Exhibit 10.2

 

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH
"***".   A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION
REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE EXCHANGE ACT OF 1934.

 

CO-PROMOTION AGREEMENT

This Co-Promotion Agreement (this “Agreement”) is entered into this 24th day of
July, 2006 by and between Depomed, Inc., a California corporation (“Depomed”),
and Esprit Pharma, Inc., a Delaware corporation (“Esprit”).

BACKGROUND

A.            Esprit has exclusive marketing rights to the extended release
ciprofloxacin hydrochloride pharmaceutical product known as ProQuin® XR, which
product is the subject of NDA #021744 (as such NDA may be amended or
supplemented subsequent to the Effective Date) (the “Product”).

B.            Esprit and Depomed desire to enhance the marketing of the Product
in the Territory (as hereinafter defined) by enlisting the support and
participation of Depomed and the Depomed Sales Force (as defined below) in the
Product marketing effort.

AGREEMENT

Now, therefore, in consideration of the foregoing and the mutual promises herein
contained, Esprit and Depomed hereby agree as follows:

1.             DEFINITIONS

1.1.          “Affiliate” means a corporation or business entity that, directly
or indirectly, is controlled by, controls, or is under common control with any
entity.  For this purpose, “control” means the direct or indirect ownership of
more than fifty percent of the voting or income interest in such corporation or
business entity, or such other relationship as, in fact, constitutes actual
control.

1.2.          “Call” means an in-person, face-to-face sales presentation of the
Product made by a sales representative, which presentation is for the purpose of
promoting the sale of the Product.

1.3.          “Depomed Net Sales” means, for a particular period, the amount
calculated by multiplying (a) Net Sales for such period by (b) the Depomed
Percentage.

1.4.          “Depomed Percentage” means, for a particular period, the
percentage determined by dividing (a) the total number of Units of prescriptions
for Product written during such period by Prescribers on the Depomed Physician
List (not including any Prescriber who is an Excluded Depomed Physician as of
the end of any calendar month included within such period), by (b) the total
number of Units of prescriptions for Product written during such period, in each
case based on Prescriber Data for the applicable period.

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1.5.          “Depomed Physician List” means the list of Prescribers to whom,
pursuant to the terms of this Agreement, the Depomed Sales Force conducts Calls,
as such list may be amended from time to time either (i) by mutual agreement of
Esprit and Depomed, or (ii) otherwise in accordance with this Agreement. 
Notwithstanding the foregoing, the Depomed Physician List will not include
urologists, ob/gyns or Prescribers on the Esprit Target Physician List, and will
not include more than 40,000 Prescribers.

1.6.          “Early Termination Detail Amount” is an amount equal to ***.

1.7.          “Early Termination Fee” is an amount equal to ***.

1.8.          “Effective Date” means the date first set forth above.

1.9.          “Esprit Target Physician List” means those Prescribers identified
by Esprit with whom the Esprit Sales Force conducts Calls, which includes all
ob/gyns, urologists and certain high prescribing primary care physicians, as
such list may modified from time to time upon timely notice to Depomed. 
Notwithstanding the foregoing, the Esprit Target Physician List will not include
any Prescribers on the Depomed Physician List.

1.10.        “Excluded Depomed Physicians” means any Prescriber on the Depomed
Physician List who, following the Promotion Commencement Date ***.

1.11.        “FDA” means the United States Food and Drug Administration.

1.12.        “First Position Detail Call” means a Call in which a full Product
presentation is made,  during which key Product attributes are verbally
presented, the Product is the first Product presented and (c) on which the most
time is spent during the Call.  No more than one presentation in any Call shall
be considered a First Position Detail Call.

1.13.        “Fiscal Quarter” means the three-month periods ending on March 31,
June 30, September 30 and December 31 of each year, except for the first “Fiscal
Quarter” hereof, which shall begin on the Promotion Commencement Date and end on
the earliest to occur of the dates set forth in this sentence.  These periods
(other than the first “Fiscal Quarter” referred to above) correspond to the
quarters in the Esprit fiscal year, which ends on December 31 of each year.

1.14.        “License Agreement” means that certain Exclusive Marketing and
Supply Agreement, dated as of July 21, 2005, by and between Depomed and Esprit
as amended by Amendment No.1 thereto of even date herewith.

1.15.        “Marketing Plan” means a plan for the marketing and detailing of
the Product in the Territory to Prescribers, and may include provisions related
to promotional strategies, detailing plans, pricing, advertising plans and
budgets for promotional and advertising activities.

1.16.        “NDA” means a New Drug Application filed with the FDA.

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1.17.        “Net Sales” means the actual gross amount invoiced on sales of the
Product in the Territory by Esprit, its Affiliates, sublicensees and assigns to
independent, unrelated third parties during a calendar year in bona fide arms
length transactions, less the following deductions allowed and taken by third
parties and not otherwise recovered by or reimbursed to Esprit, its Affiliates,
sublicensees or assigns: (a) freight, insurance 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 and/or
duties or allowances on the selling price of the Product which fall due and are
paid as a consequence of such sale; (c) chargebacks, trade, quantity and cash
discounts and rebates actually allowed and taken to the extent customary in the
trade, including, without limitation, governmental rebates; (d) allowances or
credits, including but not limited to, allowances or credits to customers on
account of rejection, defects or returns of the Product or because of a
retroactive price reduction, and such other deductions (including without
limitation shortage deductions) actually taken by customers that are customary
in the trade; and (e) bad debt.  Net Sales shall not include a sale or transfer
to an Affiliate, sublicensee and assign or if done for clinical, regulatory or
governmental purposes where no consideration is received but the resale by such
Affiliate, sublicensee, or assign shall be considered a sale of the Product.

1.18.        “Prescribers” means physicians and other health care practitioners
who are permitted by law to prescribe Product in the Territory.

1.19.        “Prescriber Data” means data provided by a third party which
measures prescriptions written for Product (by individual Prescriber) in the
Territory during a specified time period, from a source mutually agreed in
writing by the parties.

1.20.        “Promotion Commencement Date” means the first date upon which the
Product is promoted within the Territory by the Depomed Sales Force in the
Territory to Prescribers.

