exv10w20



 





Exhibit 10.20



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.




LICENSE AGREEMENT




PREAMBLE




     This LICENSE AGREEMENT (the “Agreement”) is entered into as of the 30th day of November, 2007
(the “Effective Date”) by and between Santarus, Inc., a Delaware corporation, with its principal
place of business at 10590 West Ocean Air Drive, Suite 200, San Diego, CA 92130 (“Santarus”) and
Glaxo Group Limited, an English company with its principal place of business at 40 Berkeley Avenue
Greenford Middlesex United Kingdom on behalf of itself and its Affiliates (together “GSK”).
Santarus and GSK are sometimes referred to herein collectively as the “Parties” and separately as a
“Party.”



     WHEREAS, Santarus has developed, manufactures, and is commercializing in the United States a
line of pharmaceutical products based on proton pump inhibitors in combination with one or more
buffering agents under the trademark Zegerid®;



     WHEREAS, GSK is interested in developing, manufacturing and commercializing Licensed Products
in the GSK Territory (each as defined below);



     WHEREAS, Santarus is willing to grant GSK licenses to develop, manufacture and commercialize
Licensed Products for use in the Field (as defined below) and in the GSK Territory, all on the
terms and conditions set forth herein below; and



     WHEREAS, effective concurrently herewith, the Parties are entering into that certain Puerto
Rico Distribution Agreement (the “Distribution Agreement”) pursuant to which GSK will distribute
and sell PR Products (as defined in the Distribution Agreement) for the Commonwealth of Puerto Rico
and the U.S. Virgin Islands (collectively, the “PR Territory”), all on the terms and conditions set
forth therein.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein below
and other good and valuable consideration, the receipt and legal sufficiency of which are hereby
mutually acknowledged, GSK and Santarus hereby agree as follows:



ARTICLE 1

DEFINITIONS




     The following capitalized terms shall have the meanings set forth below when used in this
Agreement:



     1.1 “Adverse Event” means any untoward medical occurrence in a patient or clinical trial
subject who has been administered a Licensed Product, where the untoward medical occurrence













 







is temporally associated with the use of the Licensed Product, whether or not considered
related to the Licensed Product. An Adverse Event can therefore be any unfavourable and unintended
sign (including an abnormal laboratory finding) symptom or disease (new or exacerbated) temporally
associated with the use of a Licensed Product. For a marketed Licensed Product, this can also
include failure to produce expected benefits (i.e. lack of efficacy), and adverse events associated
with circumstances of abuse or misuse. In addition to the foregoing, in the context of clinical
trials, an Adverse Event will also mean events associated with or possibly attributable to the
clinical trial protocol design or clinical trial procedures.



     1.2 “Affiliate” with respect to any Person, means any other Person, whether de jure or de
facto, that directly or indirectly, controls, is controlled by, or is under common control with
such first Person, as applicable, for as long as such control exists. Solely as used in this
definition, “control” means (a) direct or indirect ownership of more than fifty percent (50%) of
the equity (or such lesser percentage which is the maximum allowed to be owned by a foreign
corporation in a particular jurisdiction) having the power to vote on or direct the affairs of such
Person, as applicable, or (b) the possession, directly or indirectly, of the power to direct or
cause the direction of the policies and management of such Person, as applicable, whether by the
ownership of stock, by contract, or otherwise.



     1.3 “API” means any active pharmaceutical ingredient in a Licensed Product.



     1.4 “Applicable Law” means all applicable provisions of any and all Federal, national,
multinational, state, provincial, and local statutes, laws, rules, regulations, administrative
codes, ordinances, decrees, orders, decisions, injunctions, awards judgments, permits and licenses
of or from governmental authorities relating to or governing the use or regulation of the subject
item.



     1.5 [***].



     1.6 “Business Day” means any day other than a day which is a Saturday, a Sunday or any day
banks are authorized or required to be closed in New York, New York.



     1.7 “Calendar Quarter” means each of the consecutive three (3) month periods ending March 31,
June 30, September 30, and December 31, as the case may be.



     1.8 “Commercially Reasonable Efforts” means those diligent efforts and resources, with respect
to a particular Party, at the relevant point in time, that are comparable to those generally used
by that Party, in good faith, in the exercise of its reasonable and prudent business judgment
relating to other prescription pharmaceutical products owned or licensed by it or to which it has
exclusive rights in the GSK Territory, which have market potential and are at a stage of product
life similar to the Licensed Product in the GSK Territory, taking into account measures of relative
safety and efficacy, product profile, the competitiveness of the marketplace, the regulatory
structure involved, the relative profitability of the products and other relevant factors including
comparative technical, scientific or medical factors. Such Commercially Reasonable Efforts shall
include (i) promptly assigning responsibility for manufacturing and commercialization activities to
specific employees who are held accountable for progress and monitoring such progress on an
on-going basis, (ii) setting and consistently seeking to achieve specific and meaningful objectives
and





 




			
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2









 









timelines for carrying out such manufacturing and commercialization activities, (iii)
consistently making and implementing decisions and allocating resources designed to advance
progress with respect to such objectives and timelines, and (iv) employing compensation systems for
its employees working with the Licensed Product that are similar to the compensation systems the
applicable Party applies with respect to its other programs with products of similar potential.





     1.9 “Competing Third Party” means any Person which [***].



     1.10 “Confidential Information” means any and all information disclosed to or obtained by
Recipient pursuant to or in connection with the negotiation, execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby and any and all
information regarding, related to, or associated with any or all elements of this Agreement,
including Licensed Products or each Party’s operations, that is disclosed by the Disclosing Party
to the Recipient; provided, however, that Confidential Information will not include information
which: (a) at the time of disclosure is in the public domain; (b) after disclosure becomes part of
the public domain, except through breach of this Agreement; (c) the Recipient can demonstrate by
reasonable proof was in its possession prior to the time of disclosure by the Disclosing Party
hereunder, and was not acquired directly or indirectly from the Disclosing Party; (d) the Recipient
can demonstrate by reasonable proof was developed by or on behalf of Recipient independent of and
without reference to the Disclosing Party’s Confidential Information; or (e) becomes available to
Recipient from a Third Party who did not acquire such information directly or indirectly from the
Disclosing Party and who is not otherwise prohibited from disclosing such information.



     1.11 “Control” means, with respect to any Santarus IP or GSK IP, possession by the Party
granting the applicable right, license or sublicense to the other Party as provided herein of the
power and authority, whether arising by ownership, license, or other authorization (in each case
other than pursuant to this Agreement) to disclose and deliver the particular Know-How to the other
Party, and to grant and authorize under such Santarus IP or GSK IP the right, license or
sublicense, as applicable, of the scope granted to such other Party in this Agreement without
giving rise to a violation of the terms of any written agreement with any Third Party.
“Controlled” or “Controlling” shall have their correlative meanings.



     1.12 “Data” means any and all research and development data, such as preclinical data,
pharmacology data, chemistry data (including analytical, product characterization, manufacturing,
and stability data), toxicology data, clinical data (including investigator reports (both
preliminary and final), statistical analyses, expert opinions and reports, safety and other
electronic databases), together with supporting data, in each case specifically directed to, or
used in the development of, a Licensed Product. For clarity, “Data” includes results from any
post-approval clinical studies of Licensed Products.



     1.13 “FDA” means the United States Food and Drug Administration or any successor thereto.



     1.14 “Field” means all approved and future human therapeutic indications, for either
prescription or over-the-counter (OTC) distribution.




 




			
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     1.15 “Force Majeure” means occurrences beyond the reasonable control of the Party affected,
including acts of God, embargoes, governmental restrictions, terrorism, materials shortages or
failure of any supplier (where such shortage or failure is attributable to an event of Force
Majeure suffered by such supplier), fire, flood, explosion, earthquake, hurricanes, storms,
tornadoes, riots, wars, civil disorder, failure of public utilities or common carriers, labor
disturbances, rebellion or sabotage.



     1.16 “GAAP” means United States generally accepted accounting principles, in each case
consistently applied.



     1.17 “Generic Competitive Product” means a pharmaceutical product sold by a Third Party in a
particular country in the GSK Territory, which pharmaceutical product (a) contains the same APIs
(e.g.. omeprazole and sodium bicarbonate with respect to the capsule and powder formulations of
Licensed Product) as the applicable Licensed Product being sold in such country by GSK under this
Agreement (the “Comparable Licensed Product”), (b) does not infringe any of the Santarus Patents,
(c) is bioequivalent with respect to pharmacokinetic properties to the Comparable Licensed Product,
(d) is substantially the same dosage form, strength (for each API) and route of administration, as
the Comparable Licensed Product and (e) is approved for marketing and sale by the applicable
Regulatory Authority in such country.



     1.18 “GSK IP” means (a) any Patent Controlled by GSK or its Affiliates covering any [***] and
(b) any [***].



     1.19 “GSK Territory” means those countries of the world set forth on Exhibit 1.19
hereto to the extent GSK maintains its license pursuant to Section 2.1.1 in such countries.



     1.20 “Important Medical Event” means an Adverse Event that may not be immediately
life-threatening or result in death or hospitalisation but may jeopardise the subject or require
medical or surgical intervention to prevent one of the outcomes listed in (a) — (e) of the
definition of Serious Adverse Event. Examples of such events include invasive or malignant
cancers, intensive treatment (in an emergency room or at home) for allergic bronchospasm, blood
dyscrasias or convulsions that do not result in hospitalisation, or the development of drug
dependency or abuse, overdose or misuse.



     1.21 “Know-How” means any and all information and tangible materials comprising (a) ideas,
discoveries, inventions, improvements or trade secrets, (b) Data, (c) databases, practices,
methods, techniques, specifications, formulations, formulae, knowledge, (d) techniques, methods,
formulas, processes, manufacturing information, and (e) research materials, reagents and
compositions of matter and biological materials. Know-How shall not include any Patent rights with
respect thereto.



     1.22 “Licensed Product” means any pharmaceutical product incorporating omeprazole in
combination with one or more buffering agents.



     1.23 “Major GSK Country” means each of the following: Brazil, Mexico, People’s Republic of
China, South Africa, South Korea, Taiwan and Turkey.




 




			
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     1.24 “Marketing Authorization” means, with respect to a Licensed Product in a particular
jurisdiction, all approvals, licenses, registrations or authorizations necessary for the
commercialization of such Product in such jurisdiction, including only where mandatory for
initiation of commercialization of such Licensed Product, approval of labeling, price,
reimbursement and manufacturing.



     1.25 “MAA” (Marketing Authorization Application) means any filing, application or submission
filed with or submitted to any Regulatory Authority in the applicable jurisdiction to obtain
permission to initiate commercialization in the Field.



     1.26 “Missouri Agreement” means that certain Exclusive License Agreement between Santarus and
the Curators of the University of Missouri (“UMissouri”) effective as of January 26, 2001, as
amended from time to time.



     1.27 “Net Sales” means the gross amount invoiced by GSK and its Affiliates and Sublicensees
(the “Selling Party”) to Third Parties for the sales of Licensed Products in the GSK Territory. To
the extent that the gross amounts invoiced by the Selling Party for such sales of Licensed Products
do not already reflect deductions or exclusions of the following amounts, the following may be
deducted in calculation of Net Sales, in accordance with GAAP, to the extent such deductions are at
rates customary within the industry:




	 	(a)	 	[***];
	 
	 	(b)	 	[***]; and
	 
	 	(c)	 	[***].




Net Sales shall not include sales of Licensed Products between and among GSK and its Affiliates and
Sublicensees; provided, however, that Net Sales shall include the amounts invoiced by the Selling
Party (with applicable deductions as set forth above) upon any resale of such Licensed Products to
a Third Party. With respect to Licensed Products, if any, that are sold in “bundles” with other
products or services, if the amount invoiced for the applicable Licensed Products represents a
discount greater than the average discount for all products and services in the applicable
“bundle,” then Net Sales for such “bundled” Licensed Product shall be determined using a sales
price based on [***].




     1.28 “Patent” means any of the following, whether existing now or in the future anywhere in
the world: (a) any issued patent, including any inventor’s certificate, substitution, extension,
supplemental protection certificate, registration, confirmation, reissue, re-examination, renewal
or any like governmental grant for protection of inventions; and (b) any pending application for
any of the foregoing, including any continuation, divisional, substitution, continuations-in-part,
provisional and converted provisional applications.



     1.29 “Person” means any individual, corporation, partnership, firm, association, joint
venture, joint stock company, trust or other entity, or any government or regulatory administrative
or political subdivision or agency, department or instrumentality thereof.





 




			
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     1.30 “PPI” means any proton pump inhibitor, e.g. omeprazole.



     1.31 “PPI Pharmaceutical Product” means a pharmaceutical product containing one or more PPIs
as active pharmaceutical ingredients.



     1.32 “Regulatory Authority” means any federal, national, multinational, state, provincial or
local regulatory agency, department, bureau or other governmental entity with authority over the
development, commercialization or other use or exploitation (including the granting of Marketing
Authorizations) of any Licensed Product in any jurisdiction.



     1.33 “Regulatory Filing” means any filing, application or submission filed with or submitted
to any Regulatory Authority, including applications to initiate or continue clinical or other
studies and MAAs and authorizations, approvals or clearances arising from the foregoing, including
Marketing Authorizations, and all correspondence with any Regulatory Authority, as well as minutes
of any material meetings, telephone conferences or discussions with the relevant Regulatory
Authority, in each case with respect to a Licensed Product.



     1.34 “Santarus IP” means, individually and collectively, the Santarus Know-How and Santarus
Patents.



     1.35 “Santarus Know-How” means any and all Know-How Controlled by Santarus during the Term
that is reasonably necessary for the development, manufacture (including testing) or
commercialization of a Licensed Product within the Field in the GSK Territory in accordance with
this Agreement.



     1.36 “Santarus Patents” means the Patents listed on Exhibit 1.36, together with any
and all other Patents in the GSK Territory that are Controlled by Santarus and claim (specifically
or generically) subject matter developed after the Effective Date which is (a) a formulation of any
Licensed Product, (b) a method or process for the manufacture or synthesis of any Licensed Product
(or any formulation thereof) or (c) a method of use or administration of any Licensed Product (or
any formulation thereof) and for which GSK has exercised its option therefor in accordance with
Section 8.1.2. The list of Santarus Patents existing as of the Effective Date which is appended
hereto as Exhibit 1.36 will be updated upon request from GSK to reflect changes thereto
during the Term.



     1.37 “Serious Adverse Event” means an Adverse Event which (a) results in death; (b) is
life-threatening; that is, an event where the patient or clinical trial subject was at risk of
death at the time of the event: it does not refer to an event that, hypothetically, might have
caused death if it had been more severe; (c) requires hospitalisation or prolongation of existing
hospitalisation; (d) results in persistent or significant disability or incapacity; (e) is a
congenital anomaly or birth defect; (f) is an Important Medical Event or (g) involves suspected
transmission via a PR Product of an infectious agent.



