Document:

exv10w31

 

Confidential
materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.

Exhibit 10.31

SPI-8811 AND SPI-017 EXCLUSIVE CLINICAL

MANUFACTURING AND SUPPLY AGREEMENT

     THIS SPI-8811 AND SPI-017 EXCLUSIVE CLINICAL MANUFACTURING AND SUPPLY AGREEMENT (“Agreement”)
is made as of this 4th day of October 2006 (the “Signing Date”), by and among Sucampo
Pharmaceuticals, Inc., a corporation organized and existing under the laws of the state of
Delaware, U.S.A. and having its principal office at 4733 Bethesda Avenue, Suite 450, Bethesda,
Maryland 20814, U.S.A. (“SPI”), and R-Tech Ueno, Ltd., a corporation organized and existing under
the laws of Japan and having its registered office at 10F, Yamato Life Insurance Bldg., 1-1-7
Uchisaiwaicho, Chiyoda-ku, Tokyo, Japan 100-0011 (“RTU”) (each referred to herein as a “Party” and
collectively as the “Parties”).

     WHEREAS, RTU has expertise in the manufacture of drug substances and drugs for preclinical and
clinical use;

     WHEREAS, SPI is a United States based pharmaceutical company that seeks a supply source for
Drug Substance and Drug Product (defined below) for SPI clinical evaluation;

     WHEREAS, RTU has in the past supplied prostone products, including SPI-8811 and SPI-017, for
preclinical and clinical development, and as such RTU has developed a substantial level of
expertise in the manufacture of Drug Substance and Drug Product;

     WHEREAS, RTU desires to be the exclusive clinical supplier of Drug Substance and Drug Product;
and

     WHEREAS, SPI seeks to have RTU supply Drug Substance and Drug Product for use in SPI clinical
development and desires to have RTU be SPI’s exclusive clinical supplier of Drug Substance and Drug
Product.

     NOW, THEREFORE, in consideration of the mutual promises herein, the Parties agree as follows:

ARTICLE 1. DEFINITIONS

     Article 1.1. “Certificate of Analysis” means a certificate provided by RTU to SPI with each
shipment of the Drug Substance and the Drug Product, which sets forth: (a) the results of any
quality assurance testing; and (b) the manufacturing date.

     Article 1.2. “Confidential Information” means all information, whether in tangible form or
not, provided by either party hereunder to the other, including but not limited to: financial
information, including but not limited to current and projected financials and funding needs;
information on research and development compounds, products, and processes; trade secrets;
technical know-how; formulas; studies; regulatory submissions and records; research data and
information; sales and marketing information (including, without limitation, customer lists);
inventions; patent information and all other information pertaining to a party’s intellectual
property; in any form (including but not limited to information provided orally, electronically, or
in writing). It shall further include the existence and nature and terms of this Agreement, and any
and all attachments or exhibits thereto.

 

 

     Article 1.3. “Drug Substance” means the SPI-8811 active ingredient or the SPI-017 active
ingredient, or such other prostone compound as SPI may designate from time to time by written
notice to RTU, in each case prior to formulation as a final drug product.

     Article 1.4. “Drug Product” means a finally formulated SPI-8811 or SPI-017 drug product, or
such other finally formulated prostone drug product as SPI may designate from time to time by
written notice to RTU, ready for clinical use.

     Article 1.5. “Good Manufacturing Practices” or “GMP” means the current good manufacturing
practices for manufacturing drug substances and drug products as set forth in 21 USC 351(a)(2)(B)
and 21 CFR Parts 210 and 211 (or any successor provisions), or such other good manufacturing
practices as may be established by relevant governmental authorities having jurisdiction for the
clinical development of the Drug Product.

     Article 1.6. “NDA” means a New Drug Application, as defined in the United States Food, Drug
and Cosmetic Act and applicable regulations promulgated there under, or other appropriate marketing
authorization in the United States, or any counterpart application or marketing authorization in
any country.

     Article 1.7. “Order” means a written communication from SPI to RTU of SPI’s need for Drug
Substance or Drug Product for a particular supply period, issued in accordance with Article 2.4 and
specifying the quantity of Drug Substance or Drug Product ordered, and the requested time, manner
and address of delivery.

     Article 1.8. “Person” means any individual, trust (or any of its beneficiaries), estate,
partnership, limited partnership, association, limited liability company, corporation, any other
enterprise engaged in the conduct of business or operating as a non-profit entity, however formed
or wherever organized, or any governmental body, agency or unit.

     Article 1.9. “Process” or “Processing” means the act of purification, preparation, filling
(including without limitation tableting/encapsulation), storing, testing, packaging and labeling,
and any other pharmaceutical manufacturing procedures, or any part thereof, involved in
manufacturing the Drug Substance and Drug Products.

     Article 1.10. “Specifications” mean the manufacturing, quality control, packaging, labeling,
shipping and storage specifications as separately set out for Drug Substance and Drug Product in
Appendix B and as updated from time to time on mutual agreement in writing by the parties.

     Article 1.11. “Territory” means all of the countries located in the World.

     Article 1.12. “SPI-017” means the compound designated by SPI as (to be determined), as
described in more detail in Appendix A-1.

     Article 1.13.
“SPI-8811” means the compound designated by SPI as
[**], as described in
more detail in Appendix A-2.

