Document:

exv10w24

 

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

Exhibit 10.24

SUPPLY AND PURCHASE AGREEMENT

THIS SUPPLY AND PURCHASE AGREEMENT is made as of January 25, 2006, by and among Sucampo
Pharmaceuticals, Inc., a Delaware corporation having its principal place of business at 4733
Bethesda Avenue, Suite 450, Bethesda, Maryland 20814 USA (“SPI”), Takeda Pharmaceutical Company
Limited, a corporation organized under the laws of Japan having its principal place of business at
1-1, Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, JAPAN (“Takeda”) and R-Tech Ueno, Ltd., a
corporation organized under the laws of Japan having its principal place of business at 10F, Yamato
Life Insurance Bldg., 1-1-7 Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011, JAPAN (“RTU”) (this
“Agreement”). SPI, Takeda and RTU are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”

Recitals

WHEREAS, Takeda has obtained from SPI an exclusive license to co-develop, use, sell, promote, offer
for sale, import and distribute the Product (hereinafter defined) for the gastroenterology
indications in the United States and Canada under a collaboration and license agreement as of
October 29, 2004 (the “Collaboration and License Agreement”) and Takeda has the right to execute
its rights and duties under the Collaboration and License Agreement through Takeda Affiliates
and/or its sublicensees;

WHEREAS, SPI, Takeda and RTU have entered into a supply agreement as of October 29, 2004 (the
“Supply Agreement”) pursuant to which the Parties acknowledged and agreed (i) Takeda has the right
to execute its rights and duties under the Supply Agreement through Takeda Affiliates and/or its
sublicensees and (ii) to enter into a definitive supply and purchase agreement for the purpose of
determining more detailed terms and conditions for the manufacturing and supply of the Product to
Takeda;

NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the
Parties hereto have agreed as follows:

Article 1 INTRODUCTORY PROVISIONS

1.1 Defined Terms. The following terms, when used in capitalized form in this
Agreement, shall have the meanings assigned to them in this Article. The terms when used in
capitalized form in this Agreement and not defined in this Agreement shall have the same meanings
as defined in the Supply Agreement.

“Binding Forecasts” shall have the meaning ascribed to such term in Section 6.2 hereof.

“JPY Equivalent” shall mean JPY one hundred seven point ninety-two (107.92).

“Manufacturing” means the compounding, component preparation, testing, and other procedures, or any
part thereof, involved in manufacturing the Products in accordance with

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the Manufacturing Specifications. The terms “Manufacture,” “Manufactured” and “Manufacturing” in
this Agreement shall have the identical meaning.

“Manufacturing Specification(s)” shall mean the commercial specification for the manufacturing,
quality control, packaging, labeling, shipping, delivery and storage of the Product and Samples to
be agreed upon between the Parties but which at least satisfies specifications approved by FDA and
TPDHC.

“Non-Conformity/Non-Conforming” shall have the meaning ascribed to such term in Section 7.1 hereof.

“Packaging” means the procedures of filling, inspecting, labeling, packaging and packing of the
Products or any part thereof in accordance with the Manufacturing Specifications. The terms
“Package,” “Packaged” and “Packaging” in this Agreement shall have the identical meaning.

“Product” shall mean any and all pharmaceutical preparations for human use that contains the
Compound, a chemical equivalent, a salt, or a prodrug thereof as an active ingredient, in finished
package form suitable for distribution to end users.

“RTU Contractor” shall mean a third party under contract with RTU in accordance with Section 2.3 of
this Agreement to conduct any portion of Manufacturing and/or Packaging for which RTU is
responsible under this Agreement.

“Sample(s)” shall mean the samples of the Product for promotional use.

Article 2 SUPPLY AND PURCHASE OBLIGATIONS OF THE PARTIES

2.1 Supply and Purchase Obligations. During the term of this Agreement, Takeda agrees to
purchase all its demand on the Product exclusively from RTU, Takeda’s requirements for the Product
and Samples for the Initial Territory in accordance with the terms and conditions set forth in this
Agreement.

2.2 Product. Subject to the terms and conditions of this Agreement, RTU shall Manufacture,
Package and supply Takeda with entire requirement of the Product and Samples of Takeda, or if
applicable Takeda Affiliates or its sub-licensee(s), in a timely manner according to forecasted
demands of Takeda in the Initial Territory. Except as provided in Article 8, Takeda agrees to
purchase its requirements for the Product and Samples exclusively from RTU at the prices described
in Article 3.

2.3 Subcontracts. RTU shall be responsible for Manufacturing and Packaging the Product and
Sample at RTU’s own premises or by use of contractors selected by RTU. Any and all RTU Contractors
shall have sufficient knowledge and expertise to carry out the Manufacture and/or Packaging, as the
case may be, of the Product and Samples and sufficient capacity to meet the requirements of Takeda
for the Product and Samples. Any such Manufacturing and/or Packaging by an RTU Contractor,
however, shall not relieve RTU from

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any of its obligations or covenants under this Agreement and/or the Supply Agreement. RTU shall
inform Takeda and SPI of its contractor promptly after RTU’s appointment of its contractor.

2.4 Development Product. The Parties acknowledge that any Product to be used in connection
with the conduct of clinical studies shall be provided to Takeda pursuant to the Collaboration and
License Agreement.

Article 3 PRICE AND PAYMENT

3.1 Price for Product. The prices for the Manufacture, Packaging and supply of Product
shall be:

     (a) the prices set forth in subsections 3.1(a)(i), (ii) and(iii), as applicable, until the
earlier of (i) the [**] anniversary of the first Commercial Launch by Takeda (or, if applicable,
Takeda Affiliates or its sub-licensee(s)) of any Product for the Initial Indications in the Initial
Territory, or (ii) such time as the cumulative quantity of the Product (other than Samples and
Product used for clinical studies) supplied to Takeda (or, if applicable, Takeda Affiliates or its
sub-licensee(s)) reaches [**] capsules.