     1.38 “Sublicensee” means any Third Party to whom GSK or its Affiliates have granted a
sublicense under the licenses conveyed to GSK under the Santarus IP to make, have made, use, sell,
offer for sale or import a Licensed Product in the Field in the GSK Territory. As used in this
Agreement, the term “Sublicensee” shall also include a Third Party to whom GSK or its Affiliate







6









 







have granted, directly or indirectly, the right to distribute a Licensed Product; provided
that such Third Party has the responsibility for marketing or promotion of a Licensed Product
within the markets or territories for which such distribution rights are granted, but “Sublicensee”
shall not include a Third Party whose only role with respect to a Licensed Product is as contract
manufacturer.



     1.39 “Third Party” means any Person other than the Parties or their respective Affiliates.



     1.40 Additional Definitions. Each of the following capitalized terms shall have the
meanings defined in the corresponding section of this Agreement indicated below:



	 	 	 	 	 	 	 	 	 	 	 
	Definition	 	Section	 	Definition	 	Section
	AAA

	 	 	14.2	 	 	Indemnitor
	 	 	10.3	 
	Agreement

	 	Preamble
	 	Infringing Product
	 	 	8.4.1	 
	Aggregate Product Net Sales

	 	 	7.2.1	 	 	Losses
	 	 	10.1	 
	Buyout Payment

	 	 	7.2.4	 	 	Manufacturing Technology
	 	 	5.3.3	 
	CGL

	 	 	10.5.1	 	 	[***]
	 	 	[***]	 
	Confidentiality Agreement

	 	 	12.1	(h)	 	[***]
	 	 	[***]	 
	Cure Period

	 	 	13.2	 	 	Parties
	 	Preamble

	Defending Party

	 	 	8.3	 	 	Party
	 	Preamble

	Designated Manufacturer

	 	 	5.3.2	 	 	PR Territory
	 	Preamble

	Diligence Failure

	 	 	4.2	 	 	Prosecute and Maintain
	 	 	8.2.3	 
	Disclosing Party

	 	 	12.1	(a)	 	Prosecution and Maintenance
	 	 	8.2.3	 
	Dispute

	 	 	14.1	 	 	Recipient
	 	 	12.1	(a)
	Dispute Notice

	 	 	14.1	 	 	Santarus
	 	Preamble

	Distribution Agreement

	 	Preamble
	 	Santarus Indemnitees
	 	 	10.2	 
	Effective Date

	 	Preamble
	 	Santarus Invention
	 	 	8.1.1	 
	Enforcement Action

	 	 	8.4.1	 	 	Santarus Marks
	 	 	4.6	 
	GSK

	 	Preamble
	 	Substantial Generic Competition	 	 	7.2.2	 
	GSK Indemnitees

	 	 	10.1	 	 	Term
	 	 	13.1	 
	GSK Invention

	 	 	8.1.1	 	 	UMissouri
	 	 	1.26	 
	GSK Indemnitee

	 	 	10.3	 	 	 	 	 	 	 
	GSK Marks

	 	 	4.7	 	 	 	 	 	 	 






     1.41 General Interpretation. Except where the context requires otherwise, (a) the use
of any gender herein shall be deemed to be or include the other gender; (b) the use of the singular
shall be deemed to include the plural (and vice versa); (c) the word “or” is used in the inclusive
sense typically associated with the phrase “and/or”; (d) the words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation” and shall not be
construed to limit any general statement which it follows to the specific or similar items or
matters immediately following it; (e) the word “will” shall be construed to have the same meaning
and effect as the word “shall”; (f) the words “under authority” shall mean, with respect to a
Person, any other Person (including with respect to GSK, its Affiliates and any Sublicensees)
acting, directly or indirectly, within the scope of authorization or engagement of the first
Person; for clarity, an Affiliate of a Party shall be deemed to be acting “under authority” of such
Party for all purposes hereunder, however neither Party or its Affiliates shall be deemed to be
acting “under authority” of the other Party or the other Party’s Affiliates for any purposes of
this Agreement; (g) any definition of or reference to any




 




			
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agreement, instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or modifications set forth
herein); (h) any reference herein to any Person shall be construed to include the Person’s
successors, heirs and assigns; (i) the words “herein”, “hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof; (j) all references herein to Articles, Sections or Exhibits shall be
construed to refer to Articles, Sections and Exhibits of this Agreement, and references to this
Agreement include all Exhibits hereto; and (k) references to any specific law or article, section
or other division thereof shall be deemed to include the then-current amendments thereto or any
replacement or successor law thereof. Each accounting term used in this Agreement that is not
specifically defined in this Agreement shall have the meaning given to it under GAAP, but only to
the extent consistent with its usage and the other definitions in this Agreement, and all
calculations hereunder shall be made in accordance with GAAP.



ARTICLE 2

LICENSES




     2.1 Licenses to Santarus IP.



          2.1.1 General. Subject to the terms and conditions of this Agreement, Santarus hereby
grants to GSK an exclusive license under the Santarus IP to sell, offer for sale and import for
sale Licensed Products for applications in the Field in the GSK Territory. Additionally, subject
to the terms and conditions of this Agreement, Santarus hereby grants to GSK a non-exclusive
license under the Santarus IP: (a) to develop and use Licensed Products for applications in the
Field in the GSK Territory; and (b) to make and have made Licensed Products anywhere in the world
to support the other licenses granted in this Section 2.1.1. [***].




          2.1.2 Sublicenses. The licenses under Section 2.1.1 include the right for GSK to
grant sublicenses within the scope thereof to its Affiliates and Third Parties, subject to the
terms and conditions of this Section 2.1.2; and accordingly, except as otherwise expressly provided
herein, GSK shall have the right to fulfill any or all of its obligations hereunder through one or
more Affiliates or Sublicensees:




                    (a) Each sublicense shall be consistent with the terms and conditions of this Agreement.



                    (b) GSK shall promptly notify Santarus in writing of the grant of each sublicense to a Third
Party and provide Santarus a copy of the final executed sublicense agreement, redacted for
financial information not pertinent to this Agreement.



                    (c) GSK shall be responsible for the failure by its Affiliates and Sublicensees to comply
with, and GSK guarantees the compliance by each of its Affiliates and Sublicensees with, all
relevant restrictions, limitations and obligations in this Agreement.




 




			
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                    (d) GSK shall remain responsible for all payments and other obligations under this Agreement
arising from activities of its Affiliates and Sublicensees.



     2.2 License to Santarus. Subject to the terms and conditions of this Agreement, GSK
hereby grants to Santarus [***] license under all GSK IP to [***]. Additionally, subject to the
terms and conditions of this Agreement, GSK hereby grants to Santarus [***] license under the GSK
IP to [***]. Notwithstanding anything herein to the contrary, the licenses granted in this Section
2.2 shall not include any GSK IP subject to payment obligations to a Third Party (and GSK shall
promptly disclose such obligations to Santarus in writing), unless Santarus agrees in writing to
reimburse all amounts owed to such Third Party as a result of Santarus’ exercise of such license.
In addition, in the event Santarus elects to take a license to such GSK IP, the terms for such
license shall be [***]; provided that no compensation shall be due to GSK if [***].



     2.3 No Other Rights. Each Party acknowledges that the rights and licenses granted
under this Article 2 and elsewhere in this Agreement are limited to the scope expressly granted.
Accordingly, except for the rights expressly granted under this Agreement, no right, title, or
interest of any nature whatsoever is granted whether by implication, estoppel, reliance, or
otherwise, by either Party to the other Party. All rights with respect to Know-How, Patent or
other intellectual property rights that are not specifically granted herein are reserved to the
owner thereof.



ARTICLE 3

DEVELOPMENT / REGULATORY




     3.1 Development of Licensed Products.



          3.1.1 General. GSK shall have the right and be responsible for conducting at its
expense: (a) all development (including clinical studies) with respect to the Licensed Products
necessary to file for and obtain Marketing Authorizations to launch the Licensed Products for
application in the Field, subject to the limitations in Section 2.1.1, throughout the GSK Territory
in accordance with this Agreement and (b) all phase IV clinical studies, quality of life
assessments, pharmacoeconomic, label expansion or other post-marketing studies as may be required
by any applicable Regulatory Authority or as GSK may elect to perform in the GSK Territory.
Without limiting the foregoing, GSK shall have the right, but not the obligation, to develop line
extensions and new formulations within the Licensed Products in the GSK Territory; provided that
GSK shall keep Santarus informed with respect to such activities in accordance with Section 6.5.



          3.1.2 Stability Data. Without limiting Santarus’ obligations in Section 5.3.1, GSK
shall have the right and be responsible for generating at its expense any stability data necessary
to expeditiously file for and obtain Marketing Authorizations throughout the GSK Territory to the
extent such data is beyond the current or scheduled Santarus stability programs. In the event that
Santarus wishes to use any of this stability data in Regulatory Filings for Licensed Products
outside of the GSK Territory and Territory under the Distribution Agreement, [***].




 




			
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     3.2 Regulatory Matters.



          3.2.1 Interactions. GSK shall have, at its expense, the responsibility for all
interactions with any Regulatory Authority in the GSK Territory and for filing, obtaining and
maintaining approvals for development and commercialization of Licensed Products for applications
in the Field in the GSK Territory, subject to the limitations in Section 2.1.1, including any MAA
or Marketing Authorization therefor. Notwithstanding the foregoing, Santarus shall be able to
communicate with any Regulatory Authority in the GSK Territory regarding any Licensed Product, but
only to the extent that such communication is [***]. Santarus shall provide GSK at least [***]
days advance notice (or, if [***] days advance notice is not possible, such advance notice that is
possible under the circumstances) of any meetings between Santarus and Regulatory Authorities in
the GSK Territory relating to the activities set out in [***] above. Santarus shall provide to GSK
copies of correspondence received by Santarus from Regulatory Authorities in the GSK Territory
promptly (within [***] following Santarus’ receipt thereof), and Santarus shall (i) provide GSK an
opportunity to review and comment on such Regulatory Filings and correspondence with Regulatory
Authorities in the GSK Territory prior to submission, and (ii) consider in good faith the comments
of GSK in such Regulatory Filings and correspondence. To the extent not prohibited by Applicable
Laws, GSK shall own all Regulatory Filings filed by or under authority of it for the Licensed
Products for applications in the Field in the GSK Territory. For clarity, as between the Parties,
Santarus shall retain the right and, at its expense, the responsibility for all interactions with
any Regulatory Authority and filing, obtaining and maintaining approvals for development and
commercialization of Licensed Products outside the GSK Territory, including any MAA or Marketing
Authorization therefor.



          3.2.2 Assistance. Each Party agrees to provide in a timely manner such assistance in
connection with the other Party exercising its rights or fulfilling its responsibilities described
in Section 3.2.1 as such other Party may reasonably request; provided that the requesting Party
shall reimburse the other Party for all reasonable costs and expenses incurred in providing such
assistance. Without limiting the foregoing, Santarus agrees to so provide GSK access to
manufacturing data Controlled by Santarus and required to generate Regulatory Filings for Licensed
Products for applications in the Field in the GSK Territory, subject to the limitations in Section
2.1.1. In addition, each Party shall provide the other Party information regarding plans to make
any Regulatory Filings to the extent such Regulatory Filings are reasonably likely to affect the
other Party’s Regulatory Filings in their respective territories.



          3.2.3 Safety Data Exchange. Each of Santarus and GSK agree to notify each other
concerning possible Serious Adverse Events, and possible Adverse Events that are not Serious
Adverse Events, within the respective time periods, and in accordance with the applicable
procedures, set forth in a pharmacovigilance agreement to be mutually agreed and executed by the
Parties within thirty (30) days of the Effective Date but in any event prior to the first
administration of any Licensed Product to a human in a clinical trial conducted by or under
authority of GSK or, if earlier, the first sale of Licensed Product by or under authority of GSK,
which pharmacovigilance agreement shall be reviewed and revised, as may be necessary, annually by
the Parties. 




 




			
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10









 





     3.3 Access to Data.



          3.3.1 By GSK.



          (a) Without limiting Section 5.3.2, promptly after the Effective Date and in any event within
[***] thereafter, Santarus shall make available to GSK all Regulatory Filings and Santarus Know-How
in its Control as of the Effective Date reasonably necessary for GSK to manufacture or have
manufactured Licensed Products and obtain and maintain Marketing Authorizations for Licensed Products in accordance with this Agreement. Data provided under
this Section 3.3.1(a) shall be provided in editable format.



          (b) The Parties acknowledge that Santarus has no obligation, express or implied, to generate
additional Data or Regulatory Filings related to the Licensed Products hereunder. However, if
Santarus does generate such additional Data or Regulatory Filings during the Term, to the extent
such Data or Regulatory Filings are Controlled by Santarus and are reasonably necessary for GSK to
manufacture or have manufactured Licensed Products and obtain Marketing Authorizations for Licensed
Products in accordance with this Agreement, Santarus shall make such Data and Regulatory Filings
available to GSK hereunder.



          (c) The mode that Santarus makes available Data and Regulatory Filings under this Section
3.3.1 shall be as mutually determined by Santarus and GSK in good faith with the goals of
efficiency and cost-effectiveness. For clarity, GSK shall have the right to use and reference all
such Regulatory Filings and Data made available under this Section 3.3.1 in connection with its
development, manufacture and commercialization of Licensed Products in accordance with this
Agreement; provided that all such Regulatory Filings and Data received by GSK, together with all
embodiments thereof, shall be deemed the Confidential Information of Santarus, subject to the terms
and conditions of Article 12.



          3.3.2 By Santarus. GSK shall provide to Santarus the core regulatory file used by GSK
to generate all Regulatory Filings within [***] after its initial completion and [***] after any
updates thereto. In addition, from time to time or upon Santarus’ reasonable request, GSK shall
provide to Santarus all Data in its Control during the Term. Santarus shall have the right to use
and reference all Data and Regulatory Filings in connection with Santarus’ development, manufacture
and commercialization of Licensed Products outside of the GSK Territory; provided that such core
regulatory file and Data received by Santarus, together with all embodiments thereof, shall be
deemed the Confidential Information of GSK, subject to the terms and conditions of Article 12. The
mode that GSK provides Data and the core regulatory file under this Section 3.3.2 shall be mutually
determined by Santarus and GSK in good faith with the goals of efficiency and cost-effectiveness.



ARTICLE 4

COMMERCIALIZATION




     4.1 Commercialization of Licensed Products. GSK shall have the right and be
responsible at its expense for commercializing the Licensed Products for applications in the Field
throughout the GSK Territory, subject to the limitations in Section 2.1.1. GSK agrees to use
Commercially Reasonable Efforts to (a) seek and obtain Marketing Authorizations necessary to




 




			
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launch Licensed Products for applications in the Field in the GSK Territory, (b) after receipt of such
Marketing Authorizations to launch Licensed Products for applications in the Field in the GSK
Territory, and thereafter (c) to market, promote and sell such Licensed Products for application in
the Field in the GSK Territory. In the event that GSK elects, in its sole discretion, not to launch
and commercialize Licensed Products for applications in the Field in any country in the GSK
Territory, GSK shall promptly notify Santarus in writing of such decision, in which case Santarus
shall have the right to terminate this Agreement with respect to such country in accordance with
Section 13.3. For clarity, nothing in the previous sentence shall be construed to prejudice GSK’s right to
terminate this Agreement pursuant to Section 13.4.2.



