Exhibit 10.1
 
PROMOTION AGREEMENT
by and between
DEPOMED, INC.
and
KING PHARMACEUTICALS, INC.
Dated as of June 27, 2006
 

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

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EXECUTION COPY
PROMOTION AGREEMENT
     This PROMOTION AGREEMENT (this “Agreement”) is made as of June 27, 2006
(the “Effective Date”), by and between Depomed, Inc., a California corporation
(“Depomed”), and King Pharmaceuticals, Inc., a Tennessee corporation (“King”).
Each of Depomed and King is referred to herein individually as a “party” and
collectively as the “parties.”
     WHEREAS, Depomed desires to engage King to promote and market the Product
in the Territory (each as defined below), and King desires to promote and market
the Product, all in accordance with the terms and conditions contained herein;
     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, the parties hereto intending to be legally bound
hereby agree as follows:
ARTICLE I
DEFINITIONS
     As used in this Agreement, the following terms shall have the following
meanings:
     Section 1.1 “1000mg Formulation” has the meaning set forth in
Section 6.8(a).
     Section 1.2 “Act” means the United States Federal Food, Drug and Cosmetic
Act, 21 U.S.C. 301, et. seq., as it may be amended from time to time, and the
regulations promulgated thereunder, including the Generic Drug Act.
     Section 1.3 “AcuForm Patent License” has the meaning set forth in
Section 10.1.
     Section 1.4 “Adverse Drug Experience” means any “adverse drug experience”
as defined or contemplated by 21 C.F.R. 314.80 or 312.32, associated with the
Product.
     Section 1.5 “Adverse Drug Experience Report” means any oral, written or
electronic report of any Adverse Drug Experience transmitted to any Person.
     Section 1.6 “Advertising/Marketing/Educational Expenses” means the direct,
out-of-pocket expenses of directly Promoting the Product and conducting
Educational Programs with respect to the Product, each clearly identified as
such, pursuant to the Launch Plan or an Annual Plan.
Advertising/Marketing/Educational Expenses will include (a) King’s out-of-pocket
costs for Samples incurred as contemplated by Section 6.5, (b) all out-of-pocket
costs for Promotional Materials and training materials, and (c) out-of-pocket
costs for the purchase of the Prescriber Data. Advertising/Marketing/Educational
Expenses will not include (i) any expenses of the King Sales Force or Depomed
Sales Force, (ii) any costs incurred by Depomed with respect to the Depomed
Sales Force, including as described in Section 4.9(g), or (iii) any costs for
the personnel of King or Depomed.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

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     Section 1.7 “Affiliate” means, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by or is under common
control with, such first Person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise.
     Section 1.8 “Agreement” has the meaning set forth in the preamble to this
Agreement.
     Section 1.9 “Agreement Month” means each calendar month during the Term
(including any partial calendar month in the case of the first and last calendar
months of the Term).
     Section 1.10 “Agreement Quarter” means the Initial Agreement Quarter, each
successive period of three months during the Term after the Initial Agreement
Quarter and the Final Agreement Quarter.
     Section 1.11 “Altace Physician List” means the list of physicians or other
health care practitioners to whom King’s sales representatives present
in-person, face-to-face sales presentations of King’s Altace® product, as such
list may be amended from time to time by King.
     Section 1.12 “Annual Plan” has the meaning set forth in Section 4.5.
     Section 1.13 “Baseline Percentage” means the percentage determined by
dividing (a) the total amount of unit sales for Product based on prescriptions
written by Professionals on the Depomed Physician List during the two complete
Agreement Quarters prior to the delivery by Depomed of its intention to commence
Promotion of the Product in the Territory pursuant to Section 4.9, by (b) the
total amount of unit sales of Product based on all prescriptions written during
such two complete Agreement Quarters, based on Prescriber Data for such two
complete Agreement Quarters; as it may be amended pursuant to Section 4.9.
     Section 1.14 “BLS” means Biovail Laboratories International SRL.
     Section 1.15 “BLS Agreements” means that certain Amended and Restated
License Agreement, dated as of December 13, 2005, by and between Depomed and
BLS, the BLS Supply Agreements, and any other agreements between Depomed and BLS
with respect to the Product, including the 1000mg Formulation.
     Section 1.16 “BLS Supply Agreements” means that certain Manufacturing
Transfer Agreement, dated as of December 13, 2005, by and between Depomed and
BLS and that certain Supply Agreement, dated as of December 13, 2005, between
Depomed and BLS.
     Section 1.17 “BLS Fees” means, for any period, the sum of (a) [***] for
such period, and (b) [***] for such period[***] but [***] such amount is payable
(and is paid in or subsequent to such period) [***] In the event the amounts
payable under either such agreement are reduced or terminate, the BLS Fees will
correspondingly be reduced or terminate.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.
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     Section 1.18 “cGMP” shall mean current “Good Manufacturing Practices” as
such term is defined from time to time by the FDA or other relevant Governmental
Authority having jurisdiction over the manufacture or sale of the Product
pursuant to its regulations, guidelines or otherwise.
     Section 1.19 “Co-Chairs” has the meaning set forth in Section 3.2.
     Section 1.20 “COGS” means, for any period, Depomed’s expenses for cost of
goods sold (calculated in accordance with Section 7.2(d)) for Product in the
Territory for such period, including any expenses incurred directly in
connection with the distribution of the Product in the Territory, multiplied by
the Promotion Percentage for such period.
     Section 1.21 “Combination Product” has the meaning set forth in
Section 13.2.
     Section 1.22 “Combination Product License” has the meaning set forth in
Section 13.1(a).
     Section 1.23 “Confidentiality Agreement” means that certain Confidentiality
Agreement, dated as of February 21, 2006, between Depomed and King.
     Section 1.24 “Control” or “Controlled” means, with respect to patents,
know-how or other intellectual property rights of any kind, the possession by a
party of the ability to grant a license or sublicense of such rights without the
payment of additional consideration and without violating the terms of any
agreement or arrangement between such party and any Third Party.
     Section 1.25 “DDMAC” means the FDA’s Division of Drug Marketing,
Advertising and Communications.
     Section 1.26 “Depomed” has the meaning set forth in the preamble to this
Agreement.
     Section 1.27 “Depomed Net Sales” means, for a particular period, Net Sales
for such Period, multiplied by the Depomed Percentage for such period.
     Section 1.28 “Depomed Percentage” means, for a particular period, the
difference of (a) the percentage determined by dividing (i) the total amount of
unit sales for Product based on prescriptions written during such period by
Professionals on the Depomed Physician List, by (ii) the total amount of unit
sales of Product based on all prescriptions written during such period, in each
case based on Prescriber Data for the applicable period; minus (b) the Baseline
Percentage; provided that the Depomed Percentage shall not be less than zero.
     Section 1.29 “Depomed Physician List” means the list of Professionals to
whom the Depomed Sales Force may present Details, as such list may be amended
from time to time as contemplated by this Agreement; provided that the list must
conform to the requirements of Section 4.9.
     Section 1.30 “Depomed Promotional Materials” has the meaning set forth in
Section 4.9(f).

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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     Section 1.31 “Depomed Sales Force” means the field force of Sales
Representatives employed or contracted by Depomed.
     Section 1.32 “Depomed Supply Failure” means (a) with respect to the 500mg
formulation of the Product, Depomed’s failure to fill orders from its
wholesalers and distributors for the 500mg formulation of the Product equal to
or in excess of (i) [***] percent of the aggregate amount of 500mg formulation
of the Product ordered during any period of three consecutive Agreement Months
that does not exceed the then-current Volume Forecast for such period, or (ii)
[***] percent of the amount of 500mg formulation of the Product ordered for
three consecutive Agreement Months that does not exceed the then-current Volume
Forecast for such period; and (b) with respect to the 1000mg Formulation,
Depomed’s failure to fill orders from its wholesalers and distributors for the
1000mg Formulation equal to or in excess of (i) [***] percent of the aggregate
amount of 1000mg Formulation ordered during any period of six consecutive
Agreement Months that does not exceed the then-current Volume Forecast for such
period, or (ii) [***] percent of the amount of 1000mg Formulation ordered for
twelve consecutive Agreement Months that does not exceed the then-current Volume
Forecast for such period; provided, in each case, that (x) any back-up
manufacturing rights in favor of Depomed pursuant to any exclusive supply
arrangement relating to the applicable formulation of the Product are applicable
as a result of such supply failure, and (y) Depomed is not diligently exercising
such back-up manufacturing rights.
     Section 1.33 “Depomed Trademarks” means (a) the GlumetzaTM trademark, for
which Depomed’s licensor has sought registration for in the United States Patent
and Trademark Office, (b) the AcuFormTM trademark, for which Depomed has sought
registration for in the United States Patent and Trademark Office, and
(c) Depomed®, and, in each case, all related domain names and other trademark
related rights. The Depomed Trademarks are attached hereto as Schedule 1.33.
     Section 1.34 “Detail” means an in-person, face-to-face sales presentation
of the Product made by a Sales Representative to a Professional, including a P1
Detail, P2 Detail, or P3 Detail.
     Section 1.35 “Educational Programs” means any activities undertaken with
respect to the medical education of Professionals and customers regarding the
Product and the market or funded by unrestricted educational grants, including
educational programs and seminars and continuing medical education materials.
     Section 1.36 “Effective Date” has the meaning set forth in the preamble to
this Agreement.
     Section 1.37 “Evaluation Period” has the meaning set forth in Section 13.2.
     Section 1.38 “Executive Officers” means the Chief Operating Officer of
Depomed (or, if there is no such officer, its President or Chief Executive
Officer) and the Chief Commercial Officer of King (or, if there is no such
officer, its President or Chief Executive Officer).
     Section 1.39 “FDA” means the United States Food and Drug Administration or
any successor agency performing comparable functions in the Territory.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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     Section 1.40 “Final Agreement Quarter” means the period commencing on the
first day following the last full Agreement Quarter during the Term and ending
on the last day of the Term.
     Section 1.41 “Force Majeure Event” has the meaning set forth in
Section 16.6.
     Section 1.42 “GAAP” has the meaning set forth in Section 7.2(c).
     Section 1.43 “Generic Drug Act” has the meaning set forth in
Section 9.1(j).
     Section 1.44 “Governmental Authority” shall mean any court, agency,
authority, department, regulatory body or other instrumentality of any
government or country or of any national, federal, state, provincial, regional,
county, city or other political subdivision of any such government or any
supranational organization of which any such country is a member, which has
competent and binding authority to decide, mandate, regulate, enforce, or
otherwise control the activities of the parties contemplated by this Agreement.
     Section 1.45 “Gross Margin” means, for a particular period, (A) Promotion
Net Sales for such period minus (B) all BLS Fees and COGS for such period.
     Section 1.46 “Initial Agreement Quarter” means the period commencing on the
Effective Date and ending on September 30, 2006.
     Section 1.47 “JAMS” has the meaning set forth in Section 3.5(b).
     Section 1.48 “JCC” has the meaning set forth in Section 3.1.
     Section 1.49 “King” has the meaning set forth in the Preamble to this
Agreement.
     Section 1.50 “King CCC” means King’s Copy Clearance Committee.
     Section 1.51 “King Manufacturing Notice” has the meaning set forth in
Section 6.6.
     Section 1.52 “King Physician List” means the list of Professionals to whom
the King Sales Force presents Details agreed to in writing prior to the
Effective Date, as such list may be amended from time to time as part of the
Annual Plan or in accordance with Section 4.1(d).
     Section 1.53 “King Sales Force” means the field force of Sales
Representatives employed or contracted by King.
     Section 1.54 “King Trademarks” means the trademarks set forth on Schedule
1.54, including the “King Pharmaceuticals” trademark and associated design
     Section 1.55 “Launch Period” means the period beginning on the Effective
Date and ending on December 31, 2006.
     Section 1.56 “Launch Plan” means the plan and schedule for the commercial
launch of the Product in the Territory during the Launch Period, including the
parties’ responsibilities for the activities associated with such commercial
launch of the Product, a budget for the activities

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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to be undertaken in connection with such commercial launch (taking into account
Advertising/Marketing/Educational Expenses incurred by Depomed prior to the
Effective Date), and the parties’ responsibilities for the payment of such
budgeted expenses. The initial Launch Plan describing a summary of the plan and
schedule for commercial launch is attached hereto as Schedule 1.56, which plan
will be amended by the JCC in accordance with Section 4.5.
     Section 1.57 “Launch Promotional Materials” has the meaning set forth in
Section 4.4(c).
     Section 1.58 “Legal Requirements” means laws, rules and regulations of any
Governmental Authority.
     Section 1.59 “Metformin Product Rights” has the meaning set forth in
Section 13.2.
     Section 1.60 “Minimum Sales Force Level” has the meaning set forth in
Section 4.3(a).
     Section 1.61 “NDA” means any “new drug application” (as such term is used
under the Act) filed or acquired by Depomed or any Affiliate with the FDA with
respect to the Product and all subsequent submissions, supplements and
amendments thereto, including NDA No. 21-748 filed with the FDA on April 27,
2004 (as such NDA may be amended or supplemented subsequent to the Effective
Date).
     Section 1.62 “Negotiation Period” has the meaning set forth in
Section 13.2.
     Section 1.63 “Net Sales” means, for any period, the actual gross amount
invoiced on sales of Product in the Territory by Depomed, its Affiliates,
licensees, sublicensees and assigns to independent, unrelated Third Parties
during such period in bona fide arms’ length transactions, less the following
deductions, so long as they conform with the requirements of Section 6.4,
allowed and taken by Third Parties and not otherwise recovered by or reimbursed
to Depomed, its Affiliates, licensees, sublicensees or assigns: (a) freight,
insurance (but only insurance with respect to shipping the Product), and other
transportation charges to the extent added to the sales price and set forth
separately as such on the total amount invoiced; (b) any sales, use,
value-added, excise taxes or duties or allowances on the selling price of
Product which fall due and are paid as a consequence of such sale;
(c) chargebacks, trade, quantity and cash discounts and rebates to the extent
customary in the trade, including governmental rebates, in each case, accrued in
accordance with GAAP; and (d) allowances or credits, including allowances or
credits to customers on account of rejection, defects or returns of the Product
or because of a retroactive price reduction, actually taken by customers that
are customary in the trade. Net Sales shall not include (a) a sale or transfer
to an Affiliate, licensee, sublicensee or assign of King or Depomed or if done
for clinical, regulatory or governmental purposes where no consideration is
received; but the resale by such Affiliate, licensee, sublicensee or assign of
King or Depomed shall be considered a sale of such Product; or (b) a sale to a
wholesaler or distributor during the Launch Period in connection with the
initial stocking of the Product with respect to which (x) the invoice relating
to such sale has not been paid as of the date on which a report setting forth
Net Sales for such period is due pursuant to this Agreement, and (y) the
wholesaler or distributor has the right to return the Product as of the date on
which a report setting forth Net Sales for such period is due pursuant to this
Agreement.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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     Section 1.64 “Order” means any award, decision, injunction, judgment,
decree, order, ruling, or verdict entered, issued, made, or rendered by any
Governmental Authority or by any arbitrator.
     Section 1.65 “P1 Detail” means a Detail where the Product is the first item
presented and comprises more than one-half of the presentation time.
     Section 1.66 “P2 Detail” means a Detail where the Product is the second
item presented and comprises at least one-third of the presentation time.
     Section 1.67 “P3 Detail” means a Detail where the Product is not the first
item presented and comprises at least 15% of the presentation time.
     Section 1.68 “PDE” means a Primary Detail Equivalent, and is equivalent to
any of the following: (a) one P1 Detail; (b) two P2 Details; or (c) five P3
Details. Details other than P1 Details, P2 Details and P3 Details will have no
effect on any calculation of PDEs.
     Section 1.69 “PDE Cost” means $[***] per PDE.
     Section 1.70 “PDE Minimum” has the meaning set forth in Section 8.2(a)(i).
     Section 1.71 “PDE Shortfall” has the meaning set forth in
Section 8.2(a)(i).
     Section 1.72 “PDMA” means the Prescription Drug Marketing Act, as amended,
and the rules and regulations promulgated thereunder.
     Section 1.73 “Person” means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Authority.
     Section 1.74 “Prescriber Data” means data provided by a Third Party which
measures prescriptions filled for Product (by individual prescriber) in the
Territory during a specified time period, from a source mutually agreed in
writing by the parties (it being understood that IMS Health Incorporated is a
source agreeable to the parties).
     Section 1.75 “Product” means any once-daily oral tablet formulation
containing metformin as the sole active pharmaceutical ingredient, including the
1000mg Formulation.
     Section 1.76 “Product Complaints” means any report concerning the quality,
purity, quantity, weight, pharmacologic activity, labeling, identity or
appearance of the Product.
     Section 1.77 “Professional” means a physician or other health care
practitioner who is permitted by law to prescribe Product.
     Section 1.78 “Promote,” “Promotional” and “Promotion” mean, with respect to
the Product, any activities undertaken to encourage sales or use of the Product,
including Details, product sampling, detail aids, drop-offs, coupons, discount
cards, journal advertising, direct mail

