Document:

exh_1085.htm

Exhibit 10.85

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 21, 2014, is hereby entered into in the State of Maryland by and between SUCAMPO PHARMACEUTICALS, INC., a Delaware limited liability company (the "Company"), and Stanley Miele ("Executive").

 

WHEREAS, Executive has been employed by the Company under a certain Employment Agreement dated December 31, 2012;

 

WHEREAS, Executive has been the Senior Vice President, Sales & Marketing & President, SPA since February 27, 2006;

 

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 continue to employ Executive as the Senior Vice President, Sales & Marketing & President, SPA as of October 21, 2014 (the “Effective Date”) and Executive desires to continue 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:

 

  

 

  

1.    Employment and Duties

 

	
1.1  

	
The Company offers and Executive hereby accepts employment with the Company for the  Term (as hereinafter defined) as its Senior Vice President, Sales & Marketing & President, SPA, and in connection therewith, to perform such duties as Executive shall reasonably be assigned by Executive's supervisor and/or by the Company's Board of Directors and to enter into this Agreement.

 

	
1.2  

	
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.

 

	
1.3  

	
Executive shall perform such duties and carry out Executive's responsibilities hereunder faithfully and to the best of Executive's ability, and shall devote Executive's full business time and best efforts to the business and affairs of the Company during normal business hours (exclusive of periods of vacation, sickness, disability, or other leaves to which Executive is entitled).

 

	
1.4  

	
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.

 

  

2

  

	
2.  

	
Employment Term

 

	
2.1  

	
Term

 

The term of Executive's employment hereunder (the "Term") shall commence on October 21, 2014 and shall end on October 21, 2015, 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 date on which it would otherwise expire unless either party gives a Notice of Termination (as defined below) to the other party at least sixty (60) days prior to such expiration date.

 

	
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.

 

	
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 Forty Eighty Thousand One Hundred and Sixty and 02/100 dollars ($248,160.02), to be paid in bi-weekly installments, in arrears (the "Base Salary").  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 either mutually agreed by Executive and the Company, or established as part of across-the-board salary reductions that apply equally to all similarly situated officers as a percentage reduction in their salaries).

 

  

3

  

	
(b)  

	
Stock Compensation.

 

(i)   Awards.  At least annually for the Term of this Agreement, Executive shall be eligible for consideration to receive restricted stock grants, incentive stock options or other awards in accordance with the Amended and Restated 2006 Stock Incentive Plan.  Recommendations concerning the decision to make an award pursuant to that Plan and the amount of any award are entirely discretionary and shall be made initially by the Compensation Committee, subject to review and approval by the Board of Directors.

 

(ii)   Effect of Termination of Employment.   As more fully set forth in the Executive’s Incentive Stock Option Agreement and generally described herein, in the event that, during the Term, (1) the Company terminates Executive’s employment by not renewing this Agreement or without cause, any unvested stock options that have  duration vesting condition as defined in the Incentive Stock Option Agreement (such terms shall govern in the event of any conflict with this Agreement) shall immediately vest to the extent such unvested stock options would have vested in the twelve (12) months from the Date of Termination; or (2) if the Company is acquired or is the non-surviving party in a merger, or the Company sells all of its assets, and in advance of the closing of such transaction or within twelve (12) months thereafter the Executive is terminated without Cause, or terminates his or her employment for Good Reason or because this Agreement is not assumed by the successor corporation (or affiliate thereto), any unvested stock options that have a duration vesting condition as defined in the Incentive Stock Option Agreement (such terms shall govern in the event of any conflict with this Agreement), shall immediately vest and any unvested stock options under the Plan with a performance condition shall immediately vest and may be exercised only to the extent the performance targets have been achieved or would be achieved by such acquisition, merger or sale in accordance with the terms of the Plan and the Executive’s Incentive Stock Option Agreement, which in the event of a conflict with this Agreement controls.

 

  

4

  

	
(c)  

	
Bonuses.  Executive shall be eligible to receive an annual cash bonus award targeted at 40% of annual base earnings in recognition of Executive's contributions to the success of the Company pursuant to the Company's management incentive bonus program as it may be amended or modified from time to time.  Recommendations concerning the decision to make an award and the amount of any award are entirely discretionary and shall be made initially by the Compensation Committee, subject to review and approval by the Board of Directors.

 

	
(d)  

	
Taxes.  Executive acknowledges and agrees that Executive shall be solely responsible for the satisfaction of any applicable taxes that may arise pursuant to this Agreement (including taxes arising under Code Section 409A (regarding deferred compensation) or 4999 (regarding golden parachute excise taxes), and that neither the Company nor any of its employees, officers, directors, or agents shall have any obligation whatsoever to pay such taxes or to otherwise indemnify or hold Executive harmless from any or all of such taxes.  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  All compensation due to Executive shall be paid subject to withholding by the Company to ensure compliance with all applicable laws and regulations.

 

  

5

  

	
3.2  

	
Participation in Benefit Plans

 

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

 

	
3.3  

	
Expenses

 

The Company will pay or reimburse Executive for all reasonable and necessary out-of-pocket expenses incurred by Executive in the performance of Executive's duties under this Agreement.  Executive shall provide to the Company detailed and accurate records of such expenses for which payment or reimbursement is sought, and Company payments shall be in accordance with the regular policies and procedures maintained by the Company from time to time, and all reimbursements due under this Agreement shall be separately requested and paid not later than one year after Executive incurs the underlying expense.

 

  

6

  

	
3.4  

	
Professional Organizations

 

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

 

	
3.5  

	
Parking

 

During the Term and where Executive uses an automobile to commute to work, the Company shall either provide parking for Executive's automobile at the Company's expense or reimburse Executive for such expense.

 

	
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 twelve (12) month period commencing on the Date of Termination which occurs in connection with a termination of employment described in the Section 4.4(a) or (ii) the eighteen (18) month period commencing on the Date of Termination which occurs in connection with a termination of employment described in the first sentence of Section 4.4(b), or a period ending when Executive becomes eligible for group medical benefits coverage from another source, whichever is shorter.

