Exhibit 10.6

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.

MANUFACTURING AND SUPPLY AGREEMENT

THIS MANUFACTURING AND SUPPLY AGREEMENT (the “AGREEMENT”) is made effective as
of the 27th day of September, 2004 (the “EFFECTIVE DATE”), by and between
SANTARUS, INC., a Delaware corporation, having offices at 10590 West Ocean Air
Drive, Suite 200, San Diego, California 92130, U.S.A. (“SANTARUS”) and OSG
Norwich Pharmaceuticals Inc., a Delaware corporation, having offices at 6826
State Highway 12, Norwich, New York 13815 (“MANUFACTURER”). Manufacturer and
Santarus are sometimes referred to herein individually as a “PARTY” and
collectively as the “PARTIES.”

RECITALS

WHEREAS, Santarus is a specialty pharmaceutical company focused on acquiring,
developing and commercializing products for the prevention and treatment of
gastrointestinal diseases and disorders;

WHEREAS, Manufacturer is a provider of outsourced drug development and
manufacturing services to pharmaceutical and biotechnology companies;

WHEREAS, Santarus seeks to retain a contract manufacturer to manufacture and
supply commercial quantities of its SAN-10 immediate-release omeprazole
pharmaceutical product;

WHEREAS, Manufacturer possesses substantial resources, experience, and expertise
in the manufacture of pharmaceutical products; and

WHEREAS, the Parties mutually desire to enter into an agreement for the
commercial manufacture and supply of Santarus’ SAN-10 product.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth below and in the Quality Agreement, the Parties agree as
follows:

ARTICLE 1

DEFINITIONS

1.1 “AFFILIATE” means any individual, corporation, association, or other
business entity, which directly or indirectly controls, is controlled by, or is
under common control with the Party in question. As used in this definition of
“Affiliate,” the term “control” shall mean, as to

 

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an entity, (a) direct or indirect ownership of [***] percent [***] or more of
the voting interests or other ownership interests in the entity in question;
(b) direct or indirect ownership of [***] percent [***] or more of the interest
in the income of the entity in question; or (c) possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies of the entity in question (whether through ownership of securities or
other ownership interests, by contract or otherwise).

1.2 “API” means the active pharmaceutical ingredient known as omeprazole
(Chemical Abstract No. 73590-58-6).

1.3 “API REIMBURSEMENT VALUE” means [***].

1.4 “APPLICABLE LAWS” mean all laws, statutes, ordinances, codes, rules,
regulations, guidelines, and procedures enacted or made by a Government
Authority, including, without limitation, the FDA and any applicable Foreign
Regulatory Authority, that are in force during the Term, and in each case only
to the extent applicable to the subject matter of, or the performance by the
Parties of their respective obligations under, this Agreement. For purposes of
this Agreement, “Applicable Laws” shall include, without limitation, the FFDCA,
the regulations promulgated thereunder (including, without limitation, those
regulations currently contained in Title 21 of the Code of Federal Regulations),
and other rules and regulations promulgated under the FFDCA relating to the
manufacture of pharmaceutical products; and equivalent laws, regulations and
standards promulgated by a Government Authority that may assert jurisdiction
over the Finished Product or any applicable Manufacturer manufacturing
facilities; GMP, including the FDA’s Guidance for Industry, Manufacturing,
Processing or Holding Active Pharmaceutical Ingredients, March 1998, and any
updates thereto; and the FDA’s regulations for drug establishment registration.

1.5 “BULK API” means the bulk form of API manufactured by a Third Party
manufacturer and provided to Manufacturer for use in manufacturing the Finished
Product in accordance with the terms and conditions of this Agreement.

1.6 “BUSINESS DAY” means any day other than a Saturday, Sunday or statutory
holiday in San Diego, California.

1.7 “CERTIFICATES OF COMPLIANCE” means (a) the certificate of analysis
confirming the identity, strength, quality and purity of each invoiced batch of
Finished Product to which it pertains (together with any certificate of analysis
pertaining to the Bulk API contained in such batch), (b) the certificate of
compliance confirming that the each invoiced batch of Finished Product was
manufactured, tested, stored and supplied by Manufacturer in compliance with
this Agreement, including without limitation the Specifications, GMP and
Applicable Laws, and (c) such other certificates and confirmations as described
in the Quality Agreement, each such certificate signed by an authorized
signatory of Manufacturer.

 

 

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1.8 “COMMENCEMENT OF COMMERCIAL MANUFACTURING” means the date on which
Manufacturer commences to manufacture commercial quantities of Finished Product
pursuant to the first Firm Purchase Order submitted by Santarus under
Section 2.2.3.

1.9 “DEFICIENCY NOTICE” has the meaning set forth in Section 3.5.1.

1.10 “EFFECTIVE DATE” has the meaning specified on the first page of this
Agreement.

1.11 “FACILITY” means Manufacturer’s facilities located at 6826 State Highway
12, Norwich, New York 13815, and any other facilities (including facilities
utilized by subcontractors as permitted hereunder) that are used in connection
with the activities performed by Manufacturer hereunder and are approved in
writing by Santarus.

1.12 “FDA” means the United States Food and Drug Administration, and any
successor thereto.

1.13 “FFDCA” means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C.
Section 321 et seq., as amended.

1.14 “FINISHED PRODUCT” means Santarus’ SAN-10 immediate-release omeprazole
pharmaceutical product, as more particularly described in the Specifications.

1.15 “PURCHASE ORDER” has the meaning set forth in Section 2.2.3.

1.16 “FORECAST” has the meaning set forth in Section 2.2.2.

1.17 “FOREIGN REGULATORY AUTHORITY” means, for each country other than the
United States of America, the authority or authorities having jurisdiction over
the Finished Product that correspond to the FDA.

1.18 “GMP” means current good manufacturing practices applicable in the United
States of America as described in:

(a) Parts 210 and 211 of Title 21 of the United States Code of Federal
Regulations and the requirements imposed thereunder by the FDA, together with
the latest FDA guidance and like documents pertaining to manufacturing and
quality control practice, all as updated, amended and revised from time to time.

1.19 “GOVERNMENT AUTHORITY” means any supra-national, national, regional, state,
provincial or local government, court, governmental agency, authority, board,
bureau, instrumentality or regulatory body having jurisdiction over the Finished
Product.

1.20 “INDA” means an investigational new drug application.

1.21 “MANUFACTURER EQUIPMENT” has the meaning set forth in Section 14.1.

 

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1.22 “MANUFACTURER SUPPLY COMMITMENT” has the meaning set forth in
Section 2.2.4.

1.23 “INITIAL TERM” has the meaning set forth in Section 11.1.

1.24 “INVENTION” means information relating to any invention, innovation,
improvement, development, discovery, computer program, device, trade secret,
method, know-how, process, technique or the like, whether or not written or
otherwise fixed in any form or medium, regardless of the media on which it is
contained and whether or not patentable or copyrightable.

1.25 “MINIMUM RUN QUANTITY” means the minimum number of batches of Finished
Product to be produced during the same cycle of manufacturing as set forth in
EXHIBIT A hereto.

1.26 “NDA” means a New Drug Application filed with the FDA for marketing
approval for a pharmaceutical product.

1.27 “MANUFACTURER MANUFACTURING RESPONSIBILITIES” has the meaning specified in
Section 3.1 of this Agreement.

1.28 “PRICE” means the price for the manufacture and supply of Finished Product
under this Agreement specified in the pricing structure set forth in EXHIBIT B,
as may be amended from time to time in accordance with Section 6.2 of this
Agreement.

1.29 “PRODUCT PATENTS” means (i) United States patents 6,489,346 and 5,840,737,
(ii) [***] and (iii) [***].

1.30 “QUALITY AGREEMENT” means that certain quality agreement to be entered into
by and between the Parties, following the Effective Date but reasonably in
advance of the Commencement of Commercial Manufacturing, and relating to the
obligations of the Parties regarding procedures to assure the identity,
strength, purity and quality of the Finished Product.

1.31 “RAW MATERIALS” has the meaning set forth in Section 7.1.

1.32 “REGULATORY APPROVAL” means, with respect to a national or multinational
jurisdiction, any approvals, licenses, registrations, or authorizations
necessary for the manufacture (where relevant), marketing and sale of the
Finished Product in such nation or jurisdiction.

1.33 “RENEWAL TERM” has the meaning set forth in Section 11.1.

 

 

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1.34 “RESPONSIBLE EXECUTIVE” means the President or the Chief Executive Officer
of a Party, or his or her designated representative.

1.35 “SECONDARY MANUFACTURER SUPPLY COMMITMENT” has the meaning set forth in
Section 2.2.4.

1.36 “SPECIFICATIONS” means the specifications for the Finished Product set
forth in the Quality Agreement (as amended from time to time) together with
applicable manufacturing protocols, packaging specifications, testing
methodologies and all applicable requirements set forth in regulatory filings
made with the FDA (including INDA’s and NDA’s) for the Finished Product.

1.37 “TERM” means the Initial Term and the Renewal Term.

1.38 “TERRITORY” means the United States of America.

1.39 “THIRD PARTY” means any individual or entity other than Manufacturer or
Santarus or their respective Affiliates.

ARTICLE 2

SUPPLY, STORAGE, AND DELIVERY OF FINISHED PRODUCT

2.1 SUPPLY OF FINISHED PRODUCT. During the Term, subject to Section 2.2.4,
Manufacturer shall manufacture and supply, in accordance with the provisions of
this Agreement, the Specifications, GMP and Applicable Laws, [***].

2.2 COMMERCIAL SUPPLY.

2.2.1 Supply Obligations. Manufacturer shall manufacture and supply to Santarus,
and Santarus agrees to purchase from Manufacturer, such quantities of Finished
Product specified by Santarus in accordance with this Agreement at the Price.
[***].

2.2.2 Forecasts.

Santarus shall use commercially reasonable efforts to determine its estimated
requirements for Finished Product from Manufacturer and shall deliver to
Manufacturer a written, non-binding, rolling [***] month forecast, by month, of
such estimated requirements (the “FORECAST”). Santarus shall deliver the first
Forecast to Manufacturer (the “INITIAL FORECAST”) as soon as reasonably
practicable following the execution of this Agreement. After delivery of the
Initial Forecast, Santarus shall, in accordance with the terms of this
Agreement, update and revise the Forecast on a not less than [***] basis.