          (i) in the event NDA approval for the Product provides for BID dosing (i.e., intake twice
daily) only, US$[**] (or US$[**] per capsule) for [**] of the total quantity of Product purchased
by Takeda and JPY Equivalent of US$[**] (or US$[**] per capsule) for the remaining [**] of such
total quantity;

          (ii) in the event NDA approval for the Product provides for QD dosing (i.e., intake once
daily) only, US$[**] (or US$[**] per capsule) for [**] of the total quantity of Product purchased
by Takeda and JPY Equivalent of US$[**] (or US$[**] per capsule) for the remaining [**] of such
total quantity; and

          (iii) in the event NDA approval for the Product provides for both BID and QD dosing, then the
price shall be determined by mutual agreement of the Parties (based on the ratio of BID and QD
supplied to Takeda (or, if applicable, Takeda Affiliates or its sub-licensee(s)) within the range
of US$[**] and US$[**] for [**] of the total quantity of Product purchased by Takeda and the JPY
Equivalent of such determined price for the remaining [**] of such total quantity.

     (b) the price set forth in this subsection 3.1(b) after the earlier of (i) the [**]
anniversary of the first Commercial Launch by Takeda (or, if applicable, Takeda Affiliates or its
sub-licensee(s)) of any Product for the Initial Indications in the Initial Territory, or (ii) such
time as the cumulative quantity of the Product (other than Samples and Product used for clinical
studies) supplied to Takeda (or, if applicable, Takeda Affiliates or its sub-licensee(s)) reaches
[**] capsules. Immediately following the occurrence of the applicable triggering event described
in the prior sentence, the price shall be [**] percent ([**]%) of the Net Sales Revenue of the
Product; provided, however, if only the QD dosage form (and nothing else) is Commercialized for the
Initial Indications, then the price shall not exceed US$[**] (or US$[**] per capsule). In case
there is a significant change in economic conditions beyond

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the reasonable expectation and assumption, including those with regard to the Net Sales Revenue
price of the Product, of the Parties as of the Effective Date, the Parties shall meet and discuss
in good faith about the possibility of modifying such price.

3.2 Price for Samples.

     (a) The price for the Manufacturing and supply of Samples shall be US$[**], excluding
Packaging costs. Takeda shall pay all reasonable direct costs (excluding any mark up) to Package
the Samples.

     (b) RTU shall keep complete and accurate records of its Packaging costs for Sample in
accordance with generally accepted accounting principles in Japan. Such records shall be
maintained by RTU for a period of five (5) years. Not more frequently than once each year, Takeda,
at its expense, shall have the right to conduct an examination or audit of said records of RTU in
order to verify that amounts paid to RTU for Samples hereunder are correct. RTU shall cooperate
fully with the auditor and to provide all reasonable access to records and employees necessary to
promptly complete this audit. In the event any examination or audit of the records of RTU discloses
an under- or overpayment hereunder, written notice of such fact, specifying the amount and basis of
the under- or overpayment shall promptly be furnished to both parties by the auditor. In the event
of an overpayment the amount thereof shall be credited against future amounts owed to RTU
hereunder, or if there will be no such future amounts, RTU shall refund the overpayment to Takeda
within [**] of such notice. In the event of an underpayment, Takeda shall pay the amount thereof
to RTU within [**] after such disclosure.

3.3 Payment.

     (a) RTU shall submit invoices to Takeda for each shipment of Product and/or Samples shipped to
Takeda (or, if applicable, Takeda Affiliates and/or its sublicensees). Such invoices shall be paid
by Takeda within [**] after the date the relevant invoice is received or the date of shipment,
whichever is later.

     (b) With regard to Product supplied at the price set forth in Section 3.1(b), Takeda shall pay
to RTU each month a provisional price to be mutually and separately agreed upon by SPI and Takeda
not later than [**] following the occurrence of the applicable triggering event described in
subsection 3.1(b). If the Parties are unable to reach agreement on such provisional price, then
the provisional price shall be [**]% of the Net Sales Revenue of the latest six months divided by
6. Within ninety (90) days following each calendar year beginning with the calendar year in which
the price set forth in Section 3.1(b) becomes effective, Takeda shall submit to SPI and RTU a
report stating its Net Sales Revenue for such calendar year (or for the portion of such year for
which the price set forth in Section 3.1(b) is applicable) and the amount equal to [**] percent
([**]%) of such Net Sales Revenue. If Takeda’s payments of such provisional price for such
calendar year (i) are less than [**]% of Net Sales Revenue, Takeda shall pay RTU the shortfall
within fifteen (15) days of submitting such report, or (ii) exceed [**]% of Net Sales Revenue, RTU
shall pay Takeda the excess amount within fifteen (15) days of receiving such report.

     (c) All payments hereunder shall be made as follows:

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     (i) Payments for the Product whose prices are set forth in subsections 3.1(a) shall be made in
United States Dollars for [**] of the quantity of the Product purchased by Takeda and in JPY for
the remaining [**] of such total quantity whose price is calculated by using JPY Equivalent.

     (ii) Payments for the Product whose prices are set forth in subsection 3.1(b) and the Samples
shall be made in United States Dollars. The exchange rates from local currency to United States
Dollars shall be the exchange rates (buying rates of United States Dollars) at the time of each
shipment published in The Wall Street Journal (or any substitute source mutually agreed to by the
Parties).

3.4 Development Product. Pursuant to Section 4.2(b)(vii) of the Collaboration and License
Agreement, the costs for any Product and/or placebo used in connection with the conduct of clinical
studies shall be deemed to be included within Development costs and any such costs therefore shall
be paid by SPI or Takeda as provided in the Collaboration and License Agreement. The Parties
acknowledge the price [**] of such Product is U.S.$[**]. The price for any placebo [**] supplied
by RTU for use in connection with the conduct of clinical studies shall be US $[**] equal to [**]
percent ([**]%) of Product). RTU shall supply and Takeda and SPI shall purchase their entire
requirements for the Product from RTU in the standard order quantities of standard case lots (i.e.
[**] per lot). RTU shall keep the Product and placebo in appropriate condition until the Product
and placebo are required for use.

Article 4 MANUFACTURING AND QUALITY

4.1 RTU manufacturing. RTU shall be responsible for Manufacturing, Packaging, storing and
shipping the Product, Samples and placebo to be supplied to Takeda and/or SPI hereunder. The
Product, Samples and placebo shall be Manufactured, Packaged, stored and shipped in accordance with
the Manufacturing Specifications, Applicable Regulations and Market Authorizations. Each batch of
the Product, Samples and placebo shipped to Takeda and/or SPI will include (i) a certificate of
analysis confirming that the Product, Samples and/or placebo meets the then-current Manufacturing
Specifications; and (ii) a certificate of release approval stating that the Product, Samples and/or
placebo were Manufactured and/or Packaged in accordance with current good manufacturing and control
practices.

