Exhibit
10.1


 


SETTLEMENT AGREEMENT AND RELEASE


This Settlement Agreement and Release is made and
entered into this 22nd day of November 2002, by and between Bristol-Myers
Squibb Company (“Bristol”), a Delaware corporation having a place of business
at 345 Park Avenue, New York, New York, and DepoMed, Inc. (“DepoMed”), a
California corporation having a place of business at 1360 O’Brien Drive,
Menlo Park, California.  Bristol and
DepoMed are collectively referred to herein as “the Parties.”


WITNESSETH


WHEREAS,
DepoMed commenced Civil Action No. C02-0336 WHA against Bristol in the United
States District Court for the Northern District of California (“the
Litigation”), alleging infringement of United States Patent 6,430,475 (the
“‘475 patent”) and asserting other causes of action against Bristol for unfair
competition, breach of contract and the covenant of good faith and fair dealing
and misappropriation of trade secrets and ideas under state law;


WHEREAS,
Bristol asserted counterclaims against DepoMed in the litigation for breach of
contract and declaratory judgment of non-infringement and invalidity of, and
ownership interest in the ‘475 patent;


WHEREAS,
Bristol obtained leave of court to assert claims against Biovail Laboratories
Incorporated for interference with contract and unfair competition;


WHEREAS,
the Parties desire to amicably resolve the Litigation and all claims that have
been and/or could be asserted therein by the Parties;


 

















 


WHEREAS,
in settlement of the Litigation, Bristol has agreed to pay a certain sum to
DepoMed, DepoMed has agreed to dismiss with prejudice all claims it has
asserted or could have asserted in the Litigation, Bristol has agreed to
dismiss with prejudice all claims it has asserted or could have asserted in the
Litigation, and the Parties have agreed to certain licenses of their respective
patent rights and to mutual releases, as more fully described below.


NOW,
THEREFORE, for and in consideration of the mutual licenses, releases, covenants
and the promises herein contained, the Parties, intending to be legally bound,
and to legally bind their respective successors, hereby agree as follows.


 


1.0                               Definitions


1.01                        “The DepoMed Patents” means United States
Patent 6,340,475, which issued on January 22, 2002, and any United States or non-United
States patent application or patent that publishes or issues in any country
which claims priority based on either or both of United States patent
application serial number 08/870,509 filed in the United States on June 6,
1997, or United States patent application serial number 09/282,233 filed in the
United States on March 29, 1999, including all continuations,
continuations-in-part, divisionals, re-examinations, extensions or reissues of
any such patents or patent applications.


1.02                        “The Bristol Patents” shall mean U.S.
Patent 6,475,521, which issued on


 


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November 5, 2002 and any
United States or non-United States patent application or patent that publishes
or issues in any country which claims priority based on either or both of
United States patent application serial number 09/044,446 filed in the United
States on March 19, 1998, or United States Patent Application serial number
09/398,107 filed in the United States on September 16, 1999, including all
continuations, continuations-in-part, divisionals, re-examinations, extensions
or reissues of any such patents or patent applications.


1.03                        “Bristol’s Partners” shall mean Merck
KgaA and Merck Sante s.a.s., and their successors.


1.04                        “DepoMed’s Partner” shall mean:  (i) Biovail Laboratories Incorporated; (ii)
any corporation or other entity that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with Biovail Laboratories Incorporated; or (iii) the successors of the
foregoing corporations and entities.


1.05                        “The Letter Agreement” refers to the July
11, 1996 Letter Agreement between DepoMed and Bristol concerning a joint
research project to develop formulations of the drug metformin for Bristol.


 


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2.0          Payment


2.01                        In consideration of the licenses and
releases granted herein and for settlement of the Litigation, Bristol agrees to
make a cash payment of $18,000,000.00 to DepoMed.


2.02                        Bristol shall make the payment in
paragraph 2.01 no later than five (5) business days after execution of this
Settlement Agreement and Release by the Parties.