1.21.        “Proprietary Information” means any and all scientific, clinical,
regulatory, marketing, financial and commercial information or data, whether
communicated in writing, orally or by any other means, which is owned and under
the protection of one party and is provided by that party to the other party in
connection with this Agreement.

1.22.        “Sales Force” means the sales representatives employed by or on
behalf of Depomed or Esprit, as the case may be, for the detailing of the
Product in the Territory to Prescribers.  A party’s Sales Force includes,
without limitation, any sales representatives engaged by the party during
through an arrangement with a contract sales organization or other third party
(in the case of Depomed, engaged in accordance with Section 2.5).

1.23.        “Second Position Detail Call” means any Call other than a First
Position Detail Call.

1.24.        “Supply Agreement” means that certain Supply Agreement, dated as of
July 21, 2005, by and between Depomed and Esprit.

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1.25.        “Term” of this Agreement means the period of time defined in
Section 13.1 of this Agreement.

1.26.        “TERRITORY” MEANS THE UNITED STATES OF AMERICA.

1.27.        “UNIT” MEANS A SINGLE TABLET OF THE PRODUCT.

2.             GRANTS AND OBLIGATIONS

2.1.          Grant of Co-Promotion Right.  Pursuant to its rights under the
License Agreement, Esprit hereby grants to Depomed, during the Term of this
Agreement, the non-exclusive right to promote and detail the Product in the
Territory to Prescribers jointly with Esprit, subject to the terms and
conditions of this Agreement.

2.2.          Limitation on Marketing Diligence.  Subject to the provisions of
this Agreement, including those related to termination and compensation and
those related to the Prescribers on whom Depomed is entitled to call, Depomed
shall have no specific minimum marketing diligence obligations with respect to
the Product with regard to minimum Calls or minimum First Position Details or
Second Position Details.

2.3.          Proprietary Interest in the Product.  Nothing contained in this
Agreement shall be deemed to grant Depomed, either expressly or by implication,
a license or other right or interest in any patent, trademark or other similar
property of Esprit or its affiliates except as may be necessary for Depomed to
promote and detail the Product pursuant to this Agreement; provided, however,
that except for the grant by Esprit to Depomed of the license to market the
Product in the Territory in the License Agreement, nothing in this Agreement
shall supersede or modify the provisions of the License Agreement relating to
intellectual property matters.

2.4.          Establishment of Depomed Physician List.  At Depomed’s option, it
may, but is not obligated to, have the Depomed Sales Force promote and detail
the Product directly to Prescribers who are not on the Esprit Target Physician
List.  Depomed will inform Esprit at least forty-five (45) days in advance of
the commencement of Calls by the Depomed Sales Force and provide Esprit with the
Depomed Physician List.  During such fifteen (15) day period following its
receipt of the Depomed Physician List, Esprit will be entitled to review the
Depomed Physician List and confirm that such list does not contain any
Prescribers who are, as of the end of the most recently completed month, on the
Esprit Target Physician List.  Following creation of the initial Depomed
Physician List, from time to time but not more than three (3) times per calendar
year, Depomed may have the Depomed Sales Force promote and detail the Product to
Prescribers on the Esprit Target Physician List, but such Prescribers will not
be added to the Depomed Physician List for purposes of calculating promotion
fees payable to Depomed hereunder.

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2.5.          Depomed Sales Force.  Depomed shall be entitled to perform Calls
through its own sales force, or through a contract sales organization engaged by
Depomed to perform Calls on Depomed’s behalf.  Depomed’s engagement of any third
party, other than members of Depomed’s sales force or a contract sales
organization, to perform Calls on Depomed’s behalf shall be subject to Esprit’s
prior written consent, which shall not be unreasonably withheld, delayed or
conditioned.  Prior to engaging any such third party to perform Calls on its
behalf, Depomed shall identify such third party in writing to Esprit (such
communication, a “Sales Force Notice”), and Esprit shall approve or reject in
writing Depomed’s engagement of such third party within fifteen (15) business
days after receipt from Depomed of the Sales Force Notice.  Esprit’s failure to
respond in writing to a Sales Force Notice within such fifteen (15) business day
period shall be deemed to be an approval of Depomed’s engagement of the third
party identified in the Sales Force Notice.

3.             MARKETING COMMITTEE

3.1.          Coordinators.  Esprit and Depomed shall each appoint an authorized
representative (“Coordinator”) between whom communications will be directed. 
Each party will notify the other as to the name of the individual so appointed. 
The Coordinators shall meet periodically in person or by video or telephone
conference, but not less frequently than monthly through 2006 and thereafter on
a quarterly basis, to monitor the call plan of the Depomed Sales Force and the
Esprit Sales Force to ensure coordination between the parties’ respective call
plans.  Each party may replace its Coordinator at any time, upon written notice
to the other party.

3.2.          Marketing Committee.  If requested by Esprit, Depomed’s
Coordinator shall appoint a qualified representative of Depomed with expertise
in the marketing of specialty pharmaceutical products to any marketing or
commercialization committee established by Esprit for the purpose of
coordinating and/or directing the marketing effort with respect to the Product
(such committee, the “Marketing Committee”).  The Marketing Committee may
perform such coordination and oversight functions as determined by Esprit.  Such
functions may include, among others:  (i) meeting from time to time, at mutually
agreeable times and locations, to discuss and coordinate the promotion and
detailing of the Product in the Territory and the strategies and programs that
should be developed to maximize Net Sales of the Product; and (ii) coordinating
marketing activities with respect to the Product.  Esprit will have the final
responsibility for developing promotional materials with respect to the Product
in the Territory.  The parties acknowledge that Depomed’s participation on the
Marketing Committee is not expected to require more than ten (10) working days
annually of the time of the Depomed representative appointed to the Marketing
Committee.

3.3.          Expenses.  Each party shall bear its own costs associated with its
participation in the Marketing Committee, including but not limited to the costs
of travel and expenses directly associated with participation in the Marketing
Committee.

3.4.          Dispute Resolution.  Esprit shall have the right to resolve any
disagreement among the members of the Marketing Committee in its sole and
absolute discretion.