4.2 Modifications. In case RTU wishes to modify its Manufacturing or Packaging processes
and procedures and/or to change the facilities and/or site where the Product, Samples or Compound
are Manufactured and/or Packaged, RTU shall provide to Takeda and SPI in writing the information
and the reason therefore sufficiently in advance. RTU shall ensure that any such approved
modifications or changes are in compliance with Applicable Regulations and the Market
Authorizations, and that such changes do not affect the Manufacturing Specifications or do not
result in any interruption of supply of Product and Samples to Takeda and SPI (or, if applicable,
Takeda Affiliates and/or its sublicensees). If any such changes are made or are to be made that
are substantial or will require an amendment to the Market Authorizations, RTU shall be
responsible, at its expense, for obtaining any necessary or advisable amendments to the Market
Authorizations.

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4.3 Quality Control and Audit.

     (a) Testing. RTU shall perform quality control tests, assays and final release
testing on Compound, Products and Samples in accordance with the Manufacturing Specifications and
Applicable Regulations. Results of such tests and assays will be submitted to Takeda and SPI
promptly upon request. Takeda shall have the right to reject any lot or batch of the Products not
later than thirty (30) days after the date on which results of the tests and assays are received if
there is any non-conformity of the results with the Manufacturing Specifications or Applicable
Regulations.

     (b) Retention Samples. RTU shall retain, for at least one (1) year after the
expiration date of the applicable lot or batch of Products, a file sample properly stored from each
lot or batch of Products Manufactured or Packaged of sufficient quantity to perform each quality
control test specified in the Manufacturing Specifications at least two (2) times.

     (c) Nonconformance. In the event a material quality issue arises at any RTU facility
or RTU Contractor facility relating to the Product or Samples, RTU shall promptly provide Takeda
and SPI written notice of such issue, its impact on the supply of Product and/or Samples, and the
corrective measures to be utilized. For purposes of this Section 4.3(c), a material quality issue
shall include: foreign product mix-up, contamination; failure to meet stability and/or release
specifications; incorrect labeling material used in Packaging; and missing or incorrect lot number
or expiration date on Packaging.

     (d) Audits. Takeda and SPI shall have the right to conduct or to have a designated
third party conduct quality assurance audits at any and all facilities (whether operated by RTU or
RTU Contractors) in the presence of RTU, where Manufacturing, Packaging, storage, testing or other
related activities are carried out on the Product and/or Samples for the purpose of verifying
conformance to the Manufacturing Specifications and Applicable Regulations in an interval of not
more than once a year in the normal course. Takeda’s, SPI’s or designated third party’s auditors
shall have the right to review any and all relevant documents related to the Product, Samples
and/or facility operations related to their Manufacturing, Packaging, storage, testing (including
without limitation test results, batch records, investigations by Regulatory Authorities) and may
take copies of relevant documents with RTU’s and, if applicable, RTU Contractor’s approval. Such
audits shall be conducted following at least thirty days (30 days) notice during normal business
hours and shall be limited to those operations that are directly related to the Compound, Product
or Samples. Not withstanding the foregoing, in the emergency situation including without limitation
the event of Product quality complaints, Takeda and SPI shall have the right to conduct such audits
on a needed basis with shorter notice and RTU shall fully cooperate with such audit.

4.4 Regulatory Inspections. In the event any Party receives a notification of inspection or
other communication (including the reporting of adverse drug experiences or field alerts) from the
Regulatory Authorities relating to the Product, or Samples and/or a facility at which they are
Manufactured, Packaged, stored or tested, the Party receiving such notice will notify the other
Parties within three (3) days. RTU, Takeda and SPI agree to notify each other in advance of any
response to agency observations. The Party so inspected or communicated

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with shall provide the other Parties with a report on the outcome of the inspection or
communication.

4.5 Recalls.

     (a) Determination. If SPI or Takeda believes that a voluntary recall of a Product is
necessary, such Party shall notify and consult with the other Party within one (1) working day of
such determination, and SPI and Takeda shall cooperate in good faith to determine if such a recall
is necessary and, if so, to allow such recall to occur under the direction of the JSC. In the
event of a dispute regarding whether or not to recall a Product, the decision of the JSC shall
prevail. SPI or Takeda may recall the Product unilaterally due to an emergency, for example, (a)
relevant Regulatory Authorities instructed, recommended or suggested the recall or (b) in such
Party’s reasonable judgment, non-implementation of recall may constitute a violation of a relevant
law or regulation or (c) non-implementation of recall may court criminal or administrative
punishment under a relevant law or regulation or (d) if the mechanism under the foregoing
provisions of this Section 4.5 is not adequate to address a serious health or safety risk to
consumers.

     (b) Implementation. The conduct of any recall of the Product or Samples from the
market shall be the responsibility of RTU and/or SPI. Takeda shall fully cooperate with RTU and/or
SPI in the event of any recall, field alert or similar event and provide such assistance in
connection therewith as RTU may reasonably request.

     (c) Costs. The cost and expenses for the recall shall be borne by SPI or Takeda or
shared by both SPI and Takeda, respectively, in accordance with the same rules as provided for in
Article 10 of the Collaboration and License Agreement. In the event of recall of the Product due
to manufacturing defect of the Product, the cost and expenses for the recall shall be borne by RTU.

4.6 Product Quality Complaints and Adverse Experience Data.

     (a) Product Quality Complaints. RTU shall be responsible for handling all Product complaints.
Takeda shall forward to RTU any Product complaints received by Takeda five (5) business days after
receipt thereof and shall, at RTU’s cost, provide such assistance in investigating and resolving
such complaints as RTU may reasonably request. RTU shall notify Takeda at least once each calendar
quarter of any Product quality complaints received by RTU or RTU Contractors. RTU’s handling of
complaints shall in no way waive, modify or diminish any of its obligations under this Agreement,
the Supply Agreement or the Collaboration and License Agreement.

     (b) Adverse Experience Data. The Parties shall be responsible for reporting and investigating
Adverse Experience Data in accordance with a separate safety data exchange protocol to be mutually
agreed by SPI and Takeda.

     (c) Annual Reports. The Parties shall be responsible for filing annual safety reports with
the Regulatory Authority in accordance with a separate safety data exchange protocol to be mutually
agreed by SPI and Takeda.

