Exhibit10.1 PROMOTION AGREEMENTby and betweenDEPOMED, INC.andKING PHARMACEUTICALS, INC.Dated as of June 27, 2006 
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
 

 
**EXECUTION COPY****PROMOTION AGREEMENT**     This PROMOTION AGREEMENT (this “Agreement”) is made as of June 27, 2006 (the“Effective Date”), by and between Depomed, Inc., a California corporation(“Depomed”), and King Pharmaceuticals, Inc., a Tennessee corporation (“King”).Each of Depomed and King is referred to herein individually as a “party” and collectivelyas the “parties.”     WHEREAS, Depomed desires to engage King to promote and market the Product in the Territory(each as defined below), and King desires to promote and market the Product, all in accordance withthe terms and conditions contained herein;     NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants hereincontained, the parties hereto intending to be legally bound hereby agree as follows:**ARTICLE I****DEFINITIONS**     As used in this Agreement, the following terms shall have the following meanings:     Section 1.1 “1000mg Formulation” has the meaning set forth in Section 6.8(a).     Section 1.2 “Act” means the United States Federal Food, Drug and Cosmetic Act, 21U.S.C. 301, *et. seq.*, as it may be amended from time to time, and the regulations promulgatedthereunder, including the Generic Drug Act.     Section 1.3 “AcuForm Patent License” has the meaning set forth in Section 10.1.     Section 1.4 “Adverse Drug Experience” means any “adverse drug experience” as definedor contemplated by 21 C.F.R. 314.80 or 312.32, associated with the Product.     Section 1.5 “Adverse Drug Experience Report” means any oral, written or electronicreport of any Adverse Drug Experience transmitted to any Person.     Section 1.6 “Advertising/Marketing/Educational Expenses” means the direct,out-of-pocket expenses of directly Promoting the Product and conducting Educational Programs withrespect to the Product, each clearly identified as such, pursuant to the Launch Plan or an AnnualPlan. Advertising/Marketing/Educational Expenses will include (a) King’s out-of-pocket costs forSamples incurred as contemplated by Section 6.5, (b) all out-of-pocket costs for PromotionalMaterials and training materials, and (c) out-of-pocket costs for the purchase of the PrescriberData. Advertising/Marketing/Educational Expenses will not include (i) any expenses of the KingSales Force or Depomed Sales Force, (ii) any costs incurred by Depomed with respect to the DepomedSales Force, including as described in Section 4.9(g), or (iii) any costs for the personnel of Kingor Depomed.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
 

 
     Section 1.7 “Affiliate” means, with respect to any Person, any other Person thatdirectly or indirectly controls, is controlled by or is under common control with, such firstPerson. For the purposes of this definition, “control” (including, with correlativemeanings, the terms “controlling,” “controlled by” and “under common controlwith”), as applied to any Person, means the possession, directly or indirectly, of the power todirect or cause the direction of the management and policies of that Person, whether through theownership of voting securities, by contract or otherwise.     Section 1.8 “Agreement” has the meaning set forth in the preamble to this Agreement.     Section 1.9 “Agreement Month” means each calendar month during the Term (including anypartial calendar month in the case of the first and last calendar months of the Term).     Section 1.10 “Agreement Quarter” means the Initial Agreement Quarter, each successiveperiod of three months during the Term after the Initial Agreement Quarter and the Final AgreementQuarter.     Section 1.11 “Altace Physician List” means the list of physicians or other health carepractitioners to whom King’s sales representatives present in-person, face-to-face salespresentations of King’s Altace® product, as such list may be amended from time to time by King.     Section 1.12 “Annual Plan” has the meaning set forth in Section 4.5.     