 

  

7

  

	
(b)  

	
"Cause" shall mean any of the following:

 

	
i.  

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

 

	
ii.  

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

 

	
iii.  

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

 

	
iv.  

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

 

	
v.  

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

 

	
vi.  

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

 

  

8

  

	
(c)  

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

 

	
(d)  

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

 

	
(e)  

	
"Good Reason" shall mean:

 

	
i.  

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

 

	
ii.  

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

 

	
iii.  

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

 

	
iv.  

	
any material breach by Company of this Agreement.

 

  

9

  

           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 thirty (30) days, and Executive resigns within sixty (60) days thereafter.

 

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

 

	
4.2  

	
Termination upon Death or Disability

 

This Agreement and Executive's employment hereunder, shall terminate automatically and without the necessity of any action on the part of the Company upon the death of Executive.  In addition, except as prohibited by applicable law, the Company may terminate Executive’s employment on account of Disability, as defined in this subparagraph.  "Disability" shall mean a physical or mental illness, injury, or condition that prevents Executive from performing some or all of the essential functions of Executive’s job for a period of at least ninety (90) consecutive calendar days, or one hundred and twenty (120) calendar days whether consecutive or not, during any one (1) year period, as certified by an independent physician competent to assess the condition at issue, and which cannot be reasonably accommodated without undue hardship on the Company.

 

  

10

  

	
4.3  

	
Company’s and Executive’s Right to Termination.

 

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

 

	
4.4  

	
Compensation Upon Termination

 

Severance.

 

  

11

  

	
(a)  

	
In the event (1) the Company terminates Executive’s employment without Cause; or (2) this Agreement terminates pursuant to Section 4.2 due to the death or disability of Executive, or (3) the Company elects not to renew this Agreement under circumstances where Executive is willing and able to execute a new agreement providing terms and conditions substantially similar to those in this Agreement, or (4) the Executive terminates this Agreement for Good Reason, Executive (or his estate)  shall be entitled to receive: (i) Executive's Base Salary through the Date of Termination, (ii) reimbursement for the duration of the Benefit Period of (1) any COBRA continuation premium payments made by Executive and (iii) a lump sum severance payment equal to twelve (12) months of Executive’s then current annual Base Salary to be made not later than sixty (60) days following Executive’s Date of Termination; provided, however that each of the benefits under clauses (ii) and (iii) hereof are absolutely contingent on Executive's execution of the 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.  If any amounts that become due under Section 4.4 constitute “nonqualified deferred compensation” within the meaning of Section 409A, payment of such amounts shall not commence until  Executive incurs a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h). If, at the time of Executive’s separation from service, Executive is a “specified employee” (under Internal Revenue Code Section 409A), any benefit as to which Section 409A penalties could be assessed that becomes payable to Executive on account of Executive’s “separation from service” (including any amounts payable pursuant to the preceding sentence) shall be paid, without interest thereon, on the date six months and one day after such separation from service.  In no event shall Executive be entitled to the continuation of any compensation, bonuses or benefits provided hereunder, or any other payments following the Date of Termination, other than Base Salary earned through such Date of Termination and any other benefits payable under Section 4.4(a).

 

  

12

  

	
(b)  

	
Change in Control.  In the event that Executive in advance of the closing or within twelve (12) months following the occurrence of a “Change in Control” of the Company (1) is terminated other than for Cause, or (2) terminates for Good Reason, or (3) terminates because this Agreement is not assumed by the successor corporation (or affiliate thereto) as the result of a Change in Control, Executive (or his estate) shall be entitled to receive: (i) Executive's Base Salary through the Date of Termination, (ii) reimbursement for the duration of the Benefit Period of (1) any COBRA continuation premium payments made by Executive and (iii) a lump sum severance payment equal to eighteen (18) months of Executive’s then current annual Base Salary to be made not later than sixty (60) days following Executive’s Date of Termination; provided, however that each of the benefits under clauses (ii) and (iii) hereof are absolutely contingent on Executive's execution of the 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 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, with any such reduction being made last with respect to benefits that are not exempt from Code §409A.

 

  

13

  

	
(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 not later than forty-five (45) days after Executive’s Date of Termination.  The Company shall have no obligation to provide any severance benefits to Executive until it has received the general release from Executive within the time specified in the preceding sentence, and any revocation or rescission period applicable to the Release shall have expired without revocation or rescission.

 

  

14

  

	
5.  

	
Employment Covenants

 

5.1           Definitions

 

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

 

	
(a)  

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

 

	
(b)  

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

 

  

15

  

	
(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.

 

 

  

16

  

	
(d)  

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

 

	
(e)  

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

 

	
(f)  

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

 

	
5.2  

	
Nondisclosure and Nonuse

 

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

 

	
5.3  

	
Other Confidentiality Obligations

 

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

 

  

17

  

	
5.4  

	
Return of Confidential Information

 

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

 

	
5.5  

	
Confidential Information of Others

 

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

 

  

18

  

	
5.6  

	
Other Obligations

 

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

 

	
5.7  

	
Assignment of Confidential Information and Inventions; Works Made for Hire

 

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

 

  

19

  

	
5.8  

	
Representations

 

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

 

	
5.9  

	
Inventions, Intellectual Property and Equipment Not Transferred

 

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

 

  

20

  

	
5.10  

	
Exclusivity of Employment

 

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

 

	
5.11  

	
Covenant Not to Compete

 

Executive acknowledges that his services to the Company involve a unique level of trust, of skills, and of access to Confidential Information and other business and strategic insights about the Company, and accordingly 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.

 

  

21

  

	
(b)  

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

 

	
(c)  

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

 

"Conflicting Product" means any product, method or process, system or service of any person or organization other than the Company that is the same as, similar to or interchangeable with any product, method or process, system or service material to the Company’s business 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.