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Article 5 WARRANTIES

In addition to Article 6 of the Supply Agreement, Each Party represents and warrants to the other
Parties that:

5.1 RTU and SPI Warranties. RTU and SPI warrant to Takeda that:

     (a) RTU and SPI have good and marketable title to the Products and Samples delivered to Takeda
hereunder;

     (b) The Products and Samples delivered to Takeda will be Manufactured and Packaged in
compliance with Applicable Regulations and will meet the Manufacturing Specifications;

     (c) The Products and Samples delivered to Takeda will not be adulterated or misbranded within
the meaning of the United States Food, Drug and Cosmetic Act or any regulation thereunder; and

     (d) The Products and Samples delivered to Takeda do not infringe on any currently existing
United States or Canadian patents held by any person or entity.

5.2 Takeda Warranties. Takeda hereby represents and warrants to SPI and RTU that:

	 	(a)	 	Takeda will distribute the Products and Samples in compliance with Applicable
Regulations.
	 
	 	(b)	 	Takeda will not adulterate or misbrand the Products and Samples within the
meaning of the United States Food, Drug and Cosmetic Act or any regulation hereunder.

Article 6 ORDERS AND FORECASTS

6.1 Undertaking.

RTU, directly or through RTU Contractors (subject to receipt of any required approvals of
Regulatory Authorities), will Manufacture, Package and ship the Product and Samples to Takeda,
directly or, if applicable, to Takeda Affiliates and/or its sublicensees, by the delivery dates and
in the quantities specified by Takeda in purchase orders submitted in accordance with this Article
6.

6.2 Forecasts.

At least [**] prior to each calendar quarter, Takeda will provide RTU (and a copy to SPI) with a
written twenty-four (24) month rolling forecast of the quantities of Product and Samples that
Takeda expects to purchase during each of the next twenty-four (24) months (the “Rolling
Forecast”); provided, however, the first Rolling Forecast shall be attached hereto as Exhibit B.
Each Rolling Forecast shall be non-binding except for the first [**] months thereof (the “Binding
Forecast”) which shall be firm and Takeda shall purchase from RTU no less than [**] percent ([**]%)
of the quantities of the Product and the Samples contained in the Binding Forecast. RTU shall be
obliged to fill Takeda’s purchase orders for quantities of the Product and/or Samples up to [**]
percent ([**]%) of the Binding Forecast. RTU will use its commercially reasonable efforts to
supply Product and/or Samples in excess of [**] percent ([**]%) of the Binding Forecast. If, prior
to the delivery of the next Rolling

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Forecast, Takeda shall have cause to revise its purchase projections, Takeda will promptly provide
RTU (and a copy to SPI) with a revised Rolling Forecast. If Takeda’s right to commercialize the
Product is terminated by reason of termination of this Agreement, the Collaboration and License
Agreement or the Supply Agreement, Takeda shall not be obligated to purchase the quantity of the
Product and/or Samples contained in the Binding Forecast.

6.3 Order Size

Takeda shall purchase its requirements for the Product and Samples from RTU in the standard order
quantities of standard case lots (i.e. [**] per lot).

6.4 Shelf life of the Product

Products, when shipped to Takeda, shall not have an expiration date of less than [**] from the date
of delivery; provided, however, that the shelf life approved by relevant Regulatory Authority is
less than [**], such period shall be its shelf life [**], but shall not be less than [**].

6.5 Purchase Orders

Takeda will purchase the Product and Samples solely by written purchase orders (including
non-verbal, electronic format), which must be consistent with Section 6.3 above. Takeda will submit
each such written firm purchase order to RTU at least [**] in advance of the date specified in each
purchase order for delivery of the Product and/or the Samples to Takeda (or, if applicable, to
Takeda Affiliates and/or its sublicensees). Such firm orders shall show clearly (i) the quantity
of the Product and/or the Samples, (ii) the delivery destination, and (iii) the required delivery
date. RTU will provide written notice to Takeda of its receipt of a specific purchase order within
five (5) business days of receipt thereof. The terms and conditions of this Agreement will be
controlling over any conflicting terms and conditions in any such purchase order, RTU’s
acknowledgement form or any other form. Notwithstanding the foregoing, RTU will use its Best
Efforts, but will not be obligated, to (i) meet any request of Takeda for delivery of the Product
or the Samples to Takeda (or, if applicable, to Takeda Affiliates and/or its sublicensees) in less
than [**] from the delivery date specified in purchase orders, and (ii) accommodate any changes
requested by Takeda in delivery schedules for the Product and the Samples following RTU’s receipt
of purchase orders from Takeda. RTU is not entitled to accept verbal orders of any kind for the
supply of the Product or the Samples hereunder.

6.6 Shipment.

The Product and Samples will be shipped to the one (1) location in the Initial Territory designated
by Takeda in its purchase orders. RTU (or RTU Contractors) shall include with each shipment a copy
of the documents required under Section 4.1, the bill of lading, and documents setting forth the
quantity of the Product and Samples shipped, sufficient to allow for an accurate count of the
quantity delivered. The Product and Samples will be shipped in accordance with DDP (INCOTERMS
2000) to the delivery destination designated by Takeda. Title to the Product and Samples shall
pass from RTU to Takeda free and clear of any security interest, other lien or encumbrance at such
time as they have been delivered to the delivery

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destination designated by Takeda, and risk of loss of the Product and Samples shall pass from RTU
to Takeda in accordance with DDP term (INCOTERMS 2000).

6.7 Inventory.

In addition to Article 5 of the Supply Agreement, RTU shall maintain an adequate level of inventory
of the Product in accordance with the following:

     (a) RTU shall maintain an adequate level of inventory of the Product to meet the
requirements of Takeda as estimated in the Rolling Forecasts; provided, however, that Takeda shall
provide RTU (and a copy to SPI) with information, in such format as reasonably requested by RTU,
concerning the inventory of the Product maintained by Takeda (or, if applicable, Takeda Affiliates
and/or its sublicensees) on at least a monthly basis.