     4.2 Specific Requirements. Without limiting the provisions of Section 4.1, GSK shall
file a MAA in (a) each Major GSK Country (other than [***]) within [***] after the Effective Date
and (b) [***] within [***] after the Effective Date. In addition, GSK shall launch the Licensed
Products (i) within [***] after the date of receipt of Marketing Authorization in each Major GSK
Country and (ii) within [***] of receipt of Marketing Authorization in each other country in the
GSK Territory, but in the case of (i) and (ii) no later than [***] after the Effective Date. In
order to allow Santarus to monitor the progress of the activities described in this Section 4.2,
GSK shall notify Santarus in writing within [***] days of each filing for an MAA, approval of a
Marketing Authorization and launch of a Licensed Product, in each case in any country in the GSK
Territory. In the event that GSK fails to file an MAA or launch License Products within the
timeframes set forth in this Section 4.2 in a country (each such failure, a “Diligence Failure”),
then Santarus shall have as its sole remedy for such breach, but without limiting the remedies for
other breaches the right to terminate this Agreement with respect to such country in accordance
with Section 13.3.



     4.3 Managed Care. For clarity, GSK shall be responsible for decisions and
negotiations with relevant governmental authorities, agencies and managed care organizations
(including health maintenance organizations, preferred provider organizations, exclusive provider
organizations, independent practice associations, point-of-service plans and the like) and other
institutions regarding price and reimbursement status of Licensed Products in the GSK Territory.



     4.4 OTC. GSK shall have the right to switch any or all Licensed Products hereunder
from prescription to OTC distribution at any time during the Term or indeed launch any Licensed
Product hereunder as OTC, in any case at its sole discretion.



     4.5 Sales Outside of Territories.



          4.5.1 GSK. Subject to Applicable Law, GSK will implement reasonable safeguards
consistent with those safeguards that it uses in relation to its own products so that Licensed
Product is sold to customers for resale only in the GSK Territory and not for resale anywhere
outside the GSK Territory. If GSK becomes aware that any of its customers has shipped Licensed
Product outside the GSK Territory, or has reason to believe that a customer intends to ship
Licensed Product outside the GSK Territory, GSK, to the extent permitted by Applicable Law, will
take Commercially Reasonable Efforts to cause such customer to cease such activities. GSK shall,
within [***] days after learning that any Licensed Products sold by or under authority of GSK under
this Agreement have been sold, distributed or dispensed outside of the GSK Territory, notify
Santarus in writing of




 




			
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12









 







all pertinent information relating to such occurrence and the actions GSK plans to take in response thereto.



          4.5.2 Santarus. Subject to Applicable Law, Santarus will implement reasonable
safeguards consistent with those safeguards that it uses in relation to its own products so that
Licensed Product is sold to customers for resale only outside of the GSK Territory and not for
resale anywhere in the GSK Territory. If Santarus becomes aware that any of its customers has
shipped Licensed Product into the GSK Territory, or has reason to believe that a customer intends
to ship Licensed Product into the GSK Territory, Santarus, to the extent permitted by Applicable Law,
will take Commercially Reasonable Efforts to cause such customer to cease such activities.
Santarus shall, within [***] days after learning that any Licensed Products sold by or under
authority of Santarus under this Agreement have been sold, distributed or dispensed into of the GSK
Territory, notify GSK in writing of all pertinent information relating to such occurrence and the
actions Santarus plans to take in response thereto.



     4.6 No Use of Santarus Marks. GSK acknowledges that no license is conveyed under this
Agreement to GSK, its Affiliates or Sublicensees with respect to Santarus’ corporate name and logo,
the ZEGERID® trademark or any modifications or variations thereof, or to any replacements thereof
that Santarus may or its licensees may use in connection with Licensed Products outside of the GSK
Territory or outside the Field (collectively, the “Santarus Marks”). GSK hereby acknowledges
Santarus’ ownership rights in the Santarus Marks, and accordingly agrees that (i) except as
expressly licensed with respect to PR Product under the Distribution Agreement, GSK and its
Affiliates and Sublicensees shall not use the Santarus Marks in connection with the development,
importation, marketing or promotion of Licensed Products without first entering into a written
license therefor from Santarus, and (ii) at no time during the Term or thereafter will it challenge
or assist others to challenge the Santarus Marks, or the registration thereof, or attempt to
register any trademarks, service marks or trade names confusingly similar to the Santarus Marks, or
domain names based thereon.



     4.7 No Use of GSK Marks. Santarus acknowledges that, subject to Section 13.8.3, no
license is conveyed under this Agreement to Santarus or its Affiliates with respect to GSK’s
corporate name and logo or any trademarks used by GSK or its Affiliates or Sublicensees in
connection with Licensed Products in the GSK Territory (collectively, the “GSK Marks”). Santarus
hereby acknowledges GSK’s ownership rights in the GSK Marks, and accordingly agrees that (i)
subject to Section 13.8.3, Santarus and its Affiliates shall not use the GSK Marks in connection
with the development, importation, marketing or promotion of Licensed Products without first
entering into a written license therefor from GSK, and (ii) at no time during the Term or
thereafter will it challenge or assist others to challenge the GSK Marks, or the registration
thereof, or attempt to register any trademarks, service marks or trade names confusingly similar to
the GSK Marks, or domain names based thereon.




 




			
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ARTICLE 5

MANUFACTURE




     5.1 Manufacture of Licensed Products. GSK shall have the right and, at its expense
shall be responsible to, manufacture or have manufactured all Licensed Products (including all API
used therein) in accordance with the terms and conditions of this Agreement necessary for GSK to
fulfill its obligations with respect to the development and commercialization of Licensed Products
hereunder.



     5.2 Coordination of Supply.



          5.2.1 Introductions. From time to time during the Term, if either Party engages a
Third Party contractor with respect to the manufacture, testing, handling, finishing, storage or
other activities related to the production of Licensed Product or API, then such Party shall
introduce the other Party to such Third Party and use reasonable efforts, upon the other Party’s
request, to facilitate one or more meetings between such other Party and the Third Party for the
purpose of such Third Party supplying Licensed Product or API for the other Party.



          5.2.2 Supply Shortage. In the event that Santarus and GSK are using the same contract
manufacturer for Licensed Products or API and there is any shortage of supply of Licensed Products
or API to either Party as a result of a Force Majeure event, [***].



     5.3 Technology Transfer.



          5.3.1 Stability Data. Notwithstanding anything herein to the contrary, Santarus
agrees to transfer to GSK all stability data related to the Licensed Products Controlled by
Santarus that it may generate from time to time during the Term.



          5.3.2 Designated Manufacturer. If GSK elects to manufacture Licensed Products itself
or have a Third Party, who is not then manufacturing Licensed Products for Santarus, manufacture
for GSK, then Santarus shall assist in the transfer of Manufacturing Technology to GSK or such
Third Party on a one-time basis, at GSK’s expense; provided that such Third Party is not a
Competing Third Party. Accordingly, within [***] days of written notice from GSK designating the
Person to whom such transfer will be made (i.e., either GSK or such Third Party, the “Designated
Manufacturer”) and the physical facility(ies) that will be used in such manufacturing processes,
Santarus shall transfer or caused to be transferred to the Designated Manufacturer a copy of the
Manufacturing Technology. For clarity, GSK shall be responsible for ensuring any Third Party
Designated Manufacturer’s compliance with all applicable terms and conditions of this Agreement and
ensuring that the Designated Manufacturer is approved by applicable Regulatory Authorities to
manufacture and supply Licensed Product in the GSK Territory. All Manufacturing Technology received
by the Designated Manufacturer, together with all embodiments thereof shall be deemed the
Confidential Information of Santarus, subject to the terms and conditions of Article 12. Santarus
shall promptly request the inclusion of the name of any Designated Manufacturer on its NDA (as that
term is defined in the Distribution Agreement) for the Licensed Product.




 




			
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          5.3.3 Manufacturing Technology. “Manufacturing Technology” means any and all
specifications (raw material (including API) and finished product), protocols, documentation and
instructions (including validation, quality control and assurance, storage and other supporting
documentation) and master batch records Controlled by Santarus, in each case (a) in the form used
in the manufacture (including packaging, labeling, quality control and assurance testing and
storage and handling) of Licensed Products under authority of Santarus as of the date of GSK’s
written notice described in Section 5.3.2 and (b) reasonably necessary for GSK to manufacture or
have manufactured Licensed Products pursuant to this Agreement.



ARTICLE 6

NON-COMPETE/OTHER RESTRICTIONS/REPORTING




     6.1 Non-Compete.



          6.1.1 By GSK. During the Term, and for a period of two (2) years thereafter or, if
GSK exercises its right of termination pursuant to Section 13.4.2 in relation to the Agreement in
its entirety or on a country-by-country basis, until the later of (a) the fifth (5th)
anniversary of the Effective Date or (b) the second (2nd) anniversary of the effective
date of any termination of this Agreement in its entirety or with respect to a given country as the
case may be, neither GSK nor any of its Affiliates or Sublicensees will directly or indirectly
distribute, market, promote, detail, advertise or sell any PPI Pharmaceutical Product containing
one or more PPIs formulated in combination with one or more buffering agents, or which is otherwise
formulated to provide, in either case, for immediate release of the PPI (other than Licensed
Products pursuant to this Agreement) in or for such country. The foregoing covenants shall not
restrict GSK or any Affiliate or Sublicensee from obtaining rights to, or engaging in research and
development activities related to, products in such class during the restricted time period, so
long as GSK or its Affiliate or Sublicensee does not engage in the activities set forth in the
first sentence of this Section 6.1.1.



          6.1.2 By Santarus. Until the earlier of (a) the fifth (5th) anniversary of
the Effective Date or (b) termination of GSK’s license pursuant to Section 2.1.1 to sell, offer for
sale and import Licensed Products in a given country within the GSK Territory, neither Santarus nor
any of its Affiliates will directly or indirectly distribute, market, promote, detail, advertise or
sell any PPI Pharmaceutical Product containing one or more PPIs which is either formulated in
combination with one or more buffering agents, or which is otherwise formulated to provide, in
either case, for immediate release of the PPI in or for such country in the GSK Territory. On or
after the fifth (5th) anniversary of the Effective Date (for so long as GSK’s license
under Section 2.1.1 is still in effect with respect to the applicable country), Santarus and any
Affiliates shall have the right to directly or indirectly distribute, market, promote, detail,
advertise or sell any PPI Pharmaceutical Product containing one or more PPIs which is either
formulated in combination with one or more buffering agents, or which is otherwise formulated to
provide, in either case, for immediate release of the PPI, in or for such country in the GSK
Territory; provided that Santarus shall discuss with GSK the out-license of such product to GSK for
such country; and provided further that in the event that Santarus grants the right to
commercialize the product to any Third Party, or commercializes the product in its own right, in
such country in the GSK Territory, GSK shall be released from its obligations under







15









 







Section 6.1.1 on the first commercial sale of such product in such country by such Third Party
or Santarus, as the case may be. The foregoing covenants shall not restrict Santarus or any
Affiliate from obtaining rights to, or engaging in research and development activities related to,
products in such class during the restricted time period, so long as Santarus or its Affiliate does
not engage in the activities set forth in the first sentence of this Section 6.1.2.



     6.2 Know-How Restrictions and Firewall. GSK shall not, and shall ensure its
Affiliates and Persons acting under its authority do not, use or practice (or authorize the use or
practice of) any Santarus Know-How or other Confidential Information of Santarus (including Data
regarding the manufacture, formulation, release profile, efficacy or safety, use, sale or promotion
of any Licensed Product, for the purposes of manufacturing, developing or commercializing any
product (other than Licensed Products for applications in the Field in the GSK Territory in
accordance with this Agreement or the PR Product in the PR Territory in accordance with the
Distribution Agreement). GSK recognizes that, while GSK is Santarus’ licensee of Licensed Products
in the GSK Territory pursuant to this Agreement, GSK could, subject to Section 6.1 and this Section
6.2, develop a PPI Pharmaceutical Product which would, once launched, compete with Santarus with
respect to the Licensed Products. GSK acknowledges that Santarus is disclosing to GSK Santarus
Know-How and other Confidential Information of Santarus for GSK’s use solely with respect to the
Licensed Products for applications in the Field in the GSK Territory under this Agreement (or as
otherwise provided with respect to PR Products in the PR Territory pursuant to the Distribution
Agreement), and GSK agrees not to use the Santarus Know-How or other Confidential Information of
Santarus, directly or indirectly, in the research, manufacture, development, sale or marketing of
any PPI Pharmaceutical Product other than (a) Licensed Products to the extent permitted under this
Agreement or (b) the PR Product to the extent permitted under the Distribution Agreement. GSK
shall limit disclosure of Santarus Know-How or other Confidential Information of Santarus to its
and its Affiliates’ employees, consultants and other agents located in the Territory (or the PR
Territory to the extent permitted under and in accordance with the Distribution Agreement) who need
to access such Santarus Know-How or other Confidential Information of Santarus for the development,
manufacture or commercialization of Licensed Products in the GSK Territory in accordance with this
Agreement (or the PR Territory to the extent permitted under the Distribution Agreement) and who
are bound by obligations of confidentiality and non-use no less burdensome than those set forth in
this Agreement. Santarus Know-How or other Confidential Information of Santarus shall not be
disclosed to any of GSK’s or its Affiliates’ employees, consultants or other agents involved in the
research, development, manufacture or commercialization of any PPI Pharmaceutical Product other
than Licensed Products as permitted under this Agreement or the PR Product as permitted under the
Distribution Agreement, nor use or consider any such information or GSK’s plans with regard to any
Licensed Product in the development, manufacture or commercialization of any PPI Pharmaceutical
Product, and GSK agrees to institute reasonable procedures and safeguards intended to prevent such
prohibited disclosures.



     6.3 No Patent Challenges. In partial consideration for the licenses and other rights
granted herein, and access to Santarus Know-How or other Confidential Information of Santarus, GSK
agrees that if GSK or any of its Affiliates commences, participates in or actively supports in any
way any challenge to the validity, enforceability, claim construction or coverage of any Patents
Controlled by Santarus claiming or covering the composition, formulation, manufacture, use or sale
of Licensed Products in the GSK Territory in any court or before any government or regulatory







16









 







agency (national or international) with authority to determine the validity, enforceability or
scope of such patents, or cause or request a review by any such court or government or regulatory
agency of the same, then at any time thereafter Santarus shall be entitled to elect to treat such
activity as permissive termination by GSK under Section 13.4.2 of this Agreement in its entirety,
and such termination shall be effective immediately upon written notice to GSK.