 


3.0                               Grant of Licenses


3.01                        DepoMed’s Grant of License to Bristol and its Partners
for Metformin Products.  DepoMed
hereby grants to Bristol and Bristol’s Partners a royalty-free, worldwide,
non-exclusive, irrevocable and paid-up license, to the DepoMed Patents with
respect to any product that includes metformin.  Bristol and its Partners have the express right to sublicense the
DepoMed Patents to any entities authorized by Bristol or its Partners to make,
use, sell, or offer to sell a product that includes metformin for or on behalf
of Bristol or Bristol’s Partners.


3.02                        DepoMed’s Grant of License to Bristol for
Non-Metformin Products.  With respect
to any other product (not containing metformin), DepoMed hereby grants to
Bristol a royalty-free, worldwide, non-exclusive, irrevocable and paid-up
license to the DepoMed Patents, including the express right to sublicense,
provided that such product incorporates (a) a compound conceived and developed 


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by Bristol, or (b) a
compound exclusively licensed to Bristol, and which has at least 5 years of
exclusivity (which can include data exclusivity, patent exclusivity, or any
combination thereof) at the time Bristol acquires the exclusive license.


3.03                        Bristol’s Grant of License to DepoMed.  Bristol hereby grants to DepoMed a
royalty-free, worldwide, non-exclusive, irrevocable and paid-up license to the
Bristol Patents solely with respect to any product developed by DepoMed that
includes metformin and employs DepoMed’s proprietary technology.  DepoMed has the express right to sublicense
only to those parties, including DepoMed’s Partner, with whom DepoMed has
entered into or enters into an agreement to further develop and/or
commercialize a product conceived and developed by DepoMed and employing
DepoMed’s proprietary technology and only for that product.


3.04                        The Licenses granted in Paragraphs 3.01,
3.02, and 3.03 are not assignable.


 


4.0                               Dismissal of Pending Proceedings


4.01                        DepoMed and Bristol agree that they will
promptly cause their attorneys to sign and file a Stipulation of Dismissal with
Prejudice in the form appended hereto providing for the settlement and
dismissal with prejudice of all claims and counterclaims asserted in the
Litigation.  The Parties agree to
execute promptly any additional documentation necessary to effectuate this
dismissal.


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5.0                               Mutual Releases


5.01                        Effective as of the date of this
Agreement, DepoMed including its administrators, affiliates, predecessors,
successors, assigns, officers, directors, employees, trustees, and
subsidiaries, hereby releases and forever discharges Bristol and its past and
present directors, officers and employees, administrators, agents, attorneys,
predecessors, successors, subsidiaries, affiliates, assigns, customers,
licensees and other transferees from any and all causes of action, actions,
claims, and demands whatsoever in law or in equity relating to the Litigation,
and any liabilities, losses, costs and expenses related thereto which DepoMed
ever had, now has or which have or could have been brought in the Litigation.


5.02                        Effective as of the date of this
Agreement, Bristol including its administrators, affiliates, predecessors,
successors, assigns, officers, directors, employees, trustees, and
subsidiaries, hereby releases and forever discharges DepoMed, and its past and
present directors, officers and employees, administrators, agents, attorneys,
predecessors, successors, subsidiaries, affiliates, assigns, customers,
licensees and other transferees from any and all causes of action, actions,
claims, and demands whatsoever in law or in equity relating to the Litigation,
and any liabilities, losses, costs and expenses related thereto which Bristol
ever had, now has or which have or could have been brought in the Litigation.


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5.03                        Nothing herein shall be construed to
release either of the Parties from their respective obligations pursuant to
this Settlement Agreement and Release.


5.04                        The mutual releases in paragraphs 5.01
and 5.02 expressly include any claim of ownership or joint inventorship to the
DepoMed Patents or the Bristol Patents. 
The mutual releases also expressly include any claim arising out of or
based upon the Letter Agreement or the resulting collaboration between the
Parties, including any and all such claims of trade secret misuse, breach of
contract, interference with contract, or other unfair competition, whether
based on past or future actions by either of the Parties.


5.05                        Each Party has been advised by legal
counsel and is familiar with the provision of Section 1542 of the California
Civil Code, which provides as follows:


“A general release
does not extend to claims which the creditor does not know or suspect to exist
in his favor at the time of executing the release, which if known by him must
have materially affected a settlement with the debtor.”