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ARTICLE 2. GENERAL TERMS OF MANUFACTURING AND SUPPLY

     Article 2.1. Supply. Subject to the terms of this Agreement, RTU agrees to manufacture and
supply the Drug Substance and the Drug Product to SPI and SPI agrees to purchase said Drug
Substance and Drug Product in all such quantities as required by SPI for SPI’s clinical purposes.
SPI shall be allowed to supply said Drug Substance and Drug Product to its affiliates for the
purpose of clinical development. SPI may assign its right under this Agreement in whole or in part
to any of its affiliates engaging in the development of any Drug Substance or Drug Product.

     Article 2.2. Cost to Produce. RTU, at its sole expense, will provide all labor, utilities,
equipment, personnel, facilities, raw materials and components necessary for manufacturing,
development and implementation of all appropriate quality control measures, shipping, and storage
of the Drug Substance and the Drug Product in compliance with the Specifications and the warranties
contained in Article 9 and the Regulatory and Legal requirements of Article 7. RTU shall also be
responsible for all Process development and scale-up, and all costs and expenses associated
therewith. SPI, at its sole expense, will provide all resources necessary to ship, store, and
otherwise handle such Drug Substance and Drug Product in a manner necessary to meet applicable
Regulatory and Legal requirements after delivery of the Drug Substance and Drug Product to SPI as
described in Article 2.5.

     Article 2.3. Quality Assurance. RTU, at its sole expense, will perform all testing for
compliance with the Specifications and the applicable GMPs and will supply a chemical Certificate
of Analysis with each batch of Drug Substance and Drug Product and any other documentation required
by law or regulation. Complete copies of all test results and/or assays will be submitted to SPI
promptly following any reasonable request therefor during the term of this Agreement. RTU shall
make available its facilities and relevant records for inspection by the appropriate government
authorities, SPI or SPI’s agents for regulatory or quality assurance purposes upon reasonable
notice and at reasonable times during normal business hours; provided, however that the inspection
by SPI or its agents hereunder shall be within the scope of inspection that is allowed under the
relevant statutes and regulations.

     Article 2.4. Clinical Supply; Order. During the term of this Agreement, SPI shall grant RTU
the exclusive right to manufacture and supply Drug Substance and Drug Product to SPI for clinical
development purposes. During the term of this Agreement, RTU and SPI shall from time to time
confer and agree on SPI’s supply needs for SPI’s ongoing clinical development program. SPI and
RTU shall mutually agree upon a reasonable advance notice period for ordering clinical supply, and
SPI shall inform RTU of its final requirements in accordance with such advance notice period in the
form of an Order which, subject to the terms and conditions of this Agreement, RTU agrees to
supply.

     Article 2.5. Delivery; Risk of Loss. Any Drug Substance and Product supplied hereunder to
SPI shall be shipped from RTU’s manufacturing facility in Sanda (Hyogo, Japan) or its contract
manufacturer and delivered to a common carrier to be transported for importation into the United
States (or a place mutually agreed upon the commencement of batch production). The identity of
the common carrier and the port of entry shall be mutually determined by the Parties in writing.
Title and risk of loss shall pass to SPI at the time the goods are delivered to SPI or its

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designee, and SPI shall assume all responsibility for and costs associated with the goods upon
such delivery.

     Article 2.6. Performance Issue. If either party becomes aware of any issue that may
materially impact RTU’s ability to fulfill its obligations under this Agreement, it shall
immediately notify the other party and both parties shall confer in good faith in order to address
such issue.

ARTICLE 3. ADDITIONAL SERVICES

     Article 3.1. Consulting. In addition to the products supplied hereunder, RTU agrees to
provide consulting to SPI on manufacturing-related regulatory issues, which consulting services
shall include provision of (i) all information and assistance which is reasonably necessary for or
useful in the preparation of comprehensive and complete INDs and NDAs and any amendments and
supplements thereto, including, without limitation, the Chemistry Manufacturing and Controls (CMC)
section of the NDA for the Drug Product and (ii) access to RTU facilities and pertinent information
to FDA inspectors or, with respect to countries in the Territory other than the United States, such
countries’ equivalent governmental inspectors, conducting inspections, whether on a pre-approval
basis or as part of a post-approval audit. Such consulting services shall be subject to payment by
SPI of service fees at reasonable consulting rates.

ARTICLE 4. PRICING AND PAYMENT

     Article 4.1. Clinical Development Schedule and Report. SPI and/or its affiliate, when
applicable, will provide to RTU in writing a schedule of the clinical development of each Drug
Product in each Phase each calendar quarter and at any other time whenever there are material
changes to the development plan and schedule during the term of this Agreement. SPI and/or its
affiliate shall provide RTU with updates in writing in reasonable detail of progress and forecast
of the clinical development of the Drug Substance and Drug Product on at least a quarterly basis
and as reasonably requested from time to time during the term of this Agreement.

     Article 4.2. Clinical Supply Price. Drug Substance and Drug Product for use in clinical
development shall be supplied pursuant to an Order issued under Article 2.4 on a batch-by-batch
basis and invoiced to SPI in the amount, which shall not exceed actual cost plus a mark up of [**]%,
mutually agreed upon in writing prior to commencement of the relevant batch production

     Article 4.3.
Terms of Payment. Any payments due hereunder shall be made within [**] days of receipt of an invoice. Orders shall be invoiced at the time of shipment. Payment may be
made by wire transfer or other suitable means agreed upon by the parties. Payments for clinical
supply under this Agreement shall be made in Japanese Yen.

     Article 4.4. Shipping Terms. All payments for Drug Substance and Drug Product supplied
hereunder are inclusive of all cost, insurance and freight (GIF) necessary for delivery to SPI as
described in Article 2.5, except that title and risk of loss shall pass to SPI upon delivery to SPI
or its designee.