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4.             PRODUCT PROMOTION

4.1.          Depomed Physician List.  Depomed shall be primarily responsible
for, and shall bear all costs and expenses associated with, the detailing of the
Product in the Territory to the Prescribers on the Depomed Physician List. 
Depomed will not compensate Esprit for services performed by the Esprit Sales
Force or for other costs of promotion incurred by Esprit.

4.2.          Promotional Materials.  Esprit shall create and develop sales and
promotional materials relating to the Product.  Depomed will not, without
Esprit’s prior review and approval, publish or distribute any sales or
promotional material with respect to the Product developed or created by or on
behalf of Depomed.  Esprit shall provide Depomed with copies of promotional
materials relating to the Product at ***% of Esprit’s out-of-pocket cost for
such materials.

4.3.          Adverse Reaction Reports.  During the Term of this Agreement, each
party shall promptly notify the other party of all information required to be
reported to the FDA coming into its possession concerning side effects, injury,
toxicity or sensitivity reaction including unexpected increased incidence and
severity thereof associated with commercial or clinical uses, studies,
investigations or tests with the Product (animal or human), throughout the
world, whether or not determined to be attributable to the Product (“Adverse
Reaction Reports”).  In the case of Adverse Reaction Reports within the scope of
21 CFR 314.80(c)(iii), Depomed shall transmit such adverse reaction reports so
that they are received by Esprit within three (3) business days after receipt by
Depomed, or such earlier reporting period as may be required by law.  Esprit
shall transmit adverse reaction reports to Depomed on a periodic basis, but no
less often than once every six (6) months; provided, however, that Esprit shall
promptly notify Depomed of any Adverse Reaction Report requiring the cessation
or substantial alteration of detailing activities by the Depomed Sales Force. 
All such communications shall be held in the strictest confidence by Depomed and
shall be subject to the terms of Article 11 hereof.

4.4.          Regulatory Compliance.  Depomed’s detailing and promotional
activities with respect to the Product shall be conducted (a) only in a manner
which is consistent with FDA and all other applicable regulatory approvals or
requirements which are then in effect with respect to the Product and (b) in
compliance with all applicable laws, restrictions and regulations of the FDA,
the Department of Commerce and any other United States, state, local, or
applicable agency or authority.  Depomed shall (a) limit its claims of efficacy
and safety for the Product to those that are consistent with approved
promotional materials and FDA-approved prescribing information for the Product
in the Territory, (b) not add, delete or modify claims of efficacy and safety in
the marketing of the Product under this Agreement from those claims of efficacy
and safety that are consistent with the FDA-approved prescribing information and
applicable law and (c) detail and promote the Product in adherence to applicable
laws and in compliance with the then current Pharmaceutical Research and
Manufacturers of America Code on Interactions with Healthcare Professionals.

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4.5.          Samples.  Esprit will provide Depomed with samples (such as
starter or trial kits) of Product for distribution to health care personnel and
the trade in connection with Depomed’s promotion of the Product hereunder at
***% Esprit’s out-of-pocket cost for such samples; provided, however, that
during the term of the Supply Agreement, Depomed may obtain samples directly
from its contract manufacturer (provided that Depomed shall supply Esprit’s
requirements of samples pursuant to the terms of the Supply Agreement prior to
supplying its own sample requirements).  With respect to Depomed’s purchase of
samples through either of the foregoing options, Depomed shall only order full
lots of samples.  Depomed shall maintain records concerning its trial kit or
sample distribution as required by the Prescription Drug Marketing Act of 1987
(the “Act”) and relevant state laws.  Depomed shall take such steps as necessary
to ensure that its representatives comply with all requirements of the Act,
including but not limited to obtaining requests and receipts signed by licensed
prescribers for all trial kits or samples delivered.  If requested by Esprit,
Depomed shall provide to Esprit copies of such records as the manufacturer is
required by the Act to retain.  Otherwise, Esprit shall have access to such
records in accordance with Section 12.1 of this Agreement.  Depomed shall
indemnify Esprit and hold Esprit harmless from any liability that Esprit may
incur, whether civil, criminal or otherwise, by reason of a violation of the Act
by Depomed or by any member of the Depomed Sales Force.

4.6.          Trademarks.  This Agreement shall not confer upon Depomed any
interest in any trademark or trade name associated with the Product in the
Territory, including those used in promotional materials.

4.7.          Ownership of Promotional Materials.  Esprit shall own all
copyrights to all advertising, promotional and training materials as well as all
other written materials, audiotapes, videotapes, or other copyrightable
materials that are created by or on behalf of Esprit during the Term of this
Agreement in connection with the marketing of the Product.  Depomed 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 Esprit.  Esprit shall, and
does hereby, grant to Depomed a royalty-free license to use and reproduce such
materials solely in conjunction with its performance of services pursuant to
this Agreement, which license shall not be assignable or transferable by
Depomed.

4.8.          Prescriber Data.  Depomed shall reimburse Esprit quarterly for the
portion of Esprit’s out-of-pocket costs incurred in procuring the Prescriber
Data that is equal to the cost of such Prescriber Data multiplied by the Depomed
Percentage for the applicable Fiscal Quarter.  Esprit shall make all Prescriber
Data available to Depomed promptly, but in no event more than twenty-one (21)
days following, Esprit’s receipt thereof.

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5.             DETAILING EFFORT; DEPOMED PHYSICIAN LIST

5.1.          Reports.  Following the Promotion Commencement Date, within thirty
(30) days following the end of each calendar month during the Term, Depomed
shall provide Esprit with a status report, which report will summarize Depomed’s
detailing efforts pursuant to this Agreement for such prior month and on a
rolling 12 month basis, including:  (a) the number of Calls made, including
detail as to the Prescribers who received Calls, dates of Calls and the relative
emphasis of the Calls (i.e., First Position Detail Call or Second Position
Detail Call); (b) information pertaining to the Depomed Sales Force, including
the number of sales representatives and the number of days in the field per
sales representative; (c) a list of Prescribers on the Depomed Physician List
who, as of the date such report, are Excluded Depomed Physicians.  Depomed
warrants and represents that it maintains records of Calls made by its Sales
Force and that these records accurately represent the number of Calls made and
the relative emphasis given to each Product during a Call.  Esprit shall be
entitled to audit the source data and documents used to compile such reports
pursuant to the provisions of Section 12.1 of this Agreement.

