Exhibit
10.7


 


CERTAIN MATERIAL (INDICATED BY AN
ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.


 


PROMOTION AGREEMENT


 


This PROMOTION AGREEMENT (this “Agreement”)
is made as of July 21, 2008 (the “Effective Date”), by and between
Depomed, Inc., a California corporation (“Depomed”), and Santarus, Inc.,
a Delaware corporation (“Santarus”). 
Each of Depomed and Santarus is referred to herein individually as a “party”
and collectively as the “parties.”


 


WHEREAS, Depomed desires to engage Santarus to
promote and market the Products in the Territory (each as defined below), and
Santarus desires to promote and market the Products, all in accordance with the
terms and conditions contained herein;


 


NOW, THEREFORE, in consideration of the foregoing
and of the mutual covenants herein contained, the parties hereto intending to
be legally bound hereby agree as follows:


 


ARTICLE I

DEFINITIONS


 


As used in this Agreement, the following terms shall
have the following meanings:


 


Section 1.1             “500mg
Product” means the once-daily formulation of 500 mg of metformin HCl that
is the subject of NDA No. 21-748 filed with FDA on April 27, 2004 (as
such NDA may be amended or supplemented subsequent to the filing date).


 


Section 1.2             “1000mg
Product” means the once-daily formulation of 1000 mg of metformin HCl that
is the subject of NDA No. 21-748 filed with FDA on April 27, 2004 (as
such NDA may be amended or supplemented subsequent to the filing date).


 


Section 1.3             “Act”
means the United States Federal Food, Drug and Cosmetic Act, 21 U.S.C. 301, et.
seq., as it may be amended from time to time, and the regulations promulgated
thereunder, including the Generic Drug Act.


 


Section 1.4             “AcuForm Patent
License” has the meaning set forth in Section 10.1.


 


Section 1.5             “Adverse
Drug Experience” means any “adverse drug experience” as defined or
contemplated by 21 C.F.R. 314.80 or 312.32, associated with a Product.


 


Section 1.6             “Adverse
Drug Experience Report” means any oral, written or electronic report of any
Adverse Drug Experience transmitted to any Person.


 


Section 1.7             “Advertising/Marketing/Educational
Expenses” means the following Santarus expenses for directly Promoting the
Products and conducting Educational Programs with respect to the Products in
the Territory:  (a) all
out-of-pocket costs for Samples incurred as contemplated by Section 6.5 as
well as all out-of-pocket costs for Sample warehousing and distribution, (b) all
out-of-pocket costs for Promotional Materials and training materials, (c) all



 

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


out-of-pocket costs for sales training meetings to the extent
attributable to the Products, (d) all out-of-pocket costs for the purchase
of Prescriber Data (including any prescriber data for competitive products), (e) all
out-of-pocket costs associated with market research, advisory boards, speaker
programs, trade shows and “lunch and learns” and other outreach programs with
respect to the Products, (f) all costs related to scientific liaisons, and
national and regional account managers to the extent attributable to the
Products, (g) all costs related to up to one (1) full-time equivalent
dedicated product manager; (h) all Medical Affairs Expenses reimbursed by
Santarus pursuant to Section 4.7; and (i) all other out-of-pocket
costs and expenses of Santarus for directly Promoting the Products and
conducting Educational Programs with respect to the Products in the
Territory.  In the case of Product
voucher, coupon, loyalty card or other co-pay assistance programs approved by
the JCC, all out-of-pocket costs of Santarus associated with such programs
(other than redemption costs) shall be treated as Advertising/Marketing/
Educational Expenses.   Notwithstanding
the foregoing, (A) the costs set forth in items (f) and (g) above
shall be subject to a $[***] cap per Agreement Quarter and (B) the costs
set forth in item (c) above shall be subject to a $[***] cap during the
Launch Period and to a $[***] cap during each twelve (12) month period
thereafter; and such costs in excess of the caps set forth in clauses (A) and
(B) shall not be treated as Advertising/Marketing/Educational Expenses.


 


Section 1.8             “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
controls, is controlled by or is under common control with, such first
Person.  For the purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise.


 


Section 1.9             “Agreement”
has the meaning set forth in the preamble to this Agreement.


 


Section 1.10           “Agreement
Month” means each calendar month during the Term (including any partial
calendar month in the case of the first and last calendar months of the Term).


 


Section 1.11           “Agreement
Quarter” means the Initial Agreement Quarter, each successive period of
three months during the Term after the Initial Agreement Quarter and the Final
Agreement Quarter.


 


Section 1.12           “Annual
Plan” has the meaning set forth in Section 4.5(a).


 


Section 1.13           “Baseline
Percentage” means the percentage determined by dividing (a) the total
number of Units of Product prescribed by Professionals on the Depomed Physician
List during the two (2) complete Agreement Quarters prior to delivery by
Depomed of its intention to commence Promotion and Detailing of the Product in
the Territory pursuant to Section 4.9, by (b) the total number of
Units of Product prescribed by all Professionals during such two (2) complete
Agreement Quarters, based on Prescriber Data for such two (2) complete
Agreement Quarters, as such percentage may be amended pursuant to Section 4.9.


 


2

















 


Section 1.14           “BLS”
means Biovail Laboratories International SRL, or any Person which succeeds to
the obligations of Biovail Laboratories International SRL under the BLS
Agreements.


 


Section 1.15           “BLS
Agreements” means, collectively, the BLS License Agreement, the BLS
Manufacturing Transfer Agreement and the BLS Supply Agreement.


 


Section 1.16           “BLS
Fees” means, for any period, the sum of the following amounts actually paid
by Depomed to BLS in such period:  (a) earned
royalty payments made pursuant to Section 4.6 of the BLS Manufacturing
Transfer Agreement attributable to Promotion Net Sales of the 500mg Product,
and (b) (i) the Supply Price (as defined under the BLS Supply
Agreement) for the 1000mg Product or (ii) in the event that BLS is no
longer supplying the 1000mg Product under the BLS Supply Agreement, earned
royalty payments made pursuant to Section 4.2 of the BLS Manufacturing
Transfer Agreement attributable to Promotion Net Sales of the 1000mg Product;
but only to the extent and for so long as such amounts are actually paid by
Depomed in respect of supply or the Promotion Net Sales for such period under
the applicable BLS Agreement.  In the
event the amounts actually paid under any such BLS Agreement are reduced or
terminate, or Depomed receives a credit for any prior payment of BLS Fees or
receives any other payment from BLS under any BLS Agreement, the BLS Fees will
correspondingly be reduced or terminate or the credit or other payment shall be
applied to the then-current calculation of BLS Fees.


 


Section 1.17           “BLS
License Agreement” means that certain Amended and Restated License
Agreement (Extended Release Metformin Formulations – Canada), dated as of December 13,
2005, by and between Depomed and BLS, as the same may be amended from time to
time.


 


Section 1.18           “BLS
Manufacturing Transfer Agreement” means that certain Manufacturing Transfer
Agreement (Controlled Release Metformin Formulations – USA), dated as of December 13,
2005, by and between Depomed and BLS, as the same may be amended from time to
time.


 


Section 1.19           “BLS
Supply Agreement” means that certain Supply Agreement (Extended Release
Metformin Formulations – U.S.A.), dated as of December 13, 2005, between
Depomed and BLS, as amended on June 30, 2007, as the same may be amended
from time to time.


 


Section 1.20           “Branded Extended Release
Metformin Products” shall mean (i) Glucophage XR (metformin
hydrochloride) Extended Release Tablets (NDA No. 21202) and Fortamet
(metformin hydrochloride) Extended Release Tablets (NDA No. 21574), each
in the dosage strengths and formulations marketed as of the Effective Date (and
excluding any generic forms of such products); and (ii) the Products.


 


Section 1.21           “Branded Metformin Products”
shall mean (i) Glucophage (metformin hydrochloride) Tablets (NDA No. 20357)
in the dosage strengths and formulations marketed as of the Effective Date (and
excluding any generic forms of such product); and (ii) the Branded
Extended Release Metformin Products.


 


3

















 


Section 1.22           “cGMP” shall mean current “Good
Manufacturing Practices” as such term is defined from time to time by the FDA
or other relevant Governmental Authority having jurisdiction over the
manufacture or sale of a Product pursuant to its regulations, guidelines or
otherwise.


 


Section 1.23           “Co-Chairs” has the meaning
set forth in Section 3.2.


 


Section 1.24           “COGS” means, for a particular
period, Depomed’s cost of goods sold (calculated in accordance with Section 7.3(c))
for the Products in the Territory for such period, but not including (i) BLS
Fees, (ii) expenses which are to be deducted from gross sales in reaching
the calculation of Net Sales hereunder, and (iii) costs of Samples
purchased from Depomed by Santarus hereunder.


 


Section 1.25           “Combination Product” has the
meaning set forth in Section 13.1.


 


Section 1.26           “Confidentiality Agreement”
means that certain Confidentiality Agreement, dated as of May 20, 2004,
between Depomed and Santarus.


 


Section 1.27           “Control” or “Controlled”
means, with respect to patents, know-how or other intellectual property rights
of any kind, the possession by a party of the ability to grant a license or
sublicense of such rights without the payment of additional consideration and
without violating the terms of any agreement or arrangement between such party
and any Third Party.


 


Section 1.28           “DDMAC” means the FDA’s
Division of Drug Marketing, Advertising and Communications, or any successor
Governmental Authority performing comparable
functions in the Territory.


 


Section 1.29           “Depomed” has the meaning set
forth in the preamble to this Agreement.


 


Section 1.30           “Depomed Gross Margin” means, for a particular period, (A) Depomed Net
Sales for such period minus (B) (i) all BLS Fees for such period
(multiplied by the Depomed Percentage for such period) and (ii) COGS for
such period (multiplied by the Depomed Percentage for such period).


 


Section 1.31           “Depomed Net Sales” means, for
a particular period, Net Sales for such Period, multiplied by the Depomed
Percentage for such period.


 


Section 1.32           “Depomed Percentage” means,
for a particular period during which Depomed is Promoting and Detailing a
Product pursuant to Section 4.9, the difference of (a) the percentage
determined by dividing (i) the total number of Units of Product prescribed
during such period by Professionals on the Depomed Physician List, by (ii) the
total number of Units of Product prescribed during such period by all
Professionals, in each case based on Prescriber Data for the applicable period;
minus (b) the Baseline Percentage; provided that the Depomed Percentage
shall not be less than zero.


 


Section 1.33           “Depomed Physician List” means
the list of obstetrics and gynecology Professionals to whom the Depomed Sales
Force may present Details, as such list may be amended from time to time as
contemplated by this Agreement; provided that the list must conform to
the requirements of Section 4.9.


 


4

















 


Section 1.34           “Depomed Promotional Materials”
has the meaning set forth in Section 4.9(d).


 


Section 1.35           “Depomed Sales Force” means
the field force of Sales Representatives employed or contracted by Depomed.


 


Section 1.36           “Depomed Supply Failure” means
any circumstances under which any back-up manufacturing rights in favor of
Depomed pursuant to any supply arrangement relating to the applicable
formulation of the Product are applicable as a result of a failure to fill
wholesaler and distributor orders of the applicable Product.


 


Section 1.37           “Depomed Trademarks” means (a) Glumetza® , (b) the AcuFormTM trademark, for
which Depomed has sought registration for in the United States Patent and
Trademark Office, and (c) Depomed®, and, in each case, all related domain
names and other trademark related rights.  The Depomed Trademarks are
attached hereto as Schedule 1.37.


 


Section 1.38           “Detail” means an in-person,
face-to-face sales presentation of a Product made by a Sales Representative to
a Professional, including a P1 Detail or P2 Detail.


 


Section 1.39           “Educational Programs” means
any activities undertaken with respect to the education of Professionals,
pharmacists, managed care representatives or customers regarding a Product or
any indication for a Product or funded by unrestricted educational grants,
including educational programs and seminars and education materials.


 


Section 1.40           “Effective Date” has the
meaning set forth in the preamble to this Agreement.


 


Section 1.41           “Evaluation Period” has the
meaning set forth in Section 13.1.


 


Section 1.42           “Executive Officers” means the
Chief Executive Officers of Santarus and Depomed (or, if there is no such
officer, its President or other executive officer designated by the Chief
Executive Officer).


 


Section 1.43           “FDA” means the United States
Food and Drug Administration or any successor agency performing comparable
functions in the Territory.


 


Section 1.44           “Final Agreement Quarter”
means the period commencing on the first day following the last full Agreement
Quarter during the Term and ending on the last day of the Term.


 


Section 1.45           “Force Majeure Event” has the
meaning set forth in Section 16.7.


 


Section 1.46           “GAAP” has the meaning set
forth in Section 7.3(c).


 


5

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


Section 1.47           “Generic Drug Act” has the
meaning set forth in Section 9.1(j).


 


Section 1.48           “[***]”
means [***].


 


Section 1.49           “Governmental Authority” shall
mean any court, agency, authority, department, regulatory body or other
instrumentality of any government or country or of any national, federal,
state, provincial, regional, county, city or other political subdivision of any
such government or any supranational organization of which any such country is
a member, which has competent and binding authority to decide, mandate,
regulate, enforce, or otherwise control the activities of the parties
contemplated by this Agreement.


 


Section 1.50           “Gross Margin” means, for a
particular period, (A) Promotion Net Sales for such period minus (B) (i) all
BLS Fees for such period (multiplied by the Promotion Percentage for such
period), and (ii) COGS for such period (multiplied by the Promotion
Percentage for such period).


 


Section 1.51           “Initial Agreement Quarter”
means the period commencing on the Effective Date and ending on December 31,
2008.


 


Section 1.52           “JAMS” has the meaning set
forth in Section 3.5(b).


 


Section 1.53           “JCC” has the meaning set
forth in Section 3.1.


 


Section 1.54           “Launch Period” means the
period beginning on the Effective Date and ending on March 31, 2009.


 


Section 1.55           “Launch Plan” means the plan
and schedule for the commercial re-launch of the Products in the Territory
during the Launch Period, including the parties’ responsibilities for the
activities associated with such commercial re-launch of the Products, a budget
for the activities to be undertaken in connection with such commercial
re-launch.  The initial Launch Plan describing a summary of the plan and
schedule for commercial re-launch is attached hereto as Schedule 1.55.


 


Section 1.56           “Legal Requirements” means
laws, rules and regulations of any Governmental Authority in the
Territory, including, for clarity, all guidelines, policies and procedures
referenced in Section 5.3 of this Agreement.


 


Section 1.57           “Mediation Notice” has the
meaning set forth in Section 3.5(b).


 


Section 1.58           “Medical Affairs Expenses”
means all of Depomed’s
out-of-pocket costs related to the handling of medical inquiries under Section 4.7
to the extent attributable to the Product.


 


Section 1.59           “Metformin Product Rights” has
the meaning set forth in Section 13.1.


 


Section 1.60           “Minimum Detailing Obligations”
has the meaning set forth in Section 4.1(b).


 


6

















 


Section 1.61           “Minimum Detailing Period” has
the meaning set forth in Section 4.1(b).


 


Section 1.62           “NDA” means any “new drug
application” (as such term is used under the Act) filed or acquired by
Depomed or any Affiliate with the FDA with respect to a Product and all
subsequent submissions, supplements and amendments thereto, including NDA No. 21-748
filed with the FDA on April 27, 2004 (as such NDA may be amended or
supplemented subsequent to the filing date).


 


Section 1.63           “Negotiation Period” has the
meaning set forth in Section 13.1.


 


Section 1.64           “Net Sales” means, for a particular period, the gross amount
invoiced on sales of Product in the Territory recognized as gross revenue in
accordance with GAAP by Depomed, its Affiliates, licensees, sublicensees and
assigns to independent, unrelated Third Parties during such period in bona fide
arms’ length transactions, less the following deductions, calculated to arrive
at net sales in accordance with GAAP:  (a) freight,
insurance (but only insurance with respect to shipping the Product), and other
transportation charges to the extent added to the sales price and set forth
separately as such on the total amount invoiced; (b) any sales, use,
value-added, excise taxes or duties or allowances on the selling price of
Product to the extent added to the sales price and set forth separately as such
on the total amount invoiced; (c) chargebacks, trade, quantity and cash
discounts and rebates to the extent customary in the trade, including
governmental rebates; (d) allowances or credits, including allowances or
credits to customers on account of rejection, defects or returns of the
Product, or because of a retroactive price reduction; and (e) redemption
costs associated with any Product voucher, coupon, loyalty card or other co-pay
assistance programs approved by the JCC, or listed in Schedule 4.5(h).  Net Sales shall not include a sale or
transfer to an Affiliate, licensee, sublicensee or assign of Santarus or
Depomed or if done for clinical, regulatory or governmental purposes where no
consideration is received; but the resale by such Affiliate, licensee,
sublicensee or assign of Santarus or Depomed shall be considered a sale of such
Product.  For purposes of clarity, it is
the intent of the parties that “Net Sales” for the purposes of this Agreement
shall be consistent with the GAAP net sales reported by Depomed in its periodic
reports with the U.S. Securities and Exchange Commission.


 


Section 1.65           “Order” means any award,
decision, injunction, judgment, decree, order, ruling, or verdict entered,
issued, made, or rendered by any Governmental Authority or by any arbitrator.