Santarus shall provide each updated Forecast not less than [***] calendar days
prior to the beginning of the next [***]. Manufacturer shall use the Forecast
for planning purposes and make available the production capacity and associated
testing and release capacity required to manufacture and supply the forecasted
quantities of Finished Product within the time frames specified in each
Forecast.

 

 

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2.2.3 Purchase Orders. Santarus shall submit to Manufacturer a written purchase
order (the “PURCHASE ORDER”) for the purchase of Finished Product at least [***]
calendar days prior to the specified delivery date. Each Purchase Order shall
specify the quantity or, if more than one shipment is requested, quantities of
Finished Product ordered, the requested delivery date or dates, the delivery
address(es) and any applicable shipping information (if different from that
specified in Section 2.3). Manufacturer shall manufacture and supply the
Finished Product in the quantities and by the delivery dates set forth in the
applicable Purchase Order.

2.2.4 Supply Commitment.

Manufacturer shall supply to Santarus [***] (the “MANUFACTURER SUPPLY
COMMITMENT”) and Manufacturer further agrees to [***] (the “SECONDARY
MANUFACTURER SUPPLY COMMITMENT”). Manufacturer shall ensure that adequate
Manufacturing Equipment (as defined in Section 14.1 below) is available and
dedicated to fulfill the supply and that such Manufacturing Equipment is
maintained in good working order.

2.2.5 Purchase Order Amendments. Santarus may amend a Purchase Order by
submitting an amended Purchase Order, as follows: [***].

2.3 SHIPPING AND DELIVERY OF FINISHED PRODUCT. Manufacturer shall serve as agent
for Santarus, arrange for shipping and insurance so that the Finished Product
will be delivered to the delivery address on the delivery date set forth in the
applicable Purchase Order, at Santarus’ expense. Santarus may select the freight
carrier used by Manufacturer to ship Finished Products and may monitor
Manufacturer’s shipping and freight practices as they pertain to this Agreement.
Finished Products shall be transported in accordance with the Specifications,
GMP and Applicable Laws. Manufacturer shall notify Santarus in writing at the
time of shipment as to the quantity of Finished Product shipped, the identity of
the carrier and the anticipated delivery date. If any order is delayed and is
not likely to be delivered on time, Manufacturer shall immediately notify
Santarus and Santarus may direct Manufacturer to ship such order by expedited
means of transportation as designated by Santarus. [***].

2.4 TITLE AND RISK OF LOSS. Manufacturer shall deliver the Finished Product to
the carrier selected by Santarus at Manufacturer’s shipping point unless
otherwise mutually agreed in writing. Such title as Manufacturer has in Finished
Products and risk of loss or of damage to Finished Products shall remain with
Manufacturer until Finished Products are loaded onto the carrier’s vehicle by
Manufacturer for shipment at Manufacturer’s shipping point at which time title
and risk of loss or damage shall transfer to Santarus. Except as expressly
provided otherwise in this Agreement, Santarus shall be responsible for all
charges associated with shipping of Finished Product.

 

 

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2.5 DOCUMENTATION AND CUSTOMS. Upon completion of manufacturing, packaging and
testing of Finished Product pursuant to each Purchase Order, Manufacturer shall
deliver to Santarus by electronic means quality documentation for such Finished
Product manufactured pursuant to such Purchase Order as specified in the Quality
Agreement, including without limitation, the Certificates of Compliance in
respect of such Purchase Order and, if requested by Santarus, completed batch
production records (collectively, the “PRE-SHIPPING DOCUMENTATION”).
Manufacturer acknowledges and agrees that Santarus shall be responsible, at all
times, for the final release of the Finished Product and accordingly,
Manufacturer shall not ship any Finished Product until Santarus has notified
Manufacturer in writing that it has completed its final release.

Concurrent with the shipment of each Purchase Order of Finished Product,
Manufacturer shall deliver to Santarus any applicable documentation
corresponding to such shipment and such other documentation and information as
may be necessary or desirable for complying with import, export, and customs
laws, regulations and like requirements, as applicable.

2.6 INVOICES. MANUFACTURER SHALL INVOICE SANTARUS ON [***] AND SANTARUS SHALL
PAY [***] FOLLOWING RECEIPT THEREOF (IN ACCORDANCE WITH SECTIONS 6.3 AND 15.5
BELOW).

2.7 LATE DELIVERY/SHORTAGES AND OVERAGES.

[***].

2.8 KEY PERFORMANCE INDICATORS.

2.8.1 For each [***] period during the Term, Manufacturer shall meet or exceed
the key performance indicators established in good faith by Manufacturer and
Santarus for such [***] period (collectively, as established with respect to the
applicable [***] period, the “KPIS”). The preliminary categories of KPIs in
respect of the first [***] period following Commencement of Commercial
Manufacturing are set forth in EXHIBIT C, and the parties mutually agree to
refine such KPIs reasonably in advance of the Commencement of Commercial
Manufacturing. Thereafter, the KPIs will be reviewed by Manufacturer and
Santarus at each [***] review meeting contemplated by Section 2.12 with the
intention of amending, if necessary, the KPIs in respect of the forthcoming
[***] period. If no such amendments are necessary or if amendments are not
agreed, the KPIs in respect of such forthcoming [***] period shall be at least
as beneficial to Santarus as the KPIs for the then current [***] period.

2.8.2 In the event that Manufacturer fails to meet one or more of the KPIs at
any time during the term of this Agreement, then Manufacturer and Santarus shall
work diligently to address such failure including, without limitation, the
following:

(i) Manufacturer’s Customer Service Director and the Senior Manager of Supply
Chain Management of Santarus shall meet within five (5) days of the

 

 

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determination of the sustained failure in order to establish a procedure to
address the problem (the “REMEDIATION PLAN”). If such meeting does not occur
within such five (5) days or if there is no agreement as to the Remediation Plan
(a “STAGE 1 FAILURE”), then clause (ii) shall apply;

(ii) Manufacturer’s Plant Manager and the Director of Manufacturing of Santarus
shall meet within five (5) days of the Stage 1 Failure in order to establish a
Remediation Plan. If such meeting does not occur within such five (5) days or if
there is no agreement as to the Remediation Plan (a “STAGE 2 FAILURE”), then
clause (iii) shall apply; and

(iii) Manufacturer’s President and Senior Vice President, Manufacturing and
Product Development of Santarus shall meet within five (5) days of the Stage 2
Failure in order to establish a Remediation Plan.

If the Remediation Plan is either not mutually agreed upon or is not, in the
reasonable judgment of Santarus, implemented satisfactorily, then Manufacturer
shall be deemed to be in material breach of its obligations hereunder and will
be formally notified in writing of such status by the appropriate Santarus
personnel. The Parties may mutually agree in writing to extend any of the time
periods referenced in this Section 2.8.

2.9 STORAGE OF FINISHED PRODUCT. Until Finished Product is shipped, Manufacturer
shall store all Finished Product identifiably distinct from any other raw
material and finished or filled product stocks and shall comply with all storage
requirements set forth in the Specifications.

Manufacturer shall assume responsibility for any loss or damage to such Finished
Product while stored by Manufacturer.

2.10 MULTI-COUNTRY PACKAGING REQUIREMENTS. If and when Santarus decides that it
wishes to have Manufacturer manufacture the Finished Product for countries in
addition to the Territory, then Santarus shall inform Manufacturer of the
packaging requirements for each new country and Manufacturer shall prepare a
quotation for consideration by Santarus of the additional Raw Material costs, if
any, and the Price for the Finished Product destined for such new country. The
agreed additional packaging requirements and related packaging costs and Price
shall be set out in a written amendment to this Agreement or otherwise recorded
in a writing signed by the Parties.

2.11 API YIELD.

2.11.1 Manufacturer shall promptly (and in any event no later than two
(2) Business Days after Santarus’ request) provide an inventory status report to
Santarus from time to time as reasonably requested by Santarus. In addition,
Manufacturer shall monitor on a monthly basis the inventory of Bulk API held by
Manufacturer and Manufacturer shall provide Santarus with a monthly inventory
report (within five (5) Business Days following the last day of the applicable
month) of the Bulk API held by Manufacturer, which shall contain the following
information for such month:

QUANTITY RECEIVED: The total quantity of Bulk API that complies with the
Specifications and is received at the Facility during the applicable period.

 

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QUANTITY DISPENSED: The total quantity of Bulk API dispensed at the Facility
during the applicable period. The Quantity Dispensed is calculated by adding the
Quantity Received to the inventory of Bulk API that complies with the
Specifications and is held at the beginning of the applicable period, less the
inventory of Bulk API that complies with the Specifications and is held at the
end of such period. The Quantity Dispensed shall only include Bulk API received
and dispensed in connection with commercial manufacturing of Finished Product
and, for certainty, shall not include any Bulk API received or dispensed in
connection with technical transfer activities or development activities during
the applicable period, including, without limitation, any regulatory, stability,
validation or test batches manufactured during the applicable period.

QUANTITY CONVERTED: The total amount of Bulk API contained in the Finished
Products produced with the Quantity Dispensed, delivered by Manufacturer, and
not rejected or returned in accordance with Section 3.5 or recalled under
Article 5 as a result of a failure by Manufacturer to manufacture Finished
Product that conforms to the Manufacturer Manufacturing Responsibilities.

2.11.2 In addition, Manufacturer shall reconcile the inventory of Bulk API held
by Manufacturer on a [***] basis and shall provide a report to Santarus
concerning such reconciliation within ten (10) days following the end of the
applicable [***]. Within [***] days of the end of each six (6) month period
after the Commencement of Commercial Manufacturing, Manufacturer shall calculate
the “ACTUAL SIX-MONTH YIELD” or “ASY” for the Finished Product during the
six-month period, which ASY is the percentage of the Quantity Dispensed that was
converted to Finished Products and is calculated as follows:

Quantity Converted during the six-month period

Quantity Dispensed during the six-month period

2.11.3 After Manufacturer has produced a minimum of [***] batches of Finished
Product and has produced batches for at least [***] months pursuant to this
Agreement, the Parties will mutually agree on the target yield (each, a “TARGET
YIELD”). Thereafter, Manufacturer shall strive to maintain Actual Six-Month
Yield levels for each Finished Product above the applicable Target Yield. If the
Actual Six-Month Yield falls below the respective Target Yield in any six month
period, then Manufacturer shall reimburse Santarus for the cost of the shortfall
based on the following calculation:

[***]

 

 

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2.11.4 Manufacturer shall notify Santarus in writing in the event that an amount
in excess of [***] kilograms of Bulk API is damaged, lost or otherwise rendered
unusable (including to the extent contained in any non-conforming Finished
Product) at any one time (a “Significant API Loss”) as soon as practicable
following such incident. In addition, and notwithstanding any provision in this
Section 2.11 to the contrary, Manufacturer shall reimburse Santarus for such
Bulk API within [***] days after discovery of the Significant API Loss.