5.2.          Modification of Depomed Physician List.  Esprit may, in its sole
discretion, remove from the Depomed Physician List any Prescriber identified as
an Excluded Depomed Physician in the most recent report received by Esprit
pursuant to Section 5.1, or who otherwise qualifies as an Excluded Depomed
Physician.

5.3.          Esprit Reports.  Within thirty (30) days following the end of each
calendar month during the Term, Esprit shall provide Depomed with a status
report, which report will summarize, on a monthly and rolling three and 12 month
basis, including:  (a) the number of Calls made, including detail as to the
Prescribers who received Calls, dates of Calls and the relative emphasis of the
Calls (i.e., First Position Detail Call or Second Position Detail Call); (b)
information pertaining to the Esprit Sales Force, including the number of sales
representatives and the number of days in the field per sales representative;
and (c) a list of all Prescribers on the Esprit Target Physician List (which
list shall specifically identify those Prescribers who are Esprit Provisional
Prescribers).  Esprit warrants and represents that it maintains records of Calls
made by its Sales Force and that these records accurately represent the number
of Calls made and the relative emphasis given to each Product during a Call. 
Depomed shall be entitled to audit the source data and documents used to compile
such reports pursuant to the provisions of Section 12.1 of this Agreement.

6.             COMPENSATION

6.1.          Compensation.  During the Term, for each Fiscal Quarter of the
Term in which Depomed conducts detailing and promotional activities pursuant to
this Agreement, Esprit shall pay Depomed compensation at a rate equal to
eighteen (18) percent of the amount of Depomed Net Sales in such Fiscal
Quarter.  Compensation payable for any partial Fiscal Quarter during the Term
shall be pro-rated based on the number of days within such Fiscal Quarter that
occur during the Term relative to the total number of days within such Fiscal
Quarter.

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6.2.          Payment.  (a)  Within fifteen (15) days after receipt of the
Prescriber Data, but in no event later than sixty (60) days after the close of
each Fiscal Quarter during the Term, Esprit shall submit to Depomed an
accounting reporting the Depomed Net Sales and itemizing all deductions under
Section 1.17 for such Fiscal Quarter and calculating the compensation due
Depomed for said Fiscal Quarter under Section 6.1 above.  At the time of
submitting each accounting report, Esprit shall remit to Depomed all payments
accruing under this Agreement during such Fiscal Quarter.  All payments to
Depomed under this Agreement shall be made in U.S. Dollars.

(B)           DURING THE TERM OF THIS AGREEMENT, ANY RETURNS, RECALLS, CREDITS
OR OTHER REDUCTIONS TO NET SALES ALLOWED BY THIS AGREEMENT SHALL BE RECOGNIZED
IN THE FISCAL QUARTER IN WHICH THEY ARISE.  IF ANY SUCH REDUCTION RESULTS IN
NEGATIVE DEPOMED NET SALES FOR THE CURRENT FISCAL QUARTER, THE NEGATIVE AMOUNT
SHALL BE TREATED AS A REDUCTION TO DEPOMED NET SALES FOR THE FISCAL QUARTER(S)
IN WHICH THE SALES GIVING RISE TO SUCH RETURN, RECALL, CREDIT OR OTHER REDUCTION
OCCURRED (THE “RELEVANT FISCAL QUARTER”) SOLELY FOR PURPOSES OF CALCULATING THE
COMPENSATION THAT SHOULD HAVE BEEN PAID TO DEPOMED FOR THE RELEVANT FISCAL
QUARTER(S).

(C)           LIKEWISE, IF, AFTER THE TERM OF THIS AGREEMENT, ACTUAL DEPOMED NET
SALES ARE REDUCED DUE TO RETURNS, RECALLS, CREDITS, OR OTHER REDUCTIONS ALLOWED
BY THIS AGREEMENT RELATING TO PRODUCTS SOLD DURING THE TERM OF THIS AGREEMENT,
THEN THE NET SALES FOR THE RELEVANT FISCAL QUARTER(S) SHALL BE REDUCED
ACCORDINGLY, SOLELY FOR PURPOSES OF CALCULATING THE COMPENSATION THAT SHOULD
HAVE BEEN PAID TO DEPOMED FOR THE RELEVANT FISCAL QUARTER(S).

(D)           WHENEVER DEPOMED NET SALES FOR A RELEVANT FISCAL QUARTER ARE
REDUCED, WHETHER DURING OR AFTER THE TERM OF THIS AGREEMENT, ESPRIT SHALL GIVE
DEPOMED A REPORT DETAILING THE COMPENSATION PAID TO DEPOMED IN RESPECT OF
DEPOMED NET SALES DURING SUCH RELEVANT FISCAL QUARTER THAT IS IN EXCESS OF THE
COMPENSATION THAT SHOULD HAVE BEEN PAID TO DEPOMED BASED ON THE REDUCED DEPOMED
NET SALES, AND DEPOMED SHALL RETURN TO ESPRIT SUCH EXCESS COMPENSATION WITHIN
SIXTY DAYS AFTER RECEIPT OF SUCH REPORT.

(E)           FOR THE PURPOSES OF CALCULATING ANY REDUCTION IN DEPOMED NET SALES
AND ANY COMPENSATION THAT SHOULD HAVE BEEN PAID TO DEPOMED UNDER SECTIONS 6.2(B)
OR 6.2(C), OR THE EXCESS COMPENSATION THAT IS TO BE RETURNED TO ESPRIT BY
DEPOMED UNDER SECTION 6.2(D), IT SHALL BE ASSUMED THAT THE LAST PRODUCT SOLD IN
ANY RELEVANT FISCAL QUARTER IS THE FIRST PRODUCT TO COME BACK OR BE RETURNED,
RECALLED, ETC., THUS, IN EFFECT, CAUSING THE ABOVE CALCULATIONS TO BE DETERMINED
AT THE LOWEST COMPENSATION RATE THAT WAS USED IN ANY SUCH RELEVANT FISCAL
QUARTER, GRADUALLY WORKING TOWARD THE HIGHEST COMPENSATION RATE, IF MORE THAN
ONE COMPENSATION RATE WAS USED IN SUCH RELEVANT FISCAL QUARTER, AND, IF FURTHER
CALCULATION IS NEEDED, CONTINUING THIS PROCESS IN PRIOR RELEVANT FISCAL
QUARTER(S).