 


Section 1.66           “P1 Detail” means a Detail in
which the promotional message involving a Product is presented in the first
position and is the principal topic of discussion during the contact.


 


Section 1.67           “P2 Detail” means a Detail in
which the promotional message involving a Product is presented in the second
position and is emphasized more than any other product in the Detail, except
for the product in the P1 Detail.


 


Section 1.68           “PDMA” means the Prescription
Drug Marketing Act, as amended, and the rules and regulations promulgated
thereunder.


 


7

















 


Section 1.69           “Patheon” means Patheon Puerto
Rico, Inc. (f/k/a MOVA Pharmaceutical Corporation), or any Person which
succeeds to the obligations of Patheon Puerto Rico, Inc. under the Patheon
Agreement.


 


Section 1.70           “Patheon Agreement” means that
certain Commercial Manufacturing Agreement, dated as of December 19, 2006,
by and between Depomed and Patheon, as the same may be amended from time to
time.


 


Section 1.71           “Person” means any individual,
corporation (including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or Governmental
Authority.


 


Section 1.72           “Prescriber Data” means data
provided by a Third Party which measures prescriptions filled for Products (by
individual prescriber) in the Territory during a specified time period, from a
source mutually agreed in writing by the parties (it being understood that each
of IMS Health Incorporated and Wolters Kluwer is a source agreeable to the
parties).


 


Section 1.73           “Product(s)” means any
pharmaceutical product formulation for human use containing metformin or any
other salt, chiral forms or metabolites thereof as the sole active
pharmaceutical ingredient, including the 500mg Product and the 1000mg Product.


 


Section 1.74           “Product Complaints” means any
report concerning the quality, purity, quantity, weight, pharmacologic
activity, labeling, identity or appearance of a Product.


 


Section 1.75           “Professional” means a
physician or other health care practitioner who is permitted by law to
prescribe Products.


 


Section 1.76           “Promote,” “Promotional”
and “Promotion” mean, with respect to a Product, any activities
undertaken to encourage sales or use of such Product, including Details,
product sampling, detail aids, drop-offs, coupons, discount cards, journal
advertising, direct mail programs, direct-to-consumer advertising, convention
exhibits and all other forms of marketing, advertising, public relations or
promotion.


 


Section 1.77           “Promotion Commencement Date”
has the meaning set forth in Section 4.1(e).


 


Section 1.78           “Promotion Fees” has the
meaning set forth in Section 7.2(a).


 


Section 1.79           “Promotion Net Sales” means
Net Sales multiplied by the Promotion Percentage.


 


Section 1.80           “Promotion Percentage” means,
for a particular period, 100% minus the Depomed Percentage for such period, if
any Depomed Net Sales occur in such period.


 


Section 1.81           “Promotional Effort” has the
meaning set forth in Section 4.1(a).


 


Section 1.82           “Promotional Materials” has
the meaning set forth in Section 4.4(a).


 


8

















 


Section 1.83           “Proprietary Information”
means any proprietary or confidential information communicated from one party
to the other in connection or relating to this Agreement, which is identified
as confidential or proprietary, or which the other party knows or has reason to
know is confidential or proprietary, including the Technology and financial,
marketing, business, technical and scientific information or data, information
related to Santarus’ compensation of its Sales Representatives, information
contained within the Annual Plan and Launch Plan, and the information described
in Section 4.6, whether communicated in writing, orally or
electronically.  Proprietary Information shall not include information
that the receiving party can show through written documentation:


 


(a)           at
the time of disclosure, is publicly known;


 


(b)           after
the time of disclosure, becomes part of the public domain, except by breach of
an agreement between the disclosing party or any Affiliate thereof and the
receiving party or any Affiliate thereof;


 


(c)           is
or was in the possession of the receiving party or any Affiliate thereof at the
time of disclosure by the disclosing party and was not acquired directly or
indirectly from the disclosing party or any Affiliate thereof or from any other
party under an agreement of confidentiality to the disclosing party or any
Affiliate thereof; and


 


(d)           is
or was developed by the receiving party or its Affiliates without use of or
reference to the other party’s Proprietary Information.


 


Section 1.84           “Regulatory Approval” means
any and all consents or other authorizations or approvals required from a
Governmental Authority to market and sell a Product in the Territory, but
excluding any form of reimbursement approval.


 


Section 1.85           “Safety Stock” has the meaning
set forth in Section 6.1.


 


Section 1.86           “Sales Force Expenditures”
means the costs allocated to the Santarus Sales Force in accordance with Section 4.1(c).


 


Section 1.87           “Sales Representatives” means
sales representatives employed by Santarus or Depomed, or a Third Party engaged
by Santarus or Depomed, to Detail the Products, who have been trained and
equipped to Detail the Products in accordance with this Agreement.


 


Section 1.88           “Samples” has the meaning set
forth in Section 6.5.


 


Section 1.89           “Santarus” has the meaning set
forth in the Preamble to this Agreement.


 


Section 1.90           “Santarus CAC” means Santarus’
Copy Approval Committee.


 


Section 1.91           “Santarus Manufacturing Notice”
has the meaning set forth in Section 6.6.


 


9

















 


Section 1.92           “Santarus Sales Force” means
the field force of Sales Representatives employed or engaged by Santarus,
including field-based sales force management such as regional and district
sales managers.


 


Section 1.93           “Santarus Trademarks” means
the trademarks set forth on Schedule 1.93, including the “Santarus”
trademark and associated design and logo.


 


Section 1.94           “Serious Adverse Drug Experience”
means any Adverse Drug Experience, including those subject to expedited
reporting as defined in the regulations cited below, that is fatal or
life-threatening, requires hospitalization or prolongation of existing
hospitalization, results in persistent or significant disability or incapacity,
is a congenital anomaly/birth defect, or is of comparable medical significance
or any other event which would constitute a “serious” Adverse Drug
Experience pursuant to the terms of 21 C.F.R. 314.80 or 312.32.


 


Section 1.95           “Serious Adverse Drug Experience
Report” means any Adverse Drug Experience Report that involves a Serious
Adverse Drug Experience.


 


Section 1.96           “Subcontracting” means
subcontracting or sublicensing a party’s rights or obligations hereunder (a) pursuant
to which a Third Party will manufacture the Products; or (b) pursuant to
which a Third Party Sales Representative is engaged to Promote the
Products.  “Subcontractor” means the Third Party with whom the
Subcontracting agreement is entered into.


 


Section 1.97           “Technology” means all
pharmacological, toxicological, preclinical, clinical, technical or other
information, data and analysis and know-how relating to the registration,
manufacture, packaging, use, marketing or sale of a Product and all proprietary
rights relating thereto owned by Depomed or its Affiliates or to which Depomed
or its Affiliates has rights so as to be able to license.


 


Section 1.98           “Term” has the meaning set
forth in Section 8.1.


 


Section 1.99           “Territory” means the United
States, including its territories and possessions and Puerto Rico.


 


Section 1.100         “Third Party” means any Person
other than Santarus or Depomed or their respective Affiliates.


 


Section 1.101         “Unit” means one (1) tablet
of the 1000mg Product and two (2) tablets of the 500mg Product; provided
that “Unit” shall have such other meaning as the parties may negotiate in good
faith in the event that either party reasonably determines that the then
current definition of Unit does not equitably reflect differences in value
between the 500mg Product and the 1000mg Product for purposes of calculating
the Baseline Percentage and the Depomed Percentage.


 


Section 1.102         “United States Bankruptcy Code”
means the U.S. Bankruptcy Code, 11 U.S.C. §§ 101, et seq.


 


10

















 


Section 1.103         “Valid Claim” means a claim in
any issued patent or pending patent application which (a) has not been
held invalid or unenforceable by a non-appealed or un-appealable decision of a
court or government agency or other appropriate body of competent jurisdiction
and has not been admitted invalid through disclaimer or dedication to the
public, and (b) has not expired, been determined to be unenforceable, been
cancelled, withdrawn, abandoned or been on file with the applicable patent
office for more than seven (7) years from the earlier of its date of
filing or earliest claim of priority under 35 U.S.C. §119 or §120 and its
successors in the United States.


 


Section 1.104         “Volume Forecast” has the
meaning set forth in Section 6.3.


 


ARTICLE II

GRANT


 


Section 2.1             Grant of
Promotion Rights


 


During the Term, subject to the
terms and conditions of this Agreement (including Depomed’s right to elect to
Promote the Products as set forth in Section 4.9), Depomed hereby grants
to Santarus and its Affiliates and Santarus and its Affiliates hereby accept an
exclusive right to Promote the Products under the Depomed Trademarks in the
Territory, on the terms and subject to the conditions set forth herein. 
Depomed agrees that its and its Affiliates’ right to Promote the Products is
limited to the rights set forth in Section 4.9.


 


Section 2.2             Sublicense


 


Except pursuant to Section 16.9
or in connection with the use of Third Party Sales Representatives, Santarus
shall not assign, subcontract or otherwise transfer or delegate any of its
rights or obligations under this Agreement without the express written consent
of Depomed, which consent may be withheld by Depomed in its sole discretion.


 


Section 2.3             Limitation
on Metformin Promotion


 


Except as expressly contemplated
by this Agreement (including Article XIII hereof) and subject to Section 13.1
hereof, Santarus shall not promote, market or distribute any product containing
metformin hydrochloride as the sole active ingredient in the Territory during
the Term of this Agreement, other than the Products.


 


Section 2.4             Retention
of Rights


 


Depomed retains and shall retain
all proprietary and property interests in the Products until the point of sale
or, in the case of Samples, until delivered to Santarus as contemplated by Section 6.5. 
Santarus will not have nor represent that it has any control or proprietary or
property interests in the Products, except for the licenses and rights
specifically granted hereunder.  Except as expressly set forth herein,
nothing contained herein shall be deemed to grant Santarus, by implication, a
license or other right or interest in any patent, trademark or other similar
property of Depomed or its Affiliates, except as may be necessary for Santarus
to Promote the Products pursuant to this Agreement or to manufacture the
Products in accordance with Section 6.6.  Except 


 


11

















 


as expressly set forth herein, nothing contained
herein shall be deemed to grant Depomed, by implication, a license or other
right or interest in any patent, trademark or other similar property of
Santarus or its Affiliates, except as may be necessary for Depomed to Promote
the Products pursuant to this Agreement.


 


ARTICLE III

JOINT COMMERCIALIZATION COMMITTEE


 


Section 3.1             Establishment


 


The parties agree to establish,
for the purposes specified herein, a Joint Commercialization Committee (the “JCC”). 
The parties acknowledge and agree that the JCC does not have the power to
amend, modify or waive any of the terms or conditions of this Agreement.


 


Section 3.2             Joint
Commercialization Committee


 


The JCC shall be established by
the parties and shall be comprised of four (4) members, two (2) of
whom shall be appointed by Depomed and two (2) of whom shall be appointed by
Santarus.  Each party has indicated to the other its initial appointments
to the JCC.  A party may change any of its representatives at any time if
a new person is appointed to any of the foregoing positions by giving written
notice to the other party.  The total number of JCC members may be changed
by unanimous vote of the JCC from time to time as appropriate; provided, that
the JCC shall in all cases be comprised of an equal number of members from each
of Depomed and Santarus.  Santarus and Depomed each will designate one
representative of such party to serve as co-chairs of the JCC (the “Co-Chairs”). 
The members appointed to the JCC by each party shall be employees of such party
and shall be vested with appropriate decision-making authority and power by
such party.  The Chief Executive Officers of Santarus and Depomed shall
not be members of the JCC.


 


Section 3.3             JCC
Responsibilities


 


Except as otherwise set forth
herein, the JCC shall provide strategic oversight of all Promotional activities
for the Products hereunder, it being understood that Santarus shall be
responsible for directing such Promotional and marketing activities.  The
responsibilities of the JCC shall be exercised consistent with this Agreement
and shall include, but shall not be limited to:


 


(a)           reviewing
the Annual Plan as contemplated by Section 4.5(a);


 


(b)           reviewing
material modifications by Santarus to the Annual Plan or the Launch Plan;


 


(c)           reviewing
Santarus’ Product Promotion strategies and objectives, including Product
positioning, messaging and branding;


 


(d)           if
applicable, monitoring the Depomed Sales Force call plan for coordination with
the Santarus Sales Force;


 


12

















 


(e)           monitoring
advertising placement and market responses, including any post-implementation
reviews;


 


(f)            reviewing
and approving any Volume Forecasts and reviewing any Sample forecasts,
consistent with Section 6.3;


 


(g)           establishing
pricing for commercial sale of Products by or on behalf of Depomed, including
the timing of any pricing changes;


 


(h)           reviewing
sales incentive compensation plans for the Santarus Sales Force related to the
Products;


 


(i)            establishing
contracting guidelines for the distribution of the Products (or if no such
guidelines have been established, approving any new or amended contracts);


 


(j)            establishing
contracting guidelines for the managed care and government markets (or if no
such guidelines have been established, approving any new or amended contracts);


 


(k)           proposing
any new packaging design for the Products (subject to Depomed’s approval, and
followed by and subject to applicable FDA and other Legal Requirements);


 


(l)            establishing
the Net Sales forecast for 2009 for purposes of calculating the minimum
Advertising/Marketing/Educational Expenses for that year in accordance with Section 4.1(d);


 


(m)          reviewing
and approving any Product voucher, coupon, loyalty card or other co-pay
assistance programs;


 


(n)           reviewing
and approving any proposed material capital expenditures relating to the manufacture
of the Products; and


 


(o)           such other
functions as may be mutually agreed upon by the parties from time to time.


 


For
the avoidance of doubt, (i) the JCC shall not have any review or approval
rights with respect to any matters relating to the development of the Products,
(ii) any decisions of the JCC with respect to matters which relate to
Regulatory Approval for a Product shall require Depomed’s prior written
consent, (iii) the JCC cannot require Santarus to pay more than the
minimum amounts described in Section 4.1 with respect to
Advertising/Marketing/Educational Expenses or Sales Force Expenditures, and (iv) “reviewing”
as set forth above shall not imply any approval right or other decision-making
power on the part of the JCC.


 


13
















 


Section 3.4             Meetings
of the JCC.


 


Meetings of the JCC may be
called by the Co-Chairs of the JCC from time to time and, upon no less than ten
(10) days’ notice, shall otherwise be called when requested by a party;
provided, however, that meetings of the JCC shall be held monthly during the
first six months of the Term, and on at least a quarterly basis
thereafter.  If possible, the meetings shall be held in person or where
appropriate, by video or telephone conference.  Unless otherwise agreed, the
location of any in-person meetings of the JCC shall alternate between the
corporate offices of the parties.  The parties shall determine the form of
the meetings.  Subject to Section 3.5, decisions shall be made
unanimously, each party having one (1) vote regardless of the number of
representatives present or voting; provided, that no such vote shall be valid
unless each party is represented by at least two (2) members either by
written proxy or actual presence at the meeting at which the vote is
taken.  Subject to appropriate confidentiality undertakings where
applicable, each party shall have the right, upon written notice to the other
party, to have present at JCC meetings additional, non-voting participants (not
to exceed ten such participants at any JCC meeting without the consent of the
other party).  Such additional participants shall not be deemed to be, or
have any rights or responsibilities of, a member of the JCC.  The parties
shall cause their respective representatives on the JCC to use their reasonable
efforts to resolve all matters presented to them as expeditiously as
possible.  The party hosting any meeting shall propose the agenda for the
meeting and appoint a secretary to the meeting who shall record the minutes of
the meeting.  Such minutes shall be circulated to the parties promptly
following the meeting for review and comment and for unanimous ratification by
both parties.  Each party shall bear its own travel and related costs
incurred in connection with participation in the JCC.


 


Section 3.5             JCC
Disputes


 


(a)           In the
event that the JCC is, after a period of ten (10) days, unable to make a
decision due to a lack of required unanimity, either party may submit the
matter being considered to the Executive Officers for a joint decision. 
In such event, either Co-Chair of the JCC, by written notice to the other
party, shall formally request the dispute be resolved by the Executive
Officers, specifying the nature of the dispute with sufficient detail to permit
adequate consideration by the Executive Officers.  The Executive Officers
shall diligently and in good faith attempt to resolve the referred dispute
expeditiously and, in any event, within fifteen (15) days of receiving such
written notification.


 


(b)           In the
event that the Executive Officers are unable to reach a resolution of any
referred dispute after good faith negotiations during the fifteen (15)-day
period referred to in Section 3.5(a) above and in the event such
dispute is not related to compliance with this Agreement, regulatory matters,
or the validity, breach or interpretation of this Agreement, either party may
commence mediation within fifteen (15) days after the conclusion of such
fifteen (15)-day period by providing to the other party a written request for
non-binding mediation, setting forth the subject of the dispute and the relief
requested (a “Mediation Notice”).  The parties will cooperate with
Judicial Arbitration and Mediation Services (“JAMS”) and with one
another in selecting a mediator from JAMS’ panel of neutrals, and in scheduling
the mediation proceedings.  The parties shall endeavor to conclude any
mediation under this Section 3.5 within thirty (30) days after delivery by
either party of Mediation Notice.  The parties covenant that they will
participate in the mediation in good faith and that they will share equally in
its costs; provided that each party will be responsible for its own attorneys’
fees.  Either party may seek equitable relief prior to the mediation to
preserve the status quo pending the completion of that process.  Except for
such an action to obtain equitable relief, neither party may commence a civil
action with respect to the matters submitted to mediation until after the
completion of the initial mediation session, or thirty (30) days after delivery
of the Mediation Notice, whichever occurs first.


