EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 24, 2011, is
hereby entered into in the State of Maryland by and between SUCAMPO
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and Cary
Claiborne ("Executive").

 

WHEREAS, Executive has been the interim Chief Financial Officer of the Company
since March 9, 2011;

 

WHEREAS, Executive possesses certain skills, experience or expertise which will
be of use to the Company;

 

WHEREAS, the parties acknowledge that Executive's abilities and services are
unique and will significantly enhance the business prospects of the Company; and

 

WHEREAS, in light of the foregoing, the Company desires to employ Executive as
the Chief Financial Officer as of October 17, 2011 (the “Effective Date”) and
Executive desires to obtain such employment.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements herein contained, the Company and Executive hereby agree as follows:

 

 

 

Article 1. Employment Agreement

 

1.1 Employment and Duties

 

The Company offers and Executive hereby accepts employment with the Company for
the Term (as hereinafter defined) as its Chief Financial Officer, and in
connection therewith, to perform such duties as Executive shall reasonably be
assigned by Executive's supervisor and/or by the Company's Board of Directors.
Executive hereby warrants and represents that Executive has no contractual
commitments or other obligations to third parties inconsistent with Executive's
acceptance of this employment and performance of the obligations set forth in
this Agreement. Executive shall perform such duties and carry out Executive's
responsibilities hereunder faithfully and to the best of Executive's ability,
and shall devote Executive's full business time and best efforts to the business
and affairs of the Company during normal business hours (exclusive of periods of
vacation, sickness, disability, or other leaves to which Executive is entitled).
Executive will perform all of Executive's responsibilities in compliance with
all applicable laws and will ensure that the operations that Executive manages
are in compliance with all applicable laws.

 

Article 2. Employment Term

 

2.1 Term

 

The term of Executive's employment hereunder (the "Term") shall be deemed to
commence on the Effective Date and shall end on the second anniversary of the
Effective Date, unless sooner terminated as hereinafter provided; provided,
however, that the Term shall be automatically renewed and extended for an
additional period of one (1) year on each anniversary thereafter unless either
party gives a Notice of Termination (as defined below) to the other party at
least sixty (60) days prior to such anniversary.

 

 

 

2.2 Survival on Merger or Acquisition

 

In the event the Company is acquired during the Term, or is the non-surviving
party in a merger, or sells all or substantially all of its assets, this
Agreement shall not automatically be terminated, and the Company agrees to use
its best efforts to ensure that the transferee or surviving company shall assume
and be bound by the provisions of this Agreement.

 

Article 3. Compensation and Benefits

 

3.1 Compensation

 

(a) Base Salary. The Company shall pay Executive a salary at an annual rate that
is not less than Two Hundred and Ninety Four Thousand and no/100 dollars
($294,000.00), to be paid in bi-weekly installments, in arrears (the "Base
Salary"). Thereafter, the Base Salary will be reviewed by the Compensation
Committee of the Board of Directors ("Compensation Committee") at least
annually, and the Committee's recommendation shall be reviewed and approved by
the Board of Directors. The Base Salary may, in the sole discretion of the Board
of Directors, be increased, but not decreased (unless mutually agreed by
Executive and the Company).

 

(b) Stock Compensation. At least annually for the Term of this Agreement,
Executive shall be eligible for consideration to receive restricted stock
grants, incentive stock options or other awards in accordance with the 2006
Stock Incentive Plan. Recommendations concerning the decision to make an award
pursuant to that Plan and the amount of any award are entirely discretionary and
shall be made initially by the Compensation Committee, subject to review and
approval by the Board of Directors. In the event that, during the Term (i) the
Company is acquired or is the non-surviving party in a merger, or (ii) the
Company sells all or substantially all of its assets, or (iii) in the event of
the death of Executive, all unvested restricted stock awards and incentive stock
options having previously been awarded to Executive shall immediately vest and
may be exercised in accordance with the terms of the Plan and the Executive's
grant award.

 

 

 

(c) Bonuses. Executive shall be eligible to receive an annual bonus award in
recognition of Executive's contributions to the success of the Company pursuant
to the Company's management incentive bonus program as it may be amended or
modified from time to time. Recommendations concerning the decision to make an
award and the amount of any award are entirely discretionary and shall be made
initially by the Compensation Committee, subject to review and approval by the
Board of Directors.