Section 1.13 “Baseline Percentage” means the percentage determined by dividing (a) thetotal amount of unit sales for Product based on prescriptions written by Professionals on theDepomed Physician List during the two complete Agreement Quarters prior to the delivery by Depomedof its intention to commence Promotion of the Product in the Territory pursuant to Section 4.9, by(b) the total amount of unit sales of Product based on all prescriptions written during such twocomplete Agreement Quarters, based on Prescriber Data for such two complete Agreement Quarters; asit may be amended pursuant to Section 4.9.     Section 1.14 “BLS” means Biovail Laboratories International SRL.     Section 1.15 “BLS Agreements” means that certain Amended and Restated LicenseAgreement, dated as of December 13, 2005, by and between Depomed and BLS, the BLS SupplyAgreements, and any other agreements between Depomed and BLS with respect to the Product, includingthe 1000mg Formulation.     Section 1.16 “BLS Supply Agreements” means that certain Manufacturing TransferAgreement, dated as of December 13, 2005, by and between Depomed and BLS and that certain SupplyAgreement, dated as of December 13, 2005, between Depomed and BLS.     Section 1.17 “BLS Fees” means, for any period, the sum of (a) [***] for such period,and (b) [***] for such period[***] but [***] such amount is payable (and is paid in or subsequentto such period) [***] In the event the amounts payable under either such agreement are reduced orterminate, the BLS Fees will correspondingly be reduced or terminate.**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**2

 
     Section 1.18 “cGMP” shall mean current “Good Manufacturing Practices” as such term isdefined from time to time by the FDA or other relevant Governmental Authority having jurisdictionover the manufacture or sale of the Product pursuant to its regulations, guidelines or otherwise.     Section 1.19 “Co-Chairs” has the meaning set forth in Section 3.2.     Section 1.20 “COGS” means, for any period, Depomed’s expenses for cost of goods sold(calculated in accordance with Section 7.2(d)) for Product in the Territory for such period,including any expenses incurred directly in connection with the distribution of the Product in theTerritory, multiplied by the Promotion Percentage for such period.     Section 1.21 “Combination Product” has the meaning set forth in Section 13.2.     Section 1.22 “Combination Product License” has the meaning set forth in Section13.1(a).     Section 1.23 “Confidentiality Agreement” means that certain Confidentiality Agreement,dated as of February 21, 2006, between Depomed and King.     Section 1.24 “Control” or “Controlled” means, with respect to patents,know-how or other intellectual property rights of any kind, the possession by a party of theability to grant a license or sublicense of such rights without the payment of additionalconsideration and without violating the terms of any agreement or arrangement between such partyand any Third Party.     Section 1.25 “DDMAC” means the FDA’s Division of Drug Marketing, Advertising andCommunications.     Section 1.26 “Depomed” has the meaning set forth in the preamble to this Agreement.     Section 1.27 “Depomed Net Sales” means, for a particular period, Net Sales for suchPeriod, multiplied by the Depomed Percentage for such period.     Section 1.28 “Depomed Percentage” means, for a particular period, the difference of(a) the percentage determined by dividing (i) the total amount of unit sales for Product based onprescriptions written during such period by Professionals on the Depomed Physician List, by (ii)the total amount of unit sales of Product based on all prescriptions written during such period, ineach case based on Prescriber Data for the applicable period; minus (b) the Baseline Percentage;provided that the Depomed Percentage shall not be less than zero.     Section 1.29 “Depomed Physician List” means the list of Professionals to whom theDepomed Sales Force may present Details, as such list may be amended from time to time ascontemplated by this Agreement; provided that the list must conform to the requirements of Section4.9.     Section 1.30 “Depomed Promotional Materials” has the meaning set forth in Section4.9(f).