Each Party knowingly waives any rights it may have
under Section 1542, and under any similar provision of any other state or
federal law, and the releases provided in Sections 5.01, 5.02 and 5.04 include
all causes of action, actions, claims, and demands whatsoever in law or in
equity that are not known or are not ascertainable as of the execution of this
Settlement Agreement and Release.


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5.06                        DepoMed shall not bring in the future, in
any tribunal in the world, any claim against Bristol and/or Bristol’s Partners
that is based upon conduct or allegations related to the Letter Agreement.  This specifically includes but is not
limited to any claims for trade secret violations or unfair competition.


5.07                        Bristol shall not bring in the future, in
any tribunal in the world, any claim against DepoMed and/or DepoMed’s Partner
that is based upon conduct or allegations related to the Letter Agreement.  This specifically includes but is not
limited to any claims for breach of contract, interference with contract, or
unfair competition.


 


6.0                               Confidentiality


6.01                        The specific terms of this agreement
shall be confidential and no party may authorize the public disclosure beyond
that already made as of the date of this agreement, except by Bristol to
Bristol’s Partners and to legal, accounting and financial consultants, unless
such disclosure is compelled by a court or administrative agency or otherwise
required by law.  In the event a party
is compelled or required by law to disclose such information, including but not
limited to compliance with the securities laws, reasonable notice shall be
provided to the other party, and the extent of such disclosure will not exceed
that necessary to comply with applicable law. 
With respect to any information contained in a public disclosure
permitted under this paragraph, this confidentiality provision no longer
applies to such information.


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7.0                               The Agreement


7.01                        This Agreement can be amended or modified
only in writing executed by the Parties.


7.02                        It is understood and agreed that this
Agreement, any consideration given or accepted in connection with it and the
releases made in it are all made, given and accepted in settlement and
compromise of disputed claims and are not an admission of liability by anyone.


7.03                        Each party has undertaken such
independent investigation and evaluation as it deems appropriate and is
entering this agreement in reliance on that and not in reliance on any advice,
disclosure, representation or information provided by or expected from the
other party.  This is an agreement of
settlement and compromise, made in recognition that the parties may have
different or incorrect understandings, information and contentions, as to facts
and law, and with each party compromising and settling any potential
correctness or incorrectness of its understandings, information and contentions
as to the facts and law.


7.04                        Each party warrants that it has the right
to enter into this Agreement and to grant the rights set forth therein, and
further warrants that it is under no restriction with respect to the grant of
such rights.


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8.0                               Universal Provisions


8.01                        Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
Agreement.  A signature by facsimile
shall be an original.


8.02                        Governing Law.  This
Agreement and the rights of the parties hereunder shall be governed by the laws
of the State of New York.


8.03                        Severability.  If any
provision of this Settlement Agreement and Release is found to be unenforceable
or invalid for any reason, the remaining provisions of the Settlement Agreement
shall remain in force.


8.04                        Entire Agreement.  This Settlement Agreement and Release
constitutes the entire understanding between the parties with respect to the
subject matter hereof and replaces and supersedes any previous agreements
between the parties, and specifically the “Agreement in Principle to Settle
Current Litigation” dated and executed November 7, 2002. There are no
understandings, representations, licenses or warranties of any kind, express or
implied, not expressly set forth herein.


8.05                        Beneficiaries of Agreement. 
Even if not expressly stated, the liabilities and releases implied by
this Settlement Agreement and Release apply to the


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administrators,
affiliates, predecessors, successors, assigns, officers, directors, employees,
trustees, and subsidiaries of the Parties. The releases and covenants that
DepoMed has granted herein inure to the benefit of Bristol’s Partners.  The releases and covenants that Bristol has
granted herein inure to the benefit of DepoMed’s Partner.  This paragraph, however, does not apply to
extend the scope of the licenses granted in paragraphs 3.01, 3.02 and 3.03.