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ARTICLE 5. CONFIDENTIALITY

     Article 5.1. General Obligation. In order that each party may provide appropriate products
and services, each has, and will continue to provide the other with, certain Confidential
Information prepared by or on behalf of and belonging to the “Disclosing Party.” The “Receiving
Party” shall maintain Confidential Information in confidence and shall not, without Disclosing
Party’s written authorization, disclose to any Person any Confidential Information. Receiving
Party shall not use Confidential Information for any purpose except for the purposes delineated in
this Agreement and for the Disclosing Party’s benefit.

     Article 5.2. Exceptions. Article 5.1 shall not apply to any information (1) that was in
Receiving Party’s possession prior to receipt from Disclosing Party, (2) that was in the public
domain at the time of receipt from Disclosing Party, (3) that becomes part of the public domain
without breach of any obligation of confidentiality to Disclosing Party, (4) that is lawfully
received by Receiving Party from a third party independent of Disclosing Party that has no
obligation of confidentiality to Disclosing Party, or (5) that is required by law to be disclosed.
Further, both Parties agree that this Agreement may be filed as an exhibit to, and its terms
summarized in, a registration statement filed by SPI with the U.S. Securities and Exchange
Commission relating to the public offering of stock by SPI.

     Article 5.3. Notice; Return of Confidential Information. Receiving Party shall provide
immediate notice to Disclosing Party of any request or demand for Disclosing Party’s Confidential
Information, or any request or demand for information pertaining to the subject matter of this
Agreement Upon written request, Receiving Party shall promptly provide to Disclosing Party all
Confidential Information provided to Receiving Party or prepared by Receiving Party on Disclosing
Party’s behalf in connection with this agreement.

     Article 5.4. Irreparable Harm. The Parties mutually acknowledge and agree that Confidential
Information disclosed under this Agreement is valuable principally because of its confidential
nature, and so any improper disclosure of Confidential Information will represent irreparable harm
that cannot be adequately compensated monetarily.

     Article 5.5. Term. This Article 5 confidentiality provision in all events shall remain in
effect for ten (10) years following any disclosure made hereunder. Notwithstanding the foregoing,
however, any trade secret disclosed to either Party, shall be held in strict confidence in
perpetuity or until said trade secret is publicly disclosed through no fault of the receiving
party.

ARTICLE 6. INTELLECTUAL PROPERTY

     Article 6.1. Ownership. Each party shall retain all right, title and interest in its
intellectual property, including information, improvements, developments, inventions, patents,
trade secrets and know-how, and Confidential Information and other materials disclosed by it to the
other party hereunder.

     Article 6.2. Grant of Limited License. Subject to the terms and conditions of this
Agreement, each party hereby grants to the other party a non-exclusive, non-transferable license to
the extent, and only to the extent, necessary to perform this Agreement. All rights and licenses
not granted herein are reserved to each party, and no other rights or licenses are granted or will
be

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deemed to be granted to the other party (whether by implication, estoppel or otherwise).
Without limiting the generality of the foregoing, RTU retains the right to manufacture the Drug
Substance and the Drug Product, and to permit third parties to manufacture the Drug Substance and
the Drug Product, around the world.

ARTICLE 7. REGULATORY & LEGAL

     Article 7.1. Compliance. RTU shall at all times remain in substantial compliance with all
applicable laws, regulations and guidelines that apply to the manufacturing and supply contemplated
hereunder.

     Article 7.2. Records. RTU shall keep accurate written records in substantial compliance with
all applicable legal and regulatory requirements that apply to the manufacturing and supply
contemplated hereunder. Such records will be made available to SPI on reasonable request for
inspection, to the same extent that they would be available to an appropriate governmental
inspector, during normal business hours. Records shall be maintained for the period of time
required by applicable laws or regulations, or if there is no period of time specified by such laws
or regulations, for three (3) years following the respective dates of records.

     Article 7.3. Regulatory Audits; Notice of Audit. RTU shall make its facilities, records and
personnel available to the FDA or any other regulatory authority as may be needed for compliance
with the applicable laws, rules and regulations enforced by such authority. RTU shall advise SPI
in writing immediately if:

          (a) an agent of any regulatory body having jurisdiction over the manufacture or distribution
of the Drug Product makes an inquiry about the Drug Product or visits RTU’s manufacturing facility
for the Drug Product, and shall specify what, if any, inquiry was made; or

          (b) any regulatory authority takes action against RTU on any issue related directly or
indirectly to the manufacturing or distribution of the Drug Product.

     Article 7.4. Drug Master File. RTU shall produce and maintain a drug master file for Drug
Substance made under this Agreement, which shall contain all information necessary to comply with
FDA, U.S. Environmental Protection Agency, and all U.S. Pharmacopoeia standards, and, with respect
to countries in the Territory other than the United States, their non-U.S. equivalents, with
respect to the applicable manufacturing processes and Drug Product.

     Article 7.5. Import/Export Issues. RTU shall be responsible for (i) obtaining all
governmental permits, consents and approvals which are required in order to export Drug Product
from the country of origin, and (ii) making any required notifications or other filings (whether
before or after shipment) which are required in connection with the exportation of Drug Product
from the country of origin.

ARTICLE 8. REPRESENTATIONS & WARRANTIES OF SPI

     Article 8.1. Organization. SPI represents and warrants to RTU that it is a corporation duly
organized, validly existing, and, where applicable, in good standing under the laws of the
jurisdiction of its incorporation.

