Document:

exv10w2

Exhibit 10.2

PLEDGE AND SECURITY AGREEMENT

     THIS PLEDGE AND SECURITY AGREEMENT (as the same may be amended, restated, supplemented or
otherwise modified from time to time, this “Security Agreement”) is entered into as of
April 15, 2011 by and among PROASSURANCE CORPORATION (the “Borrower”), any additional
Persons which become parties to this Security Agreement by executing a Supplement hereto in
substantially the form of Annex I (together with the Borrower, the “Grantors”), and
U.S. BANK NATIONAL ASSOCIATION in its capacity as administrative agent (the “Administrative
Agent”) for the lenders party to the below-defined Credit Agreement (collectively, the
“Lenders”).

PRELIMINARY STATEMENT

     The Borrower, the Administrative Agent and the Lenders are party to a Credit Agreement dated
as of April 15, 2011 (as the same may be amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”). The Grantors are entering into this Security
Agreement in order to secure their obligations under and in connection with Loans made pursuant to
the Secured Borrowing Option under, and as defined in, Section 2.1.2 of the Credit Agreement and to
induce the Lenders to continue extending credit to the Borrower pursuant to the Secured Borrowing
Option under the Credit Agreement.

     ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the Holders of Secured
Obligations, hereby agree as follows:

ARTICLE I

DEFINITIONS

     1.1. Terms Defined in the Credit Agreement. All capitalized definitional terms used
herein and not otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.

     1.2. Terms Defined in Delaware UCC. Terms defined in the Delaware UCC which are not
otherwise defined in this Security Agreement are used herein as defined in the Delaware UCC.

     1.3. Definitions of Certain Terms Used Herein. As used in this Security Agreement, in
addition to the terms defined in the Preliminary Statement, the following terms shall have the
following meanings:

     “Article” means a numbered article of this Security Agreement, unless another document
or the Delaware UCC is specifically referenced.

 

 

     “Collateral” means account number 001050975707 maintained with U.S. Bank National
Association and all amounts and items on deposit in or credited thereto, including, without
limitation, all (i) cash, (ii) certificates of deposit and money market mutual funds of the
Borrower or the applicable Grantor, in each case maintained with or issued by U.S. Bank National
Association, (iii) commercial paper (other than commercial paper issued by U.S. Bank National
Association), (iv) collateralized mortgage obligations or real estate mortgage investment conduit
pass through securities, in any case issued by the Federal National Mortgage Association, the
Government National Mortgage Association or the Federal Home Loan Mortgage Corporation, (v)
Instruments, issued by the Federal National Mortgage Association, the Government National Mortgage
Association or the Federal Home Loan Mortgage Corporation, that entitles the holder of, or
beneficial owner under, the Instrument to the whole or any part of the rights or entitlements of a
mortgagee and any other rights or entitlements in respect of a pool of mortgages or any money
payable by mortgagors under those mortgages in relation to real estate mortgages, and the money
payable to the holder of, or beneficiary owner under, the Instrument is based on actual or
scheduled payments on the underlying mortgages, (vi) short-term obligations of, or fully guaranteed
by, the United States of America, (vii) discount notes of U.S. government sponsored enterprises,
including Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, the
Federal Home Loan Banks and the Federal Farm Credit Banks and (viii) corporate or municipal bonds
or similar long term Indebtedness, in each case whether constituting Deposit Accounts, Securities
Accounts, Instruments, General Intangibles or Investment Property, and in each case together with
all proceeds thereof.

     “Control” shall have the meaning set forth in Article 8 or, if applicable, in Section
9-104, 9-105, 9-106 or 9-107 of Article 9 of the Delaware UCC.

     “Default” means an event described in Section 5.1 hereof.

     “Delaware UCC” means the Delaware Uniform Commercial Code as in effect from time to
time.

     “Deposit Accounts” shall have the meaning set forth in Article 9 of the Delaware UCC.

     “Exhibit” refers to a specific exhibit to this Security Agreement, unless another
document is specifically referenced.

     “General Intangibles” shall have the meaning set forth in Article 9 of the Delaware
UCC.

     “Holders of Secured Obligations” means the holders of the Secured Obligations from
time to time and shall include, without limitation, each Lender, the Administrative Agent, and each
of their Affiliates, together with their respective successors and transferees and assigns.

     “Instruments” shall have the meaning set forth in Article 9 of the Delaware UCC.

     “Section” means a numbered section of this Security Agreement, unless another document
is specifically referenced.

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     “Secured Obligations” means all Obligations corresponding with the Loans made pursuant
to the Secured Borrowing Option, including, without limitation, all unpaid principal of and accrued
and unpaid interest on such Loans, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations in respect thereof, in each case owing to one or more Lenders or
their respective Affiliates.

     “Securities Accounts” shall have the meaning set forth in Article 8 of the Delaware
UCC.

     “Unliquidated Obligations” means, at any time, any Secured Obligations (or portion
thereof) that are contingent in nature or unliquidated at such time, including any Secured
Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under a letter
of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in
nature at such time; or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.

     The foregoing definitions shall be equally applicable to both the singular and plural forms of
the defined terms.

ARTICLE II

GRANT OF SECURITY INTEREST

     Each of the Grantors hereby pledges, assigns and grants to the Administrative Agent, on behalf
of and for the ratable benefit of the Holders of Secured Obligations, a security interest in all of
such Grantor’s right, title and interest, whether now owned or hereafter acquired, in and to the
Collateral to secure the prompt and complete payment and performance of the Secured Obligations.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants on the date of this Agreement and on any date on which
representations or warranties are made or re-made under the Credit Agreement to the Administrative
Agent and the Holders of Secured Obligations, and each Grantor that becomes a party to this
Security Agreement pursuant to the execution of a Supplement in substantially the form of Annex
I represents and warrants on the date of such supplement (after giving effect to supplements to
each of the Exhibits hereto with respect to such subsequent Grantor as attached to such
Supplement), that:

     3.1. Title, Authorization, Validity and Enforceability. Such Grantor has good and
valid rights in or the power to transfer the Collateral owned by it and title to such owned
Collateral with respect to which it has purported to grant a security interest hereunder, free of
all Liens except for Liens permitted under Section 4.1.6 hereof, and has full corporate,
limited liability company, partnership or other entity, power and authority to grant to the
Administrative Agent the security interest in such Collateral pursuant hereto. The execution and
delivery by such Grantor of this Security Agreement have been duly authorized by proper corporate,
limited liability company, partnership or, as applicable, other proceedings, and this Security
Agreement

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constitutes a legal, valid and binding obligation of such Grantor and creates a security
interest which is enforceable against such Grantor in all Collateral it now owns or hereafter
acquires, except as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally.

     3.2. Conflicting Laws and Contracts. Neither the execution and delivery by such
Grantor of this Security Agreement, the creation and perfection of the security interest in the
Collateral granted hereunder, nor compliance with the terms and provisions hereof will violate (i)
any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on such
Grantor, or (ii) such Grantor’s charter, articles, partnership agreement or by-laws (or similar
constitutive documents), or (iii) the provisions of any indenture, instrument or agreement to which
such Grantor is a party or is subject, or by which it, or its Property is bound, or conflict with
or constitute a default thereunder, or result in or require the creation or imposition of any Lien
in, of or on the property of such Grantor pursuant to the terms of any such indenture, instrument
or agreement (other than any Lien of the Administrative Agent on behalf of the Holders of Secured
Obligations).

     3.3. Principal Location. Such Grantor’s mailing address and the location of its place
of business (if it has only one) or its chief executive office (if it has more than one place of
business), is disclosed in Exhibit “A”; such Grantor has no other places of business except
those set forth in Exhibit “A”.

     3.4. No Other Names; Etc. Within the last five (5) years, such Grantor has not
conducted business under any legal name, changed its jurisdiction of formation, merged with or into
or consolidated with any other corporation, except as disclosed in Exhibit “A”. The name
in which such Grantor has executed this Security Agreement is the exact name as it appears in such
Grantor’s organizational documents as filed with such Grantor’s jurisdiction of organization as of
the date hereof.

     3.5. No Default. No Default or Event of Default exists.

     3.6. Filing Requirements. None of the Collateral owned by such Grantor is of a type
for which security interests or liens may be perfected by filing under any federal statute.

     3.7. No Financing Statements. No valid financing statement describing all or any
portion of the Collateral which has not lapsed or been terminated naming such Grantor as debtor has
been filed in any proper jurisdiction except financing statements (i) naming the Administrative
Agent on behalf of the Holders of Secured Obligations as the secured party and (ii) in respect of
Liens permitted by Section 6.16 of the Credit Agreement; provided, that nothing herein
shall be deemed to constitute an agreement to subordinate any of the Liens of the Administrative
Agent under the Loan Documents to any Liens otherwise permitted under Section 6.16 of the Credit
Agreement.

