**Exhibit10.7**

 

**CERTAIN MATERIAL (INDICATED BY ANASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FORCONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION.**

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**PROMOTION AGREEMENT**

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This PROMOTION AGREEMENT (this “Agreement”)is made as of July 21, 2008 (the “Effective Date”), by and betweenDepomed, 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 topromote and market the Products in the Territory (each as defined below), andSantarus desires to promote and market the Products, all in accordance with theterms and conditions contained herein;

 

NOW, THEREFORE, in consideration of the foregoingand of the mutual covenants herein contained, the parties hereto intending tobe legally bound hereby agree as follows:

 

# **ARTICLE IDEFINITIONS**

# ** **

As used in this Agreement, the following terms shallhave the following meanings:

 

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

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

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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 promulgatedthereunder, including the Generic Drug Act.

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

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

 

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

 

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

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

 

out-of-pocket costs for sales training meetings to the extentattributable to the Products, (d) all out-of-pocket costs for the purchaseof Prescriber Data (including any prescriber data for competitive products), (e) allout-of-pocket costs associated with market research, advisory boards, speakerprograms, trade shows and “lunch and learns” and other outreach programs withrespect to the Products, (f) all costs related to scientific liaisons, andnational and regional account managers to the extent attributable to theProducts, (g) all costs related to up to one (1) full-time equivalentdedicated product manager; (h) all Medical Affairs Expenses reimbursed bySantarus pursuant to Section 4.7; and (i) all other out-of-pocketcosts and expenses of Santarus for directly Promoting the Products andconducting Educational Programs with respect to the Products in theTerritory.  In the case of Productvoucher, coupon, loyalty card or other co-pay assistance programs approved bythe JCC, all out-of-pocket costs of Santarus associated with such programs(other than redemption costs) shall be treated as Advertising/Marketing/Educational Expenses.   Notwithstandingthe foregoing, (A) the costs set forth in items (f) and (g) aboveshall be subject to a $[***] cap per Agreement Quarter and (B) the costsset forth in item (c) above shall be subject to a $[***] cap during theLaunch Period and to a $[***] cap during each twelve (12) month periodthereafter; and such costs in excess of the caps set forth in clauses (A) and(B) shall not be treated as Advertising/Marketing/Educational Expenses.

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Section 1.8             “Affiliate”means, with respect to any Person, any other Person that directly or indirectlycontrols, is controlled by or is under common control with, such firstPerson.  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 thepossession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of that Person, whether through theownership of voting securities, by contract or otherwise.

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

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

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Section 1.11           “AgreementQuarter” means the Initial Agreement Quarter, each successive period ofthree months during the Term after the Initial Agreement Quarter and the FinalAgreement Quarter.

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

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

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

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Section 1.15           “BLSAgreements” means, collectively, the BLS License Agreement, the BLSManufacturing Transfer Agreement and the BLS Supply Agreement.

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Section 1.16           “BLSFees” means, for any period, the sum of the following amounts actually paidby Depomed to BLS in such period:  (a) earnedroyalty payments made pursuant to Section 4.6 of the BLS ManufacturingTransfer Agreement attributable to Promotion Net Sales of the 500mg Product,and (b) (i) the Supply Price (as defined under the BLS SupplyAgreement) for the 1000mg Product or (ii) in the event that BLS is nolonger supplying the 1000mg Product under the BLS Supply Agreement, earnedroyalty payments made pursuant to Section 4.2 of the BLS ManufacturingTransfer 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 byDepomed in respect of supply or the Promotion Net Sales for such period underthe applicable BLS Agreement.  In theevent the amounts actually paid under any such BLS Agreement are reduced orterminate, or Depomed receives a credit for any prior payment of BLS Fees orreceives any other payment from BLS under any BLS Agreement, the BLS Fees willcorrespondingly be reduced or terminate or the credit or other payment shall beapplied to the then-current calculation of BLS Fees.

 

Section 1.17           “BLSLicense Agreement” means that certain Amended and Restated LicenseAgreement (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 totime.

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Section 1.18           “BLSManufacturing Transfer Agreement” means that certain Manufacturing TransferAgreement (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 totime.

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

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

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

 

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

 

Section 1.24           “COGS” means, for a particularperiod, 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) BLSFees, (ii) expenses which are to be deducted from gross sales in reachingthe calculation of Net Sales hereunder, and (iii) costs of Samplespurchased from Depomed by Santarus hereunder.

 

Section 1.25           “Combination Product” has themeaning 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 rightsof any kind, the possession by a party of the ability to grant a license orsublicense of such rights without the payment of additional consideration andwithout violating the terms of any agreement or arrangement between such partyand any Third Party.

 

Section 1.28           “DDMAC” means the FDA’sDivision of Drug Marketing, Advertising and Communications, or any successorGovernmental Authority performing comparablefunctions in the Territory.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 1.37           “Depomed Trademarks” means (a) Glumetza® , (b) the AcuFormTM trademark, forwhich Depomed has sought registration for in the United States Patent andTrademark Office, and (c) Depomed®, and, in each case, all related domainnames and other trademark related rights.  The Depomed Trademarks areattached 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 toa Professional, including a P1 Detail or P2 Detail.

 

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

 

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

 

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

 

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

 

Section 1.43           “FDA” means the United StatesFood and Drug Administration or any successor agency performing comparablefunctions in the Territory.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 1.50           “Gross Margin” means, for aparticular period, (A) Promotion Net Sales for such period minus (B) (i) allBLS Fees for such period (multiplied by the Promotion Percentage for suchperiod), and (ii) COGS for such period (multiplied by the PromotionPercentage 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 setforth in Section 3.5(b).

 

Section 1.53           “JCC” has the meaning setforth in Section 3.1.

 

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

 

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

 

Section 1.56           “Legal Requirements” meanslaws, rules and regulations of any Governmental Authority in theTerritory, including, for clarity, all guidelines, policies and proceduresreferenced in Section 5.3 of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 1.64           “Net Sales” means, for a particular period, the gross amountinvoiced on sales of Product in the Territory recognized as gross revenue inaccordance with GAAP by Depomed, its Affiliates, licensees, sublicensees andassigns to independent, unrelated Third Parties during such period in bona fidearms’ length transactions, less the following deductions, calculated to arriveat net sales in accordance with GAAP:  (a) freight,insurance (but only insurance with respect to shipping the Product), and othertransportation charges to the extent added to the sales price and set forthseparately as such on the total amount invoiced; (b) any sales, use,value-added, excise taxes or duties or allowances on the selling price ofProduct to the extent added to the sales price and set forth separately as suchon the total amount invoiced; (c) chargebacks, trade, quantity and cashdiscounts and rebates to the extent customary in the trade, includinggovernmental rebates; (d) allowances or credits, including allowances orcredits to customers on account of rejection, defects or returns of theProduct, or because of a retroactive price reduction; and (e) redemptioncosts associated with any Product voucher, coupon, loyalty card or other co-payassistance programs approved by the JCC, or listed in Schedule 4.5(h).  Net Sales shall not include a sale ortransfer to an Affiliate, licensee, sublicensee or assign of Santarus orDepomed or if done for clinical, regulatory or governmental purposes where noconsideration is received; but the resale by such Affiliate, licensee,sublicensee or assign of Santarus or Depomed shall be considered a sale of suchProduct.  For purposes of clarity, it isthe intent of the parties that “Net Sales” for the purposes of this Agreementshall be consistent with the GAAP net sales reported by Depomed in its periodicreports 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 inwhich the promotional message involving a Product is presented in the firstposition and is the principal topic of discussion during the contact.

 

Section 1.67           “P2 Detail” means a Detail inwhich the promotional message involving a Product is presented in the secondposition and is emphasized more than any other product in the Detail, exceptfor the product in the P1 Detail.

 

Section 1.68           “PDMA” means the PrescriptionDrug Marketing Act, as amended, and the rules and regulations promulgatedthereunder.

 

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

 

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

 

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

 

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

 

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

 

Section 1.74           “Product Complaints” means anyreport concerning the quality, purity, quantity, weight, pharmacologicactivity, labeling, identity or appearance of a Product.

 

Section 1.75           “Professional” means aphysician or other health care practitioner who is permitted by law toprescribe Products.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           atthe time of disclosure, is publicly known;

 

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

 

(c)           isor was in the possession of the receiving party or any Affiliate thereof at thetime of disclosure by the disclosing party and was not acquired directly orindirectly from the disclosing party or any Affiliate thereof or from any otherparty under an agreement of confidentiality to the disclosing party or anyAffiliate thereof; and

 

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

 

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

 

Section 1.85           “Safety Stock” has the meaningset 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” meanssales representatives employed by Santarus or Depomed, or a Third Party engagedby Santarus or Depomed, to Detail the Products, who have been trained andequipped to Detail the Products in accordance with this Agreement.

 

Section 1.88           “Samples” has the meaning setforth in Section 6.5.

 

Section 1.89           “Santarus” has the meaning setforth 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.

 

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

 

Section 1.93           “Santarus Trademarks” meansthe 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 expeditedreporting as defined in the regulations cited below, that is fatal orlife-threatening, requires hospitalization or prolongation of existinghospitalization, results in persistent or significant disability or incapacity,is a congenital anomaly/birth defect, or is of comparable medical significanceor any other event which would constitute a “serious” Adverse DrugExperience pursuant to the terms of 21 C.F.R. 314.80 or 312.32.

 

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

 

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

 

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

 

Section 1.98           “Term” has the meaning setforth in Section 8.1.

 

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

 

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

 

Section 1.101         “Unit” means one (1) tabletof the 1000mg Product and two (2) tablets of the 500mg Product; providedthat “Unit” shall have such other meaning as the parties may negotiate in goodfaith in the event that either party reasonably determines that the thencurrent definition of Unit does not equitably reflect differences in valuebetween the 500mg Product and the 1000mg Product for purposes of calculatingthe 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.

 

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

 

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

 

**ARTICLE IIGRANT**

 

Section 2.1             **Grant ofPromotion Rights**

 

During the Term, subject to theterms and conditions of this Agreement (including Depomed’s right to elect toPromote the Products as set forth in Section 4.9), Depomed hereby grantsto Santarus and its Affiliates and Santarus and its Affiliates hereby accept anexclusive right to Promote the Products under the Depomed Trademarks in theTerritory, on the terms and subject to the conditions set forth herein. Depomed agrees that its and its Affiliates’ right to Promote the Products islimited to the rights set forth in Section 4.9.

 

Section 2.2             **Sublicense**

 

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

 

Section 2.3             **Limitationon Metformin Promotion**

 

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

 

Section 2.4             **Retentionof Rights**

 

Depomed retains and shall retainall proprietary and property interests in the Products until the point of saleor, 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 orproperty interests in the Products, except for the licenses and rightsspecifically granted hereunder.  Except as expressly set forth herein,nothing contained herein shall be deemed to grant Santarus, by implication, alicense or other right or interest in any patent, trademark or other similarproperty of Depomed or its Affiliates, except as may be necessary for Santarusto Promote the Products pursuant to this Agreement or to manufacture theProducts in accordance with Section 6.6.  Except 

 

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as expressly set forth herein, nothing containedherein shall be deemed to grant Depomed, by implication, a license or otherright or interest in any patent, trademark or other similar property ofSantarus or its Affiliates, except as may be necessary for Depomed to Promotethe Products pursuant to this Agreement.

 

**ARTICLE IIIJOINT 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 toamend, modify or waive any of the terms or conditions of this Agreement.