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 1.31 “Depomed Sales Force” means the field force of Sales Representativesemployed or contracted by Depomed.     Section 1.32 “Depomed Supply Failure” means (a) with respect to the 500mg formulationof the Product, Depomed’s failure to fill orders from its wholesalers and distributors for the500mg formulation of the Product equal to or in excess of (i) [***] percent of the aggregate amountof 500mg formulation of the Product ordered during any period of three consecutive Agreement Monthsthat does not exceed the then-current Volume Forecast for such period, or (ii) [***] percent of theamount of 500mg formulation of the Product ordered for three consecutive Agreement Months that doesnot exceed the then-current Volume Forecast for such period; and (b) with respect to the 1000mgFormulation, Depomed’s failure to fill orders from its wholesalers and distributors for the 1000mgFormulation equal to or in excess of (i) [***] percent of the aggregate amount of 1000mgFormulation ordered during any period of six consecutive Agreement Months that does not exceed thethen-current Volume Forecast for such period, or (ii) [***] percent of the amount of 1000mgFormulation ordered for twelve consecutive Agreement Months that does not exceed the then-currentVolume Forecast for such period; provided, in each case, that (x) any back-up manufacturing rightsin favor of Depomed pursuant to any exclusive supply arrangement relating to the applicableformulation of the Product are applicable as a result of such supply failure, and (y) Depomed isnot diligently exercising such back-up manufacturing rights.     Section 1.33 “Depomed Trademarks” means (a) the GlumetzaTM trademark, forwhich Depomed’s licensor has sought registration for in the United States Patent and TrademarkOffice, (b) the AcuFormTM trademark, for which Depomed has sought registration for inthe United States Patent and Trademark Office, and (c) Depomed®, and, in each case, all relateddomain names and other trademark related rights. The Depomed Trademarks are attached hereto asSchedule 1.33.     Section 1.34 “Detail” means an in-person, face-to-face sales presentation of theProduct made by a Sales Representative to a Professional, including a P1 Detail, P2 Detail, or P3Detail.     Section 1.35 “Educational Programs” means any activities undertaken with respect tothe medical education of Professionals and customers regarding the Product and the market or fundedby unrestricted educational grants, including educational programs and seminars and continuingmedical education materials.     Section 1.36 “Effective Date” has the meaning set forth in the preamble to thisAgreement.     Section 1.37 “Evaluation Period” has the meaning set forth in Section 13.2.     Section 1.38 “Executive Officers” means the Chief Operating Officer of Depomed (or, ifthere is no such officer, its President or Chief Executive Officer) and the Chief CommercialOfficer of King (or, if there is no such officer, its President or Chief Executive Officer).     Section 1.39 “FDA” means the United States Food and Drug Administration or anysuccessor agency performing comparable functions in the Territory.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 1.40 “Final Agreement Quarter” means the period commencing on the first dayfollowing the last full Agreement Quarter during the Term and ending on the last day of the Term.     Section 1.41 “Force Majeure Event” has the meaning set forth in Section 16.6.     Section 1.42 “GAAP” has the meaning set forth in Section 7.2(c).     Section 1.43 “Generic Drug Act” has the meaning set forth in Section 9.1(j).     Section 1.44 “Governmental Authority” shall mean any court, agency, authority,department, regulatory body or other instrumentality of any government or country or of anynational, federal, state, provincial, regional, county, city or other political subdivision of anysuch government or any supranational organization of which any such country is a member, which hascompetent and binding authority to decide, mandate, regulate, enforce, or otherwise control theactivities of the parties contemplated by this Agreement.     Section 1.45 “Gross Margin” means, for a particular period, (A) Promotion Net Salesfor such period minus (B) all BLS Fees and COGS for such period.     Section 1.46 “Initial Agreement Quarter” means the period commencing on the EffectiveDate and ending on September 30, 2006.     Section 1.47 “JAMS” has the meaning set forth in Section 3.5(b).     Section 1.48 “JCC” has the meaning set forth in Section 3.1.     Section 1.49 “King” has the meaning set forth in the Preamble to this Agreement.     