 

  

22

  

	
5.12  

	
Non-Solicitation

 

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

 

	
5.13  

	
Judicial Enforcement

 

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

 

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:

 

  

23

  

To Company:                        Sucampo Pharma Americas, LLC

4520 East West Highway, Third Floor

Bethesda, Maryland 20814

Attention: Executive Vice President, Human Resources

 

Copy to: Corporate Secretary

 

To Executive:                        Stanley Miele

1955 Bells Ferry Road

Marietta, GA 30066

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

 

	
6.2  

	
Headings

 

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

 

	
6.3  

	
Modifications; Waiver

 

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

 

  

24

  

	
6.4  

	
Entire Agreement

 

This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and supersedes all other agreements, oral or written, heretofore made with respect thereto including, without limitation, the offer letter between Executive and the Company dated October 21, 2012.

 

	
6.5  

	
Severability

 

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

 

	
6.6  

	
Controlling Law

 

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

 

	
6.7  

	
Arbitration

 

Any controversy, claim, or breach arising out of or relating to executive’s employment or termination of employment, 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.  All other disputes or any nature related to executive’s employment or this agreement will be resolved by arbitration.  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.

 

  

25

  

	
6.8  

	
Assignments

 

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

 

	
6.9  

	
Read and Understood

 

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

 

  

26

  

6.10. Counterparts

 

This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and both of which, taken together shall constitute one and the same instrument.  Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.

 

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

 

 

	 	SUCAMPO PHARMA AMERICAS, LLC
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Peter Greenleaf 	 
	 	 	Peter Greenleaf	 
	 	 	Chief Executive Officer
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	/s/ Stanley Miele	 
	 	EXECUTIVE	 

 

 

27exh_1088.htm

Exhibit 10.88

*** Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

 

STIPULATION AND LICENSE AGREEMENT

 

THIS STIPULATION AND LICENSE AGREEMENT (this “Agreement”) is made and entered into as of February 5, 2015 (the “Effective Date”) by and between, on the one hand, Sucampo AG and Sucampo Pharmaceuticals, Inc. (collectively, “Sucampo”) and R-Tech Ueno, Ltd. (“RTU”), and on the other hand, Par Pharmaceutical, Inc. (“Par”).  Each of Sucampo, RTU, and Par is a “Party” and, together, are the “Parties” with respect to the following:

 

WHEREAS, the United States Patent & Trademark Office has lawfully granted the Sucampo Patents (as defined below) providing for the exclusive right to exclude others from making, using, offering for sale, or selling any of the inventions described in the Sucampo Patents;

 

WHEREAS, RTU is the owner of the right, title and interest to the Sucampo Patents;

 

WHEREAS, Sucampo is the exclusive licensee of the Sucampo Patents;

 

WHEREAS, RTU has manufactured and Sucampo has marketed Rescula® brand (unoprostone isopropyl) ophthalmic solution/drops for the lowering of intraocular pressure in patients with open-angle glaucoma or ocular hypertension (the “Rescula® Product”) approved under New Drug Application No. 21-214 (the “Rescula® NDA”);

 

WHEREAS, Par has submitted an Abbreviated New Drug Application No. 206893 (as amended or supplemented, the “Par ANDA”), including a certification pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) (a “Paragraph IV Certification”) asserting, alternatively, the invalidity, unenforceability, and/or non-infringement of U.S. Patent No. 6,458,836 (“the ’836 patent”) and U.S. Patent No. 6,770,675 (“the ’675 patent”) (collectively, “the Sucampo Patents”), to the United States Food and Drug Administration (the “FDA”) to obtain approval to market Par’s ANDA Product (defined below);

 

WHEREAS, on December 19, 2014, Par sent a Notice Letter to Sucampo, informing Sucampo of the filing of Par’s ANDA, accompanied by a Paragraph IV Certification directed to the ’836 patent and the ’675 patent;

 

WHEREAS, the current expiration dates for the Sucampo Patents which are the subject of this Agreement are:

 

	
  

	
·

	
U.S. Patent No. 6,458,836 currently expires on July 9, 2021;

 

	
  

	
·

	
U.S. Patent No. 6,770,675 currently expires on November 24, 2018;

 

WHEREAS, in connection with the Notice Letter, Sucampo is entitled to initiate an Action (the “Lawsuit”);

 

  

1

  

WHEREAS, Rescula® NDA generated total net sales of less than $1 million in the 2014 calendar year; manufacturing of the Rescula® Product has already ended; and Sucampo’s current inventory expires March 31, 2015;

 

WHEREAS, as a result of the weak and decreasing sales of the Rescula® Product, Sucampo’s expected litigation costs would very likely exceed its sales, and the avoidance of litigation will enable Sucampo to focus its finite resources on more productive, procompetitive activities;

 

WHEREAS, Sucampo and RTU agrees herein to permanently resolve the issues of liability by granting to Par a license to the Sucampo Patents;

 

WHEREAS, the Parties agree their purpose and intent in entering this Stipulation and License Agreement is to enable a procompetitive resolution and license;

 

WHEREAS, without any admission of fault by any Party and prior to the commencement of any legal action in connection with Par’s ANDA, the Notice Letter or Par’s ANDA Product, Sucampo, RTU, and Par desire to resolve, without litigating or defending the Lawsuit, any and all outstanding issues between them on a worldwide basis relating to Par’s importation, exportation, manufacture, use, distribution, offer for sale and sale of Par’s ANDA Product, on the terms set forth below; and

 

WHEREAS, this Stipulation and License Agreement reflects the entirety of the parties’ agreement with respect to the Rescula® Product and PAR’s ANDA, and is independent of any other agreement or understanding between the parties.

 

NOW, THEREFORE, for and in consideration of the mutual covenants, agreements, and undertakings set forth in this Agreement, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties, on behalf of themselves, and their respective officers, directors, agents, employees, representatives, heirs, assigns, predecessors and successors (“Related Parties”), agree as follows:

 

1.  DEFINITIONS AND RULES OF CONSTRUCTION

 

(a) Definitions.