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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programs, direct-to-consumer advertising, convention exhibits and all other
forms of marketing, advertising, public relations or promotion.
     Section 1.79 “Promotion Commencement Date” has the meaning set forth in
Section 4.1(c).
     Section 1.80 “Promotion Fees” has the meaning set forth in Section 7.1(a).
     Section 1.81 “Promotion Net Sales” means Net Sales multiplied by the
Promotion Percentage.
     Section 1.82 “Promotion Percentage” means, for a particular period, 100%
minus the Depomed Percentage for such period, if any Depomed Net Sales occur in
such period.
     Section 1.83 “Promotional Effort” has the meaning set forth in
Section 4.1(a).
     Section 1.84 “Promotional Materials” has the meaning set forth in
Section 4.4(a).
     Section 1.85 “Proprietary Information” means any proprietary or
confidential information communicated from one party to the other in connection
or relating to this Agreement, which is identified as confidential or
proprietary, or which the other party knows or has reason to know is
confidential or proprietary, including the Technology and financial, marketing,
business, technical and scientific information or data, information related to
King’s compensation of its Sales Representatives, information contained within
the Annual Plan and Launch Plan, and the information described in Section 4.6,
whether communicated in writing, orally or electronically. Proprietary
Information shall not include information that the receiving party can show
through written documentation:
     (a) at the time of disclosure, is publicly known;
     (b) after the time of disclosure, becomes part of the public domain, except
by breach of an agreement between the disclosing party or any Affiliate thereof
and the receiving party or any Affiliate thereof;
     (c) is or was in the possession of the receiving party or any Affiliate
thereof at the time of disclosure by the disclosing party and was not acquired
directly or indirectly from the disclosing party or any Affiliate thereof or
from any other party under an agreement of confidentiality to the disclosing
party or any Affiliate thereof; and
     (d) is or was developed by the receiving party or its Affiliates without
use of or reference to the other party’s Proprietary Information.
     Section 1.86 “Reconciliation Report” has the meaning set forth in
Section 7.5(d).
     Section 1.87 “Regulatory Approval” means any and all consents or other
authorizations or approvals required from a Governmental Authority to market and
sell the Product in the Territory, but excluding any form of reimbursement
approval.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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     Section 1.88 “Safety Stock” has the meaning defined in Section 6.1
     Section 1.89 “Sales Representatives” means sales representatives employed
by King or Depomed, or a Third Party engaged by King or Depomed, to Promote the
Product, who have been trained and equipped to Promote the Product in accordance
with this Agreement. In the case of King, Third Parties may only be engaged as
Sales Representatives if they are full-time contractors of King, exclusive to
King, and carry King’s business card.
     Section 1.90 “Samples” has the meaning set forth in Section 6.5.
     Section 1.91 “Serious Adverse Drug Experience” means any Adverse Drug
Experience, including those subject to expedited reporting as defined in the
regulations cited below, that is fatal or life-threatening, requires
hospitalization or prolongation of existing hospitalization, results in
persistent or significant disability or incapacity, is a congenital
anomaly/birth defect, or is of comparable medical significance or any other
event which would constitute a “serious” Adverse Drug Experience pursuant to the
terms of 21 C.F.R. 314.80 or 312.32.
     Section 1.92 “Serious Adverse Drug Experience Report” means any Adverse
Drug Experience Report that involves a Serious Adverse Drug Experience.
     Section 1.93 “Standard Cost” means, (a) with respect to COGS, the cost
assigned from time to time, but at least annually, by Depomed to use in
calculating Gross Margin under Section 7.1(a) for the purpose of facilitating
timely reporting of Gross Margin; and, (b) with respect to Samples, the cost
assigned from time to time, but at least annually, by Depomed to use in
calculating Advertising/Marketing/Educational Expenses pursuant to
Section 4.5(e); each determined in accordance with Section 7.2(e).
     Section 1.94 “Subcontracting” means subcontracting or sublicensing a
party’s rights or obligations hereunder (a) pursuant to which a Third Party will
manufacture the Product; or (b) pursuant to which a Third Party Sales
Representative is engaged to Promote the Product. “Subcontractor” means the
Third Party with whom the Subcontracting agreement is entered into.
     Section 1.95 “Technology” means all pharmacological, toxicological,
preclinical, clinical, technical or other information, data and analysis and
know-how relating to the registration, manufacture, packaging, use, marketing
and sale of the Product and all proprietary rights relating thereto owned by
Depomed or its Affiliates or to which Depomed or its Affiliates has rights so as
to be able to license, and relating or pertaining to the Product.
     Section 1.96 “Term” has the meaning set forth in Section 8.1.
     Section 1.97 “Territory” means the United States, including its possessions
and Puerto Rico.
     Section 1.98 “Third Party” means any Person other than King or Depomed or
their respective Affiliates.
     Section 1.99 “Unit” means a single tablet of the Product.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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     Section 1.100 “United States Bankruptcy Code” shall mean the U.S.
Bankruptcy Code, 11 U.S.C. §§ 101, et seq.
     Section 1.101 “Volume Forecast” has the meaning set forth in Section 6.3.
ARTICLE II
GRANT
     Section 2.1 Grant of Promotion Rights. During the Term, subject to the
terms and conditions of this Agreement, Depomed hereby grants to King and its
Affiliates and King and its Affiliates hereby accept a co-exclusive right to
Promote the Product under the Depomed Trademarks in the Territory together with
Depomed and its Affiliates only, on the terms and subject to the conditions set
forth herein. Depomed agrees that its and its Affiliates’ right to Promote the
Product is limited to the rights set forth in Section 4.9.
     Section 2.2 Sublicense. Except pursuant to Section 16.9 or in connection
with the use of Third Party Sales Representatives, King shall not assign,
subcontract or otherwise transfer or delegate any of its rights or obligations
under this Agreement without the express written consent of Depomed, which
consent may be withheld by Depomed in its sole discretion.
     Section 2.3 Limitation on Metformin Promotion. Except as expressly
contemplated by this Agreement (including Article XIII hereof) and subject to
Section 13.1 hereof, King shall not promote, market or distribute any product
containing metformin hydrochloride as the sole active ingredient in the
Territory during the Term of this Agreement, other than the Product.
     Section 2.4 Retention of Rights. Depomed retains and shall retain all
proprietary and property interests in the Product until the point of sale or, in
the case of Samples, until delivered to King as contemplated by Section 6.5.
King will not have nor represent that it has any control or proprietary or
property interests in the Product, except for the licenses and rights
specifically granted hereunder. Except as expressly set forth herein, nothing
contained herein shall be deemed to grant King, by implication, a license or
other right or interest in any patent, trademark or other similar property of
Depomed or its Affiliates, except as may be necessary for King to Promote the
Product pursuant to this Agreement or to manufacture the Product in accordance
with Section 6.6. Except as expressly set forth herein, nothing contained herein
shall be deemed to grant Depomed, by implication, a license or other right or
interest in any patent, trademark or other similar property of King or its
Affiliates, except as may be necessary for Depomed to Promote the Product
pursuant to this Agreement.
ARTICLE III
JOINT COMMERCIALIZATION COMMITTEE
     Section 3.1 Establishment. The parties agree to establish, for the purposes
specified herein, a Joint Commercialization Committee (the “JCC”). The parties
acknowledge and agree that the JCC does not have the power to amend, modify or
waive any of the terms or conditions of this Agreement.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

10

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     Section 3.2 Joint Commercialization Committee. The JCC shall be established
by the parties and shall be comprised of eight members, four of whom shall be
appointed by Depomed and four of whom shall be appointed by King. Each party’s
respective initial appointments to the JCC are set forth on Schedule 3.2 hereto.
A party may change any of its representatives at any time if a new person is
appointed to any of the foregoing positions by giving written notice to the
other party. The total number of JCC members may be changed by unanimous vote of
the JCC from time to time as appropriate; provided, that the JCC shall in all
cases be comprised of an equal number of members from each of Depomed and King.
King and Depomed each will designate one representative of such party to serve
as co-chairs of the JCC (the “Co-Chairs”). The members appointed to the JCC by
each party shall be employees of such party and shall be vested with appropriate
decision-making authority and power by such party. The Chief Executive Officers
of King and Depomed, the Chief Operating Officer of Depomed, and the Chief
Commercial Officer of King shall not be members of the JCC.
     Section 3.3 JCC Responsibilities. Except as otherwise set forth herein, the
JCC shall direct all Promotional and marketing activities for the Product
hereunder. The responsibilities of the JCC shall be exercised consistent with
this Agreement and shall include, but shall not be limited to:
     (a) reviewing and approving modifications to the Launch Plan (provided that
no such modification may increase or reduce the
Advertising/Marketing/Educational Expenses allocated to the parties under the
Launch Plan, or modify any call plan or sampling plan set forth in the Launch
Plan, without both parties’ written approval).
     (b) reviewing and approving the Annual Plan as contemplated by Section 4.5,
including developing the Advertising/Marketing/Educational Expenses associated
with the Promotion activities under the Annual Plan;
     (c) monitoring and reviewing compliance with the Annual Plan and the Launch
Plan;
     (d) reviewing and approving any modifications to the Annual Plan to address
market or Product-related issues and opportunities (provided that, without the
written approval of both parties, such modifications do not (i) result in a
decrease of more than 10% of the annual budget set forth in the Annual Plan, or
(ii) result in an increase of more than 5% of the
Advertising/Marketing/Educational Expenses allocated to either party under the
Annual Plan);
     (e) developing Product Promotion strategies and objectives, including
Product positioning, messaging and branding, and reviewing and approving all
material communications to Third Parties related to commercial matters for the
purpose of Promoting the Product;
     (f) monitoring the Depomed Sales Force call plan for coordination with the
King Sales Force;
     (g) monitoring advertising placement and market responses, including any
post-implementation reviews;
     (h) reviewing and approving any Volume Forecasts and Sample forecasts;

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

11

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     (i) establishing pricing for the Product, including the timing of any
pricing changes;
     (j) reviewing, but not approving, sales incentive compensation for the King
Sales Force related to the Product;
     (k) establishing contracting guidelines for the distribution of the
Product;
     (l) overseeing the coordination of the parties’ efforts in respect of
managed care marketing strategies;
     (m) proposing any new packaging design for the Product (subject to
Depomed’s approval, and followed by and subject to applicable FDA and other
Legal Requirements);
     (n) reviewing and approving reductions to the King Physician List (provided
that, without the approval of both parties, (i) the King Physician List may not
be reduced prior to the second anniversary of the Promotion Commencement Date,
and (ii) the number of Professionals on the King Physician List may not be
decreased such that the number of Professionals on the King Physician List is
less than [***]% of the number of Professionals on the King Physician List as of
the Effective Date); and
     (o) such other functions as may be mutually agreed upon by the parties from
time to time.
For the avoidance of doubt, (i) the JCC shall not have any review or approval
rights with respect to any matters relating to the development of the Product
and (ii) any decisions of the JCC with respect to matters which relate to
Regulatory Approval for the Product shall require Depomed’s prior written
consent.
     Section 3.4 Meetings of the JCC. Meetings of the JCC may be called by the
Co-Chairs of the JCC from time to time and, upon no less than five days’ notice,
shall otherwise be called when requested by a party; provided, however, that
meetings of the JCC shall be held on at least a monthly basis during the first
six months of the Term, and on at least a quarterly basis thereafter. If
possible, the meetings shall be held in person or where appropriate, by video or
telephone conference. Unless otherwise agreed, the location of any in-person
meetings of the JCC shall alternate between the corporate offices of the
parties. The parties shall determine the form of the meetings. Subject to
Section 3.5, decisions shall be made unanimously, each party having one (1) vote
regardless of the number of representatives present or voting; provided, that no
such vote shall be valid unless each party is represented by at least two
members either by written proxy or actual presence at the meeting at which the
vote is taken. Subject to appropriate confidentiality undertakings where
applicable, each party shall have the right, upon written notice to the other
party, to have present at JCC meetings additional, non-voting participants (not
to exceed ten such participants at any JCC meeting without the consent of the
other party). Such additional participants shall not be deemed to be, or have
any rights or responsibilities of, a member of the JCC. The parties shall cause
their respective representatives on the JCC to use their reasonable efforts to
resolve all matters presented to them as expeditiously as possible. The party
hosting any meeting shall propose the agenda for the meeting and appoint a
secretary to the meeting who shall record the minutes of the meeting. Such
minutes shall be circulated to the parties promptly following the meeting for
review and comment and for unanimous ratification

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

12

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by both parties. Each party shall bear its own travel and related costs incurred
in connection with participation in the JCC.
     Section 3.5 JCC Disputes.
     (a) In the event that the JCC is, after a period of ten days, unable to
make a decision due to a lack of required unanimity, either party may submit the
matter being considered to the Executive Officers for a joint decision. In such
event, either Co-Chair of the JCC, by written notice to the other party, shall
formally request the dispute be resolved by the Executive Officers, specifying
the nature of the dispute with sufficient detail to permit adequate
consideration by the Executive Officers. The Executive Officers shall diligently
and in good faith attempt to resolve the referred dispute expeditiously and, in
any event, within fifteen days of receiving such written notification.
     (b) In the event that the Executive Officers are unable to reach a
resolution of any referred dispute after good faith negotiations during the
fifteen-day period referred to in Section 3.5(a) above and in the event such
dispute is not related to compliance with this Agreement, regulatory matters, or
the validity, breach or interpretation of this Agreement, either party may
commence mediation within fifteen days after the conclusion of such fifteen-day
period by providing to the other party a written request for non-binding
mediation, setting forth the subject of the dispute and the relief requested (a
“Mediation Notice”). The parties will cooperate with Judicial Arbitration and
Mediation Services (“JAMS”) and with one another in selecting a mediator from
JAMS’ panel of neutrals, and in scheduling the mediation proceedings. The
parties shall endeavor to conclude any mediation under this Section 3.5 within
thirty days after delivery by either party of Mediation Notice. The parties
covenant that they will participate in the mediation in good faith and that they
will share equally in its costs; provided that each party will be responsible
for its own attorney’s fees. Either party may seek equitable relief prior to the
mediation to preserve the status quo pending the completion of that process.
Except for such an action to obtain equitable relief, neither party may commence
a civil action with respect to the matters submitted to mediation until after
the completion of the initial mediation session, or thirty days after delivery
of the Mediation Notice, whichever occurs first.
     (c) Any disputes referred to the Executive Officers for resolution pursuant
to this Section 3.5 shall not be subject to any dispute resolution mechanism or
procedure other than pursuant to this Section 3.5.
ARTICLE IV
PRODUCT PROMOTION
     Section 4.1 Product Promotion.
     (a) Subject to applicable Legal Requirements, as well as the provisions of
this Agreement, King shall, from and after the Promotion Commencement Date, at
its sole expense, use commercially reasonable efforts to Promote the Product
within the Territory in accordance with the Launch Plan or Annual Plan (the
“Promotional Effort”). For purposes of the preceding sentence, King’s
commercially reasonable efforts shall mean, until [***], at least the same

