Exhibit 10.1


Execution copy


 


 


TERMINATION AGREEMENT


 


 


ELAN CORPORATION, PLC


 


 


ELAN PHARMA
INTERNATIONAL LIMITED


 


 


ELAN INTERNATIONAL
SERVICES, LTD.


 


 


DEPOMED, INC.


 


 


AND


 


 


DEPOMED DEVELOPMENT,
LTD.


 

















 


INDEX


 


	
  Section

  	
   

  	
  Heading

  
	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  DEFINITIONS

  
	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  TERMINATION OF THE NEWCO AGREEMENTS

  
	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  REPRESENTATIONS, WARRANTIES, CONFIRMATIONS
  AND INDEMNITIES

  
	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  INTELLECTUAL PROPERTY

  
	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  RIGHTS RELATED TO SECURITIES

  
	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  COMPLETION

  
	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  CONFIDENTIALITY

  
	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  WAIVER OF ACCRUED RIGHTS/MUTUAL RELEASES

  
	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  GENERAL

  



 


2

















 


THIS TERMINATION AGREEMENT
made this 16 day of September 2003 (this “Agreement”)


 


AMONG:-


 


(1)                                  ELAN
CORPORATION, PLC, a public limited company incorporated under the
laws of Ireland, and having its registered office at Lincoln House, Lincoln
Place, Dublin 2, Ireland (“Elan Corp”);


 


(2)                                  ELAN PHARMA
INTERNATIONAL LIMITED, a private limited company incorporated under
the laws of Ireland, and having its registered office at WIL House, Shannon
Business Park, Shannon, County Clare, Ireland (“EPIL Shannon”);


 


(3)                                  ELAN
INTERNATIONAL SERVICES, LTD., an exempted limited liability company
incorporated under the laws of Bermuda, and having its registered office at
Clarendon House, 2 Church St., Hamilton, Bermuda (“EIS”);


 


(4)                                  DEPOMED,
INC., a California corporation having its principal  place of business at 1360 O’Brien Drive, Menlo
Park, CA 94025, United States of America; and


 


(5)                                  DEPOMED
DEVELOPMENT, LTD., an exempted company incorporated under the laws
of Bermuda, and having its registered office at Clarendon House, 2 Church St.,
Hamilton, Bermuda (“Newco”).


 


RECITALS


 


A.                                   The
Parties entered into various agreements whereby Elan Corp, EPIL Shannon, EIS
and JVP established the joint venture company, Newco, and Elan Corp, EPIL
Shannon, EIS and JVP each licensed certain intellectual property to Newco for a
specified field of use, including, without limitation:


 


(i)                                     Elan
Corp, EIS, EPIL Shannon, JVP and Newco entered into a Subscription, Joint
Development and Operating Agreement dated 21 January 2000 (the “JDOA”);


 


(ii)                                  Elan
Corp, EPIL Shannon, JVP and Newco entered into a License Agreement dated 21
January 2000, as amended by that certain Waiver and Termination Agreement
dated 8 November, 2002 (the “Elan License Agreement”);


 


(iii)                               Elan
Corp, EPIL Shannon, EIS and JVP entered into a Funding Agreement dated 21
January 2000 (“Funding Agreement”); and


 


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(iv)                              EIS
and JVP and Brock Silverstein LLC entered into an Escrow Agreement dated
January 20, 2000 (“Escrow Agreement”).


 


B.                                     The
JDOA, Elan License Agreement, Funding Agreement and Escrow Agreement are
together defined in this Agreement as the “Newco Agreements”.


 


C.                                     The
Parties also entered into agreements whereby JVP sold and EIS and EPIL Shannon
purchased certain securities of JVP and the Parties agreed to certain matters
related to the ownership of such securities. 
Specifically:


 


(i)                                     EIS,
Elan Corp and JVP entered into a Securities Purchase Agreement dated 21
January 2000 (the “Securities Purchase Agreement”); and


 


(ii)                                  EIS
and JVP entered into a Registration Rights Agreement with respect to the
capital stock of JVP dated 21 January 2000 (the “JVP Registration Rights Agreement”);


 


(iii)                               EIS,
JVP and Newco entered into a Registration Rights Agreement with respect to the
capital stock of Newco dated 21 January 2000 (the “Newco Registration Rights Agreement”);
and


 


(iv)                              JVP
issued and delivered to EIS a Convertible Promissory Note, dated  21 January 2000, in a principal amount
not to exceed $8,010,000.00  (the “Note”).


 


D.                                    Elan
Corp, EPIL Shannon, JVP and Newco entered into a certain Waiver and Termination
Agreement dated 8 November, 2002 (“Waiver and Termination Agreement”).


 


E.                                      The
Parties wish to (i) terminate in full the Newco Agreements as set forth below,
and (ii) agree in relation to certain other matters as set forth below.


 


IN CONSIDERATION OF THE MUTUAL COVENANTS
CONTAINED HEREIN, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
ADEQUACY OF WHICH ARE HEREBY ACKNOWLEDGED, IT IS HEREBY AGREED AS FOLLOWS:


 


1                                          DEFINITIONS


 


Capitalized terms
used in this Agreement shall have the same meanings assigned to them in the
Newco Agreements, unless such terms are expressly defined to the contrary in
this Agreement.


 


“Affiliate” shall
mean any corporation or entity controlling, controlled or under the common
control of any other corporation or entity, excluding, in the case of Elan, an
Elan JV.  For the purpose of this
definition, (i) “control” shall mean


 


4

















 


direct or
indirect ownership of fifty percent (50%) or more of the stock or shares entitled
to vote for the election of directors; and (ii) Newco shall not be an Affiliate
of Elan and Elan shall not be an Affiliate of Newco.


 


“Balance
Sheet” shall mean the unaudited balance sheet of Newco as of the
Balance Sheet Date, as set forth in Schedule 1.


 


“Balance
Sheet Date” shall mean August 31, 2003.


 


“Effective
Date” shall mean the date of this Agreement.