2.11.5 For the purposes of clarity, any Bulk API damaged, lost or otherwise
rendered unusable in connection with the Significant API Loss shall be included
in the calculation of the Quantity Dispensed and any amount paid by Manufacturer
in accordance with subsection 2.11.4 shall be credited against the amount, if
any, to be paid by Manufacturer to Santarus pursuant to subsection 2.11.3.

2.12 COOPERATION AND QUARTERLY REVIEW. Each Party shall forthwith upon execution
of this Agreement designate those of its employees to be part of the team
responsible for managing the relationship between the parties (the “RELATIONSHIP
TEAM”). The Relationship Team from each Party shall meet in person or by
telephone or video conference not less than quarterly to review the current
status of the business relationship (including performance against the KPIs as
well as any additional manufacturing performance indicators established by the
Parites) and address any issues that have arisen.

ARTICLE 3

STANDARDS OF MANUFACTURE

3.1 FINISHED PRODUCT. Manufacturer hereby warrants and covenants that all
Finished Product manufactured and supplied to Santarus under this Agreement:
(a) shall have been manufactured, packaged, tested and stored in compliance with
the Specifications, GMP, Applicable Laws and the terms and conditions of this
Agreement and the Quality Agreement; (b) shall not be adulterated, or misbranded
within the meaning of the FFDCA or other Applicable Laws as of the time that the
Finished Product is transferred to the carrier at Manufacturer’s shipping point;
and (c) will have been shipped to Santarus not later than [***]days after the
date of the product blend manufacture (unless any delay in shipment beyond such
[***] day period is due solely to a delay by Santarus in conducting its review
for the final release of the Finished Product). The foregoing obligations are
referred to in this Agreement as the “MANUFACTURER MANUFACTURING
RESPONSIBILITIES.”

3.2 MANUFACTURING FACILITY. Manufacturer will manufacture Finished Product at
the Facility. Manufacturer shall not manufacture any Finished Product in any
other facility without first obtaining Santarus’ prior written consent.

3.3 TESTING AND RELEASE BY MANUFACTURER. Manufacturer shall conduct chemical
identity testing for all Bulk API received at the Facility within [***] days of
such receipt. Further, Manufacturer shall conduct full release testing of all
Bulk API received at the Facility not later than [***] months after the date of
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procedures and using the analytical testing methodologies set forth in the
Specifications and the Quality Agreement. Manufacturer shall promptly (and in
any event within five (5) days following completion of the applicable testing)
notify Santarus in writing of any failure of the Bulk API to conform to the
Specifications for same, and any other problem it may identify with the Bulk API
detected during the inspection and testing process. Prior to shipping (or
temporarily storing, if requested by Santarus) any order, Manufacturer shall
test each batch of Finished Product manufactured under this Agreement, and Raw
Materials used for such batch, for conformity with the Specifications.
Manufacturer shall conduct all such testing in accordance with the procedures
and using the analytical testing methodologies set forth in the Specifications
and the Quality Agreement. Manufacturer shall retain sufficient quantities of
all shipped Finished Product, Bulk API and Raw Materials to perform at least
full duplicate quality control testing. Retained repository samples of all
shipped Finished Product, Bulk API and Raw Materials shall be maintained in a
suitable storage facility until one (1) year after expiry or such longer period
as may be required by Applicable Laws. All such samples shall be available for
inspection and testing by Santarus at reasonable intervals upon reasonable
notice. Santarus shall be responsible, at all times, for the final release of
the Finished Product, and Manufacturer shall not ship any Finished Product until
Santarus has completed its final release. Upon prior written consent from
Santarus, Manufacturer may arrange for subcontractors to perform specific
testing services for Raw Materials arising under this Agreement; provided that
(a) all such subcontractors shall be duly qualified by Manufacturer under GMP
and Applicable Laws to perform such testing; (b) Manufacturer shall at all times
remain fully responsible to Santarus for the performance of all obligations
hereunder related to such subcontracted testing services; and (c) no
subcontractors shall be utilized in connection with release testing of the
Finished Product.

3.4 STABILITY STUDIES. Manufacturer shall conduct stability studies on the
Finished Products according to the Specifications therefor, as required by the
FDA or Foreign Regulatory Authorities as advised by Santarus or as requested by
Santarus, and in any case on at least one batch of Finished Product from the
Facility at least once per calendar year following Commencement of Commercial
Manufacturing or more frequently as may be specified in the Quality Agreement.
Manufacturer shall provide to Santarus a report of all results and data obtained
from such stability studies annually or more frequently as may be specified in
the Quality Agreement. Santarus will reimburse Manufacturer for the execution of
the requested stability studies and the preparation of reports based upon a
mutually agreed upon (in writing) cost schedule.

3.5 ACCEPTANCE PROCEDURES.

3.5.1 Finished Product Claims. Santarus has the right to reject any portion of
any shipment of Finished Products that deviates from the Manufacturer
Manufacturing Responsibilities, without invalidating any remainder of such
shipment. Santarus or its agent shall visually inspect the Finished Products
manufactured by Manufacturer upon receipt thereof and shall give Manufacturer
written notice (a “DEFICIENCY NOTICE”) of all claims for Finished Products that
deviate from the Manufacturer Manufacturing Responsibilities within [***] days
after Santarus’ receipt thereof (or, in the case of any defects not reasonably

 

 

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susceptible to discovery upon receipt by visual inspection of the Finished
Product, including those requiring laboratory analysis, within [***] days after
discovery thereof by Santarus). Should Santarus fail to provide Manufacturer
with the Deficiency Notice within the applicable [***] -day period, then the
delivery shall be deemed to have been accepted by Santarus on the [***] day
after delivery or discovery, as applicable.

3.5.2 Determination of Deficiency. Upon receipt of a Deficiency Notice,
Manufacturer shall have [***] to advise Santarus by notice in writing that it
disagrees with the contents of such Deficiency Notice. If Santarus and
Manufacturer fail to agree within [***] after the Santarus’ receipt of
Manufacturer’s notice as to whether any Finished Products identified in the
Deficiency Notice deviate from the Manufacturer Manufacturing Responsibilities,
then the Parties shall mutually select an independent laboratory to evaluate if
the Finished Products deviate from the Manufacturer Manufacturing
Responsibilities. Such evaluation shall be binding on the Parties, and if such
evaluation certifies that any Finished Products deviate from the Manufacturer
Manufacturing Responsibilities, Santarus may reject those Finished Products in
the manner contemplated in this Section 3.5. If such evaluation does not so
certify in respect of any such Finished Products, then Santarus shall be deemed
to have accepted delivery of such Finished Products on the [***] day after
delivery (or, in the case of any defects not reasonably susceptible to discovery
upon receipt by visual inspection of the Finished Product, including those
requiring laboratory analysis, on the [***] day after discovery thereof by
Santarus). The expenses of such testing shall be borne by Manufacturer if the
non-conformity with the Manufacturer Manufacturing Responsibilities is
confirmed, and otherwise by Santarus.

3.5.3 Manufacturer Responsibility. In the event Santarus rejects Finished
Products in accordance with this Section 3.5 and the rejected Finished Product
is determined not to conform to the Manufacturer Manufacturing Responsibilities,
Manufacturer will credit Santarus’ account for Manufacturer’s invoice price to
Santarus for such non-conforming Finished Products. If Santarus shall have
previously paid for such defective Finished Products, Manufacturer shall
promptly, at Santarus’ election, either: (i) refund the invoice price for such
defective Finished Products; (ii) offset such amount against other amounts due
to Manufacturer hereunder; or (iii) use its best efforts to replace such
Finished Products with conforming Finished Products as soon as reasonably
possible without Santarus being liable for payment therefor under Section 6.3.
Further, Manufacturer shall reimburse Santarus for all reasonable shipping,
handling and storage charges incurred in association with such non-conforming
Finished Product and for the Bulk API utilized in such non-conforming Finished
Product in accordance with Section 2.11. Nothing in this Section 3.5.3 shall be
construed to limit the rights and remedies available to Santarus at law or in
equity.

3.6 SPECIFICATION AMENDMENTS.

3.6.1 Cooperation. Subject to Section 3.6.4, the Parties shall cooperate with
each other to amend or supplement the Specifications to the extent necessary to
comply with changes in GMP, Applicable Laws or other requirements of Government
Authorities. If an amendment to the Specifications requires FDA approval and/or
the approval of a Foreign

 

 

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Regulatory Authority, Manufacturer shall not implement such change unless and
until the necessary approval has been obtained by Santarus in writing. In no
event shall Manufacturer implement any other modification or addition to the
Specifications, including without limitation, changes in raw materials,
equipment or methods of production or testing for the Finished Product, without
the prior written consent of Santarus, which consent may be withheld for any or
no reason.

3.6.2 Santarus’ Request for Change. Subject to Section 3.6.4, Santarus shall
have the right to amend the Specifications from time to time.

3.6.3 Manufacturer’s Request for Change. Subject to Section 3.6.4, if
Manufacturer wishes to make any change to the Specifications, Manufacturer shall
notify Santarus, and such notice shall describe the proposed change and the
impact of such change on the manufacturing process, including details of any
changes in manufacturing costs. Santarus may accept or reject, in its sole and
absolute discretion, any such change proposed by Manufacturer.

3.6.4 Price Adjustments. Amendments to the Specifications or the Quality
Agreement requested by Santarus will only be implemented following a technical
and cost review in good faith by Manufacturer and are subject to Santarus and
Manufacturer reaching agreement as to revisions, if any, to the Price specified
in Exhibit B necessitated by any such amendment. If Santarus accepts a proposed
Price change, the proposed change in the Specifications shall be implemented,
and the Price change shall become effective only with respect to those orders of
Finished Products that are manufactured in accordance with the revised
Specifications.