 

(i)  “Action” means any legal action or proceeding that may be brought or instituted by either Sucampo or Par in connection with Par’s ANDA (including the filing thereof with the FDA), any Paragraph IV Certification included therewith, any Notice Letter sent by Par to Sucampo in connection therewith or any of Par’s ANDA Product.

 

(ii) “Affiliate” means, with respect to a Party, any Person that directly or indirectly controls, is controlled by, or is under common control with such Party.  For purposes of the foregoing definition only, the term “control” (including, with correlative meaning, the terms “controlling”, “controlled by”, and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of interests representing equity securities, or partnership interests or by contract, or otherwise.

 

  

2

  

 Ownership of more than fifty percent (50%) of such equity securities or partnership interests in a Person shall, without limitation, be deemed to be control for purposes of this definition.  Any venture capital fund or private equity fund, or any Person that directly or indirectly is controlled thereby, that otherwise would be considered an “Affiliate” shall not, for purposes of this Agreement, be considered an Affiliate, except that in the case of Par, Sky Growth Holdings Corporation and its direct and indirect subsidiaries as well as any successor entity to Sky Growth Holdings Corporation and the successor entity’s direct and indirect subsidiaries, shall be considered an Affiliate of Par.  For the avoidance of doubt Sucampo and RTU are not Affiliates of each other.

 

(iii) “Authorized Generic” means unoprostone isopropyl ophthalmic solution/drops product sold in the Territory pursuant to the Rescula® NDA but not under the Rescula® trademark.

 

(iv) “Commercial[ly] Market[ing]” is defined consistent with 21 C.F.R. 314.107(c)(4) and means the first date of introduction or delivery for introduction into interstate commerce outside the control of the manufacturer of a drug product, but does not include transfer of the drug product for reasons other than a sale within the control of the manufacturer or application holder.

 

(v) “Final Court Decision” means a decision of a United States Court, including any settlement order, consent decree, consent judgment, or similar form of judgment entered by such court, from which no appeal has been or can be taken, other than a petition to the Supreme Court for a review of certiorari.

 

(vi) “Fully Loaded Manufacturing Cost” means the Party’s direct out-of-pocket costs actually incurred for the manufacturing, labeling, and packaging of a Rescula® Product, including API, excipients, packaging components, labeling components, internal direct labor, and quality control and assurance testing that are a necessary part of manufacturing.

 

(vii) “Generic Equivalent” means any pharmaceutical product that has received FDA approval for marketing in the Territory as an AB-rated generic version of Rescula® Product, whether pursuant to an ANDA, a 505(b)(2) application, or the Rescula® NDA.

 

(viii) “Gross Profits” means [...***...].

 

(ix) “License Launch Date” means the earliest to occur of the following dates:

 

	
A.  

	
provided that Par has not forfeited its 180-day exclusivity pursuant to 21 U.S.C. § 355(J)(5)(D), the date of a Final Court Decision in an action brought against or by a Third Party that causes the 75-day period of 21 U.S.C. § 355(J)(5)(D)(i)(I)(bb)(AA) to begin; in the event of such forfeiture, the date following the entry of such Final Court Decision on which such Third Party begins to Commercially Market a Generic Equivalent; or

 

  

3

  

 

	
B.  

	
the date of a Final Court Decision holding all claims of the ’836 and ‘675 patents asserted against a third party to be invalid or  unenforceable; or

 

	
C.  

	
the date on which (x) Sucampo, RTU or any of their respective Affiliates or (y) a third party, pursuant to a license or authorization, directly or indirectly, by Sucampo or RTU (or any of their respective Affiliates), launches or sells a Generic Equivalent, provided that Par has secured final approval of Par’s ANDA from the FDA; or

 

	
D.  

	
the date on which a third party, without license or authorization from Sucampo, RTU, or its Affiliates, directly or indirectly, launches or sells a Generic Equivalent, provided that Par has secured final approval of Par’s ANDA from the FDA.

 

(x) “Net Sales” means the gross sales of Par’s ANDA Product by Par or its Affiliate in arm’s-length transactions with third parties in the Territory, less all applicable deductions, to the extent accrued, paid or allowed are in accordance with GAAP and in the ordinary course of business with respect to the sale of Par’s ANDA Product, including:

 

	
A.  

	
cash discounts, quantity discounts, promotional discounts, stocking or other promotional allowances;

 

	
B.  

	
sales and excise taxes, customs and any other taxes, all to the extent added to the sale price and paid and not refundable in accordance with applicable law (but not including taxes assessed against the income derived from such sale);

 

	
C.  

	
returns, recalls and returned goods allowances;

 

	
D.  

	
retroactive corrections, including price adjustments (including those on customer inventories following price changes) and corrections for billing errors or shipping errors;

 

	
E.  

	
chargebacks, rebates, administrative fees, any other allowances actually granted or allowed to any person or entity, including group purchasing organizations, managed health care organizations and to governments, including their agencies, or to trade customers, in each case that are not Affiliates of Par, and that are directly attributable to the sale of Par’s ANDA Product;

 

  

4

  

	
F.  

	
redistribution center (RDC) fees, information service agreement (ISA) fees, and like fees that are customary in the industry that are passed from wholesalers, retailers, distributors, and other customers back to Par; and

 

	
G.  

	
any failure-to-supply penalties that Par may incur from any third party customer purchasing Par ANDA Product pursuant to a written agreement between Par and such third party.

 

In no event will any particular amount, identified above, be deducted more than once in calculating Net Sales (i.e., no “double counting” of reductions).  Sales of any of Par’s ANDA Product between Par and its Affiliates or sublicensees for resale shall be excluded from the computation of Net Sales, but the subsequent resale of Par’s ANDA Product to a Third Party shall be included within the computation of Net Sales.  If any of Par’s ANDA Product is sold or transferred for consideration other than cash, the Net Sales from such sale or transfer shall be deemed the then fair market value of such Par’s ANDA Product.