     3.8. Federal Employer Identification Number; State Organization Number; Jurisdiction of
Organization. Such Grantor’s federal employer identification number is, and if such Grantor is
a registered organization, such Grantor’s State of organization, type of

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organization and State of organization identification number is, as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Federal Employer	 	 	 	State of	 	State
	 	 	Identification	 	Type of	 	Organization or	 	Organization
	Grantor	 	Number	 	Organization	 	Incorporation	 	Number
	ProAssurance 

Corporation

	 	[                    ]
	 	corporation
	 	Delaware
	 	[                    ]

ARTICLE IV

COVENANTS

     From the date of this Security Agreement and thereafter until this Security Agreement is
terminated, the Borrower agrees, and from and after the effective date of any Supplement hereto
substantially in the form of Annex I applicable to any Grantor (and after giving effect to
supplements to each of the Exhibits hereto with respect to such subsequent Grantor as attached to
such Supplement) and thereafter until this Security Agreement is terminated, each such subsequent
Grantor agrees:

     4.1. General.

     4.1.1 Inspection. Each Grantor will permit the Administrative Agent or any
Holder of Secured Obligations, by its representatives and agents (i) to inspect the
Collateral, (ii) to examine and make copies of the books of accounts and other financial
records of such Grantor relating to the Collateral and (iii) to discuss the Collateral and
the related records of such Grantor with, and to be advised as to the same by, such
Grantor’s officers, at such reasonable times and intervals as the Administrative Agent or
such Holder of Secured Obligations may designate.

     4.1.2
Taxes. Each Grantor will timely file complete and correct United States federal and applicable foreign, state and local tax returns required by
law and pay when due all taxes, assessments and governmental charges and levies upon the
Collateral owned by such Grantor, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been set aside in
accordance with GAAP.

     4.1.3 Records and Reports; Notification of Default. Each Grantor shall keep
proper books of record and account in which full, true and correct entries are made with
respect to the Collateral owned by such Grantor, and furnish to the Administrative Agent,
with sufficient copies for each of the Holders of Secured Obligations, such reports
relating to the Collateral as the Administrative Agent shall from time to time reasonably
request. Each Grantor will give prompt notice in writing to the Administrative Agent and
the Lenders of the occurrence of any Default.

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     4.1.4 Financing Statements and Other Actions; Defense of Title. Each Grantor
hereby authorizes the Administrative Agent to file, and if requested will execute and
deliver to the Administrative Agent, all financing statements describing the Collateral
owned by such Grantor and other documents and take such other actions as may from time to
time reasonably be requested by the Administrative Agent in order to grant or maintain a
first perfected security interest in and, if applicable, Control of, the Collateral owned
by such Grantor, subject to Liens permitted under Section 6.16 of the Credit Agreement,
provided that nothing herein shall be deemed to constitute an agreement to subordinate any
of the Liens of the Administrative Agent under the Loan Documents to any Liens otherwise
permitted under Section 6.16 of the Credit Agreement. Such financing statements may
describe the Collateral in the same manner as described herein or may contain an indication
or description of collateral that describes such property in any other manner as the
Administrative Agent may determine, in its reasonable discretion, is necessary, advisable
or prudent to ensure the perfection of the security interest in the Collateral granted to
the Administrative Agent herein. Each Grantor will take any and all actions necessary to
defend title to the Collateral owned by such Grantor against all persons and to defend the
security interest of the Administrative Agent in such Collateral and the priority thereof
against any Lien not expressly permitted hereunder.

     4.1.5 Disposition of Collateral. No Grantor will sell, lease or otherwise
dispose of the Collateral owned by such Grantor except such Grantor may make sales, leases,
transfers and dispositions that are permitted under the Credit Agreement until such time as
a Default has occurred and is continuing.

     4.1.6 Liens. No Grantor will create, incur, or suffer to exist any Lien on
the Collateral owned by such Grantor except Liens permitted pursuant to Section 6.16 of the
Credit Agreement; provided, that nothing herein shall be deemed to constitute an
agreement to subordinate any of the Liens of the Administrative Agent under the Loan
Documents to any Liens otherwise permitted under Section 6.16 of the Credit Agreement.

     4.1.7 Change in Corporate Existence, Type or Jurisdiction of Organization,
Location, Name. Each Grantor will (except as otherwise permitted hereunder or under
the Credit Agreement):

	 	(i)	 	preserve its existence in effect on the date hereof or such other date on which
such Grantor becomes a party to this Security Agreement;
	 
	 	(ii)	 	not change its jurisdiction of organization;
	 
	 	(iii)	 	not maintain its place of business (if it has only one) or its chief executive
office (if it has more than one place of business) at a location other than a location
specified on Exhibit “A;” and
	 
	 	(iv)	 	not (i) change its name or taxpayer identification number or (ii) change its
mailing address,

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	 	 	 	unless, in each such case, such Grantor shall have given the Administrative Agent not less
than 30 days’ prior written notice of such event or occurrence and the Administrative Agent
shall have either (x) reasonably determined that such event or occurrence will not adversely
affect the validity, perfection or priority of the Administrative Agent’s security interest
in the Collateral, or (y) taken such steps (with the cooperation of such Grantor to the
extent necessary or advisable) as are necessary or advisable to properly maintain the
validity, perfection and priority of the Administrative Agent’s security interest in the
Collateral owned by such Grantor.

     4.1.8 Other Financing Statements. No Grantor will suffer to exist or
authorize the filing of any valid financing statement naming it as debtor covering all or
any portion of the Collateral owned by such Grantor, except any financing statement
authorized under Section 4.1.4 hereof.

     4.2. Instruments. Upon the Administrative Agent’s request, after the occurrence and
during the continuance of an Event of Default, each Grantor will deliver to the Administrative
Agent (and thereafter hold in trust for the Administrative Agent upon receipt and immediately
deliver to the Administrative Agent) the originals of all Instruments constituting Collateral,
marked with such legends and assigned as the Administrative Agent shall specify. The rights of the
Administrative Agent under any allonge delivered in connection with any Instrument constituting
Collateral shall be exercised only upon the occurrence and during the continuance of an Event of
Default.

     4.3. Updating of Exhibits to Security Agreement. Each Grantor will provide to the
Administrative Agent, concurrently with the delivery of the certificate of a financial officer of
the Borrower as required by Section 6.1(ii) of the Credit Agreement, updated versions, as
necessary, of the Exhibits to this Security Agreement. Each Grantor, in its discretion, may also
from time to time provide additional updates to the Exhibits to this Security Agreement. Updated
versions of Exhibits shall replace the prior versions thereof being updated. For the avoidance of
doubt, the receipt of such updated Exhibits by the Administrative Agent shall not be understood to
permit any action prohibited hereunder or constitute a waiver of any provision contained herein.

ARTICLE V

DEFAULT

     5.1. The occurrence of any one or more of the following events shall constitute a Default:

     5.1.1 Any representation or warranty made or deemed made by a Grantor herein or which
is contained in any certificate, document or financial or other statement furnished by such
Grantor at any time under or in connection with this Security Agreement shall prove to have
been incorrect, false or misleading in any material respect on or as of the date made or
deemed made.

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     5.1.2 The breach by any Grantor of any of the terms or provisions of Sections
4.1.5 or 4.1.6 or Article VII.

     5.1.3 The breach by any Grantor (other than a breach which constitutes a Default
under Section 5.1.1 or 5.1.2 hereof) of any of the terms or provisions of
this Security Agreement which is not remedied within 30 days after the giving of written
notice to such Grantor by the Administrative Agent.

     5.1.4 Any material portion of the Collateral shall be transferred or otherwise
disposed of, in any manner not permitted by Section 4.1.5 or 8.6 hereof.

     5.1.5 The occurrence of any “Event of Default” under, and as defined in, the Credit
Agreement.

     5.2. Acceleration and Remedies. Upon the acceleration of payment of any principal,
interest or other obligations owing under or in connection with the Loan Documents, pursuant to
Article VIII of the Credit Agreement, all principal, interest, fees and other amounts owing or
outstanding under the Credit Agreement, and, to the extent provided for under any other Loan
Documents, such obligations owing or outstanding under such Loan Documents, shall immediately
become due and payable without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and the Administrative Agent may, with the concurrence or at the direction
of the Required Lenders, exercise any or all of the following rights and remedies:

     5.2.1 Those rights and remedies provided in this Security Agreement, the Credit
Agreement, or any other Loan Document, provided that this Section 5.2.1
shall not be understood to limit any rights or remedies available to the Administrative
Agent and the Holders of Secured Obligations prior to a Default.

     5.2.2 Those rights and remedies available to a secured party under the Delaware UCC
(whether or not the Delaware UCC applies to the affected Collateral) or under any other
applicable law (including, without limitation, any law governing the exercise of a bank’s
right of setoff or bankers’ lien) when a debtor is in default under a security agreement.

     5.2.3 Without notice except as specifically provided in Section 8.1 hereof or
elsewhere herein, sell, lease, assign, grant an option or options to purchase or otherwise
dispose of the Collateral or any part thereof in one or more parcels at public or private
sale, for cash, on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable.

The Administrative Agent, on behalf of the Holders of Secured Obligations, may comply with any
applicable state or federal law requirements in connection with a disposition of the Collateral,
and such compliance will not be considered to adversely affect the commercial reasonableness of any
sale of the Collateral.

Notwithstanding the foregoing, the Administrative Agent and Lenders will be subject to those
limitations on rights and remedies set forth in Article VIII of the Credit Agreement.

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     5.3. Grantors’ Obligations Upon Default. Upon the request of the Administrative Agent
after the occurrence and during the continuance of a Default, each Grantor will:

     5.3.1 Assembly of Collateral. Assemble and make available to the
Administrative Agent the Collateral and all records relating thereto at any place or places
specified by the Administrative Agent.

     5.3.2 Secured Party Access. Permit the Administrative Agent, by the
Administrative Agent’s representatives and agents, to enter any premises where all or any
part of the Collateral, or the books and records relating thereto, or both, are located, to
take possession of all or any part of the Collateral and to remove all or any part of the
Collateral.