3.7 RECORDS. Manufacturer shall maintain all records necessary to comply with
all GMP and Applicable Laws relating to the manufacture, packaging, testing,
storage and shipment of Finished Product. All such records shall be maintained
for such period as may be required by Applicable Laws; provided, however, that
all records relating to the manufacture, stability and quality control of each
batch of Finished Product shall be retained until the Parties agree in writing
to dispose of such records.

3.8 AUDIT. Upon reasonable prior notice and at reasonable intervals,
Manufacturer shall allow Santarus and its representatives to inspect
Manufacturer’s books and records relating to the manufacture of the Finished
Product and permit Santarus to access Manufacturer’s facilities used to
manufacture the Finished Product for the purposes of (a) making quality
assurance audits of the facilities and of the procedures and processes used by
Manufacturer in manufacturing, packaging, testing, storing and shipping Finished
Product, and (b) confirming Manufacturer’s compliance with this Agreement,
provided that a Manufacturer representative is present during any such
inspection. Santarus, or its representative(s), shall conduct such audit during
normal business hours at a time on which the Parties have mutually agreed, and
in such a manner that does not unreasonably interfere with Manufacturer’s normal
business activities.

 

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ARTICLE 4

REGULATORY MATTERS AND QUALITY CONTROL

4.1 COMPLIANCE BY MANUFACTURER. Manufacturer shall remain in compliance with all
Applicable Laws, including GMP, at all times during the Term and, without
limiting the generality of the foregoing, maintain a quality control program
consistent with GMP as required by the FDA, and to the extent the parties have
reached agreement pursuant to Section 2.10 with respect to countries in addition
to the Territory, the applicable Foreign Regulatory Authorities.

4.2 SANTARUS’ REGULATORY RESPONSIBILITY. Santarus shall be responsible for
obtaining and maintaining all regulatory filings and approvals (excluding the
overall licensure and permitting of the Facility) for the manufacture and
marketing of the Finished Product, including without limitation all INDA’s and
NDA’s for the Finished Product. Santarus shall control and own all such filings
and approvals. Manufacturer will supply to Santarus from time to time, all such
data relating to the Finished Product, including release test results, complaint
test results, all investigations (in manufacturing, testing and storage), and
the like, that Santarus reasonably requires in order to complete any such filing
or approval, including any annual product review report that Santarus is
required to file with the FDA and as provided in the Quality Agreement. At
Santarus’ request, Manufacturer may prepare annual product review reports on
behalf of Santarus and in accordance with Santarus’ instructions. Santarus will
compensate Manufacturer for the preparation of annual product review reports
based upon a mutually agreed upon (in writing) cost schedule.

4.3 MANUFACTURING PROCESS. If any process event occurs during the manufacturing
of any Finished Product, which event is likely materially to affect the safety,
efficacy or regulatory status of the Finished Product, then Manufacturer shall
promptly notify Santarus. Further, Manufacturer shall fully and appropriately
investigate and report to Santarus on all complaints and notices of quality
issues concerning the Finished Products from the FDA, any Foreign Regulatory
Authority or Government Authority of which Santarus shall have given
Manufacturer notice. Santarus and Manufacturer shall consult with each other as
to the disposition of all affected batches of such Finished Product.
Manufacturer shall report to Santarus in writing any other atypical process
event that is unlikely to materially affect the safety, efficacy or regulatory
status of the Finished Product within a reasonable time after occurrence. No
Bulk API or Finished Product may be reprocessed without the prior written
consent of Santarus.

4.4 COMMUNICATIONS. Each party may communicate with the FDA or any Foreign
Regulatory Authority or Government Authority regarding the Finished Products if
such communication is necessary to comply with the terms of this Agreement or
the requirements of any Applicable Law, governmental order or regulation;
provided, however, in the event such requirement applies to Manufacturer,
Manufacturer shall notify Santarus in writing of the requirement and pending
communication and, unless there is a legal prohibition against doing so,
Manufacturer shall permit Santarus to accompany Manufacturer and take part in
any communications with the FDA or any Foreign Regulatory Authority or
Government Authority, and to receive copies of all such communications to and
from the FDA or any Foreign Regulatory Authority or Government Authority.

 

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4.5 GOVERNMENT INSPECTION.

4.5.1 Manufacturer shall make its internal practices, books and records relating
to its manufacture of the Finished Product available and allow access to all
facilities used for manufacturing the Finished Product to the FDA, any Foreign
Regulatory Authority and any other Government Authority having jurisdiction over
the manufacture of the Finished Product for the purposes of determining
Manufacturer’s compliance with GMP and Applicable Laws.

4.5.2 Manufacturer agrees to advise Santarus by telephone and facsimile
immediately of any proposed or announced visit or inspection (and shall permit
Santarus to be onsite at any such visit or inspection), and as soon as possible
but in any case on the same business day of any unannounced visit or inspection,
by the FDA, any Foreign Regulatory Authority or any other Government Authority
relating to the Finished Product. Manufacturer shall provide Santarus with a
reasonable description in writing of each such visit or inspection promptly (but
in no event later than five (5) calendar days) thereafter, and with copies of
any letters, reports or other documents (including form 483’s) issued by any
such authorities that relate to the Finished Product. Santarus may review
Manufacturer’s responses to any such reports and communications, and Santarus’
comments and suggestions shall be incorporated into such response.

4.5.3 If the FDA or any other Foreign Regulatory Authority or any other
Government Authority conducts an inspection of the Facility in circumstances
that are not related to the manufacturing of the Finished Product (as
contemplated by subsection 4.5.2 above) and issues a 483 observation, inspection
report or other formal or informal document in respect of such inspection which
questions Manufacturer’s compliance with critical or major GMP standards
relating to operations at the Facility which is otherwise could have an adverse
impact on the Finished Product then Manufacturer shall notify Santarus promptly
(but in no event later than five (5) calendar days) after Manufacturer receives
a written copy of such observation, report or document.

4.5.4 Manufacturer shall keep Santarus informed of (i) the remediation plan
Manufacturer adopts to alleviate any concerns raised by the FDA or any other
Foreign Regulatory Authority contemplated by Sections 4.5.2 or 4.5.3,
(ii) progress in implementing the remediation plan and (iii) the formal
responses of the FDA or applicable Foreign Regulatory Authority to such
remediation plan and its implementation.

4.6 ENVIRONMENTAL AND OTHER LAWS AND REGULATIONS. In carrying out its
obligations under this Agreement, Manufacturer shall comply with all applicable
environmental and health and safety laws (current or as amended or added), and
shall be solely responsible for determining how to comply with same in carrying
out these obligations. Notwithstanding the foregoing, nothing provided to
Manufacturer by Santarus, by way of materials, specifications, processing
information or otherwise, is meant to diminish Manufacturer’s responsibility for
such compliance. Manufacturer shall obtain and maintain all necessary licenses,
permits and governmental approvals (except for product-related Regulatory
Approvals such as NDA’s) required to perform its manufacturing and supply
services hereunder, including licensure and permitting of its manufacturing
facilities by the FDA and Foreign Regulatory Authorities. Manufacturer shall
promptly notify Santarus of any circumstances,

 

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including the receipt of any notice, warning, citation, finding, report or
service of process or the occurrence of any release, spill, upset, or discharge
of hazardous substances (as may be defined under Applicable Laws) relating to
Manufacturer’s compliance with this Section 4.6 and which relates to the
manufacture of Finished Product. Santarus reserves the right to conduct an
environmental inspection of the Facility, at reasonable intervals during normal
business hours and with reasonable advance notice, for the purpose of
determining compliance with this Section 4.6. Such inspection shall not relieve
Manufacturer of its obligation to comply with all applicable environmental and
health and safety laws and does not constitute a waiver of any right otherwise
available to Santarus.

4.7 END-USER INQUIRIES AND COMPLAINTS. Subject to Manufacturer’s obligation to
report certain information on a more expedited basis in respect of Adverse
Experiences as described in Section 5.1 below, Manufacturer shall notify and
refer to Santarus, within three (3) Business Days after receipt, all
communications from end-users of the Finished Product, including without
limitation, inquiries regarding the Finished Product and its uses, and
complaints, comments and suggestions regarding the Finished Product and its
effects on users. Santarus shall have the sole right to respond to all such
communications and Manufacturer shall provide to Santarus reasonable cooperation
and assistance in effecting such responses.

ARTICLE 5

ADVERSE EVENTS; RECALL

5.1 ADVERSE EXPERIENCE REPORTING. Manufacturer shall notify Santarus promptly
and not later than twenty-four (24) hours after it becomes aware of (a) any
information concerning any potentially serious or unexpected side effect,
injury, toxicity or sensitivity reaction or any unexpected incidence or other
adverse experience (an “ADVERSE EXPERIENCE”) and the severity thereof associated
with the use of the Finished Product, whether or not determined to be
attributable to the Finished Product; or (b) any information regarding any
pending or threatened action which may affect the safety or efficacy claims of
the Finished Product or the continued marketing of the Finished Product in any
nation or jurisdiction. Further and without limiting the foregoing, Manufacturer
shall notify Santarus by telephone and facsimile within twenty-four (24) hours
after Manufacturer first becomes aware of any serious Adverse Experience that
gives cause for concern or is unexpected or that is fatal, life-threatening (as
it occurred), permanently disabling, requires (or prolongs) inpatient
hospitalization, represents a significant hazard, or is a cancer or a congenital
anomaly or represents an overdose, or any other circumstance that might
necessitate a recall, expedited notification of FDA or any other relevant
Government Authorities or a significant change in the label of the Finished
Product, including, without limitation, information concerning any incident that
causes Finished Product shipped to Santarus or its labeling to be mistaken for
or, applied to, another product, information concerning any bacteriological
contamination, or any significant chemical, physical, or other change or
deterioration in the Finished Product shipped to Santarus, or any failure of one
or more batches of Finished Product shipped to Santarus to meet Specifications
or to conform with Applicable Laws, and any deviation from the specified
environmental conditions for shipping or storage of the Finished Product. To the
extent that Santarus becomes aware of any Adverse Experience that appears to be
related to the manufacture of Finished Product, Santarus shall notify
Manufacturer promptly and not later than twenty-four (24) hours after Santarus
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such Adverse Experience, each Party shall make such reports as are necessary to
comply with Applicable Laws, at its sole expense. Further, in the event a Party
(or its Affiliates) receives a communication or directive from a Government
Authority commencing or threatening seizure of Finished Product, or other
removal from the market of Finished Product, such Party shall transmit such
information to the other Party within twenty-four (24) hours of receipt.