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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degree of effort (including with respect to the reach and frequency of Details)
that King would use for the Promotion of any of King’s products that are
promoted in the [***], are of a similar market size and patent life, and
represent a similar commercial opportunity; thereafter, King will apply the same
standard, except that it may fulfill its obligations by Promoting the Product in
the [***]. All statements, core selling messages and materials to be utilized by
King to Promote the Product shall be consistent in all material respects with
the Annual Plan and the Launch Plan. King will cause the King Sales Force and
King employees and agents acting on King’s behalf to comply with this Agreement
and all applicable Legal Requirements in connection with the Promotion of the
Product. It is understood, and King agrees, that it will be accountable for the
acts or omissions of the King Sales Force and its employees and agents to the
extent such acts or omissions fail to comply with King’s obligations under this
Agreement.
     (b) From and after the Promotion Commencement Date, King shall perform at
least [***] PDEs per calendar year, with such amount prorated over the initial
and final calendar years of the Term if either such year is a partial year. In
fulfilling its obligations under this Section 4.1(b), King will perform [***],
as follows: King will perform no less than an average of [***], with such reach
and frequency as the JCC determines as part of the Annual Plan each year. The
determination of the [***] will be based on [***] used by King with respect to
[***]; provided that the [***] by King will be [***] will be deemed the [***]
Notwithstanding the foregoing, the parties acknowledge and agree that during the
first month following the Commencement Date, King will be building its
Promotional Efforts.
     (c) King shall commence (the date of such commencement, the “Promotion
Commencement Date”) Promotion (including Details by the King Sales Force) of the
Product in accordance with this Agreement and the performance of the other
obligations contained herein that are required to be performed from and after
the Promotion Commencement Date as soon as practicable following the date
hereof, but no later than September 5, 2006, or as soon thereafter as the
Product (including Samples) is available in commercial quantities reasonably
adequate to support the commercial launch of the Product in the Territory. The
parties agree to cooperate with each other in good faith in furtherance of the
preceding sentence.
     (d) Any Professional on the King Physician List who does not receive [***]
Detail prior to the end of the Launch Period will be removed from the King
Physician List at the end of the Launch Period. From time to time, King may
Promote the Product to Professionals who are not on the King Physician List or
the Depomed Physician List. At such time as King conducts [***] Details to any
such Professional during a six-month period, such Professional will
automatically be added to the King Physician List.
     Section 4.2 Representations to Customers. King will not make any false or
misleading representations to Professionals, customers or others regarding
Depomed or the Product and will not make any representations, warranties or
guarantees with respect to the specifications, features or capabilities of the
Product that are not consistent with the applicable then-current FDA approved
labeling, package insert or other documentation accompanying or describing the
Product, including Depomed’s standard limited warranty and disclaimers. King
agrees to undertake timely and complete corrective action for any deviations
from this Section 4.2, subject to discussion and review by Depomed’s regulatory
affairs and quality assurance department.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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     Section 4.3 Staffing; Training.
     (a) King agrees that from and after the Promotion Commencement Date, the
King Sales Force will be staffed with at least [***] full-time Sales
Representatives (subject to vacancies consistent with average vacancy rate
experienced by King across its total sales force) who are actively promoting the
Product in accordance with the Launch Plan or Annual Plan (the “Minimum Sales
Force Level”); provided that King may meet such requirement to actively promote
the Product by promoting the Product through P2 Details and P3 Details.
Throughout the remainder of the Term, King shall use its commercially reasonable
efforts to ensure that the number of Sales Representatives comprising the King
Sales Force meets or exceeds the Minimum Sales Force Level, including by
promptly filling all vacant positions in the King Sales Force resulting from
resignations or terminations.
     (b) King shall be solely responsible for all costs and expenses of
compensating its Sales Representatives. Consistent with applicable Legal
Requirements, King shall pay incentive compensation to its Sales Representatives
with respect to the Product in accordance with King’s incentive compensation
plan for King’s own products; it being understood that, (i) through [***], King
shall determine the target incentive payment for the Product in a manner
consistent with the way in which King determines the target incentive payment
for pharmaceutical drug products that are promoted in the [***], are of a
similar market size and patent life, and represent a similar commercial
opportunity; and (ii) thereafter, King shall determine the target incentive
payment for the Product in a manner consistent with the way in which King
determines the target incentive payment for pharmaceutical drug products
promoted by King that are of a similar market size and patent life, and
represent a similar commercial opportunity. King shall notify its Sales
Representatives prior to the Promotion Commencement Date, or coinciding with the
launch of the Product and consistent with its procedures for King’s other
products, of the total potential incentive compensation for the Product.
Promptly after the adoption by King of an incentive compensation payment plan
with respect to the Product pursuant to this Agreement and any material
amendments thereto, King shall provide to Depomed [***] for the Product pursuant
to such plan.
     (c) Depomed shall make available to King any training materials created by
Depomed prior to the Effective Date at Depomed’s out-of-pocket cost for such
materials. In consultation with Depomed, King shall develop, [***], training
materials for its Sales Representatives in other media or forms provided that
such materials shall be subject to Depomed’s review as Promotional Materials as
provided in Section 4.4. King shall, at its own expense prior to the Promotion
Commencement Date, train its Sales Representatives using such training
materials, the other Promotional Materials and such programs as King shall deem
appropriate that are in compliance with King’s obligations hereunder and all
other Legal Requirements and that have been approved by the JCC. Such programs
shall include training with respect to reporting Adverse Drug Experiences and
technical complaints. After the initial training, King shall periodically
provide additional training to each of its Sales Representative, and shall
update its training materials as appropriate in connection with such additional
training, in accordance with this Section 4.3.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

15

--------------------------------------------------------------------------------

 

     Section 4.4 Promotional Materials; Educational Materials.
     (a) Subject to Sections 4.4(b), 4.4(c) and 4.9, King shall, [***], create,
develop, produce or otherwise obtain, and utilize sales, promotional,
advertising, marketing, educational and training materials (“Promotional
Materials”) which are necessary to support fully the Promotional Effort for the
Product. Such Promotional Materials may include, by way of example, detailing
aids; leave items; journal advertising; educational programs; formulary binders;
appropriate reprints and reprint carriers; product monographs; patient support
kits; convention exhibit materials; direct mail; market research survey and
analysis; training materials; and scripts for telemarketing and teleconferences.
All Promotional Materials used by the King Sales Force or bearing the King
Trademarks will be subject to the review and approval of the King CCC. All
Promotional Materials developed by King hereunder shall prominently display such
Depomed Trademark(s) as shall be specified by Depomed to King following its
review of the applicable prototype in accordance with Section 4.4(b).
     (b) Prior to the use thereof, King shall provide to Depomed a prototype of
any Promotional Materials created by King for review. Depomed shall notify King
of any objections it has to such prototype and the basis therefor as soon as
reasonably practicable, but no later than ten business days following its
receipt thereof (five business days during the Launch Period). King shall modify
such Promotional Materials to the extent necessary to resolve any objections
made by Depomed to such Promotional Materials on the grounds that such
Promotional Materials are inconsistent with any Legal Requirements or this
Agreement and shall in good faith consider and address any of Depomed’s other
objections. The final version of the Promotional Materials approved by the King
CCC shall be provided to Depomed for its review and approval to confirm their
consistency with the prototype approved by Depomed and the resolution of
Depomed’s objections in accordance with this Section 4.4(b), which review and
approval shall occur, as soon as reasonably practicable, but no later than ten
business days (five business days during the Launch Period) following its
receipt by Depomed. Upon approval, the Promotional Materials may be produced in
quantity, and King shall provide Depomed with the requisite number of copies of
the final printed form in a timely manner so as to allow Depomed to satisfy its
obligation to file such materials with the FDA prior to the first use of the
Promotional Materials, and Depomed will make such filing with the FDA within
five business days of its receipt of such copies.
     (c) Notwithstanding the provisions of Section 4.4(a), Depomed shall
maintain responsibility for the creation and development of Promotional
Materials to be utilized in connection with the commercial launch of the Product
(the “Launch Promotional Materials”). Depomed shall provide to King prototypes
of all Launch Promotional Materials for the review and approval of the King CCC.
King shall notify Depomed of any objections it has to such prototype and the
basis therefor within five business days following its receipt thereof. Depomed
shall modify such Promotional Materials to the extent necessary to resolve any
objections made by King to such Promotional Materials on the grounds that such
Promotional Materials are inconsistent with any Legal Requirements or this
Agreement, and shall in good faith consider and endeavor to resolve and address
any of King’s other objections. The final version of the Launch Promotional
Materials shall be provided to King for the review and approval of the King CCC
to confirm their consistency with the prototype approved by King and the
resolution of King’s objections in accordance with this Section 4.4(c), which
review and

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

16

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approval shall occur, as soon as reasonably practicable, but no later than five
business days following its receipt by Depomed. On or prior to the Promotion
Commencement Date, Depomed shall deliver to King all King-approved Launch
Promotional Materials created by Depomed in its inventory, less a reasonable
amount thereof necessary to support Promotion efforts undertaken by Depomed. The
Launch Promotional Materials supplied to King under this Section 4.4(c) shall be
delivered to a single location specified by King in writing prior to such
delivery. Depomed hereby grants to King the non-exclusive right, during the
Term, to use the Launch Promotional Materials supplied to King pursuant to this
Section 4.4(c) in the performance of its obligations under this Agreement.
     (d) Depomed shall own all copyrights to all Promotional Materials that are
created during the Term of this Agreement in connection with the Promotion of
the Product. King shall use commercially reasonable efforts consistent with
accepted business practices to obtain such assignments from the authors and
creators of such materials as may be necessary to vest ownership of the
copyright in Depomed. Depomed shall, and does hereby, grant to King a
royalty-free license to use and reproduce such materials solely in conjunction
with its Promotion of the Product pursuant to this Agreement, which license
shall not be assignable or transferable by King, except in accordance with the
terms of Section 2.2.
     (e) All written materials relating to Educational Programs that are funded
using Advertising/Marketing/Educational Expenses shall identify both Depomed and
King as sponsors of such Educational Programs, unless otherwise agreed by the
JCC.
     Section 4.5 Launch Plan; Annual Plan; Promotion Expenses.
     (a) The JCC shall use all reasonable efforts to refine the Launch Plan
prior to the Promotion Commencement Date in order to set forth in detail the
parties’ responsibilities during the Launch Period, incorporating the components
of an Annual Plan set forth in Section 4.5(b) below.
     (b) On or prior to September 1 of the preceding calendar year with respect
to each calendar year during the Term beginning with the 2007 calendar year,
King shall develop an annual commercialization plan (the “Annual Plan”) and
submit the Annual Plan to the JCC for review and approval; provided that the
Annual Plan for the 2007 calendar year will be developed on or prior to
December 1, 2006. The Annual Plan shall set forth the manner in which the
Product is to be Promoted and commercialized during the period to which the
Annual Plan relates and shall include, at a minimum:
     (i) the anticipated number of quarterly and annual Details (including P1
Details, P2 Details and P3 Details) to be provided by the King Sales Force;
     (ii) the King Physician List;
     (iii) Product positioning, strategy and tactics with supporting advertising
and promotional activity to be undertaken, including all material communications
to Third Parties related to commercial matters for the purpose of Promoting the
Product;
     (iv) any training and/or sampling programs to be conducted;

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

17

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     (v) medical education programs to be conducted;
     (vi) planned public relations activities;
     (vii) Product production forecasts;
     (viii) Sample forecasts and delivery schedules;
     (ix) pricing and contracting strategies;
     (x) format and quantity of sales, marketing and educational materials;
     (xi) managed health care strategies and tactics;
     (xii) customer targets;
     (xiii) Product manufacturing and distribution;
     (xiv) post-marketing clinical studies that Depomed, in its sole discretion,
decides to conduct; and
     (xv) a detailed, itemized budget for all costs and expenses associated with
the activities to be undertaken pursuant to the Annual Plan (including all
Advertising/Marketing/Educational Expenses), and the allocation of such costs
and expenses between the parties.
     (c) The JCC shall use all reasonable efforts to approve the Annual Plan not
later than November 1 of each preceding calendar year; provided that the Annual
Plan for the 2007 calendar year will be approved no later than January 1, 2007.
The Annual Plan for 2007 shall incorporate tasks, activities and
responsibilities in addition to any tasks, activities and responsibilities in
the Launch Plan. The JCC shall endeavor to ensure the parties there are no
tasks, activities or responsibilities in the Launch Plan inconsistent with those
set forth in the Annual Plan for 2007.
     (d) Each party shall use its commercially reasonable efforts to perform all
tasks, responsibilities and activities for which it is responsible under the
Launch Plan and the Annual Plan. Neither party shall have any obligation to
incur Advertising/Marketing/Educational Expenses in excess of those set forth in
the Annual Plan; provided, that King shall be responsible for any and all costs
and expenses associated with creating and approving any new Product packaging
design proposed by King (and such costs and expenses shall be in addition to
King’s Advertising/Marketing/Educational Expenses). Furthermore, except to the
extent the JCC has approved any payment in accordance with this Agreement,
including approval as part of an Annual Plan, or except for a party’s obligation
to pay its portion of the Advertising/Marketing/Educational Expenses described
in Section 4.5(e) below, neither party shall (i) be obligated to incur any costs
or expend any funds that have not been approved by such party or (ii) have the
authority to cause the other party to incur any costs or expend any funds that
have not been approved by such other party.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

18

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     (e) All Advertising/Marketing/Educational Expenses incurred by a party on
and after the Effective Date (and such expenses incurred prior to the Effective
Date as are specifically set forth in the Launch Plan attached hereto as
Schedule 1.56) shall be allocated between the parties according to the following
percentages: [***]% will be allocated to King and [***]% will be allocated to
Depomed; provided that the first $[***] of Advertising/Marketing/Educational
Expenses set forth in the Launch Plan is allocated to, and shall be paid by,
Depomed and the next $[***] of Advertising/Marketing/Educational Expenses set
forth in the Launch Plan is allocated to, and shall be paid by, King. Without
the prior written consent of each party, the aggregate
Advertising/Marketing/Educational Expenses to be incurred by the parties each
calendar year during the Term shall be as set forth on Schedule 4.5. With the
prior written consent of each party, the JCC may increase or decrease the
Advertising/Marketing/Educational Expenses above those amounts set forth on such
schedule.
     (f) Each party will bear its own operating expenses associated with the
Product and Promotion thereof, including all personnel, general and
administrative and overhead costs. King will bear all King Sales Force expenses,
and Depomed will bear all Depomed Sales Force expenses. Depomed will bear all
costs associated with maintaining and continuing all Regulatory Approvals of the
Product in the Territory, including all costs associated with Adverse Drug
Experience reporting and all clinical and regulatory requirements.
     Section 4.6 King Promotion Reports. Within thirty (30) days following the
end of each Agreement Quarter, King shall provide the JCC with a status report,
which report will summarize King’s Promotional activities pursuant to this
Agreement for such prior Agreement Quarter and on a calendar year-to-date basis,
including, to the extent King customarily creates the following reports for
King’s other products which are promoted by or on behalf of King: (a) the number
of P1, P2 and P3 Details made and recorded by King’s standard record keeping
procedures; (b) the names and addresses of the Professionals called upon;
(c) the percentage of Professionals Detailed who were provided with Samples;
(d) the average number of such Samples delivered on each Detail; (e) a breakdown
of all information required to be contained in each report on an aggregate
basis; (f) any Professionals added to the King Physician List during such
quarter; and (g) such other information as may be required in the then-current
Annual Plan.
     Section 4.7 Medical Inquiries. The parties acknowledge that each may
receive requests for medical information concerning the Product from members of
the medical and paramedical professions and consumers regarding the Product. If
such requests come from a Professional on the King Physician List or are
otherwise received by King, the request will be handled by King’s medical
department. The King medical department will submit all form letters to the
Depomed’s development department for approval prior to use. King will comply
with direction provided by Depomed as to the content of any such letters or
communications. Depomed shall be responsible for responding to such requests
that do not come from Professionals on the King Physician List or are not
otherwise received by King, which responses shall be in compliance with all
applicable Legal Requirements and the NDA. The parties shall use the same form
of letter or communication for all such responses to Professionals and
consumers. Each party shall promptly provide the other party with (i) copies of
all written materials and (ii) written summaries of all oral advice, provided by
such party in response to such inquiries.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