Section 1.50 “King CCC” means King’s Copy Clearance Committee.     Section 1.51 “King Manufacturing Notice” has the meaning set forth in Section 6.6.     Section 1.52 “King Physician List” means the list of Professionals to whom the KingSales Force presents Details agreed to in writing prior to the Effective Date, as such list may beamended from time to time as part of the Annual Plan or in accordance with Section 4.1(d).     Section 1.53 “King Sales Force” means the field force of Sales Representativesemployed or contracted by King.     Section 1.54 “King Trademarks” means the trademarks set forth on Schedule1.54, including the “King Pharmaceuticals” trademark and associated design     Section 1.55 “Launch Period” means the period beginning on the Effective Date andending on December 31, 2006.     Section 1.56 “Launch Plan” means the plan and schedule for the commercial launch ofthe Product in the Territory during the Launch Period, including the parties’ responsibilities forthe activities associated with such commercial launch of the Product, a budget for the activities
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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to be undertaken in connection with such commercial launch (taking into accountAdvertising/Marketing/Educational Expenses incurred by Depomed prior to the Effective Date), andthe parties’ responsibilities for the payment of such budgeted expenses. The initial Launch Plandescribing a summary of the plan and schedule for commercial launch is attached hereto asSchedule 1.56, which plan will be amended by the JCC in accordance with Section 4.5.     Section 1.57 “Launch Promotional Materials” has the meaning set forth in Section4.4(c).     Section 1.58 “Legal Requirements” means laws, rules and regulations of anyGovernmental Authority.     Section 1.59 “Metformin Product Rights” has the meaning set forth in Section 13.2.     Section 1.60 “Minimum Sales Force Level” has the meaning set forth in Section 4.3(a).     Section 1.61 “NDA” means any “new drug application” (as such term is used under theAct) filed or acquired by Depomed or any Affiliate with the FDA with respect to the Product and allsubsequent submissions, supplements and amendments thereto, including NDA No. 21-748 filed with theFDA on April 27, 2004 (as such NDA may be amended or supplemented subsequent to the EffectiveDate).     Section 1.62 “Negotiation Period” has the meaning set forth in Section 13.2.     Section 1.63 “Net Sales” means, for any period, the actual gross amount invoiced onsales of Product in the Territory by Depomed, its Affiliates, licensees, sublicensees and assignsto independent, unrelated Third Parties during such period in bona fide arms’ length transactions,less the following deductions, so long as they conform with the requirements of Section 6.4,allowed and taken by Third Parties and not otherwise recovered by or reimbursed to Depomed, itsAffiliates, licensees, sublicensees or assigns: (a) freight, insurance (but only insurance withrespect to shipping the Product), and other transportation charges to the extent added to the salesprice and set forth separately as such on the total amount invoiced; (b) any sales, use,value-added, excise taxes or duties or allowances on the selling price of Product which fall dueand are paid as a consequence of such sale; (c) chargebacks, trade, quantity and cash discounts andrebates to the extent customary in the trade, including governmental rebates, in each case, accruedin accordance with GAAP; and (d) allowances or credits, including allowances or credits tocustomers on account of rejection, defects or returns of the Product or because of a retroactiveprice reduction, actually taken by customers that are customary in the trade. Net Sales shall notinclude (a) a sale or transfer to an Affiliate, licensee, sublicensee or assign of King or Depomedor if done for clinical, regulatory or governmental purposes where no consideration is received;but the resale by such Affiliate, licensee, sublicensee or assign of King or Depomed shall beconsidered a sale of such Product; or (b) a sale to a wholesaler or distributor during the LaunchPeriod in connection with the initial stocking of the Product with respect to which (x) the invoicerelating to such sale has not been paid as of the date on which a report setting forth Net Salesfor such period is due pursuant to this Agreement, and (y) the wholesaler or distributor has theright to return the Product as of the date on which a report setting forth Net Sales for suchperiod is due pursuant to this Agreement.