 


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Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


(c)           Any
disputes referred to the Executive Officers for resolution pursuant to this Section 3.5
shall not be subject to any dispute resolution mechanism or procedure other
than pursuant to this Section 3.5.


 


ARTICLE IV

PRODUCT PROMOTION


 


Section 4.1             Product
Promotion


 


(a)           Subject
to applicable Legal Requirements, as well as the provisions of this Agreement,
Santarus shall, from and after the Promotion Commencement Date, at its sole
expense, use commercially reasonable efforts to Promote the Products within the
Territory in accordance with the Launch Plan or Annual Plan (the “Promotional
Effort”).  For purposes of the preceding sentence, Santarus’
commercially reasonable efforts shall be met if Santarus is in compliance with
its obligations under Section 4.1(b), 4.1(c), 4.1(d) and 4.1(e) of
this Agreement.  Santarus will cause the
Santarus Sales Force and Santarus employees and agents acting on Santarus’
behalf to comply with this Agreement and all applicable Legal Requirements in
connection with the Promotion of the Products.  It is understood, and
Santarus agrees, that it will be accountable for the acts or omissions of the
Santarus Sales Force and its employees and agents to the extent such acts or
omissions fail to comply with Santarus’ obligations under this Agreement.


 


(b)           From
the Promotion Commencement Date and through the first anniversary of such
Promotion Commencement Date (the “Minimum Detailing Period”), the
Santarus Sales Force shall perform a minimum of [***] P1 Details and a minimum
of [***] P2 Details (the “Minimum Detailing Obligations”); [***].  For purposes of determining P1 and P2 Details
hereunder, each Product shall be deemed to be the same Product and shall be
counted only once.  By way of
illustration, Santarus shall not have the right to count both a P1 Detail for
the 500mg Product and a P2 Detail for the 1000mg Product.  In such case, only the P1 Detail shall be
counted for purposes of determining compliance with the Minimum Detailing
Obligations.


 


(c)           During
each of the [***] periods within the [***]  month period
following the end of the Minimum Detailing Period, Santarus Sales Force
Expenditures shall equal at least [***]  percent
([***]%)  of the immediately prior [***]
Promotion Net Sales.  From and after the
end of such [***] month period, the minimum shall be reduced to [***] percent
([***]%) of the immediately prior [***] Promotion Net Sales.  Santarus Sales Force Expenditures for any
[***] period shall be calculated as follows: 
(i) each P1 Detail shall be valued at $[***]; and (ii) each P2
Detail shall be valued at $[***] ($[***] for any period during which a
particular Santarus Sales Representative who is delivering Details is at the
same time delivering details for two (2) or more additional products),
with such amounts to be increased on each May 1 by the amount of increase
in the Consumer Price Index published for the prior year.


 


15

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


(d)           From and
after the Effective Date and for the remainder of the Term, Santarus shall
spend at least the following amounts on Advertising/Marketing/Educational
Expenses during the periods set forth below:


 


	
  Period

  	
   

  	
  Advertising/Marketing/Educational Expenses

  	
   

  
	
  Effective Date
  through March 31, 2008

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  
					



 


(e)           Santarus shall commence (the date of
such commencement, the “Promotion Commencement Date”) Promotion (including Details by the Santarus Sales Force)
of the Products in accordance with this Agreement and the performance of the
other obligations contained herein that are required to be performed from and
after the Promotion Commencement Date as soon as practicable following the date
hereof, but no later than [***],
2008.  The parties agree to cooperate with each other in good faith in
furtherance of the preceding sentence.


 


(f)            For the avoidance of doubt, the
obligations of Santarus as set forth in this Section 4.1 shall be suspended
for any period of time during which Depomed is unable to:  (i) timely supply Samples or trade
Product in accordance with Article 6 or (ii) maintain the continued
effectiveness of the Regulatory Approvals.


 


Section 4.2             Representations
to Customers


 


Santarus will not make any
false or misleading representations to Professionals, customers or others
regarding Depomed or the Products and will not make any representations,
warranties or guarantees with respect to the specifications, features or
capabilities of the Products that are not consistent with the applicable
then-current FDA approved labeling and package insert (except to the extent
permitted by Legal Requirements). 
Santarus agrees to undertake timely and complete corrective action for
any deviations from this Section 4.2, subject to discussion and review by
Depomed’s regulatory affairs and quality assurance department.


 


Section 4.3             Staffing;
Training


 


(a)           Santarus shall be solely responsible for all costs and
expenses of compensating its Sales Representatives.  Consistent with
applicable Legal Requirements, Santarus shall pay incentive compensation to its
Sales Representatives with respect to the Products in accordance with Santarus’
incentive compensation plan for Santarus’ own products; it being understood
that, through the Minimum Detailing Period, such incentive compensation shall
constitute (i) at least [***]  percent ([***]%)
(on a pro-rated basis) of the total targeted cash 


 


16

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


incentive compensation under
Santarus’ field incentive compensation plans for the aggregate of Santarus
Sales Representatives engaged in Detailing Products under this Agreement, and (ii) at
least [***]
percent ([***]%) (on a pro-rated basis) of
the sales component (and excluding any MBO component) of the targeted cash
incentive compensation under Santarus’ field incentive compensation plans for
the aggregate of Santarus district sales managers involved in the Promotion of
the Product.  Santarus
shall notify its Sales Representatives and district sales managers prior to the
Promotion Commencement Date and consistent with its procedures for Santarus’
other products of the total potential incentive compensation for the
Products.  For clarity, the minimum
incentive compensation requirement in this Section 4.3 does not apply to
sales force management (other than district sales managers), such as regional
sales managers.


 


(b)           Depomed shall make available to
Santarus any training materials created by Depomed prior to the Effective Date
at Depomed’s out-of-pocket cost for printing and delivering such materials (and
such costs shall be included in the Advertising/Marketing/Education Expenses
for Santarus).  In consultation with Depomed, Santarus may modify any such
training materials or develop additional training materials for its Sales
Representatives with respect to a Product; provided that such modified or
developed training materials shall be subject to Depomed’s review as
Promotional Materials as provided in Section 4.4.  Promptly after the
Effective Date, at a time and location to be agreed upon by the parties
consistent with the Launch Plan, Depomed shall make available to Santarus, at
Depomed’s cost and expense, personnel and materials for one “train the trainers” meeting to facilitate Santarus’
training of its Sales Representatives.  Santarus
shall, at its own expense subsequent to the “train the trainers” meeting and
prior to the Promotion Commencement Date, provide training programs to its
Sales Representatives consistent with Santarus’ obligations hereunder and all
other Legal Requirements.  Such programs shall include training with
respect to reporting Adverse Drug Experiences and technical complaints. 
After the initial training, Santarus shall periodically provide additional
training to each of its Sales Representatives, and shall update its training
materials as appropriate in connection with such additional training, in
accordance with this Section 4.3.


 


Section 4.4             Promotional
Materials; Educational Materials


 


(a)           Subject
to Sections 4.4(b), 4.4(c) and 4.9, Santarus shall, at its own
expense (which for clarity shall be included as an Advertising/Marketing/Educational
Expense hereunder) have the right to create, develop, produce or otherwise
obtain, and utilize sales, promotional, advertising, marketing, educational and
training materials (“Promotional Materials”) which
are necessary to support fully the Promotional Effort for the Products. 
Such Promotional Materials may include, by way of example, detailing aids;
leave behind items; premium branded items; journal advertising; educational
programs; formulary binders; appropriate reprints and reprint carriers; product
monographs; patient support kits; convention exhibit materials; direct mail;
market research survey and analysis; training materials; and scripts for
telemarketing and teleconferences.  All Promotional Materials used by the
Santarus Sales Force or bearing the Santarus Trademarks will be subject to the
review and approval of the Santarus CAC.  All Promotional Materials
developed by Santarus hereunder shall prominently display such Depomed
Trademark(s) as shall be specified by Depomed to Santarus following its
review of the applicable prototype in accordance with Section 4.4(b).


 


17

















 


(b)           Prior to
the use thereof, Santarus shall provide to Depomed a prototype of any
Promotional Materials created by Santarus for review.  Depomed shall
notify Santarus of any objections it has to such prototype and the basis
therefor as soon as reasonably practicable, but no later than ten (10) business
days following its receipt thereof (five (5) business days during the
Launch Period).  Santarus shall modify such Promotional Materials to the
extent necessary to resolve any objections made by Depomed to such Promotional
Materials on the grounds that such Promotional Materials are inconsistent with
any Legal Requirements or this Agreement and shall in good faith consider any
of Depomed’s other objections.  The final version of the Promotional
Materials approved by the Santarus CAC shall be provided to Depomed for its
review and approval to confirm their consistency with the prototype approved by
Depomed and the resolution of Depomed’s objections in accordance with this Section 4.4(b),
which review and approval shall occur, as soon as reasonably practicable, but
no later than five (5) business days following its receipt by
Depomed.  Upon approval, the Promotional Materials may be produced in
quantity, and Santarus shall provide Depomed with the requisite number of
copies of the final printed form in a timely manner so as to allow Depomed to
satisfy its obligation to file such materials with the FDA prior to the first
use of the Promotional Materials, and Depomed will make such filing with the
FDA within five (5) business days of its receipt of such copies.  In furtherance of the foregoing provisions of
this Section 4.4(b), the parties will endeavor to cooperate to facilitate
the timely and efficient review of Promotional Materials and resolution of any
disputes or disagreements related to Promotional Materials, with a view to
containing both parties’ internal personnel resources and external costs
associated with the creation, review and approval of the Promotional Materials.


 


(c)           At
Santarus’ request, Depomed shall make available to Santarus any Promotional
Materials created by Depomed prior to the Effective Date, including electronic
copies of Promotional Materials, at Depomed’s out-of-pocket cost for printing
and delivering such materials (and such costs shall be included in the
Advertising/Marketing/Education Expenses for Santarus).  On or prior to
the Promotion Commencement Date, Depomed shall deliver to Santarus all such
Promotional Materials created by Depomed in its inventory.  The
Promotional Materials supplied to Santarus under this Section 4.4(c) shall
be delivered to a single location specified by Santarus in writing prior to
such delivery.  Depomed hereby grants to Santarus the exclusive right,
during the Term, to use the Promotional Materials supplied to Santarus pursuant
to this Section 4.4(c) in the performance of its obligations under
this Agreement.


 


(d)           Depomed
shall own all copyrights to all Promotional Materials that are created during
the Term of this Agreement in connection with and to the extent relating to the
Promotion of the Products.  Santarus shall use commercially reasonable
efforts consistent with accepted business practices to obtain such assignments
from the authors and creators of such materials as may be necessary to vest
ownership of the copyright in Depomed.  Depomed shall, and does hereby,
grant to Santarus a royalty-free license to use and reproduce such materials
solely in conjunction with its Promotion of the Products pursuant to this
Agreement, which license shall not be assignable or transferable by Santarus,
except in accordance with the terms of Section 2.2.


 


18

















 


Section 4.5             Annual
Plan; Promotion Expenses


 


(a)           On or prior to October 31st of
the preceding calendar year with respect to each calendar year during the Term
beginning with the 2009 calendar year, Santarus shall develop an annual
commercialization plan (the “Annual Plan”)
and submit the Annual Plan to the JCC for review.  The Annual Plan shall
set forth the manner in which Santarus anticipates it will Promote the Products
during the period to which the Annual Plan relates; provided, however, that the
Annual Plan may be modified from time to time as Santarus reasonably deems
appropriate for the Promotion of the Products, subject where applicable to
Santarus’ compliance with its obligations under this Agreement, including without
limitation the obligations set forth in Section 4.1.  Any such modified
Annual Plan shall be provided to the JCC for its review at its next regularly
scheduled meeting.   The Annual Plan
shall include, at a minimum:


 


(i)            the
anticipated number of quarterly and annual Details (including P1 Details and P2
Details) to be provided by the Santarus Sales Force, and the physicians
targeted to receive those Details;


 


(ii)           product
positioning, strategy and tactics with supporting advertising and promotional
activity to be undertaken;


 


(iii)          planned
public relations activities, if any;


 


(iv)          any
training or sampling programs to be conducted;


 


(v)           medical
education programs to be conducted;


 


(vi)          pricing
and contracting strategies; provided, however, that Product pricing shall be
established as set forth in Section 3.3;


 


(vii)         managed
health care strategies and tactics; provided, however, that managed care
contracting guidelines shall be established as set forth in Section 3.3;
and


 


(viii)        a budget
for all costs and expenses associated with the activities to be undertaken
pursuant to the Annual Plan (including the projected
Advertising/Marketing/Educational Expenses and Sales Force Expenditures).


 


(b)           In
addition, on or prior to October 31st of the preceding calendar year with
respect to each calendar year during the Term beginning with the 2009 calendar
year, Depomed shall provide the following information to the JCC to assist the
JCC in its review of the Annual Plan:  (i) Product
manufacturing and distribution forecasts for the coming year (including
forecasted COGS and BLS Fees), and (ii) plans for and reasonably detailed
reports summarizing any data resulting from post-marketing clinical studies
that Depomed, in its sole discretion and expense, decides to conduct.  Depomed shall also provide to the JCC its
proposed Volume Forecast on a quarterly basis pursuant to Section 6.3.


 


(c)           The JCC
shall use all reasonable efforts to review and provide comments to the Annual
Plan not later than December 1 of each preceding calendar year.  Santarus will consider in good faith any
comments to the Annual Plan provided by the JCC.


 


(d)           Santarus
shall not have any obligation to incur Sales Force Expenditures or
Advertising/Marketing/Educational Expenses in excess of the minimum amounts
provided in Sections 4.1(c) and (d), respectively, of this Agreement.


 


19

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


(e)           [***].


 


(f)            Each
party will bear its own operating expenses associated with the Products and
Promotion thereof, including all personnel, general and administrative and
overhead costs.  Santarus will bear all Santarus Sales Force expenses, and
Depomed will bear all Depomed Sales Force expenses.  Depomed will bear all
costs associated with maintaining and continuing all Regulatory Approvals of
the Products in the Territory, including all costs associated with Adverse Drug
Experience reporting, filing annual reports in connection with the NDAs, user
fees and establishment fees associated with the NDAs and all clinical and
regulatory requirements.


 


(g)           At the end
of each Agreement Quarter, Santarus shall provide directly to Depomed, within
ten (10) business days of its receipt, the Prescriber Data for such
Agreement Quarter related to the Product, to the extent and in such form as is
permitted under the applicable Third Party agreements under which Santarus
purchases the Prescriber Data.


 


(h)           From the
Effective Date through September 15, 2008, Depomed shall maintain, at a
minimum, the Promotion activity set forth in Schedule 4.5(h).


 


Section 4.6             Santarus
Promotion Reports


 


(a)           Within forty-five (45)
days following the end of each Agreement Quarter, Santarus shall provide the
JCC with a status report, which report will summarize Santarus’ Detailing
activities pursuant to this Agreement for such prior Agreement Quarter and on a
calendar year-to-date basis, including, to the extent Santarus customarily
creates the following reports for Santarus’ other products which are promoted
by or on behalf of Santarus:  (a) the number of P1 and P2 Details
made and recorded by Santarus’ standard record keeping procedures; (b) the
names and addresses of the Professionals called upon; (c) the percentage
of Professionals Detailed who were provided with Samples; (d) the average
number of such Samples delivered on each Detail; (e) Advertising/Marketing/Education
Expenses for such Agreement Quarter; and (f) such other information as may
be agreed upon in writing by the parties.


 


(b)           [***].


 


Section 4.7             Medical
Inquiries


 


The parties acknowledge that each may receive
requests for medical information concerning the Product from members of the
medical and paramedical professions and consumers regarding the Product.  If such requests are received by Santarus,
the request will be referred to Depomed’s medical department.  Depomed shall also be responsible for
responding to such requests that are not received by Santarus, all of which
responses shall be in compliance with all applicable Legal Requirements and the
NDA.  Depomed shall promptly provide
Santarus with (i) copies of all written materials and (ii) written
summaries of all oral advice, provided by Depomed in response to such
inquiries.  Depomed shall be obligated
for any costs associated with its responsibilities pursuant to this Section 4.7;
[***].