19

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     Section 4.8 Trademarks.
     (a) The “Depomed” trademark must appear on all Promotional Material that
makes reference to the Product. The “AcuForm” trademark must appear on all
Promotional Materials that make reference to the “AcuForm” drug delivery
technology incorporated into the Product. Depomed hereby grants to King a
non-assignable, non-sublicensable, non-exclusive, royalty-free right and license
to use the Depomed Trademarks in the Territory solely in connection with King’s
Promotion of the Product in accordance with this Agreement; provided King may
assign and sublicense such right and license in accordance with Section 2.2.
Such license shall expire immediately upon the expiration or termination of this
Agreement. Subject to this Section 4.8 and to applicable Legal Requirements,
King shall have the right to use the King Trademarks, and include the name
“King” or any variation thereof on the Promotional Materials developed by King;
provided, that such King Trademarks shall not appear in such Promotional
Materials in greater prominence or in greater frequency than the Depomed
Trademark(s). In addition, the JCC will discuss including the King Trademarks,
in equal prominence to the Depomed Trademarks and in accordance with all Legal
Requirements, on all packaging for Samples distributed by the King Sales Force,
with determination as to including such marks being based on the timing for
implementing such change and the costs associated therewith, with all costs
associated with creating and approving new packaging borne by King in accordance
with Section 4.5(d). King recognizes Depomed’s title to the Depomed Trademarks,
and shall not at any time, during or after the Term, do or knowingly suffer to
be done any act or thing which will in any way impair the rights of Depomed in
or to the Depomed Trademarks. King acknowledges and agrees that it shall not
acquire and shall not claim any title to the Depomed Trademarks adverse to
Depomed by virtue of the rights granted under this Agreement or through King’s
use of the Depomed Trademarks, it being the intention of the parties that all
goodwill and improved reputation generated by King and use of the Depomed
Trademarks shall inure to the benefit of Depomed.
     (b) King hereby grants to Depomed a non-assignable, non-sublicensable
(except to any Third Party acting as the Depomed Sales Force), non-exclusive,
royalty-free right and license to use the King Trademarks in the Territory
solely in connection with Depomed’s Promotion of the Product. Such license shall
expire immediately upon the expiration or termination of this Agreement. Subject
to this Section 4.8 and to applicable Legal Requirements, Depomed shall have the
right to use Depomed Trademarks, and include the name “Depomed,” “AcuForm,” or
any variation thereof on the Promotional Materials developed by Depomed in
accordance with this Agreement. Depomed recognizes King’s title to the King
Trademarks, and shall not at any time, during or after the Term, do or knowingly
suffer to be done any act or thing which will in any way impair the rights of
King in or to the King Trademarks. Depomed shall not be obligated to use the
King Trademarks in the Depomed Promotional Materials. Depomed acknowledges and
agrees that it shall not acquire and shall not claim any title to the King
Trademarks adverse to King by virtue of the rights granted under this Agreement
or through Depomed’s use of the King Trademarks, it being the intention of the
parties that all goodwill and improved reputation generated by Depomed and use
of the King Trademarks shall inure to the benefit of King.
     (c) Each of King with respect to its use of the Depomed Trademarks and
Depomed with respect to its use of the King Trademarks will maintain quality
standards for all of its uses
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

20

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of the trademarks of the other party in connection with the Promotion of the
Product that are substantially equivalent to those standards used by the owner
of such trademarks in connection with pharmaceutical products. Subject to the
foregoing and to the other provisions of this Agreement, each party acknowledges
and agrees that the owner or licensee of the trademark has the right, at any
time, to modify or supplement such quality standards and that the licensee or
sublicensee must implement such new standards or changes following receipt of
notice of such additions or changes; provided that the licensor agrees to bear
all reasonable costs associated with such modifications and supplements.
Compliance with this Section 4.8(c) shall be determined pursuant to the
Promotional Material and Depomed Promotional Materials review and approval
procedures set forth in Sections 4.4(b) and 4.9(e), as applicable.
     Section 4.9 Promotion by Depomed.
     (a) At Depomed’s option, it may, but is not obligated to, have the Depomed
Sales Force Promote the Product directly to Professionals who are (i) not on the
King Physician List or (ii) are on the King Physician List but did not receive
at least [***] Details in the four most complete Agreement Quarters following
the Promotion Commencement Date (or, if Depomed desires to commence Details
prior to March 31, 2008, at least [***] Details during the two Agreement
Quarters on which the Baseline Percentage is determined). If Depomed desires to
use the Depomed Sales Force for this purpose, it will inform King at least
90 days in advance of the commencement of Details by the Depomed Sales Force and
provide King with the Depomed Physician List. During such 90-day period, King
will be entitled to review the Depomed Physician List and confirm that such list
does not contain any Professionals that are not, as of the date of King’s
receipt of the Depomed Physician List, eligible for inclusion on the Depomed
Physician List. Following creation of the initial Depomed Physician List, from
time to time but not more than two times per calendar year, Depomed may add
Professionals to the Depomed Physician List pursuant to the procedure set forth
above, so long as Depomed has conducted at least [***] Details to such
Professional during the six-month period immediately prior to being added.
Following the addition of such Professionals to the Depomed Physician List, the
Baseline Percentage shall be adjusted to reflect prescriptions written by any
such Professionals by adding to the then-current Baseline Percentage the
quotient obtained by dividing (x) [***] prior to Depomed’s commencement of
providing Details to such Professionals, by (y) [***], based on Prescriber Data
for such two complete Agreement Quarters.
     (b) Depomed will submit to the JCC a call plan setting forth the Details to
be performed by the Depomed Sales Force. Such call plan may be taken into
account in developing the Annual Plan. Any Professional on the Depomed Physician
List who does not receive at least [***] Details in each full calendar year
following the commencement of Promotion of the Product by the Depomed Sales
Force will be excluded from the Depomed Physician List in subsequent calendar
years for purposes of calculating Depomed Net Sales, and for purposes of
calculating the Baseline Percentage.
     (c) During any period in which the Depomed Sales Force is making Details,
efforts will be made at the local level to coordinate the Details by the Depomed
Sales Force with Details by the King Sales Force to ensure the most effective
coverage of the target audiences and to minimize non-productive efforts. Depomed
will provide the JCC with such information related to Depomed’s promotion
activities as is reasonably necessary to assist in such efforts.
Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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     (d) All Details made by the Depomed Sales Force will be reported to King.
Such reports by Depomed will be made in the same manner as King’s Details under
Section 4.6 (to the extent Depomed customarily creates such reports for
Depomed’s other products which are promoted by or on behalf of Depomed).
     (e) Depomed may purchase from King, [***], copies of any Promotional
Materials created by King for use by the Depomed Sales Force. Upon Depomed’s
request, King will provide to Depomed electronic copies of Promotional Materials
created by or for King, which Promotional Materials may be modified for use by
Depomed; provided that any modification must be approved in the same manner as
approval of Depomed Promotional Materials (as defined below). King [***] for
such Promotional Materials. Depomed may also create and develop its own
Promotional Materials for use by the Depomed Sales Force (“Depomed Promotional
Materials”). Prior to the use thereof, Depomed shall provide to the JCC a
prototype of any Depomed Promotional Materials. The JCC may review such
prototype for consistency with Legal Requirements and the Product positioning
and messaging reflected in the then-current Annual Plan. If the JCC notifies
Depomed within 10 business days after receipt of a prototype that is objects to
such prototype on the grounds that it is inconsistent with the Product
positioning and messaging reflected in the then current Annual Plan, Depomed
shall modify such Depomed Promotional Materials to the extent necessary to
resolve any objections made by the JCC to such Depomed Promotional Materials on
such grounds. In addition, Depomed shall in good faith consider any other
objections the JCC may have to any Depomed Promotional Materials. The Depomed
Promotional Materials will not contain any King Trademark unless such materials
are subject to the review and approval of the King CCC. King may purchase from
Depomed, [***], copies of any Depomed Promotional Materials. Upon King’s
request, Depomed will provide to King electronic copies of Depomed Promotional
Materials created by or for Depomed, which Depomed Promotional Materials may be
modified for use by King; provided that any modification must be approved in the
same manner as approval of Promotional Materials.
     (f) Depomed may purchase from King, [***], copies of training materials
developed by King related to the Product for use by Depomed in the training of
the Depomed Sales Force. Depomed shall be responsible for training of the
Depomed Sales Force, and may, at its own expense, develop training materials for
the Depomed Sales Force in other media or forms, provided that such materials
shall be subject to King’s review as Depomed Promotional Materials as provided
in Section 4.9(e). Depomed shall, at its own expense, train the Depomed Sales
Force using such training materials, the other Promotional Materials and Depomed
Training Materials and such programs as Depomed shall deem appropriate that are
in compliance with Depomed’s obligations hereunder. Such programs shall include
training with respect to reporting Adverse Drug Experiences and technical
complaints. After the initial training, Depomed shall periodically provide
additional training to each Sales Representative, and shall update its training
materials as appropriate in connection with such additional training, in
accordance with this Section 4.9(f).
     (g) [***] Depomed’s costs or expenses related to any activities of the
Depomed Sales Force, including costs for Depomed Promotional Materials, training
or training materials or the purchase from King of Promotional Materials for the
Depomed Sales Force, will be included in Advertising/Marketing/Educational
Expenses or be reimbursable by King.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

22

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     (h) It is understood, and Depomed agrees, that it will be accountable for
the acts or omissions of its employees and agents to the extent such acts or
omissions fail to comply with Depomed’s obligations under this Agreement.
ARTICLE V
CLINICAL AND REGULATORY AFFAIRS; DEVELOPMENT
     Section 5.1 Regulatory Approvals. Depomed shall use commercially reasonable
efforts to maintain and continue all Regulatory Approvals currently in effect
for the Product. King agrees that all Regulatory Approvals, applications
therefor and any other submissions to a Governmental Authority with respect to
the Product shall be in the name of, and shall be owned by, Depomed or its
designee.
     Section 5.2 Compliance with Regulatory Requirements. Unless otherwise
required by law or expressly required by this Agreement, Depomed will retain
exclusive authority over and responsibility for complying with all regulatory
requirements and maintaining all contacts with Governmental Authorities with
respect to the Product, including maintaining and updating of the NDA, the
development and submission of applications for new indications, the reporting of
any adverse drug reactions to the FDA, the compliance of Promotional Materials
with FDA rules and regulations and the filing of Promotional Materials with the
FDA.
     Section 5.3 Compliance. In performing its duties hereunder, each party
shall, and shall cause the King Sales Force or Depomed Sales Force, as
applicable, and its employees and agents to, comply with all Legal Requirements,
including the FDA’s regulations and guidelines concerning the advertising of
prescription drug products, DDMAC’s promotional guidelines, the Department of
Health and Human Services Office of the Inspector General Compliance Program
Guidance for Pharmaceutical Manufacturers, the American Medical Association’s
Guidelines on Gifts to Physicians, the PhRMA Code on Interactions with
Healthcare Providers, the Prescription Drug Marketing Act of 1987, as amended,
and the rules and regulations promulgated thereunder, the ACCME Standards for
Commercial Support of Continuing Medical Education, equal employment,
non-discrimination and federal and state anti-kickback Legal Requirements, Legal
Requirements with respect to submission of false claims to governmental or
private health care payors, and all industry and professional standards, which
may be applicable to the activities (including the warehousing, handling and
distribution of Samples) to be performed by such party hereunder. None of King,
Depomed, the King Sales Force, the Depomed Sales Force and either party’s
employees and agents shall offer, pay, solicit or receive any remuneration to or
from Professionals in order to induce referrals of or purchase of the Product.
The King Sales Force and the Depomed Sales Force shall have no direct contact
with, nor shall the King Sales Force or the Depomed Sales Force be involved with
the delivery of Product to patients, other than delivery of Samples directly to
Professionals authorized to prescribe the Product. The King Sales Force and the
Depomed Sales Force shall be trained in connection with compliance with Sec.
1128B(b) of the Social Security Act and the AMA Guidelines on Gifts to
Physicians from Industry prior to engaging in Promotion of the Product.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

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     Section 5.4 Communications with Regulatory Authorities.
     (a) All communications with Government Authorities concerning the Product
shall be the sole responsibility of Depomed. Depomed shall within two business
days provide King with copies of all such communications (including summaries of
all relevant verbal communications) related to Promotional Materials and Serious
Adverse Drug Experiences (except that routine communications as to such matters
(e.g., FDA 2253 correspondence) may be forwarded to King within 5 business
days). Depomed will consult with King concerning adverse drug reaction reporting
to the FDA that Depomed reasonably considers to be significant to the Product,
including regulatory responses to follow up inquiries regarding adverse drug
reactions. Depomed will provide to King a copy of all draft responses related to
such matters as soon as practicable, and will endeavor to provide them at least
five business days in advance of their submission (to the extent allowable under
Legal Requirements), and will consider in good faith any comments provided to
Depomed by King.
     (b) King shall not, without the consent of Depomed or unless so required by
Legal Requirements (and then only pursuant to the terms of this Section 5.4,
unless this Section 5.4 is inconsistent with Legal Requirements), correspond or
communicate with the FDA or with any other Governmental Authority, whether
within the Territory or otherwise, concerning the Product, or otherwise take any
action concerning any Regulatory Approval under which the Product is sold or any
application for Regulatory Approval of the Product; provided that during the
Term, King shall have the right to communicate with the FDA or any other
Governmental Authority regarding the Product if such communication is necessary
to comply with the terms of this Agreement or any Legal Requirement, or if King
made a request of such agency to communicate with Depomed instead, and such
Governmental Authority denied such request (in any such case, King shall give
Depomed notice as soon as reasonably practicable of such communication and, to
the extent practicable, Depomed shall be permitted to accompany King, take part
in any such communications and receive copies of all such communications). King
shall, immediately upon receipt of any communication from the FDA or from any
other Governmental Authority relating to the Product, forward a copy of the same
to Depomed and respond to all inquiries by Depomed relating thereto. If King is
required by law to communicate with the FDA or with any other Governmental
Authority relating to the Product, then King shall so advise Depomed immediately
(within one business day) and provide Depomed in advance with a copy of any
proposed written communication, or a written summary of any proposed oral
communication with the FDA or any other Governmental Authority. King shall
comply with any and all reasonable direction of Depomed concerning any meeting
or written or oral communication with the FDA or any other Governmental
Authority relating to the Product unless otherwise required by Legal
Requirements.
     Section 5.5 Product Complaints. King shall refer any oral or written
Product Complaints which it receives concerning the Product to Depomed within
four calendar days of its receipt thereof; provided, that all complaints
concerning suspected or actual Product tampering, contamination or mix-up shall
be delivered within twenty-four hours of its receipt thereof. King shall not
take any other action in respect of any such complaint without the consent of
Depomed unless otherwise required by Legal Requirements. If requested by
Depomed, King will collaborate with Depomed to resolve any Product Complaints.
All Product Complaints shall be directed to the attention of Depomed’s Vice
President, Regulatory Affairs, at

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

24

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Depomed’s address set forth in Section 14.1. Depomed shall provide King with a
summary of all Product Complaints received by Depomed within ten business days
of its receipt thereof.
     Section 5.6 Adverse Drug Experience Reports.
     (a) Each party shall notify the other: (i) of all Serious Adverse Drug
Experience Reports within forty-eight (48) hours of the time such Serious
Adverse Drug Experience Report becomes known to such party (including its
employees); and (ii) of all Adverse Drug Experience Reports within five
(5) calendar days of the time such Adverse Drug Experience Report becomes known
to such party (including its employees).
     (b) Except as may otherwise be required by Legal Requirements, (i) King
shall not disclose any information concerning Adverse Drug Experience Reports or
Serious Adverse Drug Experience Reports to any Person or Governmental Authority
without the prior consent of Depomed; and (ii) Depomed shall have the sole
discretion to determine whether any Product Complaint, Adverse Drug Experience
Report or Serious Adverse Drug Experience Report must be reported to the FDA or
any other Governmental Authority.
     (c) All follow-up investigations concerning Adverse Drug Experience Reports
and Serious Adverse Drug Experience Reports shall be conducted by Depomed;
provided that King shall have the right to participate in such investigations
upon its request. King shall provide all reasonable cooperation with any such
follow-up investigation as may be requested by Depomed from time to time.
     Section 5.7 Recalls or Other Corrective Action. Depomed shall have sole
responsibility for and shall make all decisions with respect to any recall
(including recall of packaging and promotion materials), market withdrawals or
any other corrective action related to the Product. Depomed shall promptly
notify King of any such actions taken by Depomed, including all actions that are
reasonably likely to result in a material adverse effect on the marketability of
the Product in the Territory. At Depomed’s request, King shall provide
assistance to Depomed in conducting such recall, market withdrawal or other
corrective action (including retrieving Samples distributed by the King Sales
Force to Professionals). With respect to any recall, market withdrawal or
corrective action initiated by Depomed as a result of Depomed becoming aware of
any manufacturing defect in Product (other than Product manufactured by King in
accordance with Section 6.6), Depomed shall reimburse King for its reasonable,
documented, direct, out-of-pocket costs incurred in connection with
participating in such recall, market withdrawal or other corrective action
provided that King’s breach of its obligations hereunder is not a material cause
of the recall, market withdrawal or other corrective action. Except as set forth
above, Depomed shall be under no liability whatsoever to compensate King or make
any other payment to King for any decision to recall, initiate a market
withdrawal or take any other corrective action with respect to the Product.
     Section 5.8 Assistance. Each party agrees to provide to the other all
reasonable assistance and take all actions reasonably requested by the other
party that are necessary to enable the other party to comply with any Legal
Requirement applicable to the Product.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