ARTICLE VI

WAIVERS, AMENDMENTS AND REMEDIES

     No delay or omission of the Administrative Agent or any Holder of Secured Obligations to
exercise any right or remedy granted under this Security Agreement shall impair such right or
remedy or be construed to be a waiver of any Default or an acquiescence therein, and any single or
partial exercise of any such right or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right or remedy. No waiver, amendment or other variation of
the terms, conditions or provisions of this Security Agreement whatsoever shall be valid unless in
writing signed by the Administrative Agent with the concurrence or at the direction of the (a)
Required Lenders (or, if required under Section 8.3 of the Credit Agreement, all Lenders) and (b)
each Grantor, and then only to the extent in such writing specifically set forth, provided that the
addition of any Subsidiary as a Grantor hereunder by execution of a Supplement hereto in the form
of Annex I (with such modifications as shall be acceptable to the Administrative Agent)
shall not require receipt of any consent from or execution of any documentation by the Required
Lenders or any other Grantor party hereto. All rights and remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be available to the Administrative
Agent and the Holders of Secured Obligations until the Secured Obligations (excluding Unliquidated
Obligations not then due) have been paid in full.

ARTICLE VII

PROCEEDS; COLLECTION OF RECEIVABLES

     7.1. Special Collateral Account. At any time after the occurrence and during the
continuance of a Default, the Administrative Agent may require all cash proceeds of the Collateral
to be deposited in a special non-interest bearing cash collateral account with the Administrative
Agent and held there as security for the Secured Obligations. No Grantor shall have any control
whatsoever over said cash collateral account. The Administrative Agent shall apply the collected
balances in said cash collateral account promptly to the payment of the Secured Obligations whether
or not the Secured Obligations shall then be due.

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     7.2. Application of Proceeds. Any proceeds of Collateral received by the
Administrative Agent shall be applied pursuant to Section 2.1.2 of the Credit Agreement.

ARTICLE VIII

GENERAL PROVISIONS

     8.1. Notice of Disposition of Collateral; Condition of Collateral. Each Grantor
hereby waives notice of the time and place of any public sale occurring during the continuance of a
Default or the time after which any private sale or other disposition of all or any part of the
Collateral may be made during the continuance of a Default. To the extent such notice may not be
waived under applicable law, any notice made shall be deemed reasonable if sent to the Borrower,
addressed as set forth in Article IX hereof, at least ten days prior to (i) the date of any
such public sale or (ii) the time after which any such private sale or other disposition may be
made. The Administrative Agent shall have no obligation to clean-up or otherwise prepare the
Collateral for sale.

     8.2. Secured Party Performance of Grantor’s Obligations. Without having any
obligation to do so, the Administrative Agent may perform or pay any obligation which any Grantor
has agreed to (and failed to) perform or pay in this Security Agreement and such Grantor shall
reimburse the Administrative Agent for any reasonable amounts paid by the Administrative Agent
pursuant to this Section 8.2. Each Grantor’s obligation to reimburse the Administrative
Agent pursuant to the preceding sentence shall be a Secured Obligation payable on demand.

     8.3. Authorization for Secured Party to Take Certain Action. Each Grantor irrevocably
authorizes the Administrative Agent at any time and from time to time in the sole discretion of the
Administrative Agent and appoints the Administrative Agent as its attorney-in-fact (i) to execute
on behalf of such Grantor as debtor and to file financing statements necessary or desirable in the
Administrative Agent’s sole discretion to perfect and to maintain the perfection and priority of
the Administrative Agent’s security interest in the Collateral, (ii) to indorse and collect any
cash proceeds of the Collateral, (iii) to file a carbon, photographic or other reproduction of this
Security Agreement or any financing statement with respect to the Collateral as a financing
statement and to file any other financing statement or amendment of a financing statement (which
does not add new collateral or add a debtor) in such offices as the Administrative Agent in its
sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority
of the Administrative Agent’s security interest in the Collateral, (iv) subject to the terms of
Section 4.1.5 hereof, to enforce payment of the Instruments in the name of the
Administrative Agent or such Grantor, (v) to apply the proceeds of any Collateral received by the
Administrative Agent to the Secured Obligations as provided in Article VII and (vi) to
discharge past due taxes, assessments, charges, fees or Liens on the Collateral (except for such
Liens as are specifically permitted hereunder or under any other Loan Document or which are being
contested in good faith pursuant to any other Loan Document), and each Grantor agrees to reimburse
the Administrative Agent on demand for any reasonable payment made or any reasonable expense
incurred by the Administrative Agent in connection therewith, provided that this authorization
shall not relieve any Grantor of any of its obligations under this Security Agreement or under the
Credit Agreement.

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     8.4. Specific Performance of Certain Covenants. Each Grantor acknowledges and agrees
that a breach of any of the covenants contained in Sections 4.1.5, 4.1.6,
4.2, 5.3, or 8.6 or in Article VII hereof will cause irreparable
injury to the Administrative Agent and the Holders of Secured Obligations, that the Administrative
Agent and Holders of Secured Obligations have no adequate remedy at law in respect of such breaches
and therefore agrees, without limiting the right of the Administrative Agent or the Holders of
Secured Obligations to seek and obtain specific performance of other obligations of the Grantors
contained in this Security Agreement, that the covenants of the Grantors contained in the Sections
referred to in this Section 8.4 shall be specifically enforceable against the Grantors.

     8.5. Entry onto Certain Premises. Upon the occurrence and during the continuance of a
Default, the Administrative Agent shall be entitled, in its reasonable discretion, to enter any
premises owned or leased by the Grantors where any of the Collateral or any records relating to the
Collateral are located until the Secured Obligations are paid or the Collateral or records relating
thereto are removed therefrom, whichever first occurs, without any obligation to pay any Grantor
for such entry.

     8.6. Dispositions Not Authorized. No Grantor is authorized to sell or otherwise
dispose of the Collateral except as set forth in Section 4.1.5 hereof and notwithstanding
any course of dealing between any Grantor and the Administrative Agent or other conduct of the
Administrative Agent, no authorization to sell or otherwise dispose of the Collateral (except as
set forth in Section 4.1.5 hereof) shall be binding upon the Administrative Agent or the
Holders of Secured Obligations unless such authorization is in writing signed by the Administrative
Agent with the consent or at the direction of the Required Lenders.

     8.7. Benefit of Agreement. The terms and provisions of this Security Agreement shall
be binding upon and inure to the benefit of the Grantors, the Administrative Agent and the Holders
of Secured Obligations and their respective successors and permitted assigns (including all persons
who become bound as a debtor to this Security Agreement), except that the Grantors shall not have
the right to assign their rights or delegate their obligations under this Security Agreement or any
interest herein, without the prior written consent of the Administrative Agent.

     8.8. Survival of Representations. All representations and warranties of the Grantors
contained in this Security Agreement shall survive the execution and delivery of this Security
Agreement.

     8.9. Taxes and Expenses. Taxes, costs, fees and expenses in respect of this Security
Agreement shall be paid by the Grantors as required by Section 9.6 of the Credit Agreement (with
the understanding and agreement of each Grantor that, for purposes hereof, each Grantor shall have
the same payment and reimbursement obligations as the Borrower under Section 9.6 even though such
Grantor is not specifically referenced in Section 9.6). Any and all costs and expenses incurred by
the Grantors in the performance of actions required pursuant to the terms hereof shall be borne
solely by the Grantors.

     8.10. Headings. The title of and section headings in this Security Agreement are for
convenience of reference only, and shall not govern the interpretation of any of the terms and
provisions of this Security Agreement.

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     8.11. Termination. This Security Agreement shall continue in effect (notwithstanding
the fact that from time to time there may be no Secured Obligations outstanding) until (i) the
Credit Agreement has terminated (subject to the survival of those terms that survive termination)
pursuant to its express terms and (ii) all of the Secured Obligations have been paid in full in
cash and performed in full and no commitments of the Administrative Agent or the Holders of Secured
Obligations which would give rise to any Secured Obligations are outstanding.

     8.12. Entire Agreement. This Security Agreement embodies the entire agreement and
understanding between the Grantors and the Administrative Agent relating to the Collateral and
supersedes all prior agreements and understandings between the Grantors and the Administrative
Agent relating to the Collateral.

     8.13. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.

          8.13.1 CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF
THE STATE OF DELAWARE, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

          8.13.2 CONSENT TO JURISDICTION. EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT SITTING IN
DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT
AND EACH GRANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY HOLDER OF SECURED
OBLIGATIONS TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE ADMINISTRATIVE AGENT OR
ANY HOLDER OF SECURED OBLIGATIONS OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT OR ANY
HOLDER OF SECURED OBLIGATIONS INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT SHALL BE BROUGHT ONLY
IN A COURT IN DELAWARE.

          8.13.3 WAIVER OF JURY TRIAL. EACH GRANTOR, THE ADMINISTRATIVE AGENT AND EACH
HOLDER OF SECURED OBLIGATIONS HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.