     6.4 Missouri Agreement. Santarus shall have the obligation to pay all amounts owed to
the UMissouri under the Missouri Agreement, and in accordance with the terms set forth therein,
with respect to sales of Licensed Products by GSK (and any of its Affiliates and Sublicensees)
pursuant to the terms and conditions of this Agreement. It is understood and agreed that the
sublicense to GSK under this Agreement of rights licensed to Santarus under the Missouri Agreement
is subject to the terms and conditions of the Missouri Agreement applicable to such a sublicense,
and that such obligations are incorporated by reference herein. In the event of termination (but
not earlier expiration) of the Missouri Agreement during the Term of this Agreement, (a) GSK’s
sublicense under the Missouri Agreement shall be assigned by Santarus to the UMissouri with respect
to Licensed Products for applications in the Field in the GSK Territory, and this Agreement will be
assigned in part to the UMissouri to effect such assignment of the sublicense, (b) this Agreement
(including all payment obligations of GSK hereunder) shall otherwise be retained by Santarus with
respect to all matters other than the sublicense of rights under the Missouri Agreement and (c) GSK
shall thereafter be responsible for making all payments that would have been owed by Santarus to
UMissouri pursuant to the Missouri Agreement (if the Missouri Agreement had not been terminated) in
respect of GSK’s, its Affiliates’ and their Sublicensees’ sales of Licensed Products for
applications in the Field in the GSK Territory after the date of such assignment; provided that GSK
shall have the right to offset the amounts so paid to UMissouri in respect of the sales of Licensed
Products during the Term against amounts due hereunder to Santarus with respect to such sales.



     6.5 Reporting. Without limiting any other provision herein, GSK agrees to provide
Santarus during the Term with [***] reports describing the activities taken during the previous
period and GSK’s plans for activities during the upcoming period with respect to GSK’s obligations
to develop (including plans for and results of non-clinical and clinical studies regarding Licensed
Products), manufacture (including establishment of Third Party contractors) and commercialize the
Licensed Products (including sales forecasts) and interactions with Regulatory Authorities in the
GSK Territory with respect to the Licensed Products (including status of MAA filings and receipt of
Market Authorizations in each country within the GSK Territory). On [***] basis, the Parties shall
meet (telephonically or in person) to discuss GSK’s then current and anticipated development,
manufacturing, commercialization and regulatory activities conducted by or under authority of GSK
in or for the GSK Territory.



ARTICLE 7

PAYMENTS; ROYALTIES; REPORTS




     7.1 Up-Front Payment. Within three (3) days after the Effective Date, GSK shall pay
Santarus an up-front license fee of Eleven Million Five Hundred Thousand U.S. Dollars




 




			
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(US$11,500,000), which amount shall be non-refundable and non-creditable against other amounts
due to Santarus hereunder or under the Distribution Agreement.



     7.2 Royalties on Net Sales. In partial consideration for the rights and licenses
granted to GSK under this Agreement, GSK shall pay to Santarus tiered royalties on Net Sales of
Licensed Products in the GSK Territory during the Term at the applicable rates set forth in Section
7.2.1, subject to adjustment as set forth in Section 7.2.2 below and subject to Section 7.2.3.
Royalties with respect to Net Sales made in each Calendar Quarter shall be paid within [***] days
following the applicable Calendar Quarter end.



          7.2.1 Royalty Rates. It is understood and agreed that applicable royalty rates on Net
Sales of Licensed Products under this Agreement shall be determined based on the total aggregate of
(a) Net Sales of Licensed Products under this Agreement, together with (b) any and all Net Sales
(as defined under the Distribution Agreement) of PR Products (as defined under the Distribution
Agreement) under the Distribution Agreement (collectively, “Aggregate Product Net Sales”) during
the applicable calendar year, as follows:



	 	 	 	 	 	 	 
	 	 	Aggregate Product Net Sales	 	 	 	 
	 	 	(in U.S. Dollars) During	 	 	 	 
	 	 	Applicable Calendar Year	 	Royalty Rate	 	 
	 

	 	[***]
	 	[***]
	 	 
	 
	 	 	 	 	 	 
	 

	 	[***]
	 	[***]	 	 
	 
	 	 	 	 	 	 
	 

	 	[***]
	 	[***]	 	 






          7.2.2 Reduction for Substantial Generic Competition.



          (a) In the event that, and for so long as, there exists Substantial Generic Competition in a
Major GSK Country: (a) the royalty rates payable under Section 7.2.1 for Net Sales in such country
shall be reduced from the rates of [***] specified in Section 7.2.1 above to [***], respectively,
and (b) [***]. As used herein, “Substantial Generic Competition” means that, during the
immediately preceding [***] Calendar Quarters, combined sales of Generic Competitive Products in a
particular country in the GSK Territory by Third Parties equate to at least [***], as measured by
IMS [***] data. For clarity, the royalty reduction set forth in this Section 7.2.2 shall only
apply for so long as there is Substantial Generic Competition, and the royalty rates set forth in
Section 7.2.1 shall again apply if Substantial Generic Competition ceases at any time during the
Term following a royalty reduction pursuant to this Section 7.2.2. GSK shall notify Santarus in
writing within [***] days after GSK becomes aware of any Substantial Generic Competition.



          (b) Allocation of Reduction Among Royalty Tiers. In the event that Substantial
Generic Competition (as set forth in this Section 7.2.2 or Section 6.2.2 of the Distribution
Agreement, as applicable) occurs in any one or more, but not all, of the countries in the GSK
Territory under this Agreement and the Territory under the Distribution Agreement, then the royalty
reduction described in Section 7.2.2(a) above and under Section 6.2.2(a) of the Distribution




 




			
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Agreement shall be allocated to a portion of Net Sales in each royalty tier described in
Section 7.2.1 above (or Section 6.2.1 of the Distribution Agreement, as applicable) equal to the
proportion of Aggregate Product Net Sales under this Agreement and the Distribution Agreement
eligible for such reduction compared to the total Aggregate Product Net Sales. By way of example,
and not limitation, if the total Aggregate Product Net Sales for the first Calendar Quarter of a
given calendar year is $50 million, and $10 million of such Aggregate Product Net Sales occurs in
countries with Substantial Generic Competition (meaning 20% of total Aggregate Product Net Sales
for such Calendar Quarter occurred in countries with Substantial Generic Competition), then (A) the
reduced royalty rates set forth in Section 7.2.2(a) above and in Section 6.2.2(a) of the
Distribution Agreement shall apply to 20% of the Aggregate Product Net Sales in each applicable
royalty tier, and (B) the unreduced royalty rates set forth in Section 7.2.1 above and in Section
6.2.1 of the Distribution Agreement shall apply to the remaining 80% of the Aggregate Product Net
Sales in each applicable royalty tier.



          7.2.3 Waiver of Certain Amount of Initial Royalties. To support GSK’s
commercialization of Licensed Products in the GSK Territory and help defray start-up costs of GSK,
Santarus agrees to waive the first Two Million Five Hundred Thousand U.S. Dollars (U.S. $2,500,000)
of combined royalties due from GSK under this Section 7.2 of this Agreement and Section 6.2 of the
Distribution Agreement. For clarity, the waiver of royalties under this Section 7.2.3 and under
Section 6.2. of the Distribution Agreement together shall not exceed Two Million Five Hundred
Thousand U.S. Dollars (U.S. $2,500,000) in the aggregate.



          7.2.4 Royalty Term; Buyout Payment. The obligation of GSK to pay royalties under this
Section 7.2 shall continue for so long as GSK manufactures, markets, promotes, uses or sells
Licensed Product in the GSK Territory, unless GSK pays to Santarus within thirty (30) days
following the twentieth (20th) anniversary of the Effective Date an amount (the “Buyout
Payment”) equal to [***], Upon GSK’s timely payment of the Buyout Payment, GSK’s obligation to pay
royalties under this Section 7.2 shall cease; provided, however, that GSK shall thereafter continue
to pay Santarus continuing royalties equal to the amount of royalties (if any) that Santarus is
required to pay under the Missouri Agreement with respect to Licensed Products sold by or under
authority of GSK in the GSK Territory.



          7.2.5 Convenience. GSK agrees that substantial commercial value has been and will be
contributed by Santarus’ grant to GSK of the rights and licenses under this Agreement with respect
to the Licensed Products in the GSK Territory and other rights and licenses conveyed to GSK on the
terms and conditions set forth in this Agreement, and acknowledges that Santarus may not Control
Patents covering the manufacture, use or commercialization of Licensed Products throughout the Term
or throughout the GSK Territory. For their mutual convenience, the Parties have agreed to the
royalty rates and payment obligations set forth in this Agreement with respect to Net Sales of
Licensed Products in the GSK Territory, regardless of whether the manufacture, use or
commercialization of Licensed Products sold by GSK hereunder is covered by Patents Controlled by
Santarus.



     7.3 Withholding. [***].




 




			
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     7.4 Method of Payments. All amounts payable to Santarus under this Agreement shall be
paid in U.S. Dollars by wire transfer to a bank account it designates. All payments hereunder
shall be made in the legal currency of the United States of America, and all references to “$” or
“Dollars” shall refer to United States dollars. When Licensed Products are sold for monies other
than Dollars, the royalties will first be determined in the foreign currency of the country in
which such Licensed Products were sold and then converted into equivalent Dollars. The exchange
rate will be that rate quoted by The Wall Street Journal on the last Business Day of the reporting
period. Except as otherwise set forth in this Agreement, including Section 7.2 with respect to
royalty payments, all payments due to a Party hereunder shall be due and payable within thirty (30)
days of an invoice from the other Party. All payments under this Agreement shall bear interest
from the date due until paid at a rate equal to [***], or, if less, the maximum rate permitted by
Applicable Law. The payment of such interest shall not limit either Party from exercising any
other rights it may have as a consequence of the lateness of any payment or breach of this
Agreement by the other Party.



     7.5 Royalty Reports. GSK shall, within [***] days following each Calendar Quarter,
make quarterly written reports to Santarus stating in each report, separately for GSK and each of
its Affiliates and Sublicensees, and by country: (a) the number, description and aggregate gross
amounts invoiced and Net Sales of each Licensed Product sold in the GSK Territory during the
immediately preceding quarter, including reasonably detailed descriptions of all itemized
deductions from gross amounts invoiced; (b) the number of Licensed Products sold or distributed on
a product-by-product basis; (c) the calculated amount of royalties due Santarus on account of such
Net Sales; (d) the basis for calculation of royalties due to Santarus, including applicable
deductions or adjustments; (e) the exchange rates used in making such calculations; and (f) the
date of first commercial sale of each Licensed Product. If no royalties are due for a particular
quarter, GSK shall so report to Santarus. GSK shall also make monthly interim written reports to
Santarus stating in each such report the aggregate Net Sales of Licensed Products sold in each
country in the GSK Territory during the immediately preceding month. GSK’s reports under this
Section 7.5 shall be transmitted to Santarus by email (to [***] and [***], or to such other e-mail
address(es) as Santarus may from time to time designate in writing). Quarterly reports shall be
sent within thirty (30) days after the end of each Calendar Quarter and monthly interim reports
shall be sent within ten (10) days after the end of each calendar month. The reports required
under this Section 7.5 may be combined with royalty reports due under the Distribution Agreement;
provided that any such combined report shall set forth the required information separately for each
country in the GSK Territory.



     7.6 Audits. GSK shall keep, and cause its Affiliates and any Sublicensees to keep,
complete and accurate records in sufficient detail to enable a calculation of royalties due to
Santarus on account of Net Sales of Licensed Products in the GSK Territory, determined in
accordance with GAAP (including calculation of gross amounts invoiced for each Licensed Product,
Net Sales of each Licensed Product, all itemized deductions from gross amounts invoiced taken to
calculate Net Sales, and amounts payable hereunder to Santarus for each Licensed Product). For the
sole purpose of verifying amounts relating to this Agreement, Santarus shall have the right no more
than [***] each calendar year, at its own expense, to have agents or representatives of Santarus or
any of its licensors of Santarus Patents review such records for the [***] Calendar Quarters
preceding such review in the location(s) where such records are maintained by GSK and its
Affiliates upon reasonable notice and during regular business hours. Results of such review shall
be made available to GSK. The records and results of such audits shall be deemed Confidential
Information of GSK.




 




			
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In the event that such a review identifies an underpayment greater than [***] of the amounts
that were otherwise due for a [***] during such period, [***]. Further, if the review reflects an
underpayment to Santarus, such underpayment shall be promptly remitted to Santarus, together with
interest calculated in the manner provided in Section 7.4. If the review reflects an overpayment
to Santarus, such overpayment shall be credited against the next payment due Santarus. If the
review reveals an underpayment of more than [***] of the amounts due for any period of [***], GSK
shall reimburse Santarus for the costs of such audit.




ARTICLE 8

INTELLECTUAL PROPERTY RIGHTS




     8.1 Inventions.



          8.1.1 General. With respect to inventions and intellectual property arising during
the course of, or as a result of, each Party’s performance under this Agreement, (a) title to all
inventions and intellectual property made solely by GSK employees or its agents hereunder (each a
“GSK Invention”) shall be solely owned by GSK, (b) title to all inventions and intellectual
property made solely by Santarus employees or its agents hereunder (each a “Santarus Invention”)
shall be solely owned by Santarus, and (c) title to all inventions and intellectual property made
by jointly by GSK employees or agents and Santarus employees or agents shall be jointly owned.
Inventorship of inventions shall be determined in accordance with the laws of inventorship of the
country in which the patent applications directed to the relevant inventions are filed. Except as
expressly provided in this Agreement, it is understood that neither Party shall have any obligation
to account to the other for profits, or to obtain any approval of the other Party to license,
assign or otherwise exploit such jointly owned inventions or intellectual property, by reason of
joint ownership thereof, and each Party hereby waives any right it may have under Applicable Law of
any jurisdiction to require any such approval or accounting.



          8.1.2 GSK Option. In the event that Santarus (alone or with others) develops any
[***], then GSK shall have an option [***], to include all of Santarus’ intellectual property
rights (including Patents) in the GSK Territory thereto Controlled by Santarus within the Santarus
IP for all purposes of this Agreement, as set forth in this Section 8.1.2. Santarus hereby
covenants that it will use Commercially Reasonable Efforts, [***]. Promptly after [***], Santarus
shall notify GSK in writing describing the same and providing such Data in Santarus’ Control as may
be reasonably necessary to evaluate whether GSK desires to exercise its option described in this
Section 8.1.2. In such case, GSK shall notify Santarus in writing within [***] days of receipt of
Santarus’ notice as to whether it desires to exercise such option. If GSK so notifies Santarus
that it desires to exercise its option, then the Parties shall negotiate in good faith for a period
of at least [***] days to determine [***] that GSK shall be required to pay to Santarus, [***];
provided that if the Parties are unable for any reason to agree on such payment amount during such
period, then either Party may submit such issue for dispute resolution pursuant to Article 14.
Notwithstanding anything herein to the contrary, the option granted in this Section 8.1.2 shall not
include any [***] subject to payment obligations to a Third Party (and Santarus shall promptly
disclose such obligations to GSK in writing), unless GSK also agrees in writing to reimburse all
amounts owed to such Third Party as a result of GSK’s




 




			
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exercise of its license rights to such [***]. In the event GSK does not exercise its option
with respect to a particular [***].