 


“EGTS
Know-How” shall have the meaning as such term is defined in the Elan
License Agreement.


 


“EGTS Patents”
shall have the meaning as such term is defined in the Elan License Agreement.


 


“Elan” shall
mean Elan Corp and its Affiliates.


 


“Elan
Clinical Trials” shall mean the clinical trials listed on Schedule 3.3.5.


 


“Elan Corp
CR
Know-How” shall have the meaning as such term is defined in the Elan
License Agreement.


 


“Elan Corp
CR
Patents” shall have the meaning as such term is defined in the Elan
License Agreement.


 


“Elan
Improvements” shall mean improvements relating to:


 


(i)                                     the Nano Know-How and/or the Nano
Patents;


 


(ii)                                  the
Elan Corp CR Know-How and/or the Elan Corp CR Patents; and


 


(iii)                               the
EPIL Gas Generation Know-How and/or the EPIL Gas Generation Patents;


 


developed (i)
by Elan outside the Project, (ii) by Elan, JVP or Newco or by a third party
(under contract with Elan, JVP or Newco) pursuant to the Project, and/or (iii)
jointly by any combination of Elan, JVP, Newco or a third party (under contract
with Newco, Elan or JVP) pursuant to the Project.


 


“Elan JV”
shall mean an entity that Elan and a third party (i) establish or have established;
(ii) take shareholdings in or have a right to take shareholdings in; and (iii)
grant certain licenses in and to certain intellectual property rights for the
purpose of implementing a strategic alliance.


 


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“Elan Know-How”
shall mean, collectively,


 


(i)                                     the Nano Know-How;


 


(ii)                                  the
Elan Corp CR Know-How; and


 


(iii)                               the
EPIL Gas Generation Know-How.


 


“Elan Patents”
shall mean, collectively,


 


(i)                                     the Nano Patents;


 


(ii)                                  the
Elan Corp CR Patents; and


 


(iii)                               the
EPIL Gas Generation Patents.


 


“Elan Trademarks”
shall have the meaning set forth in the Elan License Agreement.


 


“EPIL
Gas
Generation  Know-How” shall have the meaning set forth
in the Elan License Agreement.


 


“EPIL
Gas
Generation  Patents” shall have the meaning set forth
in the Elan License Agreement.


 


“EPIL II”
shall mean Elan Pharmaceuticals Investment II, Ltd. an exempted limited
liability company incorporated under the laws of Bermuda.


 


“Force
Majeure” shall mean causes beyond a Party’s reasonable control,
including, without limitation, acts of God, fires, strikes, acts of war, or
intervention of a governmental authority.


 


“JVP”
shall mean Depomed, Inc. and its Affiliates.


 


“JVP
Certificate of Designations” shall mean that certain certificate of
designations filed with the California Secretary of State dated 14
January 2000.


 


“JVP
Improvements” shall mean improvements to the JVP Patents and/or the
JVP Know-How, developed (i) by JVP outside the Project, (ii) by JVP, Elan or
Newco or by a third party (under contract with Newco, Elan or JVP) pursuant to
the Project, and/or (iii) jointly by any combination of JVP, Elan, Newco or a
third party (under contract with Newco, Elan or JVP) pursuant to the Project.


 


“JVP Know-How”
shall mean Depomed Know-How (as such term is defined in the JVP License
Agreement).


 


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“JVP License
Agreement” shall mean that certain license agreement entered into by
JVP, Elan Corp and Newco dated 21 January 2000.


 


“JVP Patents”
shall mean Depomed Patents (as such term is defined in the JVP License
Agreement).


 


“JVP Patents”
shall mean Depomed Trademarks (as such term is defined in the JVP License
Agreement).


 


“Nano
Know-How” shall have the meaning set forth in the Elan License Agreement.


 


“Nano Patents”
shall have the meaning set forth in the Elan License Agreement.


 


“Newco”
shall mean Depomed Development, Ltd.


 


“Newco
Agreements” shall have the meaning set forth in the Recitals to this
Agreement.


 


“Newco
Clinical Trials” shall mean the clinical trials that were carried
out by or on behalf of JVP by or on behalf of Newco but shall exclude the Elan
Clinical Trials.


 


“Newco
Intellectual Property” shall have the meaning set forth in the JDOA.


 


“Newco
Patents” shall have the meaning set forth in the Elan License
Agreement.


 


“Party”
shall mean EPIL Shannon, EIS, JVP or Newco, as the case may be, and “Parties”
shall mean all such parties together.


 


“Project”
shall have the meaning set forth in the JDOA.


 


“Territory”
shall mean all of the countries of the world.


 


“United States
Dollar” and “US$” and “$” shall mean the lawful
currency of the United States of America.


 


2.                                       TERMINATION OF THE NEWCO AGREEMENTS


 


2.1.                              Subject
to the provisions of Clauses 2.2 and 2.3 hereof, the Parties hereby agree to
terminate the Newco Agreements, including without limitation, those provisions
expressly stated to survive termination, in each case with effect from the
Effective Date.


 


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All the
provisions of the Newco Agreements shall terminate forthwith with effect from
the Effective Date and be of no further legal force or effect.


 


2.2.                              Notwithstanding
anything contained herein to the contrary, the Parties acknowledge that the
provisions of Clause 16 of the JDOA (the “Transfer Provisions”) shall continue in
full force and effect as among EPIL II, JVP and any other party that becomes a
holder of shares in Newco.  Solely for
the purposes of the Transfer Provisions, any definitions or additional clauses
of the JDOA required to give effect to the Transfer Provisions will be deemed
to survive termination.


 


The Parties
agree that EPIL II is a third party beneficiary of this Clause 2.2.