     (b) During the initial [**] period following Takeda’s initial sales launch and, if any,
launch of any Product with new therapeutic indication, respectively, RTU shall maintain, at its
expense and at a location mutually agreed by the Parties, a safety stock of both (i) Product and
(ii) Product in the form before final packaging (collectively, the “Safety Stock”). The quantity of
both (i) and (ii) mentioned above shall be at least an amount equal to the quantity for the first
[**] respectively, or, the latest six-month moving average of quantity in total of (i) and (ii) shall be
at least an amount equal to the quantity for the first six
(6) months subject that the quantity of (i) shall
not be less than an amount equal to the quantity for the first [**] as indicated in Takeda’s most
recent Rolling Forecast. If RTU fills Takeda’s purchase orders for quantities of Product and/or
Samples in quantity larger than the Binding Forecast pursuant to Section 6.2 and consequently uses
all or part of the required level of the Safety Stock temporarily, RTU shall use its Best Efforts
to make up for the used quantity and to return the Safety Stock to the required level as soon as
possible. As soon as reasonably practicable after the execution of this Agreement, RTU shall
commence building the Safety Stock.

Article 7 INSPECTION AND REJECTION OF THE PRODUCT

7.1 Non-Conforming Product. Takeda (or, if applicable, Takeda Affiliates and/or its
sublicensees) will visually inspect each shipment of Product and Samples supplied to it (or, if
applicable, Takeda Affiliates and/or its sublicensees) hereunder to (i) determine whether such
Product and/or Samples are damaged, (ii) verify that the quantity of Product and/or Samples
delivered agrees with the invoice and other applicable documentation, and (iii) verify conformance
with the Manufacturing Specifications and Applicable Regulations by reviewing documents included in
the shipment (but Takeda shall have no obligation to test or study the contents of the Products).
If Takeda finds damage, a deficiency in the quantity of the Product and/or Samples, or
non-conformity with the Manufacturing Specifications and/or Applicable Regulations (hereafter
referred to as a “Non-Conformity” or “Non-Conforming”), Takeda will notify RTU in writing within
[**] after receipt of the applicable shipment specifying the details of such Non-Conformity. If
the Non-Conformity of the Product and/or Samples is latent and hidden such that it cannot
reasonably be found by visual inspection, then Takeda shall give notice to RTU regarding such
latent Non-Conformity within [**] after such Non-Conformity comes to the knowledge of Takeda (or,
if applicable, Takeda Affiliates and/or its sublicensees).

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7.2 Replacement or Reimbursement. Upon receipt of any notice of Non-Conformity from
Takeda, RTU shall, at Takeda’s option, either (i) replace, at RTU’s cost, the quantity of such
Non-Conforming Product and/or Samples within the commercially reasonable shortest time, or (ii)
reimburse Takeda for the cost of such Non-Conforming Product and/or Samples. Takeda’s rights set
forth in this Section 7.2 shall not be exclusive of, or prejudicial to, any other rights or
remedies that Takeda may otherwise have on account of such Non-Conformity or RTU’s breach of any of
its obligations hereunder.

7.3 RTU’s Obligations. RTU shall not be subject to the obligations as set forth in this
Article 7 to the extent that any such damage, deficiency or Non-Conformity of the Product and/or
Samples is due to Takeda’s negligence after the receipt of them by Takeda.

Article 8 INABILITY TO SUPPLY

In the event that RTU (directly or through RTU Contractors) is unable for any reason to manufacture
or supply sufficient quantities of the Compound or the Product hereunder to meet Takeda’s, or if
applicable Takeda Affiliate’s and its sub-licensee(s)’s requirements for the Product and/or Samples
in excess of [**] percent ([**]%) of the Binding Forecast in any given quarter, then RTU shall
provide Takeda and SPI with immediate written notice thereof. The Parties shall negotiate in good
faith how to cope with such shortage of supply, including the purchase by RTU of the necessary
materials from third parties and the possibility of Takeda’s Manufacturing of the Product and/or
Samples.

Article 9 TERM AND TERMINATION

The term of this Agreement shall commence on the date first above written and shall continue in
full force and effect until December 31, 2020. RTU hereby acknowledges and accepts that this
Agreement may be terminated earlier than said termination date in case the Collaboration and
License Agreement or the Supply Agreement terminates, in which case SPI and Takeda shall use
commercially reasonable effort to provide RTU with a prior notice of such early termination, but in
no event shall such notice be provided later than three (3) months prior to such termination. RTU
shall accept such early termination upon receiving the notice from SPI and Takeda.

Article 10 MISCELLANEOUS

10.1 Applying the provisions of the Supply Agreement. The Parties hereby acknowledge and
agree that the Supply Agreement shall remain effective, and its terms and conditions shall remain
applicable among the Parties to the extent not particularly changed or amended by this Agreement.

10.2 Notices; Language. Except as may be otherwise provided in this Agreement, any
notice, demand or request given, made or required to be made shall be in writing and shall be
effective, unless otherwise provided herein, when received after delivery by (a) registered air
mail, postage prepaid; (b) facsimile with electronic confirmation of receipt; or (c) a reputable
international courier such as Federal Express or DHL at the addresses
set forth below or to

11

 

any other address that a Party specifies pursuant hereto. All reports, notices and communications
required or permitted hereunder shall be in the English language.

	 	 	 	 	 
	 

	 	If to Takeda:
	 	Takeda Pharmaceutical Company Limited.
	 

	 	 	 	12-10, Nihonbashi 2-chome, Chuo-ku,
	 

	 	 	 	Tokyo 103-8668, Japan
	 
	 	 	 	 
	 

	 	 	 	Facsimile: 81-3-3278-2230
	 

	 	 	 	Attention: Shinji Honda, Senior Manager,
	 

	 	 	 	US Operations, Corporate Strategy & Planning Department
	 
	 	 	 	 
	 

	 	If to SPI:
	 	Sucampo Pharmaceuticals, Inc.

4733 Bethesda Avenue, Suite 450
	 

	 	 	 	Bethesda, Maryland 20814
	 

	 	 	 	United States
	 
	 	 	 	 
	 

	 	 	 	Facsimile: 1-301-961-3440
	 

	 	 	 	Attention: Director of Business Development
	 
	 	 	 	 
	 

	 	If to RTU:
	 	R-Tech Ueno, Ltd.
	 