 

(d) Withholding Taxes. All compensation due to Executive shall be paid subject
to withholding by the Company to ensure compliance with all applicable laws and
regulations.

 

3.2 Participation in Benefit Plans

 

Executive shall be entitled to participate in all employee benefit plans or
programs of the Company offered to other employees to the extent that
Executive's position, tenure, salary, and other qualifications make Executive
eligible to participate in accordance with the terms of such plans. The Company
does not guarantee the continuance of any particular employee benefit plan or
program during the Term, and Executive's participation in any such plan or
program shall be subject to all terms, provisions, rules and regulations
applicable thereto.

 

 

 

3.3 Expenses

 

The Company will pay or reimburse Executive for all reasonable and necessary
out-of-pocket expenses incurred by Executive in the performance of Executive's
duties under this Agreement. Executive shall provide to the Company detailed and
accurate records of such expenses for which payment or reimbursement is sought,
and Company payments shall be in accordance with the regular policies and
procedures maintained by the Company from time to time.

 

3.4 Professional Organizations

 

During the Term, Executive shall be reimbursed by the Company for the annual
dues payable for membership in professional societies associated with subject
matter related to the Company's interests. New memberships for which
reimbursement will be sought shall be approved by the Company in advance.

 

3.5 Parking

During the Term, the Company shall either provide parking for Executive's
automobile at the Company's expense or reimburse Executive for such expense.

 

 

 

Article 4. Termination of Employment

 

4.1 Definitions

 

As used in Article 4 of this Agreement, the following terms shall have the
meaning set forth for each below:

 

(a) "Benefit Period" shall mean the six (6) month period commencing on the Date
of Termination which occurs in connection with a termination of employment
described in the first sentence of Section 4.4(a), or a period ending when
Executive becomes eligible for group medical benefits coverage from another
source, whichever is shorter.

 

(b) "Cause" shall mean any of the following:

 

(i) the gross neglect or willful failure or refusal of Executive to perform
Executive's duties hereunder (other than as a result of Executive's death or
Disability);

 

(ii) perpetration of an intentional and knowing fraud against or affecting the
Company or any customer, supplier, client, agent or employee thereof;

 

(iii) any willful or intentional act that could reasonably be expected to injure
the reputation, financial condition, business or business relationships of the
Company or Executive's reputation or business relationships;

 

 

 

(iv) conviction (including conviction on a nolo contendere plea) of a felony or
any crime involving fraud, dishonesty or moral turpitude;

 

(v) the material breach by Executive of this Agreement (including, without
limitation, the Employment Covenants set forth in Article 5 of this Agreement);
or

 

(vi) the failure or continued refusal to carry out the directives of Executive's
supervisor or the Board of Directors that are consistent with Executive's duties
and responsibilities under this Agreement which is not cured within thirty (30)
days after receipt of written notice from the Company specifying the nature of
such failure or refusal; provided, however, that Cause shall not exist if such
refusal arises from Executive's reasonable, good faith belief that such failure
or refusal is required by law.

 

(c) "Date of Termination" shall mean the date specified in the Notice of
Termination (as hereinafter defined) (except in the case of Executive's death,
in which case the Date of Termination shall be the date of death); provided,
however, that if Executive's employment is terminated by the Company other than
for Cause, the date specified in the Notice of Termination shall be at least
thirty (30) days from the date the Notice of Termination is given to Executive.

 

(d) "Notice of Termination" shall mean a written notice from the Company to
Executive that indicates Section 2 or the specific provision of Section 4 of
this Agreement relied upon as the reason for such termination or nonrenewal, the
Date of Termination, and, in the case of termination or non-renewal by the
Company for Cause, in reasonable detail, the facts and circumstances claimed to
provide a basis for termination or nonrenewal.

 

 

 

(e) "Good Reason" shall mean:

 

(i) Company effects a material diminution of Executive's position, authority or
duties;

 

(ii) any requirement that Executive, without his/her consent, move his/her
regular office to a location more than fifty (50) miles from Company's executive
offices;

 

(iii) the material failure by Company, or its successor, if any, to pay
compensation or provide benefits or perquisites to Executive as and when
required by the terms of this Agreement; or

 

(iv) any material breach by Company of this Agreement.