 


20

















 


Section 4.8             Trademarks


 


(a)           The “Depomed”
trademark must appear on all Promotional Material that makes reference to the
Products, to the extent such Promotional Materials would typically contain a
company trademark.  The “AcuForm” trademark must appear on all Promotional
Materials that make reference to the “AcuForm” drug delivery technology
incorporated into the Products.  Depomed hereby grants to Santarus a
non-assignable, non-sublicensable, non-exclusive, royalty-free right and
license to use the Depomed Trademarks in the Territory solely in connection
with Santarus’ Promotion of the Products in accordance with this Agreement;
provided Santarus may assign and sublicense such right and license in
accordance with Section 2.2.  Such license shall expire immediately
upon the expiration or termination of this Agreement.  Subject to this Section 4.8
and to applicable Legal Requirements, Santarus shall have the right to use the
Santarus Trademarks, and include the name “Santarus” or any variation thereof
on the Promotional Materials; provided that such Santarus Trademarks will not appear
in greater prominence or in greater frequency than the Depomed
Trademarks.  In addition, the JCC will discuss including the Santarus
Trademarks, in equal prominence to the Depomed Trademarks and in accordance
with all Legal Requirements, on all packaging for Samples distributed by the
Santarus Sales Force, with determination by the JCC as to including such marks
being based on the timing for implementing such change and the costs associated
therewith, with all out-of-pocket costs associated with creating and approving
new packaging borne by Santarus if so approved by the JCC.  Santarus
recognizes Depomed’s title to the Depomed Trademarks, and shall not at any
time, during or after the Term, do or knowingly suffer to be done any act or
thing which will in any way impair the rights of Depomed in or to the Depomed
Trademarks.  Santarus acknowledges and agrees that it shall not acquire
and shall not claim any title to the Depomed Trademarks adverse to Depomed by
virtue of the rights granted under this Agreement or through Santarus’ use of
the Depomed Trademarks, it being the intention of the parties that all goodwill
and improved reputation generated by Santarus and use of the Depomed Trademarks
shall inure to the benefit of Depomed.


 


(b)           Santarus
hereby grants to Depomed a non-assignable, non-sublicensable (except to any
Third Party acting as the Depomed Sales Force), non-exclusive, royalty-free
right and license to use the Santarus Trademarks in the Territory solely in
connection with Depomed’s Promotion of the Products in the Territory in
accordance with this Agreement.  Such license shall expire immediately
upon the expiration or termination of this Agreement.  Subject to this Section 4.8
and to applicable Legal Requirements, Depomed shall have the right to use
Depomed Trademarks, and include the name “Depomed,” “AcuForm,” or any variation
thereof on the Promotional Materials developed by Depomed in accordance with
this Agreement.  Depomed recognizes Santarus’ title to the Santarus
Trademarks, and shall not at any time, during or after the Term, do or
knowingly suffer to be done any act or thing which will in any way impair the
rights of Santarus in or to the Santarus Trademarks.  Depomed shall not be
obligated to use the Santarus Trademarks in the Depomed Promotional
Materials.  Depomed acknowledges and agrees that it shall not acquire and
shall not claim any title to the Santarus Trademarks adverse to Santarus by
virtue of the rights granted under this Agreement or through Depomed’s use of
the Santarus Trademarks, it being the intention of the parties that all
goodwill and improved reputation generated by Depomed and use of the Santarus
Trademarks shall inure to the benefit of Santarus.


 


21

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


(c)           Each of
Santarus with respect to its use of the Depomed Trademarks and Depomed with
respect to its use of the Santarus Trademarks will maintain quality standards
for all of its uses of the trademarks of the other party in connection with the
Promotion of the Products that are substantially equivalent to those standards
used by the owner of such trademarks in connection with pharmaceutical
products.  Subject to the foregoing and to the other provisions of this
Agreement, each party acknowledges and agrees that the owner or licensee of the
trademark has the right, at any time, to modify or supplement such quality
standards and that the licensee or sublicensee must implement such new
standards or changes following receipt of notice of such additions or changes;
provided that the licensor agrees to bear all reasonable costs associated with
such modifications and supplements.  Compliance with this Section 4.8(c) shall
be determined pursuant to the Promotional Material and Depomed Promotional
Materials review and approval procedures set forth in Sections 4.4(b) and
4.9(f), as applicable.


 


Section 4.9             Election by
Depomed to Promote in the Territory


 


(a)           Depomed
may elect, at any time prior to the third (3rd) anniversary of the Effective
Date, to have the Depomed Sales Force Promote and Detail the Products directly
to obstetrics and gynecology Professionals who are on the Depomed Physician
List.  If Depomed desires to make this election and to use the Depomed
Sales Force for this purpose, it will inform Santarus at least sixty (60) days
in advance of the commencement of Details by the Depomed Sales Force and
provide Santarus with the proposed Depomed Physician List and Depomed shall
commence its Promotion and Detailing activities no later than ninety (90) days
after the date of its notice to Santarus.  During such sixty (60)-day
period, Santarus will be entitled to review the Depomed Physician List and
confirm that such list does not contain any Professionals that are not, as of
the date of Santarus’ receipt of the Depomed Physician List, eligible for
inclusion on the Depomed Physician List. 
Following creation of the initial Depomed Physician List, from time to
time but not more than two (2) times per calendar year, Depomed may add
Professionals to the Depomed Physician List pursuant to the procedure set forth
above.  Following the addition of such
Professionals to the Depomed Physician List, the Baseline Percentage shall be
adjusted to reflect prescriptions written by any such Professionals by adding
to the then-current Baseline Percentage the quotient obtained by dividing (x) [***],
by (y) [***].  Notwithstanding the
foregoing, the average number of Professionals on the Depomed Physician List
shall in no event exceed [***] Professionals per Depomed Sales Representative
providing Details.


 


(b)           Depomed
will submit to the JCC a call plan setting forth the Details to be performed by
the Depomed Sales Force.  Such call plan may be taken into account in
developing subsequent Annual Plans.  Any
Professional on the Depomed Physician List who does not receive at least [***]
Details in each full calendar year following the commencement of Promotion of
the Product by the Depomed Sales Force will be excluded from the Depomed
Physician List in subsequent calendar years for purposes of calculating Depomed
Net Sales, and for purposes of calculating the Baseline Percentage.


 


(c)           All
Details made by the Depomed Sales Force will be reported to Santarus. 
Such reports by Depomed will be made in the same manner as Santarus’ Details
under Section 4.6(a).  Depomed shall
be responsible for purchasing Prescriber Data relating to the Depomed Physician
List at its sole cost and expense.


 


22

















 


(d)           Depomed
may purchase from Santarus, at Santarus’ actual out-of-pocket costs, copies of
any Promotional Materials created by Santarus for use by the Depomed Sales
Force.  Upon Depomed’s request, Santarus will provide to Depomed
electronic copies of Promotional Materials created by or for Santarus, which
Promotional Materials may be modified for use by Depomed; provided that any
modification must be approved as described below.  Depomed may also create
and develop its own Promotional Materials for use by the Depomed Sales Force (“Depomed
Promotional Materials”).  Prior to the use thereof, Depomed shall
provide to Santarus a prototype of any Depomed Promotional Materials for
review.  Santarus shall notify Depomed of any objections it has to such
prototype and the basis therefor as soon as reasonably practicable, but no
later than ten (10) business days following its receipt thereof. 
Depomed shall modify such Depomed Promotional Materials to the extent necessary
to resolve any objections made by Santarus to such Depomed Promotional
Materials on the grounds that such Depomed Promotional Materials are
inconsistent with the overall Product positioning and messaging for the
Products and shall in good faith consider any of Santarus’ other
objections.  The final version of the Depomed Promotional Materials shall
be provided to Santarus for its review and approval to confirm their
consistency with the prototype approved by Santarus and the resolution of
Santarus’ objections in accordance with this Section 4.9(d), which review
and approval shall occur, as soon as reasonably practicable, but no later than
five (5) business days following its receipt by Santarus.  The
Depomed Promotional Materials will not contain any Santarus Trademark unless
such materials are approved by the Santarus CAC.  Santarus may purchase
from Depomed, at Depomed’s out-of-pocket costs for printing and delivering such
materials, copies of any Depomed Promotional Materials.  Upon Santarus’
request, Depomed will provide to Santarus electronic copies of Depomed
Promotional Materials created by or for Depomed, which Depomed Promotional
Materials may be modified for use by Santarus; provided that any modification
must be approved in the same manner as approval of Promotional Materials.


 


(e)           Depomed
may purchase from Santarus, at Santarus’ actual out-of-pocket costs, copies of
training materials developed and Controlled by Santarus related to the Products
for use by Depomed in the training of the Depomed Sales Force.  Depomed shall be responsible for training of
the Depomed Sales Force, and may, at its own expense, develop training
materials for the Depomed Sales Force in other media or forms, provided that
such materials shall be subject to Santarus’ review as Depomed Promotional
Materials as provided in Section 4.9(d).  Depomed shall, at its own
expense, train the Depomed Sales Force using such training materials, the other
Promotional Materials and Depomed Training Materials and such programs as
Depomed shall deem appropriate that are in compliance with Depomed’s
obligations hereunder.  Such programs shall include training with respect
to reporting Adverse Drug Experiences and technical complaints.  After the
initial training, Depomed shall periodically provide additional training to
each Sales Representative, and shall update its training materials as
appropriate in connection with such additional training, in accordance with
this Section 4.9(e).


 


(f)            Depomed
shall be solely responsible for costs or expenses related to any activities of
the Depomed Sales Force, including costs for Depomed Promotional Materials,
training or training materials or the purchase from Santarus of Promotional
Materials for the Depomed Sales Force.


 


23

















 


(g)           Depomed
will cause the Depomed Sales Force and Depomed employees and agents acting on
Depomed’s behalf to comply with this Agreement and all applicable Legal
Requirements in connection with the Promotion of the Products.  It is
understood, and Depomed agrees, that it will be accountable for the acts or
omissions of its employees and agents to the extent such acts or omissions fail
to comply with Depomed’s obligations under this Agreement.


 


(h)           Depomed
will not make any false or misleading representations to Professionals,
customers or others regarding Santarus or the Products and will not make any
representations, warranties or guarantees with respect to the specifications,
features or capabilities of the Products that are not consistent with the
applicable then-current FDA approved labeling, package insert or other
documentation accompanying or describing the Products.  Depomed agrees to
undertake timely and complete corrective action for any deviations from this Section 4.9(h).


 


Section 4.10           Product Website


 


Unless otherwise agreed in
writing by the parties, Depomed shall maintain the existing Product website and
implement any changes to such Product website, subject to the procedure set
forth in Section 4.4 used for Promotional Materials.  Santarus will reimburse Depomed for its
direct out-of-pocket costs associated with implementing any changes requested
by Santarus.  Such reimbursed costs shall
be included in the Advertising/Marketing/Educational Expenses for Santarus.


 


ARTICLE V

CLINICAL AND REGULATORY AFFAIRS; DEVELOPMENT


 


Section 5.1             Regulatory
Approvals


 


Depomed shall use active,
sustained, diligent efforts to maintain and continue all Regulatory Approvals
currently in effect for the Products.  Santarus agrees that all Regulatory
Approvals, applications therefor and any other submissions to a Governmental
Authority with respect to the Products shall be in the name of, and shall be
owned by, Depomed or its designee and Santarus shall have access, free of
charge, to all clinical and non-clinical data related to the Products generated
by or on behalf of and controlled by Depomed, whether before or after the
Effective Date.


 


Section 5.2             Compliance with
Regulatory Requirements


 


Unless otherwise required by
law or expressly required by this Agreement, Depomed will retain exclusive
authority over and responsibility for complying with all regulatory
requirements and maintaining all contacts with Governmental Authorities with
respect to the Products, including maintaining and updating of the NDA, the
development and submission of applications for new formulations, dosage
strengths or indications of the Products, the reporting of any Adverse Drug
Experiences to the FDA, the compliance of Promotional Materials with FDA rules and
regulations and the filing of Promotional Materials with the FDA.


 


24
















 


Section 5.3             Compliance


 


In performing its duties
hereunder, each party shall, and shall cause the Santarus Sales Force or
Depomed Sales Force, as applicable, and its employees and agents to, comply
with all Legal Requirements, including the FDA’s regulations and guidelines
concerning the advertising of prescription drug products, DDMAC’s promotional
guidelines, the PhRMA Code on Interactions with Healthcare Providers, the
Prescription Drug Marketing Act of 1987, as amended, and the rules and
regulations promulgated thereunder, equal employment, non-discrimination and
federal and state anti-kickback Legal Requirements, and Legal Requirements with
respect to submission of false claims to governmental or private health care
payors, which may be applicable to the activities (including the warehousing,
handling and distribution of Samples) to be performed by such party
hereunder.  None of Santarus, Depomed, the Santarus Sales Force, the
Depomed Sales Force and either party’s employees and agents shall offer, pay,
solicit or receive any remuneration to or from Professionals in order to induce
referrals of or purchase of the Products in violation of applicable Legal
Requirements, including without limitation federal or state anti-kickback Legal
Requirements.  The Santarus Sales Force
and the Depomed Sales Force shall have been trained in compliance with
applicable Legal Requirements prior to engaging in Promotion of the Products.


 


Section 5.4             Communications
with Regulatory Authorities


 


(a)           Except to
the extent set forth in Section 5.4(b), all communications with Government
Authorities concerning the Product shall be the sole responsibility of
Depomed.  Depomed shall within two (2) business
days provide Santarus with copies of all such communications (including summaries
of all relevant verbal communications) related to Promotional Materials and
Serious Adverse Drug Experiences (except that routine communications as to such
matters (e.g., FDA 2253 correspondence) may be forwarded to Santarus within
five (5) business days) and shall reasonably respond to all inquiries by
Santarus relating thereto.  Depomed will
reasonably consult with Santarus concerning adverse drug reaction reporting to
the FDA and communications related to Promotional matters with the FDA or other
Governmental Authorities that Depomed reasonably considers to be significant to
the Product, including regulatory responses to follow up inquiries regarding
adverse drug reactions.  Depomed will
provide to Santarus a copy of all draft responses related to such matters as
soon as practicable, and will endeavor to provide such responses at least five (5) business
days in advance of their submission (to the extent allowable under Legal
Requirements), and will consider in good faith any comments provided to Depomed
by Santarus.


 


(b)           Santarus
shall not, without the consent of Depomed or unless so required by Legal
Requirements, correspond or communicate with the FDA or with any other
Governmental Authority, whether within the Territory or otherwise, concerning
the Products, or otherwise take any action concerning any Regulatory Approval
under which the Products are sold or any application for Regulatory Approval of
the Products; provided that  during the
Term,  Santarus shall have the right to
communicate with the FDA or any other Governmental Authority regarding the
Products if such communication is necessary to comply with the terms of this
Agreement or any Legal Requirement (including without limitation state or local
Legal Requirements related to marketing activities undertaken by Santarus or
the Santarus Sales Force), or if Santarus made a request of such agency to
communicate with Depomed instead, and such Governmental Authority denied such
request (in any such case, Santarus shall give Depomed notice as soon as reasonably
practicable of such communication and, to the extent practicable, Depomed shall
be permitted to accompany Santarus, take part in any such communications and
receive copies of all such 


 


25

















 


communications).  Santarus shall within two (2) business
days upon receipt of any communication from the FDA or from any other
Governmental Authority relating to the Products, forward a copy of the same to
Depomed and reasonably respond to all inquiries by Depomed relating
thereto.  If Santarus is required by law to communicate with the FDA or
with any other Governmental Authority relating to the Products, then Santarus
shall so advise Depomed within two (2) business days and provide Depomed
in advance with a copy of any proposed written communication, or a written
summary of any proposed oral communication with the FDA or any other
Governmental Authority.  Santarus shall
comply with any and all reasonable direction of Depomed concerning any meeting
or written or oral communication with the FDA or any other Governmental
Authority relating to the Product unless otherwise required by Legal
Requirements.


 


Section 5.5             Product
Complaints


 


Santarus shall refer any oral
or written Product Complaints which it receives concerning the Products to
Depomed within four (4) days of its receipt thereof; provided, that
all complaints concerning suspected or actual Product tampering, contamination
or mix-up shall be delivered within twenty four (24) hours of its receipt
thereof.  Santarus shall not take any other action in respect of any such
complaint without the consent of Depomed unless otherwise required by Legal
Requirements.  If requested by Depomed, Santarus will collaborate with
Depomed to resolve any Product Complaints.  All Product Complaints shall
be directed to the attention of Depomed’s Vice President, Regulatory Affairs,
at Depomed’s address set forth in Section 14.1.  Depomed shall
provide Santarus with a summary of all Product Complaints received by Depomed
within ten (10) business days of its receipt thereof; provided, however,
that all complaints concerning suspected or actual Product tampering,
contamination or mix-up shall be delivered within twenty-four (24) hours of its
receipt thereof.


 


Section 5.6             Adverse
Drug Experience Reports


 


(a)           Each party
shall notify the other:  (i) of all Serious Adverse Drug Experience
Reports within forty-eight (48) hours of the time such Serious Adverse Drug
Experience Report becomes known to such party (including its employees); and (ii) of
all Adverse Drug Experience Reports within five (5) days of the time such
Adverse Drug Experience Report becomes known to such party (including its
employees).


 


(b)           Except as
may otherwise be required by Legal Requirements, (i) Santarus shall not disclose
any information concerning Adverse Drug Experience Reports or Serious Adverse
Drug Experience Reports to any Person or Governmental Authority without the
prior consent of Depomed; and (ii) Depomed shall have the sole discretion
to determine whether any Product Complaint, Adverse Drug Experience Report or
Serious Adverse Drug Experience Report must be reported to the FDA or any other
Governmental Authority.