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 1.64 “Order” means any award, decision, injunction, judgment, decree, order,ruling, or verdict entered, issued, made, or rendered by any Governmental Authority or by anyarbitrator.     Section 1.65 “P1 Detail” means a Detail where the Product is the first item presentedand comprises more than one-half of the presentation time.     Section 1.66 “P2 Detail” means a Detail where the Product is the second item presentedand comprises at least one-third of the presentation time.     Section 1.67 “P3 Detail” means a Detail where the Product is not the first itempresented and comprises at least 15% of the presentation time.     Section 1.68 “PDE” means a Primary Detail Equivalent, and is equivalent to any of thefollowing: (a) one P1 Detail; (b) two P2 Details; or (c) five P3 Details. Details other than P1Details, P2 Details and P3 Details will have no effect on any calculation of PDEs.     Section 1.69 “PDE Cost” means $[***] per PDE.     Section 1.70 “PDE Minimum” has the meaning set forth in Section 8.2(a)(i).     Section 1.71 “PDE Shortfall” has the meaning set forth in Section 8.2(a)(i).     Section 1.72 “PDMA” means the Prescription Drug Marketing Act, as amended, and therules and regulations promulgated thereunder.     Section 1.73 “Person” means any individual, corporation (including any non-profitcorporation), general or limited partnership, limited liability company, joint venture, estate,trust, association, organization, labor union, or other entity or Governmental Authority.     Section 1.74 “Prescriber Data” means data provided by a Third Party which measuresprescriptions filled for Product (by individual prescriber) in the Territory during a specifiedtime period, from a source mutually agreed in writing by the parties (it being understood that IMSHealth Incorporated is a source agreeable to the parties).     Section 1.75 “Product” means any once-daily oral tablet formulation containingmetformin as the sole active pharmaceutical ingredient, including the 1000mg Formulation.     Section 1.76 “Product Complaints” means any report concerning the quality, purity,quantity, weight, pharmacologic activity, labeling, identity or appearance of the Product.     Section 1.77 “Professional” means a physician or other health care practitioner who ispermitted by law to prescribe Product.     Section 1.78 “Promote,” “Promotional” and “Promotion” mean, withrespect to the Product, any activities undertaken to encourage sales or use of the Product,including Details, product sampling, detail aids, drop-offs, coupons, discount cards, journaladvertising, direct mail
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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programs, direct-to-consumer advertising, convention exhibits and all other forms ofmarketing, advertising, public relations or promotion.     Section 1.79 “Promotion Commencement Date” has the meaning set forth in Section4.1(c).     Section 1.80 “Promotion Fees” has the meaning set forth in Section 7.1(a).     Section 1.81 “Promotion Net Sales” means Net Sales multiplied by the PromotionPercentage.     Section 1.82 “Promotion Percentage” means, for a particular period, 100% minus theDepomed Percentage for such period, if any Depomed Net Sales occur in such period.     Section 1.83 “Promotional Effort” has the meaning set forth in Section 4.1(a).     Section 1.84 “Promotional Materials” has the meaning set forth in Section 4.4(a).     Section 1.85 “Proprietary Information” means any proprietary or confidentialinformation communicated from one party to the other in connection or relating to this Agreement,which is identified as confidential or proprietary, or which the other party knows or has reason toknow is confidential or proprietary, including the Technology and financial, marketing, business,technical and scientific information or data, information related to King’s compensation of itsSales Representatives, information contained within the Annual Plan and Launch Plan, and theinformation described in Section 4.6, whether communicated in writing, orally or electronically.Proprietary Information shall not include information that the receiving party can show throughwritten documentation:     (a) at the time of disclosure, is publicly known;     (b) after the time of disclosure, becomes part of the public domain, except by breach of anagreement between the disclosing party or any Affiliate thereof and the receiving party or anyAffiliate thereof;     (c) is or was in the possession of the receiving party or any Affiliate thereof at the time ofdisclosure by the disclosing party and was not acquired directly or indirectly from the disclosingparty or any Affiliate thereof or from any other party under an agreement of confidentiality to thedisclosing party or any Affiliate thereof; and     (d) is or was developed by the receiving party or its Affiliates without use of or referenceto the other party’s Proprietary Information.     