EXHIBIT 10.7
*** CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN
THIS DOCUMENT (INDICATED BY ASTERISKS) HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER 17 C.F.R. SECTIONS
200.80(B)(4), 200.83 AND 230.406.
This CAPITAL REIMBURSEMENT AGREEMENT (the "Agreement") dated this 19th day
of December, 2003, is entered into by and between Patheon Inc. ("Patheon") and
Santarus, Inc. ("Santarus").
WHEREAS Patheon and Santarus have entered into a manufacturing and supply
agreement (the "MSA") dated the date hereof pursuant to which Patheon will
manufacture commercial supplies of a product known as SAN-05 (a powder for
suspension) ("SAN-05") for Santarus; and
WHEREAS Patheon and Santarus have agreed that in anticipation of the
commercial manufacturing of SAN-05 Patheon will acquire certain equipment and
implement certain facility improvements to address Santarus' packaging capacity
requirements, on the terms and conditions set forth herein (the "Capacity
Expansion Plan");
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties agree as follows:
1. CAPITAL EXPENDITURES
1.1 A detailed description of the packaging equipment (the "Packaging
Equipment") and the facility improvements, including associated
utility upgrades ("Facility Improvements") required to implement the
Capacity Expansion Plan is outlined in Schedule A. The capital
expenditures and related costs (the "Expenditures") associated with
the Facility Improvements and Packaging Equipment is also detailed
in Schedule A.
1.2 Patheon shall pay ***
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1.3 Subject to Sections 5 and 6 hereof, Santarus shall pay ***
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2. EXPENDITURE APPROVAL
Before any Packaging Equipment Expenditures are incurred by Patheon, it
shall first obtain the prior written approval of Santarus for such
Expenditure. Such approval may be obtained by an authorized representative
of Santarus executing the relevant Patheon Capital Appropriation Approval
Form.
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3. TIMELINE
Patheon shall be responsible for *** .
4. REPRESENTATION
Patheon represents that prior to and following the implementation of the
Facility Improvements and the purchase of the Packaging Equipment and
related materials, as well as the purchase of the additional equipment
contemplated by ***
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5. PATHEON REIMBURSEMENT
No later than the *** following the date upon which Patheon has delivered
to Santarus an aggregate of *** of SAN-05 under the terms of the MSA, Patheon
shall pay to Santarus the Reimbursement Amount.
6. TERMS & CONDITIONS WHILE PACKAGING EQUIPMENT IS OWNED BY SANTARUS
Between the date hereof and the date Patheon has paid the Reimbursement
Amount to Santarus:
6.1 Patheon shall operate and use the Packaging Equipment in accordance
with the instructions set forth in the service manual provided by
the manufacturer(s) of the Packaging Equipment, if any.
6.2 Patheon shall conduct routine and preventative maintenance of the
Packaging Equipment.
6.3 Patheon shall indemnify, defend and hold Santarus harmless from and
against any claims, liabilities, damages, or expenses ("Claims") in
connection with any loss, destruction of or damage to the Packaging
Equipment while such Packaging Equipment is situated on Patheon's
premises relating to Patheon's use, operation or possession of the
Packaging Equipment other than those Claims that arise from a defect
in the Packaging Equipment.
6.4 Title and risk of loss to the Packaging Equipment shall remain with
Patheon while the Packaging Equipment is situated on Patheon's
premises.
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6.5 Patheon shall carry adequate insurance for the Packaging Equipment
under its blanket policy covering risk of loss or damage by fire,
extended coverage perils and other risks generally provided for
under such blanket policy.
6.6 In the event that the MSA is terminated or expires prior to the
payment by Patheon of the Reimbursement Amount pursuant to Section
5, ***
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(c) If Santarus desires the return of the Packaging Equipment, then
Santarus shall pay Patheon for all reasonable costs relating to:
i) ***
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ii) ***
7. All dollar amounts expressed herein are U.S. dollars.
8. This Agreement shall be construed and enforced in accordance with the laws
of the State of *** (without regard to principles of conflicts of law).
9. This Agreement and the other agreements referenced herein contain the entire
understanding of the parties with respect to the subject matter herein and
supersedes all previous agreements (oral and written), negotiations and
discussions.
10. The parties may modify or amend the provisions hereof only by an instrument
in writing duly executed by both of the parties.
11. Neither party may assign or otherwise transfer its rights or obligations
hereunder without the prior written consent of the other party.
In witness whereof, the parties have executed this Agreement as of the date
first written
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above.
PATHEON INC. SANTARUS, INC.
By: /s/ Riccardo Treeroce By: /s/ Xxxxxx X. Xxxxxx
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Name: Riccardo Treeroce Name: Xxxxxx X. Xxxxxx
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General Counsel & Senior Vice President
Title: Corporate Administration Title: President & CEO
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SCHEDULE A
CAPACITY EXPANSION PLAN
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