	 	 	 	10F, Yamato Life Insurance Bldg.,
	 

	 	 	 	1-1-7 Uchisaiwaicho
	 

	 	 	 	Chiyoda-ku, Tokyo 100-0011 Japan
	 
	 	 	 	 
	 

	 	 	 	Facsimile: 81-3-3596-8023
	 

	 	 	 	Attention: Ms. Yukiko Hashitera, Representative Director

10.3 Governing Law. This Agreement shall be governed by, and interpreted and construed in
accordance with, the law of the State of New York, USA, excluding its choice of law rules and the
U.N. Convention on the International Sale of Goods.

10.4 Entire Agreement. This Agreement, including Exhibits attached hereto and incorporated
as an integral part of this Agreement, together with the Supply Agreement constitute the entire
agreement of the Parties with respect to the subject matter hereof, and supersede all previous
agreements by and among the Parties as well as all proposals, oral or written, and all prior or
contemporaneous negotiations, conversations or discussions among the Parties related to this
Agreement. Any differences between the text of certain provisions contained in both this Agreement
and the Supply Agreement are intended for clarification purposes only and not to alter the original
intent of the Parties.

Article 11 LIMITATION OF LIABILITY

EXCEPT FOR ANY BREACH OF CONFIDENTIALITY OBLIGATION, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTIES HEREUNDER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR
SIMILAR LOSSES OR DAMAGES, EVEN IF SUCH PARTIES SHALL HAVE BEEN

12

 

ADVISED IN ADVANCE OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE. IN ADDITION, SPI AND ITS
AFFILIATES SHALL NOT BE LIABLE TO TAKEDA AND RTU IN THE EVENT THAT AN NDA IS NEVER ISSUED OR
GRANTED OR NET SALES REVENUE ARE NEVER ACHIEVED.

NOTWITHSTANDING OF THE PRECEDING SENTENCES, LIMITATION OF LIABILITY PROVIDED FOR IN THIS ARTICLE
SHALL NOT BE APPLICABLE WHERE LOSS OR DAMAGES ARE CAUSED BY WILFUL MISCONDUCT OR GROSS NEGLIGENCE
OF EACH PARTY.

This Article shall supersede, to the extent that liability relating to subject matter of this
Agreement of the Parties is concerned, any provisions concerning limitation of liability in the
Supply Agreement or Collaboration and License Agreement.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day first above
written,

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Takeda Pharmaceutical Company Limited	 	 	 	Sucampo Pharmaceuticals, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Yasuhiko Yamanaka
	 	 	 	By
	 	/s/ Brad E. Fackler	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name: Yasuhiko Yamanaka	 	 	 	Name: Brad E. Fackler	 	 
	Title: Corporate Officer	 	 	 	Title: Vice President of Marketing and Sales	 	 
	          General Manager, Corporate Strategy	 	 	 	 	 	 	 	 
	          & Planning Department	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	R-Tech Ueno, Ltd.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Mitsunaga Tada	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Name: Mitsunaga Tada	 	 	 	 	 	 	 	 
	Title: President and Representative Director	 	 	 	 	 	 	 	 

Exhibits

	 	 	 	 	 
	 

	 	A
	 	Manufacturing Specifications
	 
	 

	 	B
	 	First 24-Month Rolling Forecast

13

 

Exhibit A            Manufacturing Specifications

Confidential
Materials omitted and filed separately with

the Securities and Exchange Commission.

14

 

Exhibit B            First 24-Month Rolling Forecast

	 	 	 	 	 	 	 	 	 
	 	 	Product	 	Product	 	Sample	 	Sample
	 	 	Purchase Pills	 	Purchase Bottles	 	Purchase Pills	 	Boxes
	Mar-06
	 	[**]	 	[**]	 	[**]	 	[**]
	 
	 	 	 	 	 	 	 	 
	Apr-06
	 	[**]	 	[**]	 	[**]	 	[**]
	May-06
	 	[**]	 	[**]	 	[**]	 	[**]
	Jun-06
	 	[**]	 	[**]	 	[**]	 	[**]
	Jul-06
	 	[**]	 	[**]	 	[**]	 	[**]
	Aug-06
	 	[**]	 	[**]	 	[**]	 	[**]
	Sep-06
	 	[**]	 	[**]	 	[**]	 	[**]
	4-9/06
	 	[**]	 	[**]	 	[**]	 	[**]
	 
	 	 	 	 	 	 	 	 
	Oct-06
	 	[**]	 	[**]	 	[**]	 	[**]
	Nov-06
	 	[**]	 	[**]	 	[**]	 	[**]
	Dec-06
	 	[**]	 	[**]	 	[**]	 	[**]
	Jan-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Feb-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Mar-07
	 	[**]	 	[**]	 	[**]	 	[**]
	10-3/06
	 	[**]	 	[**]	 	[**]	 	[**]
	2-3/06
	 	[**]	 	[**]	 	[**]	 	[**]
	 
	 	 	 	 	 	 	 	 
	Apr-07
	 	[**]	 	[**]	 	[**]	 	[**]
	May-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Jun-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Jul-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Aug-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Sep-07
	 	[**]	 	[**]	 	[**]	 	[**]
	4-9/07
	 	[**]	 	[**]	 	[**]	 	[**]
	 
	 	 	 	 	 	 	 	 
	Oct-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Nov-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Dec-07
	 	[**]	 	[**]	 	[**]	 	[**]
	Jan-08
	 	[**]	 	[**]	 	[**]	 	[**]
	Feb-08
	 	[**]	 	[**]	 	[**]	 	[**]
	Mar-08
	 	[**]	 	[**]	 	[**]	 	[**]
	10-3/07
	 	[**]	 	[**]	 	[**]	 	[**]
	4-3/07
	 	[**]	 	[**]	 	[**]	 	[**]exv10w33

 

Exhibit 10.33

EXECUTION COPY

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of January 2, 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 Ronald W. Kaiser
(“Executive”).

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

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

     WHEREAS, in light of the foregoing, the Company desires to employ Executive as its Chief
Financial Officer and Executive desires to accept such employment.