 


2.3.                              For
the avoidance of doubt and without prejudice to the generality of the foregoing
Clause 2.1, the Parties hereby acknowledge and agree as follows:


 


2.3.1                        the
EIS Director, Seamus Mulligan, holding office with Newco immediately prior to
the Effective Date shall resign;


 


EIS hereby
assigns to JVP all of EIS’ rights, powers and obligations and JVP agrees to
such assignment of rights and powers and agrees to assume such obligations
under (i) Sections 7 and 11 of the Bye-laws (including, without limitation, the
Nomination Right) and (ii) Clause 5 of the JDOA and authorizes JVP to take such
actions as JVP sees fit in exercising such rights.


 


JVP hereby
designates Bret Berner as the EIS Director, subject to such person accepting
such nomination.


 


2.3.2                        the
nominees on the Management Committee of the EIS Director shall be deemed to
have been removed from the Management Committee by the EIS Director;


 


2.3.3                        the
nominees on the R&D Committee of the nominees on the Management Committee
of the EIS Director, shall be deemed to have been removed from the R&D
Committee by the nominees on the Management Committee of the EIS Director;


 


2.3.4                        all
rights granted to Newco pursuant to the Elan License Agreement to use the Elan
Patents, the Elan Know-How, the Elan Improvements and the Elan Trademarks shall
terminate forthwith;


 


JVP and Newco
hereby acknowledge that all rights granted to Newco to use the EGTS Patents and
the EGTS Know-How were


 


8

















 


terminated
pursuant to that certain Waiver and Termination Agreement.


 


2.3.5                        neither
JVP nor Newco shall have any rights in or to the Elan Patents, the Elan
Know-How, the Elan Improvements, the Elan Trademarks and any other patents,
know-how or any other intellectual property rights whatsoever of Elan;


 


2.3.6                        Elan
shall not have any rights in or to the JVP Patents, the JVP Know-How, the JVP
Improvements, JVP Trademarks and any other patents, know-how or any other
intellectual property rights whatsoever of JVP;


 


2.3.7                        Elan
shall terminate or shall cause to be terminated any and all research and
development work being conducted in connection with or pursuant to the Project,
the Newco Agreements, or otherwise by or on behalf of Newco;


 


2.3.8                        Elan
shall terminate or cause to be terminated any and all technical services and
assistance being conducted in connection with the Newco Agreements;


 


2.3.9                        for
the avoidance of doubt, Elan shall not have any obligation to provide working
capital, research or development funding, or other funding or financing of any
nature to Newco;


 


2.3.10                  Elan
shall not have any obligation to pay any milestone payment or make any
milestone investment to or in Newco or JVP whether relating to the Project, the
achievement of any objectives set forth therein or otherwise; and


 


2.4                 Each
of the Parties acknowledges and agrees with the other Parties that, as of the
Effective Date, no monies are owed or are refundable by any of the Parties to
the others pursuant to the Newco Agreements and/or the JVP License Agreement.


 


For the avoidance of doubt, the Parties acknowledge that Newco is
liable to pay any fees due and owing to Codan Corporate Administrative Services
upon the Effective Date, and thereafter.


 


9

















 


3                          REPRESENTATIONS, WARRANTIES, CONFIRMATIONS AND
INDEMNITIES


 


3.1                                 Sub-licenses:


 


Newco
represents and warrants to the other Parties that it has not granted any
sub-licenses or any other rights of any nature to any third parties pursuant to
the Elan License Agreement or the JVP License Agreement.


 


3.2                                 Balance
Sheet:


 


JVP represents
and warrants to each other Party that the Balance Sheet is accurate, and that
to JVP’s knowledge, since the Balance Sheet Date, there has been no material
adverse change in the financial position of Newco.


 


JVP represents
and warrants to each other Party that, to JVP’s knowledge, there are no other
creditors of Newco other than as described in the Balance Sheet.


 


3.3                                 Third
party agreements / Orders / Claims:


 


3.3.1                        Each
of the Parties confirms to the other Parties hereto that, as of the Effective
Date, to its actual knowledge, Newco is not a party to, or bound by, any
judgment, order, decree or other directive of or stipulation with any court or
any governmental or regulatory authority.


 


3.3.2                        Each
Party represents and warrants to the other Parties that, to its knowledge,
Newco is not a party to, or bound by, or is a third party beneficiary of any
agreement with any third party, except for the Newco Agreements, the JVP
License Agreement, the agreements for the benefit of Newco set out in Schedule 3.3.2A
(the “Elan
Third Party Agreements”) and the agreements for the benefit of Newco
set forth in Schedule 3.3.2B (the “JVP Third Party Agreements).


 


For the
avoidance of doubt and with reference to the indemnity in Clause 3.6.1, the
Parties agree that the indemnity in Clause 3.6.1 shall extend to any claims,
losses, liabilities and/or damages arising from the JVP Third Party Agreements.


 


3.3.3                        With
respect the Elan Third Party Agreements, Elan will, as of the Effective Date,
terminate its relationship thereunder with all other Parties hereto which may
be a party thereto, and cease to have any obligations of any nature whatsoever
to any such Party thereunder.


 


3.3.4                        Each
of the Parties confirms to the other Parties hereto that, as of the Effective
Date, to its actual knowledge, there are no claims, suits or proceedings
pending or threatened against Newco.


 


10

















 


3.3.5                        Elan
represents to the other Parties that, other than the Elan Clinical Trials, no
clinical trials were undertaken by or under the direction of Elan or any of its
affiliates on behalf of Newco.


 


3.4                                 Regulatory
Applications:


 


Each of the
Parties confirms to the other Parties that, prior to and as of the Effective
Date, no regulatory applications have been filed by Newco or by any Party on
behalf of Newco with any government authority (other than Newco patent
applications listed on Schedule 4.1.3) in any part of the world for
any product or otherwise howsoever in relation to the Project, except as set
forth in Schedule 3.4 hereto.


 


3.5                                 Exclusion
of warranties / liability:


 


EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT, ALL OTHER WARRANTIES, CONDITIONS OR
REPRESENTATIONS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, ARE HEREBY
EXPRESSLY EXCLUDED BY THE PARTIES.