Section 1.86 “Reconciliation Report” has the meaning set forth in Section 7.5(d).     Section 1.87 “Regulatory Approval” means any and all consents or other authorizationsor approvals required from a Governmental Authority to market and sell the Product in theTerritory, but excluding any form of reimbursement approval.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 1.88 “Safety Stock” has the meaning defined in Section 6.1     Section 1.89 “Sales Representatives” means sales representatives employed by King orDepomed, or a Third Party engaged by King or Depomed, to Promote the Product, who have been trainedand equipped to Promote the Product in accordance with this Agreement. In the case of King, ThirdParties may only be engaged as Sales Representatives if they are full-time contractors of King,exclusive to King, and carry King’s business card.     Section 1.90 “Samples” has the meaning set forth in Section 6.5.     Section 1.91 “Serious Adverse Drug Experience” means any Adverse Drug Experience,including those subject to expedited reporting as defined in the regulations cited below, that isfatal or life-threatening, requires hospitalization or prolongation of existing hospitalization,results in persistent or significant disability or incapacity, is a congenital anomaly/birthdefect, or is of comparable medical significance or any other event which would constitute a“serious” Adverse Drug Experience pursuant to the terms of 21 C.F.R. 314.80 or 312.32.     Section 1.92 “Serious Adverse Drug Experience Report” means any Adverse DrugExperience Report that involves a Serious Adverse Drug Experience.     Section 1.93 “Standard Cost” means, (a) with respect to COGS, the cost assigned fromtime to time, but at least annually, by Depomed to use in calculating Gross Margin under Section7.1(a) for the purpose of facilitating timely reporting of Gross Margin; and, (b) with respect toSamples, the cost assigned from time to time, but at least annually, by Depomed to use incalculating Advertising/Marketing/Educational Expenses pursuant to Section 4.5(e); each determinedin accordance with Section 7.2(e).     Section 1.94 “Subcontracting” means subcontracting or sublicensing a party’s rights orobligations hereunder (a) pursuant to which a Third Party will manufacture the Product; or (b)pursuant to which a Third Party Sales Representative is engaged to Promote the Product.“Subcontractor” means the Third Party with whom the Subcontracting agreement is enteredinto.     Section 1.95 “Technology” means all pharmacological, toxicological, preclinical,clinical, technical or other information, data and analysis and know-how relating to theregistration, manufacture, packaging, use, marketing and sale of the Product and all proprietaryrights relating thereto owned by Depomed or its Affiliates or to which Depomed or its Affiliateshas rights so as to be able to license, and relating or pertaining to the Product.     Section 1.96 “Term” has the meaning set forth in Section 8.1.     Section 1.97 “Territory” means the United States, including its possessions and PuertoRico.     Section 1.98 “Third Party” means any Person other than King or Depomed or theirrespective Affiliates.     Section 1.99 “Unit” means a single tablet of the Product.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 1.100 “United States Bankruptcy Code” shall mean the U.S. Bankruptcy Code, 11U.S.C. §§ 101, *et seq*.     Section 1.101 “Volume Forecast” has the meaning set forth in Section 6.3.**ARTICLE II****GRANT**     Section 2.1 **Grant of Promotion Rights****.**During the Term, subject to the terms andconditions of this Agreement, Depomed hereby grants to King and its Affiliates and King and itsAffiliates hereby accept a co-exclusive right to Promote the Product under the Depomed Trademarksin the Territory together with Depomed and its Affiliates only, on the terms and subject to theconditions set forth herein. Depomed agrees that its and its Affiliates’ right to Promote theProduct is limited to the rights set forth in Section 4.9.     Section 2.2 **Sublicense****.**Except pursuant to Section 16.9 or in connection with the useof Third Party Sales Representatives, King shall not assign, subcontract or otherwise transfer ordelegate any of its rights 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 **Limitation on Metformin Promotion****.