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

Article 1. Employment Agreement

       1.1 Employment and Duties

          The Company offers and Executive hereby accepts employment with the Company for the Term (as
hereinafter defined) as its Chief Financial Officer, and in connection therewith, to perform such
duties as Executive shall reasonably be assigned by the Chief Executive Officer and/or by the
Company’s Board of Directors. Executive hereby warrants and represents that Executive has no
contractual commitments or other obligations to third parties

 

 

inconsistent with Executive’s acceptance of this employment and performance of the obligations set
forth in this Agreement. Executive shall perform such duties and carry out Executive’s
responsibilities hereunder faithfully and to the best of Executive’s ability, and shall, subject to
the provisions of Section 5.10 below, devote Executive’s full business time and best efforts to the
business and affairs of the Company during normal business hours (exclusive of periods of vacation,
sickness, disability, or other leaves to which Executive is entitled). Executive will perform all
of Executive’s responsibilities in compliance with all applicable laws and will ensure that the
operations that Executive manages are in compliance with all applicable laws.

       1.2 Work Schedule

     Executive will ordinarily work four days per week, but will devote such additional time as may
be required to meet the particular demands of his position including, but not limited to, the
additional time required to participate in the “road show” activities and pricing process required
for the Company’s initial public offering of its stock, which is presently anticipated to occur in
the first quarter of calendar year 2007. With respect to Executive’s ordinary four-day work week,
it is understood that he may work one of those days from his home, rather than from the Company’s
office.

Article 2. Employment Term

       2.1 Term

     The term of Executive’s employment hereunder (the “Term”) shall be deemed to commence
on the Effective Date and shall end on the second anniversary of the Effective Date, unless sooner
terminated as hereinafter provided; provided, however, that the Term shall be

2

 

automatically renewed and extended for an additional period of one (1) year on each
anniversary thereafter unless either party gives a Notice of Termination (as defined below) to the
other party at least sixty (60) days prior to such anniversary.

       2.2 Survival on Merger or Acquisition

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

Article 3. Compensation and Benefits

       3.1 Compensation

     (a) Base Salary. The Company shall pay Executive a salary at an annual rate
that is not less than Two Hundred Thousand Dollars ($200,000), to be paid in bi-weekly
installments, in arrears (the “Base Salary”). Thereafter, the Base Salary will be
reviewed by the Compensation Committee of the Board of Directors (“Compensation Committee”)
at least annually, and the Committee’s recommendation shall be reviewed and approved by the
Board of Directors. The Base Salary may, in the sole discretion of the Board of Directors,
be increased, but not decreased (unless mutually agreed by Executive and the Company).

     (b) Performance Bonus. Executive shall be eligible to receive an annual bonus
award, targeted at 25%, in recognition of Executive’s contributions to the success of the
Company pursuant to the Company’s management incentive bonus program as it

3

 

may be amended or modified from time to time. Recommendations concerning the decision
to make an award and the amount of any award are entirely discretionary and shall be made
initially by the Compensation Committee, subject to review and approval by the Board of
Directors.

     (c) Signing Bonus. In consideration of Executive’s acceptance of this
employment and execution of this Agreement, the Company shall pay Executive a signing bonus
in the gross sum of One Hundred Thousand Dollars ($100,000) to be payable as follows: (i)
the gross sum of Fifty Thousand Dollars ($50,000) payable on January 5, 2007, and (ii) a
second installment in the gross sum of Fifty Thousand Dollars ($50,000) to be payable on
July 1, 2007 provided that Executive’s employment hereunder has not been terminated either
by Executive without Good Reason or by the Company for Cause prior to that time.

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

       3.2 Participation in Benefit Plans

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

4

 

subject to all terms, provisions, rules and regulations applicable thereto. Executive will be
entitled to twenty (20) vacation days per year, to be used and administered in accordance with the
Company’s vacation policy as it may change from time to time.

       3.3 Expenses

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

       3.4 Professional Organizations

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

       3.5 Parking

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

5

 

Article 4. Termination of Employment

       4.1 Definitions

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

     (a) “Benefit Period” shall mean (i) the six (6) month or twelve (12) month
period, as the case may be, which coincides with the six (6) month or twelve (12) month
period for determining the amount of the lump sum severance payment described in Section
4.4(a)(iii) commencing on the Date of Termination which occurs in connection with a
termination of employment described in the first sentence of Section 4.4(a), or (ii) a
period ending when Executive becomes eligible as an employee or spouse of an employee of
another firm for group medical benefits coverage, whichever is shorter. Executive shall
give prompt written notice to the Company when Executive becomes eligible for group medical
benefits coverage as an employee or spouse of an employee of another firm.

     (b) “Cause” shall mean any of the following as determined by the Board of
Directors or a committee of the Board of Directors designated for this purpose:

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

6

 

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

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

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

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

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

     (c) “Date of Termination” shall mean the date specified in the Notice of
Termination (as hereinafter defined) (except in the case of Executive’s death, in which

7

 

case the Date of Termination shall be the date of death); provided,
however, that if Executive’s employment is terminated by the Company other than for
Cause, the date specified in the Notice of Termination shall be at least thirty (30) days
after the date the Notice of Termination is given to Executive.

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

     (e) “Good Reason” shall mean:

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

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

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

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

8

 

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

     (f) “Change in Control” shall mean:

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

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

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

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

9

 

       4.2 Termination Upon Death or Disability

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

       4.3 Company’s and Executive’s Right to Terminate

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

10

 

       4.4 Compensation Upon Termination

     (a) Severance. In the event the Company terminates (or elects not to renew)
this Agreement without Cause or pursuant to Section 4.2 due to the disability of Executive,
or in the event Executive terminates this Agreement for Good Reason, Executive shall be
entitled to receive: (i) Executive’s Base Salary through the Date of Termination, (ii)
reimbursement of any COBRA continuation premium payments made by Executive for the Benefit
Period, and (iii) a lump sum severance payment equal to six (6) months of Executive’s then
current Base Salary in the event that such termination by the Company should occur within
the first twelve (12) months following the Effective Date, or twelve (12) months of
Executive’s then current base salary in the event that such termination by the Company
should occur after a date that is twelve (12) months following the Effective Date, to be
made not later than ten (10) business days following the expiration of the revocation period
in Executive’s Release (as provided in Section 4.4(c) below) without any revocation having
occurred. Notwithstanding the foregoing, the Company shall, to the extent necessary and
only to the extent necessary, modify the timing of delivery of severance benefits to
Executive if the Company reasonably determines that the timing would subject the severance
benefits to any additional tax or interest assessed under Section 409A of the Internal
Revenue Code. In such event, the payments will be made as soon as practicable without
causing the severance benefits to trigger such additional tax or interest under Section 409A
of the Internal Revenue Code. In the event this Agreement is terminated (or not renewed)
for any reason other than by the Company without Cause or pursuant to Section 4.2 due to the
disability of Executive or by Executive for Good Reason, Executive shall not be entitled to
the continuation of any

11

 

compensation, bonuses or benefits provided hereunder, or any other payments following
the Date of Termination, other than Base Salary earned through such Date of Termination.