12

 

     8.14. Indemnity. Each Grantor hereby agrees, jointly with the other Grantors and
severally, to indemnify the Administrative Agent and the Holders of Secured Obligations, and their
respective successors, assigns, agents and employees (the “Indemnified Parties”), from and
against any and all liabilities, damages, penalties, suits, costs, and reasonable expenses of any
kind and nature (including, without limitation, all reasonable expenses of litigation or
preparation therefor whether or not an Indemnified Party is a party thereto) imposed on, incurred
by or asserted against an Indemnified Party arising out of this Security Agreement, or arising out
of or relating to the manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, sale, return or other disposition of any Collateral
(including, without limitation, latent and other defects, whether or not discoverable by an
Indemnified Party or any Grantor), provided that such indemnity shall not, as to any indemnitee, be
available to the extent that such losses, claims, damages, penalties, liabilities or related
expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence, bad faith or willful misconduct of such indemnitee;
provided, that with respect to fees and expenses in respect of counsel for the Indemnified
Parties in connection with any of the foregoing, the Grantors shall only be required to pay (on a
joint and several basis) for the reasonable fees and expenses of one outside counsel (and up to one
local counsel in each applicable local jurisdiction and any applicable regulatory counsel) for the
Indemnified Parties, unless the Administrative Agent or a Holder of Secured Obligations (or its
counsel) determines that it would create actual or potential conflicts of interest to not have
individual counsel, in which case the Administrative Agent and such Holder of Secured Obligations
may have its own counsel which may be reimbursed in connection with the foregoing.

     8.15. Subordination of Intercompany Indebtedness. Each Grantor agrees that any and
all claims of such Grantor against any other Grantor (each an “Obligor”) with respect to
any “Intercompany Indebtedness” (as hereinafter defined), any endorser, obligor or any other
guarantor of all or any part of the Secured Obligations, or against any of its properties shall be
subordinate and subject in right of payment to the prior payment, in full and in cash, of all
Secured Obligations; provided that, and not in contravention of the foregoing, so long as
no Default has occurred and is continuing, such Grantor may make loans to and receive payments with
respect to Intercompany Indebtedness from each such Obligor to the extent not prohibited by the
terms of this Security Agreement and the other Loan Documents. Notwithstanding any right of any
Grantor to ask, demand, sue for, take or receive any payment from any Obligor, all rights, liens
and security interests of such Grantor, whether now or hereafter arising and howsoever existing, in
any assets of any other Obligor shall be and are subordinated to the rights of the Holders of
Secured Obligations and the Administrative Agent in those assets. No Grantor shall have any right
to foreclose upon any such asset, whether by judicial action or otherwise, unless and until all of
the Secured Obligations (other than Unliquidated Obligations) shall have been fully paid and
satisfied (in cash) and all Commitments of the Lenders under the Credit Agreement have terminated
or expired. If all or any part of the assets of any Obligor, or the proceeds thereof, are subject
to any distribution, division or application to the creditors of such Obligor, whether partial or
complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or
any other similar action or proceeding, or if the business of any such Obligor is dissolved or if
substantially all of the assets of any such Obligor are sold (except to the extent not prohibited
by the Loan Documents), then, and in any such event (such event being herein referred to as an

13

 

“Insolvency Event”), any payment or distribution of any kind or character, either in cash,
securities or other property, which shall be payable or deliverable upon or with respect to any
Indebtedness of such Obligor to any Grantor (“Intercompany Indebtedness”) shall be paid or
delivered directly to the Administrative Agent for application on any of the Secured Obligations,
due or to become due, until such Secured Obligations (other than Unliquidated Obligations) shall
have first been fully paid and satisfied (in cash). Should any payment, distribution, security or
instrument or proceeds thereof be received by the applicable Grantor upon or with respect to the
Intercompany Indebtedness after any Insolvency Event and prior to the satisfaction of all of the
Secured Obligations (other than Unliquidated Obligations) and the termination or expiration of all
Commitments of the Lenders have been terminated or expired, such Grantor shall receive and hold the
same in trust, as trustee, for the benefit of the Holders of Secured Obligations and shall
forthwith deliver the same to the Administrative Agent, for the benefit of the Holders of Secured
Obligations, in precisely the form received (except for the endorsement or assignment of the
Grantor where necessary), for application to any of the Secured Obligations, due or not due, and,
until so delivered, the same shall be held in trust by the Grantor as the property of the Holders
of Secured Obligations. If any such Grantor fails to make any such endorsement or assignment to
the Administrative Agent, the Administrative Agent or any of its officers or employees is
irrevocably authorized to make the same. Each Grantor agrees that until the Secured Obligations
(other than Unliquidated Obligations) have been paid in full (in cash) and satisfied and all
Commitments of the Lenders have terminated or expired, no Grantor will assign or transfer to any
Person (other than the Administrative Agent or the Borrower or another Grantor) any claim any such
Grantor has or may have against any Obligor.

     8.16. Severability. Any provision in this Security Agreement that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Security Agreement are declared to be
severable.

     8.17. Counterparts. This Security Agreement may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract. Delivery of an executed
counterpart of a signature page of this Security Agreement by telecopy or electronic mail (PDF)
shall be effective as delivery of a manually executed counterpart of this Security Agreement.

     8.18. Release of Collateral. Notwithstanding Article VI hereof or anything to the
contrary set forth herein, if Collateral is permitted to be sold, transferred or assigned by a
Grantor pursuant to or in connection with a transaction permitted hereunder or under the Credit
Agreement (such as, but not limited to, a permitted asset sale or a permitted sale of a
Subsidiary), then the Administrative Agent shall release such Collateral from its Lien thereon;
provided, that the Borrower shall deliver a written certificate to the Administrative Agent
(upon which the Administrative Agent shall be entitled to conclusively rely) certifying that such
transaction is permitted under the Credit Agreement, and providing evidence that reasonably
supports such
certification, prior to any such release. The Administrative Agent, at the Grantors’ sole cost
and expense, shall deliver such documents and make such filings reasonably requested of it to
further evidence such release. The security interest in the Collateral granted hereunder shall be
released as provided under and in accordance with the terms of the Credit Agreement.

14

 

ARTICLE IX

NOTICES

     9.1. Sending Notices. Any notice required or permitted to be given under this
Security Agreement shall be sent (and deemed received) in the manner and to the addresses set forth
in Section 13.1 of the Credit Agreement. Any notice delivered to the Borrower shall be deemed to
have been delivered to all of the Grantors.

     9.2. Change in Address for Notices. Each of the Grantors, the Administrative Agent
and the Lenders may change the address for service of notice upon it by a notice in writing to the
other parties in accordance with Section 9.1.

ARTICLE X

THE ADMINISTRATIVE AGENT

     U.S. Bank National Association has been appointed Administrative Agent for the Holders of
Secured Obligations hereunder pursuant to Article X of the Credit Agreement. It is expressly
understood and agreed by the parties to this Security Agreement that any authority conferred upon
the Administrative Agent hereunder is subject to the terms of the delegation of authority made by
the Holders of Secured Obligations to the Administrative Agent pursuant to the Credit Agreement,
and that the Administrative Agent has agreed to act (and any successor Administrative Agent shall
act) as such hereunder only on the express conditions contained in such Article X. Any successor
Administrative Agent appointed pursuant to Article X of the Credit Agreement shall be entitled to
all the rights, interests and benefits of the Administrative Agent hereunder.

[SIGNATURE PAGES TO FOLLOW]

15

 

     IN WITNESS WHEREOF, each of the Grantors and the Administrative Agent have executed this
Security Agreement as of the date first above written.

	 	 	 	 	 	 	 

	 	 	PROASSURANCE
CORPORATION, as a Grantor
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	 
 

	 	 
	 

	 	Title:	 	 	 	 

Signature Page to Pledge and Security Agreement

 

 

U.S. BANK NATIONAL

ASSOCIATION, as Administrative Agent

	 	 	 	 	 

	By: 

Name:

	 	 
 

	 	 
	Title:
	 	 	 	 

Signature Page to Pledge and Security Agreement

 

 

EXHIBIT “A”

(See Sections 3.3 and 3.4 of Security Agreement)

Prior names, jurisdiction of formation, place of business (if Grantor has only
one place of business), chief executive office (if Grantor has more than one
place of business), mergers and mailing address:

[________]

[_________]

[_________]

[_________]

[_________]

 

 

ANNEX I

to

SUBSIDIARY

SECURITY AGREEMENT

          Reference is hereby made to the Pledge and Security Agreement (the “Agreement”), dated as of
April 15, 2011 made by PROASSURANCE CORPORATION (the “Borrower”, and together with any additional
Persons, including the undersigned, which become parties thereto by executing a Supplement in
substantially the form hereof and after giving effect to any Persons released from the Agreement as
permitted by the Agreement, the “Grantors”), in favor of the Administrative Agent. Capitalized
terms used herein and not defined herein shall have the meanings given to them in the Agreement.
By its execution below, the undersigned, [NAME OF NEW GRANTOR], a [__________________________]
[corporation/limited liability company/other] agrees to become, and does hereby become, a Grantor
under the Agreement and agrees to be bound by such Agreement as if originally a party thereto. By
its execution below, the undersigned hereby pledges, assigns and grants to the Administrative
Agent, on behalf of and for the ratable benefit of the Holders of Secured Obligations and (to the
extent specifically provided the Agreement) their Affiliates, a security interest in all of its
right, title and interest, whether now owned or hereafter acquired, in and to the Collateral to
secure the prompt and complete payment and performance of the Secured Obligations. The undersigned
hereby represents and warrants as to itself that all of the representations and warranties
contained in the Agreement are true and correct in all respects as of the date hereof. Except as
modified pursuant to Schedule A hereto (to the extent such modifications are permitted under the
Agreement), [NAME OF NEW GRANTOR] represents and warrants that the supplements to the Exhibits to
the Agreement attached hereto are true and correct in all respects and such supplements set forth
all information required to be scheduled under the Agreement. To the extent required under the
Agreement, [NAME OF NEW GRANTOR] shall take all steps necessary to perfect, in favor of the
Administrative Agent, a security interest in and lien against [NAME OF NEW GRANTOR]’s Collateral,
including to the extent so required delivering all certificated Securities to the Administrative
Agent, and taking all steps necessary to properly perfect the Administrative Agent’s interest in
any uncertificated equity or membership interests.