8.06                        Notice.  Any notice given
under this Settlement Agreement shall be in writing and transmitted by
registered mail and facsimile addressed to the other party for whom notice is
given at the address shown below or at such other address as the addressee
shall have furnished in writing to the other party as follows:


	
   

  	
  If to Bristol:

  
	
   

  	
   

  
	
   

  	
  Bristol-Myers Squibb Company

  
	
   

  	
  345 Park Avenue

  
	
   

  	
  New York, NY 
  10154

  
	
   

  	
  Attn: 
  General Counsel

  
	
   

  	
  Telephone: 
  212-546-4460

  
	
   

  	
  Facsimile: 
  212-546-9562

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Bristol-Myers Squibb Company

  
	
   

  	
  P.O. Box 4000

  
	
   

  	
  Princeton, NJ 
  08543-4000

  
	
   

  	
  Attn:  Patent
  Counsel

  
	
   

  	
  Telephone: 
  609-252-4328

  
	
   

  	
  Facsimile: 
  609-252-7328

  



 


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  If to DepoMed:

  
	
   

  	
   

  
	
   

  	
  DepoMed, Inc.

  
	
   

  	
  1360 O’Brien Drive

  
	
   

  	
  Menlo Park, CA 94025-1436

  
	
   

  	
  Attn: President

  
	
   

  	
  Telephone: 650-462-5900

  
	
   

  	
  Facsimile: 650-462-9993

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Stephen C. Ferruolo

  
	
   

  	
  Heller Ehrman White & McAuliffe LLP

  
	
   

  	
  4350 La Jolla Village Drive

  
	
   

  	
  7th Floor

  
	
   

  	
  San Diego, CA 92122-1246

  
	
   

  	
  Telephone: 858-450-8400

  
	
   

  	
  Facsimile: 858-450-8499

  



IN WITNESS WHEREOF, the parties have caused this
Settlement Agreement to be executed by their duly authorized representatives as
of the day and year first above written.


	
   

  	
   

  	
  BRISTOL-MYERS
  SQUIBB COMPANY

  
	
   

  	
   

  	
   

  
	
  Dated: 

  	
  November 22, 2002

  	
   

  	
  By:

  	
  /s/  GRAHAM BRAZIER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President, Business Development

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEPOMED,
  INC.

  
	
   

  	
   

  	
   

  
	
  Dated: 

  	
  November 22, 2002

  	
   

  	
  By:

  	
  /s/ JOHN W. FARA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President & CEO

  



 


 


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The undersigned hereby consents to the license granted to Bristol and
Bristol’s Partners in Section 3.01 of this Agreement.


 


	
   

  	
   

  	
  BIOVAIL LABORATORIES INCORPORATED

  
	
   

  	
   

  	
   

  
	
  Dated: 

  	
  22-11-2002

  	
   

  	
  By:

  	
  /s/ KENNETH CANCELLARA

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief Legal Officer of Biovail Corporation, Parent Corporation of Biovail
  Laboratories Incorporated

  
	
   

  	
   

  	
   

  



 


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IN
THE UNITED STATES DISTRICT COURT


FOR THE NORTHERN DISTRICT OF
CALIFORNIA


 


	
  DEPOMED, INC.

  	
  :

  	
   

  
	
   

  	
  :

  	
  Case No. C 02-0336 WHA

  
	
  Plaintiff,

  	
  :

  	
   

  
	
  v.

  	
  :

  	
   

  
	
   

  	
  :

  	
   

  
	
  BRISTOL-MYERS SQUIBB
  COMPANY,

  	
  :

  	
   

  
	
   

  	
  :

  	
   

  
	
  Defendant.

  	
  :

  	
   

  
	
   

  	
  :

  	
   

  



 


STIPULATION OF DISMISSAL WITH
PREJUDICE OF ALL CLAIMS AND COUNTERCLAIMS PURSUANT TO FED.R.CIV.P. RULE 41


[ADD
BIOVAIL]


                Plaintiff DepoMed
Inc. And Defendant Bristol-Myers Squibb Company hereby stipulate and agree that
pursuant to a settlement agreement between the parties, the above captioned
action, including any and all asserted claims and counterclaims, is hereby
dismissed with prejudice.  Each party
shall bear its own costs and attorneys’ fees.


 


[signature lines]


 


 


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