 

For purposes of determining Net Sales with respect to a unit of product that is sold in a Bundled Sale (as defined below), the gross sales deemed to have been invoiced shall be the average gross sales invoiced for a unit of Par’s ANDA Product during the immediately preceding thirty (30)-day period, and the total amount of any deductions made from such gross amount with respect to each such unit pursuant to this definition shall be no greater than the average total amount deducted for a unit of Par’s ANDA Product during the immediately preceding thirty (30)-day period.  For purposes of this definition of Net Sales, the term “Bundled Sale” shall mean the sale of any other product with Par’s ANDA Product, where discounts, credits, allowances, charge backs, rebates, and other deductions are granted wholly or partially by Par in consideration of a Third Party’s agreement to purchase such other product (other than “across the board” discounts, credits, allowances, chargebacks, rebates, and other deductions that would otherwise be applied independently to the sale of Par’s ANDA Product and such other product).

 

(xi) “Par’s ANDA Product” means any existing formulation of a product that is the subject of Par’s ANDA whose ability to be marketed in the United States is contingent upon the FDA approving Par’s ANDA.  Par’s ANDA Product does not mean or include any product that is not the subject of Par’s ANDA and does not include any products for any indication other than the currently-approved indications for the Rescula® Product.

 

(xii) “Person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, governmental authority, or other entity or organization.

 

(xiii)  “Sucampo IP Rights” means the ’836 Patent and the ’675 Patent, and (A) any patents (issued or that may issue in the future) owned by or licensed to Sucampo, RTU, and/or any of their Affiliates purporting to cover the Rescula® Product, including, but not limited to, any continuations, continuations-in-part, divisionals, reissues or reexaminations of the ’836 Patent or ’675 Patent.

 

  

5

  

(xiv) “Term” means the period commencing on the Effective Date and expiring on the date of expiration of the last-to-expire of the Sucampo IP Rights.

 

(xv)  “Territory” means the United States of America, and its commonwealths, territories, districts and possessions, including the District of Columbia, Commonwealth of Puerto Rico; any installation, territory, location or jurisdiction under the purview of the FDA or control of the United States government; and any United States military bases and installations worldwide.

 

(xvi) “Third Party” means any Person other than Sucampo, RTU, Par, their Affiliates, and their subsidiaries.

 

(xvii) “Valid Claim” means a claim of an issued patent or pending patent application that has not (A) lapsed or become permanently abandoned, (B) been held permanently revoked, unenforceable, invalid, or unpatentable (as the case may be) by a final decision of a court or other governmental agency of competent jurisdiction, which decision is unappealable or not appealed within the time allowed for appeal, and (C) been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

 

(b) Rules of Construction.

 

(i) The definitions of the terms herein shall apply equally to the singular and plural forms of the terms defined.  Neutral pronouns and any variations thereof shall be deemed to include the feminine and masculine and all terms used in the singular shall be deemed to include the plural, and vice versa, as the context may require.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  The word “any” shall mean “any and all” unless otherwise clearly indicated by context.  Where either Party’s consent is required hereunder, except as otherwise specified herein, such Party’s consent may be granted or withheld in such Party’s sole discretion.  Derivative forms of any capitalized term defined herein shall have meanings correlative to the meaning specified herein.

 

(ii) Unless the context requires otherwise: (1) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (2) any reference to any laws herein shall be construed as referring to such laws as from time to time enacted, repealed or amended, (3) any reference herein to any person or entity shall be construed to include such person’s or entity’s successors and permitted assigns, and (4) the words “herein”, “hereof’ and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof.

 

  

6

  

 

2.  STIPULATION AND LICENSE

 

(a) Par, on behalf of itself, its Affiliates, and Related Parties, stipulate that they shall not make, have made, import into, distribute, offer to sell or sell in the Territory Par’s ANDA Product prior to the expiration date of the ’836 patent, including any patent term adjustment or patent term extension, except as provided by Section 2(b).  Par agrees that any breach by it, or its Affiliates and/or Related Parties, of this Section 2 shall cause irreparable harm to Sucampo and RTU, and Par, its Affiliates and its Related Parties consent irrevocably and unconditionally to specific performance, or immediate entry of a temporary restraining order, preliminary injunction, and permanent injunction, to enforce this Section 2(a).  Notwithstanding anything to the contrary, Par, its Affiliates and its Related Parties consent irrevocably and unconditionally to personal jurisdiction and venue in the United States District Court for the District of Delaware for the purpose of enforcing this provision.  Notwithstanding the foregoing, Par and its Affiliates and Related Parties shall have the right to engage in certain pre-marketing activities, as set forth in Section 2(d), prior to the License Launch Date.

 

(b) Notwithstanding Section 2(a), if a License Launch Date occurs, Sucampo and RTU hereby grant to Par a non-exclusive license with respect to the Sucampo Patents with the right to grant sublicenses to Affiliates, (i) to make, have made, use, promote, offer to sell, sell, import, or otherwise dispose of Par’s ANDA Product in the Territory, and (ii) to make and have made Par’s ANDA Product outside the Territory only for use, sale and importation in the Territory.

 

(c) With respect only to Par’s ANDA Product, each of Sucampo and RTU (and their respective Affiliates) covenants not to sue Par or any of Par’s Affiliates, Related Parties, or any of their importers, suppliers, distributors, or customers, or support or encourage any Third Party to sue, for infringement of any Sucampo IP Rights based on the making, using, selling, or offering for sale in the Territory, or making or having made only for importation, use, sale or offering for sale into or for the Territory, Par’s ANDA Product.  Sucampo and RTU, on behalf of themselves and their Affiliates, will impose the license grants, covenants, waivers and other obligations contained in this Article 2 and elsewhere in this Agreement on any Person to whom Sucampo and RTU or their Affiliates may assign or otherwise transfer title or interest in or to the Rescula® NDA and/or the Sucampo Patents.