     IN WITNESS WHEREOF, [NAME OF NEW GRANTOR], a [__________________] [corporation/limited
liability company/other] has executed and delivered this Annex I counterpart to the
Agreement as of this ___________ day of ____________, ___.

	 	 	 	 	 	 	 

	 	 	[NAME OF NEW GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 
 

	 	 
	 

	 	Title:exv10w1

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between Santarus,
Inc., a Delaware corporation (the “Company”), and Wendell Wierenga, Ph.D.
(“Executive”), and shall be effective as of June 20, 2011 (the “Effective Date”).

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

     1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:

          (a) Board. “Board” means the Board of Directors of the Company.

          (b) Bonus. “Bonus” means an amount equal to the average of the bonuses
awarded to Executive for each of the three (3) fiscal years prior to the date of termination, or
such lesser number of years as may be applicable if Executive has not been employed for three (3)
full years on the date of termination. For purposes of determining Executive’s “Bonus,” to the
extent Executive received no bonus in a year due to a failure to meet the applicable performance
objectives, such year will still be taken into account (using zero (0) as the applicable bonus) in
determining Executive’s “Bonus” for purposes of Section 4. If any portion of the bonuses awarded
to Executive consisted of securities or other property, the fair market value thereof shall be
determined in good faith by the Board.

          (c) Cause. “Cause” means any of the following:

               (i) the commission of an act of fraud, embezzlement or dishonesty by Executive that has a
material adverse impact on the Company or any successor or affiliate thereof;

               (ii) a conviction of, or plea of “guilty” or “no contest” to, a felony by Executive;

               (iii) any unauthorized use or disclosure by Executive of confidential information or trade
secrets of the Company or any successor or affiliate thereof that has a material adverse impact on
any such entity;

               (iv) Executive’s gross negligence, insubordination or material violation of any duty of
loyalty to the Company or any other material misconduct on the part of Executive;

               (v) Executive’s ongoing and repeated failure or refusal to perform or neglect of Executive’s
duties as required by this Agreement, which failure, refusal or neglect continues for fifteen (15)
days following Executive’s receipt of written notice from the Board or the CEO stating with
specificity the nature of such failure, refusal or neglect; or

               (vi) Executive’s breach of any material provision of this Agreement;

 

 

provided, however, that prior to the determination that “Cause” under this Section
1(c) has occurred, the Company shall (w) provide to Executive in writing, in reasonable detail, the
reasons for the determination that such “Cause” exists, (x) other than with respect to clause (v)
above which specifies the applicable period of time for Executive to remedy his or her breach,
afford Executive a reasonable opportunity to remedy any such breach, (y) provide the Executive an
opportunity to be heard prior to the final decision to terminate the Executive’s employment
hereunder for such “Cause” and (z) make any decision that such “Cause” exists in good faith.

          The foregoing definition shall not in any way preclude or restrict the right of the Company or
any successor or affiliate thereof to discharge or dismiss Executive for any other acts or
omissions, but such other acts or omissions shall not be deemed, for purposes of this Agreement, to
constitute grounds for termination for Cause.

          (d) Change of Control. “Change of Control” means and includes each of the
following:

               (i) the acquisition, directly or indirectly, by any “person” or “group” (as those terms are
defined in Sections 3(a)(9), 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and the rules thereunder) of “beneficial ownership” (as determined
pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the
election of directors (“voting securities”) of the Company that represent fifty percent
(50%) or more of the combined voting power of the Company’s then outstanding voting securities,
other than:

               (A) an acquisition by a trustee or other fiduciary holding securities under any
employee benefit plan (or related trust) sponsored or maintained by the Company or any
person controlled by the Company or by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any person controlled by the Company, or

               (B) an acquisition of voting securities by the Company or a corporation owned, directly
or indirectly by the stockholders of the Company in substantially the same proportions as
their ownership of the stock of the Company;

          Notwithstanding the foregoing, the following event shall not constitute an “acquisition” by
any person or group for purposes of this Section 1(d): an acquisition of the Company’s securities
by the Company that causes the Company’s voting securities beneficially owned by a person or group
to represent fifty percent (50%) or more of the combined voting power of the Company’s then
outstanding voting securities; provided, however, that if a person or group shall
become the beneficial owner of fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding voting securities by reason of share acquisitions by the Company as
described above and shall, after such share acquisitions by the Company, become the beneficial
owner of any additional voting securities of the Company, then such acquisition shall constitute a
Change of Control; or

               (ii) during any period of two (2) consecutive years, individuals who, at the beginning of such
period, constitute the Board together with any new director(s) (other

2

 

than a director designated by a person who shall have entered into an agreement with the Company to
effect a transaction described in clauses (i) or (iii) of this Section 1(d)) whose election by the
Board or nomination for election by the Company’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors at the beginning
of the two (2) year period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or

               (iii) the consummation by the Company (whether directly involving the Company or indirectly
involving the Company through one or more intermediaries) of (x) a merger, consolidation,
reorganization, or business combination or (y) a sale or other disposition of all or substantially
all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each
case other than a transaction:

               (A) which results in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being converted
into voting securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly, all or
substantially all of the Company’s assets or otherwise succeeds to the business of the
Company (the Company or such person, the “Successor Entity”)), directly or
indirectly, at least a majority of the combined voting power of the Successor Entity’s
outstanding voting securities immediately after the transaction, and

               (B) after which no person or group beneficially owns voting securities representing
fifty percent (50%) or more of the combined voting power of the Successor Entity;
provided, however, that no person or group shall be treated for purposes of
this clause (B) as beneficially owning fifty percent (50%) or more of combined voting power
of the Successor Entity solely as a result of the voting power held in the Company prior to
the consummation of the transaction; or

               (iv) the Company’s stockholders approve a liquidation or dissolution of the Company.

          (e) Code. “Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the Treasury Regulations and other interpretive guidance issued thereunder.

          (f) Good Reason. “Good Reason” means Executive’s voluntary resignation
following any one or more of the following that is effected without Executive’s written consent:

               (i) the relocation of the office of Executive more than fifty (50) miles from Executive’s
principal place of employment as of the Effective Date or to a location outside of San Diego
County;

               (ii) a change in Executive’s position that materially reduces his or her duties or
responsibilities;

3

 

               (iii) a reduction in Executive’s base salary or target bonus as an employee of the Company,
other than pursuant to a Company-wide reduction of base salaries and target bonuses for employees
of the Company generally; or

               (iv) the Company’s breach of any material provision of this Agreement; provided, that
Executive shall (w) provide to the Company in writing, in reasonable detail, notice of such breach
and (x) afford the Company a reasonable opportunity to remedy any such breach.

          (g) Permanent Disability. Executive’s “Permanent Disability” shall be deemed
to have occurred if Executive shall become physically or mentally incapacitated or disabled or
otherwise unable fully to discharge his or her duties hereunder for a period of ninety (90)
consecutive calendar days or for one hundred twenty (120) calendar days in any one hundred eighty
(180) calendar-day period. The existence of Executive’s Permanent Disability shall be determined
by the Company on the advice of a physician chosen by the Company and the Company reserves the
right to have the Executive examined by a physician chosen by the Company at the Company’s expense.

          (h) Stock Awards. “Stock Awards” means all stock options, restricted stock
and such other awards granted pursuant to the Company’s stock option and equity incentive award
plans or agreements and any shares of stock issued upon exercise thereof.

     2. Services to Be Rendered.

          (a) Duties and Responsibilities. Executive shall serve as Executive Vice President,
Research and Development, of the Company. In the performance of such duties, Executive shall
report directly to the CEO and shall be subject to the direction of the CEO and to such limits upon
Executive’s authority as the Board or the CEO may from time to time impose. Executive hereby
consents to serve as an officer and/or director of the Company or any subsidiary or affiliate
thereof without any additional salary or compensation, if so requested by the Board. Executive
shall be employed by the Company on a full time basis. Executive’s primary place of work shall be
the Company’s facility in San Diego, California, or such other location within San Diego County as
may be designated by the CEO from time to time. Executive shall also render services at such other
places within or outside the United States as the CEO may direct from time to time, however,
Executive’s primary place of work shall not be relocated more than fifty (50) miles from his or her
primary place of work as of the Effective Date or outside San Diego County without Executive’s
prior consent. Executive shall be subject to and comply with the policies and procedures generally
applicable to senior executives of the Company to the extent the same are not inconsistent with any
term of this Agreement.

          (b) Exclusive Services. Executive shall at all times faithfully, industriously and to
the best of his or her ability, experience and talent perform to the satisfaction of the Board and
the CEO all of the duties that may be assigned to Executive hereunder and shall devote
substantially all of his or her productive time and efforts to the performance of such duties.
Subject to the terms of the Employee Confidentiality and Invention Assignment Agreement referred to
in Section 5(b), this shall not preclude Executive from devoting time to personal and family
investments or serving on community and civic boards, or participating in

4

 

industry associations, provided such activities do not interfere with his or her duties to the
Company, as determined in good faith by the CEO. Executive agrees that he or she will not join any
boards, other than community and civic boards (which do not interfere with his or her duties to the
Company), without the prior approval of the CEO.