     8.2 Patent Prosecution.



          8.2.1 Santarus Patents. As between the Parties, Santarus shall have the right, to
control the Prosecution and Maintenance of the Santarus Patents using counsel of its choice and GSK
agrees to reimburse Santarus for Santarus’ reasonable out-of-pocket expenses (including amounts
reimbursed therefor to UMissouri or any other licensor of Santarus Patents) in connection with such
activities with respect to the GSK Territory as they are incurred. GSK may elect upon [***] prior
written notice to Santarus not to continue paying for Prosecution and Maintenance of any Santarus
Patent, in which case, the Patent shall be excluded from the Santarus Patents and all of GSK’s
license rights under such Patent shall cease as of the effective date of GSK’s notice. Santarus
agrees to keep GSK reasonably informed of such activities in the GSK Territory with respect to
claims that are subject to GSK’s license rights under this Agreement. GSK shall have the right to
advise and comment upon the prosecution of patent application claims that are subject to GSK’s
license rights under this Agreement in the GSK Territory. Santarus shall, in good faith, consider
and incorporate such advice and comments of GSK to the extent reasonably acceptable to Santarus and
its licensor of such patent application, if applicable. Upon the request of GSK, the Parties shall
discuss in good faith the filing at GSK’s expense of any continuation, continuation-in-part or
divisional to any patent or patent application within the Santarus Patents to be filed in the GSK
Territory beyond those Santarus may elect to file, which continuation, continuation-in-part or
divisional contains claims that are subject to GSK’s license rights under this Agreement.



          8.2.2 Joint Patents. The Parties shall jointly Prosecute and Maintain Patents
claiming inventions that are owned jointly by GSK and Santarus under Section 8.1.1, and each Party
agrees to take all reasonable action to cooperate fully with the other Party in this regard.
Except as otherwise provided in Section 8.2.1, each Party shall be responsible for fifty percent
(50%) of the out-of-pocket expenses in connection with Prosecution and Maintenance of jointly owned
Patents; provided that if either Party notifies the other Party in writing, referencing this
Section 8.2.2 and the applicable Patent that such Party elects not to be responsible for any
further costs under this Section 8.2.2, such Party shall not be required to reimburse the other
Party for its share of costs incurred under this Section 8.2.2 with respect to such Patent after
the date of receipt of written notice, and all right, title and interest in and to such Patent
(including any Patents issuing therefrom) shall be owned by the other Party, and such Patent shall
be excluded from the Santarus Patents for all purposes of this Agreement (subject to the licenses
granted to Santarus under this Agreement).



          8.2.3 Prosecute and Maintain. For purposes of this Section 8.2, “Prosecution and
Maintenance” shall mean, with respect to a Patent, the preparing, filing, prosecuting,
nationalizing, registering and maintaining such Patent, as well as re examinations, reissues,
confirmations, renewals, requests for Patent term extensions, supplemental protection certificates
and the like with respect to such Patent, together with the conduct of interferences, the defense
of oppositions and other similar proceedings with respect to the particular Patent; and “Prosecute
and Maintain” shall have the correlative meaning.




 




			
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     8.3 Defense of Third Party Infringement Claims. If any Licensed Product developed,
manufactured or commercialized by or under authority of GSK or its Affiliates or Sublicensees
becomes the subject of a Third Party’s claim or assertion of infringement of a Patent relating to
the development, manufacture or commercialization of such Product for applications in the Field in
the GSK Territory, the Party first having notice of the claim or assertion shall promptly notify
the other Party in writing, and, without limiting GSK’s indemnification obligations under Section
10.2, the Parties shall promptly confer to consider the claim or assertion and the appropriate
course of action. Unless the Parties otherwise agree in writing, each Party shall have the right
to defend itself against a suit that names it as a defendant (the “Defending Party”). Neither
Party shall enter into any settlement of any claim described in this Section 8.3 that adversely
affects the other Party’s rights or interests without such other Party’s written consent, which
consent shall not be unreasonably conditioned, withheld or delayed. In any event, the other Party
shall reasonably assist the Defending Party and cooperate in any such litigation at the Defending
Party’s request and expense.



     8.4 Enforcement of Santarus Patents.



          8.4.1 In-Licensed Patents. It is understood and agreed that, with respect to Patents
within the Santarus Patents that are owned by a Third Party and licensed to Santarus, the
provisions set forth in this Section 8.4 shall apply only to the extent consistent with Santarus’
rights under the applicable in-license for such Santarus Patents.



          8.4.2 General Enforcement. Each Party shall promptly notify the other Party in
writing of any actual or suspected infringement of any claim in a Santarus Patent in the GSK
Territory, which claim is subject to GSK’s license rights hereunder (including via unauthorized
importation into the GSK Territory for sale in the GSK Territory) or is subject to a declaratory
judgment action alleging non-infringement or unenforceability. Such notice shall specify in
reasonable detail the nature of such actual or suspected infringement or judicial action. GSK
shall not give notice (written or other) of infringement of any of the Santarus Patents to any
Third Party without Santarus’ prior written consent; provided, however, that GSK may give such
notice to a Third Party, without Santarus’ consent but upon [***] prior written notice to Santarus,
if (a) Santarus has declined to take steps to abate such infringement and GSK has the right to
enforce the Santarus Patents against such Third Party infringer as set forth in this Section 8.4.2;
or (b) disclosure is required by securities or other Applicable Laws to which GSK is subject; or
(c) disclosure is made in the course of a financial audit. Unless the Parties otherwise mutually
agree in writing, Santarus shall have the initial right, using counsel of its choice, to enforce
the Santarus Patents or defend any declaratory action with respect thereto (an “Enforcement
Action”), at its expense, and GSK shall give all reasonable assistance (excluding financial
assistance) to Santarus in such Enforcement Action, at Santarus’ expense. However, if (i) Santarus
elects in writing not to bring or defend an Enforcement Action with respect to any Licensed Product
in the GSK Territory for use in the Field for which GSK has license rights under this Agreement or
(ii) within [***] following a written request by GSK to do so and confirmation of facts reasonably
supporting existence of such actual or suspected infringement with respect to Licensed Products in
the Field and GSK Territory for which GSK has license rights under this Agreement, Santarus fails
to bring or defend an Enforcement Action or take other commercially reasonable action to protect
the Santarus Patents from such infringement, or to abate such infringement (which may in Santarus’
discretion include, without limitation, negotiations for a license (not in conflict with the
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Santarus for the manufacture, use or sale of Licensed Products to be sold outside the GSK
Territory), then GSK shall have the right, at its sole discretion, to institute an Enforcement
Action in its own name using counsel of its choice, at its own expense, and with the right to
control the course of such Enforcement Action (and Santarus shall provide all reasonable
assistance, other than financial, to GSK for such Enforcement Action, at GSK’s expense, including
joining such Enforcement Action if necessary to maintain the Enforcement Action, and Santarus shall
have the right to join and participate in the Enforcement Action whether or not such joinder is
requested by GSK).



          8.4.3 Recoveries. Any recovery received as a result of any Enforcement Action to
enforce a Santarus Patent pursuant to this Section 8.4 shall be used first to reimburse the Parties
for the costs and expenses (including attorneys’ and professional fees and amounts paid or payable
to the UMissouri) incurred in connection with such Enforcement Action (and not previously
reimbursed). Of any remaining amounts, the amount (if any) which is required to be paid to
UMissouri under the terms of the Missouri Agreement or any other licensors of the applicable
Santarus Patents under the terms of the respective in-license agreement, shall then be paid to
UMissouri or such other licensor, and any amounts remaining thereafter shall (a) to the extent
attributable to infringement of claims of the Santarus Patents in the GSK Territory for which
claims GSK has license rights under this Agreement), be shared [***] to [***] and [***] to [***]
and (b) to the extent not attributable to infringement of claims of the Santarus Patents in the GSK
Territory for which claims GSK has license rights under this Agreement, be distributed to, or
retained by, Santarus.



          8.4.4 Limits on Disposition. In no case may GSK enter into any settlement or consent
judgment or other voluntary final disposition that: (a) extends, or purports to exercise, GSK’s
rights under the Santarus IP beyond the rights expressly granted pursuant to this Agreement, (b)
makes any admission regarding wrongdoing by Santarus or UMissouri or any other licensor of Santarus
Patents, or the invalidity, unenforceability or absence of infringement of any Santarus Patents;
(c) subjects Santarus to an injunction or other equitable relief; or (d) obligates Santarus to make
a monetary payment; in all cases without the prior written consent of Santarus. Similarly, in no
case may Santarus enter into any settlement or consent judgment or other voluntary final
disposition that: (i) limits GSK’s rights under the Santarus IP or under this Agreement other than
as expressly stated herein; (ii) makes any admission regarding wrongdoing on the part of GSK, an
Affiliate or Sublicensee, or the invalidity, unenforceability or absence of infringement of any GSK
IP; (iii) subjects GSK to an injunction or other equitable relief; (iv) obligates GSK to make a
monetary payment; or (iv) extends, or purports to exercise, Santarus’ rights under the GSK IP
beyond the rights expressly granted pursuant to this Agreement; in all cases without the prior
written consent of GSK.



ARTICLE 9

REPRESENTATIONS AND WARRANTIES




     9.1 Representations and Warranties of Both Parties. Each Party hereby represents and
warrants to the other Party that, as of the Effective Date:



          9.1.1 Good Standing. Such Party is duly organized, validly existing and in good
standing under the Applicable Law of the state or country of its incorporation, is duly qualified
to




 




			
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transact the business in which it is engaged in each jurisdiction where failure to be so
qualified would have a material adverse effect upon its business as currently conducted, and has
full corporate power and authority to enter into this Agreement and to carry out the provisions of
this Agreement.



          9.1.2 Power and Authority. Such Party has the requisite power and authority and the
legal right to enter into this Agreement, and to perform its obligations hereunder, and has taken
all necessary corporate action on its part to authorize the execution and delivery of the Agreement
and the performance of its obligations hereunder. All Persons who have executed this Agreement on
behalf of such Party, or who will execute on behalf of such Party any agreement or instrument
contemplated hereby, have been duly authorized to do so by all necessary corporate action.



          9.1.3 Binding Obligation. This Agreement has been duly executed and delivered on its
behalf and (assuming the due execution and delivery hereof by the other Party) each such agreement
is a legal and valid obligation binding upon it and is enforceable, in accordance with its terms,
to the extent provided under Applicable Law.



          9.1.4 No Conflicts. The execution and the delivery of this Agreement by such Party
and the consummation of the transactions contemplated hereby will not, to the best of such Party’s
knowledge, materially conflict with or result in a material breach of any of the terms, conditions
or provisions of, or constitute an express event of default under, any material instrument,
agreement, mortgage, judgment, order, award, or decree to which such Party is a party or by which
it is bound.



          9.1.5 Compliance with Applicable Law. Such Party and its Affiliates are, and will
ensure that they remain throughout the Term, in compliance in all material respects with all
requirements of Applicable Law.



          9.1.6 Litigation and Claims. There is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or, to the knowledge of such Party, governmental
investigation pending or threatened in writing against such Party or any of its Affiliates which,
if adversely determined, would have a material adverse effect with respect to such Party performing
its obligations hereunder with respect to Licensed Products in or for the GSK Territory (except, in
the case of Santarus, as publicly disclosed by Santarus).



     9.2 Representations and Warranties of Santarus. Santarus hereby represents and
warrants to GSK that, as of the Effective Date:



          9.2.1 Right, Title and Interest. Except as provided in the Missouri Agreement or as
otherwise described on Exhibit 1.36, Santarus is the sole and exclusive owner or exclusive licensee
of the rights under each of the Santarus Patents granted to GSK pursuant to Section 2.1.1, and to
Santarus’ knowledge, all maintenance fees and annual payments due for the Santarus Patents have
been paid.



          9.2.2 No Third Party Claims. Santarus has not received any written claim or demand
from any Third Party alleging that any infringement, violation or misappropriation of such Third
Party’s intellectual property rights has occurred as a result of Santarus’ activities related to
the PR Product in the United States or the GSK Territory, nor is Santarus aware of any material
actual,







25









 







alleged or threatened infringement, violation or misappropriation by a Third Party of any of
the Santarus IP in the GSK Territory. There are no existing or, to Santarus’ knowledge, threatened
litigation actions, suits, claims, proceedings or governmental investigations in the GSK Territory
involving Licensed Products or Santarus Patents by or against Santarus or any of its Affiliates.



          9.2.3 Clinical and Regulatory Information. The clinical and regulatory data regarding
Licensed Products that Santarus has made available to GSK prior to the Effective Date is true and
accurate in all material respects, and Santarus has, to its knowledge as of the Effective Date,
[***].



          9.2.4 Pharmacovigilance Systems. The information contained in that certain
Self-Certification Regarding Santarus’ Pharmacovigilance Systems is true and accurate in all
material respects.



     9.3 No Reliance by Third Parties. The representations and warranties of a Party set
forth in this Agreement are intended for the sole and exclusive benefit of the other Party hereto,
and may not be relied upon by any Third Party.



     9.4 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 9,
SANTARUS AND GSK EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY
OR OTHERWISE, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT (INCLUDING THE SANTARUS IP),
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT OF
THE INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY.



ARTICLE 10

INDEMNIFICATION; INSURANCE AND LIMITATIONS




     10.1 Santarus Indemnification Obligations. Santarus will indemnify, defend and hold
harmless GSK, its Affiliates, and their respective officers, directors, trustees, agents, employees
and Sublicensees (collectively, “GSK Indemnitees”), from and against any and all losses,
liabilities, claims, obligations, demands, awards, settlements, penalties, fines, suits, damages,
costs (including costs of investigation, defense and enforcement of this Agreement), fees, taxes,
and expenses, including reasonable attorneys’ fees, experts’ fees and expenses, incurred or
suffered in respect of a claim or action of a Third Party (collectively, “Losses”), that are
incurred or suffered by the GSK Indemnitees or any of them by reason of, arising out of or in
connection with:



          (a) any breach of contract or negligence on the part of Santarus in performing Santarus’
obligations under this Agreement;



          (b) the distribution, marketing, advertisement, promotion or sale of Licensed Product in the
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          (c) the distribution, marketing, advertisement, promotion or sale of Licensed Products outside
of the GSK Territory and outside of the Territory under the Distribution Agreement, including any
actual or alleged infringement of a Third Party’s intellectual property rights, by or under
authority of Santarus or its Affiliates; or



          (d) any violation of Applicable Law by Santarus in the performance of any of Santarus’
obligations under this Agreement;


provided, however, except in each case to the extent that such Loss is attributable to any matter
for which GSK is obligated to indemnify a Santarus Indemnitee as provided in Section 10.2.




     10.2 GSK Indemnification Obligations. GSK will indemnify, defend and hold harmless
Santarus, its Affiliates and licensors (including the UMissouri), and their respective officers,
directors, trustees, agents, curators and employees, inventors of, and sponsors of the research
that led to, any of the inventions covered by Santarus Patents, and their employees (collectively,
“Santarus Indemnitees”), from and against any and all Losses incurred or suffered by the Santarus
Indemnitees or any of them, by reason of, arising out of or in connection with:



          (a) any breach of contract or negligence on the part of GSK in performing GSK’s obligations or
permitted activities under this Agreement;



          (b) the manufacture, storage, handling, distribution, marketing, advertisement, promotion, use
or sale of Licensed Products by or under authority of GSK, its Affiliates or Sublicensees; or



          (c) any violation of Applicable Law by GSK in the performance of any of GSK’s obligations
under this Agreement;


provided, however, except in each case to the extent that such Loss is attributable to any matter
for which Santarus is obligated to indemnify a GSK Indemnitee as provided in Section 10.1.