25

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ARTICLE VI
MANUFACTURING AND SUPPLY; SALES; PRICING; 1000MG FORMULATION
     Section 6.1 Obligations of Depomed. In accordance with the provisions of
this Agreement and all applicable Legal Requirements, Depomed shall, at its cost
and expense, use reasonable best efforts to perform or cause to be performed all
Product manufacture, labeling, packaging, warehousing, distribution and return,
order entry, customer services and all other activities to supply and distribute
the Product in the Territory in order to fill orders for Product conforming to
the then-current Volume Forecast in a timely and efficient manner. From and
after the completion of the sixth full calendar month following the Promotion
Commencement Date, Depomed shall use commercially reasonable efforts to maintain
at least one month’s safety stock of Product (“Safety Stock”) to address
unanticipated changes in demand for the Product (calculated on the basis of the
Volume Forecast contained in the then-current Annual Plan).
     Section 6.2 Manufacturing Activities. The Product, including all Samples,
to be manufactured by or for Depomed for sale in the Territory shall be
manufactured to meet applicable specifications for the Product in accordance
with the NDA, cGMP and in compliance with all other applicable Legal
Requirements.
     Section 6.3 Volume Forecasts. At least 30 days prior to the beginning of
each Agreement Quarter ending after the Promotion Commencement Date, King shall
submit to the JCC a written forecast by month of the number of Units of Product
expected to be sold in the Territory during the twelve (12) month period
beginning with such Agreement Quarter, which forecast shall be prepared by King
in good faith. In order to assist King in developing such forecasts, Depomed
shall give King trade wholesaler stocking levels information within ten days
following the beginning of each Agreement Quarter ending after the Promotion
Commencement Date (or, if later, within two business days after such information
becomes available to Depomed). The JCC shall review and discuss such forecast
and shall make such modifications thereto as may be necessary for such forecast
to be unanimously approved by the JCC and to be consistent with the forecasting
and purchasing provisions of Depomed’s Third Party supply agreement relating to
the Product (as so modified and approved for the applicable twelve (12) month
period, the “Volume Forecast”). Depomed shall use reasonable best efforts to
manufacture and distribute, or cause to be manufactured and distributed, Product
consistent with the Volume Forecast. The Volume Forecast for the twelve month
period beginning on August 1, 2006 is attached hereto as Schedule 6.3.
     Section 6.4 Sales; Pricing.
     (a) Depomed or its Affiliates shall book all sales of the Product in the
Territory and shall be responsible for entering into any contracts and other
arrangements with any Person regarding the sale of the Product, and for
establishing and approving the form, content and terms and conditions thereof,
including any discount, allowance, rebate, chargeback or other term granted
therein; provided, however, that (i) the pricing of the Product shall be
consistent with the pricing established by the JCC in accordance with
Section 3.3 hereof, (ii) the terms of such contract and other arrangement shall
be consistent with the contracting guidelines established by the JCC in
accordance with Section 3.3(k) and reflected in the Annual Plan, and (iii) any

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

26

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deductions from gross amounts invoiced pursuant to any such contract or
arrangement shall correspond to one or more of the categories of deductions set
forth in the definition of “Net Sales” in Article I. The parties have reviewed
the initial pricing and contracting guidelines applicable to the Product. The
parties agree to discuss among the JCC and finalize the initial pricing and
contracting guidelines within two weeks after the Effective Date.
     (b) King will work on behalf of Depomed to provide necessary support for
managed markets and trade customer groups with respect to the Product to enable
Depomed to enter into such contracts and other arrangements described above. For
purposes of clarity, all such contracts and arrangements supported by King must
be executed and administered by Depomed.
     Section 6.5 Samples.
     (a) Depomed shall provide or cause to be provided to King, from time to
time as contemplated by the Annual Plan, with samples of the Product that are
not for sale and with no fee associated (“Samples”) to be distributed by King
solely in connection with the performance of Details. Depomed shall supply such
Samples FOB Depomed’s or its designee’s warehouse, and the risk of loss and
responsibility for handling and warehousing of the Samples shall pass to King
upon delivery to a carrier designated by King. King shall be responsible for
distributing the Samples to its Sales Representatives in a timely manner.
Depomed shall invoice King for each shipment of Samples at its Standard Cost
payable within 30 days of the invoice date. King shall also be responsible for
securing the return and appropriate disposal of and reconciling existing Sample
inventories from discontinued Sales Representatives.
     (b) Samples supplied by Depomed to King shall be used by King solely in
performing Details to Professionals in accordance with this Agreement. Upon its
receipt of Samples, King shall be solely responsible for accountability and
compliance with the PDMA for the King Sales Force, and other applicable Legal
Requirements relating to such Samples or the distribution of same by the King
Sales Force, and shall be responsible for adherence by its Sales Representatives
to such Legal Requirements.
     (c) Sampling volume shall be consistent with King’s Promotional Effort and
considered a component of the Advertising/Marketing/Educational Expenses.
Sampling volume will be included as a part of each Annual Plan.
     Section 6.6 Inability to Supply. In the event that a Depomed Supply Failure
occurs, notwithstanding its compliance with its obligations under Section 6.1,
to fulfill all orders for the Product generated by King activities in a timely
and efficient manner, upon written notice to Depomed (a “King Manufacturing
Notice”), King shall have, and hereby grants King, exercisable only in
accordance with the provisions hereof, the right, but not the obligation, to
manufacture, or have manufactured, the Product on behalf of Depomed, at
Depomed’s expense, including expenses related to the technical transfer of the
Product, and Depomed will provide reasonable assistance to King in connection
therewith, including by transferring or licensing to King all Technology
necessary or useful to give King the capability of manufacturing the Product so
that King can undertake manufacture of the Product; provided, however, that
Depomed shall not be required to reimburse King for more than [***] percent
([***]%) of Depomed’s standard cost for such Product. Any such Product
manufactured by King will be

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

27

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sold by Depomed in accordance with this Agreement. King’s right to use the
Technology to manufacture, or have manufactured, the Product under this
Section 6.6 shall terminate upon the later to occur of (a) the second (2nd)
anniversary of the date upon which King delivered the King Manufacturing Notice
to Depomed and (b) the six (6) month anniversary of the date upon which Depomed
shall have delivered to King a certification of its CEO as to Depomed’s ability
to fulfill all orders for the Product generated by King activities in a timely
and efficient manner, but in any event on termination of this Agreement.
     Section 6.7 Manufacture by King. Depomed agrees to consider in good faith
any proposal by King to manufacture the 500mg formulation of the Product at
King’s Bristol facility that would result in a reduction in the supply price
applicable to the Product relative to Depomed’s then current contract
manufacturer, and would be suitable to Depomed’s operations, regulatory affairs,
and quality assurance groups. Any fixed and determinable savings in Product
manufacturing cost to Depomed realized during the Term, and during the eight
calendar quarters during which a payment is being paid pursuant to Section 7.4,
that results from any definitive long-term supply arrangement between Depomed
and King relating to the Product relative to Depomed’s then current long-term
supply arrangement [***]; provided that, in the event King continues to
manufacture the Product for Depomed, the parties will negotiate in good faith
with respect to adjusting the pricing mechanism for the manufacture of such
Product following the Term, and such eight calendar quarter period, in order to
compensate King for such savings and for any discounts King provided to Depomed
as a result of the relationship of the parties hereunder. Any manufacture by
King of the Product would be subject to regulatory approval of a supplemental
NDA providing for such manufacture.
     Section 6.8 1000mg Formulation.
     (a) The parties acknowledge that Depomed will use commercially reasonable
efforts to submit a supplemental new drug application to the FDA and to obtain
Regulatory Approval for a 1000mg formulation using metformin as the sole active
pharmaceutical ingredient (the “1000mg Formulation”) to which Depomed has
certain rights pursuant to the BLS Supply Agreements.
     (b) The provisions of Section 6.1 through 6.6 will not apply to the 1000mg
Formulation unless and until Depomed obtains Regulatory Approval for the 1000mg
Formulation, at which time such provisions will apply, except as follows:
(i) Depomed shall have no obligation to continue to supply and distribute the
1000mg Formulation if Depomed, in the exercise of its reasonable business
judgment after consultation with the JCC, determines that marketing the 1000mg
Formulation in the Territory is not commercially feasible due to reasons related
to intellectual property matters, safety, FDA, manufacturing or supply issues,
or market conditions; and (ii) Depomed shall have no liability under this
Agreement for any failure by BLS to timely deliver and supply the 1000mg
Formulation under the BLS Supply Agreement in accordance with the terms thereof,
and any such failure on the part of BLS shall not be a breach or default of this
Agreement by Depomed (except to the extent that any such failure by BLS arises
directly from Depomed’s failure to comply with its obligations, including paying
amounts due, under such agreement).

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

28

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     Section 6.9 BLS Supply Agreements. The parties acknowledge that Depomed is
subject to certain obligations under the BLS Supply Agreements. Depomed shall
not amend, terminate or cause to be terminated any BLS Supply Agreement (or any
other agreement between Depomed and BLS concerning rights to, or the supply or
marketing of, the Product in the Territory) without the prior written consent of
King, which consent shall not to be unreasonably withheld, delayed or
conditioned; provided that Depomed shall have the right to amend any BLS
Agreement without the consent of King if such amendment does not materially and
adversely affect (a) Depomed’s ability to maintain Regulatory Approval for the
1000mg Formulation, (b) Depomed’s ability to purchase the 1000mg Formulation in
commercial quantities under the BLS Supply Agreements, or (c) King’s economic
benefits hereunder.
ARTICLE VII
COMPENSATION
     Section 7.1 Promotion Fees.
     (a) In consideration for King’s performance of its obligations under this
Agreement, Depomed shall pay promotion fees (the “Promotion Fees”) to King as
follows: following each Agreement Quarter during the Term, Depomed shall pay to
King 50% of the Gross Margin for such Agreement Quarter.
     (b) Within thirty (30) days following the end of each Agreement Quarter
during the Term, Depomed shall provide King with a statement setting forth:
          (i) the aggregate number of Units of Product sold to customers in the
Territory during such Agreement Quarter;
          (ii) Net Sales during such Agreement Quarter;
          (iii) Depomed Net Sales during such Agreement Quarter (if any);
          (iv) COGS during such Agreement Quarter (based on Depomed’s Standard
Cost);
          (v) Advertising/Marketing/Educational Expense with respect to the
costs of Samples (based on Depomed’s Standard Cost) during such Agreement
Quarter;
          (vi) Gross Margin for such Agreement Quarter; and
          (vii) a calculation of the amount, if any, payable by Depomed to King
in respect of such Agreement Quarter pursuant to Section 7.3(a).
     (c) Within 4 business days following the end of each Agreement Month (or if
later, within two business days after such information becomes available to
Depomed) during the Term, Depomed shall provide King with a statement setting
forth the aggregate number of Units of Product sold to customers in the
Territory during such Agreement Month.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

29

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     (d) Except as expressly specified otherwise, any amounts payable by one
party to the other party in respect of any Agreement Quarter pursuant to this
Agreement shall be paid within forty-five (45) days after the end of such
Agreement Quarter.
     Section 7.2 Maintenance of Records.
     (a) Each party agrees to keep, for a period of at least three years after
the date of entry (or such longer period as may be required by Legal
Requirements) full and accurate records maintained in accordance with such
party’s accounting practices in sufficient detail to enable a Third Party to
accurately calculate (i) in the case of Depomed, COGS, BLS Fees, Depomed’s
Advertising/Marketing/Educational Expenses, Net Sales and Depomed Net Sales
reported, payments to be made under this Agreement and Details completed by the
Depomed Sales Force, and (ii) in the case of King, King’s
Advertising/Marketing/Educational Expenses and PDEs completed by the King Sales
Force. Upon 30 days prior written notice, such records shall be made available
by the audited party for audit by an independent certified public accounting
firm designated by the other party and reasonably acceptable to the party whose
records are to be examined. The auditor will only examine such books and records
during business hours but not more than once each fiscal year while this
Agreement remains in effect and for three years thereafter in order to verify
expenses, Net Sales, Depomed Net Sales, PDEs or Details completed, or payments
due under this Agreement. The fees and expenses of the auditor performing such
verification examination shall be borne by the party conducting the
verification; provided, however, that if any verification reveals that the
audited party has reported incorrectly, and the amount of such discrepancy is at
least five percent of the aggregate amount that should have been reported for
the period examined, then the audited party shall pay the entire amount of the
fees and expenses for such verification.
     (b) Each party shall have the right, upon five business days’ prior written
notice, to audit all applicable records of the other party (other than records
described in Section 7.2(a)) for the purpose of determining the audited party’s
compliance with the obligations set forth in this Agreement, including with
respect to training programs and certifications and records reports for the
Samples. The audit will be conducted during normal business hours, at convenient
times. Any such audit may be conducted no more than once each fiscal year. The
fees and expenses of the auditing party shall be borne by such party. This right
to audit shall extend throughout the term of this Agreement and for one year
after expiration or termination of this Agreement.
     (c) Whenever in this Agreement a party is required to report its costs, or
is entitled to receive or obligated to make a payment based on its costs, such
costs shall be determined in accordance with generally accepted accounting
principles as applied in the United States (“GAAP”), consistent with the terms
of this Agreement. The term “out-of-pocket” costs or expenses means cost or
expenses paid to Third Parties and shall not include any fixed costs or
expenses, personnel costs or expenses, overhead costs or expenses, or other
costs or expenses of a similar nature.
     (d) COGS and all Advertising/Marketing/Educational Expenses, including
Samples, shall be determined in accordance with GAAP, except as follows:
(i) COGS and Samples shall be calculated at Depomed’s Standard Cost for each
Agreement Quarter and reconciled

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

30

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periodically as set forth in Section 7.5(d); and (ii) COGS shall include costs
incurred by Depomed associated with achieving manufacturing efficiencies and
ensuring Product supply.
     (e) Depomed shall calculate Standard Costs in good faith to approximate as
closely as reasonably practicable such actual costs calculated in accordance
with GAAP (e.g., the unit cost of finished goods by bottle size or packaged
samples) and shall provide the JCC with its methodology for calculating such
costs. The JCC shall review Depomed’s methodology for calculating Standard Cost
at least annually during the Term to ensure that Depomed’s Standard Costs
continue to approximate as closely as reasonably practicable such actual costs
calculated in accordance with GAAP, and Depomed shall revise such methodology
following such review in accordance with the recommendations of the JCC.
     Section 7.3 Payments. Any payments required to be made by either party
under this Agreement shall be made in United States dollars via wire transfer of
immediately available funds to such bank account as the other party shall
designate in writing prior to the date of such payment.
     Section 7.4 Tail Promotion Fees. Following the termination of this
Agreement at the conclusion of the initial five year term or any additional
term, for each of the eight full calendar quarters following such termination,
Depomed shall pay to King an amount equal to, in each of the first four such
calendar quarters, [***]% of the Net Sales for each such quarter and, in each of
the fifth through eighth such calendar quarters, [***]% of such Net Sales for
each such quarter.
     Section 7.5 Expense Reimbursement.
     (a) If Depomed pays Advertising/Marketing/Educational Expenses allocated to
King under the Launch Plan or the Annual Plan, Depomed shall notify King at
least five business days in advance of the payment of such
Advertising/Marketing/Educational Expenses, and, unless King objects in writing
to Depomed before the end of such five business-day period, King shall reimburse
Depomed for such Advertising/Marketing/Educational Expenses within thirty days’
after receipt of a detailed invoice therefor. If King pays
Advertising/Marketing/Educational Expenses allocated to Depomed under the Launch
Plan or the Annual Plan, King shall notify Depomed at least five business days
in advance of the payment of such Advertising/Marketing/Educational Expenses,
and, unless Depomed objects in writing to King before the end of such five
business-day period, Depomed shall reimburse King for such
Advertising/Marketing/Educational Expenses within thirty days’ after receipt of
a detailed invoice therefor.
     (b) Within 15 days following the end of each Agreement Quarter, each party
shall provide to the JCC a report setting forth in reasonable detail
Advertising/Marketing/Educational Expenses incurred by such party in such
Agreement Quarter in accordance with GAAP, including expenses incurred by a
party but not reimbursed by the other party pursuant to Section 7.5(a) above or
expenses reimbursed by a party pursuant to such section. Within 10 days
thereafter, the JCC shall produce a report setting forth the calculation of
Advertising/Marketing/Educational Expenses and its allocation between the
parties in accordance with Section 4.5(e) above. The report shall also set forth
the amount of any