 

Section 3.2             **JointCommercialization Committee**

 

The JCC shall be established bythe parties and shall be comprised of four (4) members, two (2) ofwhom shall be appointed by Depomed and two (2) of whom shall be appointed bySantarus.  Each party has indicated to the other its initial appointmentsto the JCC.  A party may change any of its representatives at any time ifa new person is appointed to any of the foregoing positions by giving writtennotice to the other party.  The total number of JCC members may be changedby unanimous vote of the JCC from time to time as appropriate; provided, thatthe JCC shall in all cases be comprised of an equal number of members from eachof Depomed and Santarus.  Santarus and Depomed each will designate onerepresentative 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 partyand shall be vested with appropriate decision-making authority and power bysuch party.  The Chief Executive Officers of Santarus and Depomed shallnot be members of the JCC.

 

Section 3.3             **JCCResponsibilities**

 

Except as otherwise set forthherein, the JCC shall provide strategic oversight of all Promotional activitiesfor the Products hereunder, it being understood that Santarus shall beresponsible for directing such Promotional and marketing activities.  Theresponsibilities of the JCC shall be exercised consistent with this Agreementand shall include, but shall not be limited to:

 

(a)           reviewingthe Annual Plan as contemplated by Section 4.5(a);

 

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

 

(c)           reviewingSantarus’ Product Promotion strategies and objectives, including Productpositioning, messaging and branding;

 

(d)           ifapplicable, monitoring the Depomed Sales Force call plan for coordination withthe Santarus Sales Force;

 

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(e)           monitoringadvertising placement and market responses, including any post-implementationreviews;

 

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

 

(g)           establishingpricing for commercial sale of Products by or on behalf of Depomed, includingthe timing of any pricing changes;

 

(h)           reviewingsales incentive compensation plans for the Santarus Sales Force related to theProducts;

 

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

 

(j)            establishingcontracting guidelines for the managed care and government markets (or if nosuch guidelines have been established, approving any new or amended contracts);

 

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

 

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

 

(m)          reviewingand approving any Product voucher, coupon, loyalty card or other co-payassistance programs;

 

(n)           reviewingand approving any proposed material capital expenditures relating to the manufactureof the Products; and

 

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

 

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

 

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Section 3.4             **Meetingsof the JCC.**

 

Meetings of the JCC may becalled 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 thefirst six months of the Term, and on at least a quarterly basisthereafter.  If possible, the meetings shall be held in person or whereappropriate, by video or telephone conference.  Unless otherwise agreed, thelocation of any in-person meetings of the JCC shall alternate between thecorporate offices of the parties.  The parties shall determine the form ofthe meetings.  Subject to Section 3.5, decisions shall be madeunanimously, each party having one (1) vote regardless of the number ofrepresentatives present or voting; provided, that no such vote shall be validunless each party is represented by at least two (2) members either bywritten proxy or actual presence at the meeting at which the vote istaken.  Subject to appropriate confidentiality undertakings whereapplicable, each party shall have the right, upon written notice to the otherparty, to have present at JCC meetings additional, non-voting participants (notto exceed ten such participants at any JCC meeting without the consent of theother party).  Such additional participants shall not be deemed to be, orhave any rights or responsibilities of, a member of the JCC.  The partiesshall cause their respective representatives on the JCC to use their reasonableefforts to resolve all matters presented to them as expeditiously aspossible.  The party hosting any meeting shall propose the agenda for themeeting and appoint a secretary to the meeting who shall record the minutes ofthe meeting.  Such minutes shall be circulated to the parties promptlyfollowing the meeting for review and comment and for unanimous ratification byboth parties.  Each party shall bear its own travel and related costsincurred in connection with participation in the JCC.

 

Section 3.5             **JCCDisputes**

## ** **

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

 

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

 

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

 

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

 

**ARTICLE IVPRODUCT PROMOTION**

# ** **

Section 4.1             **ProductPromotion**

## ** **

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

 

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

 

(c)           Duringeach of the [***] periods within the [***]****month periodfollowing the end of the Minimum Detailing Period, Santarus Sales ForceExpenditures shall equal at least [***]****percent([***]%)****of the immediately prior [***]Promotion Net Sales.  From and after theend 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 P2Detail shall be valued at $[***] ($[***] for any period during which aparticular Santarus Sales Representative who is delivering Details is at thesame time delivering details for two (2) or more additional products),with such amounts to be increased on each May 1 by the amount of increasein the Consumer Price Index published for the prior year.

 

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

 

(d)           From andafter the Effective Date and for the remainder of the Term, Santarus shallspend at least the following amounts on Advertising/Marketing/EducationalExpenses 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 ofsuch 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 theother obligations contained herein that are required to be performed from andafter the Promotion Commencement Date as soon as practicable following the datehereof, but no later than [***],2008.  The parties agree to cooperate with each other in good faith infurtherance of the preceding sentence.

###  

### (f)            For the avoidance of doubt, theobligations of Santarus as set forth in this Section 4.1 shall be suspendedfor any period of time during which Depomed is unable to:  (i) timely supply Samples or tradeProduct in accordance with Article 6 or (ii) maintain the continuedeffectiveness of the Regulatory Approvals.

###  

Section 4.2             **Representationsto Customers**

## ** **

Santarus will not make anyfalse or misleading representations to Professionals, customers or othersregarding Depomed or the Products and will not make any representations,warranties or guarantees with respect to the specifications, features orcapabilities of the Products that are not consistent with the applicablethen-current FDA approved labeling and package insert (except to the extentpermitted by Legal Requirements). Santarus agrees to undertake timely and complete corrective action forany deviations from this Section 4.2, subject to discussion and review byDepomed’s regulatory affairs and quality assurance department.

 

Section 4.3             **Staffing;Training**

## ** **

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

 

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

 

### incentive compensation underSantarus’ field incentive compensation plans for the aggregate of SantarusSales Representatives engaged in Detailing Products under this Agreement, and (ii) atleast [***]percent ([***]%) (on a pro-rated basis) ofthe sales component (and excluding any MBO component) of the targeted cashincentive compensation under Santarus’ field incentive compensation plans forthe aggregate of Santarus district sales managers involved in the Promotion ofthe Product.  Santarusshall notify its Sales Representatives and district sales managers prior to thePromotion Commencement Date and consistent with its procedures for Santarus’other products of the total potential incentive compensation for theProducts.  For clarity, the minimumincentive compensation requirement in this Section 4.3 does not apply tosales force management (other than district sales managers), such as regionalsales managers.

###  

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

###  

Section 4.4             **PromotionalMaterials; Educational Materials**

## ** **

(a)           Subjectto Sections 4.4(b), 4.4(c) and 4.9, Santarus shall, at its ownexpense (which for clarity shall be included as an Advertising/Marketing/EducationalExpense hereunder) have the right to create, develop, produce or otherwiseobtain, and utilize sales, promotional, advertising, marketing, educational andtraining materials (“Promotional Materials”) whichare 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; educationalprograms; formulary binders; appropriate reprints and reprint carriers; productmonographs; patient support kits; convention exhibit materials; direct mail;market research survey and analysis; training materials; and scripts fortelemarketing and teleconferences.  All Promotional Materials used by theSantarus Sales Force or bearing the Santarus Trademarks will be subject to thereview and approval of the Santarus CAC.  All Promotional Materialsdeveloped by Santarus hereunder shall prominently display such DepomedTrademark(s) as shall be specified by Depomed to Santarus following itsreview of the applicable prototype in accordance with Section 4.4(b).

 

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(b)           Prior tothe use thereof, Santarus shall provide to Depomed a prototype of anyPromotional Materials created by Santarus for review.  Depomed shallnotify Santarus of any objections it has to such prototype and the basistherefor as soon as reasonably practicable, but no later than ten (10) businessdays following its receipt thereof (five (5) business days during theLaunch Period).  Santarus shall modify such Promotional Materials to theextent necessary to resolve any objections made by Depomed to such PromotionalMaterials on the grounds that such Promotional Materials are inconsistent withany Legal Requirements or this Agreement and shall in good faith consider anyof Depomed’s other objections.  The final version of the PromotionalMaterials approved by the Santarus CAC shall be provided to Depomed for itsreview and approval to confirm their consistency with the prototype approved byDepomed 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, butno later than five (5) business days following its receipt byDepomed.  Upon approval, the Promotional Materials may be produced inquantity, and Santarus shall provide Depomed with the requisite number ofcopies of the final printed form in a timely manner so as to allow Depomed tosatisfy its obligation to file such materials with the FDA prior to the firstuse of the Promotional Materials, and Depomed will make such filing with theFDA within five (5) business days of its receipt of such copies.  In furtherance of the foregoing provisions ofthis Section 4.4(b), the parties will endeavor to cooperate to facilitatethe timely and efficient review of Promotional Materials and resolution of anydisputes or disagreements related to Promotional Materials, with a view tocontaining both parties’ internal personnel resources and external costsassociated with the creation, review and approval of the Promotional Materials.

 

(c)           AtSantarus’ request, Depomed shall make available to Santarus any PromotionalMaterials created by Depomed prior to the Effective Date, including electroniccopies of Promotional Materials, at Depomed’s out-of-pocket cost for printingand delivering such materials (and such costs shall be included in theAdvertising/Marketing/Education Expenses for Santarus).  On or prior tothe Promotion Commencement Date, Depomed shall deliver to Santarus all suchPromotional Materials created by Depomed in its inventory.  ThePromotional Materials supplied to Santarus under this Section 4.4(c) shallbe delivered to a single location specified by Santarus in writing prior tosuch delivery.  Depomed hereby grants to Santarus the exclusive right,during the Term, to use the Promotional Materials supplied to Santarus pursuantto this Section 4.4(c) in the performance of its obligations underthis Agreement.

 

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

 

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Section 4.5             **AnnualPlan; Promotion Expenses**

## ** **

### (a)           On or prior to October 31st ofthe preceding calendar year with respect to each calendar year during the Termbeginning with the 2009 calendar year, Santarus shall develop an annualcommercialization plan (the “Annual Plan”)and submit the Annual Plan to the JCC for review.  The Annual Plan shallset forth the manner in which Santarus anticipates it will Promote the Productsduring the period to which the Annual Plan relates; provided, however, that theAnnual Plan may be modified from time to time as Santarus reasonably deemsappropriate for the Promotion of the Products, subject where applicable toSantarus’ compliance with its obligations under this Agreement, including withoutlimitation the obligations set forth in Section 4.1.  Any such modifiedAnnual Plan shall be provided to the JCC for its review at its next regularlyscheduled meeting.   The Annual Planshall include, at a minimum:

###  

(i)            theanticipated number of quarterly and annual Details (including P1 Details and P2Details) to be provided by the Santarus Sales Force, and the physicianstargeted to receive those Details;

 

(ii)           productpositioning, strategy and tactics with supporting advertising and promotionalactivity to be undertaken;

 

(iii)          plannedpublic relations activities, if any;

 

(iv)          anytraining or sampling programs to be conducted;

 

(v)           medicaleducation programs to be conducted;

 

(vi)          pricingand contracting strategies; provided, however, that Product pricing shall beestablished as set forth in Section 3.3;

 

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

 

(viii)        a budgetfor all costs and expenses associated with the activities to be undertakenpursuant to the Annual Plan (including the projectedAdvertising/Marketing/Educational Expenses and Sales Force Expenditures).