     10.3 Indemnity Procedures. A Person entitled to indemnification pursuant to either
Section 10.1 or Section 10.2 will hereinafter be referred to as an “Indemnitee.” A Party obligated
to indemnify an Indemnitee hereunder will hereinafter be referred to as an “Indemnitor.” In the
event an Indemnitee is seeking indemnification under either Section 10.1 or Section 10.2, the
Indemnitee will inform the Indemnitor of a claim as soon as reasonably practicable after it
receives notice of the claim, it being understood and agreed that the failure by an Indemnitee to
give notice of a claim as provided in this Section 10.3 will not relieve the Indemnitor of its
indemnification obligation under this Agreement except and only to the extent that such Indemnitor
is actually prejudiced as a result of such failure to give notice. The Indemnitee will permit the
Indemnitor to assume direction and control of the defense of the claim (including, subject to this
Section 10.3, the right to settle the claim solely for monetary consideration to be paid by the
Indemnitor), and, at the Indemnitor’s expense, will co-operate as reasonably requested in the
defense of the claim. The Indemnitee will have the right to retain its own counsel at its own
expense; provided that, if the Indemnitor assumes control of such defense and the Indemnitee
reasonably concludes, based on advice from counsel, that the Indemnitor and the Indemnitee have
conflicting interests with respect to such action, suit,







27









 







proceeding or claim, the Indemnitor will be responsible for the reasonable fees and expenses
of counsel to the Indemnitee solely in connection therewith. The Indemnitor may not settle such
action or claim, or otherwise consent to an adverse judgment in such action or claim, in any manner
which admits liability or wrongdoing of the Indemnitee, or which would subject the Indemnitee to an
injunction, or if such settlement or judgment would materially diminish or limit or otherwise
adversely affect the rights, activities or financial interests of the Indemnitee, without the
express written consent of the Indemnitee.



     10.4 No Punitive or Exemplary Damages. EXCEPT FOR BREACHES OF THE OBLIGATIONS SET
FORTH IN SECTIONS 6.1, 6.2 AND 6.3 AND ARTICLE 12, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS) SUFFERED BY THE
OTHER PARTY UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT A PARTY IS REQUIRED TO INDEMNIFY THE OTHER
PURSUANT TO THIS ARTICLE 10 WITH RESPECT TO ANY SUCH DAMAGES PAID TO A THIRD PARTY AS PART OF A
CLAIM.



     10.5 Insurance.



          10.5.1 Santarus. Santarus shall maintain self insurance or comprehensive general
liability insurance (“CGL”), including broad form contractual liability, in an amount of at least
[***] Dollars (U.S. $[***]) and product liability coverage in an amount of at least [***] U.S.
Dollars (U.S. $[***]) for bodily injury and property damage. Santarus shall maintain such
insurance during the Term and thereafter for a period of [***]. Santarus shall give GSK at least
[***] notice of any cancellation or termination of such insurance. Santarus will furnish to GSK a
certificate of insurance evidencing such coverage (or evidence reasonably acceptable to GSK of
Santarus level of self-insurance) as of the Effective Date and upon reasonable request by GSK at
any time thereafter.



          10.5.2 GSK. Santarus acknowledges that GSK is self-insured. GSK shall maintain
self-insurance at levels at least consistent with the levels of insurance described for
Sublicensees in this Section 10.5.2 during the Term and for a period of [***] thereafter. GSK
shall ensure that its Sublicensees maintain CGL insurance, including broad form contractual
liability, in an amount of at least [***] U.S. Dollars (U.S. $[***]) and product liability coverage
in an amount of at least [***] U.S. Dollars (U.S. $[***]) for bodily injury and property damage
during the Term and thereafter for a period of [***]. GSK shall give Santarus at least [***] prior
written notice of any cancellation or termination of such insurance. The minimum level of
insurance set forth herein will not be construed to create a limit on GSK’s or its Sublicensees’
liability with respect to its indemnification obligations hereunder. GSK shall give Santarus at
least [***] notice of any cancellation or termination of such insurance. GSK will furnish to
Santarus a certificate of insurance evidencing such coverage (or evidence reasonably acceptable to
Santarus of GSK’s level of self-insurance) as of the Effective Date and upon reasonable request by
Santarus at any time thereafter.



ARTICLE 11

FORCE MAJEURE




     Any delays in performance by any Party under this Agreement, other than with respect to the
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by Force Majeure. The Party suffering such Force Majeure event shall notify the other Party in
writing as soon as practicable of such inability and of the period for which such inability is
expected to continue, and any time for performance hereunder shall be extended by the actual time
of delay caused by the Force Majeure event; provided that the Party suffering such occurrence uses
Commercially Reasonable Efforts to mitigate any damages incurred by the other Party.



ARTICLE 12

CONFIDENTIALITY




     12.1 Confidential Information. GSK and Santarus each hereby recognize and acknowledge
that the other Party’s Confidential Information constitutes valuable and confidential information.
Subject to other express provisions of this Agreement, GSK and Santarus each agree as follows that
during the Term, and for a period of [***] years after the effective date of termination of this
Agreement for any reason:



                    (a) The Parties will not disclose, directly or indirectly, in any manner whatsoever to any
Third Parties any Confidential Information received from the other Party (the “Disclosing Party”)
without first obtaining the written consent of the Disclosing Party, and the other Party
(“Recipient”) will keep confidential, all of the Disclosing Party’s Confidential Information that
is disclosed to Recipient. Recipient agrees to use the same level of care in safeguarding the
Disclosing Party’s Confidential Information that Recipient uses with its own confidential
information of a similar nature, but in no event less than reasonable care. Recipient will
restrict disclosure of the Disclosing Party’s Confidential Information solely to those of its (or
its Affiliate’s) employees or representatives having a need to know such Confidential Information
in order to exercise a right granted or fulfill an obligation under, this Agreement.



                    (b) Both Parties shall ensure that each of their respective employees and representatives who
will have access to the Confidential Information of the Disclosing Party are bound by an agreement
to maintain such Confidential Information in accordance with the confidentiality obligations set
forth in this Article 12.



                    (c) Recipient will not use the Disclosing Party’s Confidential Information in any manner
whatsoever other than solely in connection with the performance of its obligations, or exercise of
its rights, under this Agreement in accordance with the terms and conditions set forth in this
Agreement.



                    (d) Except as permitted by this Article 12, GSK and Santarus each agree not to disclose any
terms or conditions of this Agreement or the existence of this Agreement to any Third Party without
the prior written consent of the other Party, provided that each Party will be entitled to disclose
the terms of this Agreement without such consent to its advisors and potential and existing
financing sources, acquirors/acquirees (including to the consultants and advisors of the
foregoing), and to others (including in the case of Santarus, to UMissouri and, in the case of GSK,
to potential and existing Sublicensees), in each case on a need-to-know basis and on the condition
that such Persons agree to keep such Confidential Information in accordance with the obligations
set forth in this Article 12. In addition, either Party may disclose the terms of this Agreement
to the




 




			
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29









 







extent reasonably required by Applicable Law or by applicable rules of any national stock
exchange on which the shares of such Party are listed.



                    (e) In the event Recipient is requested pursuant to, or required by, Applicable Law to
disclose any of the Disclosing Party’s Confidential Information, it will notify the Disclosing
Party promptly in writing so that the Disclosing Party may seek a protective order or other
appropriate remedy or, in the Disclosing Party’s sole discretion, waive compliance with the
confidentiality provisions of this Agreement. At the Disclosing Party’s expense, Recipient will
co-operate in all reasonable respects, in connection with any reasonable actions to be taken for
the foregoing purpose. Recipient may, without liability, disclose the Confidential Information of
the other Party to the extent such disclosure is required under Applicable Law, and Recipient will
exercise reasonable efforts to obtain reliable assurances that confidential treatment will be
accorded to any of the Disclosing Party’s Confidential Information so disclosed.



                    (f) Upon the effective date of the termination of this Agreement for any reason, either Party
may request in writing, and the other Party will either: (i) promptly destroy all copies of the
requesting Party’s Confidential Information in the possession of the other Party and confirm such
destruction in writing to the requesting Party; or (ii) promptly deliver to the requesting Party,
at the other Party’s expense, all copies of such Confidential Information in the possession of the
other Party, provided, however, the other Party will be permitted to retain one (1) copy of the
requesting Party’s Confidential Information for the sole purpose of determining any continuing
obligations hereunder (or in the case of Santarus, fulfill its obligations under the Missouri
Agreement). Additionally, except as otherwise expressly provided herein, upon termination of this
Agreement for any reason, both Parties will immediately cease all use of the other Party’s
Confidential Information including, to the extent reasonably possible, removing all references to
such Confidential Information from its internal analyses, memoranda, compilations, studies or other
documents. All Confidential Information will continue to be subject to the terms of this Agreement
for the period set forth in this Section 12.1.



                    (g) Each Party represents and warrants to the other Party that it has all right, title and
ownership interest in and to its Confidential Information or it has the right to disclose its
Confidential Information to the other Party. Each Party may seek to enforce all rights and legal
remedies available under this Article 12 or by law, including injunctive relief, specific
performance and other equitable remedies in the event of a breach of the provisions of this Article
12 by the other Party.



                    (h) Notwithstanding the provisions of this Article 12, the Parties agree that nothing
contained in this Article 12 will prevent (i) GSK from disclosing any Santarus Confidential
Information, without obtaining Santarus’ prior consent, to any Affiliate of GSK or to any Third
Party who has a need to know such Confidential Information for the purposes of engaging in the
development, manufacture or commercialization of Licensed Products in the Field in the GSK
Territory in accordance with this Agreement; provided that such Affiliate or Third Party is bound
by obligations of confidentiality and non-use no less burdensome than those set forth in this
Agreement with respect to the Confidential Information, (ii) Santarus from disclosing any GSK
Confidential Information, without obtaining GSK’s prior consent, to UMissouri, as required under
the Missouri Agreement, or to any Affiliate of Santarus or to any Third Party who has a need to
know such







30









 







Confidential Information for the purposes of engaging in the development, manufacture or
commercialization of Licensed Products for sale outside of the GSK Territory; provided that such
Affiliate or Third Party is bound by obligations of confidentiality and non-use no less burdensome
than those set forth in this Agreement with respect to the Confidential Information or (iii)
Santarus from disclosing information or data related to Licensed Products in its filings or
submissions to Regulatory Authorities in connection with Licensed Products.



                    (i) The confidentiality obligations set forth in this Article 12 will supersede that certain
Confidentiality Agreement between GlaxoSmithKline Services Unlimited and Santarus dated [***]
(“Confidentiality Agreement”), and will govern any and all information disclosed by either Party to
the other pursuant thereto.



     12.2 Publicity. Any key announcements or publicity regarding the existence of this
Agreement or any terms or subject matter of this Agreement by either GSK or Santarus will be agreed
to by GSK and Santarus in writing in advance of any such announcement or publicity. The Party
preparing any such announcement, publicity or press release will provide the other Party with a
draft thereof reasonably in advance of disclosure so as to permit the other Party to review and
comment on such announcement, publicity or press release, unless Applicable Law otherwise requires
sooner public disclosure. The foregoing notwithstanding, the Parties have agreed on a press
release to announce the execution of this Agreement in the form attached as Exhibit 12.2, together
with a corresponding conference call script and question/answer outline for use in responding to
inquiries about this Agreement. Thereafter, GSK and Santarus may each disclose to Third Parties
the information contained in such press release and question/answer outline without the need for
further approval by the other Party. Each Party agrees that it will cooperate fully with the other
with respect to all disclosures regarding or arising out of the activities under this Agreement as
required by the U.S. Securities Exchange Commission (or any foreign equivalent thereof) and any
other governmental authority, including requests for confidential treatment of proprietary
information of either Party included in any such disclosure.



     12.3 Trial Data; Publication. To the extent that GSK conducts any clinical trials
permitted under the terms and conditions of this Agreement, GSK may post the data generated from
such trials in accordance with GSK’s corporate policy on Public Disclosure and Access to Clinical
Trial and Observational Study Information Data. [***].



ARTICLE 13

TERM AND TERMINATION




     13.1 Term. The term of this Agreement (the “Term”) will commence on the Effective
Date and, unless sooner terminated as provided in this Article 13, shall continue in effect until
GSK has no remaining royalty payment obligations to Santarus pursuant to Section 7.2.



     13.2 Termination for Material Breach. Each Party will be entitled to terminate this
Agreement in its entirety at any time during the Term by written notice to the other Party in the
event that the other Party is in material default or breach of any of its obligations hereunder,
and fails to remedy any such default or breach within sixty (60) days or, in the case of a failure
to pay amounts due hereunder, within fifteen (15) days (respectively, the “Cure Period”) after
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notice thereof by the non-defaulting/non-breaching Party. If such default or breach is not
corrected within the applicable Cure Period, the non-defaulting/non-breaching Party will have the
right to immediately terminate this Agreement by giving written notice to the Party in default or
breach.



     13.3 Termination for Diligence Failure/Notice. Santarus may, upon written notice to
GSK referencing this Section 13.3, terminate this Agreement with respect to the applicable country
in the event of a Diligence Failure affecting such country as set forth in Section 4.2; provided
that GSK does not cure such Diligence Failure within sixty (60) days of such notice. In addition,
Santarus may terminate this Agreement with respect to any country, upon written notice to GSK
effective immediately, if GSK has given written notice pursuant to Section 4.1 that it does not
intend to launch or commercialize Licensed Products for applications in the Field in such country.



     13.4 Termination Without Cause.



          13.4.1 Mutual. The Parties may terminate this Agreement in its entirety at any time
and for any reason during the Term upon their mutual written agreement; or



          13.4.2 By GSK. GSK may terminate this Agreement in its entirety or with respect to
any particular country at any time and for any reason during the Term upon providing Santarus with
not less than six (6) months’ prior written notice referencing this Section 13.4.2 and specifying
termination of the Agreement in its entirety or the specific country(ies).



     13.5 Bankruptcy. Either Party may terminate this Agreement in its entirety at any
time during the Term by giving written notice to the other Party if the other Party files in any
court or agency pursuant to any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a
receiver or trustee of the Party or of its assets, or if the other Party is served with an
involuntary petition against it, filed in any insolvency proceeding, and such petition will not be
dismissed with sixty (60) days after the filing thereof, or if the other Party proposes or is a
party to any dissolution or liquidation, or if the other Party makes an assignment for the benefit
of creditors.



     13.6 General Effects of Expiration or Termination.



          13.6.1 Accrued Obligations. Expiration or termination of this Agreement for any
reason shall not release either Party from any obligation or liability which, at the time of such
expiration or termination, has already accrued to the other Party or which is attributable to a
period prior to such expiration or termination.



          13.6.2 Termination of License. Upon termination of this Agreement (but not
expiration), all rights and licenses granted to GSK pursuant to Section 2.1 shall concurrently
terminate, and Santarus shall thereafter have the right (itself or through Third Parties) to
continue the development, manufacture and commercialization of Licensed Products in the Field and
GSK Territory without obligation to GSK.



          13.6.3 Non-Exclusive Remedy. Notwithstanding anything herein to the contrary but
without limiting the last sentence of Section 4.2, termination of this Agreement by a Party shall
be without prejudice to other remedies such Party may have at law or equity.