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

31

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payments that a party must make to the other party in order to achieve such
allocation between the parties. All such payments shall be made within 45 days
following the end of the applicable Agreement Quarter.
     (c) At the end of each Agreement Quarter, the parties will reconcile their
respective payments and expenses hereunder, including Promotion Fee payments and
expense reimbursements pursuant to this Article VII, and, at the discretion of
the party who has paid an amount greater than that allocable to such party for
the relevant Agreement Quarter, such over-paying party will be reimbursed by the
other party within 45 days following the end of the applicable Agreement
Quarter, based on the report of the JCC described in Section 7.5(b) above or, at
its discretion, will receive a credit against amounts payable by the over-paying
party to the other party in the subsequent Agreement Quarter(s), which credit
amount will be carried forward until fully credited or reimbursed. Reimbursement
of expenses pursuant to this Section 7.5(c) shall be made based on
Advertising/Marketing/Educational Expenses recorded in accordance with GAAP.
     (d) The statement submitted by Depomed pursuant to Section 7.1(b) for the
final Agreement Quarter of each calendar year during the Term, and the final
Agreement Quarter of the Term, shall be accompanied by a report created by
Depomed (a “Reconciliation Report”) that (i) reconciles Depomed’s Standard Cost
for COGS and Samples during such calendar year (or partial calendar year, as
applicable) to Depomed’s actual COGS and Depomed’s actual out-of-pocket cost for
Samples calculated in accordance with Section 7.2(d), (ii) sets forth any
adjustment to Gross Margin for such calendar year (or partial calendar year, as
applicable) on the basis of such reconciliation, and (iii) sets forth any
adjustment to Advertising/Marketing/Educational Expenses for such calendar year
(or partial calendar year, as applicable) based on reconciliation of actual
costs for Samples. The report shall also set forth the amount of any payments
that a party must make to the other party in order to achieve the proper
allocation of the adjusted Gross Margin between the parties, pursuant to
Section 7.1(a), for such calendar year and the proper allocation of
Advertising/Marketing/Educational Expenses between the parties, pursuant to
Section 4.5(e), for such calendar year. All such payments shall be made within
45 days following the receipt of the Reconciliation Report. Depomed may elect to
submit Reconciliation Reports on a quarterly basis in accordance with the
provisions of this Section 7.5(d), in which event (i) such quarterly
Reconciliation Reports will accompany the statement submitted by Depomed
pursuant to Section 7.1(b), and (ii) each reference in this Section 7.5(d) to a
calendar year shall be deemed to be reference to an Agreement Quarter.
     Section 7.6 Depomed Percentage. If, prior to or following the commencement
of Product Promotion by the Depomed Sales Force, Depomed reasonably determines
that the Prescriber Data fails to, or is likely to fail to, reasonably
accurately reflect the portion of Net Sales attributable to prescriptions
written by Professionals on the Depomed Physician List (whether as a result of
Professionals opting out of the American Medical Association’s Physician
Masterfile database or otherwise), the parties shall negotiate in good faith
with respect to implementing a revised manner of measuring the portion of Net
Sales attributable to prescriptions written by Professionals on the Depomed
Physician List, and reflect any such modification in the definition of “Depomed
Percentage” and the “Baseline Percentage.” The parties shall consider in their
discussions any other customary manner of determining similar

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

32

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information as may arise in light of Professionals opting out of the American
Medical Association’s Physician Masterfile database.
ARTICLE VIII
TERM AND TERMINATION
     Section 8.1 Term. The term of this Agreement shall commence on the
Effective Date and shall continue, unless terminated sooner in accordance with
this Article VIII, until June 27, 2011 (the “Term”). The Term of this Agreement
shall be extended for subsequent one year periods upon the mutual agreement of
the parties, which agreement shall be set forth in writing (in which event a
party that desires to so extend the Term of this Agreement shall notify the
other party at least 120 days prior to the termination of this Agreement).
     Section 8.2 Early Termination.
     (a) Depomed and King shall have the following rights with respect to the
performance of PDEs:
          (i) In the event King performs more than [***] PDEs each Agreement
Quarter (the “PDE Minimum”) in any Agreement Quarter, such excess PDEs will be
carried forward to the immediately following Agreement Quarter. In the event
that King does not perform the PDE Minimum in any Agreement Quarter (the
difference between such PDE Minimum and the number of PDEs actually conducted,
the “PDE Shortfall”), King will have until the end of the Agreement Quarter
immediately following to cure its failure by providing a sufficient number of
excess PDEs in the immediately following Agreement Quarter.
          (ii) If King does not perform, in the aggregate, two times the PDE
Minimum in any two consecutive Agreement Quarters, Depomed may demand that King
cure such default by (A) [***] and (B) [***], in each case, prior to the end of
the next succeeding Agreement Quarter following notice from Depomed.
          (iii) Upon the third failure by King to meet the PDE Minimum during
any six consecutive Agreement Quarters, Depomed shall have the right to [***] or
demand that King shall cure such default in the same manner outlined in clause
(i) above for the first such default.
     (b) If, as of the end of any period of the immediately previous four
consecutive Agreement Quarters, Promotion Net Sales for such period are less
than $[***], either party shall have the right to terminate this Agreement on
120 days’ prior written notice to the other party, which notice may not be given
before the third anniversary of the Promotion Commencement Date.
     (c) If a party desires to exercise its option to terminate this Agreement
pursuant to this Section 8.2 or demand any [***] or cure pursuant to
Section 8.2(a), it must give written notice to the other party within 60 days
after receiving the report of the Agreement Quarter or Agreement Month giving
rise to the right to terminate this Agreement pursuant to Section 8.2.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

33

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     Section 8.3 Termination for Cause. Either party may terminate this
Agreement, effective at any time after providing sixty days written notice and
an opportunity to cure during such sixty day period (ninety days in the case of
a breach by Depomed of Section 6.1), in the event of a material failure of the
other party to comply with its material obligations contained in this Agreement.
If such cure is effected, such notice with respect to such termination shall be
null and void.
     Section 8.4 Termination for Bankruptcy or Force Majeure. To the extent
permitted by law, each party will have the right to terminate this Agreement
immediately upon notice to the other party, in the event of either of the
following:
     (a) The entry of an order for relief under the United States Bankruptcy
Code (or any corresponding remedy under successor laws) against the other party;
the filing of a petition by or against the other party under any bankruptcy,
insolvency or similar law (which petition is not dismissed within sixty days
after filing), except Chapter 11 of the United States Bankruptcy Code or any
successor statute that permits a corporation to continue its operation while
protecting it from creditors; the appointment of a receiver for the other
party’s business or property; or the other party’s making of a general
assignment for the benefit of its creditors; or
     (b) Any Force Majeure Event affecting the other party beyond the other
party’s control which lasts for a period of at least six months and which is of
sufficient intensity to interrupt or prevent the carrying out of such other
party’s material obligations under this Agreement during such period.
Notwithstanding the occurrence of any of the event specified in subsection
(a) of this Section 8.4, the parties acknowledge and agree that, to the extent
Section 365(n) of the United States Bankruptcy Code applies to this Agreement,
the non-insolvent party may elect to retain and exercise the rights granted to
it hereunder with respect to the intellectual property owned or controlled by
the insolvent party.
     Section 8.5 Force Majeure. Any Force Majeure Event of the type described in
Section 16.7 affecting a party hereunder shall entitle the other party hereto,
at any time after the expiry of the period of six months specified therein and
upon sixty days written notice given after such six month period (such notice
being, null and void if the Force Majeure Event is discontinued during such
sixty-day period), in addition to the right to terminate this Agreement under
Section 8.4, the right to (i) extend this Agreement for a period equal to the
duration of the Force Majeure Event which occasioned the delay, interruption or
prevention (subject to the maximum term of six months) or (ii) continue the
Agreement in full force and effect without modification. In no circumstances
will either party be liable to the other for its inability to perform under this
Agreement due to any such Force Majeure Event.
     Section 8.6 Recall. Either party shall have the right to terminate this
Agreement in the event of a large scale recall or withdrawal of the Product from
the Territory resulting from a significant safety risk inherent in the Product
and not due to tampering, a remediable manufacturing problem, or other defect
that can be cured with respect to Products manufactured after such risk is
discovered.
     Section 8.7 Effect of Termination.

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

34

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     (a) No additional payment obligations arising under Article VII hereof
shall accrue after the date of expiration or termination of this Agreement
except as set forth in Section 7.4; provided, however, that expiration or
termination of this Agreement shall not relieve either party of any obligations
accruing prior to such expiration or termination. Certain provisions of this
Agreement by their terms continue after the expiration or termination of this
Agreement. In addition, any other provisions required to interpret and enforce
the parties’ rights and obligations under this Agreement shall also survive, but
only to the extent required for the full observation and performance of this
Agreement.
     (b) Except as indicated in Sections 8.5, expiration or termination of this
Agreement shall be without prejudice to (a) any remedies which any party may
then or thereafter have hereunder or at law; and (b) a party’s right to receive
any payment accrued under the Agreement prior to the termination date but which
became payable thereafter; and (c) either party’s right to obtain performance of
any obligations provided for in this Agreement which survive termination by
their terms or by a fair interpretation of this Agreement. Except as expressly
set forth herein, the rights to terminate as set forth herein shall be in
addition to all other rights and remedies available under this Agreement, at
law, or in equity or otherwise.
     (c) Upon the expiration or termination of this Agreement pursuant to this
Article VIII, each party shall promptly transfer and return to the other party
all Proprietary Information of the other party (provided that each party may
keep one copy of such Proprietary Information of for archival purposes only).
Upon the expiration or termination of this Agreement, King shall provide to
Depomed, at King’s out-of-pocket cost therefor, all Promotional Materials in
King’s possession (including electronic files of all Promotional Materials);
provided, however, that King may destroy any printed copies of Promotional
Materials bearing the King Trademarks and may remove the King Trademarks from
electronic files of Promotional Materials.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
     Section 9.1 Representations and Warranties of Depomed. Depomed hereby
represents and warrants to King as of the date hereof as follows:
     (a) Organization. Depomed (i) is a corporation duly organized, validly
existing and in good standing under the laws of the state of California, and
(ii) has all necessary corporate power and corporate authority to own its
properties and to conduct its business, as currently conducted.
     (b) Authorization. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby are within the corporate
power of Depomed, have been duly authorized by all necessary corporate
proceedings of Depomed, and this Agreement has been duly executed and delivered
by Depomed.
     (c) No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not: (i) conflict with
or result in a breach of any provision of Depomed’s organizational documents;
(ii) result in a material breach

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

35

--------------------------------------------------------------------------------

 

of any material agreement to which Depomed is party; (iii) result in a violation
of any Order to which Depomed is subject; (iv) require Depomed to obtain any
material approval or consent from any Governmental Authority or Third Party
other than those consents and approvals which have been obtained prior to the
date hereof; or (v) violate any Legal Requirement applicable to Depomed in any
material respect.
     (d) Enforceability. This Agreement constitutes the valid and binding
obligation of Depomed, enforceable against Depomed in accordance with its terms,
subject to bankruptcy, reorganization, insolvency and other similar laws
affecting the enforcement of creditors’ rights in general and to general
principles of equity (regardless of whether considered in a proceeding in equity
or an action at law).
     (e) Broker. Depomed has not employed any broker, finder, or agent with
respect to this Agreement or the transactions contemplated hereby.
     (f) Depomed Intellectual Property. To the knowledge of Depomed, the
Promotion and sale of Product in the Territory in accordance with this Agreement
will not infringe any patents, trademarks or other intellectual property rights
of any Third Party; provided, that Depomed makes no representation as to the
King Trademarks. Depomed has the right, power and authority to grant the
licenses granted by it hereunder, including the right, power and authority to
license to King, pursuant to Section 6.6, all Technology necessary for the
manufacture of the Product.
     (g) Litigation. There is no litigation, arbitration proceeding,
governmental investigation, action or claims of any kind, pending or, to the
knowledge of Depomed, threatened, by or against Depomed or any of its Affiliates
relating to the Product or which would reasonably be expected to materially
affect Depomed’s ability to perform its obligations hereunder.
     (h) Documentation. Depomed has made available to King copies of
substantially all clinical data and reports, medical information, competitive
information, marketing research and other documentation related to the Product
in Depomed’s possession that have been requested by King in the course of King’s
due diligence investigation of the Product.
     (i) Supply. Depomed currently has access to sufficient supplies of Product
to perform the manufacturing obligations required by it under this Agreement.
All Product will be manufactured with reasonable due care and in conformity with
current generally accepted standards and procedures for manufacturing the
Product and cGMP.
     (j) Generic Drug Act. Pursuant to the Generic Drug Enforcement Act of 1992,
21 U.S.C. § 335a, as may be amended or supplemented (the “Generic Drug Act”),
          (i) none of Depomed, its Affiliates, or any Person under its direction
or control is currently debarred by the FDA under the Generic Drug Act;
          (ii) none of Depomed, its Affiliates, or any Person under its
direction or control is currently using or will use in any capacity in
connection with the Product any Person that is debarred by FDA under the Generic
Drug Act; and

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

36

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          (iii) there have been no convictions of Depomed, its Affiliates, or
any Person under its direction or control for any of the types of crimes set
forth in the Generic Drug Act within the five years prior to the Effective Date.
     (k) Legal Requirements. None of Depomed, its Affiliates, or Person under
its direction or control is currently excluded from a federal or state health
care program under Sections 1128 or 1156 of the Social Security Act, 42 U.S.C.
§§ 1320a-7, 1320c-5 as may be amended or supplemented. None of Depomed, its
Affiliates, or Person under its direction or control is otherwise currently
excluded from contracting with the federal government. None of Depomed, its
Affiliates, or Person under its direction or control is otherwise currently
excluded, suspended, or debarred from any federal or state program. Depomed
shall immediately notify King if, at any time during the Term, Depomed, its
Affiliates, or any Person under its direction or control is convicted of an
offense that would subject it or King to exclusion, suspension, or debarment
from any federal or state program.
     (l) NDA Acquisition. Depomed has not committed fraud in relation to the
filing or acquisition of an NDA or used unfair methods of competition in
connection with such filing or acquisition, including, in either case, in
connection with any data supplied by Depomed to the FDA. The parties acknowledge
that a breach of this representation is a material failure of a material
obligation and is not subject to cure.
     (m) BLS Agreements. Depomed is not in material breach of the BLS Agreements
and has not submitted to BLS any notice (written or oral) to the effect that BLS
is in breach of the BLS Agreements. Depomed has not received from BLS any notice
(written or oral) to the effect that Depomed is in breach of the BLS Agreements.
The BLS Agreements are legal, valid, binding, enforceable and in full force and
effect in all material respects.
     Section 9.2 Representations and Warranties of King. King hereby represents
and warrants to Depomed as of the date hereof as follows:
     (a) Organization. King (i) is a corporation duly organized, validly
existing and in good standing under the laws of the state of Tennessee, and
(ii) has all necessary corporate power and corporate authority to own its
properties and to conduct its business, as currently conducted.
     (b) Authorization. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby are within the corporate
power of King, have been duly authorized by all necessary corporate proceedings
of King, and this Agreement has been duly executed and delivered by King.
     (c) No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not: (i) conflict with
or result in a breach of any provision of King’s organizational documents;
(ii) result in a material breach of any material agreement to which King is
party; (iii) result in a violation of any Order to which King is subject;
(iv) require King to obtain any material approval or consent from any
Governmental Authority or Third Party other than those consents and approvals
which have been