 

(b)           Inaddition, on or prior to October 31st of the preceding calendar year withrespect to each calendar year during the Term beginning with the 2009 calendaryear, Depomed shall provide the following information to the JCC to assist theJCC in its review of the Annual Plan:  (i) Productmanufacturing and distribution forecasts for the coming year (includingforecasted COGS and BLS Fees), and (ii) plans for and reasonably detailedreports summarizing any data resulting from post-marketing clinical studiesthat Depomed, in its sole discretion and expense, decides to conduct.  Depomed shall also provide to the JCC itsproposed Volume Forecast on a quarterly basis pursuant to Section 6.3.

 

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

 

(d)           Santarusshall not have any obligation to incur Sales Force Expenditures orAdvertising/Marketing/Educational Expenses in excess of the minimum amountsprovided in Sections 4.1(c) and (d), respectively, of this Agreement.

 

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

 

(e)           [***]**.**

** **

(f)            Eachparty will bear its own operating expenses associated with the Products andPromotion thereof, including all personnel, general and administrative andoverhead costs.  Santarus will bear all Santarus Sales Force expenses, andDepomed will bear all Depomed Sales Force expenses.  Depomed will bear allcosts associated with maintaining and continuing all Regulatory Approvals ofthe Products in the Territory, including all costs associated with Adverse DrugExperience reporting, filing annual reports in connection with the NDAs, userfees and establishment fees associated with the NDAs and all clinical andregulatory requirements.

 

(g)           At the endof each Agreement Quarter, Santarus shall provide directly to Depomed, withinten (10) business days of its receipt, the Prescriber Data for suchAgreement Quarter related to the Product, to the extent and in such form as ispermitted under the applicable Third Party agreements under which Santaruspurchases the Prescriber Data.

 

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

 

Section 4.6             **SantarusPromotion Reports**

## ** **

### (a)           Within forty-five (45)days following the end of each Agreement Quarter, Santarus shall provide theJCC with a status report, which report will summarize Santarus’ Detailingactivities pursuant to this Agreement for such prior Agreement Quarter and on acalendar year-to-date basis, including, to the extent Santarus customarilycreates the following reports for Santarus’ other products which are promotedby or on behalf of Santarus:  (a) the number of P1 and P2 Detailsmade and recorded by Santarus’ standard record keeping procedures; (b) thenames and addresses of the Professionals called upon; (c) the percentageof Professionals Detailed who were provided with Samples; (d) the averagenumber of such Samples delivered on each Detail; (e) Advertising/Marketing/EducationExpenses for such Agreement Quarter; and (f) such other information as maybe agreed upon in writing by the parties.

###  

(b)           [***]**.**

 

Section 4.7             **MedicalInquiries**

## ** **

The parties acknowledge that each may receiverequests for medical information concerning the Product from members of themedical 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 forresponding to such requests that are not received by Santarus, all of whichresponses shall be in compliance with all applicable Legal Requirements and theNDA.  Depomed shall promptly provideSantarus with (i) copies of all written materials and (ii) writtensummaries of all oral advice, provided by Depomed in response to suchinquiries.  Depomed shall be obligatedfor any costs associated with its responsibilities pursuant to this Section 4.7;[***].

 

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Section 4.8             **Trademarks**

## ** **

(a)           The “Depomed”trademark must appear on all Promotional Material that makes reference to theProducts, to the extent such Promotional Materials would typically contain acompany trademark.  The “AcuForm” trademark must appear on all PromotionalMaterials that make reference to the “AcuForm” drug delivery technologyincorporated into the Products.  Depomed hereby grants to Santarus anon-assignable, non-sublicensable, non-exclusive, royalty-free right andlicense to use the Depomed Trademarks in the Territory solely in connectionwith Santarus’ Promotion of the Products in accordance with this Agreement;provided Santarus may assign and sublicense such right and license inaccordance with Section 2.2.  Such license shall expire immediatelyupon the expiration or termination of this Agreement.  Subject to this Section 4.8and to applicable Legal Requirements, Santarus shall have the right to use theSantarus Trademarks, and include the name “Santarus” or any variation thereofon the Promotional Materials; provided that such Santarus Trademarks will not appearin greater prominence or in greater frequency than the DepomedTrademarks.  In addition, the JCC will discuss including the SantarusTrademarks, in equal prominence to the Depomed Trademarks and in accordancewith all Legal Requirements, on all packaging for Samples distributed by theSantarus Sales Force, with determination by the JCC as to including such marksbeing based on the timing for implementing such change and the costs associatedtherewith, with all out-of-pocket costs associated with creating and approvingnew packaging borne by Santarus if so approved by the JCC.  Santarusrecognizes Depomed’s title to the Depomed Trademarks, and shall not at anytime, during or after the Term, do or knowingly suffer to be done any act orthing which will in any way impair the rights of Depomed in or to the DepomedTrademarks.  Santarus acknowledges and agrees that it shall not acquireand shall not claim any title to the Depomed Trademarks adverse to Depomed byvirtue of the rights granted under this Agreement or through Santarus’ use ofthe Depomed Trademarks, it being the intention of the parties that all goodwilland improved reputation generated by Santarus and use of the Depomed Trademarksshall inure to the benefit of Depomed.

 

(b)           Santarushereby grants to Depomed a non-assignable, non-sublicensable (except to anyThird Party acting as the Depomed Sales Force), non-exclusive, royalty-freeright and license to use the Santarus Trademarks in the Territory solely inconnection with Depomed’s Promotion of the Products in the Territory inaccordance with this Agreement.  Such license shall expire immediatelyupon the expiration or termination of this Agreement.  Subject to this Section 4.8and to applicable Legal Requirements, Depomed shall have the right to useDepomed Trademarks, and include the name “Depomed,” “AcuForm,” or any variationthereof on the Promotional Materials developed by Depomed in accordance withthis Agreement.  Depomed recognizes Santarus’ title to the SantarusTrademarks, and shall not at any time, during or after the Term, do orknowingly suffer to be done any act or thing which will in any way impair therights of Santarus in or to the Santarus Trademarks.  Depomed shall not beobligated to use the Santarus Trademarks in the Depomed PromotionalMaterials.  Depomed acknowledges and agrees that it shall not acquire andshall not claim any title to the Santarus Trademarks adverse to Santarus byvirtue of the rights granted under this Agreement or through Depomed’s use ofthe Santarus Trademarks, it being the intention of the parties that allgoodwill and improved reputation generated by Depomed and use of the SantarusTrademarks shall inure to the benefit of Santarus.

 

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

 

(c)           Each ofSantarus with respect to its use of the Depomed Trademarks and Depomed withrespect to its use of the Santarus Trademarks will maintain quality standardsfor all of its uses of the trademarks of the other party in connection with thePromotion of the Products that are substantially equivalent to those standardsused by the owner of such trademarks in connection with pharmaceuticalproducts.  Subject to the foregoing and to the other provisions of thisAgreement, each party acknowledges and agrees that the owner or licensee of thetrademark has the right, at any time, to modify or supplement such qualitystandards and that the licensee or sublicensee must implement such newstandards or changes following receipt of notice of such additions or changes;provided that the licensor agrees to bear all reasonable costs associated withsuch modifications and supplements.  Compliance with this Section 4.8(c) shallbe determined pursuant to the Promotional Material and Depomed PromotionalMaterials review and approval procedures set forth in Sections 4.4(b) and4.9(f), as applicable.

 

Section 4.9**             Election byDepomed to Promote in the Territory**

## ** **

(a)           Depomedmay elect, at any time prior to the third (3rd) anniversary of the EffectiveDate, to have the Depomed Sales Force Promote and Detail the Products directlyto obstetrics and gynecology Professionals who are on the Depomed PhysicianList.  If Depomed desires to make this election and to use the DepomedSales Force for this purpose, it will inform Santarus at least sixty (60) daysin advance of the commencement of Details by the Depomed Sales Force andprovide Santarus with the proposed Depomed Physician List and Depomed shallcommence its Promotion and Detailing activities no later than ninety (90) daysafter the date of its notice to Santarus.  During such sixty (60)-dayperiod, Santarus will be entitled to review the Depomed Physician List andconfirm that such list does not contain any Professionals that are not, as ofthe date of Santarus’ receipt of the Depomed Physician List, eligible forinclusion on the Depomed Physician List. Following creation of the initial Depomed Physician List, from time totime but not more than two (2) times per calendar year, Depomed may addProfessionals to the Depomed Physician List pursuant to the procedure set forthabove.  Following the addition of suchProfessionals to the Depomed Physician List, the Baseline Percentage shall beadjusted to reflect prescriptions written by any such Professionals by addingto the then-current Baseline Percentage the quotient obtained by dividing (x) [***],by (y) [***].  Notwithstanding theforegoing, the average number of Professionals on the Depomed Physician Listshall in no event exceed [***] Professionals per Depomed Sales Representativeproviding Details.

 

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

 

(c)           AllDetails made by the Depomed Sales Force will be reported to Santarus. Such reports by Depomed will be made in the same manner as Santarus’ Detailsunder Section 4.6(a).  Depomed shallbe responsible for purchasing Prescriber Data relating to the Depomed PhysicianList at its sole cost and expense.

 

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(d)           Depomedmay purchase from Santarus, at Santarus’ actual out-of-pocket costs, copies ofany Promotional Materials created by Santarus for use by the Depomed SalesForce.  Upon Depomed’s request, Santarus will provide to Depomedelectronic copies of Promotional Materials created by or for Santarus, whichPromotional Materials may be modified for use by Depomed; provided that anymodification must be approved as described below.  Depomed may also createand develop its own Promotional Materials for use by the Depomed Sales Force (“DepomedPromotional Materials”).  Prior to the use thereof, Depomed shallprovide to Santarus a prototype of any Depomed Promotional Materials forreview.  Santarus shall notify Depomed of any objections it has to suchprototype and the basis therefor as soon as reasonably practicable, but nolater than ten (10) business days following its receipt thereof. Depomed shall modify such Depomed Promotional Materials to the extent necessaryto resolve any objections made by Santarus to such Depomed PromotionalMaterials on the grounds that such Depomed Promotional Materials areinconsistent with the overall Product positioning and messaging for theProducts and shall in good faith consider any of Santarus’ otherobjections.  The final version of the Depomed Promotional Materials shallbe provided to Santarus for its review and approval to confirm theirconsistency with the prototype approved by Santarus and the resolution ofSantarus’ objections in accordance with this Section 4.9(d), which reviewand approval shall occur, as soon as reasonably practicable, but no later thanfive (5) business days following its receipt by Santarus.  TheDepomed Promotional Materials will not contain any Santarus Trademark unlesssuch materials are approved by the Santarus CAC.  Santarus may purchasefrom Depomed, at Depomed’s out-of-pocket costs for printing and delivering suchmaterials, copies of any Depomed Promotional Materials.  Upon Santarus’request, Depomed will provide to Santarus electronic copies of DepomedPromotional Materials created by or for Depomed, which Depomed PromotionalMaterials may be modified for use by Santarus; provided that any modificationmust be approved in the same manner as approval of Promotional Materials.