 


(c)           All
follow-up investigations concerning Adverse Drug Experience Reports and Serious
Adverse Drug Experience Reports shall be conducted by Depomed; provided
that Santarus shall have the right to participate in such investigations upon
its request.  Santarus shall provide all reasonable cooperation with any
such follow-up investigation as may be requested by Depomed from time to time.


 


26

















 


(d)           The
parties will enter into a separate and more detailed pharmacovigilance
agreement, consistent with the terms of this Agreement, reasonably in advance
of the Promotion Commencement Date.


 


Section 5.7             Recalls
or Other Corrective Action


 


Depomed shall have sole
responsibility for and shall make all decisions with respect to any recall
(including recall of packaging and promotion materials), market withdrawals or
any other corrective action related to the Products.  Depomed shall
promptly consult with Santarus with respect to any such actions proposed to be
taken by Depomed (and in all events prior to the taking of such actions),
including all actions that are reasonably likely to result in a material
adverse effect on the marketability of the Products in the Territory.  At
Depomed’s request, Santarus shall provide assistance to Depomed in conducting
such recall, market withdrawal or other corrective action (including retrieving
Samples distributed by the Santarus Sales Force to Professionals).  With
respect to any recall, market withdrawal or corrective action initiated by
Depomed as a result of Depomed becoming aware of any manufacturing defect in
Products (other than Products manufactured by Santarus in accordance with Section 6.6),
Depomed shall reimburse Santarus for its reasonable, documented, direct,
out-of-pocket costs incurred in connection with participating in such recall,
market withdrawal or other corrective action provided that a breach of
the provisions of this Agreement, or a violation of Legal Requirements, by
Santarus is not a material cause of the recall, market withdrawal or other
corrective action.  Except as set forth above, but subject to Depomed’s
indemnification obligations under Section 11.1, Depomed shall be under no
liability whatsoever to compensate Santarus or make any other payment to
Santarus for any decision to recall, initiate a market withdrawal or take any
other corrective action with respect to the Products, unless such actions
results from a breach of the provisions of this Agreement or a violation of
Legal Requirements by Depomed.


 


Section 5.8             Assistance


 


Each party agrees to provide
to the other all reasonable assistance and take all actions reasonably
requested by the other party that are necessary to enable the other party to
comply with any Legal Requirement applicable to the Products in the Territory.


 


ARTICLE VI

MANUFACTURING AND SUPPLY; SALES; PRICING


 


Section 6.1             Obligations of
Depomed


 


In accordance with the
provisions of this Agreement and all applicable Legal Requirements, Depomed
shall, at its cost and expense, use reasonable best efforts to perform or cause
to be performed all Product manufacture, labeling, packaging, warehousing,
distribution and return, order entry, customer services and all other
activities to supply and distribute the Products in the Territory in order to
fill orders for (a) Product conforming to the then current Volume Forecast
and (b) Santarus’ Sample requirements pursuant to Section 6.5 in a
timely and efficient manner.  Depomed shall use commercially reasonable
efforts to maintain at least three (3) month’s safety stock of Product (“Safety
Stock”) to address unanticipated changes in demand or other manufacturing
need for the Products (calculated on the basis of the then current Volume
Forecast).  Depomed shall also request
that BLS continue any ongoing stability programs to support extending the
expiry dating for the 1000mg Product.


 


27

















 


Section 6.2             Manufacturing
Activities


 


The Products, including all
Samples, to be manufactured by or for Depomed for sale in the Territory shall
be manufactured to meet applicable specifications for the Products in accordance
with the NDA, cGMP and in compliance with all other applicable Legal
Requirements.


 


Section 6.3             Volume
Forecasts; Wholesaler Activities


 


(a)           At least
thirty (30) days prior to the beginning of each Agreement Quarter ending after
the Promotion Commencement Date, Santarus shall submit to the JCC a written
forecast by month of the number of units of Product expected to be prescribed
in the Territory during the twelve (12) month period beginning with such
Agreement Quarter, which forecast shall be prepared by Santarus in good
faith.  Depomed shall provide to Santarus trade wholesaler stocking levels
information within ten (10) days following the beginning of each Agreement
Quarter ending after the Promotion Commencement Date (or, if later, within two (2) business
days after such information becomes available to Depomed).


 


(b)           The JCC
shall review and discuss such forecast and shall make such modifications
thereto as may be necessary for such forecast, to be unanimously approved by
the JCC and to be consistent with the anticipated trade demand for the Products
and with the forecasting and purchasing provisions of any applicable Third
Party Product supply agreement, including the Patheon Agreement or the BLS
Supply Agreement (as so modified and approved by the JCC for the applicable
twelve (12) month period, the “Volume Forecast”).


 


(c)           Depomed
shall promptly inform Santarus of any back-order situations or other situations
in which wholesaler orders of the Product have not been filled (collectively, “Back
Order Events”); the parties will work together to establish a remediation
plan for any such Back Order Events.  In
addition, Depomed shall provide Santarus with access to general wholesaler
ordering and shipment reports, on no less frequently than a weekly basis.


 


Section 6.4             Sales;
Pricing


 


(a)           Depomed
or its Affiliates shall book all sales of the Products in the Territory and
shall be responsible for entering into any contracts and other arrangements
with any Person regarding the sale of the Products, and for establishing and
approving the form, content and terms and conditions thereof, including any
discount, allowance, rebate, chargeback or other term granted therein; provided,
however, that (i) the pricing of the Products
shall be consistent with the pricing established by the JCC in accordance with Section 3.3(i),
(ii) the terms of such contract and other arrangement shall be consistent
with the contracting guidelines established by the JCC in accordance with Section 3.3(j) and
reflected in the Annual Plan, with Santarus to negotiate the rebate and
chargeback amounts, the formulary position and other conditions for Product to
qualify for such rebate and chargeback amounts in compliance with the
contracting guidelines previously approved, and (iii) any deductions from
gross amounts invoiced pursuant to any such contract or arrangement shall
correspond to one or more of the categories of deductions set forth in the
definition of “Net Sales” in Article I.  The parties agree to discuss
at the JCC and finalize the initial pricing and contracting guidelines on or
before November 1, 2008.


 


28

















 


(b)           Santarus
will work on behalf of Depomed to provide reasonably necessary support for
managed markets with respect to the Products to enable Depomed to enter into
such contracts and other arrangements described above.  For purposes of
clarity, all such contracts and arrangements supported by Santarus must be
executed and administered by Depomed.


 


Section 6.5             Samples


 


(a)           Depomed
shall provide or cause to be provided to Santarus, as ordered by Santarus
hereunder, samples of the Products that are not for sale and with no fee
associated (“Samples”) to be distributed by
Santarus solely in connection with the performance of Details or as otherwise
required by the rules, guidelines and policies applicable to any Professional.


 


(b)           At least
thirty (30) days prior to the beginning of each Agreement Quarter ending after
the Promotion Commencement Date, Santarus shall submit to Depomed a written
non-binding forecast by month of the number of units of Samples, on a
Product-by-Product basis, for the twelve (12) month period beginning with such
Agreement Quarter.  Such sample forecast
shall be consistent with Depomed’s Third Party Product supply agreements (as of
the Effective Date, the Patheon Agreement and the BLS Supply Agreement).  Santarus shall place binding orders with
Depomed for Samples, in a mutually agreeable format, to the same extent as
Depomed is required to place binding orders for Samples with its Third Party
Suppliers.


 


(c)           Depomed
shall supply such Samples FOB Depomed’s or its designee’s warehouse, and the
risk of loss and responsibility for handling and warehousing of the Samples
shall pass to Santarus upon delivery to a carrier designated by Santarus. 
Santarus shall be responsible for distributing the Samples to its Sales
Representatives in a timely manner.  Depomed shall invoice Santarus for
each shipment of Samples, at Depomed’s out-of-pocket cost, within thirty (30)
days of the invoice date.  Santarus shall also be responsible for securing
the return and appropriate disposal of and reconciling existing Sample
inventories from discontinued Santarus Sales Representatives.


 


(d)           Samples
supplied by Depomed to Santarus shall be used by Santarus solely in performing
Details to Professionals in accordance with this Agreement.  Upon its
receipt of Samples, Santarus shall be solely responsible for accountability and
compliance with the PDMA for the Santarus Sales Force, and other applicable
Legal Requirements relating to such Samples or the distribution of same by the
Santarus Sales Force, and shall be responsible for adherence by its Sales
Representatives to such Legal Requirements.


 


(e)           Notwithstanding
Sections 6.5(a) and 6.5(b) hereof, Depomed agrees to supply Samples
to Santarus during the Launch Period as mutually agreed upon based upon
Santarus’ desired requirements and Depomed’s available inventory and scheduled
receipts from the Sample manufacturers.


 


(f)            All
Samples supplied to Santarus under this Agreement with approved expiry dating
of 30 months or greater will have a minimum shelf life of 24 months at time of shipment
to Santarus, and all Samples supplied to Santarus under this Agreement with
approved expiry dating of less than 30 months will be shipped to
Santarus within 6 months of the start of manufacture.


 


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Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


(g)           Depomed
shall promptly reimburse Santarus for the cost of any Samples purchased by
Santarus, to the extent that such Samples are unusable as a result of Depomed’s
failure to manufacture and supply such Samples in all material respects in
accordance with this Agreement.


 


Section 6.6             Manufacturing
Matters; Inability to Supply.


 


(a)           Depomed shall promptly inform Santarus in the event that
Depomed becomes aware of any matters which might reasonably be expected
to:  (i) result in a breach of Section 6.2
hereof; or (ii) have an adverse impact on the ability to supply trade
Products or Samples in a timely manner. 
In each such event, Depomed shall provide Santarus with a reasonable
opportunity to participate directly in discussions with Depomed’s Third Party
manufacturers of Products concerning the investigation and resolution of such
matters.  Notwithstanding the generality
of the foregoing, Depomed agrees to notify Santarus within twenty-four (24)
hours after Depomed has become aware of any event or circumstance related to
the manufacture of the Product that might reasonably be expected to impact the
safety or efficacy of Product that has been released by Depomed or that might
reasonably be expected to cause such released Product to be adulterated or
misbranded within the meaning of the Act.


 


(b)           In the event that a Depomed Supply Failure occurs,
notwithstanding its compliance with its obligations under Section 6.1,
Depomed shall diligently exercise its back-up manufacturing rights.  In the event that Depomed is not diligently
exercising its back-up manufacturing rights, upon written notice to Depomed (a “Santarus
Manufacturing Notice”), Santarus shall have, and Depomed hereby grants
Santarus, exercisable only in accordance with the provisions hereof, the right,
but not the obligation, to manufacture, or have manufactured, the Product on
behalf of Depomed, at Depomed’s expense, including expenses related to the
technical transfer of the Product, and Depomed will provide reasonable
assistance to Santarus in connection therewith, including by transferring or
licensing to Santarus all Technology necessary or useful to give Santarus the
capability of manufacturing the Product so that Santarus can undertake
manufacture of the Product.  Any such Product
manufactured by Santarus will be sold by Depomed in accordance with this
Agreement.  [***].


 


Section 6.7             Third
Party Agreements


 


(a)           The
parties acknowledge that Depomed is subject to certain rights and obligations
under the BLS Agreements.  Depomed shall not amend, terminate or cause to
be terminated any of the BLS Agreements (or any other agreement between Depomed
and BLS concerning rights to, or the supply or marketing of, a Product in the
Territory) without the prior written consent of Santarus, which consent shall
not to be unreasonably withheld, delayed or conditioned; provided that Depomed
shall have the right to amend any such BLS Agreement without the consent of
Santarus if such amendment does not materially and adversely affect (i) Depomed’s
ability to maintain Regulatory Approval for the applicable Product, (ii) Depomed’s
ability to purchase the applicable Product in commercial quantities under the
BLS Supply 


 


30

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


Agreement, (iii) Santarus’ economic benefits hereunder,
including the BLS Fees or COGS, or (iv) the applicable lead-time and
forecasting requirements.  In the event
of any failure by BLS to timely deliver and supply the 1000mg Product under the
BLS Supply Agreement in accordance with the terms thereof, Depomed shall
promptly pursue any recourse it may have under such BLS Agreement to remedy
such failure.  In such event, Depomed’s
liability to Santarus for such failure shall be limited to the recourse that
Depomed receives, if any, from BLS, and any such failure on the part of BLS
shall not be a breach or default of this Agreement by Depomed (except to the
extent that any such failure by BLS arises directly from Depomed’s failure to
comply with its obligations, including paying amounts due, under the BLS Supply
Agreement).  If requested by Santarus and
after consultation with Santarus, Depomed will request that BLS agree to modify
certain provisions of the BLS Supply Agreement relating to ordering and
forecasting matters.


 


(b)           The
parties acknowledge that Depomed is subject to certain rights and obligations
under the Patheon Agreement.  Depomed shall not amend, terminate or cause
to be terminated the Patheon Agreement (or any other agreement between Depomed
and Patheon concerning rights to, or the supply or marketing of, a Product in
the Territory) without the prior written consent of Santarus, which consent
shall not to be unreasonably withheld, delayed or conditioned; provided that
Depomed shall have the right to amend the Patheon Agreement without the consent
of Santarus if such amendment does not materially and adversely affect (i) Depomed’s
ability to maintain Regulatory Approval for the applicable Product (ii) Depomed’s
ability to purchase the applicable Product in commercial quantities under the
Patheon Agreement, (iii) Santarus’ economic benefits hereunder, or (iv) the
applicable lead-time and forecasting requirements. In addition, upon Santarus’
request, Depomed shall exercise any of its rights under the Patheon Agreement
reasonably necessary to ensure continued supply of the applicable Product in
the Territory.


 


ARTICLE VII

COMPENSATION


 


Section 7.1             Santarus
Payments


 


(a)           In
consideration for Santarus’ future share of the Gross Margin in respect of the
current 500mg Product Net Sales established by Depomed prior to the Effective
Date, Santarus shall pay to Depomed a one-time signing payment of Twelve
Million Dollars ($12,000,000), payable on the Effective Date.


 


(b)           In
consideration for the rights granted to Santarus hereunder, Santarus shall pay
to Depomed the following one-time milestone payments:


 


(i)            [***]
Dollars ($[***]) when aggregate Promotion Net Sales in any calendar year during
the Term exceed [***] Dollars ($[***]);


 


(ii)           [***]
Dollars ($[***]) when aggregate Promotion Net Sales in any calendar year during
the Term exceed [***] Dollars ($[***]);


 


(iii)          [***]
Dollars ($[***]) when aggregate Promotion Net Sales in any calendar year during
the Term exceed [***] Dollars ($[***]); and


 


31

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


(iv)          [***]
Dollars ($[***]) when aggregate Promotion Net Sales in any calendar year during
the Term exceed [***] Dollars ($[***]).


 


Payments under Section 7.1(b) shall be made within
thirty (30) days after receiving from Depomed a statement pursuant to Section 7.2(b) indicating
that such aggregate Promotion Net Sales levels have been achieved.


 


Section 7.2             Promotion
Fees


 


(a)           In consideration for Santarus’
performance of its obligations under this Agreement, beginning with the
Agreement Month ending on October 31, 2008, Depomed shall pay promotion
fees (the “Promotion Fees”) to
Santarus as follows:


 


(i)            Beginning
on the Promotion Commencement Date and continuing for [***] Agreement Quarters
thereafter, Depomed shall pay to Santarus [***] percent ([***]%) of the Gross
Margin;


 


(ii)           Thereafter
during the Term, Depomed shall pay to Santarus [***]  [***] percent ([***]%) of the Gross Margin;


 


(iii)          Beginning
on the Promotion Commencement Date and continuing for [***] Agreement Quarters
thereafter, Depomed shall pay to Santarus [***] percent ([***]%)
of the Depomed Gross Margin; and


 


(iv)          Thereafter
during the Term, Depomed shall pay to Santarus [***] percent ([***]%)
of the Depomed Gross Margin.


 


(b)           Within
[***] days following the end of each Agreement Month during the Term, Depomed
shall provide Santarus with a statement in a mutually agreeable format setting
forth:


 


(i)            the
aggregate number of units of Product (on a Product-by-Product basis) sold to
customers in the Territory during such Agreement Month;


 


(ii)           Net Sales
during such Agreement Month;


 


(iii)          Depomed
Net Sales during such Agreement Month, if any;


 


(iv)          BLS Fees
during such Agreement Month;


 


(v)           COGS
during such Agreement Month;


 


(vi)          Medical
Affairs Expenses during such Agreement Month; and


 


(vii)         Gross
Margin for such Agreement Month.


 


(c)           Within
[***] days following the end of each Agreement Month (or if later, within two (2) business
days after such information becomes available to Depomed) during the Term,
Depomed shall provide Santarus with a statement setting forth the aggregate
number of units of Product sold to customers in the Territory during such
Agreement Month.


 


32

















 


(d)           Except as
expressly specified otherwise, any amounts payable by one party to the other
party in respect of any Agreement Month pursuant to this Agreement shall be
paid within thirty (30) days after the end of such Agreement Month.  Statements required to be provided to
Santarus under this Section 7.2 shall be emailed to such email addresses
as Santarus may from time to time designate in writing.