(F)            DEPOMED SHALL NOT BE OBLIGATED TO REIMBURSE ESPRIT WITH RESPECT
TO ANY COMPENSATION PAID BY ESPRIT TO DEPOMED UNDER SECTION 6.1 ON DEPOMED NET
SALES MADE BEFORE THE DATE OF TERMINATION OF THIS AGREEMENT THAT WERE
SUBSEQUENTLY REDUCED BY RETROACTIVE PRICING REDUCTIONS MADE AFTER SUCH DATE OF
TERMINATION.

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6.3.          Net Sales.  The parties acknowledge and agree that “Net Sales”
during any particular period under this Agreement is intended to correspond to
“Net Sales” calculated under the License Agreement during the same period, and
that any modification of License Agreement to the definition or calculation of
“Net Sales”, unless otherwise agreed in writing by the parties, is intended to
apply to the definition and calculation of “Net Sales” for purposes of this
Agreement.

7.             REGULATORY AFFAIRS AND MEDICAL INQUIRY

7.1.          Ownership of NDA.  Esprit will maintain ownership of the NDA to
market the Product and any supplements thereto.  Any future regulatory
submissions pertaining to the Product shall be filed by Esprit and maintained in
its name, and Esprit shall own any regulatory approvals that may be issued with
respect to the Product.

7.2.          Regulatory Affairs.  Esprit shall have the sole right and
responsibility, and shall bear all costs related thereto, to take such actions
as may be necessary, in accordance with accepted business practices and legal
requirements, to maintain the authorization and/or ability to market the Product
in the Territory to Prescribers, including, without limitation, the following:

(A)           RESPONDING TO CUSTOMER AND MEDICAL COMPLAINTS RELATING TO THE
QUALITY, STRENGTH OR PURITY OF THE PRODUCT.  DEPOMED AGREES THAT IT SHALL
PROMPTLY REFER ANY SUCH COMPLAINTS THAT IT RECEIVES TO ESPRIT;

(B)           HANDLING ALL RETURNS OF THE PRODUCT.  IF THE PRODUCT IS RETURNED
TO DEPOMED, IT SHALL BE SHIPPED TO ESPRIT’S NEAREST DISTRIBUTION CENTER, WITH
ANY REASONABLE OR AUTHORIZED SHIPPING OR OTHER DOCUMENTED OUT-OF-POCKET COST TO
BE PAID BY DEPOMED.  DEPOMED AND ESPRIT SHALL EACH ADVISE THEIR CUSTOMERS
GENERALLY THAT THEY SHOULD MAKE RETURNS TO ESPRIT;

(C)           HANDLING ALL RECALLS OF THE PRODUCT.  AT ESPRIT’S REQUEST, DEPOMED
WILL ASSIST ESPRIT IN RECEIVING THE RECALLED PRODUCT, AND ANY DIRECT DOCUMENTED
OUT-OF-POCKET COSTS INCURRED BY DEPOMED WITH RESPECT TO PARTICIPATING IN SUCH
RECALL SHALL BE REIMBURSED BY ESPRIT.

7.3.          Communications with Regulatory Authorities.  Esprit shall have the
sole right and responsibility and shall bear all costs related to communications
with any government agencies to satisfy their requirements regarding the
authorization and/or continued authorization to market the Product in commercial
quantities in the Territory to Prescribers.  Depomed shall promptly notify
Esprit of any inquiry or other communication that it receives from the FDA
concerning the Product.  Esprit shall handle all communications with the FDA
concerning the Product, including but not limited to reporting adverse reactions
and responding to any inquiries concerning advertising or promotional materials,
and shall provide copies of all such communication to Depomed.  Depomed, however
shall be able to communicate with such governmental agency regarding the Product
if:

(A)           SUCH COMMUNICATION IS NECESSARY TO COMPLY WITH THE TERMS OF THIS
AGREEMENT OR THE REQUIREMENTS OF ANY LAW, GOVERNMENTAL ORDER OR REGULATION; OR

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(B)           DEPOMED, IF PRACTICAL, MADE A REQUEST OF SUCH AGENCY TO
COMMUNICATE WITH ESPRIT INSTEAD, AND SUCH AGENCY REFUSED SUCH REQUEST;

provided, however, that before making any communication under (a) or (b) of this
Section, Depomed shall give Esprit notice as soon as possible of Depomed’s
intention to make such communication, and Esprit shall be permitted to accompany
Depomed, take part in any such communications and receive copies of all such
communications.

7.4.          Medical Inquiries.  Esprit shall respond to medical questions or
inquiries relating to the Product directed to Depomed.  Depomed shall instruct
its Sales Force to direct medical inquiries either to Esprit’s medical personnel
or to the toll-free number referred to in the following sentence.  Esprit shall
maintain a toll-free telephone number to provide information in response to
inquiries from health care professionals and consumers.  This number shall be
noted in all appropriate advertising and promotional materials.

7.5.          License Agreement.  In the event of any inconsistency between the
provisions of this Article 7 and Article 9 of the License Agreement, the License
Agreement shall control.

8.             SUPPLY AND DISTRIBUTION

8.1.          Supply.  During the term of the Supply Agreement, the Product
shall be supplied to Esprit pursuant to the terms and conditions thereof.  As
between Depomed and Esprit, solely for purposes of this Agreement, Esprit shall
have sole responsibility and obligation for ensuring that the Product is
manufactured, either directly or through a contractor (whether pursuant to the
Supply Agreement or otherwise), receiving and processing orders, distributing
the Product to customers, and handling Product inventory and receivables, and
Esprit shall bear all costs of such activities.  Esprit shall use reasonable
efforts to insure that sufficient stock of the Product will be available in its
inventory to promptly fill orders from the trade based on its reasonable
forecasts of the commercial quantity of product reasonably necessary to ensure
the consistent availability of the Product throughout the Territory.  Esprit
shall also use reasonable efforts to have FDA-approved manufacturing facilities
available to it or its manufacturer (which facilities may be located outside of
the Territory) that can produce an amount of the Product in any fiscal year that
is equal to or greater than the amount of Product reasonably necessary to ensure
the consistent availability of the Product throughout the Territory, based on
Esprit’s reasonable forecast.