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     Article 8.2. Authority. SPI represents and warrants that it: (a) has the right to enter into
this Agreement; (b) has the power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; and (c) has by all necessary corporate action duly and validly
authorized the execution and delivery of this Agreement and the performance of its obligations
hereunder.

     Article 8.3. No Conflicts. SPI represents and warrants to RTU that its execution and
performance under this Agreement does not and will not during the term of this Agreement conflict
with or result in any breach of, or constitute a default under, any note, security agreement,
commitment, contract or other agreement, instrument or undertaking to which it is a party.

     Article 8.4. Insurance. SPI represents that it will at all times maintain commercially
reasonable levels of insurance, including general liability insurance, in light of its
responsibilities hereunder. SPI shall provide RTU with certificates of insurance upon RTU’s
written request for the same.

     Article 8.5. Obligations of Confidentiality. SPI represents and warrants that any employee or
other affiliated person, including subcontractors, who will be involved in performing this
Agreement is bound, or will be bound prior to performing any work, by a proprietary information and
technology agreement in favor of the other party, consistent with the obligations of Article 5,
pursuant to which such employee or other person is obligated to confidentiality.

ARTICLE 9. REPRESENTATIONS AND WARRANTEES OF RTU

     Article 9.1. Organization. RTU represents and warrants to SPI that it is a corporation duly
organized, validly existing, and, where applicable, in good standing under the laws of the
jurisdiction of its incorporation.

     Article 9.2. Authority. RTU represents and warrants that it: (a) has the right to enter into
this Agreement; (b) has the power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; and (c) has by all necessary corporate action duly and validly
authorized the execution and delivery of this Agreement and the performance of its obligations
hereunder.

     Article 9.3. No Conflicts. RTU represents and warrants to SPI that its execution and
performance under this Agreement does not and will not during the term of this Agreement conflict
with or result in any breach of, or constitute a default under, any note, security agreement,
commitment, contract or other agreement, instrument or undertaking to which it is a party.

     Article 9.4. Insurance. RTU represents that it will at all times maintain commercially
reasonable levels of insurance, including general liability insurance, in light of its
responsibilities hereunder. RTU shall provide SPI with certificates of insurance upon SPI’s written
request for the same.

     Article 9.5. Qualified Personnel. RTU warrants that it will at all time use appropriately
qualified personnel, having the appropriate levels of training and skill, to fulfill its
obligations arising under this Agreement

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     Article 9.6. Regulatory and Legal Compliance. RTU hereby warrants that its facilities and
processes supplied hereunder substantially comply with, and will substantially comply with at all
relevant times, all applicable legal and regulatory requirements necessary to fulfill its
obligations under this Agreement, including without limitation, securing and maintaining any
necessary certificates and permits.

     Article 9.7. Obligations of Confidentiality. RTU represents and warrants that any employee
or other affiliated person, including subcontractors, who will be involved in performing this
Agreement is bound, or will be bound prior to performing any work, by a proprietary information and
technology agreement in favor of the other party, consistent with the obligations of Article 5,
pursuant to which such employee or other person is obligated to confidentiality.

     Article 9.8. Process and Product Warranties. RTU warrants and represents that Drug Product
sold by RTU to SPI hereunder shall (i) materially comply with the Specifications for Drug Product,
and (ii) materially conform with the information shown on the Certificate of Analysis provided for
the particular shipment.

     Article 9.9. Remedy for Nonconformance. SPI shall be entitled to the replacement of any Drug
Substance or Drug Product delivered to SPI by RTU that, at the time of such delivery, does not meet
the Specifications for such Drug Substance or Drug Product (“Nonconforming Product”) with
corresponding Drug Substance or Drug Product that meets Specifications. SPI shall, at RTU’s option
and cost, either return to RTU or destroy the Nonconforming Product.

ARTICLE 10. INDEMNIFICATION

     Article 10.1. RTU’s Obligation. RTU shall defend, indemnify and hold SPI, its affiliates and
sublicensees and the respective officers, directors and employees of each (“SPI Indemnified
Persons”), harmless from and against any and all claims, demands, losses, damages, liabilities,
settlement amounts, cost or expenses whatsoever (including reasonable legal fees and costs and
court costs) arising from or relating to (i) any claim, action or proceeding made or brought
against such SPI Indemnified Person by a third party as a result of RTU’s negligence, willful
misconduct or breach of this Agreement and (ii) all Product Liability Claims, or such portion of
Product Liability Claims, as are allocated to RTU pursuant to Article 10.3. RTU shall have no
obligation under this clause to indemnify SPI for claims described in Article 10.2.

     Article 10.2. SPI’s Obligation. SPI shall defend, indemnify and hold RTU, its affiliates and
sublicensees and the respective officers, directors and employees of each (“RTU Indemnified
Persons”) harmless from and against any and all claims, demands, losses, damages, liabilities
(including without limitation product liability), settlement amounts, cost or expenses whatsoever
(including reasonable legal fees and costs and court costs) arising from or relating to (i) any
claim, action or proceeding made or brought against such RTU Indemnified Person by a third party as
a result of SPI’s negligence, willful misconduct or breach of this Agreement and (ii) all Product
Liability Claims, or such portion of Product Liability Claims, as are allocated to SPI pursuant to
Article 10.3. SPI shall have no obligation under this clause to indemnify RTU for claims described
in Article 10.1.