**Except as expressly contemplated bythis Agreement (including Article XIII hereof) and subject to Section 13.1 hereof, King shall notpromote, market or distribute any product containing metformin hydrochloride as the sole activeingredient in the Territory during the Term of this Agreement, other than the Product.     Section 2.4 **Retention of Rights****.**Depomed retains and shall retain all proprietary andproperty interests in the Product until the point of sale or, in the case of Samples, untildelivered to King as contemplated by Section 6.5. King will not have nor represent that it has anycontrol or proprietary or property interests in the Product, except for the licenses and rightsspecifically granted hereunder. Except as expressly set forth herein, nothing contained hereinshall be deemed to grant King, by implication, a license or other right or interest in any patent,trademark or other similar property of Depomed or its Affiliates, except as may be necessary forKing to Promote the Product pursuant to this Agreement or to manufacture the Product in accordancewith Section 6.6. Except as expressly set forth herein, nothing contained herein shall be deemedto grant Depomed, by implication, a license or other right or interest in any patent, trademark orother similar property of King or its Affiliates, except as may be necessary for Depomed to Promotethe Product pursuant to this Agreement.**ARTICLE III****JOINT COMMERCIALIZATION COMMITTEE**     Section 3.1 **Establishment****.**The parties agree to establish, for the purposes specifiedherein, a Joint Commercialization Committee (the “JCC”). The parties acknowledge and agreethat the JCC does not have the power to amend, modify or waive any of the terms or conditions ofthis Agreement.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 3.2 **Joint Commercialization Committee****.**The JCC shall be established by theparties and shall be comprised of eight members, four of whom shall be appointed by Depomed andfour of whom shall be appointed by King. Each party’s respective initial appointments to the JCCare set forth on Schedule 3.2 hereto. A party may change any of its representatives at anytime if a new person is appointed to any of the foregoing positions by giving written notice to theother party. The total number of JCC members may be changed by unanimous vote of the JCC from timeto time as appropriate; provided, that the JCC shall in all cases be comprised of an equalnumber of members from each of Depomed and King. King and Depomed each will designate onerepresentative of such party to serve as co-chairs of the JCC (the “Co-Chairs”). The membersappointed to the JCC by each party shall be employees of such party and shall be vested withappropriate decision-making authority and power by such party. The Chief Executive Officers ofKing and Depomed, the Chief Operating Officer of Depomed, and the Chief Commercial Officer of Kingshall not be members of the JCC.     Section 3.3 **JCC Responsibilities****.**Except as otherwise set forth herein, the JCC shalldirect all Promotional and marketing activities for the Product hereunder. The responsibilities ofthe JCC shall be exercised consistent with this Agreement and shall include, but shall not belimited to:     (a) reviewing and approving modifications to the Launch Plan (provided that no suchmodification may increase or reduce the Advertising/Marketing/Educational Expenses allocated to theparties under the Launch Plan, or modify any call plan or sampling plan set forth in the LaunchPlan, without both parties’ written approval).     (b) reviewing and approving the Annual Plan as contemplated by Section 4.5, includingdeveloping the Advertising/Marketing/Educational Expenses associated with the Promotion activitiesunder the Annual Plan;     (c) monitoring and reviewing compliance with the Annual Plan and the Launch Plan;     (d) reviewing and approving any modifications to the Annual Plan to address market orProduct-related issues and opportunities (provided that, without the written approval of bothparties, such modifications do not (i) result in a decrease of more than 10% of the annual budgetset forth in the Annual Plan, or (ii) result in an increase of more than 5% of theAdvertising/Marketing/Educational Expenses allocated to either party under the Annual Plan);     (e) developing Product Promotion strategies and objectives, including Product positioning,messaging and branding, and reviewing and approving all material communications to Third Partiesrelated to commercial matters for the purpose of Promoting the Product;     (f) monitoring the Depomed Sales Force call plan for coordination with the King Sales Force;     (g) monitoring advertising placement and market responses, including any post-implementationreviews;     (h) reviewing and approving any Volume Forecasts and Sample forecasts;
