exv10w37



 





Exhibit 10.37




EMPLOYMENT AGREEMENT




     THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of June 1, 2007 (the
“Effective Date”), is hereby entered into in the State of Maryland by and between SUCAMPO
PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), and SACHIKO KUNO, Ph.D.
(“Employee”).



     WHEREAS, Employee is one of the founders of the Company and has been employed by the Company
for some time, most recently as its President, Chairman of the Board of Directors and as a member
of the Board of Directors, pursuant to the terms of an Employment Agreement effective as of June
16, 2006 and amended by Letter Agreement dated October 30, 2006;



     WHEREAS, Employee has voluntarily resigned from her positions with the Company as President,
Chairman of its Board of Directors, and as a member of its Board of Directors effective May 31,
2007;



     WHEREAS, Employee possesses certain skills, experience or expertise which will be of continued
value to the Company;



     WHEREAS, the parties acknowledge that Employee’s abilities and services are unique and will
continue to significantly enhance the business prospects of the Company; and



     WHEREAS, in light of the foregoing, the Company desires to continue to employ Employee in a
part-time capacity as Advisor, International Business Development, Founding CEO and Co-Founder, and
Employee desires to accept such employment.



 









 





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



Article 1. Employment Agreement




     1.1 Employment and Duties



          The Company offers and Employee hereby accepts part-time employment with the Company for the
Term (as hereinafter defined) as Advisor, International Business Development, Founding CEO and
Co-Founder, and in connection therewith, agrees to perform such duties as Employee shall reasonably
be assigned by President and CEO, Dr. Ryuji Ueno consistent with Employee’s working schedule of
eight (8) hours per week. Employee hereby warrants and represents that Employee has no contractual
commitments or other obligations to third parties inconsistent with Employee’s acceptance of this
employment and performance of the obligations set forth in this Agreement. Employee shall perform
such duties and carry out Employee’s responsibilities hereunder faithfully and to the best of
Employee’s ability. Employee will perform all of Employee’s responsibilities in compliance with
all applicable laws.




Article 2. Employment Term




     2.1 Term



     The term of Employee’s employment hereunder (the “Term”) shall be deemed to commence
on the Effective Date and shall end on the first anniversary of the Effective Date, unless sooner
terminated as hereinafter provided; provided, however, that the Term shall be
automatically renewed and extended for an additional period of one (1) year on each anniversary



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thereafter unless either party gives a written notice of non-renewal to the other party at
least sixty (60) days prior to such anniversary.



     2.2 Survival on Merger or Acquisition



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



Article 3. Compensation and Benefits




     3.1 Compensation




     (a) Base Salary. The Company shall pay Employee a salary at an annual rate
that is not less than Seventy-six Thousand Dollars ($76,000.00), to be paid in bi-weekly
installments, in arrears (the “Base Salary”). Thereafter, the Base Salary will be
reviewed by the Compensation Committee of the Board of Directors (the “Compensation
Committee”) at least annually, and its recommendations shall be reviewed and approved by the
independent members of the Board. Base Salary may, in the sole discretion of the
independent Directors, be increased, but not decreased (unless mutually agreed by Employee
and the Company).




     (b) Bonuses. Employee shall be eligible to receive an annual bonus award in
recognition of Employee’s contributions to the success of the Company pursuant to the
Company’s management incentive bonus program as it may be amended or modified from time to
time. The bonus award shall be based on an annual incentive target of fifty



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percent (50%) of Employee’s Base Salary and determined by the Compensation Committee’s
assessment of Employee’s achievement of annual objectives. The Compensation Committee’s
recommendation shall be reviewed and approved by the independent members of the Board. The
decision to make an award and the amount of any award shall be determined by the independent
Directors, in their sole discretion.




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



     3.2 Participation in Benefit Plans



     Based upon Employee’s part-time working schedule, Employee will not be eligible to participate
in employee benefit plans or programs of the Company, except as expressly provided in this
Agreement.



     3.3 Expenses



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



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     3.4 Parking



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



Article 4. Termination of Employment




     4.1 Termination Upon Death or Disability



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



     4.2 Company’s and Employee’s Right to Terminate



     This Agreement and Employee’s employment hereunder may be terminated at any time and for any
reason by the Company or by Employee, upon thirty (30) days prior written notice to the other. In
the event the Company should give Employee notice of termination, the Company may, at its option,
elect to provide Employee with salary in lieu of Employee’s continued active employment during the
notice period.