     3. Compensation and Benefits. The Company shall pay or provide, as the case may be,
to the Executive the compensation and other benefits and rights set forth in this Section 3.

          (a) Base Salary. The Company shall pay to Executive a base salary of $400,000 per
year, payable in accordance with the Company’s usual pay practices (and in any event no less
frequently than monthly). Executive’s base salary shall be subject to review annually by and at
the sole discretion of the Compensation Committee of the Board.

          (b) Bonus. Executive shall participate in any Management Incentive Compensation Plan
adopted by the Company or in such other bonus plan as the Board may approve for the senior
executives of the Company.

          (c) Benefits. Executive shall be entitled to participate in benefits under the
Company’s benefit plans and arrangements, including, without limitation, any employee benefit plan
or arrangement made available in the future by the Company to its senior executives, subject to and
on a basis consistent with the terms, conditions and overall administration of such plans and
arrangements. The Company shall have the right to amend or delete any such benefit plan or
arrangement made available by the Company to its senior executives and not otherwise specifically
provided for herein.

          (d) Expenses. The Company shall reimburse Executive for reasonable out-of-pocket
expenses incurred in connection with the performance of his or her duties hereunder, subject to (i)
such policies as the Company may from time to time establish, and (ii) Executive furnishing the
Company with evidence in the form of receipts satisfactory to the Company substantiating the
claimed expenditures.

          (e) Paid Time Off. Executive shall be entitled to such periods of paid time off
(“PTO”) each year as provided under the Company’s PTO policy and as otherwise provided for
senior executive officers, but in no event shall Executive be entitled to less than four (4) weeks
of PTO.

          (f) Equity Plans. Executive shall be entitled to participate in any equity or other
employee benefit plan that is generally available to senior executive officers, as distinguished
from general management, of the Company. Except as otherwise provided in this Agreement,
Executive’s participation in and benefits under any such plan shall be on the terms and subject to
the conditions specified in the governing document of the particular plan.

          (g) Acceleration Upon a Change of Control. Subject to any additional acceleration of
exercisability described in Sections 4(b), (c) and (d) below, in connection with a Change of
Control (as defined in Section 1 above), the vesting and exercisability of fifty percent (50%) of
Executive’s outstanding Stock Awards shall be automatically accelerated.

5

 

The foregoing provision is hereby deemed to be a part of each such Stock Award and to
supersede any less favorable provision in any agreement or plan regarding such Stock Award.

     4. Termination and Severance. Executive shall be entitled to receive benefits upon
termination of employment only as set forth in this Section 4:

          (a) At-Will Employment; Termination. The Company and Executive acknowledge that
Executive’s employment is and shall continue to be at-will, as defined under applicable law, and
that Executive’s employment with the Company may be terminated by either party at any time for any
or no reason, with or without notice. If Executive’s employment terminates for any reason,
Executive shall not be entitled to any payments, benefits, damages, award or compensation other
than as provided in this Agreement. Executive’s employment under this Agreement shall be
terminated immediately on the death of Executive.

          (b) Termination by Death. If Executive’s employment is terminated by death,
Executive’s estate shall be entitled to receive (i) Executive’s fully earned but unpaid base
salary, through the date of death at the rate then in effect, plus all other amounts to which
Executive is entitled under any compensation plan or practice of the Company at the time of
Executive’s death, (ii) an amount equal to Executive’s annual base salary as in effect immediately
prior to the date of death, payable in a lump sum as soon as administratively practicable but in
any event no later than two and one-half (2 1/2) months following Executive’s death, (iii) an amount
equal to Executive’s Bonus for the year in which Executive’s death occurs prorated for the period
during such year Executive was employed prior to his or her death, payable in a lump sum as soon as
administratively practicable but in any event no later than two and one-half (2 1/2) months following
Executive’s death, and (iv) for the period beginning on the date of death and ending on the date
which is twelve (12) full months following the date of death, the Company shall pay for and provide
Executive’s dependents with healthcare and life insurance benefits coverage to the extent such
dependents were receiving such benefits prior to the date of Executive’s death, including, if
necessary, paying the costs associated with continuation coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). In addition, if
Executive’s employment is terminated by death, the vesting and/or exercisability of Executive’s
outstanding Stock Awards shall be automatically accelerated on the date of death as to the number
of shares that would vest over the twelve (12) months following Executive’s death under the
applicable vesting schedules had Executive remained continuously employed by the Company during
such period. Except as otherwise provided above with respect to accelerated vesting, if
Executive’s employment is terminated by death, the provisions of the award agreements governing
Executive’s Stock Awards regarding the exercisability of such Stock Awards following Executive’s
death shall apply.

          (c) Termination for Permanent Disability. If Executive’s employment is terminated by
the Company for Permanent Disability, Executive shall be entitled to receive (i) Executive’s fully
earned but unpaid base salary, through the date of termination at the rate then in effect, plus all
other amounts to which Executive is entitled under any compensation plan or practice of the Company
at the time such payments are due, (ii) an amount equal to Executive’s annual base salary as in
effect immediately prior to the date of termination, payable in a lump sum as soon as
administratively practicable but in any event no later than two and one-half (2 1/2)

6

 

months following the date of termination, (iii) an amount equal to Executive’s Bonus for the
year in which the date of termination occurs prorated for the period during such year Executive was
employed prior to the date of termination, payable in a lump sum as soon as administratively
practicable but in any event no later than two and one-half (2 1/2) months following the date of
termination, and (iv) for the period beginning on the date of termination and ending on the date
which is twelve (12) full months following the date of termination (or, if earlier, the date on
which Executive accepts employment with another employer that provides comparable benefits in terms
of cost and scope of coverage), the Company shall pay for and provide Executive and his or her
dependents with healthcare and life insurance benefits which are substantially the same as the
benefits provided to Executive immediately prior to the date of termination, including, if
necessary, paying the costs associated with continuation coverage pursuant to COBRA. In addition,
if Executive’s employment is terminated by the Company for Permanent Disability, the vesting and/or
exercisability of Executive’s outstanding Stock Awards shall be automatically accelerated on the
date of termination as to the number of shares that would vest over the twelve (12) months
following Executive’s date of termination under the applicable vesting schedules had Executive
remained continuously employed by the Company during such period. Except as otherwise provided
above with respect to accelerated vesting, if Executive’s employment is terminated by Permanent
Disability, the provisions of the award agreements governing Executive’s Stock Awards regarding the
exercisability of such Stock Awards following Executive’s disability shall apply.

          (d) Termination without Cause or for Good Reason.

               (i) Termination Apart From Change of Control. If Executive’s employment is terminated
by the Company without Cause or by Executive for Good Reason more than three (3) months prior to a
Change of Control or more than twelve (12) months following a Change of Control, Executive shall be
entitled to receive, in lieu of any severance benefits to which Executive may otherwise be entitled
under any severance plan or program of the Company, the benefits provided below:

               (A) the Company shall pay to Executive his or her fully earned but unpaid base salary,
when due, through the date of termination at the rate then in effect, plus all other amounts
to which Executive is entitled under any compensation plan or practice of the Company at the
time of termination;

               (B) Executive shall be entitled to receive severance pay in an amount equal to the sum
of:

               (1) Executive’s base salary as in effect immediately prior to the date
of termination for the twelve (12) month period following the date of
termination, payable in a lump sum as soon as administratively practicable
but in any event no later than two and one-half 
(2 1/2) months following the
date of termination, plus

               (2) an amount equal to Executive’s Bonus for the year in which the date
of termination occurs prorated for the period during such year Executive was
employed prior to the date of

7

 

termination, payable in a lump sum as soon as administratively
practicable but in any event no later than two and one-half (2 1/2) months
following the date of termination;

               (C) The vesting and/or exercisability of each of Executive’s outstanding Stock Awards
shall be automatically accelerated on the date of termination as to the number of Stock
Awards that would vest over the twelve (12) month period following the date of termination
had Executive remained continuously employed by the Company during such period;

               (D) for the period beginning on the date of termination and ending on the date which is
twelve (12) full months following the date of termination (or, if earlier, the date on which
Executive accepts employment with another employer that provides comparable benefits in
terms of cost and scope of coverage), the Company shall pay for and provide Executive and
his or her dependents with healthcare and life insurance benefits which are substantially
the same as the benefits provided to Executive immediately prior to the date of termination,
including, if necessary, paying the costs associated with continuation coverage pursuant to
COBRA; and

               (E) Executive shall be entitled to executive-level outplacement services at the
Company’s expense, not to exceed $15,000. Such services shall be provided by a firm
selected by Executive from a list compiled by the Company.