 

(e)           Depomedmay purchase from Santarus, at Santarus’ actual out-of-pocket costs, copies oftraining materials developed and Controlled by Santarus related to the Productsfor use by Depomed in the training of the Depomed Sales Force.  Depomed shall be responsible for training ofthe Depomed Sales Force, and may, at its own expense, develop trainingmaterials for the Depomed Sales Force in other media or forms, provided thatsuch materials shall be subject to Santarus’ review as Depomed PromotionalMaterials as provided in Section 4.9(d).  Depomed shall, at its ownexpense, train the Depomed Sales Force using such training materials, the otherPromotional Materials and Depomed Training Materials and such programs asDepomed shall deem appropriate that are in compliance with Depomed’sobligations hereunder.  Such programs shall include training with respectto reporting Adverse Drug Experiences and technical complaints.  After theinitial training, Depomed shall periodically provide additional training toeach Sales Representative, and shall update its training materials asappropriate in connection with such additional training, in accordance withthis Section 4.9(e).

 

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

 

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(g)           Depomedwill cause the Depomed Sales Force and Depomed employees and agents acting onDepomed’s behalf to comply with this Agreement and all applicable LegalRequirements in connection with the Promotion of the Products.  It isunderstood, and Depomed agrees, that it will be accountable for the acts oromissions of its employees and agents to the extent such acts or omissions failto comply with Depomed’s obligations under this Agreement.

 

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

 

Section 4.10**           Product Website**

## ** **

Unless otherwise agreed inwriting by the parties, Depomed shall maintain the existing Product website andimplement any changes to such Product website, subject to the procedure setforth in Section 4.4 used for Promotional Materials.  Santarus will reimburse Depomed for itsdirect out-of-pocket costs associated with implementing any changes requestedby Santarus.  Such reimbursed costs shallbe included in the Advertising/Marketing/Educational Expenses for Santarus.

 

**ARTICLE VCLINICAL AND REGULATORY AFFAIRS; DEVELOPMENT**

# ** **

Section 5.1             **RegulatoryApprovals**

## ** **

Depomed shall use active,sustained, diligent efforts to maintain and continue all Regulatory Approvalscurrently in effect for the Products.  Santarus agrees that all RegulatoryApprovals, applications therefor and any other submissions to a GovernmentalAuthority with respect to the Products shall be in the name of, and shall beowned by, Depomed or its designee and Santarus shall have access, free ofcharge, to all clinical and non-clinical data related to the Products generatedby or on behalf of and controlled by Depomed, whether before or after theEffective Date.

 

Section 5.2**             Compliance withRegulatory Requirements**

## ** **

Unless otherwise required bylaw or expressly required by this Agreement, Depomed will retain exclusiveauthority over and responsibility for complying with all regulatoryrequirements and maintaining all contacts with Governmental Authorities withrespect to the Products, including maintaining and updating of the NDA, thedevelopment and submission of applications for new formulations, dosagestrengths or indications of the Products, the reporting of any Adverse DrugExperiences to the FDA, the compliance of Promotional Materials with FDA rules andregulations and the filing of Promotional Materials with the FDA.

 

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Section 5.3             **Compliance**

 

In performing its dutieshereunder, each party shall, and shall cause the Santarus Sales Force orDepomed Sales Force, as applicable, and its employees and agents to, complywith all Legal Requirements, including the FDA’s regulations and guidelinesconcerning the advertising of prescription drug products, DDMAC’s promotionalguidelines, the PhRMA Code on Interactions with Healthcare Providers, thePrescription Drug Marketing Act of 1987, as amended, and the rules andregulations promulgated thereunder, equal employment, non-discrimination andfederal and state anti-kickback Legal Requirements, and Legal Requirements withrespect to submission of false claims to governmental or private health carepayors, which may be applicable to the activities (including the warehousing,handling and distribution of Samples) to be performed by such partyhereunder.  None of Santarus, Depomed, the Santarus Sales Force, theDepomed Sales Force and either party’s employees and agents shall offer, pay,solicit or receive any remuneration to or from Professionals in order to inducereferrals of or purchase of the Products in violation of applicable LegalRequirements, including without limitation federal or state anti-kickback LegalRequirements.  The Santarus Sales Forceand the Depomed Sales Force shall have been trained in compliance withapplicable Legal Requirements prior to engaging in Promotion of the Products.

 

Section 5.4             **Communicationswith Regulatory Authorities**

## ** **

(a)           Except tothe extent set forth in Section 5.4(b), all communications with GovernmentAuthorities concerning the Product shall be the sole responsibility ofDepomed.  Depomed shall within two (2) businessdays provide Santarus with copies of all such communications (including summariesof all relevant verbal communications) related to Promotional Materials andSerious Adverse Drug Experiences (except that routine communications as to suchmatters (e.g., FDA 2253 correspondence) may be forwarded to Santarus withinfive (5) business days) and shall reasonably respond to all inquiries bySantarus relating thereto.  Depomed willreasonably consult with Santarus concerning adverse drug reaction reporting tothe FDA and communications related to Promotional matters with the FDA or otherGovernmental Authorities that Depomed reasonably considers to be significant tothe Product, including regulatory responses to follow up inquiries regardingadverse drug reactions.  Depomed willprovide to Santarus a copy of all draft responses related to such matters assoon as practicable, and will endeavor to provide such responses at least five (5) businessdays in advance of their submission (to the extent allowable under LegalRequirements), and will consider in good faith any comments provided to Depomedby Santarus.

 

(b)           Santarusshall not, without the consent of Depomed or unless so required by LegalRequirements, correspond or communicate with the FDA or with any otherGovernmental Authority, whether within the Territory or otherwise, concerningthe Products, or otherwise take any action concerning any Regulatory Approvalunder which the Products are sold or any application for Regulatory Approval ofthe Products; provided that****during theTerm,****Santarus shall have the right tocommunicate with the FDA or any other Governmental Authority regarding theProducts if such communication is necessary to comply with the terms of thisAgreement or any Legal Requirement (including without limitation state or localLegal Requirements related to marketing activities undertaken by Santarus orthe Santarus Sales Force), or if Santarus made a request of such agency tocommunicate with Depomed instead, and such Governmental Authority denied suchrequest (in any such case, Santarus shall give Depomed notice as soon as reasonablypracticable of such communication and, to the extent practicable, Depomed shallbe permitted to accompany Santarus, take part in any such communications andreceive copies of all such 

 

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communications).  Santarus shall within two (2) businessdays upon receipt of any communication from the FDA or from any otherGovernmental Authority relating to the Products, forward a copy of the same toDepomed and reasonably respond to all inquiries by Depomed relatingthereto.  If Santarus is required by law to communicate with the FDA orwith any other Governmental Authority relating to the Products, then Santarusshall so advise Depomed within two (2) business days and provide Depomedin advance with a copy of any proposed written communication, or a writtensummary of any proposed oral communication with the FDA or any otherGovernmental Authority.  Santarus shallcomply with any and all reasonable direction of Depomed concerning any meetingor written or oral communication with the FDA or any other GovernmentalAuthority relating to the Product unless otherwise required by LegalRequirements.

 

Section 5.5             **ProductComplaints**

## ** **

Santarus shall refer any oralor written Product Complaints which it receives concerning the Products toDepomed within four (4) days of its receipt thereof; provided, thatall complaints concerning suspected or actual Product tampering, contaminationor mix-up shall be delivered within twenty four (24) hours of its receiptthereof.  Santarus shall not take any other action in respect of any suchcomplaint without the consent of Depomed unless otherwise required by LegalRequirements.  If requested by Depomed, Santarus will collaborate withDepomed to resolve any Product Complaints.  All Product Complaints shallbe directed to the attention of Depomed’s Vice President, Regulatory Affairs,at Depomed’s address set forth in Section 14.1.  Depomed shallprovide Santarus with a summary of all Product Complaints received by Depomedwithin 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 itsreceipt thereof**.**

 

Section 5.6             **AdverseDrug Experience Reports**

## ** **

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

 

(b)           Except asmay otherwise be required by Legal Requirements, (i) Santarus shall not discloseany information concerning Adverse Drug Experience Reports or Serious AdverseDrug Experience Reports to any Person or Governmental Authority without theprior consent of Depomed; and (ii) Depomed shall have the sole discretionto determine whether any Product Complaint, Adverse Drug Experience Report orSerious Adverse Drug Experience Report must be reported to the FDA or any otherGovernmental Authority.

 

(c)           Allfollow-up investigations concerning Adverse Drug Experience Reports and SeriousAdverse Drug Experience Reports shall be conducted by Depomed; providedthat Santarus shall have the right to participate in such investigations uponits request.  Santarus shall provide all reasonable cooperation with anysuch follow-up investigation as may be requested by Depomed from time to time.

 

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(d)           Theparties will enter into a separate and more detailed pharmacovigilanceagreement, consistent with the terms of this Agreement, reasonably in advanceof the Promotion Commencement Date.

 

Section 5.7             **Recallsor Other Corrective Action**

## ** **

Depomed shall have soleresponsibility for and shall make all decisions with respect to any recall(including recall of packaging and promotion materials), market withdrawals orany other corrective action related to the Products.  Depomed shallpromptly consult with Santarus with respect to any such actions proposed to betaken by Depomed (and in all events prior to the taking of such actions),including all actions that are reasonably likely to result in a materialadverse effect on the marketability of the Products in the Territory.  AtDepomed’s request, Santarus shall provide assistance to Depomed in conductingsuch recall, market withdrawal or other corrective action (including retrievingSamples distributed by the Santarus Sales Force to Professionals).  Withrespect to any recall, market withdrawal or corrective action initiated byDepomed as a result of Depomed becoming aware of any manufacturing defect inProducts (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 ofthe provisions of this Agreement, or a violation of Legal Requirements, bySantarus is not a material cause of the recall, market withdrawal or othercorrective action.  Except as set forth above, but subject to Depomed’sindemnification obligations under Section 11.1, Depomed shall be under noliability whatsoever to compensate Santarus or make any other payment toSantarus for any decision to recall, initiate a market withdrawal or take anyother corrective action with respect to the Products, unless such actionsresults from a breach of the provisions of this Agreement or a violation ofLegal Requirements by Depomed.

 

Section 5.8             **Assistance**

## ** **

Each party agrees to provideto the other all reasonable assistance and take all actions reasonablyrequested by the other party that are necessary to enable the other party tocomply with any Legal Requirement applicable to the Products in the Territory.

 

**ARTICLE VIMANUFACTURING AND SUPPLY; SALES; PRICING**

# ** **

Section 6.1**             Obligations ofDepomed**

## ** **

In accordance with theprovisions of this Agreement and all applicable Legal Requirements, Depomedshall, at its cost and expense, use reasonable best efforts to perform or causeto be performed all Product manufacture, labeling, packaging, warehousing,distribution and return, order entry, customer services and all otheractivities to supply and distribute the Products in the Territory in order tofill orders for (a) Product conforming to the then current Volume Forecastand (b) Santarus’ Sample requirements pursuant to Section 6.5 in atimely and efficient manner.  Depomed shall use commercially reasonableefforts to maintain at least three (3) month’s safety stock of Product (“SafetyStock”) to address unanticipated changes in demand or other manufacturingneed for the Products (calculated on the basis of the then current VolumeForecast).  Depomed shall also requestthat BLS continue any ongoing stability programs to support extending theexpiry dating for the 1000mg Product.

 

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** **

Section 6.2             **ManufacturingActivities**

## ** **

The Products, including allSamples, to be manufactured by or for Depomed for sale in the Territory shallbe manufactured to meet applicable specifications for the Products in accordancewith the NDA, cGMP and in compliance with all other applicable LegalRequirements.