 

(d) Commencing [...***...] ([...***...]) days prior to the License Launch Date or the ‘836 patent expiry, whichever is earlier, Par and its Affiliates may [...***...] but solely for the purpose of preparing for the commercial launch thereof on the License Launch Date; provided, however, that neither Par nor any of its Affiliates shall be allowed to engage in taking orders before the License Launch Date; and providedfurther, however, that other reasonably associated pre-marketing activities, including but not limited to offers to the trade that communicate information regarding the products offered for sale, may be conducted within [...***...] ([...***...]) days prior to the License Launch Date. For the avoidance of any doubt, and notwithstanding anything to the contrary herein, the option to Commercially Market an Authorized Generic is not exclusive to Par, and Sucampo reserves all rights to market and sell an Authorized Generic and to license to third parties the right to market and sell an Authorized Generic.

 

  

7

  

(e)           Par shall have the option to Commercially Market an Authorized Generic if a License Launch Date occurs.  In the event that Par or its Affiliates wishes to Commercially Market an Authorized Generic, Par shall first notify Sucampo of its desire to purchase an Authorized Generic product to resell, which Authorized Generic product shall be supplied to Par at Sucampo’s and/or RTU’s [...***...] (the “Authorized Generic Supply Cost”) and pursuant to such other terms and provisions as set forth  in the Manufacturing and Supply Agreement set forth on Exhibit A hereto. Except as stated above in this Section 2(e), all terms in this Agreement that apply to Par’s ANDA Product shall apply equally to the Authorized Generic product manufactured for, and supplied to Par, including the payment of royalties pursuant to Section 5, as though Par were Commercially Marketing its ANDA Product.

 

3.  MUTUAL RELEASE AND OBLIGATIONS

 

(a) Upon execution of this Agreement by each of the Parties, and subject to the terms of this Agreement, each of Sucampo and RTU, for themselves and on behalf of their Related Parties and all persons and entities claiming by, through and under them, does hereby fully, finally release and forever discharge, relinquish and acquit, Par, and its shareholders, employees, agents, officers, directors, successors, assigns, representatives, customers, suppliers, manufacturers, partners and distributors, from any and all claims, rights, causes of action, counterclaims, defenses and liabilities whatsoever that in each case accrued prior to the Effective Date, whether based on federal, state, local, statutory or common law or any other law, rule or regulation, whether known or unknown, that relate to (i) Par’s ANDA Product and could have been asserted in an Action now or upon the approval of Par’s ANDA Product or (ii) any activities in respect of Par’s ANDA Product that were engaged in by Par or its Affiliates prior to the Effective Date and that would have given rise to a claim of infringement of any of the Sucampo IP Rights.  Nothing in this release shall preclude Par or any of its Affiliates from asserting the invalidity, unenforceability or non-infringement of the Sucampo IP Rights in any future litigation concerning any product that is not Par’s ANDA Product.

 

(b) Upon execution of this Agreement by each of the Parties, and subject to the terms of this Agreement, Par for itself and on behalf of its shareholders, officers, directors, agents, representatives and all persons and entities claiming by, through and under them, does hereby fully, finally release and forever discharge, relinquish and acquit, Sucampo and RTU, and their respective shareholders, employees, agents, officers, directors, successors, assigns, representatives, customers, suppliers, manufacturers, partners and distributors, from any and all claims, rights, causes of action, counterclaims, defenses and liabilities whatsoever that in each case accrued prior to the Effective Date, whether based on federal, state, local, statutory or common law or any other law, rule or regulation, whether known or unknown, that relate to Par’s ANDA Product and could have been asserted in an Action now or upon the approval of Par’s ANDA Product.  Nothing in this release shall preclude Sucampo or RTU, or any of their respective Affiliates, from asserting the Sucampo IP Rights in any future litigation concerning any product that is not Par’s ANDA Product.  Nothing in this release shall preclude Sucampo, RTU, or any of their respective Affiliates from asserting the Sucampo IP Rights in any future litigation concerning any product that is not Par’s ANDA Product.

 

  

8

  

(c)           Each party shall be solely responsible for its own attorney’s fees and costs.  No payment shall be made by Sucampo or RTU to Par as consideration for this Stipulation and License Agreement.

 

4.  PAR’S OBLIGATIONS TO SUCAMPO

 

(a) Except to the extent required by law or order of a court or administrative agency of competent jurisdiction, Par, its Affiliates, and its Related Parties stipulate not to (1) challenge the validity or enforceability of, or assert the noninfringement of, any of the Sucampo IP Rights; and/or (2) cause its Affiliates, Related Parties, subsidiaries and their respective counsel (specifically including but not limited to the counsel who have advised or represented Par in connection with the Action or this Agreement), to assist, encourage, finance, or otherwise provide any information to any Third Party attacking or who may attack, the validity or enforceability of, or assert the noninfringement of, any of the Sucampo IP Rights; provided, however, that the foregoing shall not prevent or otherwise prohibit Par, its Affiliates, or its Related Parties from such challenge or assertion solely to the extent that such challenge or assertion involves any subsequent submission by Par of an ANDA or 505(b)(2) application that does not reference NDA No. 21-214.  Furthermore, any additional certification or statement required by FDA of Par with respect to the Par ANDA in light of any future patent information submission or Orange Book listing by Sucampo or RTU for NDA No. 21-214 shall not be deemed a violation of this section.

 

(b) Solely for the purposes of the enforcement of this Agreement, and only to the extent that it pertains to the Rescula® Product approved under the Rescula® NDA (and for no other purpose or product), Par acknowledges that the Sucampo IP Rights are valid and enforceable and that Par’s ANDA Product would infringe one or more Valid Claims of the Sucampo IP Rights, with such acknowledgement having no estoppel or other preclusive effect on future litigation should this Agreement be breached by either Party.