 


(e)           In the
event that Promotion Fees payable to Santarus under this Agreement for a
particular period is a negative number, Santarus will not be required to make a
payment to Depomed equal to the negative Promotion Fees, and Depomed shall
credit an amount equal to any negative Promotion Fees against any future
payments due to Santarus under this Agreement.


 


Section 7.3             Maintenance
of Records


 


(a)           Each
party agrees to keep, for a period of at least three years after the date of
entry (or such longer period as may be required by Legal Requirements) full and
accurate records maintained in accordance with such party’s accounting
practices in sufficient detail to enable a Third Party to accurately calculate (i) in
the case of Depomed, COGS, BLS Fees, Medical Affairs Expenses, Net Sales and
Depomed Net Sales reported, payments to be made under this Agreement and
Details completed by the Depomed Sales Force, if any, and (ii) in the case
of Santarus, Advertising/Marketing/Educational Expenses, Sales Force
Expenditures (i.e., Details completed by the Santarus Sales Force, including as
to each Detail whether it was a P1 Detail or P2 Detail) and, with respect to
the first twelve (12) months following the Promotion Commencement Date,
Details, including as to each Detail whether it was a P1 Detail or P2 Detail,
completed by the Santarus Sales Force.  Upon thirty (30) days prior
written notice, such records shall be made available by the audited party for
audit by an independent certified public accounting firm designated by the
other party and reasonably acceptable to the party whose records are to be
examined.  The auditor will only examine such books and records during business
hours but not more than once each fiscal year while this Agreement remains in
effect and for three years thereafter in order to verify expenses, COGS, BLS
Fees, Medical Affairs Expenses, Gross Margin, Net Sales, Depomed Net Sales or
such Details completed, or payments due under this Agreement.  The fees
and expenses of the auditor performing such verification examination shall be
borne by the party conducting the verification; provided,
however, that if any verification reveals that the
audited party has reported incorrectly, and the amount of such discrepancy is
at least five percent (5%) of the aggregate amount that should have been
reported for the period examined, then the audited party shall pay the entire
amount of the fees and expenses for such verification.


 


(b)           Each party
shall have the right, upon ten (10) business days’ prior written notice,
to audit all applicable records of the other party (other than records
described in Section 7.3(a)) for the purpose of determining the audited
party’s compliance with the obligations set forth in this Agreement, including
with respect to training programs and certifications and records and reports
for the Samples.  The audit will be conducted during normal business
hours, at convenient times.  Any such audit may be conducted no more than
once each fiscal year.  The fees and expenses of the auditing party shall
be borne by such party.  This right to audit shall extend throughout the
term of this Agreement and for one year after expiration or termination of this
Agreement.


 


33

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


(c)           Whenever
in this Agreement a party is required to report its costs, or is entitled to
receive or obligated to make a payment based on its costs, such costs
(including COGS, Medical Affairs Expenses and Advertising/Marketing/Educational
Expenses) shall be determined in accordance with generally accepted accounting
principles as applied in the United States (“GAAP”), consistent with the
terms of this Agreement.  The term “out-of-pocket” costs or expenses means
cost or expenses paid to Third Parties and shall not include any fixed costs or
expenses, personnel costs or expenses, overhead costs or expenses, or other
costs or expenses of a similar nature.


 


Section 7.4             Payments


 


Any payments required to be
made by either party under this Agreement shall be made in United States
dollars via wire transfer of immediately available funds to such bank account
as the other party shall designate in writing prior to the date of such
payment.  All payments shall bear
interest from the date due until paid at a rate equal to the prime rate
effective for the date that payment was due plus eight percent (8%), as quoted
by the Wall Street Journal, New York Edition,
on the date such payment was due, or, if less, the maximum rate permitted by
applicable law.


 


Section 7.5             Tail
Promotion Fees


 


Following the termination of
this Agreement at the conclusion of the initial three (3) years of the
Term or thereafter, for each of the [***] full
calendar quarters following such termination, Depomed shall pay to Santarus an
amount equal to [***] percent ([***]%) of aggregate Net Sales for each such quarter (excluding any Depomed
Net Sales as of the effective termination date).


 


Section 7.6             Depomed
Percentage


 


If, prior to or following the commencement of
Product Promotion by the Depomed Sales Force, either party reasonably
determines that the Prescriber Data fails to, or is likely to fail to,
reasonably accurately reflect the portion of Net Sales attributable to
prescriptions written by Professionals on the Depomed Physician List (whether
as a result of Professionals opting out of the American Medical Association’s
Physician Masterfile database or otherwise), the parties shall negotiate in
good faith with respect to implementing a revised manner of measuring the
portion of Net Sales attributable to prescriptions written by Professionals on
the Depomed Physician List, and reflect any such modification in the definition
of “Depomed Percentage” and the “Baseline Percentage.”  The parties shall consider in their
discussions any other customary manner of determining similar information as
may arise in light of Professionals opting out of the American Medical
Association’s Physician Masterfile database or otherwise.


 


ARTICLE VIII

TERM AND TERMINATION


 


Section 8.1             Term


 


The term of this Agreement
shall commence on the Effective Date and shall continue, unless terminated
sooner in accordance with this Article VIII, until the expiration of the
last-to-expire patent or patent application with a Valid Claim in the Territory
covering a Product or its uses (the “Term”).


 


34

















 


Section 8.2             Early
Termination


 


(a)                           Depomed may terminate
this Agreement, at any time after providing sixty (60) days’ prior written
notice, in the event that Santarus fails to meet its obligations under Section 4.1(b), (c) or (d) with respect to minimum
Promotion obligations.  Notwithstanding
the foregoing, Santarus shall have an opportunity to cure any such breach
within ninety (90) days following written notice from Depomed provided that:  (i) Santarus has complied with at least
ninety percent (90%) of the aggregate obligations in effect under such Sections
during the relevant time period; and (ii) no other breach of the
obligations set forth in Sections 4.1(b), (c) or (d) has occurred
within the prior twelve (12) month period.


 


(b)                           Santarus may
terminate this Agreement for any reason upon ninety (90) days’ prior written
notice; provided, however, that the effective date for such termination may not
occur prior to eighteen (18) months following the Effective Date.


 


(c)                           Santarus may terminate
this Agreement immediately upon written notice to Depomed
in the event of (i) any action taken or objection raised by any
Governmental Authority that prevents Santarus from performing its obligations
under this Agreement or otherwise makes such activity unlawful, (ii) loss
of a Product’s market exclusivity in the Territory (whether through the
introduction of a generic product or otherwise), or (iii) Depomed’s
failure to supply Product reasonably necessary to meet trade demand for the
Product and consistent with the then-current Volume Forecast, which failure
continues for a period of three (3) months or longer.


 


(d)                           Either party shall
have the right to terminate this Agreement immediately 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.


 


(e)                           Depomed shall have
the right to terminate this Agreement upon one hundred eighty (180) days’ prior
written notice if Santarus fails to timely deliver the written confirmation
related to Sales Force Expenditures required by Section 4.5(e) (provided
that if such failure is cured within thirty (30) days following receipt of
Depomed’s notice, such notice with respect to such termination shall be null
and void).


 


Section 8.3             Termination
for Cause


 


Either party may terminate
this Agreement, effective at any time after providing sixty (60) days written
notice and an opportunity to cure during such sixty (60)-day period (ninety
(90) days in the case of a breach by Depomed of Section 6.1), in the event
of a material failure of the other party to comply with its material
obligations contained in this Agreement.  If such cure is effected, such
notice with respect to such termination shall be null and void.


 


35
















 


Section 8.4                                      Termination for Bankruptcy or
Force Majeure


 


To the extent permitted by law, each party will
have the right to terminate this Agreement immediately upon notice to the other
party, in the event of either of the following:


 


(a)                                  The entry of an order for relief under the United States
Bankruptcy Code (or any corresponding remedy under successor laws) against the
other party; the filing of a petition by or against the other party under any
bankruptcy, insolvency or similar law (which petition is not dismissed within
sixty (60) days after filing), except Chapter 11 of the United States
Bankruptcy Code or any successor statute that permits a corporation to continue
its operation while protecting it from creditors; the appointment of a receiver
for the other party’s business or property; or the other party’s making of a
general assignment for the benefit of its creditors; or


 


(b)                                 Any Force Majeure Event affecting the other party beyond the
other party’s control which lasts for a period of at least six (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.


 


Notwithstanding
the occurrence of any of the events specified in subsection (a) of this Section 8.4,
the parties acknowledge and agree that, to the extent Section 365(n) of
the United States Bankruptcy Code applies to this Agreement, the non-insolvent
party may elect to retain and exercise the rights granted to it hereunder with
respect to the intellectual property owned or controlled by the insolvent
party.


 


Section 8.5                                      Force Majeure


 


Any Force Majeure Event of the type described in Section 16.7
affecting a party hereunder shall entitle the other party hereto, at any time
after the expiry of the period of six (6) months specified therein and
upon sixty (60) days written notice given after such six (6)-month period (such
notice being null and void if the Force Majeure Event is discontinued during
such sixty (60)-day period), in addition to the right to terminate this
Agreement under Section 8.4, the right to continue the Agreement in full
force and effect without modification.  In no circumstances will either
party be liable to the other for its inability to perform under this Agreement
due to any such Force Majeure Event.


 


Section 8.6                                      Effect of Termination


 


(a)                                  No additional payment obligations arising under Article VII
hereof shall accrue after the date of expiration or termination of this
Agreement except as set forth in Section 7.5; 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, including Sections 3.5, 4.4(d),
5.5, 5.6, 7.3, 7.4, 7.5, this Section 8.6, 15.1 and Articles XI and XII
and solely with respect to the reports required for the Final Agreement
Quarter, Sections 4.5(g) and 4.6(a). 
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.


 


36

















 


(b)                                 Except as indicated in Section 8.5, expiration or
termination of this Agreement shall be without prejudice to (i) any
remedies which any party may then or thereafter have hereunder or at law or in
equity; and (ii) a party’s right to receive any payment accrued under the
Agreement prior to the termination date but which became payable thereafter;
and (iii) either party’s right to obtain performance of any obligations
provided for in this Agreement which survive termination by their terms or by a
fair interpretation of this Agreement.  Except as expressly set forth
herein, the rights to terminate as set forth herein shall be in addition to all
other rights and remedies available under this Agreement, at law, or in equity
or otherwise.


 


(c)                                  Upon the expiration or termination of this Agreement pursuant
to this Article VIII, each party shall promptly transfer and return to the
other party all Proprietary Information of the other party (provided that each
party may keep one copy of such Proprietary Information for archival purposes
only).  Upon the expiration or termination of this Agreement, Santarus
shall, if requested by Depomed, provide to Depomed all Promotional Materials in
Santarus’ possession (including electronic files of all Promotional Materials)
at Santarus’ out-of-pocket cost for printing and delivering such materials; provided,
however, that Santarus shall, unless otherwise requested by Depomed,
destroy any printed copies of Promotional Materials bearing the Santarus
Trademarks and may remove the Santarus Trademarks from electronic files of
Promotional Materials.


 


(d)                                 Upon the expiration or termination of this Agreement pursuant
to this Article VIII other than pursuant to Depomed’s termination under
Sections 8.3 or 8.4, Depomed may, but is not obligated to, purchase from
Santarus, at Santarus’ cost (as determined pursuant to this Agreement) all
remaining Samples; provided, however, that Depomed shall be obligated to
purchase such Samples from Santarus in the event that this Agreement is
terminated pursuant to Section 8.3 for Depomed’s breach.


 


ARTICLE IX

REPRESENTATIONS AND WARRANTIES


 


Section 9.1                                      Representations and Warranties of
Depomed


 


Depomed hereby represents and warrants to
Santarus as of the date hereof as follows:


 


(a)                                                                                  Organization.  Depomed (i) is a corporation duly organized,
validly existing and in good standing under the laws of the state of
California, and (ii) has all necessary corporate power and corporate
authority to own its properties and to conduct its business, as currently
conducted.


 


(b)                                                                                 Authorization.  The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby are within the corporate
power of Depomed, have been duly authorized by all necessary corporate
proceedings of Depomed, and this Agreement has been duly executed and delivered
by Depomed.


 


(c)                                                                                  No Conflict.  The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not:  (i) conflict
with or result in a breach of any provision of Depomed’s organizational
documents; (ii) result in a material breach of any material agreement to
which Depomed is party; (iii) result in a violation of any Order to which
Depomed is subject; (iv) require Depomed to obtain any material approval
or consent from any Governmental Authority or Third Party other than those
consents and approvals which have been obtained prior to the date hereof; or (v) violate
any Legal Requirement applicable to Depomed in any material respect.


 


37

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


(d)                                                                                 Enforceability.  This Agreement constitutes the valid and binding
obligation of Depomed, enforceable against Depomed in accordance with its
terms, subject to bankruptcy, reorganization, insolvency and other similar laws
affecting the enforcement of creditors’ rights in general and to general
principles of equity (regardless of whether considered in a proceeding in
equity or an action at law).


 


(e)                                                                                  Broker.  Depomed has not employed any broker, finder, or agent
with respect to this Agreement or the transactions contemplated hereby.


 


(f)                                                                                    Depomed Intellectual Property.  To the knowledge of Depomed, the Promotion and sale
of Product in the Territory in accordance with this Agreement will not infringe
any patents, trademarks or other intellectual property rights of any Third
Party; provided, that Depomed makes no representation as to the Santarus
Trademarks.  Depomed has the right, power and authority to grant the
licenses granted by it hereunder, including the right, power and authority to
license to Santarus, pursuant to Section 6.6, all Technology necessary for
the manufacture of the Products.  Other
than [***]:  (i) Depomed has not received any written
claim or demand from any Third Party alleging that any infringement, violation
or misappropriation of such Third Party’s intellectual property rights has
occurred as a result of the manufacture, use, offer for sale, sale or
importation of any Product in the Territory; (ii) Depomed is not aware of
any actual, alleged or threatened infringement, violation or misappropriation
by a Third Party of any Depomed intellectual property rights covering a Product
or its uses; and (iii) Depomed has not received any written claim or
demand from any Third Party alleging invalidity or unenforceability of any
patents or patent applications owned or licensed by Depomed covering a Product
or its uses.


 


(g)                                                                                 Litigation.  There is no litigation, arbitration proceeding,
governmental investigation, action or claims of any kind, pending or, to the
knowledge of Depomed, threatened, by or against Depomed, BLS, Patheon or any of
their respective Affiliates relating to the Products or which would reasonably
be expected to materially affect Depomed’s ability to perform its obligations
hereunder.


 


(h)                                                                                 Documentation.  Depomed has made available to Santarus copies of
substantially all clinical data and reports, medical information, competitive
information, marketing research, agreements and other documentation related to
the Products in Depomed’s possession that have been requested by Santarus in
the course of Santarus’ due diligence investigation of the Products.


 


(i)                                                                                     Supply.  Depomed currently has access to sufficient supplies
of Products to satisfy the manufacturing obligations required by it under this
Agreement.  All Products will be manufactured with reasonable due care and
in conformity with the NDAs, current generally accepted standards and
procedures for manufacturing the Products, cGMP and all other applicable Legal
Requirements.


 


38

















 


(j)                                                                                     Generic Drug Act.  Pursuant to the Generic Drug Enforcement Act of 1992,
21 U.S.C. § 335a, as may be amended or supplemented (the “Generic Drug Act”),


 


(i)                                     none of Depomed, its Affiliates, or any Person under its
direction or control is currently debarred by the FDA under the Generic Drug
Act;


 


(ii)                                  none of Depomed, its Affiliates, or any Person under its
direction or control is currently using or will use in any capacity in
connection with the Products any Person that is debarred by FDA under the
Generic Drug Act; and


 


(iii)                               there have been no convictions of Depomed, its Affiliates, or
any Person under its direction or control for any of the types of crimes set
forth in the Generic Drug Act within the five years prior to the Effective
Date.


 


(k)                                  Legal Requirements.  None of Depomed, its Affiliates, or any Person under
its direction or control is currently excluded from a federal or state health
care program under Sections 1128 or 1156 of the Social Security Act, 42 U.S.C.
§§ 1320a-7, 1320c-5 as may be amended or supplemented.  None of Depomed,
its Affiliates, or Person under its direction or control is otherwise currently
excluded from contracting with the federal government.  None of Depomed,
its Affiliates, or Person under its direction or control is otherwise currently
excluded, suspended, or debarred from any federal or state program. 
Depomed shall immediately notify Santarus if, at any time during the Term,
Depomed, its Affiliates, or any Person under its direction or control is
convicted of an offense that would subject it or Santarus to exclusion,
suspension, or debarment from any federal or state program.  To Depomed’s knowledge, the manufacture, use,
offer for sale, sale and importation of the Products in the Territory has been
in material compliance with all Legal Requirements.


 


(l)                                     NDA Acquisition.  Depomed has not committed fraud in relation to the
filing or acquisition of an NDA or used unfair methods of competition in
connection with such filing or acquisition, including, in either case, in
connection with any data supplied by Depomed to the FDA.  The parties
acknowledge that a breach of this representation is a material failure of a
material obligation and is not subject to cure. 
The data regarding the efficacy and safety of the Products contained in
the NDAs and other regulatory filings submitted to the FDA in support of marketing
approval of the Products are complete and accurate in all material
respects.  The NDAs and other regulatory
filings submitted to the FDA in support of marketing approval for the Products
do not contain any material misstatement of a material fact related to safety
or efficacy nor omit to state any material fact in Depomed’s possession related
to safety or efficacy.