8.2.          Distribution.  Esprit will supply and distribute the Product to
its customers in accordance with the specifications and requirements set forth
in the NDA approved by the FDA for sale of the Product in the Territory.  Esprit
will be responsible and obligated to supply the Product to customers in
accordance with purchase orders received by Esprit from customers for the
Product, which supply of the Product shall meet FDA requirements as set forth
above.

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8.3.          Direct Sales.  Esprit will generally deliver the Product only to
wholesalers and to direct buying customers who have accounts with Esprit or its
distributor.  If Depomed desires to arrange for Esprit to make direct sales of
the Product to any customers who do not have accounts with Esprit or its
distributor, Depomed will provide the documentation required by Esprit to
determine whether to open an account for such customer.  Depomed is not
authorized to open an account with any customer or accept any order on behalf of
Esprit.  All orders are subject to acceptance by Esprit.

8.4.          Orders Received by Depomed.  If, for any reason, Depomed should
receive orders for the Product other than pursuant to the Supply Agreement,
Depomed shall promptly forward such orders to Esprit.

8.5.          Inability to Supply.  In the event that Esprit is at any time
unable to supply the Product for any reason whatsoever, whether due to the
failure of Esprit or its contract manufacturers to meet their obligations to
supply Product or otherwise, such failure will be treated as a force majeure
condition under Article 14, and Depomed’s sole and exclusive remedy in respect
of such supply failure shall be termination of this Agreement pursuant to
Article 14.  In furtherance and not in limitation of the foregoing, in no event
shall Esprit be responsible under this Agreement for an inability to supply
Product resulting from a breach by Depomed of the Supply Agreement.

9.             REPRESENTATIONS AND WARRANTIES.

Each party hereby represents and warrants to the other party as follows:

(A)           IT IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS INCORPORATION.  IT HAS ALL
REQUISITE POWER AND AUTHORITY TO CARRY ON ITS BUSINESS AND TO OWN AND OPERATE
ITS PROPERTIES AND ASSETS.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT HAVE BEEN DULY AUTHORIZED BY ITS BOARD OF DIRECTORS.  SUCH PARTY HAS
OBTAINED ALL AUTHORIZATIONS, CONSENTS AND APPROVALS, GOVERNMENTAL OR OTHERWISE,
NECESSARY FOR THE EXECUTION AND DELIVERY OF THIS AGREEMENT, AND TO OTHERWISE
PERFORM SUCH PARTY’S OBLIGATIONS UNDER THIS AGREEMENT.

(B)           THERE IS NO PENDING OR, TO ITS KNOWLEDGE, THREATENED LITIGATION
INVOLVING IT WHICH WOULD HAVE ANY MATERIAL ADVERSE EFFECT ON THIS AGREEMENT OR
ON ITS ABILITY TO PERFORM ITS OBLIGATIONS HEREUNDER.

(C)           THERE IS NO INDENTURE, CONTRACT, OR AGREEMENT TO WHICH IT IS A
PARTY OR BY WHICH IT IS BOUND WHICH PROHIBITS OR WOULD PROHIBIT THE EXECUTION
AND DELIVERY BY IT OF THIS AGREEMENT OR THE PERFORMANCE OR OBSERVANCE BY IT OF
ANY MATERIAL TERM OR CONDITION OF THIS AGREEMENT.

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10.           INDEMNIFICATION.

10.1.        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
attorneys fees, arising out of any claim, suit or proceeding brought against the
other party 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) and (ii)) to the extent arising out of the
breach, violation, failure, negligence or willful misconduct of the indemnified
party.  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 if any such claim or action 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 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.

10.2.        Survival.  The provisions of this Article 10 shall survive
termination of this Agreement and shall remain in effect until a date seven (7)
years after the Term of this Agreement.

11.           CONFIDENTIALITY

11.1.        Confidentiality Obligation.  Except as specifically authorized by
this Agreement, each party shall, for the Term and for five (5) years after the
expiration or termination of this Agreement, keep confidential, not disclose to
others and use only for the purposes authorized herein all Proprietary
Information provided by the other under this Agreement; provided, however, that
the foregoing obligations of confidentiality shall not apply to the extent that
any such information is (i) already known to the recipient at the time of
disclosure as evidenced by its prior written records; (ii) published or publicly
known prior to or after disclosure other than through unauthorized acts or
omissions of the recipient; (iii) disclosed in good faith to the recipient by a
third party entitled to make such disclosure; or (iv) independently developed by
or on behalf of the recipient without recourse to the disclosure herein as
documented in writing.  Notwithstanding the aforesaid, the recipient may
disclose Proprietary Information to governmental agencies as required by law,
and to vendors and clinical investigators having a need to know and as may be
necessary for the recipient to perform its obligations hereunder, but only if
such disclosure to vendors and, where practicable, to clinical investigators is
in accordance with a written agreement imposing essentially the same obligation
of confidentiality on such party as is imposed upon the recipient hereunder.

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11.2.        Survival.  The provisions of this Article 11 shall survive
termination of this Agreement and shall remain in effect until a date seven (7)
years after the Term of this Agreement.

12.           AUDITS

12.1.        Maintenance of Records.  Each party agrees to keep, for a period of
at least three (3) years after the date of entry (or such longer period as may
be required by law, or regulation) full and accurate records maintained in
accordance with such party’s accounting practices in sufficient detail to enable
a third party to accurately calculate Calls completed (in the case of Depomed),
and Net Sales and Depomed Net Sales reported and payments to be made under this
Agreement (in the case of Esprit).  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 twice each fiscal year while
this Agreement remains in effect and for two (2) years thereafter in order to
verify the calculation of Calls completed (in the case of Depomed), or Net Sales
and Depomed Net Sales reported and payments to be made under this Agreement (in
the case of Esprit).  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
examined party has reported incorrectly, and the amount of such discrepancy is
at least five (5) percent of the aggregate amount that should have been reported
for the period examined, then the examined party shall pay the entire amount of
the fees and expenses for such verification.