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Article 5. Employment Covenants




     5.1 Definitions



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




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




     (b) “Confidential Information” shall mean all confidential and proprietary
information of the Company, its Predecessors and Affiliates, whether in written, oral,
electronic or other form, including but not limited to trade secrets; technical, scientific
or business information; processes; works of authorship; Inventions; discoveries;
developments; systems; chemical compounds; computer programs; code; algorithms; formulae;
methods; ideas; test data; know how; functional and technical specifications; designs;
drawings; passwords; analyses; business plans; information regarding actual or demonstrably
anticipated business, research or development; marketing, sales and pricing strategies; and
information regarding the Company’s current and prospective consultants, customers,
licensors, licensees, investors and personnel, including their names, addresses, duties and
other personal characteristics. Confidential Information does not include information that
(i) is in the public domain, other than as a result of an act of misappropriation or breach
of an obligation of confidentiality by any person; (ii)



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Employee can verify by written records kept in the ordinary course of business was in
Employee’s lawful possession prior to its disclosure to Employee; (iii) is received by
Employee from a third party without a breach of an obligation of confidentiality owed by the
third party to the Company and without the requirement that Employee keep such information
confidential; or (iv) Employee is required to disclose by applicable law, regulation or
order of a governmental agency or a court of competent jurisdiction. If Employee is
required to make disclosure pursuant to clause (iv) of the preceding sentence as a result of
the issuance of a court order or other government process, Employee shall (a) promptly, but
in no event more than 72 hours after learning of such court order or other government
process, notify, pursuant to Section 6.1 below, the Company; (b) at the Company’s expense,
take all reasonable necessary steps requested by the Company to defend against the
enforcement of such court order or other government process, and permit the Company to
intervene and participate with counsel of its choice in any proceeding relating to the
enforcement thereof; and (c) if such compelled disclosure is required, Employee shall
disclose only that portion of the Confidential Information that is necessary to meet the
minimum legal requirement imposed on Employee.




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



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




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




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



     5.2 Nondisclosure and Nonuse 



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



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     5.3 Other Confidentiality Obligations 



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



     5.4 Return of Confidential Information 



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



     5.5 Confidential Information of Others 



     Employee represents that Employee’s performance of all the terms of this Agreement and
Employee’s employment with the Company do not and will not breach any agreement to keep in



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confidence proprietary information, knowledge or data with regard to which Employee has
obligations of confidentiality or nonuse, and Employee shall not disclose to the Company or cause
the Company to use any such confidential proprietary information, knowledge or data belonging to
any previous employer of Employee or other person, except as such disclosure or use may be
authorized in writing by the previous employer or other person. Employee represents that Employee
has not brought and will not bring to the Company or use at the Company any confidential materials
or documents of any former employer or other person that are not generally available to the public,
unless express written authorization for their possession and use has been obtained from such
former employer or other person. Employee agrees not to enter into any agreement, whether written
or oral, that conflicts with these obligations.



     5.6 Other Obligations 



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



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



     Employee hereby assigns to the Company all right, title and interest in all intellectual
property, including any patent applications, trade secrets, know how, copyrights, software, or
trademarks associated with the Employee Work Product and Confidential Information. Employee hereby
acknowledges and agrees that all Employee Work Product subject to copyright protection constitutes
“work made for hire” under United States copyright laws (17 U.S.C. § 101) and is owned exclusively
by the Company. To the extent that title to any Employee Work Product subject to copyright
protection does not constitute a “work for hire,”



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and to the extent title to any other Employee Work Product does not, by operation of law or
otherwise, vest in the Company, all right, title, and interest therein, including, without
limitation, all copyrights, patents and trade secrets, and all copyrightable or patentable subject
matter, are hereby irrevocably assigned to the Company. Employee shall promptly disclose to the
Company in writing all Employee Work Product. Employee shall, without any additional compensation,
execute and deliver all documents or instruments and give the Company all assistance it requires to
transfer all right, title, and interest in any Employee Work Product to the Company; to vest in the
Company good, valid and marketable title to such Employee Work Product; to perfect, by registration
or otherwise, trademark, copyright and patent protection of the Company with respect to such
Employee Work Product; and otherwise to protect the Company’s trade secret and proprietary interest
in such Employee Work Product. Employee hereby irrevocably designates and appoints the Company and
its duly authorized officers and agents as Employee’s agents and attorneys-in-fact to act for and
on Employee’s behalf, and to execute and file any documents and to do all other lawfully permitted
acts to further the purposes of this Section 5.7 with the same legal force and effect as if
executed by Employee.