 


(m)                               BLS Agreements.  Depomed is not in material breach of any BLS
Agreement and has not submitted to BLS any notice (written or oral) to the
effect that BLS is in breach of any BLS Agreement.  Depomed has not
received from BLS any notice (written or oral) to the effect that Depomed is in
breach of any BLS Agreement.  Each of the BLS Agreements is legal, valid,
binding, enforceable and in full force and effect in all material respects.


 


39

















 


(n)                                 Patheon Agreement.  Depomed is not in material breach of the Patheon
Agreement and has not submitted to Patheon any notice (written or oral) to the
effect that Patheon is in breach of the Patheon Agreement.  Depomed has
not received from Patheon any notice (written or oral) to the effect that
Depomed is in breach of the Patheon Agreement.  The Patheon Agreement is
legal, valid, binding, enforceable and in full force and effect in all material
respects.


 


(o)                                 Inventory Levels.  Since January 1, 2008, Depomed has not (i) materially
altered its distribution practices or terms with respect to the Products (other
than pricing increases in the ordinary course of business), (ii) altered
its activities and practices with respect to inventory levels of the Products
maintained at the wholesale, chain, institutional or retail levels in any
material respect, or (iii) experienced abnormally high levels of returns
of the Products when compared to historical norms.


 


Section 9.2                                      Representations and Warranties of
Santarus


 


Santarus hereby represents and warrants to
Depomed as of the date hereof as follows:


 


(a)                                  Organization.  Santarus (i) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and (ii) has all necessary corporate power and corporate
authority to own its properties and to conduct its business, as currently
conducted.


 


(b)                                 Authorization.  The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby are within the corporate
power of Santarus, have been duly authorized by all necessary corporate
proceedings of Santarus, and this Agreement has been duly executed and
delivered by Santarus.


 


(c)                                  No Conflict.  The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not:  (i) conflict
with or result in a breach of any provision of Santarus’ organizational
documents; (ii) result in a material breach of any material agreement to
which Santarus is party; (iii) result in a violation of any Order to which
Santarus is subject; (iv) require Santarus to obtain any material approval
or consent from any Governmental Authority or Third Party other than those
consents and approvals which have been obtained prior to the date hereof; or (v) violate
any Legal Requirement applicable to Santarus in any material respect.


 


(d)                                 Enforceability.  This Agreement constitutes the valid and binding
obligation of Santarus, enforceable against Santarus in accordance with its
terms, subject to bankruptcy reorganization, insolvency and other similar laws
affecting the enforcement of creditors’ rights in general and to general
principles of equity (regardless of whether considered in a proceeding in
equity or an action at law).


 


(e)                                  Broker.  Santarus has not employed any broker or finder with
respect to this Agreement or the transactions contemplated hereby.


 


(f)                                    Santarus Trademarks.  To the knowledge of Santarus, the use of the Santarus
Trademarks to Promote and sell Products in the Territory in accordance with
this Agreement will not infringe any trademarks or other intellectual property
rights of any Third Party.


 


40

















 


(g)                                 Litigation.  There is no litigation, arbitration proceeding,
governmental investigation, action or claims of any kind, pending or, to the
knowledge of Santarus, threatened, by or against Santarus or any of its
Affiliates relating to the Products or which would reasonably be expected to
materially affect Santarus’ ability to perform its obligations hereunder.


 


(h)                                 Generic Drug Act.  Pursuant to the Generic Drug Act,


 


(i)                                     none of Santarus, its Affiliates, or any Person under its
direction or control is currently debarred by the FDA under the Generic Drug
Act;


 


(ii)                                  none of Santarus, its Affiliates, or any Person under its
direction or control is currently using or will use in any capacity in
connection with the Products any Person that is debarred by FDA under the
Generic Drug Act; and


 


(iii)                               there have been no convictions of Santarus, its Affiliates,
or any Person under its direction or control for any of the types of crimes set
forth in the Generic Drug Act within the five years prior to the Effective
Date.


 


(i)                                     Legal Requirements.  None of Santarus, its Affiliates, or any Person under
its direction or control is currently excluded from a federal or state health
care program under Sections 1128 or 1156 of the Social Security Act, 42 U.S.C.
§§ 1320a-7, 1320c-5 as may be amended or supplemented.  None of Santarus,
its Affiliates, or any Person under its direction or control is otherwise
currently excluded from contracting with the federal government.  None of
Santarus, its Affiliates, or Person under its direction or control is otherwise
currently excluded, suspended, or debarred from any federal or state
program.  Santarus shall immediately notify Depomed if, at any time during
the Term, Santarus, its Affiliates, or any Person under its direction or
control is convicted of an offense that would subject it or Depomed to
exclusion, suspension, or debarment from any federal or state program.


 


Section 9.3                                      Depomed Disclaimer


 


EXCEPT AS EXPRESSLY PROVIDED HEREIN, DEPOMED
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO THE
PRODUCTS, INCLUDING THE WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE.


 


Section 9.4                                      Santarus Disclaimer


 


EXCEPT AS EXPRESSLY PROVIDED HEREIN, SANTARUS
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF
MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.


 


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Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


ARTICLE X

INTELLECTUAL PROPERTY MATTERS


 


Section 10.1                                Intellectual Property Prosecution
and Maintenance


 


Depomed shall use commercially reasonable efforts to prosecute and
maintain the Depomed intellectual property in the Territory related to any
Product Promoted pursuant to this Agreement (a “Promoted Product”) or
its use, including patents, the Depomed Trademarks and any copyrights
associated with the Promotional Materials (subject, in the case of the 1000mg
Product, to Depomed’s rights in respect of intellectual property under the BLS
Agreements).  Depomed shall make
available to Santarus (or its designated counsel) copies of such patent
application files and shall make available to Santarus (or its designated
counsel) all office actions relating to any Promoted Product wherein at least
one (1) claim is directed to the Promoted Product in those patent
applications, and copies of material correspondence with the U.S. Patent and
Trademark Office relating to such patent applications to the extent they relate
to the Promoted Product or its use. 
Santarus shall have the right to comment upon the prosecution of such
patent applications (subject, in the case of the 1000mg Product, to Depomed’s
rights in respect of intellectual property under the BLS Agreements).  Depomed shall, in good faith, consider such
comments of Santarus.  In addition,
Depomed shall keep Santarus reasonably informed regarding material developments
relating to the prosecution, maintenance or enforcement of Depomed’s
intellectual property rights related to any Promoted Product outside the
Territory that could reasonably be expected to have a material impact on
Depomed’s intellectual property rights related to the Promoted Product in the
Territory.


 


Section 10.2                                Third Party Competition


 


Nothing in this Agreement shall limit or restrict
Depomed’s ability to grant non-exclusive patent licenses to patents and patent
applications included within the Technology or otherwise covering a Product in
connection with the settlement of any pending, threatened or contemplated
patent litigation with respect to [***]
commercialized in the Territory prior to the Effective Date (each such license,
a “Patent License”).  However, in recognition of the parties’
agreement to exclusively Promote Products, in accordance with the terms and
conditions of this Agreement, Depomed agrees that if Depomed or any Affiliate
thereof grants to any Affiliate or Third Party a license, covenant not to sue,
right of reference, right of supply, other intellectual property right or other
settlement (in any case, other than Patent Licenses and covenants not to sue
and other rights in connection with the grant of Patent Licenses for [***]
commercialized in the Territory prior to the Effective Date) related to the
manufacture, use, offer for sale, sale, importation, marketing or promotion of
any Product, including any authorized generic version of any Product covered by
any NDA, then Depomed shall obtain Santarus’ consent (not to be unreasonably
withheld) in advance of the grant of any such license, covenant not to sue,
right of reference, right of supply, other intellectual property right or other
settlement, and as part of such consent the parties shall negotiate in good
faith financial adjustments to this Agreement adequate to compensate Santarus
for any payments made by Santarus prior to such grant or other settlement
(including signing and any milestone payments) and any lost market share
attributable to sales of the product by or on behalf of such Third Party or
Affiliate, taking into account the consideration received by Depomed or its
Affiliates for the grant of such rights or other settlement.


 


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Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


Section 10.3                                Infringement


 


(a)                                  If either party shall learn of a claim or assertion that the
manufacture, use or sale of a Promoted Product in the Territory infringes or
otherwise violates the intellectual property rights of any Third Party or that
any Third Party violates the intellectual property rights owned or Controlled
by (i) Depomed in a Promoted Product and the Depomed Trademarks in the
Territory or (ii) Santarus in the Santarus Trademarks, then the party
becoming so informed shall promptly, but in all events within fifteen (15) days
thereof, notify the other party to this Agreement of the claim or
assertion.  In the event Depomed receives a notice under Paragraph IV of
the U.S. Federal Drug Price Competition and Patent Term Restoration Act of
1984, as amended, also known as the Hatch-Waxman Act, with respect to any
Promoted Product, Depomed shall provide Santarus with written notice of such
Paragraph IV notice within two (2) business days (each, a “Paragraph IV
Notice”).


 


(b)                                 If warranted in the opinion of Depomed, after consultation
with the JCC, Depomed shall take such legal action (“Enforcement Action”)
as is advisable in Depomed’s opinion to restrain infringement of such Depomed
patent rights related to any Product or the Depomed Trademarks in the
Territory.  Santarus shall cooperate fully with, and as reasonably
requested by, Depomed in any Enforcement Action, and Depomed shall reimburse
Santarus for its out-of-pocket expenses incurred in providing such
cooperation.  Santarus may be represented by counsel of its own selection
at its own expense in any Enforcement Action. 
If (i) Depomed elects in writing not to bring or defend an
Enforcement Action with respect to any Product in the Territory, (ii) within
ninety (90) days following a written request by Santarus to do so (provided
that in the case of a Paragraph IV Notice, Depomed shall confirm in writing its
election to bring such Enforcement Action no later than twenty (20) days
following receipt of the Paragraph IV Notice), or (iii) Depomed fails to
bring or defend an Enforcement Action or take other reasonable action to
protect the Depomed patent rights related to any Product or the Depomed
Trademarks in the Territory from such infringement, or to abate such
infringement, then, in compliance with the BLS Manufacturing Transfer Agreement
or other in-license agreement with respect to applicable Product patent rights
licensed from a Third Party, if any, Santarus shall have the right, at its sole
discretion, to institute an Enforcement Action in its own name using counsel of
its choice, at its own expense, and with the right to control the course of
such Enforcement Action (and Depomed shall provide all reasonable assistance,
other than financial, to Santarus for such Enforcement Action, at Santarus’
expense, including joining such Enforcement Action if necessary to maintain the
Enforcement Action, and Depomed shall have the right to join and participate in
the Enforcement Action whether or not such joinder is requested by
Santarus)  (the “Santarus Step-In
Rights”); provided, however, that (i) the Santarus Step-In Rights
shall not apply to the extent the Enforcement Action relates to [***]; and (ii) Santarus
shall obtain Depomed’s consent (not to be
unreasonably withheld) in advance of the grant of any license, covenant not to
sue, right of reference, right of supply, other intellectual property right or
other settlement in any Enforcement Action.  Any recovery received as a result of any
Enforcement Action shall be used first to reimburse the parties for their costs
and expenses (including attorneys’ and professional fees) incurred in
connection with such Enforcement Action (and not previously reimbursed).  Of any remaining amounts, the amount (if any)
which is required to be paid to BLS pursuant to the BLS Agreements or to any
other licensors of the applicable patent rights or Depomed Trademarks under the
terms of the respective in-license agreement, if any, shall then be paid to BLS
or such other licensor, if any, and any amounts remaining thereafter shall be
shared seventy-five percent (75%) to Santarus and twenty-five percent (25%) to
Depomed.


 


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(c)                                  If warranted in the opinion of Santarus, Santarus shall take
such legal action as is advisable in Santarus’ opinion to restrain such
infringement of the Santarus Trademarks.  Depomed shall cooperate fully
with, and as requested by, Santarus in Santarus’ attempt to restrain such
infringement, and Santarus shall reimburse Depomed for its out-of-pocket
expenses incurred in providing such cooperation.  Depomed may be
represented by counsel of its own selection at its own expense in any suit or
proceeding brought to restrain such infringement, but Santarus shall have the
right to control the suit or proceeding.


 


ARTICLE XI

INDEMNIFICATION; LIMITS ON LIABILITY


 


Section 11.1                                Indemnification


 


Each party will defend, at its own expense,
indemnify and hold harmless the other party and its Affiliates, and their
respective directors, officers, employees, agents, Sales Representatives and
other representatives, from and against any and all damages, liabilities,
losses, costs, and expenses, including reasonable attorneys’ fees, arising out
of any Third Party claim, suit or proceeding brought against the other party or
its Affiliates, and their respective directors, officers, employees, agents,
Sales Representatives and other representatives, to the extent such claim,
suit, or proceeding is based upon a claim arising out of or relating to (i) any
breach or violation of, or failure to perform, any covenant or agreement made
by such indemnifying party in this Agreement, unless waived in writing by the
indemnified party; (ii) any breach of the representations or warranties
made by such indemnifying party in this Agreement; or (iii) the negligence
or willful misconduct of the indemnifying party, except (under any of (i) or
(ii)) to the extent arising out of the breach, violation, failure, negligence
or willful misconduct of the indemnified party.  In addition, Depomed will
defend, at its own expense, indemnify and hold harmless Santarus and its
Affiliates, and their respective directors, officers, employees, agents, Sales
Representatives and other representatives, from and against any and all
damages, liabilities, losses, costs, and expenses, including reasonable
attorneys’ fees, arising out of any Third Party claim, suit or proceeding
brought against Santarus or its Affiliates, or their respective directors,
officers, employees, agents, Sales Representatives and other representatives,
to the extent such claim, suit, or proceeding is based upon a claim arising out
of or relating to (v) any sale, use, Promotion or other commercialization
of a Product by Depomed or any Third Party, including King Pharmaceuticals, Inc.,
prior to the Promotion Commencement Date; (w) any actions of the Depomed
Sales Force, including any false or misleading representations to
Professionals, customers or others regarding Santarus or the Products; (x) any
agreement between Depomed and BLS; (y) any agreement between Depomed and
Patheon; or (z) any claim made by any Person that the manufacture, use or
sale of the Products infringes or misappropriates the patent, trademark, or
other intellectual property rights of such Person, except with respect to any
claim relating to the Santarus Trademarks; or (z) any Product liability
claim made by any person with respect to the Product, except to the extent
liability is based on a breach by Santarus of Section 4.2.  Each
party agrees that it shall promptly notify the other in writing of any such
claim or action and give the indemnifying party full information and assistance
in connection therewith.  The indemnifying party shall have the sole right
to control the defense and the sole right to settle or compromise any 


 


44

















 


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.  The provisions of this Section 11.1 shall survive
termination of this Agreement for the applicable statute of limitations (except
as to claims as to which a party has notified the other in writing prior to the
expiration of the applicable statute of limitations, in which event, the
indemnifying party’s obligations under this Section 11.1 shall survive
with respect to any such claim until its resolution pursuant to the terms of
this Article XI).


 


Section 11.2                                Consequential Damages


 


NEITHER SANTARUS NOR DEPOMED (WHICH FOR THE
PURPOSES OF THIS SECTION 11.2 SHALL INCLUDE THEIR RESPECTIVE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS) SHALL HAVE ANY LIABILITY TO THE
OTHER FOR ANY PUNITIVE DAMAGES, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT
DAMAGES, RELATING TO OR ARISING FROM THIS AGREEMENT, EVEN IF SUCH DAMAGES MAY HAVE
BEEN FORESEEABLE; PROVIDED THAT SUCH LIMITATION SHALL NOT APPLY IN THE CASE OF
EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 11.1 OR IN THE
CASE OF FRAUD OR WILLFUL MISCONDUCT.


 


ARTICLE XII

CONFIDENTIALITY AND PUBLICITY


 


Section 12.1                                Proprietary Information


 


Pursuant to this Agreement, a party receiving
Proprietary Information from the other, directly or indirectly, will treat such
Proprietary Information as confidential, will use such Proprietary Information
only for the purposes of this Agreement and will not disclose, and will take
all reasonable precautions to prevent the disclosure of, such Proprietary
Information to (a) any of its officers, directors, managers, equity
holders, employees, agents, representatives, Affiliates or consultants, except
those who need to know such Proprietary Information and who are bound by a like
obligation of confidentiality or (b) to Third Parties.


 


Section 12.2                                Disclosures Required by Law


 


In the event the recipient party is required
under applicable Legal Requirements to disclose Proprietary Information of the
disclosing party to any Governmental Authority to obtain any Regulatory
Approval for the Products, is required to disclose Proprietary Information in
connection with bona fide legal process (including in connection with any bona
fide dispute hereunder) or is required to disclose Proprietary Information
under the rules of the securities exchange upon which its securities are
traded, the recipient party may do so only if it limits disclosure to that
purpose after giving the disclosing party prompt written notice of any instance
of such a requirement in reasonable time for the disclosing party to attempt to
object to or to limit such disclosure.  In the event of disclosures
required under applicable Legal Requirements, the recipient party shall
cooperate with the disclosing party as reasonably requested thereby.