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     Article 10.3. Product Liability Claims. Notwithstanding the foregoing Article 10.1 and
Article 10.2, the Parties’ responsibilities with respect to Product Liability Claims shall be
governed by this Article 10.3. RTU shall be solely responsible for all Product Liability Claims
that arise out of Drug Substance or Drug Product that did not meet the Specifications at the time
the Drug Substance or Drug Product was delivered by RTU to SPI. SPI shall be solely responsible
for all other Product Liability Claims. For purposes of this Article 10, "Product Liability Claim”
means a claim, action or proceeding made or brought by a third party that (i) arises as a result of
the use of Drug Substance or Drug Product supplied pursuant to this Agreement that results in
personal injury or death or (ii) is in anticipation of or intended to prevent or forestall personal
injury or death as a result of the use of Drug Substance or Drug Product supplied pursuant to this
Agreement.

     Article 10.4. Notice; Defense of Claims. In the event of any claim, action or proceeding for
which a person is entitled to indemnity hereunder, the Person seeking indemnity (“Claimant”) shall
promptly notify the relevant party (“Indemnitor”) in reasonable detail in writing the factual basis
for such claim, action or proceeding and the amount of the claim; provided, however, that any delay
by the Claimant in giving such notice shall not relieve the Indemnitor of its obligations under
this Agreement except and only to the extent that the Indemnitor is materially damaged by such
delay. The Indemnitor shall be entitled to assume the defense thereof at its own expense, with
counsel satisfactory to such Claimant in its reasonable judgment; provided, however, that any
Claimant may, at its own expense, retain separate counsel to participate in such defense. The
Claimant shall not settle, compromise, discharge or otherwise admit to any liability for any claim
or demand for which it is indemnified without the prior written consent of the Indemnitor (which
consent shall not be unreasonably withheld or delayed). The Indemnitor shall not settle,
compromise, discharge or otherwise admit to any liability for any claim or demand on a basis that
would adversely affect the future activity or conduct of the Claimant without the prior written
consent of the Claimant.

ARTICLE 11. TERM AND TERMINATION

     Article 11.1. Term. This Agreement shall become effective as of the Signing Date and remain
in full force and effect for two (2) years. Thereafter, unless otherwise earlier terminated by
mutual written agreement or by the provisions set forth below, this Agreement shall automatically
renew for additional two (2) year periods; provided, however, that if the parties mutually agree
not to renew this Agreement at least ninety (90) days prior to the expiration of the then-current
term, then the Agreement shall not be so renewed. 

     Article 11.2. Termination for Cause. In addition to any other rights or remedies a party may
have, either party may terminate this Agreement upon the occurrence of any of the following events
of default which is not cured within sixty (60) days after written notice thereof is received by
the other party:

          (a)
breach by the other party of any of its material obligations
hereunder; or

          (b)
should the other party become subject of proceedings involving bankruptcy, receivership,
administration, insolvency, moratorium of payment reorganization or liquidation, or

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make any
assignment for the benefit of the creditors or any equivalent measures in any relevant
jurisdiction.

     Article 11.3. Partial Termination. SPI may terminate this Agreement in part upon thirty (30)
days written notice with respect to a particular formulation of a Drug Product in the event that
RTU rejects an Order or cannot fulfill an Order for such formulation of the Drug Product in
accordance with its terms, or in the event that SPI and RTU are, after commercially reasonable
efforts, unable to agree to supply price of such particular formulation of the Drug Product in
accordance with the provisions of Article 4.2.

     Article 11.4. Survival of Certain Rights and Obligations. The obligations under Article 5,
Article 6, Article 8, Article 9, Article 10, this Article 11.3 and Article 12 shall survive any
expiration or other termination of this Agreement in accordance with their terms.

ARTICLE 12. DISPUTE RESOLUTION

     Article 12.1. Negotiation. The parties agree to consult and negotiate in good faith to try
to resolve any dispute, controversy or claim, of any nature or kind, whether in contract, tort or
otherwise, that arises out of or relates to this Agreement. No formal dispute resolution shall be
used by either party unless and until the chief executive officers of each party shall have
attempted to meet in person to achieve such an amicable resolution.

     Article 12.2. Arbitration. Any dispute, controversy or claim that arises out of or relates
to this Agreement that is not resolved under Article 12.1 shall be settled by final and binding
arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce
(“ICC”) in effect on the Effective Date, as modified by Article 12.3 below. Judgment upon the
award rendered by the arbitrators may be entered in any court of competent jurisdiction. The
place of arbitration shall be Paris, France unless another location is agreed upon between the
parties and arbitrators. The arbitration shall be conducted in the English language by three (3)
neutral arbitrators selected by mutual agreement of the parties or, if that is not possible within
thirty (30) days of the initial demand for such arbitration, by the ICC. At least one (1)
arbitrator shall have knowledge of and experience in the ethical pharmaceutical industry.

     Article 12.3. Special Rules. Notwithstanding any provision to the contrary in the ICC’s
Rules of Arbitration, the parties hereby stipulate that any arbitration hereunder shall be subject
to the following special rules:

          (a) The arbitrators may not award or assess punitive damages against either
party; and

          (b) Each party shall bear its own costs and expenses of the arbitration and shall share
equally the fees and costs of the arbitrators, subject to the power of the arbitrators, in their
sole discretion, to award all such reasonable costs, expenses and fees to the prevailing party.

ARTICLE 13. MISCELLANEOUS

     Article 13.1. Subcontracting. RTU may subcontract its obligations hereunder without the
consent of SPI; PROVIDED, HOWEVER, that RTU shall assume complete responsibility for

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the acts of
its subcontractor and agrees to make SPI whole for any act or omission of RTU’s subcontractor that
damages SPI as if the act or omission were RTU’s.