5.2 NOTIFICATION AND RECALL. The handling of recalls and withdrawals of Finished
Products shall be within the sole discretion of Santarus, unless otherwise
required by Applicable Laws. If any Government Authority issues or requests a
recall or takes similar action in connection with Finished Product, or if
Santarus determines that an event, incident or circumstance has occurred which
may reasonably result in the need for a recall or market withdrawal
(collectively, “RECALLS”), Santarus shall, within twenty four (24) hours, advise
Manufacturer thereof by telephone or facsimile, after which the Parties shall
promptly discuss and work together to effect an appropriate course of action.
Notification to FDA (or such other Foreign Regulatory Authority or Government
Authority) and conducting such Recall shall be the responsibility of Santarus.
Manufacturer shall (a) cooperate fully with Santarus in the event of any such
Recall, withdrawal and/or related disposition of any affected Finished Products
in Manufacturer’s possession and (b) provide such assistance in connection
therewith as Santarus may reasonably request.

5.3 RECALL EXPENSE. [***] Nothing in this Section 5.3 shall be construed to
limit the rights and remedies available to Santarus at law or in equity.

ARTICLE 6

COMPENSATION; PAYMENT

6.1 PRICE OF FINISHED PRODUCT. The Price includes all Raw Materials,
manufacturing, packaging, testing and temporary storing costs associated with
manufacturing and supplying the Finished Product, and includes the costs of such
quality control measures as required by the Specifications and the Quality
Agreement. The cost of the Bulk API shall form no part of the Price. The costs
of shipping, handling, insurance and freight will be borne by Santarus and form
no part of the Price.

6.2 CHANGES IN PRICE OF FINISHED PRODUCT. [***]

In connection with a Price review pursuant to clause (a) of this Section 6.2,
Manufacturer shall deliver to Santarus reasonably detailed documentation
concerning increases or decreases in the cost of Raw Materials or Manufacturer’s
cost of manufacturing to facilitate the discussion. In connection with all fee
adjustment requests pursuant to clause (b) of this Section 6.2, Manufacturer
shall deliver to Santarus a revised Exhibit B and such budgetary pricing
information or other documentation reasonably sufficient to demonstrate that a
Price adjustment is justified. Each of Santarus and Manufacturer shall forthwith
use all reasonable efforts to agree on a revised Price in respect of each
affected Finished Product. In the event the Parties are unable to reach
agreement concerning adjustments to the Price, such dispute shall be resolved in
accordance with Article 13. Until such time as dispute is resolved the price per
Finished Product shall be the most current mutually agreed upon Price.

 

 

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6.3 PAYMENT TERMS. Santarus shall pay Manufacturer for the Finished Product
shipped to Santarus within [***] pursuant to Section 2.6. Manufacturer shall
send all invoices by email or facsimile to the email address or facsimile number
of the accounts payable personnel designated by Santarus from time to time. All
invoices shall be dated as of the date of the email or facsimile as noted in the
foregoing sentence, and not any earlier date. Manufacturer’s invoice shall
reference the Purchase Order number and be sent to the “Bill to” address of
Santarus specified on the Purchase Order, and Manufacturer’s packing list must
reference the Purchase Order number and be sent to the applicable “Ship to”
address on the Purchase Order. Santarus may withhold a portion of any invoice
that it disputes in good faith pending resolution of such dispute.

6.4 FORM OF PAYMENT. Each Party shall make all payments due the other Party
under this Agreement in U.S. Dollars by check made payable to the order of the
other Party or by wire transfer of immediately available funds to such account
notified by the receiving Party from time to time to the other Party in writing.

6.5 INTENTIONALLY OMITTED.

6.6 DISPUTED INVOICES. In the event that Santarus disputes any amounts under any
invoice for Finished Product supplied by Manufacturer, such dispute shall be
resolved in accordance with Section 3.5 (with respect to non-conformance of
Finished Product) or otherwise under Article 13. Pending resolution of such
dispute, Santarus shall be obligated to pay any amounts under such invoice that
are not in dispute. Upon resolution of any such dispute in favor of
Manufacturer, Santarus shall pay all remaining amounts owing under such invoice
within [***] Business Days after such resolution.

ARTICLE 7

RAW MATERIALS

7.1 PURCHASE OF RAW MATERIALS. Except for the Bulk API which will be supplied to
Manufacturer by Santarus, Manufacturer shall purchase all packaging components
(including labels, product inserts and other labeling for the Finished Product),
raw materials and other ingredients for the manufacture of the Finished Product
(collectively, “RAW MATERIALS”). Any obligation that Santarus may have under
this Agreement to purchase or reimburse Manufacturer for expired or obsolete Raw
Materials shall in no event extend beyond a [***] month supply of such Raw
Materials based on the most recent Forecast. Manufacturer shall utilize and
manufacture all Raw Materials and Bulk API on a first-in, first-out basis.

7.2 STORAGE OF BULK API AND RAW MATERIALS. Manufacturer shall store the Bulk API
and Raw Materials at Manufacturer’s storage facility at the Facility with due
care and attention to the requirements set forth in the Specifications and in
accordance with GMP and

 

 

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Applicable Laws so as to protect such materials from loss or damage. While the
Bulk API and the Raw Materials are in storage, Manufacturer shall assume the
risk of loss or damage to such materials from any cause whatsoever. Manufacturer
shall ensure that, while such Bulk API is in storage, such materials do not
become subject to any lien or other security interest securing any obligation
owed or alleged to be owed by Manufacturer to any person or entity.

7.3 SANTARUS’ RESPONSIBILITY FOR COST OF RAW MATERIALS. If Raw Materials become
obsolete or otherwise no longer useable in the manufacturing process for the
Finished Product because (a) Santarus deviated from the Forecast, or (b) the
Specifications have been changed pursuant to Section 3.6, Manufacturer shall use
its commercially reasonable efforts to cover the cost of excess Raw Materials
by: (i) returning such Raw Materials to the vendor, (ii) selling such Raw
Materials, (iii) utilizing such Raw Materials in manufacturing products for its
other customers to the extent possible, and (iv) implementing other measures to
mitigate the loss due to such excess Raw Materials. To the extent that
Manufacturer is unable to off-set such loss fully, Santarus shall reimburse
Manufacturer for such Raw Materials but solely to the extent actually incurred
by Manufacturer and in no event beyond the limit of liability set forth in
Section 7.1.

7.4 MANUFACTURER’S RESPONSIBILITY FOR COST OF RAW MATERIALS. In the event Raw
Materials expire or become obsolete or no longer useable in the manufacturing
process for the Finished Product because (a) Manufacturer failed to manufacture
and supply the quantities ordered by Santarus pursuant to a Purchase Order,
(b) quantities of such Raw Materials are in excess of the limits of Santarus’
liability set forth in Section 7.1, or (c) Manufacturer failed to store Raw
Materials as required by the applicable Specifications or under Section 7.2,
then Manufacturer shall bear all responsibility for the cost of such Raw
Materials.

ARTICLE 8

CONFIDENTIALITY

8.1 CONFIDENTIALITY; EXCEPTIONS. The Parties agree that, for the Term and for
[***] thereafter (other than for trade secrets, for which the confidentiality
obligations set forth herein shall last as long as trade secret law shall
allow), all non-public, proprietary or “confidential” disclosures, know-how,
data, and technical, financial and other information of any nature whatsoever
(collectively, “CONFIDENTIAL INFORMATION”), disclosed or submitted, either
orally or in writing (including, without limitation, by electronic means) or
through observation, by one Party (the “DISCLOSING PARTY”) to the other Party
(the “RECEIVING PARTY”) hereunder, including, without limitation, the terms of
this Agreement, shall be received and maintained by the Receiving Party in
strict confidence, shall not be used for any purpose other than the purposes
expressly contemplated by this Agreement, and shall not be disclosed to any
Third Party (including, without limitation, in connection with any publications,
presentations or other disclosures). Notwithstanding the foregoing, Santarus may
disclose on a need-to-know basis the existence of this Agreement and the terms
hereof to any bona fide potential acquirers, corporate partners, investors or
financial advisors. The Receiving Party will promptly notify the Disclosing
Party upon discovery of any unauthorized use or disclosure of the Disclosing
Party’s Confidential Information. Confidential Information belongs to and shall
remain the property of the Disclosing Party.

 

 

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8.2 EXCEPTIONS. The provisions of this Article 8 shall not apply to any
information of the Disclosing Party which can be shown by competent evidence by
the Receiving Party:

8.2.1 To have been known to or in the possession of the Receiving Party prior to
the date of its actual receipt from the Disclosing Party;

8.2.2 To be or to have become readily available to the public other than through
any act or omission of any Party in breach of any confidentiality obligations
owed to the Disclosing Party;

8.2.3 To have been disclosed to the Receiving Party, other than under an
obligation of confidentiality, by a Third Party which had no obligation to the
Disclosing Party not to disclose such information to others; or

8.2.4 To have been subsequently independently developed by the Receiving Party
without use of or reference or access to the Disclosing Party’s Confidential
Information.

8.3 AUTHORIZED DISCLOSURE. The Receiving Party may disclose the Disclosing
Party’s Confidential Information hereunder solely to the extent (a) approved by
the Disclosing Party; or (b) the Receiving Party is legally required to disclose
such Confidential Information, provided, however, that prior to any such
required disclosure, the Receiving Party will, except where impracticable, give
reasonable advance notice to the Disclosing Party of such disclosure (so that
the Disclosing Party may seek a protective order and or other appropriate remedy
or waive compliance with the confidentiality provisions of this Article) and
will use its reasonable efforts to secure confidential treatment of such
Confidential Information required to be disclosed.

8.4 RETURN OF CONFIDENTIAL INFORMATION. The Receiving Party shall keep the
Disclosing Party’s Confidential Information in appropriately secure locations.
Upon the expiration or termination of this Agreement or at any time upon the
Disclosing Party’s request, the Receiving Party shall destroy or return to the
Disclosing Party, at the Disclosing Party’s written request, all Confidential
Information belonging to the Disclosing Party possessed by the Receiving Party,
or its officers, directors, employees, agents and consultants; provided however
that a Receiving Party may retain one (1) copy of the Disclosing Party’s
Confidential Information in an appropriately secure location, which by
Applicable Laws it must retain, for so long as such Applicable Laws require such
retention but thereafter shall dispose of such retained Confidential Information
in accordance with Applicable Laws or this Section 8.4.