 

The Executive shall have Good Reason to terminate Executive's employment if (i)
within twenty-one (21) days following Executive's actual knowledge of the event
which Executive determines constitutes Good Reason, Executive notifies the
Company in writing that Executive has determined a Good Reason exists and
specifies the event creating Good Reason, and (ii) following receipt of such
notice, the Company fails to remedy such event within twenty-one (21) days. If
either condition is not met, Executive shall not have a Good Reason to terminate
Executive's employment.

 

(f) "Change in Control" shall mean:

 

 

 

(i) the acquisition by any person of beneficial ownership of fifty percent (50%)
or more of the outstanding shares of the Company's voting securities; or

 

(ii) the Company is the non-surviving party in a merger; or

 

(iii) the Company sells all or substantially all of its assets; provided,
however, that no "Change in Control" shall be deemed to have occurred merely as
the result of a refinancing by the Company or as a result of the Company's
insolvency or the appointment of a conservator; or

 

(iv) the Compensation Committee of the Company, in its sole and absolute
discretion determines that there has been a sufficient change in the share
ownership or ownership of the voting power of the Company's voting securities to
constitute a change of effective ownership or control of the Company.

 

4.2 Termination Upon Death or Disability

 

This Agreement and Executive's employment hereunder, shall terminate
automatically and without the necessity of any action on the part of the Company
upon the death of Executive. In addition, if at any time during the Term,
Executive shall become physically or mentally disabled (as determined by an
independent physician competent to assess the condition at issue), whether
totally or partially, so that Executive is unable substantially to perform
Executive's duties and services hereunder, with or without reasonable
accommodation, for either (i) a period of sixty (60) consecutive calendar days,
or (ii) ninety (90) consecutive or non-consecutive calendar days during any
consecutive five (5) month period (the "Disability Date"), the Company may
terminate this Agreement and Executive's employment hereunder by written notice
to Executive after the Disability Date (but before Executive has recovered from
such disability).

 

 

 

4.3 Company's and Executive's Right to Terminate

 

This Agreement and Executive's employment hereunder may be terminated at any
time by the Company for Cause or, if without Cause, upon thirty (30) days prior
written notice to Executive. In the event the Company should give Executive
notice of termination without Cause, the Company may, at its option, elect to
provide Executive with thirty (30) days' salary in lieu of Executive's continued
active employment during the notice period. This Agreement and Executive's
employment hereunder may be terminated by Executive at any time for Good Reason
and, if without Good Reason, upon thirty (30) days prior written notice to the
Company.

 

4.4 Compensation Upon Termination

 

(a) Severance. In the event the Company terminates Executive’s employment
without Cause or pursuant to Section 4.2 due to the disability of Executive, or
elects not to renew this Agreement under circumstances where Executive is
willing and able to execute a new agreement providing terms and conditions
substantially similar to those in this Agreement, or in the event Executive
terminates employment for Good Reason, Executive shall be entitled to receive:
(i) Executive's Base Salary through the Date of Termination, (ii) reimbursement
of any COBRA continuation premium payments made by Executive for the Benefit
Period, and (iii) a lump sum severance payment equal to six (6) months of
Executive's then current Base Salary to be made not later than ten (10) business
days following the expiration of the revocation period in Executive's Release
(as provided in Section 4.4(c) below) without any revocation having occurred.
Notwithstanding the foregoing, the Company shall, to the extent necessary and
only to the extent necessary, modify the timing of delivery of severance
benefits to Executive if the Company reasonably determines that the timing would
subject the severance benefits to any additional tax or interest assessed under
Section 409A of the Internal Revenue Code. In such event, the payments will be
made as soon as practicable without causing the severance benefits to trigger
such additional tax or interest under Section 409A of the Internal Revenue Code.
In the event this Agreement is terminated (or not renewed) for any reason other
than by the Company without Cause or pursuant to Section 4.2 due to the
disability of Executive or by Executive for Good Reason, Executive shall not be
entitled to the continuation of any compensation, bonuses or benefits provided
hereunder, or any other payments following the Date of Termination, other than
Base Salary earned through such Date of Termination.