               (ii) Termination In Connection With Change of Control. If Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason within three (3) months
prior to or twelve (12) months following a Change of Control, Executive shall be entitled to
receive, in lieu of any severance benefits to which Executive may otherwise be entitled under any
severance plan or program of the Company, the benefits provided below:

               (A) the Company shall pay to Executive his or her fully earned but unpaid base salary,
when due, through the date of termination at the rate then in effect, plus all other amounts
to which Executive is entitled under any compensation plan or practice of the Company at the
time of termination;

               (B) Executive shall be entitled to receive severance pay in an amount equal to the sum
of:

               (1) Executive’s base salary as in effect immediately prior to the date of
termination for the twelve (12) month period following the date of termination,
payable in a lump sum as soon as administratively practicable but in any event no
later than two and one-half 
(2 1/2) months following the date of termination (or, in
the event the date of termination precedes the consummation of a Change of Control,
with respect to those amounts the payment of which is not administratively
practicable by the foregoing date because it is not yet known whether a Change of
Control will occur within three (3) months following the date of termination, such
amounts shall be paid as soon as administratively practicable

8

 

but in any event no later than two and one-half (2 1/2) months following the
consummation of the Change of Control), plus

               (2) an amount equal to Executive’s Bonus for the year in which the date of
termination occurs prorated for the period during such year Executive was employed
prior to the date of termination, payable in a lump sum as soon as administratively
practicable but in any event no later than two and one-half (2 1/2) months following
the date of termination (or, in the event the date of termination precedes the
consummation of a Change of Control, with respect to those amounts the payment of
which is not administratively practicable by the foregoing date because it is not
yet known whether a Change of Control will occur within three (3) months following
the date of termination, such amounts shall be paid as soon as administratively
practicable but in any event no later than two and one-half (2 1/2) months following
the consummation of the Change of Control);

               (C) The vesting and/or exercisability of all of Executive’s outstanding unvested Stock
Awards shall be automatically accelerated on the date of termination;

               (D) for the period beginning on the date of termination and ending on the date which is
twelve (12) full months following the date of termination (or, if earlier, the date on which
Executive accepts employment with another employer that provides comparable benefits in
terms of cost and scope of coverage), the Company shall pay for and provide Executive and
his or her dependents with healthcare and life insurance benefits which are substantially
the same as the benefits provided to Executive immediately prior to the date of termination,
including, if necessary, paying the costs associated with continuation coverage pursuant to
COBRA;

               (E) Executive shall be entitled to executive-level outplacement services at the
Company’s expense, not to exceed $15,000. Such services shall be provided by a firm
selected by Executive from a list compiled by the Company; and

               (F) The payments and benefits provided for in this Section 4(d)(ii) shall only be
payable in the event Executive’s employment is terminated by the Company without Cause or by
Executive for Good Reason within three (3) months prior to or twelve (12) months following a
Change of Control. If Executive’s employment is terminated by the Company without Cause or
by Executive for Good Reason prior to a Change of Control and such Change of Control is not
consummated within three (3) months following such termination, then Executive shall receive
the payments and benefits described in Section 4(d)(i) and shall not be eligible to receive
any of the payments and benefits described in this Section 4(d)(ii).

          (e) Termination for Cause or Voluntary Resignation Without Good Reason. If
Executive’s employment is terminated by the Company for Cause or by Executive without Good Reason
(other than as a result of Executive’s death or Permanent Disability), the Company shall not have
any other or further obligations to Executive under this Agreement (including any financial
obligations) except that Executive shall be entitled to receive (i) Executive’s fully

9

 

earned but unpaid base salary, through the date of termination at the rate then in effect, and
(ii) all other amounts or benefits to which Executive is entitled under any compensation,
retirement or benefit plan or practice of the Company at the time of termination in accordance with
the terms of such plans or practices, including, without limitation, any continuation of benefits
required by COBRA or applicable law. In addition, if Executive’s employment is terminated by the
Company for Cause or by Executive without Good Reason (other than as a result of Executive’s death
or Permanent Disability), all vesting of Executive’s unvested Stock Awards previously granted to
him or her by the Company shall cease and none of such unvested Stock Awards shall be exercisable
following the date of such termination. The foregoing shall be in addition to, and not in lieu of,
any and all other rights and remedies which may be available to the Company under the
circumstances, whether at law or in equity.

          (f) Release. As a condition to the Executive’s receipt of any post-termination
benefits described in this Agreement, Executive shall execute a Release (the “Release”)
within ninety (90) days following termination of employment in a form reasonably acceptable to the
Company. Such Release shall specifically relate to all of Executive’s rights and claims in
existence at the time of such execution, including any claims related to Executive’s employment by
the Company and his or her termination of employment, and shall exclude any continuing obligations
the Company may have to Executive following the date of termination under this Agreement or any
other agreement providing for obligations to survive Executive’s termination of employment.

          (g) Delay of Payments. Notwithstanding anything to the contrary in this Section 4,
however, to the extent required to avoid adverse tax consequences to Executive under Section 409A
of the Code, if Executive is deemed to be a “specified employee” for purposes of Section
409A(a)(2)(B) of the Code, Executive agrees that the payments due to him or her under this Section
4 in connection with a termination of employment that would otherwise have been payable at any time
during the six-month period immediately following such termination of employment shall not be paid
prior to, and shall instead be payable in a lump sum as soon as practicable following, the
expiration of such six-month period. In the event of Executive’s death during such six-month
period, upon provision to the Company of and failure to revoke a signed general release of all
claims against the Company and its affiliates in a form reasonably acceptable to the Company,
Executive’s estate will receive the severance benefits described in this Agreement.

          (h) Exclusive Remedy. Except as otherwise expressly required by law (e.g., COBRA) or
as specifically provided herein, all of the Executive’s rights to salary, severance, benefits,
bonuses and other amounts hereunder (if any) accruing after the termination of Executive’s
employment shall cease upon such termination. In the event of a termination of Executive’s
employment with the Company, the Executive’s sole remedy shall be to receive the payments and
benefits described in this Section 4. In addition, Executive acknowledges and agrees that he or
she is not entitled to any reimbursement by the Company for any taxes payable by Executive as a
result of the payments and benefits received by Executive pursuant to this Section 4, including,
without limitation, any excise tax imposed by Section 4999 of the Code.

          (i) No Mitigation. Executive shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or otherwise, nor shall

10

 

the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation
earned by Executive as the result of employment by another employer or self-employment or by
retirement benefits; provided, however, that loans, advances or other amounts owed
by Executive to the Company may be offset by the Company against amounts payable to Executive under
this Section 4; provided, further, that, as provided in Sections 4(c) or (d),
Executive’s right to continued healthcare and life insurance benefits following his or her
termination of employment will terminate on the date on which he or she accepts employment with
another employer that provides comparable benefits in terms of cost and scope of coverage.

          (j) Return of the Company’s Property. If Executive’s employment is terminated
for any reason, the Company shall have the right, at its option, to require Executive to vacate his
or her offices prior to or on the effective date of termination and to cease all activities on the
Company’s behalf. Upon the termination of his or her employment in any manner, as a condition to
the Executive’s receipt of any post-termination benefits described in this Agreement, Executive
shall immediately surrender to the Company all lists, books and records of, or in connection with,
the Company’s business, and all other property belonging to the Company, it being distinctly
understood that all such lists, books and records, and other documents, are the property of the
Company. Executive shall deliver to the Company a signed statement certifying compliance with this
Section 4(j) prior to the receipt of any post-termination benefits described in this Agreement.

          (k) Waiver of the Company’s Liability. Executive recognizes that his or her
employment is subject to termination with or without Cause for any reason and therefore Executive
agrees that Executive shall hold the Company harmless from and against any and all liabilities,
losses, damages, costs and expenses, including but not limited to, court costs and reasonable
attorneys’ fees, which Executive may incur as a result of the termination of Executive’s
employment. Executive further agrees that Executive shall bring no claim or cause of action
against the Company for damages or injunctive relieve based on a wrongful termination of
employment. Executive agrees that the sole liability of the Company to Executive upon termination
of this Agreement shall be that determined by this Section 4. In the event this covenant is more
restrictive than permitted by laws of the jurisdiction in which the Company seeks enforcement
thereof, this covenant shall be limited to the extent permitted by law.

	5.	 	Certain Covenants.

          (a) Noncompetition. Except as may otherwise be approved by the Board, during the term
of Executive’s employment, Executive shall not have any ownership interest (of record or
beneficial) in, or have any interest as an employee, salesman, consultant, officer or director in,
or otherwise aid or assist in any manner, any firm, corporation, partnership, proprietorship or
other business that engages in any county, city or part thereof in the United States and/or any
foreign country in a business which competes directly or indirectly (as determined by the Board)
with the Company’s business in such county, city or part thereof, so long as the Company, or any
successor in interest of the Company to the business and goodwill of the Company, remains engaged
in such business in such county, city or part thereof or continues to solicit customers or
potential customers therein; provided, however, that Executive

11

 

may own, directly or indirectly, solely as an investment, securities of any entity which are
traded on any national securities exchange if Executive (x) is not a controlling person of, or a
member of a group which controls, such entity; or (y) does not, directly or indirectly, own one
percent (1%) or more of any class of securities of any such entity.

          (b) Confidential Information. Executive and the Company have entered into the
Company’s standard employee confidentiality and invention assignment agreement (the “Employee
Confidentiality and Invention Assignment Agreement”). Executive agrees to perform each and
every obligation of Executive therein contained.

          (c) Solicitation of Employees. Executive shall not during the term of Executive’s
employment and for the applicable severance period for which Executive receives severance benefits
following any termination hereof pursuant to Section 4(c) or (d) above (regardless of whether
Executive receives such severance benefits in a lump sum payment) (the “Restricted
Period”), directly or indirectly, solicit or encourage to leave the employment of the Company
or any of its affiliates, any employee of the Company or any of its affiliates.