8.5 EQUITABLE RELIEF. The Receiving Party agrees that, due to the unique nature
of the Confidential Information, the unauthorized disclosure or use of the
Confidential Information of the Disclosing Party may cause irreparable harm and
significant injury to the Disclosing Party, the extent of which may be difficult
to ascertain and for which there may be no adequate remedy at law. Accordingly,
the Receiving Party agrees that the Disclosing Party, in addition to any other
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other equitable relief enjoining any breach or threatened breach of this
Agreement. The Receiving Party shall notify the Disclosing Party in writing
immediately upon the Receiving Party’s becoming aware of any such breach or
threatened breach.

ARTICLE 9

INTELLECTUAL PROPERTY MATTERS

9.1 OWNERSHIP OF INTELLECTUAL PROPERTY.

Manufacturer agrees that Santarus shall own all right, title and interest in and
to all Inventions, and any intellectual property rights (including patent rights
and trade secret rights) therein, covering:

(a) Santarus’ Finished Product, the Specifications therefor and the uses
thereof; and

(b) any method of manufacture directly and solely related to the Finished
Product, regardless of whether such Invention was conceived, reduced to practice
or created solely by employees or agents of Manufacturer or its Affiliates or
jointly by the employees or agents of Santarus or its Affiliates with the
employees or agents of Manufacturer or its Affiliates (collectively, the
“PRODUCT INVENTIONS”). As to all Inventions other than Product Inventions,
including without limitation, those Inventions relating to manufacturing process
innovations that are generally applicable to the manufacture of drug compounds
and not solely to the manufacture of the Finished Product (collectively, the
“OTHER INVENTIONS”), the parties agree that the following shall apply:

(i) All Other Inventions, which are conceived, reduced to practice, or created
solely by employees or agents of Manufacturer or its Affiliates in the course of
performing the services under this Agreement (including any pre-existing
technology of Manufacturer which Manufacturer so employs), shall be owned by
Manufacturer. Manufacturer shall and hereby does grant to Santarus and its
Affiliates a perpetual, royalty-free, exclusive, worldwide, irrevocable license,
to use and practice all such Manufacturer-owned Other Inventions to manufacture
and have manufactured the Finished Products and to use, import, offer to sell,
and sell the same, with full right to sublicense to any Third Party in
connection with the manufacture, sale or distribution of the Finished Product.

(ii) All Other Inventions which are conceived, reduced to practice, or created
by employees or agents of Santarus or its Affiliates (including any pre-existing
technology of Santarus which Santarus shares with Manufacturer hereunder), shall
be owned by Santarus. Santarus shall and hereby does grant to Manufacturer and
its Affiliates a royalty-free, non-exclusive license during the Term, without
the right to sublicense, to use and practice all such Santarus-owned Other
Inventions solely to manufacture the Finished Products hereunder.

(iii) All Other Inventions which are conceived, reduced to practice, or created
jointly by: (i) employees or agents of Santarus or its Affiliates; and by
(ii) employees or agents of Manufacturer or its Affiliates, pursuant to this
Agreement, shall

 

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be owned by Santarus, unless the parties have agreed in writing to a different
arrangement in another consulting or services agreement which is more specific
to the services provided by Manufacturer in connection with such Other
Invention. Santarus shall and hereby does grant to Manufacturer and its
Affiliates a perpetual, royalty-free, non-exclusive, worldwide, irrevocable
license to use and practice all such Santarus-owned Other Inventions, with the
right to sublicense to any Third Party.

9.2 ASSIGNMENT. Each Party agrees to disclose promptly in writing to the other
all Product Inventions and Other Inventions to be owned by the other pursuant to
Section 9.1 and hereby irrevocably transfers, conveys and assigns, and agrees to
transfer, convey and assign, to the other, its successors and assigns, without
reservation or additional consideration, all of its right, title and interest
(anywhere in the world) in, to, and under the Product Inventions and Other
Inventions, whether currently existing or created or developed later, including,
without limitation, all copyrights, trademarks, trade secrets, patent rights,
industrial rights and all other intellectual property and proprietary rights
related thereto, including all rights to protect, enforce (whether for past,
present or future infringement), defend and exploit such Product Inventions and
Other Inventions and collect and retain all proceeds therefrom, effective
immediately upon the inception, conception, creation or development thereof.

9.3 ASSISTANCE. Each Party shall have the first right to file and prosecute
patent applications in respect of those Inventions it is to own pursuant to
Section 9.1 and such Party shall be solely responsible for the costs of filing,
prosecution and maintenance of such patents and patent applications.

Each Party agrees to cooperate with the other or its designee(s), both during
and after the Term, in applying for, obtaining, perfecting, evidencing,
sustaining and enforcing the other’s right, title and interest in and to the
Product Inventions and Other Inventions, including, without limitation,
executing such written instruments as may be prepared by the other and doing
such other acts as may be necessary in the opinion of the other to obtain a
patent, register a copyright, or otherwise enforce the other’s rights in such
Product Inventions and Other Inventions (and each Party hereby irrevocably
appoints the other and any of its officers and agents as its attorney in fact to
act for and on the other’s behalf and instead of it, with the same legal force
and effect as if executed by it). Each Party hereby represents, warrants, and
covenants that all employees, consultants and agents performing services for it
hereunder have assigned in writing all of their right, title and interest in, to
and under any and all Product Inventions and Other Inventions to such Party. All
Product Inventions and Other Inventions and embodiments thereof shall be deemed
to be Confidential Information of the Party to own such Invention pursuant to
Section 9.1, and the other Party shall be subject to the obligations of nonuse
and nondisclosure under Article 8 with respect thereto.

ARTICLE 10

REPRESENTATIONS, WARRANTIES AND COVENANTS

10.1 REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Each Party represents,
warrants and covenants to the other Party that:

10.1.1 such Party is duly organized and validly existing and in good standing
under the laws of the jurisdiction of its formation;

 

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10.1.2 such Party has the full corporate power and is duly authorized to enter
into, execute and deliver this Agreement, and to carry out and otherwise perform
its obligations thereunder;

10.1.3 this Agreement has been duly executed and delivered by, and is a legal
and valid obligation binding upon such Party and the entry into, the execution
and delivery of, and the carrying out and other performance of its obligations
under this Agreement by such Party (a) does not conflict with, or contravene or
constitute any default under, any agreement, instrument or understanding, oral
or written, to which it is a party, including, without limitation, its
certificate of incorporation or by-laws, and (b) does not violate Applicable Law
or any judgment, injunction, order or decree of any Government Authority having
jurisdiction over it; and

10.1.4 in connection with its performance under this Agreement, it shall comply
with all Applicable Laws.

10.2 ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF MANUFACTURER. In
addition to representations and warranties set forth elsewhere in this
Agreement, Manufacturer further represents, warrants to, and covenants with,
Santarus that:

10.2.1 At all times during the Term, all parts of the Facility that are directly
associated with the testing and storage of the Bulk API and Raw Materials and
the manufacturing, packaging, testing and storage of the Finished Products shall
remain in compliance with all Applicable Laws, and all other parts of the
Facility shall remain, in all material respects, in compliance with all
Applicable Laws.

10.2.2 Manufacturer shall obtain and maintain all necessary licenses, permits or
approvals required by Applicable Laws in connection with the manufacture,
packaging, testing and storage of the Finished Product, including, without
limitation, permits related to manufacturing facilities;

10.2.3 Manufacturer’s manufacturing facilities are in compliance with GMP;

10.2.4 Manufacturer has disclosed to Santarus any and all form 483’s, warning
letters or similar notices relating to its Facility and import alerts for any
other products manufactured in such Facility issued during the last five
(5) years;

10.2.5 Title to all the Finished Product sold hereunder, upon payment thereof by
Santarus as provided herein, shall pass to Santarus free and clear of any
security interest, lien or other encumbrance;

10.2.6 Throughout the Term, Manufacturer has, and shall maintain, sufficient
facilities, resources, and a work force suitably qualified and trained to meet
its obligations to supply the Finished Product to Santarus pursuant to this
Agreement;

 

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10.2.7 The contributions of Manufacturer to the manufacture of the Finished
Product in accordance with this Agreement do not infringe any Third Party rights
(including, without limitation, any intellectual property rights) anywhere in
the world;

10.2.8 Manufacturer is not aware of any pending or threatened claims against
Manufacturer asserting that any of the activities of Manufacturer relating to
the manufacture, import, use, or sale of pharmaceutical products, or the conduct
of the activities contemplated herein by Santarus, infringe, misappropriate, or
violate the rights of any Third Party; and

10.2.9 Manufacturer shall ensure all employees, consultants, subcontractors and
agents performing services for Manufacturer hereunder assign in writing to
Manufacturer all of their right, title and interest in, to and under any and all
Inventions.

10.2.10 It nor any of its employees, consultants, subcontractors and agents
performing services for Manufacturer hereunder is (1) under investigation by the
FDA for debarment action, (2) presently debarred under the regulations of the
FDA, or (3) presently debarred pursuant to the Generic Drug Enforcement Act of
1992 (21 U.S.C. ‘301 et seq.).

10.4 DISCLAIMER. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES
MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR
IMPLIED, WRITTEN OR ORAL, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF
NON-INFRINGEMENT.

ARTICLE 11

TERM AND TERMINATION

11.1 TERM. This Agreement shall commence as of the Effective Date and shall
continue in full force for a period of four (4) years from the Commencement of
Commercial Manufacturing, unless earlier terminated in accordance with the terms
and conditions of this Article 11 (the “INITIAL TERM”). After the Initial Term,
this Agreement shall continue in force for an indefinite duration (the “RENEWAL
TERM”); provided that either Party may terminate this Agreement at any time
during the Renewal Term by providing the other Party with eighteen (18) months
prior written notice of termination.

11.2 TERMINATION FOR CAUSE. In the event that either Party has failed to remedy
a material breach of any of its representations, warranties or other obligations
under this Agreement within [***] (the “REMEDIATION PERIOD”) following receipt
of a written notice thereof (the “Breach Notice”) from the other Party that
expressly states that it is a notice under this Section 11.2, the non-breaching
party may terminate this Agreement upon written notice to the other Party (the
“Termination Notice”). For the avoidance of doubt, a material breach of the
Quality Agreement shall be deemed to be a breach of this Agreement for the
purpose of determining the rights of the Parties to terminate this Agreement.