     Article 13.2. Entire Agreement This Agreement, together with the Appendices attached hereto,
constitutes the entire agreement of the parties with respect to the subject matter hereof and
supersedes any and all other previous proposals or agreements, oral or written, and all
negotiations, conversations or discussions heretofore between the parties related to the subject
matter of this Agreement.

     Article 13.3. Independent Contractor; No Agency. This agreement shall not be construed to
create an employment or agency relationship between the parties. This Agreement is not intended
to create any agency relationship of any kind; the Parties agree not to contract any obligations in
the name of the other or to use each other’s credit in conducting any activities under this
Agreement            Each party is solely responsible for the payroll taxes, workman’s compensation
insurance, and any other benefits owed to their own employees.

     Article 13.4. Assignment. Upon written approval of the other party, which approval shall not
unreasonably be withheld and shall be timely given, a party may assign or otherwise transfer its
rights and obligations under this Agreement to any successor in interest (by merger, share
exchange, combination or consolidation of any type, operation of law, purchase or otherwise),
provided that such assignee or successor agrees to be bound by the terms hereof. Notwithstanding
anything contained in this Article, this Agreement shall be assigned from SPI to any entity which
acquires, or otherwise succeeds in interest in, all or substantially all of SPI’s assets in
relation to SPI-8811 and SPI-017, and such entity shall be bound by this Agreement. For the
avoidance of doubt, the parties acknowledge that SPI is entering into this Agreement on the basis
of RTU’s special expertise in manufacturing prostone compounds, and so SPI may withhold their
approval of a proposed assignment if the proposed successor does not have reasonably comparable
expertise.

     Article 13.5. Governing Law. This Agreement shall be construed in accordance with New York
law, excluding its choice of law provisions.

     Article 13.6. Notices. All notices or other communications to a party required or permitted
hereunder shall be in writing and shall be delivered personally or by telecopy (receipt confirmed)
to such party or shall be given by certified mail, postage prepaid with return receipt requested,
addressed as follows:

	 	 	 
	If to SPI:

	 	Sucampo Pharmaceuticals, Inc.
	 

	 	4733 Bethesda Avenue, Suite 450
	 

	 	Bethesda, Maryland 20814 U.S.A.
	 

	 	Attention: Dr. Gayle Dolecek
	 

	 	Facsimile number: 1-301-961-3440
	 
	and if to RTU:

	 	Pharma Chemical Division
	 

	 	R-Tech Ueno, Ltd.
	 

	 	4-1, Techno Park
	 

	 	Sanda, Hyogo 669-1339

11

 

	 	 	 
	 

	 	Japan
	 

	 	Attention: Mr. Ryu Hirata
	 

	 	Facsimile number: 81-795-60-7180

     Article 13.7. Severability. If a court of competent jurisdiction holds any provision of this
Agreement invalid, the remaining provisions shall nonetheless be enforceable according to their
terms. Further, if any provision is held to be overbroad as written, such provision shall be
deemed amended to narrow its application to the extent necessary to make the provision enforceable
according to applicable law and shall be enforced as amended.

     Article 13.8. Waiver, Discharge, etc. This Agreement may not be released, discharged,
abandoned, changed or modified in any manner, except by an instrument in writing signed on behalf
of each of the parties to this Agreement by their duly authorized representatives. The failure of
either party to enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the validity of this
Agreement or any part of it or the right of either party after any such failure to enforce each and
every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of
any other or subsequent breach. No inspection or acceptance, approval, acquiescence, or payment
by SPI with respect to Non-Conforming Product shall relieve RTU from any portion of its warranty
obligations hereunder unless expressly agreed by SPI in writing.

     Article 13.9. Titles and Headings; Construction. The titles and headings to Articles herein
are inserted for the convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement. This Agreement shall be construed without
regard to any presumption or other rule requiring construction hereof against the party causing
this Agreement to be drafted.

     Article 13.10. Benefit. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties to this Agreement or their respective permitted
successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this
Agreement.

     Article 13.11. Execution in Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and shall become a
binding agreement when one or more counterparts have been signed by each party and delivered to the
other party.

     Article 13.12. Affiliates. In the event any entity that as of or after the Signing Date is an
affiliate of SPI ceases thereafter to be an affiliate of SPI, then RTU and such entity shall enter
into an agreement covering the subject matter hereof so as to replicate the arrangement which
existed under this Agreement between RTU and SPI with respect to such previously affiliated entity.

[Remainder of Page Intentionally Left Blank]

12

 

     IN WITNESS WHEREOF, each of the parties has caused this Exclusive Supply Agreement to
be executed in the manner appropriate to each, effective as of the date first above written.

	 	 	 	 	 	 
	R-TECH UENO, LTD.

	 	SUCAMPO PHARMACEUTICALS, INC.	 
	 
	 	 
	By: 	/s/ Yukiko Hashitera

	 	By: 	/s/ Gayle Dolecek	 
	 	 

	 	 	 
	 	Yukiko Hashitera

	 	 	Gayle Dolecek
	 	Representative Director and President

	 	 	SVP, Research and Development

13

 

Appendix A-1

Description of SPI-017

	 	 	 
	Generic name:

	 	N/A
	 	 	 
	Chemical names:

	 	 
	 	 	 
	Code name:

	 	SPI-017
	 	 	 
	CAS No.:

	 	
	 	 	 
	Structural Formula:

	 	

 

 

Appendix A-2

Description of SPI-8811

	 	 	 
	Generic name:

	 	[ * * ]
	 	 	 
	Chemical names:

	 	 
	 	 	 
	Code name:

	 	SPI-8811
	 	 	 
	CAS No.:

	 	
	 	 	 
	Structural Formula:

	 	

 

 

Appendix B

Specifications

To be provided.exv10w1

 

Exhibit 10.1

GLADSTONE COMMERCIAL LIMITED PARTNERSHIP

SCHEDULE 4.2(a)(2) TO FIRST AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

DESIGNATION OF

7.50% SERIES B CUMULATIVE REDEEMABLE PREFERRED UNITS

	(i)	 	Designation and Number. A series of Preferred Units, designated the “7.50% Series B
Cumulative Redeemable Preferred Units” (the “Series B Preferred Units”), is hereby
established. The number of Series B Preferred Units shall be 1,150,000.
	 