 

Section 6.3             **VolumeForecasts; Wholesaler Activities**

## ** **

(a)           At leastthirty (30) days prior to the beginning of each Agreement Quarter ending afterthe Promotion Commencement Date, Santarus shall submit to the JCC a writtenforecast by month of the number of units of Product expected to be prescribedin the Territory during the twelve (12) month period beginning with suchAgreement Quarter, which forecast shall be prepared by Santarus in goodfaith.  Depomed shall provide to Santarus trade wholesaler stocking levelsinformation within ten (10) days following the beginning of each AgreementQuarter ending after the Promotion Commencement Date (or, if later, within two (2) businessdays after such information becomes available to Depomed).

 

(b)           The JCCshall review and discuss such forecast and shall make such modificationsthereto as may be necessary for such forecast, to be unanimously approved bythe JCC and to be consistent with the anticipated trade demand for the Productsand with the forecasting and purchasing provisions of any applicable ThirdParty Product supply agreement, including the Patheon Agreement or the BLSSupply Agreement (as so modified and approved by the JCC for the applicabletwelve (12) month period, the “Volume Forecast”).

 

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

 

Section 6.4             **Sales;Pricing**

## ** **

(a)           Depomedor its Affiliates shall book all sales of the Products in the Territory andshall be responsible for entering into any contracts and other arrangementswith any Person regarding the sale of the Products, and for establishing andapproving the form, content and terms and conditions thereof, including anydiscount, allowance, rebate, chargeback or other term granted therein; provided,however, that (i) the pricing of the Productsshall 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 consistentwith the contracting guidelines established by the JCC in accordance with Section 3.3(j) andreflected in the Annual Plan, with Santarus to negotiate the rebate andchargeback amounts, the formulary position and other conditions for Product toqualify for such rebate and chargeback amounts in compliance with thecontracting guidelines previously approved, and (iii) any deductions fromgross amounts invoiced pursuant to any such contract or arrangement shallcorrespond to one or more of the categories of deductions set forth in thedefinition of “Net Sales” in Article I.  The parties agree to discussat the JCC and finalize the initial pricing and contracting guidelines on orbefore November 1, 2008.

 

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(b)           Santaruswill work on behalf of Depomed to provide reasonably necessary support formanaged markets with respect to the Products to enable Depomed to enter intosuch contracts and other arrangements described above.  For purposes ofclarity, all such contracts and arrangements supported by Santarus must beexecuted and administered by Depomed.

 

Section 6.5             **Samples**

## ** **

(a)           Depomedshall provide or cause to be provided to Santarus, as ordered by Santarushereunder, samples of the Products that are not for sale and with no feeassociated (“Samples”) to be distributed bySantarus solely in connection with the performance of Details or as otherwiserequired by the rules, guidelines and policies applicable to any Professional.

 

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

 

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

 

(d)           Samplessupplied by Depomed to Santarus shall be used by Santarus solely in performingDetails to Professionals in accordance with this Agreement.  Upon itsreceipt of Samples, Santarus shall be solely responsible for accountability andcompliance with the PDMA for the Santarus Sales Force, and other applicableLegal Requirements relating to such Samples or the distribution of same by theSantarus Sales Force, and shall be responsible for adherence by its SalesRepresentatives to such Legal Requirements.

 

(e)           NotwithstandingSections 6.5(a) and 6.5(b) hereof, Depomed agrees to supply Samplesto Santarus during the Launch Period as mutually agreed upon based uponSantarus’ desired requirements and Depomed’s available inventory and scheduledreceipts from the Sample manufacturers.

 

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

 

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

 

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

 

Section 6.6             **ManufacturingMatters; Inability to Supply.**

## ** **

(a)           Depomed shall promptly inform Santarus in the event thatDepomed becomes aware of any matters which might reasonably be expectedto:  (i) result in a breach of Section 6.2hereof; or (ii) have an adverse impact on the ability to supply tradeProducts or Samples in a timely manner. In each such event, Depomed shall provide Santarus with a reasonableopportunity to participate directly in discussions with Depomed’s Third Partymanufacturers of Products concerning the investigation and resolution of suchmatters.  Notwithstanding the generalityof the foregoing, Depomed agrees to notify Santarus within twenty-four (24)hours after Depomed has become aware of any event or circumstance related tothe manufacture of the Product that might reasonably be expected to impact thesafety or efficacy of Product that has been released by Depomed or that mightreasonably be expected to cause such released Product to be adulterated ormisbranded 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 diligentlyexercising its back-up manufacturing rights, upon written notice to Depomed (a “SantarusManufacturing Notice”), Santarus shall have, and Depomed hereby grantsSantarus, exercisable only in accordance with the provisions hereof, the right,but not the obligation, to manufacture, or have manufactured, the Product onbehalf of Depomed, at Depomed’s expense, including expenses related to thetechnical transfer of the Product, and Depomed will provide reasonableassistance to Santarus in connection therewith, including by transferring orlicensing to Santarus all Technology necessary or useful to give Santarus thecapability of manufacturing the Product so that Santarus can undertakemanufacture of the Product.  Any such Productmanufactured by Santarus will be sold by Depomed in accordance with thisAgreement.  [***].

 

Section 6.7             **ThirdParty Agreements**

## ** **

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

 

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***Confidential Information, indicated by [***] has been omitted from thisfiling 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 andforecasting requirements.  In the eventof any failure by BLS to timely deliver and supply the 1000mg Product under theBLS Supply Agreement in accordance with the terms thereof, Depomed shallpromptly pursue any recourse it may have under such BLS Agreement to remedysuch failure.  In such event, Depomed’sliability to Santarus for such failure shall be limited to the recourse thatDepomed receives, if any, from BLS, and any such failure on the part of BLSshall not be a breach or default of this Agreement by Depomed (except to theextent that any such failure by BLS arises directly from Depomed’s failure tocomply with its obligations, including paying amounts due, under the BLS SupplyAgreement).  If requested by Santarus andafter consultation with Santarus, Depomed will request that BLS agree to modifycertain provisions of the BLS Supply Agreement relating to ordering andforecasting matters.

 

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

 

**ARTICLE VIICOMPENSATION**

# ** **

Section 7.1             **SantarusPayments**

## ** **

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 7.2             **PromotionFees**

## ** **

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

###  

(i)            Beginningon the Promotion Commencement Date and continuing for [***] Agreement Quartersthereafter, Depomed shall pay to Santarus [***] percent ([***]%) of the GrossMargin;

 

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

####  

#### (iii)          Beginningon the Promotion Commencement Date and continuing for [***] Agreement Quartersthereafter, Depomed shall pay to Santarus [***] percent ([***]%)of the Depomed Gross Margin; and

####  

#### (iv)          Thereafterduring 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, Depomedshall provide Santarus with a statement in a mutually agreeable format settingforth:

 

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

 

(ii)           Net Salesduring such Agreement Month;

 

#### (iii)          DepomedNet Sales during such Agreement Month, if any;

####  

#### (iv)          BLS Feesduring such Agreement Month;

####  

(v)           COGSduring such Agreement Month;

 

(vi)          MedicalAffairs Expenses during such Agreement Month; and

 

(vii)         GrossMargin for such Agreement Month.

 

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

 

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

 

(e)           In theevent that Promotion Fees payable to Santarus under this Agreement for aparticular period is a negative number, Santarus will not be required to make apayment to Depomed equal to the negative Promotion Fees, and Depomed shallcredit an amount equal to any negative Promotion Fees against any futurepayments due to Santarus under this Agreement.

 

Section 7.3             **Maintenanceof Records**

## ** **

(a)           Eachparty agrees to keep, for a period of at least three years after the date ofentry (or such longer period as may be required by Legal Requirements) full andaccurate records maintained in accordance with such party’s accountingpractices in sufficient detail to enable a Third Party to accurately calculate (i) inthe case of Depomed, COGS, BLS Fees, Medical Affairs Expenses, Net Sales andDepomed Net Sales reported, payments to be made under this Agreement andDetails completed by the Depomed Sales Force, if any, and (ii) in the caseof Santarus, Advertising/Marketing/Educational Expenses, Sales ForceExpenditures (i.e., Details completed by the Santarus Sales Force, including asto each Detail whether it was a P1 Detail or P2 Detail) and, with respect tothe 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 priorwritten notice, such records shall be made available by the audited party foraudit by an independent certified public accounting firm designated by theother party and reasonably acceptable to the party whose records are to beexamined.  The auditor will only examine such books and records during businesshours but not more than once each fiscal year while this Agreement remains ineffect and for three years thereafter in order to verify expenses, COGS, BLSFees, Medical Affairs Expenses, Gross Margin, Net Sales, Depomed Net Sales orsuch Details completed, or payments due under this Agreement.  The feesand expenses of the auditor performing such verification examination shall beborne by the party conducting the verification; provided,however, that if any verification reveals that theaudited party has reported incorrectly, and the amount of such discrepancy isat least five percent (5%) of the aggregate amount that should have beenreported for the period examined, then the audited party shall pay the entireamount of the fees and expenses for such verification.

 

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

 

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

 

(c)           Wheneverin this Agreement a party is required to report its costs, or is entitled toreceive or obligated to make a payment based on its costs, such costs(including COGS, Medical Affairs Expenses and Advertising/Marketing/EducationalExpenses) shall be determined in accordance with generally accepted accountingprinciples as applied in the United States (“GAAP”), consistent with theterms of this Agreement.  The term “out-of-pocket” costs or expenses meanscost or expenses paid to Third Parties and shall not include any fixed costs orexpenses, personnel costs or expenses, overhead costs or expenses, or othercosts or expenses of a similar nature.

 

Section 7.4**             Payments**

## ** **

Any payments required to bemade by either party under this Agreement shall be made in United Statesdollars via wire transfer of immediately available funds to such bank accountas the other party shall designate in writing prior to the date of suchpayment.  All payments shall bearinterest from the date due until paid at a rate equal to the prime rateeffective for the date that payment was due plus eight percent (8%), as quotedby the *Wall Street Journal*, New York Edition,on the date such payment was due, or, if less, the maximum rate permitted byapplicable law.

 

Section 7.5             **TailPromotion Fees**

## ** **

Following the termination ofthis Agreement at the conclusion of the initial three (3) years of theTerm or thereafter, for each of the [***] fullcalendar quarters following such termination, Depomed shall pay to Santarus anamount equal to [***] percent ([***]%) of aggregate Net Sales for each such quarter (excluding any DepomedNet Sales as of the effective termination date).

 

Section 7.6             **DepomedPercentage**

## ** **

If, prior to or following the commencement ofProduct Promotion by the Depomed Sales Force, either party reasonablydetermines that the Prescriber Data fails to, or is likely to fail to,reasonably accurately reflect the portion of Net Sales attributable toprescriptions written by Professionals on the Depomed Physician List (whetheras a result of Professionals opting out of the American Medical Association’sPhysician Masterfile database or otherwise), the parties shall negotiate ingood faith with respect to implementing a revised manner of measuring theportion of Net Sales attributable to prescriptions written by Professionals onthe Depomed Physician List, and reflect any such modification in the definitionof “Depomed Percentage” and the “Baseline Percentage.”  The parties shall consider in theirdiscussions any other customary manner of determining similar information asmay arise in light of Professionals opting out of the American MedicalAssociation’s Physician Masterfile database or otherwise.

 

**ARTICLE VIIITERM AND TERMINATION**

# ** **

Section 8.1**             Term**

 

The term of this Agreementshall commence on the Effective Date and shall continue, unless terminatedsooner in accordance with this Article VIII, until the expiration of thelast-to-expire patent or patent application with a Valid Claim in the Territorycovering a Product or its uses (the “Term”).