 

(c) If Par acquires the right, title, or interest to another ANDA for unoprostone isopropyl 0.15% ophthalmic solution products that references the Rescula® NDA and that ANDA contains a Paragraph IV certification pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(IV) regarding the ’836 patent and/or the ’675 patent and seeks approval to market generic versions of unoprostone isopropyl 0.15% ophthalmic solution products before the expiration of the ’836 patent and/or the ’675 patent, the terms of this Agreement shall apply equally to that ANDA and its products as they do to Par’s ANDA and its products.

 

5.  ROYALTY PAYMENTS AND REPORTING

 

(a) Beginning on any License Launch Date that is prior to the date specified in Section 2(a), Par shall pay Sucampo [...***...] of Par’s ANDA Product sold during the term of this Agreement for all such Gross Profits [...***...], which term continues until each of the Sucampo Patents has expired, or each has been dedicated to the public or disclaimed pursuant to 35 USC § 253, or every claim that was asserted against Par in the Patent Litigation has been held invalid or unenforceable in a Final Court Decision, unless otherwise provided by this Section 5.

 

  

9

  

(b) During any period after a License Launch Date occurs where, in addition to Par Commercially Marketing a Generic Equivalent, one Third Party is Commercially Marketing a Generic Equivalent or Authorized Generic in the Territory (or Sucampo, RTU, and/or an Affiliate is Commercially Marketing an Authorized Generic in the Territory) the royalty rate provided for in Section 5(a) shall be [...***...] of Gross Profits [...***...].

 

(c) During any period after a License Launch Date occurs where, in addition to Par Commercially Marketing a Generic Equivalent, two or more Third Parties are Commercially Marketing a Generic Equivalent or Authorized Generic in the Territory (or one or more Third Parties is Commercially Marketing a Generic Equivalent and Sucampo, RTU, and/or an Affiliate is Commercially Marketing Authorized Generics in the Territory), the royalty rate provided for in Section 5(a) shall be [...***...].

 

(d) Within thirty (30) calendar days after the close of each calendar quarter for which royalties are due hereunder, Par shall deliver to Sucampo a report of the amount of Gross Profits and Net Sales of Par’s ANDA Product sold by Par or its Affiliates in the quarter listing the amount of royalties due for the quarter and the details of the calculation performed by Par to arrive at the amount of royalties due, and shall remit to Sucampo payment of said royalties in United States Dollars by wire transfer to such bank account as Sucampo may from time to time designate in writing.

 

(e) Par shall maintain accurate books and records in sufficient detail to enable the payments due hereunder to be determined.  Such records shall be available on request by Sucampo for inspection, during normal business hours, by Sucampo’s independent certified public accountant for up to three (3) years after the calendar year to which they pertain, for purposes of verifying the accuracy of the reports and payments made by Par.  If the audit reveals a deficiency in the calculation of payments resulting from any underpayment to Sucampo, Par shall promptly pay (but in all cases within thirty (30) days of such determination) Sucampo the amount remaining to be paid and, if such underpayment is five percent (5%) or more, Par shall also pay Sucampo the reasonable out-of-pocket expenses paid to a Third Party for such audit.  If the accountant determines that Par has overpaid Sucampo, Sucampo shall pay such amounts to Par within thirty (30) calendar days of the result of the audit.

 

(f) Any amount due hereunder from a Party and not paid timely under the terms of this Agreement shall bear interest from the date due at the then-prevailing prime rate.

 

  

10

  

(g) Sucampo, RTU, and Par acknowledge that any expenses or costs deducted from Net Sales under this Agreement may be based upon accruals or estimates, which accruals or estimates will be compliant with Par’s standard practices consistently applied; provided that such accruals or estimates shall be reconciled to actual amounts at least quarterly and when known relative to any accrued or estimated amount, and any difference between the actual results and the accrual or estimate shall be reported and accounted for.  To the extent that the difference between such accruals or estimates and the actual results has led to an underpayment, the amount of such underpayment shall be paid on the next date payment is due hereunder.  To the extent that the difference between such accruals or estimates and the actual results has led to an overpayment to Sucampo, that amount may set-off such overpayments against subsequent payments.  Within one (1) year of the termination or expiration of this Agreement, a “contract-end” reconciliation shall be performed (and a written report of such reconciliation shall be provided) of the deductions made, pursuant to the definition of Net Sales, and of the amounts payable.  The reconciliation shall be based on all actual amounts known through the date that is ten (10) months following the applicable termination or expiration date versus prior accruals or estimates.  No further reconciliations shall be made.  If any reconciliation under this Section 5(g) following the termination or expiration of this Agreement shows either an underpayment or an overpayment, the respective party shall pay the amount of the difference to the other within thirty (30) days of the date of delivery of the report of such reconciliation.

 

6.  REPRESENTATIONS AND WARRANTIES

 

(a) Each Party hereby warrants and represents to the other Party that (i) it has the right to enter into this Agreement and perform its obligations and duties under this Agreement, (ii) all factual statements made herein are true, (iii) the undersigned representative is duly authorized to execute and deliver this Agreement on behalf of such Party, and (iv) such Party has provided its undersigned representative with the full and necessary authority to bind it with respect to the subject matter herein.

 

(b) Sucampo and RTU hereby represent and warrant that they have all rights, title and authority necessary to grant to Par the release and covenants not to sue granted hereunder.

 

(c) Each Party hereby represents and warrants that neither this Agreement, nor any of its terms or provisions, nor any of the negotiations or proceedings connected with it, shall be construed as an admission or concession by either Party of any liability, fault, or wrongdoing of any kind.

 

7.  CONFIDENTIALITY

 

(a) The terms of this Agreement are confidential, and shall not be disclosed to any third party without the prior written consent of all Parties.  Any press release regarding this Agreement must be approved by all Parties.

