regard to the conflicts of laws provisions thereof and without regard to the
United Nations Convention on Contracts for the Sale of Goods. In the event of
any dispute arising out of or in connection with the present Agreement, the
Parties agree that such dispute shall be finally settled under the Rules of
Arbitration of the International Chamber of Commerce — ICC by a panel of three
arbitrators appointed in accordance with the said Rules of Arbitration. The
arbitrators shall apply Italian Law. The seat of arbitration shall be Paris
(France) and the language of the arbitration proceeding shall be English.    
11.12   The following documents constitute Schedules to this Agreement: A) list
of Patents for Product A; B) list of Patents for Product B; C) list of
Trademarks; D) Stock Issuance Agreement; E) Rights Registration Agreement; F)
Products Specifications.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives, as of the Effective Date.

                              Cosmo Technologies Limited       Santarus, Inc.  
 
 
                            Signature:   /s/ Giuseppe Cipriano       Signature:
  /s/ Gerald T. Proehl                          
 
  Name:   Giuseppe Cipriano           Name:   Gerald T. Proehl    
 
  Title:   CEO           Title:   President and CEO    
 
                            Date: December 10, 2008       Date: December 10,
2008    

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