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

     (c) Release. Anything to the contrary contained herein notwithstanding, as a
condition to Executive receiving severance benefits to be paid pursuant to this Section 4.4,
Executive shall execute and deliver to the Company a general release in the form attached
hereto as Exhibit A. The Company shall have no obligation to provide any severance benefits
to Executive until it has received the general release from Executive

12

 

and any revocation or rescission period applicable to the Release shall have expired
without revocation or rescission.

Article 5. Employment Covenants

       5.1 Definitions

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

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

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

13

 

information that (i) is in the public domain, other than as a result of an act of
misappropriation or breach of an obligation of confidentiality by any person; (ii) Executive
can verify by written records kept in the ordinary course of business was in Executive’s
lawful possession prior to its disclosure to Executive; (iii) is received by Executive from
a third party without a breach of an obligation of confidentiality owed by the third party
to the Company and without the requirement that Executive keep such information
confidential; (iv) Executive is required to disclose by applicable law, regulation or order
of a governmental agency or a court of competent jurisdiction; or (v) Executive may utilize
in the preparation of textbooks or other educational or instructional writing without
identification of or attribution to Sucampo or any of its employees, provided that such use
does not result in the disclosure of any proprietary or trade secret information of the
Company, or any Inventions. If Executive is required to make disclosure pursuant to clause
(iv) of the preceding sentence as a result of the issuance of a court order or other
government process, Executive shall (a) promptly, but in no event more than 72 hours after
learning of such court order or other government process, notify, pursuant to Section 6.1
below, the Company; (b) at the Company’s expense, take all reasonable necessary steps
requested by the Company to defend against the enforcement of such court order or other
government process, and permit the Company to intervene and participate with counsel of its
choice in any proceeding relating to the enforcement thereof; and (c) if such compelled
disclosure is required, Executive shall disclose only that portion of the Confidential
Information that is necessary to meet the minimum legal requirement imposed on Executive.

14

 

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

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

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

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

       5.2 Nondisclosure and Nonuse

     Executive acknowledges that prior to and during Executive’s employment with the Company,
Executive had and will have occasion to create, produce, obtain, gain access to or otherwise
acquire, whether individually or jointly with others, Confidential Information.

15

 

Accordingly, during the term of Executive’s employment with the Company and at all times
thereafter, Executive shall keep secret and shall not, except for the Company’s benefit, disclose
or otherwise make available to any person or entity or use, reproduce or commercialize, any
Confidential Information, unless specifically authorized in advance by the Company in writing.

       5.3 Other Confidentiality Obligations 

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

       5.4 Return of Confidential Information 

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

16

 

Executive’s employment for any reason whatsoever, Executive shall promptly sign and deliver to
the Company a Termination Certificate in the form of Exhibit B attached hereto.

       5.5 Confidential Information of Others 

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

       5.6 Other Obligations 

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

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

     Executive hereby assigns to the Company all right, title and interest in all intellectual
property, including any patent applications, trade secrets, know how, copyrights, software, or
trademarks associated with the Executive Work Product and Confidential Information.

17

 

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

       5.8 Representations 

     Executive represents that, to the best of his or her knowledge, none of the Inventions will
violate or infringe upon any right, patent, copyright, trademark or right of privacy, or constitute

18

 

libel or slander against or violate any other rights of any person, firm or corporation, and
that Executive will not knowingly create any Invention which causes any such violation.

       5.9 Inventions, Intellectual Property and Equipment Not Transferred 

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

       5.10 Exclusivity of Employment

     During the Term, and without prior approval of the Board of Directors, Executive shall not
directly or indirectly engage in any activity competitive with or adverse to the Company’s business
or welfare or render a material level of services of a business, professional or commercial nature
to any other person or firm, whether for compensation or otherwise; provided, however, that
Executive may (i) provide consulting services as an independent contractor to PharmAthene, Inc.
during the period ending February 28, 2007, and (ii) continue to serve as a member of the Board of
Directors of Vocus Technologies, Inc., OPNET Technologies, Inc., the Chesapeake Innovation Center
and TPO, Inc. or their successors provided that, in each case, (iii) in the event of a conflict in
scheduling or time demands between Executive’s responsibilities to the Company and the
aforementioned activities, Executive shall use every reasonable effort to give priority to the
demands of the Company in order to ensure performance of his

19

 

responsibilities to the Company, and (iv) that he shall perform the aforementioned activities
using his personal time.

       5.11 Covenant Not to Compete

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

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

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

20

 

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

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

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

       5.12 Non-Solicitation

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

21

 

       5.13 Judicial Enforcement

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

Article 6. Miscellaneous

       6.1 Notices

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

	 	 	 	 	 	 	 
	 

	 	To Company:
	 	Sucampo Pharmaceuticals, Inc.
	 	 
	 

	 	 	 	4733 Bethesda Avenue, Suite 450	 	 
	 

	 	 	 	Bethesda, Maryland 20814	 	 
	 

	 	 	 	Attention: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	To Executive:
	 	Ronald W. Kaiser	 	 
	 

	 	 	 	10 Stehle Street	 	 
	 

	 	 	 	Annapolis, MD 20401	 	 

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 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.

       6.5 Severability

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

23

 

       6.6 Controlling Law

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

       6.7 Arbitration

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

       6.8 Assignments

     Subject to obtaining Executive’s prior approval, which shall not be unreasonably withheld or
delayed, the Company shall have the right to assign this Agreement and to delegate all rights,
duties and obligations hereunder to any entity that controls the Company, that the Company controls
or that may be the result of the merger, consolidation, acquisition or

24

 

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

       6.9 Read and Understood

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

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

	 	 	 	 	 
	 	SUCAMPO PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Ryuji Ueno
 	 
	 	 	Ryuji Ueno, M.D., Ph.D., Ph.D. 	 
	 	 	Chief Executive Officer 	 
	 

	 	 	 	 	 
	 

	 	/s/ Ronald W. Kaiser
	 	 
	 

	 	 	 	 
	 

	 	Ronald W. Kaiser	 	 

25

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