 

 

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11.3 TERMINATION FOR BANKRUPTCY. Either Party may terminate this Agreement
immediately if the other Party becomes insolvent, makes a general assignment for
the benefit of creditors, suffers or permits the appointment of a receiver for
its business or assets, avails itself of or becomes subject to any petition or
proceeding under any statute of any state or country relating to insolvency or
the protection of the rights of creditors.

11.4 REGULATORY PROCEEDINGS. Santarus may terminate this Agreement effective
immediately upon written notice to Manufacturer should the FDA or a Foreign
Regulatory Authority having jurisdiction impose on the Facility an import ban in
respect of the Finished Product or withdraw any license required by Manufacturer
to manufacture the Finished Product at the Facility or take other action that is
reasonably likely to have a material adverse impact on Manufacturer’s ability to
perform hereunder.

11.5 GOVERNMENT ACTION. Santarus may terminate this Agreement effective
immediately in the event that any governmental agency (including without
limitation, the FDA or a Foreign Regulatory Authority) takes any action, or
raises any objection, that prevents Santarus from importing, exporting,
purchasing, or selling the Finished Product or otherwise makes such activity
unlawful.

11.6 TERMINATION FOR DISCONTINUATION. Santarus may terminate this Agreement
effective immediately if at any time it decides to no longer market the Finished
Product.

11.7 EFFECT OF TERMINATION. Except as otherwise provided in this Section 11.7 or
elsewhere in this Agreement, in the event this Agreement is terminated for any
reason, (a) subject to Section 11.8, all rights and obligations of the Parties
under this Agreement shall terminate; (b) Santarus shall surrender to
Manufacturer, or, at Manufacturer’s sole option and expense, Santarus shall
destroy and provide Manufacturer with a certificate signed by a Responsible
Executive of Santarus attesting to the destruction of, all copies of any
Confidential Information of Manufacturer in its possession (excluding all of the
foregoing assigned to Santarus under Article 9 above); (c) Manufacturer shall
surrender to Santarus, or, at Santarus’ sole option and expense, Manufacturer
shall destroy and provide Santarus with a certificate signed by a Responsible
Executive of Manufacturer attesting to the destruction of, all copies of any
Confidential Information provided by Santarus hereunder (except to the extent
required to be maintained by Manufacturer pursuant to Applicable Laws or this
Agreement); (d) Santarus shall pay for any Finished Product manufactured at any
time before the date of termination pursuant to any Purchase Order delivered to
Manufacturer prior to such termination, (e) Manufacturer shall return to
Santarus all unused API and (f) Manufacturer shall implement the disposition of
any unused Raw Material in accordance with Section 7.3 (including the option of
being compensated for such as specified in Section 7.3). Manufacturer shall
cooperate with Santarus and assist in the transfer to Santarus of all legal and
technical documents concerning API and Finished Products, including master batch
records, validation reports, stability reports and relevant manufacturer
authorizations, existing retention samples and all such other documents and
materials as may be reasonably necessary or useful for Santarus to source
Finished Products from other qualified Third Parties.

 

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11.8 ACCRUED RIGHTS. Termination, relinquishment, or expiration of this
Agreement for any reason shall be without prejudice to any right which shall
have accrued to the benefit of either Party prior to such termination,
relinquishment, or expiration. Such termination, relinquishment or expiration
shall not relieve either Party from obligations which are expressly indicated to
survive termination or expiration of this Agreement. The provisions of this
Article shall not limit or restrict the rights of any Party to seek remedies or
take measures that may be otherwise available to it at law or equity in
connection with the enforcement and performance of obligations under this
Agreement. Any provision of this Agreement intended by their specific terms or
by necessary implication to survive the expiration or termination of this
Agreement, including without limitation, Articles, 8, 9, 12 and 13, shall so
survive.

ARTICLE 12

INDEMNIFICATION; INSURANCE

12.1 INDEMNIFICATION BY SANTARUS. Santarus hereby agrees to defend, at its
expense, indemnify, and hold harmless Manufacturer, its directors, officers,
employees, agents, and Affiliates, against all Third Party claims, demands,
damages, liabilities, losses, costs and expenses, including, without limitation,
attorney’s fees (collectively, “CLAIMS”) resulting from or arising out of:
(a) the negligence or willful misconduct of Santarus, its Affiliates, or their
directors, officers, agents, employees or consultants in the performance of
their obligations under this Agreement; (b) a material breach by Santarus of any
material provision of this Agreement; or (c) a breach by Santarus of any of its
representations or warranties set forth in this Agreement; provided, however,
that Santarus shall not be obligated to indemnify Manufacturer under this
Section 12.1 to the extent that such Claim results from or arises out of any act
or omission for which Manufacturer is obligated to indemnify Santarus pursuant
to Section 12.3 below.

12.2 INDEMNIFICATION BY MANUFACTURER. Manufacturer hereby agrees to defend, at
its expense, indemnify, and hold harmless Santarus, its directors, officers,
employees, agents, and Affiliates against all Third Party Claims resulting from
or arising out of (a) the failure to manufacture, package and test the Finished
Product in accordance with the Specifications, GMP, Applicable Laws and the
Manufacturer Manufacturing Responsibilities; (b) the failure to store the
Finished Product, Bulk API or Raw Materials in accordance with the
Specifications, GMP and Applicable Laws; (c) the negligence or willful
misconduct of Manufacturer, its Affiliates, or their directors, officers,
agents, employees or consultants in the performance of their obligations under
this Agreement, (d) a material breach by Manufacturer of any provision of this
Agreement or the Quality Agreement; or (e) a breach of any of Manufacturer’s
representations, warranties, or covenants set forth in this Agreement or the
Quality Agreement; provided, however, that Manufacturer shall not be obligated
to indemnify Santarus under this Section 12.3 to the extent that such Claim
results from or arises out of any act or omission for which Santarus is
obligated to indemnify Manufacturer pursuant to Sections 12.1 above.

12.3 INDEMNIFICATION PROCEDURE. Each indemnified Party (the “INDEMNITEE”) agrees
to give the indemnifying Party (the “INDEMNITOR”) prompt written notice of any
Claims or discovery of fact upon which the Indemnitee intends to base a request
for indemnification. Notwithstanding the foregoing, the failure to give timely
notice to the Indemnitor shall not release the Indemnitor from any liability to
the Indemnitee to the extent the Indemnitor is not materially prejudiced
thereby.

 

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12.3.1 The Indemnitee shall furnish promptly to the Indemnitor copies of all
papers and official documents in the Indemnitee’s possession or control which
relate to any Claims; provided, however, that if the Indemnitee defends or
participates in the defense of any Claims, then the Indemnitor shall also
provide such papers and documents to the Indemnitee. The Indemnitee shall
reasonably cooperate with the Indemnitor in defending against any Claims.

12.3.2 The Indemnitor shall have the right, by prompt written notice to the
Indemnitee, to assume direction and control of the defense of any Claim, with
counsel reasonably satisfactory to the Indemnitee and at the sole cost of the
Indemnitor, so long as (a) the Indemnitor shall promptly notify the Indemnitee
in writing (but in no event more than thirty (30) days after the Indemnitor’s
receipt of notice of the Claim) that the Indemnitor intends to indemnify the
Indemnitee pursuant to this Article absent the development of facts that give
the Indemnitor the right to claim indemnification from the Indemnitee, and
(b) the Indemnitor diligently pursues the defense of the Claim.

12.3.3 If the Indemnitor assumes the defense of the Claim as provided in this
Section 12.4, the Indemnitee may participate in such defense with the
Indemnitee’s own counsel who shall be retained, at the Indemnitee’s sole cost
and expense; provided, however, that neither the Indemnitee nor the Indemnitor
shall consent to the entry of any judgment or enter into any settlement with
respect to the Claim without the prior written consent of the other Party, which
consent shall not be unreasonably withheld or delayed. If the Indemnitee
withholds consent in respect of a judgment or settlement involving only the
payment of money by the Indemnitor and which would not involve any stipulation
or admission of liability or result in the Indemnitee becoming subject to
injunctive relief or other relief, the Indemnitor shall have the right, upon
written notice to the Indemnitee within five (5) days after receipt of the
Indemnitee’s written denial of consent, to pay to the Indemnitee, or to a trust
for its or the applicable Third Party’s benefit, such amount established by such
judgment or settlement in addition to all interest, costs or other charges
relating thereto, together with all attorneys’ fees and expenses incurred to
such date for which the Indemnitor is obligated under this Agreement, if any, at
which time the Indemnitor’s rights and obligations with respect to such Claim
shall cease.

12.3.4 The Indemnitor shall not be liable for any settlement or other
disposition of a Claim by the Indemnitee which is reached without the written
consent of the Indemnitor.

12.4 INSURANCE. Each Party shall maintain commercial general liability and
product liability insurance through the term of this Agreement and for a period
of five (5) years thereafter, which insurance shall afford limits of not less
than (i) [***] for each occurrence, and (ii) [***] annual aggregate. In
addition, from time to time during the term of this Agreement, each Party shall
increase their levels of insurance coverage if reasonably deemed prudent by such
party in light of the overall activities under this Agreement. If requested each
Party will provide the other with a certificate of insurance evidencing the
above and showing the name of the

 

 

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issuing company, the policy number, the effective date, the expiration date and
the limits of liability. The insurance certificate shall further provide for a
minimum of 30 days’ written notice to the insured of a cancellation of, or
material change in, the insurance. If a Party is unable to maintain the
insurance policies required under this Agreement through no fault on the part of
such Party, then such Party shall forthwith notify the other Party in writing
and the parties shall in good faith negotiate appropriate amendments to the
insurance provision of this Agreement in order to provide adequate assurances.