 


NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PARTY SHALL BE LIABLE TO ANY
OTHER PARTY BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER
TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT,
FOR ANY CONSEQUENTIAL SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER
FOR LOSS OF CURRENT OR FUTURE PROFITS, LOSS OF ENTERPRISE VALUE OR OTHERWISE)
AND WHETHER OCCASSIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR
EMPLOYEES OR AGENTS OR OTHERWISE.


 


3.6                                 Indemnification
by JVP and Newco:


 


3.6.1                        JVP
and Newco, jointly and severally, hereby agree to indemnify and hold harmless
Elan Corp, EPIL Shannon and EIS, their respective Affiliates, officers,
directors, agents, representatives, employees and shareholders, and any person
holding office on or prior to the Effective Date as an EIS Director (as defined
in the JDOA) (or any alternate director of the EIS Director) or as a member of
the Management Committee or the R&D Committee (each such person or entity
referred to as an “Indemnified Party”) against any claims,
losses, liabilities or damages and expenses (including reasonable attorneys’
fees and expenses) incurred or sustained by such Indemnified Party arising in
relation to any


 


11

















 


claim or
proceedings made against Newco or an Indemnified Party which relate in any way
to the activities of Newco, past, present or future, including without
limitation, but subject to Clause 3.6.1.4 below, claims arising with respect to
the conduct of clinical trials by Newco, or by JVP or any other person or
entity on behalf of Newco, whether in connection with the Project or otherwise;
provided,
however, that the indemnification obligations of JVP and Newco in
this Clause 3.6 shall not be applicable to any claims or proceedings of any
third party:


 


3.6.1.1                           relating directly or
indirectly to Elan’s or any of Elan’s Affiliates’ accounting policies or
procedures, disclosure obligations under applicable laws, regulations or stock
exchange listing standards, or violations or alleged violations of corporate or
securities laws;


 


3.6.1.2                           arising directly or
indirectly from any investigation of Newco or any Indemnified Party by the U.S.
Securities and Exchange Commission or similar foreign regulatory authority
relating to Elan’s or any of Elan’s Affiliates’ accounting policies or
procedures, disclosure obligations under applicable laws, regulations or stock
exchange listing standards, or violations or alleged violations of corporate or
securities laws;


 


3.6.1.3                           resulting directly or
indirectly from, or relating to, the gross negligence, willful misconduct or
violation of law by any Indemnified Party;


 


3.6.1.4                           relating to any of the Elan
Clinical Trials;


 


3.6.1.5                           relating to any Elan Third
Party Agreement;


 


3.6.1.6                           relating to the Waiver and
Termination Agreement;


 


3.6.1.7                           any written agreement
entered into by Elan with any third party binding upon Newco prior to the
Effective Date that was not authorized by or known to Newco (and for purposes
of this Clause 3.6.1.7, the knowledge of Newco shall be construed as meaning
the actual knowledge of any of the Depomed Directors (as defined in the JDOA)
or any of Depomed’s nominees to the Management Committee (as defined in the
JDOA).


 


3.6.2                        For
the avoidance of doubt, without prejudice to the generality of Clause 3.6.1 and
subject to the exceptions set forth in Clauses


 


12

















 


3.6.1.1
through 3.6.1.7, JVP and Newco, jointly and severally, shall indemnify and hold
harmless Elan against any claims, losses, liabilities or damages and expenses
(including reasonable attorneys’ fees and expenses) which may arise in relation
to any claim or proceedings made against Elan Corp, EPIL Shannon and EIS or any
of their respective Affiliates alleging infringement or other unauthorized use
of the proprietary rights of a third party arising from the manufacture,
importation, use, offer for sale, sale or other commercialization of any
Product, the Newco Intellectual Property and/or any technology related thereto;
provided, however, that this Clause 3.6.2 shall not be construed to grant to
any of Elan Corp., EPIL Shannon, EIS or any of their respective Affiliates any
right to manufacture, import, use, offer for sale, sell or otherwise
commercialize any Porduct, the Newco Intellectual Property and/or any
technology related thereto.


 


3.6.3                        For
the avoidance of doubt and with reference to the indemnity in Clause 3.6, the
Parties acknowledge that the Newco Clinical Trials were carried out by the JVP
on behalf of Newco, and the parties agree that the indemnity in Clause 3.6
shall, subject to the exceptions set forth in Clauses 3.6.1.1 through 3.6.1.7,
extend to any claims, losses, liabilities or damages arising from such Newco
Clinical Trials.


 


For the
further avoidance of doubt and with reference to the Clause 3.6.1.4, the
Parties acknowledge that the Elan Clinical Trials and the Elan Third Party
Agreements were carried out or undertaken by, or on behalf of, Elan, on behalf
of Newco and agree that the indemnity in Clause 3.6 shall not extend to any
claims, losses, liabilities or damages arising from the Elan Clinical Trials.


 


3.6.4                        JVP
has made available to Elan Corp copies of all policies of comprehensive general
liability insurance and/or other insurance coverage (the “Policies”) which it holds in
respect of the Newco Clinical Trials referred to in Clause 3.6.3.  JVP hereby represents to Elan Corp that it
currently has no intention to terminate the Policies.