 

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Section 8.2             **EarlyTermination**

## ** **

### (a)                           Depomed may terminatethis Agreement, at any time after providing sixty (60) days’ prior writtennotice, in the event that Santarus fails to meet its obligations under Section 4.1(b), (c) or (d) with respect to minimumPromotion obligations.  Notwithstandingthe foregoing, Santarus shall have an opportunity to cure any such breachwithin ninety (90) days following written notice from Depomed provided that:  (i) Santarus has complied with at leastninety percent (90%) of the aggregate obligations in effect under such Sectionsduring the relevant time period; and (ii) no other breach of theobligations set forth in Sections 4.1(b), (c) or (d) has occurredwithin the prior twelve (12) month period.

###  

### (b)                           Santarus mayterminate this Agreement for any reason upon ninety (90) days’ prior writtennotice; provided, however, that the effective date for such termination may notoccur prior to eighteen (18) months following the Effective Date.

###  

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

###  

### (d)                           Either party shallhave the right to terminate this Agreement immediately in the event of a largescale recall or withdrawal of the Product from the Territory resulting from asignificant safety risk inherent in the Product and not due to tampering, aremediable manufacturing problem, or other defect that can be cured withrespect to Products manufactured after such risk is discovered.

###  

### (e)                           Depomed shall havethe right to terminate this Agreement upon one hundred eighty (180) days’ priorwritten notice if Santarus fails to timely deliver the written confirmationrelated to Sales Force Expenditures required by Section 4.5(e) (providedthat if such failure is cured within thirty (30) days following receipt ofDepomed’s notice, such notice with respect to such termination shall be nulland void).

###  

Section 8.3             **Terminationfor Cause**

## ** **

Either party may terminatethis Agreement, effective at any time after providing sixty (60) days writtennotice 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 eventof a material failure of the other party to comply with its materialobligations contained in this Agreement.  If such cure is effected, suchnotice with respect to such termination shall be null and void.

 

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Section 8.4                                      **Termination for Bankruptcy orForce Majeure**

 

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

 

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

 

(b)                                 Any Force Majeure Event affecting the other party beyond theother party’s control which lasts for a period of at least six (6) monthsand which is of sufficient intensity to interrupt or prevent the carrying outof such other party’s material obligations under this Agreement during suchperiod.

 

Notwithstandingthe 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) ofthe United States Bankruptcy Code applies to this Agreement, the non-insolventparty may elect to retain and exercise the rights granted to it hereunder withrespect to the intellectual property owned or controlled by the insolventparty.

 

Section 8.5                                      **Force Majeure**

## ** **

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

 

Section 8.6                                      **Effect of Termination**

## ** **

(a)                                  No additional payment obligations arising under Article VIIhereof shall accrue after the date of expiration or termination of thisAgreement except as set forth in Section 7.5; provided, however,that expiration or termination of this Agreement shall not relieve either partyof any obligations accruing prior to such expiration or termination. Certain provisions of this Agreement by their terms continue after theexpiration 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 XIIand solely with respect to the reports required for the Final AgreementQuarter, 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 theextent required for the full observation and performance of this Agreement.

 

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

 

(c)                                  Upon the expiration or termination of this Agreement pursuantto this Article VIII, each party shall promptly transfer and return to theother party all Proprietary Information of the other party (provided that eachparty may keep one copy of such Proprietary Information for archival purposesonly).  Upon the expiration or termination of this Agreement, Santarusshall, if requested by Depomed, provide to Depomed all Promotional Materials inSantarus’ 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 SantarusTrademarks and may remove the Santarus Trademarks from electronic files ofPromotional Materials.

 

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

 

# **ARTICLE IXREPRESENTATIONS AND WARRANTIES**

# ** **

Section 9.1                                      **Representations and Warranties ofDepomed**

## ** **

Depomed hereby represents and warrants toSantarus 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 ofCalifornia, and (ii) has all necessary corporate power and corporateauthority to own its properties and to conduct its business, as currentlyconducted.

###  

### (b)                                                                                 Authorization.  The execution and delivery of this Agreement and theconsummation of the transactions contemplated hereby are within the corporatepower of Depomed, have been duly authorized by all necessary corporateproceedings of Depomed, and this Agreement has been duly executed and deliveredby Depomed.

###  

### (c)                                                                                  No Conflict.  The execution and delivery of this Agreement and theconsummation of the transactions contemplated hereby do not:  (i) conflictwith or result in a breach of any provision of Depomed’s organizationaldocuments; (ii) result in a material breach of any material agreement towhich Depomed is party; (iii) result in a violation of any Order to whichDepomed is subject; (iv) require Depomed to obtain any material approvalor consent from any Governmental Authority or Third Party other than thoseconsents and approvals which have been obtained prior to the date hereof; or (v) violateany Legal Requirement applicable to Depomed in any material respect.

 

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

 

### (d)                                                                                 Enforceability.  This Agreement constitutes the valid and bindingobligation of Depomed, enforceable against Depomed in accordance with itsterms, subject to bankruptcy, reorganization, insolvency and other similar lawsaffecting the enforcement of creditors’ rights in general and to generalprinciples of equity (regardless of whether considered in a proceeding inequity or an action at law).

###  

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

###  

### (f)                                                                                    Depomed Intellectual Property.  To the knowledge of Depomed, the Promotion and saleof Product in the Territory in accordance with this Agreement will not infringeany patents, trademarks or other intellectual property rights of any ThirdParty; provided, that Depomed makes no representation as to the SantarusTrademarks.  Depomed has the right, power and authority to grant thelicenses granted by it hereunder, including the right, power and authority tolicense to Santarus, pursuant to Section 6.6, all Technology necessary forthe manufacture of the Products.  Otherthan [***]:  (i) Depomed has not received any writtenclaim or demand from any Third Party alleging that any infringement, violationor misappropriation of such Third Party’s intellectual property rights hasoccurred as a result of the manufacture, use, offer for sale, sale orimportation of any Product in the Territory; (ii) Depomed is not aware ofany actual, alleged or threatened infringement, violation or misappropriationby a Third Party of any Depomed intellectual property rights covering a Productor its uses; and (iii) Depomed has not received any written claim ordemand from any Third Party alleging invalidity or unenforceability of anypatents or patent applications owned or licensed by Depomed covering a Productor its uses.

###  

### (g)                                                                                 Litigation.  There is no litigation, arbitration proceeding,governmental investigation, action or claims of any kind, pending or, to theknowledge of Depomed, threatened, by or against Depomed, BLS, Patheon or any oftheir respective Affiliates relating to the Products or which would reasonablybe expected to materially affect Depomed’s ability to perform its obligationshereunder.

###  

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

###  

### (i)                                                                                     Supply.  Depomed currently has access to sufficient suppliesof Products to satisfy the manufacturing obligations required by it under thisAgreement.  All Products will be manufactured with reasonable due care andin conformity with the NDAs, current generally accepted standards andprocedures for manufacturing the Products, cGMP and all other applicable LegalRequirements.

 

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### (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 itsdirection or control is currently debarred by the FDA under the Generic DrugAct;

 

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

 

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

 

### (k)                                  Legal Requirements.  None of Depomed, its Affiliates, or any Person underits direction or control is currently excluded from a federal or state healthcare 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 currentlyexcluded from contracting with the federal government.  None of Depomed,its Affiliates, or Person under its direction or control is otherwise currentlyexcluded, 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 isconvicted 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 beenin material compliance with all Legal Requirements.

###  

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

###  

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

 

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###  

### (n)                                 Patheon Agreement.  Depomed is not in material breach of the PatheonAgreement and has not submitted to Patheon any notice (written or oral) to theeffect that Patheon is in breach of the Patheon Agreement.  Depomed hasnot received from Patheon any notice (written or oral) to the effect thatDepomed is in breach of the Patheon Agreement.  The Patheon Agreement islegal, valid, binding, enforceable and in full force and effect in all materialrespects.

###  

### (o)                                 Inventory Levels.  Since January 1, 2008, Depomed has not (i) materiallyaltered its distribution practices or terms with respect to the Products (otherthan pricing increases in the ordinary course of business), (ii) alteredits activities and practices with respect to inventory levels of the Productsmaintained at the wholesale, chain, institutional or retail levels in anymaterial respect, or (iii) experienced abnormally high levels of returnsof the Products when compared to historical norms.

###  

Section 9.2                                      **Representations and Warranties ofSantarus**

## ** **

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

 

### (a)                                  Organization.  Santarus (i) is a corporation dulyorganized, validly existing and in good standing under the laws of the state ofDelaware, and (ii) has all necessary corporate power and corporateauthority to own its properties and to conduct its business, as currentlyconducted.

###  

### (b)                                 Authorization.  The execution and delivery of this Agreement and theconsummation of the transactions contemplated hereby are within the corporatepower of Santarus, have been duly authorized by all necessary corporateproceedings of Santarus, and this Agreement has been duly executed anddelivered by Santarus.

###  

### (c)                                  No Conflict.  The execution and delivery of this Agreement and theconsummation of the transactions contemplated hereby do not:  (i) conflictwith or result in a breach of any provision of Santarus’ organizationaldocuments; (ii) result in a material breach of any material agreement towhich Santarus is party; (iii) result in a violation of any Order to whichSantarus is subject; (iv) require Santarus to obtain any material approvalor consent from any Governmental Authority or Third Party other than thoseconsents and approvals which have been obtained prior to the date hereof; or (v) violateany Legal Requirement applicable to Santarus in any material respect.

###  

### (d)                                 Enforceability.  This Agreement constitutes the valid and bindingobligation of Santarus, enforceable against Santarus in accordance with itsterms, subject to bankruptcy reorganization, insolvency and other similar lawsaffecting the enforcement of creditors’ rights in general and to generalprinciples of equity (regardless of whether considered in a proceeding inequity or an action at law).

###  

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

###  

### (f)                                    Santarus Trademarks.  To the knowledge of Santarus, the use of the SantarusTrademarks to Promote and sell Products in the Territory in accordance withthis Agreement will not infringe any trademarks or other intellectual propertyrights of any Third Party.

 

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### (g)                                 Litigation.  There is no litigation, arbitration proceeding,governmental investigation, action or claims of any kind, pending or, to theknowledge of Santarus, threatened, by or against Santarus or any of itsAffiliates relating to the Products or which would reasonably be expected tomaterially 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 itsdirection or control is currently debarred by the FDA under the Generic DrugAct;

 

(ii)                                  none of Santarus, its Affiliates, or any Person under itsdirection or control is currently using or will use in any capacity inconnection with the Products any Person that is debarred by FDA under theGeneric 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 setforth in the Generic Drug Act within the five years prior to the EffectiveDate.

 

### (i)                                     Legal Requirements.  None of Santarus, its Affiliates, or any Person underits direction or control is currently excluded from a federal or state healthcare 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 otherwisecurrently excluded from contracting with the federal government.  None ofSantarus, its Affiliates, or Person under its direction or control is otherwisecurrently excluded, suspended, or debarred from any federal or stateprogram.  Santarus shall immediately notify Depomed if, at any time duringthe Term, Santarus, its Affiliates, or any Person under its direction orcontrol is convicted of an offense that would subject it or Depomed toexclusion, suspension, or debarment from any federal or state program.