          (d) Rights and Remedies Upon Breach. If Executive breaches or threatens to commit a
breach of any of the provisions of this Section 5 (the “Restrictive Covenants”), the
Company shall have the following rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights and remedies shall be
in addition to, and not in lieu of, any other rights and remedies available to the Company under
law or in equity:

               (i) Specific Performance. The right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction, all without the need to post a bond
or any other security or to prove any amount of actual damage or that money damages would not
provide an adequate remedy, it being acknowledged and agreed that any such breach or threatened
breach will cause irreparable injury to the Company and that money damages will not provide
adequate remedy to the Company; and

               (ii) Accounting and Indemnification. The right and remedy to require Executive (i) to
account for and pay over to the Company all compensation, profits, monies, accruals, increments or
other benefits derived or received by Executive or any associated party deriving such benefits as a
result of any such breach of the Restrictive Covenants; and (ii) to indemnify the Company against
any other losses, damages (including special and consequential damages), costs and expenses,
including actual attorneys’ fees and court costs, which may be incurred by them and which result
from or arise out of any such breach or threatened breach of the Restrictive Covenants.

          (e) Severability of Covenants/Blue Pencilling. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the
Restrictive Covenants shall not thereby be affected and shall be given full effect, without regard
to the invalid portions. If any court determines that any of the Restrictive Covenants, or any
part thereof, are unenforceable because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the duration or area of such provision and, in
its reduced form, such provision shall then be enforceable and shall be

12

 

enforced. Executive hereby waives any and all right to attack the validity of the Restrictive
Covenants on the grounds of the breadth of their geographic scope or the length of their term.

          (f) Enforceability in Jurisdictions. The Company and Executive intend to and do
hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts of any jurisdiction
within the geographical scope of such covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company and Executive that such determination not
bar or in any way affect the right of the Company to the relief provided above in the courts of any
other jurisdiction within the geographical scope of such covenants, as to breaches of such
covenants in such other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent covenants.

          (g) Definitions. For purposes of this Section 5, the term “Company” means not
only Santarus, Inc., but also any company, partnership or entity which, directly or indirectly,
controls, is controlled by or is under common control with Santarus, Inc.

     6. Insurance. The Company shall have the right to take out life, health, accident,
“key-man” or other insurance covering Executive, in the name of the Company and at the Company’s
expense in any amount deemed appropriate by the Company. Executive shall assist the Company in
obtaining such insurance, including, without limitation, submitting to any required examinations
and providing information and data required by insurance companies.

     7. Arbitration. Except as provided in Section 5, any claim or controversy arising out
of or relating to this Agreement shall be settled by arbitration in San Diego, California, in
accordance with the Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction.
Each party shall select one arbitrator and the two arbitrators so chosen will select a third
arbitrator who shall act as the sole arbitrator of any dispute. Each party shall pay the fees of
its own attorneys, the expenses of its witnesses and all other expenses connected with presenting
its case; however, Executive and the Company agree that, except as may be prohibited by
law, the arbitrator may, in his or her discretion, award reasonable attorneys’ fees to the
prevailing party. Other costs of the arbitration, including the cost of any record or transcripts
of the arbitration, administrative fees, the fee of the sole arbitrator, and all other fees and
costs, shall be borne by the Company.

     8. General Relationship. Executive shall be considered an employee of the Company
within the meaning of all federal, state and local laws and regulations including, but not limited
to, laws and regulations governing unemployment insurance, workers’ compensation, industrial
accident, labor and taxes.

     9. Miscellaneous.

          (a) Modification; Prior Claims. This Agreement sets forth the entire understanding of
the parties with respect to the subject matter hereof, supersedes all existing

13

 

agreements between them concerning such subject matter and may be modified only by a written
instrument duly executed by each party.

          (b) Assignment; Assumption by Successor. The rights of the Company under this
Agreement may, without the consent of Executive, be assigned by the Company, in its sole and
unfettered discretion, to any person, firm, corporation or other business entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all
of the assets or business of the Company. The Company will require any successor (whether direct
or indirect, by purchase, merger or otherwise) to all or substantially all of the business or
assets of the Company expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no such succession had
taken place; provided, however, that no such assumption shall relieve the Company
of its obligations hereunder. As used in this Agreement, the “Company” shall mean the
Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law or otherwise.

          (c) Survival. The covenants, agreements, representations and warranties contained in
or made in Sections 4, 5, 7 and 9 of this Agreement shall survive any termination of Executive’s
employment.

          (d) Third-Party Beneficiaries. This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to this Agreement.

          (e) Waiver. The failure of either party hereto at any time to enforce performance by
the other party of any provision of this Agreement shall in no way affect such party’s rights
thereafter to enforce the same, nor shall the waiver by either party of any breach of any provision
hereof be deemed to be a waiver by such party of any other breach of the same or any other
provision hereof.

          (f) Section Headings. The headings of the several sections in this Agreement are
inserted solely for the convenience of the parties and are not a part of and are not intended to
govern, limit or aid in the construction of any term or provision hereof.

          (g) Notices. All notices, requests and other communications hereunder shall be in
writing and shall be delivered by courier or other means of personal service (including by means of
a nationally recognized courier service or professional messenger service), or sent by telex or
telecopy or mailed first class, postage prepaid, by certified mail, return receipt requested, in
all cases, addressed to:

If to the Company or the Board:

Santarus, Inc.

3721 Valley Centre Drive

Suite 400

San Diego, CA 92130

Attention: Legal Affairs Department

14

 

If to Executive:

Wendell Wierenga

18608 Via Cataria

Rancho Santa Fe, CA 92091

All notices, requests and other communications shall be deemed given on the date of actual receipt
or delivery as evidenced by written receipt, acknowledgement or other evidence of actual receipt or
delivery to the address. In case of service by telecopy, a copy of such notice shall be personally
delivered or sent by registered or certified mail, in the manner set forth above, within three
business days thereafter. Any party hereto may from time to time by notice in writing served as
set forth above designate a different address or a different or additional person to which all such
notices or communications thereafter are to be given.

          (h) Severability. All Sections, clauses and covenants contained in this Agreement are
severable, and in the event any of them shall be held to be invalid by any court, this Agreement
shall be interpreted as if such invalid Sections, clauses or covenants were not contained herein.

          (i) Governing Law and Venue. This Agreement is to be governed by and construed in
accordance with the laws of the State of California applicable to contracts made and to be
performed wholly within such State, and without regard to the conflicts of laws principles thereof.
Except as provided in Sections 5 and 7, any suit brought hereon shall be brought in the state or
federal courts sitting in San Diego, California, the parties hereto hereby waiving any claim or
defense that such forum is not convenient or proper. Each party hereby agrees that any such court
shall have in personam jurisdiction over it and consents to service of process in any manner
authorized by California law.

          (j) Non-transferability of Interest. None of the rights of Executive to receive any
form of compensation payable pursuant to this Agreement shall be assignable or transferable except
through a testamentary disposition or by the laws of descent and distribution upon the death of
Executive. Any attempted assignment, transfer, conveyance, or other disposition (other than as
aforesaid) of any interest in the rights of Executive to receive any form of compensation to be
made by the Company pursuant to this Agreement shall be void.

          (k) Gender. Where the context so requires, the use of the masculine gender shall
include the feminine and/or neuter genders and the singular shall include the plural, and vice
versa, and the word “person” shall include any corporation, firm, partnership or other form of
association.

          (l) Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
Agreement.

          (m) Acceleration of Stock Awards. For purposes of this Agreement, to the extent the
vesting and/or exercisability of any of Executive’s outstanding Stock Awards and/or

15

 

the lapsing of any restrictions with respect to Stock Awards that Executive holds shall be
accelerated pursuant to this Agreement, if any Stock Award had previously been partially exercised
such that an unexercised portion of the Stock Award still remains outstanding as of the date of
such acceleration, the vesting acceleration provisions of this Agreement shall be applied to the
total number of shares subject to such Award that consist of (i) then unvested exercised shares
that were previously acquired upon the partial exercise of such Stock Award, plus (ii) the
remaining unexercised portion of the Stock Award. The acceleration of vesting shall be first
applied toward the unvested previously exercised shares such that no unexercised shares shall vest
on an accelerated basis in accordance with the provisions of this Agreement unless and until all of
the unvested exercised shares subject to such Stock Award have first vested. In addition, the
acceleration of vesting shall be applied to each Stock Award individually.

          (n) Construction. The language in all parts of this Agreement shall in all cases be
construed simply, according to its fair meaning, and not strictly for or against any of the parties
hereto. Without limitation, there shall be no presumption against any party on the ground that
such party was responsible for drafting this Agreement or any part thereof.

          (o) Withholding and other Deductions. All compensation payable to Executive hereunder
shall be subject to such deductions as the Company is from time to time required to make pursuant
to law, governmental regulation or order.

          (p) Section 409A of the Code. The parties acknowledge and agree that, to the extent
applicable, this Agreement shall be interpreted in accordance with, and the parties agree to use
their best efforts to achieve timely compliance with, Section 409A of the Code, and the Department
of Treasury Regulations and other interpretive guidance issued thereunder, including, without
limitation, any such regulations or other guidance that may be issued after the Effective Date.
Notwithstanding any provision of this Agreement to the contrary, in the event that the Company
determines that any amounts payable hereunder would otherwise be taxable to Executive under Section
409A, the Company may adopt such limited amendments to this Agreement and appropriate policies and
procedures, including amendments and policies with retroactive effect, that the Company reasonably
determines are necessary or appropriate to comply with the requirements of Section 409A and thereby
avoid the application of taxes under such Section.

(Signature Page Follows)

16

 

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

	 	 	 	 	 

	SANTARUS, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Gerald T. Proehl
 

	 	 
	Gerald T. Proehl	 	 
	President and Chief Executive Officer	 	 
	 
	 	 	 	 
	/s/ Wendell Wierenga	 	 
	 	 	 
	Wendell Wierenga

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