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          13.6.4 General Survival. Sections 4.6, 4.7, 6.1, 6.2, 7.6, 9.3 and 9.4 and Articles
10, 11, 12, 14 and 15 shall survive expiration or termination of this Agreement for any reason.
Additionally, in the event of an expiration of this Agreement in accordance with its terms, but not
earlier termination the following shall survive: Sections 2.3, 4.5, 6.3, 8.2 and 8.4. Except as
otherwise provided in this Section 13.6.4 or in Section 13.7 or 13.8, all rights and obligations of
the Parties under this Agreement shall terminate upon expiration or termination of this Agreement
for any reason.



          13.6.5 Termination Press Releases. In the event of any termination of this Agreement
(whether in its entirety or as to a particular country) for any reason, the Parties shall cooperate
in good faith to coordinate public disclosure, if any, of such termination and the reasons
therefor, and shall not, except to the extent required by Applicable Law or the rules of a
recognized stock exchange, disclose such information without the prior approval of the other Party,
such approval not to be unreasonably withheld, conditioned or delayed. To the extent possible
under the situation, the terminating Party shall provide the non-terminating Party with a draft of
any such public disclosure it intends to issue [***] Business Days in advance and with the
opportunity to review and comment on such statement, it being understood that if the
non-terminating Party does not notify the terminating Party in writing within such [***] Business
Day period (or such shorter period if required by Applicable Law or and the rules of a recognized
stock exchange and, in each case as notified to the non-terminating Party in writing) of any
reasonable objections, such disclosure shall be deemed approved, and in any event the Parties shall
work diligently and reasonably to agree on the text of any such proposed disclosure in an
expeditious manner. The principles to be observed in such disclosures shall be accuracy,
compliance with Applicable Law and regulatory guidance documents, reasonable sensitivity to
potential negative reactions to such news and the need to keep investors and others informed
regarding the Parties’ business and other activities. Accordingly in such situation, the
non-terminating Party shall not withhold, condition or delay its approval of a proposed disclosure
that complies with such principles.



     13.7 [***].



     13.8 Effects of Certain Other Terminations. If GSK electively terminates this
Agreement in its entirety or with respect to a particular country pursuant to Section 13.4.2,
Santarus terminates this Agreement for a particular country in accordance with Section 13.3, either
Party terminates this Agreement pursuant to Section 13.2 or either Party terminates for the other
Party’s bankruptcy pursuant to Section 13.5, then:



          13.8.1 Regulatory Filings. GSK shall promptly assign and transfer to Santarus or its
nominee all Regulatory Filings for Licensed Products in the country(ies) affected by such
termination (or the entire GSK Territory if termination of this Agreement in its entirety) that are
held or controlled by or under authority of GSK or its Affiliates or Sublicensees, and shall take
such actions and execute such other instruments, assignments and documents as may be necessary to
effect the transfer of rights under the Regulatory Filings to Santarus. GSK shall cause each of
its Sublicensees to transfer any such Regulatory Filings to Santarus if this Agreement terminates.
If Applicable Law prevents or delays the transfer of ownership of a Regulatory Filing to Santarus,
GSK shall grant, and does hereby grant, to Santarus an exclusive and irrevocable right of access
and reference to such Regulatory Filing for Licensed Products, and shall cooperate fully to make
the




 




			
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benefits of such Regulatory Filings available to Santarus or its designee(s). Within [***]
after written notice of such termination, GSK shall provide to Santarus copies of all such
Regulatory Filings, and of all Data and other Know-How pertaining to the Licensed Products not
previously provided. Santarus shall be free to use and disclose such Regulatory Filings and other
items in connection with the exercise of its rights and licenses under this Section 13.8. In the
event that Santarus does not provide to GSK the identity of its nominee(s) within [***] of the
effective date of termination, GSK shall have the right to cancel the Regulatory Filings in the
relevant country(ies) for which such nominee was not provided.



          13.8.2 Technology Licenses. GSK hereby grants Santarus, effective upon the notice of
a termination described in this Section 13.8, a non-exclusive, irrevocable, fully paid up license
in the country(ies) effected by such termination (or the entire GSK Territory if termination of
this Agreement in its entirety), with the right to sublicense, under (a) any GSK IP; provided,
however the GSK IP shall not include any Patents or Know-How subject to payment obligations to a
Third Party, which GSK shall promptly disclose such obligations to Santarus in writing, unless
Santarus agrees in writing to reimburse all amounts owed to such Third Party as a result of
Santarus’ exercise of such license, and (b) any Know-How disclosed to Santarus under this Agreement
or developed or utilized by GSK in connection with the Licensed Products; in each case to make,
have made, use, sell, offer for sale and import Licensed Products.



          13.8.3 Trademarks. GSK hereby assigns and shall cause to be assigned to Santarus all
rights in and to any trademarks specific to one or more Licensed Products that GSK used with
Licensed Product(s) in the country(ies) affected by such termination (or the entire GSK Territory
if termination of this Agreement in its entirety). It is understood that such assignment shall not
include the name of GSK or any of its Affiliates or trademark for GSK or any Affiliate itself.



          13.8.4 Sublicensees. GSK’s sublicenses with respect to Licensed Products shall, at
the request of Santarus, be assigned to Santarus to the furthest extent possible in the
country(ies) effected by such termination (or the entire GSK Territory if termination of this
Agreement in its entirety). In the event Santarus does not request assignment of any such
sublicenses, then the rights of such Sublicensees with respect to Licensed Products shall terminate
upon termination of GSK’s rights with respect to Licensed Products.



          13.8.5 Transition Assistance. GSK agrees to fully cooperate, at its own expense, with
Santarus and its designee(s) to facilitate a smooth, orderly and prompt transition of the
development, manufacture and commercialization of Licensed Products to Santarus or its designee(s)
in the country(ies) effected by such termination (or the entire GSK Territory if termination of
this Agreement in its entirety). Without limiting the foregoing, GSK shall promptly provide
Santarus copies of customer lists, customer data and other customer information and marketing and
promotional materials relating to Licensed Products at GSK’s expense, which Santarus shall have the
right to use for any purpose related to Licensed Products. Upon request by Santarus, GSK shall
transfer to Santarus some or all quantities of Licensed Products in GSK’s or its Affiliates’
possession (as requested by Santarus) intended for sale in the country(ies) effected by such
termination (or the entire GSK Territory if termination of this Agreement in its entirety), within
[***] after the effective date of such termination; provided, however, that Santarus shall
reimburse GSK for the out-of-pocket costs that GSK actually incurred to manufacture or otherwise
acquire the




 




			
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34









 







quantities so provided to Santarus. If any Licensed Product was manufactured by any Third
Party for GSK, or GSK had contracts with vendors which contracts are necessary or useful for
Santarus to take over responsibility for the Licensed Products in the country(ies) effected by such
termination (or the entire GSK Territory if termination of this Agreement in its entirety), then
GSK shall to the extent possible and requested in writing by Santarus, assign all of the relevant
Third-Party contracts to Santarus, and in any case, GSK agrees to cooperate with Santarus to ensure
uninterrupted supply of Licensed Products. If GSK or its Affiliate or Sublicensee manufactured any
Licensed Product at the time of such termination, then GSK (or its Affiliate or Sublicensee) shall
continue to provide for manufacturing of such Licensed Product for Santarus, at [***] therefor,
from the date of written notice of such termination until such time as Santarus is able, using
Commercially Reasonable Efforts to do so but no longer than [***] after the effective date of such
termination, to secure an acceptable alternative commercial manufacturing source from which
sufficient quantities of Licensed Product may be procured and legally sold in the country(ies)
effected by such termination (or the entire GSK Territory if termination of this Agreement in its
entirety).



          13.8.6 Return of Materials. Within [***] after the effective date of a termination of
this Agreement in its entirety, GSK shall destroy all tangible items comprising, bearing or
containing any Confidential Information of Santarus that are in GSK’s or its Affiliates’ possession
or control, and provide written certification of such destruction, or prepare such tangible items
of Confidential Information for shipment to Santarus, as Santarus may direct, at Santarus’ expense;
provided that GSK may retain one copy of such Confidential Information for its legal archives.



ARTICLE 14

DISPUTE RESOLUTION




     14.1 Informal Resolution. In the event of any dispute, controversy or claim arising
out of, relating to or in connection with any provision of this Agreement or the rights or
obligations of the Parties hereunder (a “Dispute”), the Parties will try to settle their
differences amicably between themselves as contemplated herein. Either Party may initiate such
informal dispute resolution by sending written notice setting forth in reasonable detail the nature
of the dispute (the “Dispute Notice”) to the other Party. Within thirty (30) days after such
notice, the President of GSK’s International Pharmaceutical business, or his/her designee with
authority to resolve such matter, and the Chief Executive Officer of Santarus, or his/her designee
with authority to resolve such matter, shall meet to negotiate in good faith a resolution to the
dispute within such thirty (30) day period. If such representatives are unable to promptly resolve
such disputed matter within the said thirty (30) days, either Party may thereafter initiate
arbitration proceedings in accordance with Section 14.2. The provisions of this Section 14.1 will
not restrict in any way the Parties’ rights to seek preliminary injunctive or other equitable
relief from any court having jurisdiction.



     14.2 Arbitration. If a dispute is unresolved following attempted informal dispute
resolution pursuant to Section 14.1, then either Party may initiate arbitration before a panel of
three (3) arbitrators in accordance with the commercial arbitration rules of the American
Arbitration Association (“AAA”) then in force; provided, however, that any dispute related to the
infringement, validity or enforcement of any intellectual property right shall be heard by a court
of competent jurisdiction in the country where such right exists. The following provisions shall
apply with respect to such arbitration:




 




			
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          14.2.1 Arbitrators. Within thirty (30) days after receipt of the notice of
arbitration by the Party not initiating such arbitration, each Party shall appoint an arbitrator
who is independent of the Parties (which arbitrator shall have reasonable knowledge regarding the
pharmaceutical industry), and those two arbitrators shall appoint the third arbitrator within
thirty (30) days. In the event that the two (2) arbitrators are unable to agree on a third within
the required time, either Party may apply under the applicable rules of the AAA for the appointment
of that third arbitrator, and the selection of an arbitrator under such rules of the AAA shall be
final and binding on the Parties.



          14.2.2 Process. The Parties shall seek to timely appoint their respective arbitrators
and to have the full panel of three (3) arbitrators appointed within three (3) months after the
non-initiating Party received the notice of arbitration, and seek to conclude the arbitration
within nine (9) months after the full arbitration panel has been appointed. The arbitration panel
shall determine what discovery will be permitted; provided that the arbitration panel shall permit
such discovery as the panel deems necessary to permit a fair resolution of the dispute. The
arbitrators shall not order discovery against one Party of a type or nature that is not available
against the other Party. The place of arbitration shall be [***]. The arbitration shall be
conducted in the English language and all evidence shall be presented in English; provided that any
evidence original in a language other than English shall be provided in the original language with
a certified translation in English.



          14.2.3 Final and Binding. The Parties agree that the award rendered shall be final
and binding upon the Parties, and shall be the sole and exclusive remedy with respect to all
disputes, controversies, claims and counterclaims presented to the arbitrators (which shall not
include any dispute related to the infringement, validity or enforcement of any intellectual
property).



          14.2.4 Timing. The Parties and the arbitrators shall use all reasonable efforts to
complete any such arbitration within one (1) year from the filing of notice of a request for such
arbitration unless a Party can demonstrate to the arbitrators that the complexity of the issues or
other reasons warrant the extension of the one (1) year period. In such event, the arbitrators may
extend such period as reasonably required.



          14.2.5 Costs and Fees. [***]. In determining the appropriate remedy(ies) hereunder,
the arbitrators may take into account the number of prior breaches committed by a breaching Party,
the number of prior accusations of breaches alleged by the Parties and any prior breaches found to
be in bad faith.



          14.2.6 Not Public. The arbitration proceedings and the decision shall not be made
public without the joint consent of the Parties, and each Party shall maintain the confidentiality
of such proceedings and decision unless otherwise permitted by the other Party; provided either
Party makes such disclosures as are required to comply with Applicable Law.



     14.3 Courts. Nothing in this Agreement shall be deemed as preventing any Party from
seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over
the Parties and the subject matter of the dispute as necessary to protect any Party’s name,
proprietary information, trade secrets, know-how or any other proprietary rights. Judgment upon
any arbitration award hereunder may be entered in any court having jurisdiction, or application may
be made to




 




			
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36









 







such court for judicial acceptance of the award or an order of enforcement, as the case may
be. The Parties hereby consent to the jurisdiction of the state and Federal courts in and for
[***].



ARTICLE 15

GENERAL PROVISIONS




     15.1 Compliance with Laws/Other. Notwithstanding anything to the contrary contained
herein, all rights and obligations of the Parties are subject to prior compliance with, and each
Party shall comply with, all Applicable Laws, including obtaining all necessary approvals required
by the applicable agencies of the governments of the United States and foreign jurisdictions with
respect to the export to, and sale in, certain countries of products and technologies. In this
regard, the Parties acknowledge that certain of the countries within the GSK Territory are
embargoed countries by United States which may prevent GSK from developing, manufacturing or
commercializing Licensed Products in such countries unless such embargo is lifted or GSK obtains
necessary waivers from the United States government.



     15.2 Notices. Notices required or permitted under this Agreement will be in writing
and sent by prepaid registered or certified air mail or by overnight express mail (e.g., FedEx), or
by facsimile (receipt confirmed and copy provided by prepaid registered or certified air mail
letter or by overnight express mail (e.g., FedEx)), and will be deemed to have been properly served
to the addressee upon receipt of such written communication, to the following addresses of the
Parties, or such other address as each Party may from time to time designate by written notice to
the other Party as set forth herein:



     If to Santarus:


Santarus, Inc.

10590 West Ocean Air Drive, Suite 200

San Diego, California 92130

Attention: President and CEO

Facsimile No.: 858-314-5701




     with a copy to:


Santarus, Inc.

10590 West Ocean Air Drive, Suite 200

San Diego, California 92130

Attention: Legal Affairs Department

Facsimile No.: [***]




     If to GSK:


GlaxoSmithKline Services Unlimited

980 Great West Road

Brentford

Middlesex

TW8 9GS

United Kingdom

Attention : Senior Vice President Commercial Development GSK




 




			
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37









 







Pharmaceuticals International

Facsimile No: — [***]



with a copy to:

GlaxoSmithKline Serrvices Unlimited

980 Great West Road

Brentford

Middlesex

TW8 9GS

United Kingdom

Attention : Senior Vice President Legal Operations International & Japan

Facsimile No: — [***]




     15.3 Governing Law. The form, execution, validity, construction and effect of this
Agreement will be governed by and construed in accordance with the laws of the State of New York,
without regard to the choice-of-law provisions thereof.



     15.4 Performance by Affiliates. The Parties recognize that each Party may perform
some or all of its obligations under this Agreement through Affiliates; provided, however, that
each Party will remain responsible for and guarantees the performance by its Affiliates and will
cause its Affiliates to comply with the provisions of this Agreement in connection with such
performance. Each Party hereby expressly waives any requirement that the other Party exhaust any
right, power or remedy, or proceeds against an Affiliate, for any obligation or performance
hereunder prior to proceeding directly against such Party.