 

 

 

(b) Change in Control. In the event that Executive is terminated other than for
"Cause" within eighteen (18) months following the occurrence of a "Change in
Control" of the Company, then Executive shall be entitled to a severance payment
in an amount that is two (2) times the amount specified in Section 4.4(a),
clause (iii) above (the "Change in Control Severance Payment"). In the event
that Executive shall become entitled to a Change in Control Severance Payment as
provided herein, the Company shall cause its independent auditors promptly to
review, at the Company's sole expense, the applicability to those payments of
Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"). If the auditors determine that any payment of the Change in Control
Severance Payment would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties with respect to such excise tax, then such
payment owed to Executive shall be reduced by an amount calculated to provide to
Executive the maximum Change in Control Severance Payment which will not trigger
application of Sections 280G and 4999 of the Code.

 

 

 

(c) Release. Anything to the contrary contained herein notwithstanding, as a
condition to Executive receiving severance benefits to be paid pursuant to this
Section 4.4, Executive shall execute and deliver to the Company a general
release in the form attached hereto as Exhibit A. The Company shall have no
obligation to provide any severance benefits to Executive until it has received
the general release from Executive and any revocation or rescission period
applicable to the Release shall have expired without revocation or rescission.

 

Article 5. Employment Covenants

 

5.1 Definitions

 

As used in this Article 5 of the Agreement, the following terms shall have the
meaning set forth for each below:

 

(a) "Affiliate" shall mean a person or entity that directly or indirectly
through one or more intermediaries, controls or is controlled by, or under
common control with another person or entity, including current and former
directors and officers of such an entity.

 

 

 

(b) "Confidential Information" shall mean all confidential and proprietary
information of the Company, its Predecessors and Affiliates, whether in written,
oral, electronic or other form, including but not limited to trade secrets;
technical, scientific or business information; processes; works of authorship;
Inventions; discoveries; developments; systems; chemical compounds; computer
programs; code; algorithms; formulae; methods; ideas; test data; know how;
functional and technical specifications; designs; drawings; passwords; analyses;
business plans; information regarding actual or demonstrably anticipated
business, research or development; marketing, sales and pricing strategies; and
information regarding the Company's current and prospective consultants,
customers, licensors, licensees, investors and personnel, including their names,
addresses, duties and other personal characteristics. Confidential Information
does not include information that (i) is in the public domain, other than as a
result of an act of misappropriation or breach of an obligation of
confidentiality by any person; (ii) Executive can verify by written records kept
in the ordinary course of business was in Executive's lawful possession prior to
its disclosure to Executive; (iii) is received by Executive from a third party
without a breach of an obligation of confidentiality owed by the third party to
the Company and without the requirement that Executive keep such information
confidential; or (iv) Executive is required to disclose by applicable law,
regulation or order of a governmental agency or a court of competent
jurisdiction. If Executive is required to make disclosure pursuant to clause
(iv) of the preceding sentence as a result of the issuance of a court order or
other government process, Executive shall (a) promptly, but in no event more
than 72 hours after learning of such court order or other government process,
notify, pursuant to Section 6.1 below, the Company; (b) at the Company's
expense, take all reasonable necessary steps requested by the Company to defend
against the enforcement of such court order or other government process, and
permit the Company to intervene and participate with counsel of its choice in
any proceeding relating to the enforcement thereof; and (c) if such compelled
disclosure is required, Executive shall disclose only that portion of the
Confidential Information that is necessary to meet the minimum legal requirement
imposed on Executive.

 

 

 

(c) "Executive Work Product" shall mean all Confidential Information and
Inventions conceived of, created, developed or prepared by Executive (whether
individually or jointly with others) before or during Executive's employment
with the Company, during or outside of working hours, which relate in any manner
to the actual or demonstrably anticipated business, research or development of
the Company, or result from or are suggested by any task assigned to Executive
or any work performed by Executive for or on behalf of the Company or any of its
Affiliates.

 

(d) "Invention" shall mean any apparatus, biological processes, cell line,
chemical compound, creation, data, development, design, discovery, formula,
idea, improvement, innovation, know-how, laboratory notebook, manuscript,
process or technique, whether or not patentable or protectable by copyright, or
other intellectual property in any form.