12.5 NO CONSEQUENTIAL DAMAGES. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE
RESPONSIBLE OR LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE OR OTHER LIKE DAMAGES, OR FOR ANY
LOSS OF PROFITS, LOSS OF REVENUE, LOSS RESULTING FROM INTERRUPTION OF BUSINESS
OR LOSS OF USE OR DATA , EVEN IF SUCH PARTY, OR ANY OF ITS DIRECTORS, OFFICERS,
EMPLOYEES, OR AGENTS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY OF ANY
KIND, UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY, ARISING
OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR ITS IMPLEMENTATION. FOR THE
AVOIDANCE OF DOUBT, NOTHING IN THIS SECTION 12.5 SHALL BE INTERPRETED TO LIMIT
THE INDEMNIFICATION OBLIGATION OF EITHER PARTY IN CONNECTION WITH A PRODUCT
LIABILITY CLAIM WITH RESPECT TO THE CHARACTERIZATION OF DAMAGES OR LOSSES
CLAIMED BY A THIRD PARTY AS BEING INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL,
EXEMPLARY, PUNITIVE OR OTHER LIKE DAMAGES OR LOSSES.

ARTICLE 13

GOVERNING LAW; DISPUTE RESOLUTION

13.1 GOVERNING LAW. This Agreement shall be governed by and construed under the
laws of the State of California without giving effect to any choice of laws rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of California, to the rights and duties of the
Parties.

13.2 DISPUTE RESOLUTION/INJUNCTIVE RELIEF. Notwithstanding anything to the
contrary contained in this Agreement, the parties specifically agree to the
following dispute resolution procedure.

13.2.1 Negotiation Between Responsible Executives. In the event of any dispute
between the Parties arising out of or related to this Agreement, the Parties
shall refer such dispute to the Responsible Executive of Santarus and the
Responsible Executive of Manufacturer for attempted resolution by good faith
executive negotiations within thirty (30) days after such referral is made. In
the event such officers are unable to resolve such dispute within such thirty
(30) day period, then the Parties will subject themselves to the arbitration
procedures set forth below before seeking any other means of resolving the
dispute.

 

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13.2.2 Arbitration. Any dispute arising out of or in connection with this
Agreement including any question regarding its existence, validity or
termination, that can not be resolved through negotiation between Responsible
Executives, shall be finally resolved by arbitration under the Rules of the
American Arbitration Association. The arbitration shall consist of a single
arbitrator mutually agreed by the Parties, or, in the absence of such agreement,
each Party shall select an arbitrator and those two arbitrators shall select a
third arbitrator who shall arbitrate the dispute. Any arbitration shall take
place in San Diego, California, U.S.A. The award of the arbitrator shall be
final and binding. The Parties waive any right to appeal the arbitration award,
to the extent a right to appeal may be lawfully waived. Each Party retains the
right to seek judicial assistance: (a) to compel arbitration; (b) to obtain
interim measures of protection pending or during arbitration; and (c) to enforce
any decision of the arbitrator, including the final award.

13.2.3 Exceptions. Notwithstanding the provision of this Section 13.2, the
Parties agree that certain violations or threatened violations of this Agreement
will result in irrevocable harm to other Party, for which damages would be an
inadequate remedy. In addition to any rights and remedies otherwise available,
either Party, before or during arbitration, may apply to a court having
jurisdiction for a temporary restraining order, preliminary injunction or other
interim or conservatory relief, where such relief is necessary to protect its
interests pending completion of the arbitration proceedings without breach of
this arbitration agreement and without any abridgment of the powers of the
arbitrators.

13.2.4 Continuation of Performance. Except where such area of performance is the
subject of dispute, each Party shall continue to perform its respective
obligations under this Agreement while any dispute is being resolved in
accordance with this Section 13.2 unless and until such obligations are
terminated or expire in accordance with the provisions of this Agreement.

ARTICLE 14

RESOURCES

14.1 MANUFACTURING EQUIPMENT. Manufacturer shall be solely responsible for all
costs associated with purchasing and maintaining the equipment, tools,
technology, and all other items necessary to manufacture, package, test, store
and ship the Finished Product (“MANUFACTURING EQUIPMENT”).

14.3 PERSONNEL. Manufacturer shall be solely responsible for all costs
associated with hiring personnel to maintain the Manufacturing Equipment
necessary to comply with its obligations pursuant to this Agreement.

ARTICLE 15

MISCELLANEOUS

15.1 [***]

 

 

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15.2 ASSIGNMENT. Manufacturer may not assign this Agreement or any of its rights
or obligations hereunder) without the written consent of Santarus, such consent
not to be unreasonably withheld.

15.3 FORCE MAJEURE. With respect to this Agreement, neither Party shall lose any
rights hereunder or be liable to the other Party for damages or losses on
account of failure of performance by the defaulting Party if the failure is
occasioned by war, fire, explosion, flood, strike, lockout, terrorist attacks,
embargo, act of God, or any other similar cause to the extent beyond the
reasonable control of the defaulting Party, provided that the Party claiming
force majeure shall promptly notify the other Party in writing setting forth the
nature of such force majeure, shall use its best efforts to eliminate, remedy or
overcome such force majeure and shall resume performance of its obligations
hereunder as soon as reasonably practicable after such force majeure ceases.
Notwithstanding the previous sentence, if any force majeure continues for more
than ninety (90) days, the other Party may terminate this Agreement.

15.4 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and deliver such
further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purpose and intent of this Agreement.

15.5 COMPLIANCE WITH LAWS. Each Party will comply with all Applicable Laws in
such Party’s exercise of its rights and performance of its obligations under
this Agreement.

15.6 NOTICES. All notices required or permitted to be given under this Agreement
shall be in writing and shall be deemed given if delivered personally or by
facsimile transmission receipt verified, mailed by registered or certified mail
return receipt requested, postage prepaid, or sent by express courier service,
to the Parties at the following addresses, or at such other address for a Party
as shall be specified by like notice, provided that notices of a change of
address shall be effective only upon receipt thereof.

IF TO MANUFACTURER: MANUFACTURER

OSG Norwich Pharmaceuticals Inc.

6826 State Highway 12

Norwich, New York 13815

Attention: President

Fax: (607) 335-3100

IF TO SANTARUS: SANTARUS, INC.

10590 West Ocean Air Drive, Suite 200

San Diego CA 92130

Phone: 858-314-5700

Fax: 858-314-5701

Attn: Senior Vice President, Manufacturing

and Product Development

With a copy to: SANTARUS, INC.

10590 West Ocean Air Drive, Suite 200

San Diego CA 92130

Phone: 858-314-5700

Fax: 858-314-5701

Attn: Legal Affairs

 

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Unless an earlier date can be proven by competent evidence, the date of receipt
of any notice given under this Agreement, including, without limitation, any
invoice provided by Manufacturer to Santarus, shall be deemed to be the date
given if delivered personally or by facsimile transmission receipt verified,
seven (7) days after the date mailed, if mailed by registered or certified mail
return receipt requested, postage prepaid, and two (2) days after the date sent
if sent by express courier service.

15.7 WAIVER. No failure of either Party to exercise and no delay in exercising
any right, power or remedy in connection with this Agreement (each a “RIGHT”)
will operate as a waiver thereof, nor will any single or partial exercise of any
Right preclude any other or further exercise of such Right or the exercise of
any other Right. No waiver shall be effective unless made in writing and signed
by the waiving Party.

15.8 DISCLAIMER OF AGENCY. The relationship between Manufacturer and Santarus
established by this Agreement is that of independent contractors, and nothing
contained in herein shall be construed to (i) give either Party the power to
direct or control the day-to-day activities of the other, (ii) constitute the
Parties as the legal representative or agent of the other Party or as partners,
joint venturers, co-owners or otherwise as participants in a joint or common
undertaking, or (iii) allow either Party to create or assume any liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of the other Party for any purpose whatsoever, except as expressly set
forth in this Agreement.

15.9 SEVERABILITY. If any term, covenant or condition of this Agreement or the
application thereof to any Party or circumstance shall, to any extent, be held
to be invalid or unenforceable by a court or administrative agency of competent
jurisdiction, then the remainder of this Agreement, or the application of such
term, covenant or condition to Parties or circumstances, other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each term, covenant or condition shall be valid and be enforced to the fullest
extent permitted by law.

15.10 ENTIRE AGREEMENT. This Agreement, including all schedules and exhibits
attached hereto, and the Quality Agreement, which is hereby incorporated herein
by reference, set forth all covenants, promises, agreements, warranties,
representations, conditions and understandings between the Parties hereto with
respect to the manufacture and supply of commercial quantities of Finished
Product and supersedes and terminates all prior and contemporaneous agreements
and understandings between the Parties with respect to such subject matter.

15.11 MODIFICATION. No subsequent alteration, amendment, change or addition to
this Agreement shall be binding upon the Parties hereto unless reduced to
writing and signed by the respective authorized officers of the Parties. In the
event of a conflict between the terms of any Purchase Order, order
acknowledgement, packaging slip or other documentation, and the terms of this
Agreement, the terms of this Agreement shall control, unless such documentation
specifically states that it overrides conflicting terms of this Agreement and is
signed by each of the Parties.

 

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15.12 TRADEMARKS AND TRADE NAMES. The Parties hereby acknowledge that neither
Party has, and shall not acquire, any interest in any of the other Party’s
trademarks or trade names appearing on the labels or packaging materials for the
Finished Product unless otherwise expressly agreed in writing.

15.13 CONSTRUCTION. This Agreement shall be deemed to have been drafted by all
Parties and, in the event of a dispute, no Party hereto shall be entitled to
claim that any provision should be construed against any other Party by reason
of the fact that it was drafted by one particular Party. The headings used in
this Agreement are for convenience of reference only and are not a part of the
text hereof.

15.14 COUNTERPARTS. This Agreement may be executed in counterparts, by manual or
facsimile signatures, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

In Witness Whereof, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the Effective Date.

 

MANUFACTURER:     SANTARUS: OSG NORWICH PHARMACEUTICALS INC.     SANTARUS, INC.
By:  

/s/ Louis Ard

   

By:

 

/s/ Gerald T. Proehl

Name:   Louis Ard    

Name:

 

Gerald T. Proehl

Title:

 

President

   

Title:

 

President & CEO

 

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EXHIBIT A

MINIMUM RUN QUANTITY

MINIMUM RUN QUANTITY

[***]

 

 

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omitted portions.

 

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EXHIBIT B

PRICING INFORMATION

FINISHED PRODUCT:

[***]

 

 

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the Commission. Confidential treatment has been requested with respect to the
omitted portions.

 

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EXHIBIT C

KEY PERFORMANCE INDICATORS

[***]

 

 

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the Commission. Confidential treatment has been requested with respect to the
omitted portions.

 

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