     15.5 Miscellaneous.



          15.5.1 Binding Effect. This Agreement will be binding upon and inure to the benefit
of the Parties and their respective legal representatives, successors and permitted assigns.



          15.5.2 Headings. Article and Section headings are inserted for convenience of
reference only and do not form a part of this Agreement.



          15.5.3 Counterparts. This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which will be deemed an original.



          15.5.4 Entire Agreement; Amendment; Waiver. This Agreement, together with the
Distribution Agreement, constitutes the entire understanding of the Parties with respect to the
subject matter hereof and supersedes all previous writings and understandings, including the
Confidentiality Agreement. This Agreement may be amended, modified, superseded or cancelled, and
any of the terms may be waived, only by a written instrument executed by each Party or, in the case
of waiver, by the Party waiving compliance. No waiver by any Party of any condition or of the
breach of any term contained in this Agreement, whether by conduct, or otherwise, in any one or
more instances, will be deemed to be, or considered as, a further or continuing waiver of any such
condition or of the breach of such term or any other term of this Agreement.




 




			
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          15.5.5 No Third Party Beneficiaries. Except as expressly provided in Sections 10.1
and 10.2 (in either case subject to Section 10.3), no Third Party, including any employee of any
Party to this Agreement, will have or acquire any rights by reason of this Agreement.



          15.5.6 Assignment and Successors. Neither party may assign or transfer its rights
under this Agreement or delegate its duties hereunder, by merger, sale of assets, operation of law
or otherwise, without the prior written consent of the other; provided, however, that (a) Santarus
may assign this Agreement without such consent in connection with the sale or transfer of all or
substantially all of its business or assets related to the Licensed Products, and (b) GSK may
assign this Agreement without such consent of Santarus to an Affiliate or an entity that is not a
Competing Third Party and which acquires all or substantially all of GSK’s pharmaceuticals
marketing and distribution business in the GSK Territory, whether by merger, sale of assets or
otherwise. Any attempted assignment, sale or transfer in violation of the prior sentence will be
void. Upon any permitted assignment or transfer of this Agreement by either Party, (i) the other
Party shall be given prompt written notice of such assignment and (ii) the assignee shall agree in
writing to be bound by the terms and conditions set forth herein.



          15.5.7 Severability. If any provision of this Agreement is or becomes invalid or is
ruled invalid by any court of competent jurisdiction or is deemed unenforceable, such provision
shall be considered severed from this Agreement, and it is the intention of the Parties that the
remainder of the Agreement will not be affected. The Parties will make a good faith effort to
replace any invalid or unenforceable provision with a valid and enforceable one which as closely as
possible achieves the objectives contemplated by the Parties when entering this Agreement.



          15.5.8 Further Actions. Each Party agrees to execute, acknowledge and deliver such
further instruments, and to do all such other commercially reasonable acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.



          15.5.9 Relationship of the Parties. It is not the intent of the Parties hereto to
form any partnership or joint venture. Each Party will, in relation to its obligations hereunder,
be deemed to be and will be an independent contractor, and nothing in this Agreement will be
construed to give such Party the power or authority to act as agent for the other Party for any
purpose, or to bind or commit the other Party in any way whatsoever.



[The remainder of this page is intentionally left blank; signature page follows.]




39









 





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



	 	 	 	 	 	 	 	 	 	 	 
	GLAXO GROUP LIMITED	 	 	 	SANTARUS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Stephen J. Crookes
	 	 	 	By:
	 	/s/ Gerald T. Proehl
	 	 
	 

	 	 

Name: Stephen J. Crookes
	 	 	 	 	 	 

Name: Gerald T. Proehl	 	 
	 

	 	Title:   VP, Business Development — GSKI
	 	 	 	 	 	Title:   President and CEO	 	 






List of Exhibits:

     Exhibit 1.19: GSK Territory

     Exhibit 1.36: Santarus Patents

     Exhibit 12.2: Press Release





 









 








EXHIBIT 1.19

GSK TERRITORY




	 	 	 	 	 
	Afghanistan

	 	Guinea
	 	Paraguay
	Algeria

	 	Guinea Bissau
	 	Peru
	Angola

	 	Guyana
	 	Philippines
	Argentina

	 	Honduras
	 	Qatar
	Bahrain

	 	Hong Kong
	 	Rwanda
	Belize

	 	Indonesia
	 	Sao Tome & Principe
	Benin

	 	Iran
	 	Saudi Arabia
	Bhutan

	 	Iraq
	 	Senegal
	Bolivia

	 	Jordan
	 	Seychelles
	Botswana

	 	Kenya
	 	Sierra Leone
	Brazil

	 	South Korea
	 	Singapore
	Burkina Faso

	 	Kuwait
	 	Somalia
	Burundi

	 	Laos
	 	South Africa
	Cambodia

	 	Lebanon
	 	Sudan
	Cameroon

	 	Liberia
	 	Surinam
	Caribbean

	 	Libya
	 	Syria
	Central African Republic

	 	Madagascar
	 	Taiwan
	Chad

	 	Malawi
	 	Tanzania
	Chile

	 	Malaysia
	 	Thailand
	China

	 	Maldives
	 	Togo
	Colombia

	 	Mali
	 	Tunisia
	Comoros

	 	Mauritania
	 	Turkey
	Congo

	 	Mauritius
	 	UAE
	Costa Rica

	 	Mexico
	 	Uganda
	Cote d’lvoire

	 	Morocco
	 	Uruguay
	Djibouti

	 	Mozambique
	 	Venezuela
	DR Congo

	 	Myanmar
	 	Vietnam
	Ecuador

	 	Namibia
	 	Yemen
	Egypt

	 	Nepal
	 	Zambia
	El Salvador

	 	New Zealand
	 	Zimbabwe
	Equatorial Guinea

	 	Nicaragua	 	 
	Eritrea

	 	Niger	 	 
	Ethiopia

	 	Nigeria	 	 
	Gabon

	 	North Korea	 	 
	Gambia

	 	Oman	 	 
	Ghana

	 	Panama	 	 
	Guatemala

	 	Papua New Guinea	 	 







 









 








EXHIBIT 1.36

SANTARUS PATENTS




	 	 	 	 	 	 	 
	Title	 	Country	 	Application Number	 	Status/Notes
	MISSOURI PATENT PORTFOLIO	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	[***]

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




 









 






	 	 	 	 	 	 	 
	Title	 	Country	 	Application Number	 	Status/Notes
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
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	***	 	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the omitted portions.



 









 






EXHIBIT 12.2




PRESS RELEASE




 









 










	 	 	 	 	 
	COMPANY CONTACT:

	 	 
	 	INVESTOR CONTACT:
	Martha L. Hough

	 	 	 	Lippert/Heilshorn & Associates, Inc.
	VP Finance & Investor Relations

	 	 	 	Jody Cain (jcain@lhai.com)
	(858) 314-5824

	 	 	 	Eleanor Tang (etang@lhai.com)
	Debra P. Crawford

	 	 	 	(310) 691-7100
	Chief Financial Officer
	 	 	 	 
	(858) 314-5708
	 	 	 	 






For Immediate Release




SANTARUS LICENSES RIGHTS TO GLAXOSMITHKLINE FOR ZEGERID

IMMEDIATE-RELEASE OMEPRAZOLE PRODUCTS IN OVER 100 COUNTRIES




Santarus and GSK also sign distribution agreement for ZEGERID prescription products

in Puerto Rico and U.S. Virgin Islands




Conference call to begin at 5:00 p.m. Eastern time today



SAN DIEGO (December 3, 2007) — Santarus, Inc. (NASDAQ: SNTS), a specialty pharmaceutical company,
today announced that it has entered into agreements granting exclusive rights to GlaxoSmithKline
plc (GSK), to commercialize prescription and over-the-counter immediate-release omeprazole products
(Licensed Products) for a number of markets in GSK’s International Region (including Africa, Asia,
the Middle-East, and Central and South America), and to distribute and sell ZEGERID®
brand prescription products in Puerto Rico and the U.S. Virgin Islands (USVI).



Under the license agreement, GSK will be responsible for the development, manufacture and
commercialization of Licensed Products in up to 114 countries, excluding the U.S., Europe,
Australia, Japan and Canada. In addition, under a separate distribution agreement, GSK will
distribute, market and sell ZEGERID brand prescription products in Puerto Rico and the USVI
beginning in the first quarter of 2008. GSK will bear all costs for its activities under the
license and distribution agreements.



GSK will pay Santarus an $11.5 million upfront fee and tiered double digit royalties, subject to
reduction in certain circumstances, on net sales of any products sold under the license and
distribution agreements. The term of the license agreement continues so long as GSK is obligated
to pay royalties and the term of the distribution agreement continues as long as GSK sells the
products, unless the agreements are terminated earlier by either GSK or Santarus under specified
circumstances. GSK has an option to make a buy-out payment 20 years after the effective date of
the agreements, after which time, GSK’s royalty obligations generally would end. To support GSK’s
initial launch costs, Santarus will waive the first $2.5 million of aggregate royalties payable
under the license and distribution agreements.



“As a leading global pharmaceutical company, GSK has well established international
commercialization capabilities. We believe its demonstrated success in the gastrointestinal
therapeutic area make GSK an ideal partner for Santarus in the covered markets,” said Gerald T.
Proehl, president and chief executive officer of Santarus. “We also believe this relationship with
GSK is a major advancement of our strategic objective to leverage our immediate-release proton pump
inhibitor intellectual property in international markets and to further diversify our potential
sources of future revenues.”



“This agreement combines GSK’s commercial strength in these countries with a great opportunity in
the form of ZEGERID immediate-release omeprazole products,” commented Dr. Russell Greig, President,
GSK Pharmaceuticals International.




 









 








      Conference Call




     Santarus has scheduled an investor conference call regarding this announcement at 5:00 p.m.
Eastern time (2:00 p.m. Pacific time) today, December 3, 2007. Individuals interested in
participating in the call may do so by dialing 888-803-8275 for domestic callers, or 706-643-7736
for international callers. A telephone replay will be available for 48 hours following conclusion
of the call by dialing 800-642-1687 for domestic callers, or 706-645-9291 for international
callers, and entering reservation code 26421314. The live conference call also will be available
via the Internet by visiting the Investor Relations section of the Santarus Web site at
www.santarus.com, and a recording of the call will be available on the company’s Web site for 14
days following the completion of the call.



      About Currently Marketed ZEGERID Prescription Products in the U.S.




     ZEGERID (omeprazole/sodium bicarbonate) Capsules and Powder for Oral Suspension contain a
combination of omeprazole, a proton pump inhibitor (PPI), and sodium bicarbonate, an antacid, which
raises the gastric pH and thus protects the omeprazole from acid degradation.



     In the U.S., ZEGERID Capsules and ZEGERID Powder for Oral Suspension are indicated for the
treatment of heartburn and other symptoms associated with gastroesophageal reflux disease (GERD),
erosive esophagitis, and gastric and duodenal ulcers. ZEGERID Powder for Oral Suspension is also
indicated for the reduction of risk of upper gastrointestinal bleeding in critically ill patients.



     These ZEGERID products offer a distinct pharmacological profile — rapidly reaching maximal plasma
levels (in approximately 30 minutes) and providing strong acid control, with a median 24-hour
gastric pH of greater than 4 ranging from 12.2 hours to 18.6 hours, depending on the strength and
dosage form, after repeated once-daily dosing. ZEGERID can be conveniently taken once-a-day on an
empty stomach, at least one hour before a meal.



PPIs are widely prescribed for a variety of diseases and disorders of the upper digestive tract.
All currently marketed oral PPIs in the U.S., other than ZEGERID, are delayed-release formulations
that utilize an enteric coating to protect the PPI from acid degradation, thereby delaying
absorption and initial acid suppression. Unlike delayed-release PPIs, ZEGERID Capsules and Powder
for Oral Suspension utilize an antacid in lieu of an enteric coating. The antacid neutralizes
stomach acid and protects the PPI, omeprazole, from gastric acid degradation and allows for its
rapid absorption and suppression of gastric acid.




           Important Safety Information



     The most frequently reported adverse events with ZEGERID are headache, diarrhea, and abdominal
pain. In critically ill patients treated with ZEGERID, adverse events generally reflected the
serious, underlying medical condition of the patients, and were similar for patients treated with
ZEGERID and with the comparator (acid-controlling) drug. Symptomatic response to therapy does not
preclude the presence of gastric malignancy. Atrophic gastritis has been noted occasionally in
gastric corpus biopsies from patients treated long term with omeprazole.



 









 





     ZEGERID Capsules contain 303 mg of sodium per dose. ZEGERID Powder for Oral Suspension
contains 460 mg of sodium per dose. This should be taken into consideration for patients on a
sodium-restricted diet. Sodium bicarbonate is contraindicated in patients with metabolic alkalosis
and hypocalcemia. ZEGERID is contraindicated in patients with known hypersensitivity to any
component of the formulation.



     Since both 20 mg and 40 mg ZEGERID contain the same amount of sodium bicarbonate (1100 mg in
capsules, 1680 mg in packets of powder for oral suspension), two 20 mg capsules are not equivalent
to, and should not be substituted for, one 40 mg capsule, and two 20 mg packets are not equivalent
to, and should not be substituted for, one 40 mg packet.



     About Santarus




     Santarus, Inc. is a specialty pharmaceutical company focused on acquiring, developing and
commercializing proprietary products that address the needs of patients treated by
gastroenterologists or primary care physicians. The company’s current marketing efforts are
primarily focused on ZEGERID Capsules and Powder for Oral Suspension. These products are
immediate-release formulations of omeprazole, a widely prescribed PPI. More information about
Santarus is available on the company’s Web site at www.santarus.com.


Santarus cautions you that statements included in this press release that are not a description of
historical facts are forward-looking statements. The inclusion of forward-looking statements
should not be regarded as a representation by Santarus that any of its plans will be achieved.
Actual results may differ materially from those set forth in this release due to the risks and
uncertainties inherent in Santarus’ business, including, without limitation: risks related to the
license and distribution agreements with GSK, including the success of GSK’s development,
distribution, sales and marketing activities, GSK’s ability to obtain regulatory approvals in the
licensed international markets, GSK’s level of commitment and the potential for termination of one
or both of the agreements; the scope and validity of patent protection for ZEGERID and other
licensed products and Santarus’ and GSK’s ability to commercialize ZEGERID and other licensed
products without infringing the patent rights of others; unexpected adverse side effects or
inadequate therapeutic efficacy of ZEGERID or other licensed products that could delay or prevent
product development or commercialization, or that could result in recalls or product liability
claims; competition from other pharmaceutical or biotechnology companies; and other risks detailed
in Santarus’ prior press releases as well as in public periodic filings with the Securities and
Exchange Commission.



You are cautioned not to place undue reliance on these forward-looking statements, which speak only
as of the date hereof. All forward-looking statements are qualified in their entirety by this
cautionary statement and Santarus undertakes no obligation to revise or update this news release to
reflect events or circumstances after the date hereof. This caution is made under the safe harbor
provisions of Section 21E of the Private Securities Litigation Reform Act of 1995.




     Santarus® and ZEGERID® are registered trademarks of Santarus, Inc.