 


3.6.5                        In
the event that (i) any claim is asserted against any Indemnified Party or (ii)
an Indemnified Party is made a party defendant in any action or proceeding,
which claim, action or proceeding in either case the Indemnified Party asserts
is the subject of indemnification pursuant to Clause 3.6.1 hereof, then such
Indemnified Party shall give written notice within 10 business days after such
claim is asserted against the Indemnified Party (or such shorter period as is
necessary to preserve the rights of the Indemnified Party with


13

















 


respect to
said claim) to JVP and/or Newco (the “Indemnifying Party” for purposes of this
Clause 3.6.5.  The Indemnifying Party
shall be entitled to assume the defense, at its sole cost and expense, of such
claim, action or proceeding.  In the
event that JVP and/or Newco assumes such defense, the Indemnified Party shall
be entitled to join in, but not control, such defense at the Indemnified
Party’s sole cost and expense.  The
Indemnified Party shall (i) make available to the Indemnifying Party all
records and other materials reasonably required by the Indemnifying Party in
contesting such claim, action or proceeding, (ii) reasonably cooperate with the
Indemnifying Party in the defense thereof, (iii) use reasonable efforts to
promptly forward to the Indemnifying Party any information received in writing
by the Indemnified Party relating to such claim and (iv) use its reasonable
efforts to act in such a manner so as not to prejudice the defense by the
Indemnifying Party of such claim.  In
the event the Indemnifying Party assumes the defense of a claim, action or
proceeding, the Indemnifying Party shall not settle such claim, action or
proceeding without the consent of the Indemnified Party (which consent shall
not be unreasonably withheld), unless (A) the judgment or proposed settlement
only involves the payment of money damages and does not impose any injunction
or other equitable relief upon the Indemnified Party and (B) the Indemnifying
Party obtains for the Indemnified Party a full release from all liability with
respect to all claims, in which case consent of the Indemnified Party shall not
be required.


 


3.6                                 Organization
and authority:


 


Each of the
Parties represents and warrants to the other Parties that it is a corporation
duly organized and validly existing under the laws of its jurisdiction of
organization and has all the requisite corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby.


 


3.7                                 Approvals:


 


Each of the
Parties represents and warrants to the other Parties that no permit,
authorization, consent or approval of or by (“Approval”), or any
notification of or filing with (“Filing”), any person or entity
(governmental or otherwise) is required in connection with the execution,
delivery or performance of this Agreement by such Party, or if any such
Approval or Filing is so required, that same has been obtained or filed prior
to the Effective Date.


 


14

















 


3.7                                 Trademark
Applications:


 


JVP represents
and warrants to the other Parties that neither Newco nor JVP has filed for any
trademark protection or has not adopted any trademark in connection with
Newco’s business or any product or service provided thereunder.


 


3.8                                 Representation
and Warranties as of the Effective Date:


 


Except where
expressly stated otherwise, each of the representations and warranties in this
Agreement are made as of the Effective Date.


 


3.9                                 Amendment
of JVP License Agreement:


 


The Parties
acknowledge and agree that Section 14.6 of the JVP License Agreement is
hereby amended to read in its entirety as follows:  “No amendment, modification or addition hereto shall be effective
or binding on any party unless set forth in writing and executed by a duly
authorized representative of DepoMed and Newco.  No such amendment, modification or addition shall impose any
obligation of any nature whatsoever on Elan without Elan’s written consent.”


 


4                                          INTELLECTUAL PROPERTY


 


4.1                                 Ownership:


 


On and
following the Effective Date:


 


4.1.1                        For
the avoidance of doubt, the Elan Patents, the Elan Know-How, the Elan
Improvements and/or the Elan Trademarks shall remain the sole and exclusive
property of Elan.


 


A full list of
the Elan Improvements developed pursuant to the Project or otherwise pursuant
to the Newco Agreements and JVP License Agreement is set forth in Schedule 4.1.1.


 


4.1.2                        For
the avoidance of doubt, the JVP Patents, the JVP Know-How, the JVP Improvements
and/or the JVP Trademarks shall remain the sole and exclusive property of JVP.


 


A full list of
the JVP Improvements developed pursuant to the Project or otherwise pursuant to
the Newco Agreements and JVP License Agreement is set forth in Schedule 4.1.2.


 


4.1.3                        All
Newco Intellectual Property shall remain the sole and exclusive property of
Newco.


 


15

















 


A full list of
the Newco Intellectual Property (including without limitation, the Newco
Patents) developed pursuant to the Project or otherwise pursuant to the Newco
Agreements and JVP License Agreement is set forth in Schedule 4.1.3.


 


For the
avoidance of doubt, Elan shall not have any rights in or to the Newco
Intellectual Property.


 


5                                          RIGHTS RELATED TO SECURITIES


 


5.1                                 Nothing
contained herein shall constitute a waiver of any right of EPIL Shannon, EPIL
II or EIS or any of their respective successors and assigns with respect to
their respective ownership of securities in JVP under any agreements of any
kind in existence with JVP with respect thereto, which agreements shall remain
unmodified and in full force and effect, except as set forth in Schedule 5.1
hereof.


 


6                                          COMPLETION


 


6.1                                 On
the Effective Date, Elan and JVP shall take or (to the extent that the same is
within its powers) cause to be taken the following steps prior to or at directors
meetings of Newco, or such other meetings, as appropriate:


 


6.1.1                        the
modification, as appropriate, by board resolutions of Newco of matters such as
the removal of EIS as book keeper for Newco, the removal of EIS representatives
as authorized signatories of Newco’s bank account, the resignation of the
Company Secretary and any other related matters whatsoever; and


 


6.1.2                        any
other steps required by this Agreement.


 


7                                          CONFIDENTIALITY


 


7.1                                 Confidentiality:


 


7.1.1                        The
Parties agree that it may be necessary pursuant to this Agreement, from time to
time, to disclose to each other confidential and proprietary information,
including without limitation, inventions, trade secrets, specifications,
designs, data, know-how and other proprietary information, processes, services
and business of the disclosing Party.


 


The foregoing
together with the terms of this Agreement shall be referred to collectively as
“Additional
Confidential Information”.


 


16

















 


The Parties
also agree that it may have been necessary to disclose to each other
Confidential Information (as defined in the JDOA)  pursuant to the Newco
Agreements and JVP License Agreement.


 


Together
Additional Confidential Information and Confidential Information shall be
referred to collectively as “Proprietary Information”.


 


7.1.2                        Save
as otherwise specifically provided herein, and subject to Clause 7.2 and 7.3,
each Party shall disclose Proprietary Information of another Party only to
those employees, representatives and agents requiring knowledge thereof in
connection with fulfilling the Party’s obligations under this Agreement, and
not to any other third party.