12.2.        Audits Conclusive.  All audits and reports and all information
contained therein provided to a party pursuant to this article shall be deemed
conclusive and binding upon such party unless written objection shall be lodged
with the other party within one year from the date of such audit or report,
except that objections discoverable only upon audit shall be reserved for a
period of one year after completion of an audit in which the facts giving rise
to the objection are discovered.

12.3.        Calculation of Costs.  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,
consistent with the terms of this Agreement.  The term “out-of-pocket” costs
means costs paid to third parties and shall not include any fixed costs,
personnel costs, overhead costs, or other costs of a similar nature.

13.                                 TERM AND TERMINATION

13.1.        Term.  The Term of this Agreement shall commence on the Effective
Date and shall continue, unless terminated sooner in accordance with Section 8.5
or the subsequent provisions of this article, until July 24, 2010.  The Term of
this Agreement may be extended for subsequent two year periods upon the mutual
agreement of the parties, which agreement shall be set forth in writing. 
Notwithstanding the foregoing, the Term of this Agreement shall immediately
expire upon any termination or expiration of the License Agreement.

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13.2.        Termination for Cause.  Either party may terminate this Agreement
for Good Cause (as defined in Section 13.4 below), effective at any time after
providing sixty (60) days written notice and an opportunity to cure during such
sixty (60) day period (if such cure is effected, such notice with respect to
such good cause shall be null and void).  If the agreement is so terminated by
Depomed for Good Cause, Esprit shall pay to Depomed all of the compensation due
to Depomed under Section 6.1 up to and including the calendar month in which
effective termination occurs, including sums which have accrued but have not yet
been paid as of the effective date of termination.

13.3.        Termination for Change in Control. Esprit may terminate this
Agreement upon an Esprit Change in Control (as defined in the License Agreement)
upon ninety (90) days’ prior written notice, or one hundred eighty (180) days’
prior written notice if the Promotion Commencement Date has occurred, to Depomed
delivered within ninety (90) days’ following the consummation of such Change of
Control; provided, however, that if the Promotion Commencement Date occurs prior
to Depomed’s receipt of such notice of termination, or if Depomed provides to
Esprit a notice of its intention to commence Calls by the Depomed Sales Force
pursuant to Section 2.4 prior to Depomed’s receipt of such notice of
termination, then such termination shall be effective only if Esprit pays
Depomed an Early Termination Fee not later than thirty (30) days after the date
on which Depomed receives a notice of termination pursuant to this Section 13.3.

13.4.        Definition of Good Cause.  “Good Cause” which entitles a party to
terminate this Agreement under Section 13.2 means:

(A)           THE MATERIAL FAILURE OF THE OTHER PARTY TO COMPLY WITH ITS
MATERIAL OBLIGATIONS CONTAINED IN THIS AGREEMENT.  THESE MATERIAL OBLIGATIONS
INCLUDE, BUT ARE NOT LIMITED TO, (I) THE FAILURE OF ESPRIT TO MAKE THE PAYMENTS
REQUIRED BY SECTIONS 6.1, (II) ESPRIT BEING CONSIDERED AS UNABLE TO SUPPLY THE
PRODUCT IN ACCORDANCE WITH SECTION 8.2, AND (III) DEPOMED’S MATERIAL BREACH OF
ITS OBLIGATIONS UNDER SECTION 4.4;

(B)           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

(C)           ANY FORCE MAJEURE AS DEFINED IN ARTICLE 14 AFFECTING THE OTHER
PARTY BEYOND THE OTHER PARTY’S CONTROL WHICH LASTS FOR A PERIOD OF AT LEAST SIX
(6) 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.

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13.5.        Force Majeure.  Any force majeure of the type described in Article
14 affecting a party hereunder shall provide 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 is discontinued during such sixty day period), in
addition to the right to terminate this Agreement for good cause under Section
13.2, the right to (i) extend this Agreement for a period equal to the duration
of the force majeure 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.

13.6.        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.

13.7.        Remedies.  Except as indicated in Sections 8.5 and 18.4,
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.

13.8.        Post-Termination Obligations.  No additional payment obligations
arising under Article 6 hereof shall accrue after the date of expiration or
termination of this Agreement; 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.  Any
expiration or termination of this Agreement shall be without prejudice to the
rights of any party against the other accrued or accruing under this Agreement
prior to expiration or termination.  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. 
Upon the expiration or termination of this Agreement pursuant to this Article
13, 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).

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14.           FORCE MAJEURE

14.1.        Force Majeure Event.  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,
accident, act of God, or compliance with or other action taken to carry out the
intent or purpose of any law or regulation), 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.

14.2.        Performance.  In the event that a party is unable to perform by a
reason described in Section 14.1 above, its obligation to perform under the
affected provision of this Agreement shall be suspended during such time of
nonperformance.

14.3.        Effect.  If the delay resulting from the force majeure exceeds six
months, the injured party may elect to treat such delay as a default and may
terminate this Agreement pursuant to the provisions of Section 13.2.  If no
notice of such election is given prior to termination of the force majeure, the
agreement will continue in effect without modification.

15.           PUBLICITY

Neither party will originate any publicity, news release, public comment or
other public announcement, written or oral, 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 relationship of the parties reflected in this Agreement (i.e., Esprit as the
marketer of the Product and Depomed as the co-promoter of the Product in the
Territory) in a manner 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 without limitation 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. The provisions of this Article 15
shall survive termination of the agreement and shall remain in effect until a
date seven (7) years after the Term of this Agreement.

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16.                           NOTICES

16.1.        Notices.  All notifications, demands, approvals and communications
required to be made under this Agreement shall be given in writing and shall be
effective when either personally delivered or sent by facsimile if followed by
prepaid air express addressed as set forth below.  The parties hereto shall have
the right to notify each other of changes of address during the life of this
Agreement.