###  

Section 9.3                                      **Depomed Disclaimer**

## ** **

EXCEPT AS EXPRESSLY PROVIDED HEREIN, DEPOMEDDISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO THEPRODUCTS, INCLUDING THE WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FORA PARTICULAR PURPOSE.

 

Section 9.4                                      **Santarus Disclaimer**

## ** **

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

 

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

# ** **

# **ARTICLE XINTELLECTUAL PROPERTY MATTERS**

# ** **

Section 10.1                                **Intellectual Property Prosecutionand Maintenance**

## ** **

Depomed shall use commercially reasonable efforts to prosecute andmaintain the Depomed intellectual property in the Territory related to anyProduct Promoted pursuant to this Agreement (a “Promoted Product”) orits use, including patents, the Depomed Trademarks and any copyrightsassociated with the Promotional Materials (subject, in the case of the 1000mgProduct, to Depomed’s rights in respect of intellectual property under the BLSAgreements).  Depomed shall makeavailable to Santarus (or its designated counsel) copies of such patentapplication files and shall make available to Santarus (or its designatedcounsel) all office actions relating to any Promoted Product wherein at leastone (1) claim is directed to the Promoted Product in those patentapplications, and copies of material correspondence with the U.S. Patent andTrademark Office relating to such patent applications to the extent they relateto the Promoted Product or its use. Santarus shall have the right to comment upon the prosecution of suchpatent applications (subject, in the case of the 1000mg Product, to Depomed’srights in respect of intellectual property under the BLS Agreements).  Depomed shall, in good faith, consider suchcomments of Santarus.  In addition,Depomed shall keep Santarus reasonably informed regarding material developmentsrelating to the prosecution, maintenance or enforcement of Depomed’sintellectual property rights related to any Promoted Product outside theTerritory that could reasonably be expected to have a material impact onDepomed’s intellectual property rights related to the Promoted Product in theTerritory.

 

Section 10.2                                **Third Party Competition**

## ** **

Nothing in this Agreement shall limit or restrictDepomed’s ability to grant non-exclusive patent licenses to patents and patentapplications included within the Technology or otherwise covering a Product inconnection with the settlement of any pending, threatened or contemplatedpatent 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 andconditions of this Agreement, Depomed agrees that if Depomed or any Affiliatethereof grants to any Affiliate or Third Party a license, covenant not to sue,right of reference, right of supply, other intellectual property right or othersettlement (in any case, other than Patent Licenses and covenants not to sueand other rights in connection with the grant of Patent Licenses for [***]commercialized in the Territory prior to the Effective Date) related to themanufacture, use, offer for sale, sale, importation, marketing or promotion ofany Product, including any authorized generic version of any Product covered byany NDA, then Depomed shall obtain Santarus’ consent (not to be unreasonablywithheld) in advance of the grant of any such license, covenant not to sue,right of reference, right of supply, other intellectual property right or othersettlement, and as part of such consent the parties shall negotiate in goodfaith financial adjustments to this Agreement adequate to compensate Santarusfor any payments made by Santarus prior to such grant or other settlement(including signing and any milestone payments) and any lost market shareattributable to sales of the product by or on behalf of such Third Party orAffiliate, taking into account the consideration received by Depomed or itsAffiliates for the grant of such rights or other settlement.

 

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

 

Section 10.3                                **Infringement**

 

(a)                                  If either party shall learn of a claim or assertion that themanufacture, use or sale of a Promoted Product in the Territory infringes orotherwise violates the intellectual property rights of any Third Party or thatany Third Party violates the intellectual property rights owned or Controlledby (i) Depomed in a Promoted Product and the Depomed Trademarks in theTerritory or (ii) Santarus in the Santarus Trademarks, then the partybecoming so informed shall promptly, but in all events within fifteen (15) daysthereof, notify the other party to this Agreement of the claim orassertion.  In the event Depomed receives a notice under Paragraph IV ofthe U.S. Federal Drug Price Competition and Patent Term Restoration Act of1984, as amended, also known as the Hatch-Waxman Act, with respect to anyPromoted Product, Depomed shall provide Santarus with written notice of suchParagraph IV notice within two (2) business days (each, a “Paragraph IVNotice”).

 

(b)                                 If warranted in the opinion of Depomed, after consultationwith the JCC, Depomed shall take such legal action (“Enforcement Action”)as is advisable in Depomed’s opinion to restrain infringement of such Depomedpatent rights related to any Product or the Depomed Trademarks in theTerritory.  Santarus shall cooperate fully with, and as reasonablyrequested by, Depomed in any Enforcement Action, and Depomed shall reimburseSantarus for its out-of-pocket expenses incurred in providing suchcooperation.  Santarus may be represented by counsel of its own selectionat its own expense in any Enforcement Action. If (i) Depomed elects in writing not to bring or defend anEnforcement Action with respect to any Product in the Territory, (ii) withinninety (90) days following a written request by Santarus to do so (providedthat in the case of a Paragraph IV Notice, Depomed shall confirm in writing itselection to bring such Enforcement Action no later than twenty (20) daysfollowing receipt of the Paragraph IV Notice), or (iii) Depomed fails tobring or defend an Enforcement Action or take other reasonable action toprotect the Depomed patent rights related to any Product or the DepomedTrademarks in the Territory from such infringement, or to abate suchinfringement, then, in compliance with the BLS Manufacturing Transfer Agreementor other in-license agreement with respect to applicable Product patent rightslicensed from a Third Party, if any, Santarus shall have the right, at its solediscretion, to institute an Enforcement Action in its own name using counsel ofits choice, at its own expense, and with the right to control the course ofsuch 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 theEnforcement Action, and Depomed shall have the right to join and participate inthe Enforcement Action whether or not such joinder is requested bySantarus)  (the “Santarus Step-InRights”); provided, however, that (i) the Santarus Step-In Rightsshall not apply to the extent the Enforcement Action relates to [***]; and (ii) Santarusshall obtain Depomed’s consent (not to beunreasonably withheld) in advance of the grant of any license, covenant not tosue, right of reference, right of supply, other intellectual property right orother settlement in any Enforcement Action.  Any recovery received as a result of anyEnforcement Action shall be used first to reimburse the parties for their costsand expenses (including attorneys’ and professional fees) incurred inconnection 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 anyother licensors of the applicable patent rights or Depomed Trademarks under theterms of the respective in-license agreement, if any, shall then be paid to BLSor such other licensor, if any, and any amounts remaining thereafter shall beshared seventy-five percent (75%) to Santarus and twenty-five percent (25%) toDepomed.

 

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(c)                                  If warranted in the opinion of Santarus, Santarus shall takesuch legal action as is advisable in Santarus’ opinion to restrain suchinfringement of the Santarus Trademarks.  Depomed shall cooperate fullywith, and as requested by, Santarus in Santarus’ attempt to restrain suchinfringement, and Santarus shall reimburse Depomed for its out-of-pocketexpenses incurred in providing such cooperation.  Depomed may berepresented by counsel of its own selection at its own expense in any suit orproceeding brought to restrain such infringement, but Santarus shall have theright to control the suit or proceeding.

 

# **ARTICLE XIINDEMNIFICATION; 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 theirrespective directors, officers, employees, agents, Sales Representatives andother representatives, from and against any and all damages, liabilities,losses, costs, and expenses, including reasonable attorneys’ fees, arising outof any Third Party claim, suit or proceeding brought against the other party orits 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) anybreach or violation of, or failure to perform, any covenant or agreement madeby such indemnifying party in this Agreement, unless waived in writing by theindemnified party; (ii) any breach of the representations or warrantiesmade by such indemnifying party in this Agreement; or (iii) the negligenceor willful misconduct of the indemnifying party, except (under any of (i) or(ii)) to the extent arising out of the breach, violation, failure, negligenceor willful misconduct of the indemnified party.  In addition, Depomed willdefend, at its own expense, indemnify and hold harmless Santarus and itsAffiliates, and their respective directors, officers, employees, agents, SalesRepresentatives and other representatives, from and against any and alldamages, liabilities, losses, costs, and expenses, including reasonableattorneys’ fees, arising out of any Third Party claim, suit or proceedingbrought 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 outof or relating to (v) any sale, use, Promotion or other commercializationof a Product by Depomed or any Third Party, including King Pharmaceuticals, Inc.,prior to the Promotion Commencement Date; (w) any actions of the DepomedSales Force, including any false or misleading representations toProfessionals, customers or others regarding Santarus or the Products; (x) anyagreement between Depomed and BLS; (y) any agreement between Depomed andPatheon; or (z) any claim made by any Person that the manufacture, use orsale of the Products infringes or misappropriates the patent, trademark, orother intellectual property rights of such Person, except with respect to anyclaim relating to the Santarus Trademarks; or (z) any Product liabilityclaim made by any person with respect to the Product, except to the extentliability is based on a breach by Santarus of Section 4.2.  Eachparty agrees that it shall promptly notify the other in writing of any suchclaim or action and give the indemnifying party full information and assistancein connection therewith.  The indemnifying party shall have the sole rightto control the defense and the sole right to settle or compromise any 

 

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such claim or action, exceptthat the prior written consent of the other party shall be required inconnection with any settlement or compromise which could (i) place anyobligation on or require any action of such other party; (ii) admit orimply any liability or wrongdoing of such other party; or (iii) adverselyaffect the goodwill or public image of such other party.  Notwithstandingthe foregoing, the indemnified party may participate therein through counsel ofits choice, but the cost of such counsel shall be borne solely by theindemnified party.  The provisions of this Section 11.1 shall survivetermination of this Agreement for the applicable statute of limitations (exceptas to claims as to which a party has notified the other in writing prior to theexpiration of the applicable statute of limitations, in which event, theindemnifying party’s obligations under this Section 11.1 shall survivewith respect to any such claim until its resolution pursuant to the terms ofthis Article XI).

 

Section 11.2                                **Consequential Damages**

 

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

 

# **ARTICLE XIICONFIDENTIALITY AND PUBLICITY**

 

Section 12.1                                **Proprietary Information**

 

Pursuant to this Agreement, a party receivingProprietary Information from the other, directly or indirectly, will treat suchProprietary Information as confidential, will use such Proprietary Informationonly for the purposes of this Agreement and will not disclose, and will takeall reasonable precautions to prevent the disclosure of, such ProprietaryInformation to (a) any of its officers, directors, managers, equityholders, employees, agents, representatives, Affiliates or consultants, exceptthose who need to know such Proprietary Information and who are bound by a likeobligation of confidentiality or (b) to Third Parties.

 

Section 12.2                                **Disclosures Required by Law**

 

In the event the recipient party is requiredunder applicable Legal Requirements to disclose Proprietary Information of thedisclosing party to any Governmental Authority to obtain any RegulatoryApproval for the Products, is required to disclose Proprietary Information inconnection with bona fide legal process (including in connection with any bonafide dispute hereunder) or is required to disclose Proprietary Informationunder the rules of the securities exchange upon which its securities aretraded, the recipient party may do so only if it limits disclosure to thatpurpose after giving the disclosing party prompt written notice of any instanceof such a requirement in reasonable time for the disclosing party to attempt toobject to or to limit such disclosure.  In the event of disclosuresrequired under applicable Legal Requirements, the recipient party shallcooperate with the disclosing party as reasonably requested thereby.