 

(e) "Predecessor" shall mean an entity, the major portion of the business and
assets of which was acquired by another entity in a single transaction or in a
series of related transactions.

 

(f) "Trade Secrets," as used in this Agreement, will be given its broadest
possible interpretation under the law applicable to this Agreement.

 

 

 

5.2 Nondisclosure and Nonuse

 

Executive acknowledges that prior to and during Executive's employment with the
Company, Executive had and will have occasion to create, produce, obtain, gain
access to or otherwise acquire, whether individually or jointly with others,
Confidential Information. Accordingly, during the term of Executive's employment
with the Company and at all times thereafter, Executive shall keep secret and
shall not, except for the Company's benefit, disclose or otherwise make
available to any person or entity or use, reproduce or commercialize, any
Confidential Information, unless specifically authorized in advance by the
Company in writing.

 

5.3 Other Confidentiality Obligations

 

Executive acknowledges that the Company may, from time to time, have agreements
with other persons or entities or with the U.S. Government or governments of
other countries, or agencies thereof, which impose confidentiality obligations
or other restrictions on the Company. Executive hereby agrees to be bound by all
such obligations and restrictions and shall take all actions necessary to
discharge the obligations of the Company thereunder, including, without
limitation, signing any confidentiality or other agreements required by such
third parties.

 

5.4 Return of Confidential Information

 

At any time during Executive's employment with the Company, upon the Company's
request, and in the event of Executive's termination of employment with the
Company for any reason whatsoever, Executive shall immediately surrender and
deliver to the Company all records, materials, notes, equipment, drawings,
documents and data of any nature or medium, and all copies thereof, relating to
any Confidential Information (collectively the "the Company Materials") which is
in Executive's possession or under Executive's control. Executive shall not
remove any of the Company Materials from the Company's business premises or
deliver any of the Company Materials to any person or entity outside of the
Company, except as required in connection with Executive's duties of employment.
In the event of the termination of Executive's employment for any reason
whatsoever, Executive shall promptly sign and deliver to the Company a
Termination Certificate in the form of Exhibit B attached hereto.

 

 

 

5.5 Confidential Information of Others

 

Executive represents that Executive's performance of all the terms of this
Agreement and Executive's employment with the Company do not and will not breach
any agreement to keep in confidence proprietary information, knowledge or data
with regard to which Executive has obligations of confidentiality or nonuse, and
Executive shall not disclose to the Company or cause the Company to use any such
confidential proprietary information, knowledge or data belonging to any
previous employer of Executive or other person. Executive represents that
Executive has not brought and will not bring to the Company or use at the
Company any confidential materials or documents of any former employer or other
person that are not generally available to the public, unless express written
authorization for their possession and use has been obtained from such former
employer or other person. Executive agrees not to enter into any agreement,
whether written or oral, that conflicts with these obligations.

 

5.6 Other Obligations

 

The terms of this Section 5 are in addition to, and not in lieu of, any
statutory or other contractual or legal obligation to which Executive may be
subject relating to the protection of Confidential Information.

 

 

 

5.7 Assignment of Confidential Information and Inventions; Works Made for Hire

 

Executive hereby assigns to the Company all right, title and interest in all
intellectual property, including any patent applications, trade secrets, know
how, copyrights, software, or trademarks associated with the Executive Work
Product and Confidential Information. Executive hereby acknowledges and agrees
that all Executive Work Product subject to copyright protection constitutes
"work made for hire" under United States copyright laws (17 U.S.C. § 101) and is
owned exclusively by the Company. To the extent that title to any Executive Work
Product subject to copyright protection does not constitute a "work for hire,"
and to the extent title to any other Executive Work Product does not, by
operation of law or otherwise, vest in the Company, all right, title, and
interest therein, including, without limitation, all copyrights, patents and
trade secrets, and all copyrightable or patentable subject matter, are hereby
irrevocably assigned to the Company. Executive shall promptly disclose to the
Company in writing all Executive Work Product. Executive shall, without any
additional compensation, execute and deliver all documents or instruments and
give the Company all assistance it requires to transfer all right, title, and
interest in any Executive Work Product to the Company; to vest in the Company
good, valid and marketable title to such Executive Work Product; to perfect, by
registration or otherwise, trademark, copyright and patent protection of the
Company with respect to such Executive Work Product; and otherwise to protect
the Company's trade secret and proprietary interest in such Executive Work
Product. Executive hereby irrevocably designates and appoints the Company and
its duly authorized officers and agents as Executive's agents and
attorneys-in-fact to act for and on Executive's behalf, and to execute and file
any documents and to do all other lawfully permitted acts to further the
purposes of this Section 5.7 with the same legal force and effect as if executed
by Executive.