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

37

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obtained prior to the date hereof; or (v) violate any Legal Requirement
applicable to King in any material respect.
     (d) Enforceability. This Agreement constitutes the valid and binding
obligation of King, enforceable against King in accordance with its terms,
subject to bankruptcy reorganization, insolvency and other similar laws
affecting the enforcement of creditors’ rights in general and to general
principles of equity (regardless of whether considered in a proceeding in equity
or an action at law).
     (e) Broker. King has not employed any broker or finder with respect to this
Agreement or the transactions contemplated hereby.
     (f) King Trademarks. To the knowledge of King, the use of the King
Trademarks to Promote and sell Product in the Territory in accordance with this
Agreement will not infringe any trademarks or other intellectual property rights
of any Third Party.
     (g) Litigation. There is no litigation, arbitration proceeding,
governmental investigation, action or claims of any kind, pending or, to the
knowledge of King, threatened, by or against King or any of its Affiliates
relating to the Product or which would reasonably be expected to materially
affect King’s ability to perform its obligations hereunder.
     (h) Generic Drug Act. Pursuant to the Generic Drug Act,
          (i) none of King, its Affiliates, or any Person under its direction or
control is currently debarred by the FDA under the Generic Drug Act;
          (ii) none of King, its Affiliates, or any Person under its direction
or control is currently using or will use in any capacity in connection with the
Product any Person that is debarred by FDA under the Generic Drug Act; and
          (iii) there have been no convictions of King, its Affiliates, or any
Person under its direction or control for any of the types of crimes set forth
in the Generic Drug Act within the five years prior to the Effective Date.
     (i) Legal Requirements. None of King, its Affiliates, or Person under its
direction or control is currently excluded from a federal or state health care
program under Sections 1128 or 1156 of the Social Security Act, 42 U.S.C. §§
1320a-7, 1320c-5 as may be amended or supplemented. None of King, its
Affiliates, or Person under its direction or control is otherwise currently
excluded from contracting with the federal government. None of King, its
Affiliates, or Person under its direction or control is otherwise currently
excluded, suspended, or debarred from any federal or state program. King shall
immediately notify Depomed if, at any time during the Term, King, its
Affiliates, or any Person under its direction or control is convicted of an
offense that would subject it or Depomed to exclusion, suspension, or debarment
from any federal or state program.
     Section 9.3 Depomed Disclaimer. EXCEPT AS EXPRESSLY PROVIDED HEREIN,
DEPOMED DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

38

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WITH REGARD TO THE PRODUCT, INCLUDING THE WARRANTY OF MERCHANTABILITY AND
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
     Section 9.4 King Disclaimer. EXCEPT AS EXPRESSLY PROVIDED HEREIN, KING
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF
MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE X
INTELLECTUAL PROPERTY MATTERS
     Section 10.1 Third Party Competition. Expressly excluding Article XIII of
this Agreement, nothing in this Agreement shall limit or restrict Depomed’s
ability to grant non-exclusive patent licenses to patents and patent
applications included within the Technology or otherwise covering the Product in
connection with the settlement of any pending, threatened or contemplated patent
litigation with respect to extended release metformin products commercialized in
the Territory prior to the Effective Date, including any such litigation against
marketers of metformin products (each such license, an “AcuForm Patent
License”). However, in recognition of the parties’ agreement to co-exclusively
Promote Products, in accordance with the terms and conditions of this Agreement,
Depomed agrees that if Depomed or any Affiliate thereof grants to any Affiliate
or Third Party a license, covenant not to sue, right of reference, right of
supply or other intellectual right (in any case, other than AcuForm Patent
Licenses and covenants not to sue and other rights in connection with the grant
of AcuForm Patent Licenses for extended release metformin products
commercialized in the Territory prior to the Effective Date) related to the
manufacture, use, offer for sale, sale, importation, marketing or promotion of
any Product that uses Depomed’s or its Affiliate’s proprietary drug delivery
technology currently referred to as the AcuForm technology and described in U.S.
Patent Nos. 6,340,475 and 6,635,280 or other drug delivery technology
incorporated into any formulation of the Product, including any authorized
generic version of any Product covered by any NDA, then the parties shall
negotiate in good faith financial adjustments to this Agreement adequate to
compensate King for any lost market share attributable to sales of product by or
on behalf of such Third Party or Affiliate, taking into account the
consideration received by Depomed or its Affiliates for the grant of such
rights.
     Section 10.2 Infringement.
     (a) If either party shall learn of a claim or assertion that the
manufacture, use or sale of the Product in the Territory infringes or otherwise
violates the intellectual property rights of any Third Party or that any Third
Party violates the intellectual property rights owned or Controlled by
(i) Depomed in the Product and the Depomed Trademarks in the Territory or
(ii) King in the King Trademarks, then the party becoming so informed shall
promptly, but in all events within fifteen (15) business days thereof, notify
the other party to this Agreement of the claim or assertion.
     (b) If warranted in the opinion of Depomed, after consultation with the
JCC, Depomed shall take such legal action as is advisable in Depomed’s opinion
to restrain

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

39

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infringement of such Depomed patent rights or the Depomed Trademarks. King shall
cooperate fully with, and as reasonably requested by, Depomed in Depomed’s
attempt to restrain such infringement, and Depomed shall reimburse King for its
out-of-pocket expenses incurred in providing such cooperation. King may be
represented by counsel of its own selection at its own expense in any suit or
proceeding brought to restrain such infringement, but Depomed shall have the
right to control the suit or proceeding.
     (c) If warranted in the opinion of King, King shall take such legal action
as is advisable in King’s opinion to restrain such infringement of the King
Trademarks. Depomed shall cooperate fully with, and as requested by, King in
King’s attempt to restrain such infringement, and King shall reimburse Depomed
for its out-of-pocket expenses incurred in providing such cooperation. Depomed
may be represented by counsel of its own selection at its own expense in any
suit or proceeding brought to restrain such infringement, but King shall have
the right to control the suit or proceeding.
ARTICLE XI
INDEMNIFICATION; LIMITS ON LIABILITY
     Section 11.1 Indemnification. Each party will defend, at its own expense,
indemnify and hold harmless the other party and its Affiliates from and against
any and all damages, liabilities, losses, costs, and expenses, including
reasonable attorneys’ fees, arising out of any Third Party claim, suit or
proceeding brought against the other party or its Affiliates to the extent such
claim, suit, or proceeding is based upon a claim arising out of or relating to
(i) any breach or violation of, or failure to perform, any covenant or agreement
made by such indemnifying party in this Agreement, unless waived in writing by
the indemnified party; (ii) any breach of the representations or warranties made
by such indemnifying party in this Agreement; or (iii) the negligence or willful
misconduct of the indemnifying party, except (under any of (i) or (ii)) to the
extent arising out of the breach, violation, failure, negligence or willful
misconduct of the indemnified party. In addition, Depomed will defend, at its
own expense, indemnify and hold harmless King and its Affiliates from and
against any and all damages, liabilities, losses, costs, and expenses, including
reasonable attorneys’ fees, arising out of any Third Party claim, suit or
proceeding brought against King or its Affiliates to the extent such claim,
suit, or proceeding is based upon a claim arising out of or relating to (w) any
actions of the Depomed Sales Force, including any false or misleading
representations to Professionals, customers or others regarding King or the
Product; (x) any agreement between Depomed and BLS; or (y) any claim made by any
Person that the manufacture, use or sale of the Product infringes or
misappropriates the patent, trademark, or other intellectual property rights of
such Person, except with respect to any claim relating to the King Trademarks;
and (z) any product liability claim made by any Person with respect to the
Product, except to the extent liability is based on a breach by King of
Section 4.2. Each party agrees that it shall promptly notify the other in
writing of any such claim or action and give the indemnifying party full
information and assistance in connection therewith. The indemnifying party shall
have the sole right to control the defense and the sole right to settle or
compromise any such claim or action, except that the prior written consent of
the other party shall be required in connection with any settlement or
compromise which could (i) place any obligation on or require any action of such
other party; (ii) admit or imply any liability or wrongdoing of such other
party; or (iii) adversely affect the goodwill or public image of such

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

40

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other party. Notwithstanding the foregoing, the indemnified party may
participate therein through counsel of its choice, but the cost of such counsel
shall be borne solely by the indemnified party. The provisions of this
Section 11.1 shall survive the termination of this Agreement for three years
(except as to claims as to which a party has notified the other in writing prior
to the third anniversary of the termination date of this Agreement, in which
event, the indemnifying party’s obligations under this Section 11.1 shall
survive with respect to any such claim until its resolution).
     Section 11.2 Consequential Damages. NEITHER KING NOR DEPOMED (WHICH FOR THE
PURPOSES OF THIS SECTION 11.2 SHALL INCLUDE THEIR RESPECTIVE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS) SHALL HAVE ANY LIABILITY TO THE OTHER
FOR ANY PUNITIVE DAMAGES, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT
DAMAGES, RELATING TO OR ARISING FROM THIS AGREEMENT, EVEN IF SUCH DAMAGES MAY
HAVE BEEN FORESEEABLE; PROVIDED THAT SUCH LIMITATION SHALL NOT APPLY IN THE CASE
OF FRAUD OR WILLFUL MISCONDUCT.
ARTICLE XII
CONFIDENTIALITY AND PUBLICITY
     Section 12.1 Proprietary Information. Pursuant to this Agreement, a party
receiving Proprietary Information from the other, directly or indirectly, will
treat such Proprietary Information as confidential, will use such Proprietary
Information only for the purposes of this Agreement and will not disclose, and
will take all reasonable precautions to prevent the disclosure of, such
Proprietary Information to (a) any of its officers, directors, managers, equity
holders, employees, agents, representatives, Affiliates or consultants who are
not required to know such Proprietary Information or who are not bound by a like
obligation of confidentiality or (b) to Third Parties.
     Section 12.2 Disclosures Required by Law. In the event the recipient party
is required under applicable Legal Requirements to disclose Proprietary
Information of the disclosing party to any Governmental Authority to obtain any
Regulatory Approval for the Product, is required to disclose Proprietary
Information in connection with bona fide legal process (including in connection
with any bona fide dispute hereunder) or is required to disclose Proprietary
Information under the rules of the securities exchange upon which its securities
are traded, the recipient party may do so only if it limits disclosure to that
purpose after giving the disclosing party prompt written notice of any instance
of such a requirement in reasonable time for the disclosing party to attempt to
object to or to limit such disclosure. In the event of disclosures required
under applicable Legal Requirements, the recipient party shall cooperate with
the disclosing party as reasonably requested thereby.
     Section 12.3 Publicity. Neither party will originate any publicity, news
release, public comment or other public announcement, whether to the press, to
stockholders, or otherwise, relating to this Agreement, without the consent of
the other party, except for such announcement which, in accordance with the
advice of legal counsel to the party making such announcement, is required by
law; provided, however, that each party shall be entitled to refer publicly to
the

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

41

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relationship of the parties reflected in this Agreement (i.e., Depomed as the
developer of the Product and King as the co-promoter of the Product in the
Territory) in a manner that is consistent with the joint press release issued by
the parties and that is not damaging to the business or reputation of the other
party. Except as otherwise permitted pursuant to the immediately preceding
sentence, any party making any announcement which is required by law will,
unless prohibited by law, give the other party an opportunity to review the form
and content of such announcement and comment before it is made. Either party
shall have the right to make such filings with governmental agencies, including
the United States Securities and Exchange Commission, as to the contents and
existence of this Agreement as it shall reasonably deem necessary or
appropriate. The parties have agreed upon the form and content of a joint press
release to be issued by the parties promptly following the execution of this
Agreement. Once such press release or any other written statement is approved
for disclosure by both parties, either party may make subsequent public
disclosure of the contents of such statement without the further approval of the
other party. The provisions of this Article 12 shall survive termination of the
agreement and shall remain in effect until a date three years after the Term of
this Agreement.
ARTICLE XIII
COMBINATION PRODUCTS; RIGHT OF FIRST NEGOTIATION
     Section 13.1 Combination Products.
     (a) Depomed agrees to grant and hereby grants to King an exclusive option
(exercisable at King’s sole discretion by providing written notice of intent at
any time, but in no event later than 180 days after the Effective Date) to
obtain an exclusive license in the Territory to certain of Depomed’s proprietary
drug delivery technology in combination with both metformin hydrochloride and
any other active pharmaceutical ingredients (a “Combination Product License”).
If King notifies Depomed in writing within 180 days after the Effective Date
that King desires to exercise its option to obtain a Combination Product
License, King and Depomed shall promptly commence good-faith negotiations
regarding a definitive agreement providing for the Combination Product License,
for a period of 60 days or such longer period as may be mutually agreed upon by
the parties in writing; and it is agreed that, as part of such good faith
negotiations, the parties will discuss, for inclusion in any definitive
agreement, appropriate non-compete obligations for each party with respect to
any product containing metformin hydrochloride as an active pharmaceutical
ingredient. If Depomed and King fail to enter into such a definitive agreement
during such period, then Depomed shall thereafter have the right to negotiate
and enter into one or more agreements with Third Parties related to Depomed’s
proprietary drug delivery technology in combination with both metformin
hydrochloride and other active pharmaceutical ingredients; provided that, for a
period of 6 months, any such agreement may not be on terms and conditions
materially more favorable to the Third Party than the terms and conditions last
offered by King prior to the termination of discussions with Depomed.
     (b) In the event the parties are not able to enter a definitive agreement
with respect to a Combination Product License, pursuant to Section 13.1(a), then
prior to the expiration or termination of this Agreement, except pursuant to
this Agreement, (i) neither party, nor any

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

42

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Person controlled by a party, will be entitled to commercially launch in the
Territory (either directly or indirectly through a marketing partner) a product
containing metformin as an active pharmaceutical ingredient, and (ii) no
Affiliate of Depomed will be entitled to commercially launch in the Territory
(either directly or indirectly through a marketing partner) a product that (A)
contains metformin as an active pharmaceutical ingredient and (B) uses Depomed’s
or its Affiliate’s proprietary drug delivery technology currently referred to as
the AcuForm technology and described in U.S. Patent Nos. 6,340,475 and
6,635,280.
     Section 13.2 Right of First Negotiation. Depomed shall notify King in
writing in the event that Depomed desires to divest itself of its rights to the
Product in the Territory (e.g., by asset sale or product license to a Third
Party), or of its rights in the Territory to a product owned or controlled by
Depomed containing metformin and another active pharmaceutical ingredient in
combination with Depomed’s proprietary drug delivery technology incorporated
within the Product (currently referred to as the AcuForm technology) (a
“Combination Product”). If King notifies Depomed in writing within 30 days after
receipt of such notice (the “Evaluation Period”) that King is not interested in
obtaining all of Depomed’s rights in and to the Product or the applicable
Combination Product (such rights, “Metformin Product Rights”), or if King fails
to notify Depomed of King’s interest in obtaining the Metformin Product Rights,
in either case prior to the expiration of the Evaluation Period, then Depomed
shall have no further obligation to King under this Agreement with respect to
the applicable Metformin Product Rights. If King is interested in obtaining the
Metformin Product Rights, it shall so notify Depomed in writing prior to the
expiration of the Evaluation Period, and upon Depomed’s receipt of such notice
King and Depomed shall promptly commence good-faith negotiations, for a period
of 30 days and such longer period as may be mutually agreed upon by the parties
in writing in the event the parties have made material progress in the
negotiations (the “Negotiation Period”), regarding the commercially reasonable
terms of an agreement pursuant to which King shall obtain the Metformin Product
Rights. If Depomed and King fail to enter into an agreement for the Metformin
Product Rights prior to the expiration of the Negotiation Period, then Depomed
shall thereafter have the right to negotiate and enter into an agreement with a
Third Party granting the Metformin Product Rights to a Third Party; provided
that, for a period of 6 months, any such agreement may not be on terms and
conditions materially more favorable to the Third Party than the terms and
conditions last offered by King prior to the termination of discussions with
Depomed. The provisions of this Section 13.2 shall not apply to, and Depomed
shall have no obligation to King under this Section 13.2 in respect of, any
acquisition of Depomed by a Third Party, any merger or consolidation with or
involving Depomed, any acquisition by a Third Party of any material portion of
the stock of Depomed, or any acquisition by a Third Party of a material portion
of the assets of Depomed in addition to the Product or any Combination Product;
provided that such Third Party must remain bound by the terms and conditions of
this Agreement, including this Section 13.2.
ARTICLE XIV
NOTICES
     Section 14.1 Notices. All notices required or permitted hereunder shall be
given in writing and sent by facsimile transmission (with a copy sent by
first-class mail), or mailed

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

43

--------------------------------------------------------------------------------

 

postage prepaid by certified or registered mail (return receipt requested), or
sent by a nationally recognized express courier service, or hand-delivered at
the following address:
If to Depomed:
Depomed, Inc.
1360 O’Brien Drive
Menlo Park, California 94025
Attention: President
Fax No.: (650) 462-9991