 


Each Party
further agrees to inform all such employees, representatives and agents of the
terms and provisions of this Agreement relating to Proprietary Information and
their duties hereunder and to obtain their agreement hereto as a condition of
receiving Proprietary Information.


 


Each Party
shall exercise the same standard of care as it would itself exercise in
relation to its own confidential information (but in no event less than a
reasonable standard of care) to protect and preserve the proprietary and
confidential nature of the Proprietary Information disclosed to it by another
Party.


 


Each Party
shall promptly, upon request of another Party, return all documents and any
copies thereof containing Proprietary Information belonging to, or disclosed
by, such Party, save that it may retain one copy of the same solely for the
purposes of ensuring compliance with this Clause 7.


 


7.1.3                        Any
breach of this Clause 7 by any person informed by one of the Parties is
considered a breach by the Party itself.


 


7.1.4                        Proprietary
Information shall be deemed not to include:


 


(1)                                  information
which is in the public domain;


 


(2)                                  information
which is made public through no breach of this 
Agreement;


 


(3)                                  information
which is independently developed by a Party, as evidenced by such Party’s
records;


 


17

















 


(4)                                  information
that becomes available to a receiving Party on a non-confidential basis,
whether directly or indirectly, from a source other than another Party, which
source did not acquire this information on a confidential basis.


 


7.1.5                        The
provisions relating to confidentiality in this Clause 7 shall remain in effect
during the term of this Agreement, and for a period of 10 years following the
Effective Date of this Agreement.


 


7.1.6                        The
Parties agree that the obligations of this Clause 7 are necessary and
reasonable in order to protect the Parties’ respective businesses, and each
Party agrees that monetary damages may be inadequate to compensate a Party for
any breach by another Party of its covenants and agreements set forth herein.


 


The Parties
agree that any such violation or threatened violation may cause irreparable
injury to a Party and that, in addition to any other remedies that may be
available, in law and equity or otherwise, each Party shall be entitled to seek
injunctive relief against the threatened breach of the provisions of this
Clause 7, or a continuation of any such breach by another Party, specific
performance and other equitable relief to redress such breach together with
damages and reasonable counsel fees and expenses to enforce its rights
hereunder.


 


7.2                                 Announcements:


 


Subject to
Clause 7.3, no announcement or public statement concerning the existence,
subject matter or any term of this Agreement shall be made by or on behalf of
any Party without the prior written approval of the other Parties, which shall
not be unreasonably withheld.


 


The terms of
any such announcement shall be agreed in good faith by the Parties.


 


7.3                                 Required
Disclosures:


 


7.3.1                        A
Party (the “Disclosing Party”) will be entitled to make an announcement or
public statement concerning the existence, subject matter or any term of this
Agreement, or to disclose Proprietary Information that the Disclosing Party is
required to make or disclose pursuant to:


 


(1)                                  a
valid order of a court or governmental authority; or


 


18

















 


(2)                                  any
other requirement of law or regulation or any securities or stock exchange;


 


provided that
if the Disclosing Party becomes legally required to make such announcement,
public statement or disclosure hereunder, the Disclosing Party shall give the
other Parties prompt notice of such fact to enable the other Parties to seek a
protective order or other appropriate remedy concerning any such announcement,
public statement or disclosure.


 


The Disclosing
Party shall fully co-operate with the other Parties in connection with that
other Party’s or Parties’ efforts to obtain any such order or other remedy.


 


If any such
order or other remedy does not fully preclude announcement, public statement or
disclosure, the Disclosing Party shall make such announcement, public statement
or disclosure only to the extent that the same is legally required.


 


7.3.2                        Each
of the Parties shall be entitled to provide a copy of this Agreement (and any
subsequent amendments hereto) and the Newco Agreements to a potential third
party purchaser in connection with Clause 9.2.1(2); provided that the relevant
third party purchaser or assignee has entered into a confidentiality agreement
on terms no less protective than the terms of this Clause 7.


 


8                                          WAIVER OF ACCRUED RIGHTS/MUTUAL RELEASES


 


8.1                                 With
effect from the Effective Date, each Party and each of its Affiliates (“Releasor”):


 


8.1.1                        waives
any accrued rights that Releasor may have accrued against the other Parties and
each of its Affiliates, officers, directors, representative, agents and
employees and the assigns and successors in interest of any of the foregoing
entities (“Releasees”), whether known or unknown, foreseen or unforeseen,
fixed or contingent, of any nature whatsoever from the beginning of time to the
Effective Date under the Newco Agreements and JVP License Agreement; and


 


8.1.2                        fully
and finally releases and discharges the Releasees from any and all manner of
actions, claims, promises, debts, sums of money, demands, obligations, in law
or in equity, directly or indirectly, whether known or unknown, foreseen or
unforeseen, fixed or contingent, of any nature whatsoever (“Claims”)
that Releasor


 


19

















 


may have by
reason of any act, omission, matter, provision, cause or thing whatsoever from
the beginning of time to the Effective Date under the Newco Agreements and JVP
License Agreement.


 


8.2                                 The
provisions of this Clause 8 shall not in any way act as a waiver by any of the
Parties in respect of any of the provisions set forth in this Agreement
(including, for the avoidance of doubt, Clause 3.6.1).


 


8.3                                 Waiver of
Civil Code Section 1542.


 


California
Civil Code Section 1542 states as follows:


 


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


 


The Parties
hereby waive any and all rights they may have under California Civil Code Section 1542
or under any similar provision or law of any applicable jurisdiction.


 


9                                          GENERAL


 


9.1                                 Governing
law and jurisdiction:


 


9.1.1                        This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without
regard to conflicts of law principles under the laws of the State of New York.


 


9.1.2                        For
the purposes of this Agreement, the Parties submit to the nonexclusive
jurisdiction of the State and Federal Courts of New York located in New York,
New York.