 

 

 

5.8 Representations

 

Executive represents that, to the best of his or her knowledge, none of the
Inventions will violate or infringe upon any right, patent, copyright, trademark
or right of privacy, or constitute libel or slander against or violate any other
rights of any person, firm or corporation, and that Executive will not knowingly
create any Invention which causes any such violation.

 

5.9 Inventions, Intellectual Property and Equipment Not Transferred

 

Executive has set forth on Exhibit C attached hereto a complete list and brief
description of all Inventions, intellectual property and equipment located at
the Company which is owned directly or indirectly by Executive and which shall
not be transferred to the Company pursuant to this Agreement. Except as so
listed, Executive agrees that he or she will not assert any rights under any
intellectual property as having been made or acquired by Executive prior to
being employed by the Company. The Company may, at its discretion, require
detailed disclosures and materials demonstrating ownership of the intellectual
property so listed.

 

5.10 Exclusivity of Employment

 

During the Term, and without prior approval of the Board of Directors, Executive
shall not directly or indirectly engage in any activity competitive with or
adverse to the Company's business or welfare or render a material level of
services of a business, professional or commercial nature to any other person or
firm, whether for compensation or otherwise.

 

5.11 Covenant Not to Compete

 

Executive agrees to be bound and abide by the following covenant not to compete:

 

 

 

(a) Term and Scope. During Executive's employment with the Company and for a
period of twelve (12) months after the Term, Executive will not render to any
Conflicting Organization (as hereinafter defined), services, directly or
indirectly, anywhere in the world in connection with any Conflicting Product (as
hereunder defined), except that Executive may accept employment with a
Conflicting Organization whose business is diversified (and which has separate
and distinct divisions) if Executive first certifies to the Company in writing
that such prospective employer is a separate and distinct division of the
Conflicting Organization and that Executive will not render services directly or
indirectly in respect of any Conflicting Product. Such twelve (12) month time
period shall be tolled during any period that Executive is engaged in activity
in violation of this covenant.

 

(b) Judicial Construction. Executive and the Company agree that, if the period
of time or the scope of this Covenant Not to Compete shall be adjudged
unreasonably overbroad in any court proceeding, then the period of time and/or
scope shall be modified accordingly, so that this covenant may be enforced with
respect to such services or geographic areas and during such period of time as
is judged by the court to be reasonable.

 

(c) Definitions. For purposes of this Agreement, the following terms shall have
the following meanings:

 

"Conflicting Product" means any product, method or process, system or service of
any person or organization other than the Company that is the same as, similar
to or interchangeable with any product, method or process, system or service
that was provided or under development by the Company or any of its Affiliates
at the time Executive's employment with the Company terminates, or about which
Executive acquired any Confidential Information or developed any Executive Work
Product.

 

 

 

"Conflicting Organization" means any person or organization which is engaged in
research on or development, production, marketing, licensing, selling or
servicing of any Conflicting Product.

 

5.12 Non-Solicitation

 

For a period of twelve (12) months after termination of employment with the
Company for any reason, Executive shall not directly or indirectly solicit or
hire, or assist any other person in soliciting or hiring, any person employed by
the Company (as of the date of Executive's termination) or any person who, as of
the date of Executive's termination, was in the process of being recruited by
the Company, or induce any such employee to terminate his or her employment with
the Company.

 

5.13 Judicial Enforcement

 

In the event of a breach or violation of any provision of this Article 5 by
Executive, the parties agree that, in addition to any other remedies it may
have, the Company shall be entitled to equitable relief for specific
performance, and Executive hereby agrees and acknowledges that the Company has
no adequate remedy at law for the breach of the employment covenants contained
herein.