	(ii)	 	Maturity. The Series B Preferred Units have no stated maturity and will not be
subject to any sinking fund or mandatory redemption.
	 
	(iii)	 	Rank. The Series B Preferred Units, with respect to distribution rights and rights
upon liquidation, dissolution or winding up of the Partnership, will rank (i) senior to all
classes or series of Common Units of the Partnership, and to all Partnership Interests ranking
junior to the Series B Preferred Units with respect to distribution rights or rights upon
liquidation, dissolution or winding up of the Partnership; (ii) on a parity with the 7.75%
Series A Cumulative Redeemable Preferred Units and all Partnership Interests issued by the
Partnership, the terms of which Preferred Units specifically provide that such Partnership
Interests rank on a parity with the Series B Preferred Units with respect to distribution
rights or rights upon liquidation, dissolution or winding up of the Partnership (the “Parity
Preferred Units”); and (iii) junior to all existing and future indebtedness of the
Partnership. The term “Parity Preferred Units” does not include convertible debt securities,
which will rank senior to the Series B Preferred Units prior to conversion.
	 
	(iv)	 	Distributions. (a) Holders of the Series B Preferred Units are entitled to receive,
when and as declared by the General Partner out of funds legally available for the payment of
distributions, preferential cumulative cash distributions at the rate of 7.50% per annum of
the Liquidation Preference (as defined below) per Series B Preferred Unit (equivalent to a
fixed annual amount of $1.875 per Series B Preferred Unit). Distributions on the Series B
Preferred Units shall be cumulative from (but excluding) the date of original issue and shall
be payable monthly in arrears. The first distribution will be payable on November 30, 2006
and monthly thereafter on the last day of the month, or, if not a business day, on the next
succeeding business day (each, a “Distribution Payment Date”). The first distribution, which
will be payable on November 30, 2006, will be for more than a full month. Such distribution
and any distribution payable on the Series B Preferred Units for any partial distribution
period will be computed on the basis of a 360-day year consisting of twelve 30-day months.
Distributions will be payable to holders of record as they appear in the ownership records of
the Partnership at the close of business on the applicable record date, which shall be the
date designated by the General Partner of the Partnership that is not more than 20 nor less
than 7 days prior to such Distribution Payment Date (each, a “Distribution Record Date”).

 

 

(b) No distributions on Series B Preferred Units shall be declared by the General Partner
or paid or set apart for payment by the Partnership at any time that the terms and
provisions of any agreement of the Partnership, including any agreement relating to its
indebtedness, prohibits such declaration, payment or setting apart for payment or provides
that such declaration, payment or setting apart for payment of such distributions would
constitute a breach thereof or a default thereunder, or if such declaration or payment shall
be restricted or prohibited by law.

(c) Notwithstanding the foregoing, distributions on the Series B Preferred Units will
accumulate whether or not the Partnership has earnings, whether or not there are funds
legally available for the payment of such distributions and whether or not such
distributions are declared. Accumulated but unpaid distributions on the Series B Preferred
Units will not bear interest and holders of the Series B Preferred Units will not be
entitled to any distributions in excess of full cumulative distributions described above.
Except as set forth in the next sentence, no distributions will be declared or paid or set
apart for payment on any Partnership Interests or any other series of Parity Preferred Units
or any series or class of equity securities ranking junior to the Series B Preferred Units
(other than a distribution of the Partnership’s Common Units or any other class of
Partnership Interests ranking junior to the Series B Preferred Units as to distributions and
upon liquidation) for any period unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum sufficient for the payment
thereof is set apart for such payment on the Series B Preferred Units for all past
distribution periods and the then current distribution period. When distributions are not
declared and paid in full (or a sum sufficient for such full payment is not so set apart)
upon the Series B Preferred Units and any other series of Parity Preferred Units, all
distributions declared upon the Series B Preferred Units and any other series of Parity
Preferred Units shall be allocated pro rata so that the amount of distributions declared per
Series B Preferred Unit and such other series of Parity Preferred Units shall in all cases
bear to each other the same ratio that accrued and unpaid distributions per Series B
Preferred Unit and such other series of Parity Preferred Units (which shall not include any
accrual in respect of unpaid distributions for prior distribution periods if such Parity
Preferred Units do not have a cumulative distribution) bear to each other.

(d) Except as provided in the immediately preceding paragraph, unless full cumulative
distributions on the Series B Preferred Units have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof is set apart for payment
for all past distribution periods and the then current distribution period, no distributions
(other than in Common Units or other Partnership Interests ranking junior to the Series B
Preferred Units as to distributions and upon liquidation) shall be declared or paid or set
aside for payment nor shall any other distribution be declared or made upon the Common
Units, or any other Partnership Interests in the Partnership ranking junior to or on a
parity with the Series B Preferred Units as to distributions or upon liquidation, nor shall
any Common Units, or any other Partnership Interests in the Partnership ranking junior to or
on a parity with the Series B Preferred Units as to distributions or upon liquidation be
redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or
made available for a sinking fund for the redemption of any such shares) by the Partnership.
Holders of Series B Preferred Units shall not be entitled to any distribution, whether
payable in cash, property or securities, in excess of full cumulative distributions on the
Series B Preferred Units as provided above. Any distribution
payment made on Series B Preferred Units shall first be credited against the earliest
accrued but unpaid distribution due with respect to such Series B Preferred Units which
remains payable.