 


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Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


Section 12.3                                Publicity


 


The parties have agreed upon the form and content
of a joint press release to be issued by the parties promptly following the
execution of this Agreement.  Once such press release or any other written
statement is approved for disclosure by both parties, either party may make
subsequent public disclosure of the contents of such statement without the
further approval of the other party.  
Any other publicity, news release, public comment or other public
announcement, whether to the press, to stockholders, or otherwise, relating to
this Agreement, shall first be reviewed and approved by both parties, except no
such approval shall be required for such publicity, news release, public
comment or other public announcement which, in accordance with the advice of
legal counsel to the party making such disclosure, is required by law or for
appropriate market disclosure; provided, however, that each party
shall be entitled to refer publicly to the relationship of the parties
reflected in this Agreement (i.e., Depomed as the developer of the Products and
Santarus as the promoter of the Products in the Territory) in a manner that is
consistent with the joint press release issued by the parties.  For clarity, 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.  The parties shall work together to coordinate
filings with governmental agencies, including the United States Securities and
Exchange Commission, as to the contents and existence of this Agreement as the
parties shall reasonably deem necessary or appropriate and each party shall
provide the other party an opportunity to comment on any proposed filings,
including redactions thereto.  The provisions of this Article XII
shall survive termination of this Agreement and shall remain in effect until a
date three years after the Term of this Agreement.


 


ARTICLE XIII

RIGHT OF FIRST NEGOTIATION FOR CERTAIN COMBINATION PRODUCTS; 

EXCLUSIVITY


 


Section 13.1                                Right of First Negotiation


 


Depomed shall notify Santarus in writing in the
event that Depomed desires to divest itself of its rights
to the Product in the Territory (e.g., by asset sale or product license to a
Third Party) or to grant rights to a Third
Party to develop or commercialize a pharmaceutical product containing metformin
and another generic active pharmaceutical ingredient (i.e., an active pharmaceutical
ingredient that is produced and distributed within the Territory without
composition of matter patent protection for the compound) in combination with
Depomed’s proprietary AcuForm drug delivery technology incorporated within
the Products (a “Combination Product”).  If Santarus notifies
Depomed in writing within [***] days
after receipt of such notice (the “Evaluation Period”) that Santarus is
not interested in obtaining all of Depomed’s rights in and to the Products or
the applicable Combination Product (such rights, “Metformin Product Rights”),
or if Santarus fails to notify Depomed of Santarus’ interest in obtaining the
Metformin Product Rights, in either case prior to the expiration of the
Evaluation Period, then Depomed shall have no further obligation to Santarus
under this Agreement with respect to the applicable Metformin Product
Rights.  If Santarus is interested in obtaining the Metformin Product
Rights, it 


 


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Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


shall so notify Depomed in
writing prior to the expiration of the Evaluation Period, and upon Depomed’s
receipt of such notice Santarus and Depomed shall promptly commence good-faith
negotiations, for a period of [***] days
and such longer period as may be mutually agreed upon by the parties in writing
in the event the parties have made material progress in the negotiations (the “Negotiation
Period”), regarding the commercially reasonable terms of an agreement
pursuant to which Santarus shall obtain the Metformin Product Rights.  If
Depomed and Santarus fail to enter into an agreement for the Metformin Product
Rights prior to the expiration of the Negotiation Period, then Depomed shall
thereafter have the right to negotiate and enter into an agreement with a Third
Party granting the Metformin Product Rights to a Third Party; provided that,
for a period of [***], any such agreement may not be on terms and conditions materially more
favorable to the Third Party than the terms and conditions last offered by
Santarus prior to the termination of discussions with Depomed.  The
provisions of this Section 13.1 shall not apply to, and Depomed shall have
no obligation to Santarus under this Section 13.1 in respect of, any
acquisition of Depomed by a Third Party, any merger or consolidation with or
involving Depomed, any acquisition by a Third Party of any material portion of
the stock of Depomed, or any acquisition by a Third Party of a material portion
of the assets of Depomed in addition to the Products or any Combination Product
(“Merger Transaction”).


 


Section 13.2                                Exclusivity


 


During the Term, Depomed shall not, directly or
indirectly, develop, promote, market, distribute, sell or offer for sale in the
Territory any single agent metformin products for human use, other than the
Products in accordance with the terms of this Agreement.  Depomed shall not use, and shall not permit
any Third Party to use, the Glumetza® trademark in the Territory with respect
to any product other than the Products.


 


ARTICLE XIV

NOTICES


 


Section 14.1                                Notices


 


All notices required or permitted hereunder shall
be given in writing and sent by facsimile transmission (with a copy sent by first-class
mail), or mailed postage prepaid by certified or registered mail (return
receipt requested), or sent by a nationally recognized express courier service,
or hand-delivered at the following address:


 


	
   

  	
  If to Depomed:

  
	
   

  	
   

  
	
   

  	
  Depomed, Inc.

  
	
   

  	
  1360 O’Brien Drive

  
	
   

  	
  Menlo Park,
  California  94025

  
	
   

  	
  Attention:  President

  
	
   

  	
  Fax No.:  (650)
  462-9991

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Heller Ehrman LLP

  
	
   

  	
  275 Middlefield Road

  
	
   

  	
  Menlo Park, CA 94025

  
	
   

  	
  Attention: Julian Stern

  
	
   

  	
  Fax No: (650) 324-0638

  



 


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Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


	
   

  	
  If to Santarus:

  
	
   

  	
   

  
	
   

  	
  Santarus, Inc.

  
	
   

  	
  3721 Valley Centre Drive

  
	
   

  	
  Suite 400

  
	
   

  	
  San Diego, California
  92130

  
	
   

  	
  Attn: Legal Affairs
  Department

  
	
   

  	
  Facsimile: (858) 314-5702

  
	
   

  	
   

  
	
   

  	
  With a copy to (which
  shall not constitute notice 

  hereunder):

  
	
   

  	
   

  
	
   

  	
  Latham & Watkins
  LLP

  
	
   

  	
  12636 High Bluff Drive,
  Suite 400

  
	
   

  	
  San Diego, California
  92130

  
	
   

  	
  Attention:  Faye H.
  Russell

  
	
   

  	
  Fax No:  (858)
  523-5450

  



 


All notices shall be deemed made upon receipt by
the addressee as evidenced by the applicable written receipt.


 


ARTICLE XV

INSURANCE


 


Section 15.1                                Insurance


 


(a)                                  During the Term and for a period of two (2) years after
any expiration or termination of this Agreement, each party shall maintain (i) a
commercial general liability insurance policy or policies with minimum limits
of $[***] per occurrence and $[***] in the aggregate on an annual basis and (ii) a
product liability insurance policy or policies with minimum limits of $[***]
per occurrence and $[***] in the aggregate on an annual basis.


 


(b)                                 Upon request, each party shall provide certificates of
insurance to the other evidencing the coverage specified herein.  Neither
party’s liability to the other is in any way limited to the extent of its
insurance coverage.


 


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ARTICLE XVI

MISCELLANEOUS


 


Section 16.1               Headings


 


The titles, headings or captions and paragraphs in
this Agreement are for convenience only and do not define, limit, extend,
explain or describe the scope or extent of this Agreement or any of its terms
or conditions and therefore shall not be considered in the interpretation,
construction or application of this Agreement.


 


Section 16.2               Severability


 


In the event that any of the provisions or a portion
of any provision of this Agreement is held to be invalid, illegal, or
unenforceable by a court of competent jurisdiction or a governmental authority,
such provision or portion of provision will be construed and enforced as if it
had been narrowly drawn so as not to be invalid, illegal, or unenforceable, and
the validity, legality, and enforceability of the enforceable portion of any
such provision and the remaining provisions will not be adversely affected
thereby.


 


Section 16.3               Entire Agreement


 


This Agreement, together with the schedules and
exhibits hereto and the Confidentiality Agreement, all of which are
incorporated by reference, contains all of the terms agreed to by the parties
regarding the subject matter hereof and supersedes any prior agreements,
understandings, or arrangements between them, whether oral or in writing.


 


Section 16.4               Amendments


 


This Agreement may not be amended, modified,
altered, or supplemented except by means of a written agreement or other
instrument executed by both of the parties hereto.  No course of conduct
or dealing between the parties will act as a modification or waiver of any
provisions of this Agreement.


 


Section 16.5               Counterparts


 


This Agreement may be executed in any number of
counterparts, each of which will be deemed an original as against the party
whose signature appears thereon, but all of which taken together will
constitute but one and the same instrument.


 


Section 16.6               Waiver


 


The failure of either party to enforce or to
exercise, at any time or for any period of time, any term of or any right
arising pursuant to this Agreement does not constitute, and will not be
construed as, a waiver of such term or right, and will in no way affect that
party’s right later to enforce or exercise such term or right.


 


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Section 16.7               Force Majeure


 


(a)           In the event of any failure or delay in the performance by a
party of any provision of this Agreement due to acts beyond the reasonable
control of such party (such as, for example, fire, explosion, strike or other
difficulty with workmen, shortage of transportation equipment, accident, act of
God, declared or undeclared wars, acts of terrorism, or compliance with or
other action taken to carry out the intent or purpose of any law or regulation,
but not any failure of such party to perform under a Third Party agreement) (a “Force Majeure Event”),
then such party shall have such additional time to perform as shall be
reasonably necessary under the circumstances.  In the event of such
failure or delay, the affected party will use its diligent efforts, consistent
with sound business judgment and to the extent permitted by law, to correct
such failure or delay as expeditiously as possible.  In the event that a
party is unable to perform by a reason described in this Section 16.7, its
obligation to perform under the affected provision of this Agreement shall be
suspended during such time of nonperformance.


 


(b)           Neither
party shall be liable hereunder to the other party nor shall be in breach for
failure to perform its obligations caused by a Force Majeure Event.  In
the case of any such event, the affected party shall promptly, but in no event
later than ten (10) days of its occurrence, notify the other party stating
the nature of the condition, its anticipated duration and any action being taken
to avoid or minimize its effect.  Furthermore, the affected party shall
keep the other party informed of the efforts to resume performance.  After
sixty (60) days of such inability to perform, the parties agree to meet and in
good faith discuss how to proceed.  In the event that the affected party
is prevented from performing its obligations pursuant to this Section 16.7
for a period of six (6) months, the other party shall have the right to
terminate this Agreement pursuant to the provisions of Sections 8.4(b).


 


Section 16.8               Successors and Assigns


 


Subject to Section 16.9, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns permitted under this Agreement.


 


Section 16.9               Assignment


 


This Agreement and the rights granted herein shall
not be assignable (or otherwise transferred) by either party hereto without the
prior written consent of the other party.  Any attempted assignment
without consent shall be void.  Notwithstanding the foregoing, a party may
transfer, assign or delegate its rights and obligations under this Agreement
without consent to (a) an Affiliate reasonably capable of performing such
party’s obligations under this Agreement or (b) a successor to all or
substantially all of its business or assets of the assigning party to which
this Agreement relates, whether by sale, merger, consolidation, acquisition,
transfer, operation of law or otherwise or (c) in the case of either
party, to one or more financial institutions providing financing to such party
pursuant to the terms of a security agreement relating to such financing. 
In connection with any assignment, or Subcontracting pursuant to which a Third
Party Sales Representative is engaged to Promote the Products, of this
Agreement or any of the rights granted herein pursuant to this Section 16.9,
the assignor, or party Subcontracting to another, shall ensure that the
assignee, or Subcontractor, represents and warrants the matters set forth in
Sections 9.1(j) and (k) (in substantially the same form as set forth
in Sections 9.1(j) and (k)), where Depomed (or


 


50

















 


one of its successors or assigns) is the assignor or
Subcontracting party, or Sections 9.2(h) and (i) (in substantially
the same form as set forth in Sections 9.2(h) and (i)), where Santarus (or
one of its successors or assigns) is the assignor or Subcontracting
party.  In connection with any Subcontracting pursuant to which a Third
Party will manufacture the Products, the party Subcontracting to another shall
use its commercially reasonable efforts to cause the Subcontractor to represent
and warrant the matters set forth in Sections 9.1(j) and (k) (in
substantially the same form as set forth in Sections 9.1(j) and
(k)).  Neither party shall knowingly engage any Third Party appearing on
the FDA’s debarment list or the list of excluded individuals/entities of the
Office of Inspector General of the Department of Health and Human Services to
perform, or assist such party in the performance of, its obligations under this
Agreement, and each party shall review each such list prior to engaging any
such Third Party.


 


Section 16.10             Construction


 


The parties acknowledge and agree that: (a) each
party and its representatives have reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision; and (b) the
terms and provisions of this Agreement will be construed fairly as to each
party hereto and not in favor of or against either party regardless of which
party was generally responsible for the preparation or drafting of this
Agreement.  Unless the context of this Agreement otherwise requires: (i) words
of any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively; (iii) the
terms “hereof,” “herein,” “hereby,” and derivative or similar words refer to
this entire Agreement; (iv) the terms “Article,” “Section,” “Exhibit,” “Schedule,”
or “clause” refer to the specified Article, Section, Exhibit, Schedule, or
clause of this Agreement; (v) “or” is disjunctive but not necessarily
exclusive; and (vi) the term “including” or “includes” means “including
without limitation” or “includes without limitation.”  Whenever this
Agreement refers to a number of days, such number shall refer to calendar days
unless business days are specified.


 


Section 16.11             Governing Law


 


This Agreement will be construed under and in
accordance with, and governed in all respects by, the laws of the State of
California, without regard to its conflicts of law principles.


 


Section 16.12             Equitable Relief


 


Each party acknowledges that a breach by it of the
provisions of this Agreement may not reasonably or adequately be compensated in
damages in an action at law and that such a breach may cause the other party
irreparable injury and damage.  By reason thereof, each party agrees that
the other party is entitled to seek, in addition to any other remedies it may
have under this Agreement or otherwise, preliminary and permanent injunctive
and other equitable relief to prevent or curtail any breach of this Agreement
by the other party; provided, however, that no specification in this Agreement
of a specific legal or equitable remedy will be construed as a waiver or
prohibition against the pursuing of other legal or equitable remedies in the
event of such a breach. Each party agrees that the existence of any claim,
demand, or cause of action of it against the other party, whether predicated
upon this Agreement, or otherwise, will not constitute a defense to the
enforcement by the other party, or its successors or assigns, of the covenants
contained in this Agreement.


 


51

















 


Section 16.13             Relationship Between Parties


 


The parties hereto are acting and performing as
independent contractors, and nothing in this Agreement creates the relationship
of partnership, joint venture, sales agency, or principal and agent. 
Neither party is the agent of the other, and neither party may hold itself out
as such to any other party.  All financial obligations associated with
each party’s business will be the sole responsibility of such party.


 


[Signature page follows]


 


52

















 


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


 


 


	
   

  	
  DEPOMED, INC.

  
	
   

  	
   

  
	
   

  	
    /s/ Carl A. Pelzel

  
	
   

  	
  By:

  	
  Carl A. Pelzel

  
	
   

  	
  Its:

  	
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SANTARUS, INC.

  



 


	
   

  	
    /s/ Gerald T. Proehl

  
	
   

  	
  By:

  	
  Gerald T. Proehl

  
	
   

  	
  Its:

  	
  President and CEO

  



 


53

















 


PROMOTION AGREEMENT


 


by and between


 


DEPOMED, INC.


 


and


 


SANTARUS, INC.


 


Dated as of July 21, 2008


 

















 


SCHEDULES


 


Schedule 1.37 – Depomed
Trademarks


 


Schedule 1.55 – Launch
Plan


 


Schedule 1.93 – Santarus Trademarks


 


Schedule 4.5(h) –
Depomed Promotional Activities


 

















 


Schedule 1.37


 


Depomed Trademarks


 


	
   

  Mark

  	
   

  	
  Serial/Registration

  Numbers

  
	
  GLUMETZA(1)

  	
   

  	
  Reg. No. 3366577

  
	
  DEPOMED

  	
   

  	
  Reg. No. 2112593

  
	
  DEPOMED (word and design
  mark)

  	
   

  	
  Ser. No. 78781903

  
	
  ACUFORM

  	
   

  	
  Ser. No. 78781863

  
	
  G (stylized design mark)

  	
   

  	
  Ser. No.  78931764

  



 






(1)           Owned by
BLS, and licensed in the United States to Depomed for the purpose of promoting
the Products.


 

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


Schedule 1.55


 


Launch Plan


 


[***]


 


Schedule redacted in its entirety (10 pages)


 

















 


Schedule 1.93


 


Santarus Trademarks


 


	
   

  Mark

  	
   

  	
  Serial/Registration

  Numbers

  
	
  SANTARUS

  	
   

  	
  Reg. No. 2,711,984

  
	
  SANTARUS logo

  	
   

  	
  Reg. No. 2,896,926

  
	
  Triangle logo

  	
   

  	
  Reg. No. 2,899,097

  



 

















 


Confidential Information, indicated by [***] has been omitted from this
filing and filed separately with the Securities Exchange Commission


 


Schedule 4.5(h)


 


Depomed
Promotional Activities


 


[***]