 

 

 

Article 6. Miscellaneous

 

6.1 Notices

 

All notices or other communications which are required or permitted hereunder
shall be deemed to be sufficient if contained in a written instrument given by
personal delivery, air courier or registered or certified mail, postage prepaid,
return receipt requested, addressed to such party at the address set forth below
or such other address as may thereafter be designated in a written notice from
such party to the other party:

  To Company: Sucampo Pharmaceuticals, Inc.     4520 East West Highway, Third
Floor     Bethesda, Maryland 20814     Attention:  Chief Executive Officer      
  To Executive: Cary Claiborne     3056 Seneca Chief Trail     Ellicott City,
Maryland 21042

All such notices, advances and communications shall be deemed to have been
delivered and received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of air courier, on the business day after the date
when sent and (iii) in the case of mailing, on the third business day following
such mailing.

 

6.2 Headings

 

The headings of the articles and sections of this Agreement are inserted for
convenience only and shall not be deemed a part of or affect the construction or
interpretation of any provision hereof.

 

 

 

6.3 Modifications; Waiver

 

No modification of any provision of this Agreement or waiver of any right or
remedy herein provided shall be effective for any purpose unless specifically
set forth in a writing signed by the party to be bound thereby. No waiver of any
right or remedy in respect of any occurrence or event on one occasion shall be
deemed a waiver of such right or remedy in respect of such occurrence or event
on any other occasion.

 

6.4 Entire Agreement

 

This Agreement contains the entire agreement of the parties with respect to the
subject matter hereof and supersedes all other agreements, oral or written,
heretofore made with respect thereto including, without limitation, the offer
letter between Executive and the Company dated October 18, 2011.

 

6.5 Severability

 

Any provision of this Agreement that may be prohibited by, or unlawful or
unenforceable under, any applicable law of any jurisdiction shall, as to such
jurisdiction, be ineffective without affecting any other provision hereof. To
the full extent, however, that the provisions of such applicable law may be
waived, they are hereby waived, to the end that this Agreement be deemed to be a
valid and binding agreement enforceable in accordance with its terms.

 

6.6 Controlling Law

 

This Agreement has been entered into by the parties in the State of Maryland and
shall be continued and enforced in accordance with the laws of Maryland.

 

 

 

6.7 Arbitration

 

Any controversy, claim, or breach arising out of or relating to this Agreement
or the breach thereof shall be settled by arbitration in the State of Maryland
in accordance with the rules of the American Arbitration Association for
commercial disputes and the judgment upon the award rendered shall be entered by
consent in any court having jurisdiction thereof; provided, however, that this
provision shall not preclude the Company from seeking injunctive or similar
relief from the courts to enforce its rights under the Employment Covenants set
forth in Article 5 of this Agreement. It is understood and agreed that, in the
event the Company gives notice to Executive of termination for Cause and it
should be finally determined in a subsequent arbitration that Executive's
termination was not for Cause as defined in this Agreement, then the remedy
awarded to Executive shall be limited to such compensation and benefits as
Executive would have received in the event of Executive's termination other than
for Cause at the same time as the original termination.

 

6.8 Assignments

 

Subject to obtaining Executive's prior approval, which shall not be unreasonably
withheld or delayed, the Company shall have the right to assign this Agreement
and to delegate all rights, duties and obligations hereunder to any entity that
controls the Company, that the Company controls or that may be the result of the
merger, consolidation, acquisition or reorganization of the Company and another
entity. Executive agrees that this Agreement is personal to Executive and
Executive's rights and interest hereunder may not be assigned, nor may
Executive's obligations and duties hereunder be delegated (except as to
delegation in the normal course of operation of the Company), and any attempted
assignment or delegation in violation of this provision shall be void.

 

 

 

6.9 Read and Understood

 

Executive has read this Agreement carefully and understands each of its terms
and conditions. Executive has sought independent legal counsel of Executive's
choice to the extent Executive deemed such advice necessary in connection with
the review and execution of this Agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first indicated above.

 

SUCAMPO PHARMACEUTICALS, INC.

By: _______________________________

        Dr. Ryuji Ueno, Chairman, Chief
Executive Officer and Chief Scientific Officer

 

 

 

 

 

____________________________________
Cary Claiborne