     5.8 Representations 



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



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     5.9 Inventions, Intellectual Property and Equipment Not Transferred 



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



     5.10 Effect of Patent Access Agreement



     Pursuant to the Patent Access Agreement among Sucampo AG (“SAG”), Sucampo Pharmaceuticals,
Inc. (“SPI”), Sucampo Pharma, Ltd. (“SPL”), and Sucampo Pharma Europe, Ltd. (“SPE”), SAG has
licensed certain of its patented technology and know-how to SPI, SPL, and SPE on an exclusive basis
in their respective Territories (as that term is defined in the Patent Access Agreement). The
Patent Access Agreement contains provisions pursuant to which patented technology or know-how owned
by SAG is either (i) not licensed to SPI, SPL, or SPE, or (ii) if licensed by SAG to SPI, SPL, or
SPE, will be transferred back or revert to SAG under certain circumstances. In the event that the
provisions of this Agreement and the Patent Access Agreement conflict with respect to the transfer
of or right to use any patented technology or know-how covered by the Patent Access Agreement, the
parties agree that the provisions of the Patent Access Agreement shall control.



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     5.11 Conflicting Employment



     During the Term, and without prior approval of the Board of Directors, Employee shall not
directly or indirectly engage in any activity competitive with or adverse to the Company’s business
or welfare.



     5.12 Covenant Not to Compete



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




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




     (b) Judicial Construction. Employee and the Company agree that, if the period
of time or the scope of this Covenant Not to Compete shall be adjudged unreasonably
overbroad in any court proceeding, then the period of time and/or scope shall be modified
accordingly, so that this covenant may be enforced with respect to such



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services or geographic areas and during such period of time as is judged by the court
to be reasonable.




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




     “Conflicting Product” means any product, method or process, system or
service of any person or organization other than the Company that is the same as,
similar to or interchangeable with any product, method or process, system or service
involving prostones, prostone compounds or derivates, or any prostone-related
technology.




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



     5.13 Non-Solicitation



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



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     5.14 Judicial Enforcement



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



Article 6. Miscellaneous




     6.1 Notices



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




	 	To Company: 	 Sucampo Pharmaceuticals, Inc.

4733 Bethesda Avenue, Suite 450

Bethesda, Maryland 20814

Attention: Chairperson, Board of Directors
	 
	 	To Employee: 	 Sachiko Kuno, Ph.D.

24687 Yacht Club Road

St. Michael, Maryland 21663




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




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     6.2 Headings



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



     6.3 Modifications; Waiver



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



     6.4 Entire Agreement



     This Agreement, together with the Exhibits hereto, contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all other agreements, oral or
written, heretofore made with respect thereto including, without limitation, that certain agreement
between Employee and the Company dated and effective as of June 16, 2006, as amended by letter
agreement dated October 30, 2006.



     6.5 Severability



     Any provision of this Agreement that may be prohibited by, or unlawful or unenforceable under,
any applicable law of any jurisdiction shall, as to such jurisdiction, be ineffective without
affecting any other provision hereof. To the full extent, however, that the provisions of such



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applicable law may be waived, they are hereby waived, to the end that this Agreement be deemed
to be a valid and binding agreement enforceable in accordance with its terms.




     6.6 Controlling Law



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



     6.7 Arbitration



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



     6.8 Assignments



     Subject to obtaining Employee’s prior approval, which shall not be unreasonably withheld or
delayed, the Company shall have the right to assign this Agreement and to delegate



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all rights, duties and obligations hereunder to any entity that controls the Company, that the
Company controls or that may be the result of the merger, consolidation, acquisition or
reorganization of the Company and another entity. Employee agrees that this Agreement is personal
to Employee and Employee’s rights and interest hereunder may not be assigned, nor may Employee’s
obligations and duties hereunder be delegated (except as to delegation in the normal course of
operation of the Company), and any attempted assignment or delegation in violation of this
provision shall be void.



     6.9 Read and Understood



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



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.



	 	 	 	 	 
	 	 	SUCAMPO PHARMACEUTICALS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Ryuji Ueno
	 

	 	 	 	 
	 

	 	 	 	[NAME]
	 

	 	Its:
	 	Chairperson, Board of Directors
	 
	 	 	 	 
	 	 	/s/ Sachiko Kuno
	 	 	 
	 	 	SACHIKO KUNO, Ph.D.







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