With a copy to:
Heller Ehrman LLP
275 Middlefield Road
Menlo Park, CA 94025
Attention: Julian Stern
Fax No: (650) 324-0638
If to King:
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, Tennessee 37620
Attn: Legal Affairs Department
Facsimile: (423) 990-2566
All notices shall be deemed made upon receipt by the addressee as evidenced by
the applicable written receipt.
ARTICLE XV
INSURANCE
     Section 15.1 Insurance.
     (a) During the Term and for a period of two (2) years after any expiration
or termination of this Agreement, each party shall maintain (i) a commercial
general liability insurance policy or policies with minimum limits of $[***] per
occurrence and $[***] in the aggregate on an annual basis and (ii) a product
liability insurance policy or policies with minimum limits of $[***] per
occurrence and $[***] in the aggregate on an annual basis; provided that the
minimum product liability policy limits set forth above shall be increased to at
least $[***] per occurrence and $[***] in the aggregate on an annual basis no
later than December 31, 2006. Furthermore, Depomed will undertake to direct its
insurance broker to conduct an analysis to determine the appropriate level of
product liability insurance with respect to the Product to be maintained by
Depomed, which analysis will be conducted prior to Depomed’s next insurance
renewal, currently scheduled to occur in October 2006. Such analysis will
include, among other considerations, product risk characteristics, product
litigation history,

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

44

--------------------------------------------------------------------------------

 

comparable company coverage and insurance availability. Depomed will share such
analysis with King
     (b) Upon request, each party shall provide certificates of insurance to the
other evidencing the coverage specified herein. Neither party’s liability to the
other is in any way limited to the extent of its insurance coverage.
ARTICLE XVI
MISCELLANEOUS
     Section 16.1 Headings. The titles, headings or captions and paragraphs in
this Agreement are for convenience only and do not define, limit, extend,
explain or describe the scope or extent of this Agreement or any of its terms or
conditions and therefore shall not be considered in the interpretation,
construction or application of this Agreement.
     Section 16.2 Severability. In the event that any of the provisions or a
portion of any provision of this Agreement is held to be invalid, illegal, or
unenforceable by a court of competent jurisdiction or a governmental authority,
such provision or portion of provision will be construed and enforced as if it
had been narrowly drawn so as not to be invalid, illegal, or unenforceable, and
the validity, legality, and enforceability of the enforceable portion of any
such provision and the remaining provisions will not be adversely affected
thereby.
     Section 16.3 Entire Agreement. This Agreement, together with the schedules
and exhibits hereto and the Confidentiality Agreement, all of which are
incorporated by reference, contains all of the terms agreed to by the parties
regarding the subject matter hereof and supersedes any prior agreements,
understandings, or arrangements between them, whether oral or in writing.
     Section 16.4 Amendments. This Agreement may not be amended, modified,
altered, or supplemented except by means of a written agreement or other
instrument executed by both of the parties hereto. No course of conduct or
dealing between the parties will act as a modification or waiver of any
provisions of this Agreement.
     Section 16.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original as against the party
whose signature appears thereon, but all of which taken together will constitute
but one and the same instrument.
     Section 16.6 Waiver. The failure of either party to enforce or to exercise,
at any time or for any period of time, any term of or any right arising pursuant
to this Agreement does not constitute, and will not be construed as, a waiver of
such term or right, and will in no way affect that party’s right later to
enforce or exercise such term or right.
     Section 16.7 Force Majeure.
     (a) In the event of any failure or delay in the performance by a party of
any provision of this Agreement due to acts beyond the reasonable control of
such party (such as, for example, fire, explosion, strike or other difficulty
with workmen, shortage of transportation equipment,

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

45

--------------------------------------------------------------------------------

 

accident, act of God, declared or undeclared wars, acts of terrorism, or
compliance with or other action taken to carry out the intent or purpose of any
law or regulation) (a “Force Majeure Event”), then such party shall have such
additional time to perform as shall be reasonably necessary under the
circumstances. In the event of such failure or delay, the affected party will
use its diligent efforts, consistent with sound business judgment and to the
extent permitted by law, to correct such failure or delay as expeditiously as
possible. In the event that a party is unable to perform by a reason described
in this Section 16.7, its obligation to perform under the affected provision of
this Agreement shall be suspended during such time of nonperformance.
     (b) Neither party shall be liable hereunder to the other party nor shall be
in breach for failure to perform its obligations caused by a Force Majeure
Event. In the case of any such event, the affected party shall promptly, but in
no event later than 10 days of its occurrence, notify the other party stating
the nature of the condition, its anticipated duration and any action being taken
to avoid or minimize its effect. Furthermore, the affected party shall keep the
other party informed of the efforts to resume performance. After sixty (60) days
of such inability to perform, the parties agree to meet and in good faith
discuss how to proceed. In the event that the affected party is prevented from
performing its obligations pursuant to this Section 16.7 for a period of six
(6) months, the other party shall have the right to terminate this Agreement
pursuant to the provisions of Sections 8.4(b).
     Section 16.8 Successors and Assigns. Subject to Section 16.9, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns permitted under this
Agreement.
     Section 16.9 Assignment. This Agreement and the rights granted herein shall
not be assignable by either party hereto without the prior written consent of
the other party. Any attempted assignment without consent shall be void.
Notwithstanding the foregoing, a party may transfer, assign or delegate its
rights and obligations under this Agreement without consent to (a) an Affiliate
or (b) a successor to all or substantially all of its business or assets of the
assigning party to which this Agreement relates, whether by sale, merger,
consolidation, acquisition, transfer, operation of law or otherwise or (c) in
the case of either party, to one or more financial institutions providing
financing to such party pursuant to the terms of a security agreement relating
to such financing. In connection with any assignment, or Subcontracting pursuant
to which a Third Party Sales Representative is engaged to Promote the Product,
of this Agreement or any of the rights granted herein pursuant to this
Section 16.9, the assignor, or party Subcontracting to another, shall ensure
that the assignee, or Subcontractor, represents and warrants the matters set
forth in Sections 9.1(j) and (k) (in substantially the same form as set forth in
Sections 9.1(j) and (k)), where Depomed (or one of its successors or assigns) is
the assignor or Subcontracting party, or Sections 9.2(h) and (i) (in
substantially the same form as set forth in Sections 9.2(h) and (i)), where King
(or one of its successors or assigns) is the assignor or Subcontracting party.
In connection with any Subcontracting pursuant to which a Third Party will
manufacture the Product, the party Subcontracting to another shall use its
commercially reasonable efforts to cause the Subcontractor to represent and
warrant the matters set forth in Sections 9.1(j) and (k) (in substantially the
same form as set forth in Sections 9.1(j) and (k)). Neither party shall
knowingly engage any Third Party appearing on the FDA’s debarment list or the
list of excluded individuals/entities of the Office of Inspector General of the
Department of Health and Human Services to perform, or assist such party in the
performance of, its obligations

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

46

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under this Agreement, and each party shall review each such list prior to
engaging any such Third Party.
     Section 16.10 Construction. The parties acknowledge and agree that:
(a) each party and its representatives have reviewed and negotiated the terms
and provisions of this Agreement and have contributed to its revision; and
(b) the terms and provisions of this Agreement will be construed fairly as to
each party hereto and not in favor of or against either party regardless of
which party was generally responsible for the preparation or drafting of this
Agreement. Unless the context of this Agreement otherwise requires: (i) words of
any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
“hereof,” “herein,” “hereby,” and derivative or similar words refer to this
entire Agreement; (iv) the terms “Article,” “Section,” “Exhibit,” “Schedule,” or
“clause” refer to the specified Article, Section, Exhibit, Schedule, or clause
of this Agreement; (v) “or” is disjunctive but not necessarily exclusive; and
(vi) the term “including” or “includes” means “including without limitation” or
“includes without limitation.” Whenever this Agreement refers to a number of
days, such number shall refer to calendar days unless business days are
specified.
     Section 16.11 Governing Law. This Agreement will be construed under and in
accordance with, and governed in all respects by, the laws of the State of New
York, without regard to its conflicts of law principles.
     Section 16.12 Equitable Relief. Each party acknowledges that a breach by it
of the provisions of this Agreement may not reasonably or adequately be
compensated in damages in an action at law and that such a breach may cause the
other party irreparable injury and damage. By reason thereof, each party agrees
that the other party is entitled to seek, in addition to any other remedies it
may have under this Agreement or otherwise, preliminary and permanent injunctive
and other equitable relief to prevent or curtail any breach of this Agreement by
the other party; provided, however, that no specification in this Agreement of a
specific legal or equitable remedy will be construed as a waiver or prohibition
against the pursuing of other legal or equitable remedies in the event of such a
breach. Each party agrees that the existence of any claim, demand, or cause of
action of it against the other party, whether predicated upon this Agreement, or
otherwise, will not constitute a defense to the enforcement by the other party,
or its successors or assigns, of the covenants contained in this Agreement.
     Section 16.13 Relationship Between Parties. The parties hereto are acting
and performing as independent contractors, and nothing in this Agreement creates
the relationship of partnership, joint venture, sales agency, or principal and
agent. Neither party is the agent of the other, and neither party may hold
itself out as such to any other party. All financial obligations associated with
each party’s business will be the sole responsibility of such party.
[Signature page follows]

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

47

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
duplicate on the day and year first above written.

            DEPOMED, INC.
      By:   /s/ John W. Fara         Name:   John W. Fara        Title:  
President and CEO     

            KING PHARMACEUTICALS, INC.
      By:   /s/ Brian A. Markison         Name:   Brian A. Markison       
Title:   President and CEO   

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

--------------------------------------------------------------------------------

 

SCHEDULES
Schedule 1.33 — Depomed Trademarks
Schedule 1.54 — King Trademarks
Schedule 1.56 — Initial Launch Plan
Schedule 3.2 — JCC Members
Schedule 4.5 — Advertising/Marketing/Educational Expenses
Schedule 6.3 — Volume Forecast

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

--------------------------------------------------------------------------------

 

Schedule 1.33
Depomed Trademarks

          Mark   Serial/Registration Numbers  
GLUMETZA
  Ser. No. 78340355
DEPOMED
  Reg. No. 2112593
DEPOMED (word and design mark)
  Ser. No. 78781903
ACUFORM
  Ser. No. 78781863

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

--------------------------------------------------------------------------------

 

Schedule 1.54
King Trademarks

          Mark   Serial/Registration Numbers  
KING PHARMACEUTICALS
  Reg. No. 2871392
KING PHARMACEUTICALS
  Reg. No. 2927079
KING PHARMACEUTICALS and Design
  Ser. No. 78-842125
Design Mark
  Ser. No. 78-842009

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

--------------------------------------------------------------------------------

 

Schedule 1.56
Glumetza Initial Launch Plan
Market Overview
[***] affects [***] people in the US, and [***] have shown that [***]. The cost
[***] or roughly [***], is spent [***] of the [***] with [***]. Of this, [***]
is spent [***] that can [***] of the [***].
[***] has been well [***] to its [***] at [***] and its [***]. However, [***]
have [***] frequently need [***] quickly, usually the [***]. Still, [***] per
year. And although [***], there is an [***].
Product Background
Glumetza[***] a full [***]. Although the [***].
     • [***] were able to [***]
     • [***] of the [***] — significantly more than the [***]
     • Several [***]
     o            Less [***] than [***]
     o            Similar [***], but with [***]
     o            [***] in minimal [***]
Launch Overview
Glumetza product will be [***] the first [***] by the 2nd or 3rd [***]. The
[***], which will begin [***], and such [***]. The product [***] on called
[***].
Positioning
Glumetza is the [***]
     > Reaching [***] is a [***] — [***] is to [***] the most [***] from [***]
     > [***] various [***] that [***] in the [***]
     > Represents the [***] that [***], and [***] to the [***]
Key areas of focus
1. [***]
[***]AcuFormTM as [***] factor: Glumetza [***] Depomed’s AcuForm technology
which is the [***] for its [***]. It has several [***] its better [***] [***].
[***]Glumetza[***] better [***] than all [***].
In [***] research, [***] onto the [***] as the reason to [***]Glumetza [***]
better than [***]. Furthermore, [***] were willing [***] on how the [***] better
[***].
[***] Need: [***] is commonly accepted as the [***] to its [***]. However, [***]
how it [***], such as [***]. Ultimately the [***].
Our [***] on the [***]. At its [***] off a [***] for [***], even more [***].

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

--------------------------------------------------------------------------------

 

[***]Glumetza will [***], and emphasize that its [***]. [***]Glumetza[***] that
demonstrates [***], and we will [***].
[***], we will apply [***] and [***] to describe [***], yet do not [***].
Glumetza[***] goal: [***] goals is [***] and Glumetza will its [***] on how it
[***]. Significantly [***]Glumetza (without any [***], because Glumetza[***].
Goal [***]: Together with [***] that [***] goals, [***] plan to [***]. One idea
is to [***]Glumetza[***].
[***] the [***]
[***]: Depomed has [***], to assist [***] that are [***] that is [***].
[***]: While Glumetza[***] have data that [***], where appropriate, [***].
Not only will the [***], but also will [***].
[***]: Glumetza already has [***]. We expect another [***].
[***]: Years of [***] for [***] that will [***]. Healthcare [***] will be done
[***] is the [***] for which [***].
2. Point of Sale
[***]: Glumetza currently has [***]. We anticipate [***], which should [***]. We
plan to [***] in order to [***].
To support the [***], we have [***]Glumetza[***] emphasizes the [***] [***] —
particularly in [***].
Depomed has [***] with the [***].
[***]: Glumetza[***]. There are [***]Glumetza. We plan to [***] through various
[***], as determined [***]. We will [***] to encourage [***].
Glumetza is already [***], however we are [***]Glumetza receives a [***].
[***]: We have initiated [***] that will [***] will be [***].
Other launch plans
Pricing: The [***] price range will be [***]. The pricing [***]. These [***],
will further refine the price [***].
[***]: Depomed will have [***] with the [***]. The first [***] will be the [***]
King Pharmaceuticals [***] to have [***] upon the [***]Glumetza.
[***]: We are preparing a Glumetza[***] that [***]Glumetza and its [***]. This
[***] general [***].
[***]: [***] will be a [***] of the [***] of the [***]. While the exact [***] to
be [***] have begun [***].
[***]: Glumetza will be [***].

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

2

--------------------------------------------------------------------------------

 

[***]: [***] over the [***].
Launch [***]: [***] will take [***], with many [***]. We expect [***].
[***]: [***] during [***][***].

          [***]   [***]   [***]
[***]       [***]
    [***]       [***]
[***]       [***]
[***]       [***]
[***]       [***]
[***]
    [***]
    [***]
    [***]
[***]
[***]
  [***]
[***]
[***]
[***]
[***]   [***]
[***]
    [***]
    [***]
[***]
[***]
[***]
[***]

Budget: The budget for the Launch Plan will [***] with the [***]the parties
[***], with the [***]of which Depomed [***] King. The parties [***] will not
[***]; provided that [***] Depomed [***]and included with the [***] will
determine a [***].

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

3

--------------------------------------------------------------------------------

 

Schedule 3.2
Depomed Initial JCC Representatives:
     [***]
King Initial JCC Representatives:
     [***]

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

--------------------------------------------------------------------------------

 

Schedule 4.5

          Year   Advertising/Marketing/Educational Expenses
2006
  $ [***]  
2007
  $ [***]  
2008
  $ [***]  
2009
  $ [***]  
2010
  $ [***]  
2011
  $ [***]  

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

--------------------------------------------------------------------------------

 

Schedule 6.3
Volume Forecast

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.

 

--------------------------------------------------------------------------------

 

Glumetza[***] Forecast for the 1st 12 Months after Launch

                                                                               
                                                          (000s)   Aug-06    
Sep-06     Oct-06     Nov-06     Dec-06     Jan-07     Feb-07     Mar-07    
Apr-07     May-07     Jun-07     Jul-07     Aug-07     Sep-07     Oct-07    
Nov-07     Dec-07  
Demand Fcst in [***]
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]  
Adj to Demand Fcst
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]  
Ex-Factory Fcst in [***]
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]  
Projected Inventory on Hand
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]  
Projected Inventory MOHs
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]  

          1st 12 Mths   2006  
Total
  Total
[***]
    [***]  
[***]
    [***]  
[***]
    [***]  

Assumptions:
Stock in Quantity: [***]
[***] = [***]
Wholesalsers will reduce

Portions of this Exhibit were omitted and have been filed separately with the
Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934.