 


9.2                                 Assignment:


 


9.2.1                        Subject
to Clause 9.2.2, this Agreement shall not be assigned by any Party without the
prior written consent of the others, save that any Party:


 


(1)                                  may
assign this Agreement in whole or in part and delegate its duties hereunder to
its Affiliate or Affiliates without such consent; and


 


20

















 


(2)                                  may
assign its rights and obligations to a successor (whether by merger,
consolidation, reorganization or other similar event) or purchaser of all or
substantially all of its assets relating to such Party’s technology related to
this Agreement, provided that such successor or purchaser has agreed in writing
to assume all of such Party’s rights and obligations hereunder and a copy of
such assumption is provided to the other Parties.


 


9.2.2                        For
the avoidance of doubt, nothing in this Clause 9.2 shall affect the provisions
governing assignment of securities in Schedule 5.1 hereof.


 


9.3                                 Notices:


 


9.3.1                        Any
notice to be given under this Agreement shall be sent in writing in English by
registered airmail, internationally recognized courier or telefaxed to the
following addresses:


 


If to Newco at:


 


	
  Depomed
  Development Limited

  	
   

  	
   

  
	
  Clarendon
  House

  	
   

  	
   

  
	
  2 Church St.

  	
   

  	
   

  
	
  Hamilton

  	
   

  	
   

  
	
  Bermuda

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  Secretary

  
	
  Telephone:

  	
   

  	
  (441)
  292-9169

  
	
  Fax:

  	
   

  	
  (441)
  292-2224

  
					



 


with a copy to JVP at the address set forth below.


 


	
  If to JVP
  at:

  	
   

  	
   

  
	
  1360 O’Brien
  Drive

  	
   

  	
   

  
	
  Menlo Park

  	
   

  	
   

  
	
  California

  	
   

  	
   

  
	
  94025

  	
   

  	
   

  
	
  USA.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  Chief
  Executive Officer

  
	
  Telephone:

  	
   

  	
  650 462 5900

  
	
  Fax:

  	
   

  	
  650 462 9993

  
					



 


with a copy
to:


 


Julian N.
Stern


 


21

















 


	
  Heller
  Ehrman White & McAuliffe

  	
   

  	
   

  
	
  275
  Middlefield Road

  	
   

  	
   

  
	
  Menlo Park

  	
   

  	
   

  
	
  CA 94025

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
  650 324-7000

  
	
  Fax:

  	
   

  	
  650 324-0638

  
					



 


If to Elan Corp, EIS and/or EPIL Shannon at:


 


	
  Elan
  Corporation, plc

  	
   

  	
   

  
	
  Elan
  International Services, Ltd.

  	
   

  	
   

  
	
  Elan Pharma
  International Limited

  	
   

  	
   

  
	
  c/o Elan
  International Services, Ltd.

  	
   

  	
   

  
	
  102 St.
  James Court

  	
   

  	
   

  
	
  Flatts,

  	
   

  	
   

  
	
  Smiths FL04

  	
   

  	
   

  
	
  Bermuda

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  Secretary

  
	
  Telephone:

  	
   

  	
  441 292 9169

  
	
  Fax:

  	
   

  	
  441 292 2224

  
					



 


or to such other address (es) and telefax numbers as may from time to
time be notified by any Party to the others hereunder.


 


9.3.2                        Any
notice sent by mail shall be deemed to have been delivered within seven (7)
working days after dispatch or delivery to the relevant courier and notice sent
by fax shall be deemed to have been delivered upon confirmation receipt.  Notice of change of address shall be
effective upon receipt.


 


9.4                                 Waiver:


 


No waiver of
any right under this Agreement shall be deemed effective unless contained in a
written document signed by the Party charged with such waiver, and no waiver of
any breach or failure to perform shall be deemed to be a waiver of any future
breach or failure to perform or of any other right arising under this
Agreement.


 


9.5                                 Severability:


 


If any
provision in this Agreement is agreed by the Parties to be, or is deemed to be,
or becomes invalid, illegal, void or unenforceable under any law that is
applicable hereto:


 


22

















 


9.5.1                        such
provision will be deemed amended to conform to applicable laws so as to be
valid and enforceable; or


 


9.5.2                        if
it cannot be so amended without materially altering the intention of the
Parties, it will be deleted, with effect from the date of this Agreement or
such earlier date as the Parties may agree, and the validity, legality and
enforceability of the remaining provisions of this Agreement shall not be
impaired or affected in any way.


 


9.6                                 Further
Assurances:


 


At the request
of any of the Parties, the other Party or Parties shall (and shall use
reasonable efforts to procure that any other necessary parties shall) execute
and perform all such documents, acts and things as may reasonably be required
subsequent to the signing of this Agreement for assuring to or vesting in the
requesting Party the full benefit of the terms hereof.


 


9.7                                 Successors:


 


This Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns.


 


9.8                                 Amendments:


 


No amendment,
modification or addition hereto shall be effective or binding on any Party
unless set forth in writing and executed by a duly authorized representative of
each Party.


 


9.9                                 Counterparts:


 


This Agreement
may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together shall
constitute this Agreement.


 


9.10                           Costs:


 


Each Party
shall bear its own costs and expenses in connection with the transactions
contemplated by this Agreement.


 


9.11                           Force
Majeure:


 


No Party to
this Agreement shall be liable for failure or delay in the performance of any
of its obligations hereunder if such failure or delay results from Force
Majeure, but any such failure or delay shall be remedied by such Party as soon
as practicable.


 


23

















 


9.12                           Relationship
of the Parties:  


 


The Parties
are independent contractors under this Agreement.  Nothing herein contained shall be deemed to create or establish
an employment, agency, joint venture, or partnership relationship between the
Parties or any of their agents or employees, or any other legal arrangement
that would impose liability upon one Party for the act or failure to act of
another Party.  No Party shall have any
express or implied power to enter into any contracts, commitments or
negotiations or to incur any liabilities in the name of, or on behalf of,
another Party, or to bind another Party in any respect whatsoever. 