 

(b) Notwithstanding the foregoing, the Parties may disclose the terms of this Agreement if the disclosure is:

 

(i) of matters contained in the public record,

 

(ii) as required by any court or other governmental body,

 

(iii) to any regulatory agency, including disclosure required by securities laws or regulations,

 

(iv) in confidence to the Parties’ attorneys, insurers, accountants, or financial advisors,

 

  

11

  

(v) as required to assert the Parties’ rights hereunder, and

 

(vi) as otherwise agreed to in writing by the Parties, or required by law.

 

8.  GOVERNMENT NOTIFICATIONS AND GOVERNMENT PROCEEDINGS

 

(a) Within ten (10) business days following the Effective Date, and pursuant to current statutory law, the Parties shall file or cause to be filed this Agreement with the U.S. Federal Trade Commission Bureau of Competition (“FTC”), the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice (“DOJ”), and any other applicable state or federal governmental agency, and, in each case, shall request that this Agreement be treated as confidential to the fullest extent permitted under the law.

 

(b) If, within thirty (30) days of receipt of this Agreement by the FTC and DOJ, the FTC and/or DOJ object to, respond to, or otherwise comment on such submission, the Parties shall use best efforts to resolve such objection, response or comment, without making any material change to the rights and obligations of the Parties under this Agreement, except as the Parties may mutually agree.

 

9.  MISCELLANEOUS PROVISIONS

 

(a) Interpretation.  The Parties are equally responsible for the negotiation and preparation of this Agreement, and in any judicial proceeding the terms hereof shall not be more strictly construed against one Party than the other Party.

 

(b) Notice.

 

(i) Any notice or other communication to be given under this Agreement by any Party to the other Party shall be in writing and shall be either (A) personally delivered, (B) mailed by registered or certified mail, postage prepaid with return receipt requested, (C) delivered by overnight express delivery service or same-day local courier service, or (D) delivered by facsimile transmission (followed by a copy by the preceding methods in clause (A), (B) or (C)), to the address of the applicable Party as set forth below, or to such other address as may be designated by the Parties from time to time in accordance with this Section 8(b).

 

(ii) Notices delivered personally, by overnight express delivery service or by local courier service shall be deemed given as of actual receipt.  Mailed notices shall be deemed given five (5) business days after mailing.  Notices delivered by facsimile transmission shall be deemed given upon receipt by the sender of the transmission confirmation (in the case of a facsimile transmission) if transmitted before 5:00 p.m. (recipient’s local time) on a business day, and otherwise on the following business day.

 

	
  

	
If to Par:

	
Par Pharmaceutical, Inc.

One Ram Ridge Road

Chestnut Ridge, NY  10977

Attention:  General Counsel

Facsimile Number: (201) 802-4600

 

  

12

  

	
  

	
If to Sucampo:

	
Sucampo Pharmaceuticals, Inc.

	
  

	
4520 East West Highway, 3rd Flr.

	
  

	
Bethesda, MD  20814

	
  

	
Attention: Chief Legal Officer

	
  

	
Facsimile Number: (301) 961-3440

	
  

	
If to RTU:

	
R-Tech Ueno, Ltd.

NBF Hibiya Bldg. 10F, 1-1-7, Uchisaiwai-cho,

Chiyoda-ku, Tokyo, 100-0011, Japan,

Attention: Director, Office of the President

Fax No. +81-3-3596-8023

(c) Governing Law.  This Agreement and all amendments, modifications, alterations, or supplements hereto, and the rights of the parties hereunder, shall be construed under and governed by the laws of the State of Delaware, without regard to its choice of law rules.

 

(d) Dispute Resolution.  In the event of any dispute, controversy or claim arising from, out of, or in connection with or relating to this Agreement or any breach or alleged breach of this Agreement (each, a “Dispute”), a Party shall notify the other Party of such Dispute in writing and the Parties shall meet to discuss and attempt to resolve in good faith such Dispute.  If such Dispute is not resolved by the Parties within thirty (30) days of such notice, either Party may commence action in a court of competent jurisdiction.

 

(e) Entire Agreement.  This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and shall not be modified, amended, or terminated except as herein provided or except by another agreement in writing executed by the Parties hereto. This agreement is not contingent upon or related to any agreement, promise, or understanding except as expressly set forth herein.

 

(f) Severability.  If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be limited or eliminated to the minimum extent necessary so that the remainder of this Agreement will continue in full force and effect and be enforceable.  The parties agree to negotiate in good faith an enforceable substitute provision for any invalid or unenforceable provision that best achieves the intent of such provision.

 

(g) Headings.  The headings used herein are for reference and convenience only, and shall not enter into the interpretation of this Agreement.

 

(h) Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall constitute one and the same document.

 

[SIGNATURE PAGE FOLLOWS]

 

  

13

  

 

IN WITNESS WHEREOF, the Parties, intending to be legally bound, have caused this Agreement to be executed in duplicate originals by these duly authorized representatives.

 

	 	 	SUCAMPO AG
	 	 	
 

 

 

	 
	 	 	 	 	 
	 	 	 	Name	 
	 	 	 	
Title

	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
SUCAMPO PHARMACEUTICALS, INC.

	 	 	
 

 

 

	 	 
	 	 	By	 	 
	 	 	 	Name	 
	 	 	 	
Title

	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
R-Tech Ueno, Ltd.

	 
	 	 	
 

 

 

	 	 
	 	 	By	 	 
	 	 	 	Name	 
	 	 	 	
Title

	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
PAR PHARMACEUTICAL, INC.

	 
	 	 	
 

 

 

	 	 
	 	 	By	 	 
	 	 	 	Name	 
	 	 	 	
Title

	 

 

 

	
 

 ________________________________

        

	
By

	  
	  	
Name

	  	
Title

	
R-Tech Ueno, Ltd.

	
By

	  
	  	
Name

	  	
Title

	
PAR PHARMACEUTICAL, INC.

	
By

	  
	  	
Name

	  	
Title

 

 

 

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00241-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00241-of-00352.parquet"}]]