DEPOMED, INC.

1360 O’Brien Drive

Menlo Park, California  94025

Attention:  President

Facsimile:  650-462-9991

With a copy to:

Heller Ehrman LLP

275 Middlefield Road

Menlo Park, California  94025

Attention:  Julian N. Stern

Facsimile:  650-324-0638

ESPRIT PHARMA, INC.

2 Tower Center Boulevard
East Brunswick, NJ  08816
Attn:  Steve Bosacki, General Counsel
Facsimile:  (732) 828-9954

16.2.        Receipt.  Any such notice mailed as aforesaid shall be deemed to
have been received by and given to the addressee on the date specified on the
notice of receipt and delivery evidenced to the sender.

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17.           ARBITRATION

Any and all disputes between the parties relating in any way to the entering
into of this Agreement and/or the validity, construction, meaning,
enforceability, or performance of this Agreement or any of its provisions, or
the intent of the parties in entering into this Agreement, or any of its
provisions, or any dispute relating to patent validity or infringement arising
under this Agreement shall be settled by arbitration.  Such arbitration shall be
conducted in San Francisco, California (if brought by Depomed) or Newark, New
Jersey (if brought by Esprit) in accordance with the rules then pertaining of
the American Arbitration Association with a single arbitrator selected by the
American Arbitration Association from the National Panel of Arbitrators. 
Reasonable discovery as determined by the arbitrator shall apply to the
arbitration proceeding.  The law of the State of California shall apply to the
arbitration proceedings.  Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.  The successful party in
such arbitration, in addition to all other relief provided, shall be entitled to
an award of all its reasonable costs and expenses including attorney costs.

18.           MISCELLANEOUS

18.1.        Assignment.  This Agreement may be assigned by either party without
the consent of the other party to (i) an Affiliate, or (ii) a third party in
connection with the acquisition of a party (whether by merger, asset sale or
otherwise) or the business of a party associated with the Product.  This
Agreement may not otherwise be assigned by either party without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed.  Each party shall provide the other with at least thirty
(30) days’ prior written notice of any assignment of this Agreement.  No
assignment permitted by this Section 18.1 to an Affiliate shall serve to release
either party from liability for the performance of its obligations hereunder.

18.2.        Independent Contractors.  Nothing herein contained shall be
construed to constitute the parties hereto as partners or as joint venturers, or
either as agent for the other.  No employee or representative of a party shall
have any authority to bind or obligate the other party to this Agreement for any
sum in any manner whatsoever, or to create or impose any contractual or other
liability on the other party without said party’s authorized written approval. 
For all purposes, and notwithstanding any other provision of this Agreement to
the contrary, Depomed’s legal relationship under this Agreement to Esprit shall
be that of independent contractor.

18.3.        Entire Agreement.  This Agreement, the License Agreement and the
Supply Agreement represent the entire agreement between the parties concerning
the subject matter hereof and thereof and supersedes all prior or
contemporaneous oral or written agreements of the parties.  This Agreement may
be modified, amended or changed only by a written instrument signed and
delivered by the parties, with clear intent to modify, amend or change the
provisions hereof.

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18.4.        NO CONSEQUENTIAL DAMAGES.  NEITHER ESPRIT NOR DEPOMED (WHICH FOR
THE PURPOSES OF THIS SECTION 18.4 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.

18.5.        Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original.

18.6.        Governing Law.  This Agreement, including without limitation any
arbitration, shall be construed, regulated and administered and governed in all
aspects under and in accordance with the law of the State of California
(excluding its or any other jurisdiction’s choice of law principles).

18.7.        Waiver.  Except to the extent that a party may have otherwise
agreed in writing, no waiver by such party of any breach by any other party of
any of the other party’s obligations, agreements or covenants hereunder shall be
deemed to be a waiver by such first party of any subsequent or other breach of
the same or any other obligation, agreement or covenant; nor shall any
forbearance by a party to seek a remedy for any breach by the other be deemed a
waiver by said party of its rights or remedies with respect to such breach or of
any subsequent or other breach of the same or any other obligation, agreement or
covenant.

18.8.        Binding Effect.  Except as provided in Section 18.1, this Agreement
shall be binding upon and inure to the benefit of the parties to this Agreement
and their respective successors.

18.9.        Headings.  Headings as used in this Agreement are for convenience
only and are not to be construed as having any substantive effect by way of
limitation or otherwise.  References to Sections herein are, unless otherwise
indicated, references to the designated Sections of this Agreement, unless the
content requires otherwise.

18.10.      SEVERABILITY.  IF ONE OR MORE OF THE PROVISIONS OF THIS AGREEMENT
SHALL, BY ANY COURT OR UNDER ANY PROVISION OF LAW, BE FOUND TO BE VOID OR
UNENFORCEABLE, THE AGREEMENT AS A WHOLE SHALL NOT BE AFFECTED THEREBY, AND THE
PROVISIONS IN QUESTION SHALL BE REPLACED BY AN INTERPRETATION IN CONFORMITY WITH
LAW WHICH COMES CLOSER TO EFFECTING THE PARTIES’ ORIGINAL INTENTION.

18.11       Consent to Grant of Security Interest.  Depomed does hereby consent
to the granting of a security interest in this Agreement in favor of any
Fortress Credit Corp. pursuant to that certain Loan Agreement, dated as of March
9, 2006, among Esprit, Fortress Credit Corp. and the lenders identified
therein.   Depomed agrees to execute such other documentation may be reasonably
requested by Fortress Credit Corp. to evidence such security interest.

[signature page follows]

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Wherefore the parties have caused this Agreement to be executed and delivered by
their undersigned duly authorized representatives.

DEPOMED, INC.

ESPRIT PHARMA, INC.

 

 

By:

/s/ Carl A. Pelzel

 

By:

/s/ Steven M. Bosacki

Name: Carl A. Pelzel

Name: Steven M. Bosacki

Title: Executive Vice President & COO

Title: VP, General Counsel & Assistant Secretary

 

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Schedule 1.6
Per Detail Amount

Number of complete months following the
Promotion Commencement Date

 

 

Per Detail Amount

 

***

***

 

 

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