 

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

 

Section 12.3                                **Publicity**

 

The parties have agreed upon the form and contentof a joint press release to be issued by the parties promptly following theexecution of this Agreement.  Once such press release or any other writtenstatement is approved for disclosure by both parties, either party may makesubsequent public disclosure of the contents of such statement without thefurther approval of the other party.  Any other publicity, news release, public comment or other publicannouncement, whether to the press, to stockholders, or otherwise, relating tothis Agreement, shall first be reviewed and approved by both parties, except nosuch approval shall be required for such publicity, news release, publiccomment or other public announcement which, in accordance with the advice oflegal counsel to the party making such disclosure, is required by law or forappropriate market disclosure; provided, however, that each partyshall be entitled to refer publicly to the relationship of the partiesreflected in this Agreement (i.e., Depomed as the developer of the Products andSantarus as the promoter of the Products in the Territory) in a manner that isconsistent with the joint press release issued by the parties.  For clarity, any party making anyannouncement which is required by law will, unless prohibited by law, give theother party an opportunity to review the form and content of such announcementand comment before it is made.  The parties shall work together to coordinatefilings with governmental agencies, including the United States Securities andExchange Commission, as to the contents and existence of this Agreement as theparties shall reasonably deem necessary or appropriate and each party shallprovide the other party an opportunity to comment on any proposed filings,including redactions thereto.  The provisions of this Article XIIshall survive termination of this Agreement and shall remain in effect until adate three years after the Term of this Agreement.

 

# **ARTICLE XIIIRIGHT OF FIRST NEGOTIATION FOR CERTAIN COMBINATION PRODUCTS; EXCLUSIVITY**

# ** **

Section 13.1                                **Right of First Negotiation**

 

Depomed shall notify Santarus in writing in theevent that Depomed desires to divest itself of its rightsto the Product in the Territory (e.g., by asset sale or product license to aThird Party) or to grant rights to a ThirdParty to develop or commercialize a pharmaceutical product containing metforminand another generic active pharmaceutical ingredient (i.e., an active pharmaceuticalingredient that is produced and distributed within the Territory withoutcomposition of matter patent protection for the compound) in combination withDepomed’s proprietary AcuForm drug delivery technology incorporated withinthe Products (a “Combination Product”).  If Santarus notifiesDepomed in writing within [***] daysafter receipt of such notice (the “Evaluation Period”) that Santarus isnot interested in obtaining all of Depomed’s rights in and to the Products orthe applicable Combination Product (such rights, “Metformin Product Rights”),or if Santarus fails to notify Depomed of Santarus’ interest in obtaining theMetformin Product Rights, in either case prior to the expiration of theEvaluation Period, then Depomed shall have no further obligation to Santarusunder this Agreement with respect to the applicable Metformin ProductRights.  If Santarus is interested in obtaining the Metformin ProductRights, it 

 

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

 

shall so notify Depomed inwriting prior to the expiration of the Evaluation Period, and upon Depomed’sreceipt of such notice Santarus and Depomed shall promptly commence good-faithnegotiations, for a period of [***] daysand such longer period as may be mutually agreed upon by the parties in writingin the event the parties have made material progress in the negotiations (the “NegotiationPeriod”), regarding the commercially reasonable terms of an agreementpursuant to which Santarus shall obtain the Metformin Product Rights.  IfDepomed and Santarus fail to enter into an agreement for the Metformin ProductRights prior to the expiration of the Negotiation Period, then Depomed shallthereafter have the right to negotiate and enter into an agreement with a ThirdParty 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 morefavorable to the Third Party than the terms and conditions last offered bySantarus prior to the termination of discussions with Depomed.  Theprovisions of this Section 13.1 shall not apply to, and Depomed shall haveno obligation to Santarus under this Section 13.1 in respect of, anyacquisition of Depomed by a Third Party, any merger or consolidation with orinvolving Depomed, any acquisition by a Third Party of any material portion ofthe stock of Depomed, or any acquisition by a Third Party of a material portionof 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 orindirectly, develop, promote, market, distribute, sell or offer for sale in theTerritory any single agent metformin products for human use, other than theProducts in accordance with the terms of this Agreement.  Depomed shall not use, and shall not permitany Third Party to use, the Glumetza® trademark in the Territory with respectto any product other than the Products.

 

# **ARTICLE XIVNOTICES**

# ** **

Section 14.1                                **Notices**

 

All notices required or permitted hereunder shallbe given in writing and sent by facsimile transmission (with a copy sent by first-classmail), or mailed postage prepaid by certified or registered mail (returnreceipt 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 thisfiling 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 bythe addressee as evidenced by the applicable written receipt.

 

# **ARTICLE XVINSURANCE**

# ** **

Section 15.1                                **Insurance**

 

(a)                                  During the Term and for a period of two (2) years afterany expiration or termination of this Agreement, each party shall maintain (i) acommercial general liability insurance policy or policies with minimum limitsof $[***] per occurrence and $[***] in the aggregate on an annual basis and (ii) aproduct 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 ofinsurance to the other evidencing the coverage specified herein.  Neitherparty’s liability to the other is in any way limited to the extent of itsinsurance coverage.

 

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# **ARTICLE XVIMISCELLANEOUS**

# ** **

## **Section 16.1**               Headings

## ** **

The titles, headings or captions and paragraphs inthis 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 termsor 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 portionof any provision of this Agreement is held to be invalid, illegal, orunenforceable by a court of competent jurisdiction or a governmental authority,such provision or portion of provision will be construed and enforced as if ithad been narrowly drawn so as not to be invalid, illegal, or unenforceable, andthe validity, legality, and enforceability of the enforceable portion of anysuch provision and the remaining provisions will not be adversely affectedthereby.

 

## **Section 16.3**               Entire Agreement

## ** **

This Agreement, together with the schedules andexhibits hereto and the Confidentiality Agreement, all of which areincorporated by reference, contains all of the terms agreed to by the partiesregarding 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 otherinstrument executed by both of the parties hereto.  No course of conductor dealing between the parties will act as a modification or waiver of anyprovisions of this Agreement.

 

## **Section 16.5**               Counterparts

## ** **

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

 

## **Section 16.6**               Waiver

## ** **

The failure of either party to enforce or toexercise, at any time or for any period of time, any term of or any rightarising pursuant to this Agreement does not constitute, and will not beconstrued as, a waiver of such term or right, and will in no way affect thatparty’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 aparty of any provision of this Agreement due to acts beyond the reasonablecontrol of such party (such as, for example, fire, explosion, strike or otherdifficulty with workmen, shortage of transportation equipment, accident, act ofGod, declared or undeclared wars, acts of terrorism, or compliance with orother 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 bereasonably necessary under the circumstances.  In the event of suchfailure or delay, the affected party will use its diligent efforts, consistentwith sound business judgment and to the extent permitted by law, to correctsuch failure or delay as expeditiously as possible.  In the event that aparty is unable to perform by a reason described in this Section 16.7, itsobligation to perform under the affected provision of this Agreement shall besuspended during such time of nonperformance.

 

(b)           Neitherparty shall be liable hereunder to the other party nor shall be in breach forfailure to perform its obligations caused by a Force Majeure Event.  Inthe case of any such event, the affected party shall promptly, but in no eventlater than ten (10) days of its occurrence, notify the other party statingthe nature of the condition, its anticipated duration and any action being takento avoid or minimize its effect.  Furthermore, the affected party shallkeep the other party informed of the efforts to resume performance.  Aftersixty (60) days of such inability to perform, the parties agree to meet and ingood faith discuss how to proceed.  In the event that the affected partyis prevented from performing its obligations pursuant to this Section 16.7for a period of six (6) months, the other party shall have the right toterminate this Agreement pursuant to the provisions of Sections 8.4(b).

 

## **Section 16.8**               Successors and Assigns

## ** **

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

 

## **Section 16.9**               Assignment

## ** **

This Agreement and the rights granted herein shallnot be assignable (or otherwise transferred) by either party hereto without theprior written consent of the other party.  Any attempted assignmentwithout consent shall be void.  Notwithstanding the foregoing, a party maytransfer, assign or delegate its rights and obligations under this Agreementwithout consent to (a) an Affiliate reasonably capable of performing suchparty’s obligations under this Agreement or (b) a successor to all orsubstantially all of its business or assets of the assigning party to whichthis Agreement relates, whether by sale, merger, consolidation, acquisition,transfer, operation of law or otherwise or (c) in the case of eitherparty, to one or more financial institutions providing financing to such partypursuant to the terms of a security agreement relating to such financing. In connection with any assignment, or Subcontracting pursuant to which a ThirdParty Sales Representative is engaged to Promote the Products, of thisAgreement or any of the rights granted herein pursuant to this Section 16.9,the assignor, or party Subcontracting to another, shall ensure that theassignee, or Subcontractor, represents and warrants the matters set forth inSections 9.1(j) and (k) (in substantially the same form as set forthin Sections 9.1(j) and (k)), where Depomed (or

 

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one of its successors or assigns) is the assignor orSubcontracting party, or Sections 9.2(h) and (i) (in substantiallythe same form as set forth in Sections 9.2(h) and (i)), where Santarus (orone of its successors or assigns) is the assignor or Subcontractingparty.  In connection with any Subcontracting pursuant to which a ThirdParty will manufacture the Products, the party Subcontracting to another shalluse its commercially reasonable efforts to cause the Subcontractor to representand warrant the matters set forth in Sections 9.1(j) and (k) (insubstantially the same form as set forth in Sections 9.1(j) and(k)).  Neither party shall knowingly engage any Third Party appearing onthe FDA’s debarment list or the list of excluded individuals/entities of theOffice of Inspector General of the Department of Health and Human Services toperform, or assist such party in the performance of, its obligations under thisAgreement, and each party shall review each such list prior to engaging anysuch Third Party.

 

## **Section 16.10**             Construction

## ** **

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

 

## **Section 16.11**             Governing Law

## ** **

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

 

## **Section 16.12**             Equitable Relief

## ** **

Each party acknowledges that a breach by it of theprovisions of this Agreement may not reasonably or adequately be compensated indamages in an action at law and that such a breach may cause the other partyirreparable injury and damage.  By reason thereof, each party agrees thatthe other party is entitled to seek, in addition to any other remedies it mayhave under this Agreement or otherwise, preliminary and permanent injunctiveand other equitable relief to prevent or curtail any breach of this Agreementby the other party; provided, however, that no specification in this Agreementof a specific legal or equitable remedy will be construed as a waiver orprohibition against the pursuing of other legal or equitable remedies in theevent 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 predicatedupon this Agreement, or otherwise, will not constitute a defense to theenforcement by the other party, or its successors or assigns, of the covenantscontained in this Agreement.

 

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## **Section 16.13**             Relationship Between Parties

## ** **

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

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have causedthis Agreement to be executed in duplicate on the day and year first abovewritten.

 

 
|   | 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

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PROMOTION AGREEMENT

 

by and between

 

DEPOMED, INC.

 

and

 

SANTARUS, INC.

 

Dated as of July 21, 2008

 

----

 

**SCHEDULES**

** **

Schedule 1.37 – DepomedTrademarks

 

Schedule 1.55 – LaunchPlan

 

Schedule 1.93 – Santarus Trademarks

 

Schedule 4.5(h) –Depomed Promotional Activities

 

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**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          |

 

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(1)           Owned byBLS, and licensed in the United States to Depomed for the purpose of promotingthe Products.

 

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

 

**Schedule 1.55**

** **

**Launch Plan**

** **

[***]

 

**S**chedule 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          |

 

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

** **

**Schedule 4.5(h)**

** **

**DepomedPromotional Activities**

*** ***

[***]

 

----