 

 

	(v)	 	Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Partnership, the holders of Series B Preferred Units are
entitled to be paid out of the assets of the Partnership legally available for distribution to
its partners a liquidation preference of $25 per Series B Preferred Unit (the “Liquidation
Preference”), plus an amount equal to any accumulated and unpaid distributions to and
including the date of payment, but without interest, before any distribution of assets is made
to holders of Common Units or any other class or series of Partnership Interests in the
Partnership that ranks junior to the Series B Preferred Units as to liquidation rights. The
Partnership will promptly provide to the holders of Series B Preferred Units written notice of
any event triggering the right to receive such Liquidation Preference. After payment of the
full amount of the Liquidation Preference, plus any accumulated and unpaid distributions to
which they are entitled, the holders of Series B Preferred Units will have no right or claim
to any of the remaining assets of the Partnership. The consolidation or merger of the
Partnership with or into any other partnership, corporation, trust or entity or of any other
partnership or corporation with or into the Partnership, or the sale, lease or conveyance of
all or substantially all of the property or business of the Partnership, shall not be deemed
to constitute a liquidation, dissolution or winding up of the Partnership.
	 
	(vi)	 	Redemption. (a) The Series B Preferred Units are not redeemable prior to October
31, 2011. However, shares of Partnership Units owned by a Limited Partner in excess of 9.8%
in value of outstanding Partnership Units will be deemed “excess units,” and the Partnership
will have the right to purchase those excess units from the Limited Partner. On and after
October 31, 2011, the Partnership, at its option upon not less than 30 nor more than 60 days’
written notice, may redeem the Series B Preferred Units, in whole or in part, at any time or
from time to time, for cash at a redemption price of $25 per Series B Preferred Unit, plus all
accumulated and unpaid distributions thereon to the date fixed for redemption (except for
excess units), without interest. Holders of Series B Preferred Units to be redeemed shall
surrender such Series B Preferred Units at the place designated in such notice and upon such
surrender shall be entitled to the redemption price and any accumulated and unpaid
distributions payable upon such redemption. If notice of redemption of any Series B Preferred
Units has been given and if the Partnership has set aside funds necessary for such redemption
in trust for the benefit of the holders of any Series B Preferred Units so called for
redemption, then from and after the redemption date distributions will cease to accrue on such
Series B Preferred Units, such Series B Preferred Units shall no longer be deemed outstanding
and all rights of the holders of such Series B Preferred Units will terminate, except the
right to receive the redemption price. If less than all of the outstanding Series B Preferred
Units are to be redeemed, the Series B Preferred Units to be redeemed shall be selected pro
rata (as nearly as may be practicable without creating fractional Series B Preferred Units) or
by any other equitable method determined by the General Partner.

 

 

(b) Unless full cumulative distributions on all Series B Preferred Units shall have been or
contemporaneously are declared and paid or declared and a sum sufficient for the payment
thereof set apart for payment for all past distribution periods and the then current
distribution period, no Series B Preferred Units shall be redeemed unless all outstanding
Series B Preferred Units are simultaneously redeemed and in such event the Partnership shall
not purchase or otherwise acquire directly or indirectly any Series B Preferred Units
(except by exchange for Partnership Interests of the Partnership ranking junior to the
Series B Preferred Units as to distributions and upon liquidation); provided, however, that
the foregoing shall not prevent the purchase or acquisition of Series B Preferred Units
pursuant to a purchase or exchange offer made on the same terms to holders of all
outstanding Series B Preferred Units.

(c) Notice of redemption will be mailed by the Partnership, postage prepaid, not less than
30 nor more than 60 days prior to the redemption date, addressed to the respective holders
of record of the Series B Preferred Units to be redeemed at their respective addresses as
they appear on the transfer records of the Partnership. No failure to give such notice or
any defect therein or in the mailing thereof shall affect the validity of the proceedings
for the redemption of any Series B Preferred Units except as to the holder to whom notice
was defective or not given. Each notice shall state: (i) the redemption date; (ii) the
redemption price; (iii) the number of Series B Preferred Units to be redeemed; (iv) the
place or places where the Series B Preferred Units are to be surrendered for payment of the
redemption price; and (v) that distributions on the shares to be redeemed will cease to
accrue on such redemption date. If less than all of the Series B Preferred Units held by any
holder are to be redeemed, the notice mailed to such holder shall also specify the number of
Series B Preferred Units held by such holder to be redeemed.

(d) Immediately prior to any redemption of Series B Preferred Units, the Partnership shall
pay, in cash, any accumulated and unpaid distributions through the redemption date, unless a
redemption date falls after a Distribution Record Date and prior to the corresponding
Distribution Payment Date, in which case each holder of Series B Preferred Units at the
close of business on such Distribution Record Date shall be entitled to the distribution
payable on such shares on the corresponding Distribution Payment Date notwithstanding the
redemption of such shares before such Distribution Payment Date.

	(vii)	 	Voting Rights. Holders of the Series B Preferred Units will not have any voting
rights.

	(viii)	 	Conversion. The Series B Preferred Units are not redeemable for, convertible into or
exchangeable for any other property or securities of the Partnership.

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