 


9.13                           Entire
agreement:


 


9.13.1                  This
Agreement and the Waiver and Termination Agreement sets forth all of the
agreements and understandings between the Parties with respect to the subject
matter hereof.  There are no agreements
or understandings with respect to the subject matter hereof, either oral or
written, between the Parties other than as set forth in this Agreement and the
Waiver and Termination Agreement.


 


9.13.2                  No
provision of this Agreement shall be construed so as to negate, modify or affect
in any way the provisions of any other agreement between the Parties unless
specifically provided herein and only to the extent so specified.


 


9.13.3                  The
parties hereto hereby agree to amend the Waiver and Termination Agreement by
the deletion of Schedule 1 thereto and the substitution thereof with
Schedule 4.1.1 hereto.


 


THE REMAINDER OF
THIS PAGE


 


HAS BEEN
INTENTIONALLY LEFT BLANK.


 


24

















 


IN WITNESS WHEREOF
the Parties have executed this Agreement.


 


	
  SIGNED

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Pieter Bosse

  	
   

  
	
  for and on behalf of

  	
   

  
	
  Elan Corporation,
  plc

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Pieter Bosse

  	
   

  
	
  for and on behalf of

  	
   

  
	
  Elan Pharma
  International Limited

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Debra M. Buryj

  	
   

  
	
  for and on behalf of

  	
   

  
	
  Elan International
  Services, Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Allison L. Smith

  	
   

  
	
  for and on behalf of

  	
   

  
	
  Depomed Development
  Limited

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY

  	
  /s/ John W. Fara

  	
   

  
	
  for and on behalf of

  	
   

  
	
  Depomed , Inc.

  	
   

  
				



 


25

















 


SCHEDULE 5.1


 


RIGHTS RELATED TO SECURITIES


 


AMENDMENTS TO THE FINANCE DOCUMENTS


 


1.                                      Development Funding; Amendment of Convertible
Promissory Note


 


The Note is hereby amended by: 
(i) deleting paragraphs (a) and (b) of Section 2 (“Disbursements”),
Section 5 (“Exchange Right”) and Section 7(h) (JDOA
termination as Event of Default) in their entirety, which Sections shall be of
no further force or effect whatsoever as of the Effective Date; and (ii) adding
the word “material” immediately prior to the first occurrence of the word
“breach” in Section 7(c).


 


The Note is hereby further amended to provide that, notwithstanding
anything in the Note to the contrary, no further drawdowns may be made under
the Note on or after the Effective Date.


 


The aggregate outstanding principal amount of the Note as of the
Effective Date is $7,796,702.67.


 


2.                                      Transfer Restrictions


 


The following provisions are hereby amended as follows, effective as of
the Effective Date:


 


The second introductory legend on the first page of the Note is
hereby deleted in its entirety and is of no further force and effect.


 


Section 1(f) (“Exemption
from Registration”) of the Securities Purchase Agreement (as to second
legend only) is hereby deleted in its entirety and is of no further force and
effect.


 


Section 16 (“Assignments
and Transfers”) of the Securities Purchase Agreement is hereby amended by
(i) deleting the word “permitted” in the first sentence thereof, (ii) deleting
the second and third sentences thereof in their entirety; and (iii) adding a
new second sentence to read as follows: 
“The Company shall not assign all or any part of this Agreement without
the prior written consent of the other parties.”


 


Section 10 (“Transfer
of Registration Rights”) of the JVP Registration Rights Agreement is hereby
deleted in its entirety and is of no further force and effect.


 


Section 14(d) (“Successors
and Assigns”) of the JVP Registration Rights Agreement is hereby amended by
(i) deleting the word “permitted” in the second sentence thereof and (ii)
deleting in the second sentence thereof “, in accordance with Section 10
hereof”.


 

















 


Section 9(a) of the Note is hereby deleted in its entirety and
replaced by the following:


 


“This Note may be transferred or assigned by the Holder, in whole or in
part; provided that no partial assignment of this Note of less than $2,500,000
in aggregate principal amount of any unconverted portion of the Note shall be
permitted (it being acknowledged and agreed that that foregoing limitation
shall not apply to any securities received upon the conversion thereof). This
Note and all of the provisions hereof shall be binding upon and inure to the
benefit of the Holders and their respective successors and assigns. The Company
shall not assign any of its rights or obligations hereunder.”


 


In addition to the foregoing,
except as set in the immediately preceding paragraph, any and all other
contractual provisions directly or indirectly, limiting or conditioning the
free transfer, alienation or assignment of the securities of JVP and associated
rights issued by JVP to any of EIS or its subsidiaries or Affiliates are hereby
deleted in their entirety and are of no further force and effect (other than
any holdback agreements contemplated by the JVP Registration Rights Agreement).  The Parties hereby agree that the transfer
of such securities of JVP are thus no longer subject to contractual
restrictions on transfer of any kind (other than any holdback agreements
contemplated by the JVP Investor Rights Agreement).  The Parties recognize that such securities remain subject to
restrictions imposed under applicable securities laws. JVP agrees to use
reasonable efforts to inform its transfer agent, and co-operate with the holder
of JVP securities purchased pursuant to the Securities Purchase Agreement to
confirm with prospective third party transferees from time to time, of the
elimination of such contractual restrictions on transfer (other than any
holdback agreement contemplated by the JVP Registration Rights Agreement and
the restriction on partial assignments of the Note described above) and, if the
certificate representing such securities is legended to reflect a contractual
restriction, JVP, if requested by the holder of such securities, shall re-issue
such securities without such restrictive legend.


 


3.                                      Preemptive and Conversion Rights


 


Section 5(a) (“Preemptive Rights”) and Section 5(c) (“Conversion
and Exchange Rights”) of the Securities Purchase Agreement are hereby
deleted in their entirety and are of no further force or effect whatsoever as of
the Effective Date.


 


4.                                      Third Party Beneficiary


 


Each Party acknowledges and
agrees that EPIL II shall be deemed in all respects to be a third party
beneficiary of the agreements contained in Clause 2.2 of the Agreement or in
this Schedule 5.1, with the same force and effect as if EPIL II were a
party thereto.