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     (i) establishing pricing for the Product, including the timing of any pricing changes;     (j) reviewing, but not approving, sales incentive compensation for the King Sales Forcerelated to the Product;     (k) establishing contracting guidelines for the distribution of the Product;     (l) overseeing the coordination of the parties’ efforts in respect of managed care marketingstrategies;     (m) proposing any new packaging design for the Product (subject to Depomed’s approval, andfollowed by and subject to applicable FDA and other Legal Requirements);     (n) reviewing and approving reductions to the King Physician List (provided that, without theapproval of both parties, (i) the King Physician List may not be reduced prior to the secondanniversary of the Promotion Commencement Date, and (ii) the number of Professionals on the KingPhysician List may not be decreased such that the number of Professionals on the King PhysicianList is less than [***]% of the number of Professionals on the King Physician List as of theEffective Date); and     (o) such other functions as may be mutually agreed upon by the parties from time to time.For the avoidance of doubt, (i) the JCC shall not have any review or approval rights with respectto any matters relating to the development of the Product and (ii) any decisions of the JCC withrespect to matters which relate to Regulatory Approval for the Product shall require Depomed’sprior written consent.     Section 3.4 **Meetings of the JCC****.**Meetings of the JCC may be called by the Co-Chairsof the JCC from time to time and, upon no less than five days’ notice, shall otherwise be calledwhen requested by a party; provided, however, that meetings of the JCC shall beheld on at least a monthly basis during the first six months of the Term, and on at least aquarterly basis thereafter. If possible, the meetings shall be held in person or whereappropriate, by video or telephone conference. Unless otherwise agreed, the location of anyin-person meetings of the JCC shall alternate between the corporate offices of the parties. Theparties shall determine the form of the meetings. Subject to Section 3.5, decisions shall be madeunanimously, each party having one (1) vote regardless of the number of representatives present orvoting; provided, that no such vote shall be valid unless each party is represented by atleast two members either by written proxy or actual presence at the meeting at which the vote istaken. Subject to appropriate confidentiality undertakings where applicable, each party shall havethe right, upon written notice to the other party, to have present at JCC meetings additional,non-voting participants (not to exceed ten such participants at any JCC meeting without the consentof the other party). Such additional participants shall not be deemed to be, or have any rights orresponsibilities of, a member of the JCC. The parties shall cause their respective representativeson the JCC to use their reasonable efforts to resolve all matters presented to them asexpeditiously as possible. The party hosting any meeting shall propose the agenda for the meetingand appoint a secretary to the meeting who shall record the minutes of the meeting. Such minutesshall be circulated to the parties promptly following the meeting for review and comment and forunanimous ratification
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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by both parties. Each party shall bear its own travel and related costs incurred inconnection with participation in the JCC.     Section 3.5 **JCC Disputes****.**     (a) In the event that the JCC is, after a period of ten days, unable to make a decision due toa lack of required unanimity, either party may submit the matter being considered to the ExecutiveOfficers for a joint decision. In such event, either Co-Chair of the JCC, by written notice to theother party, shall formally request the dispute be resolved by the Executive Officers, specifyingthe nature of the dispute with sufficient detail to permit adequate consideration by the ExecutiveOfficers. The Executive Officers shall diligently and in good faith attempt to resolve thereferred dispute expeditiously and, in any event, within fifteen days of receiving such writtennotification.     (b) In the event that the Executive Officers are unable to reach a resolution of any referreddispute after good faith negotiations during the fifteen-day period referred to in Section 3.5(a)above and in the event such dispute is not related to compliance with this Agreement, regulatorymatters, or the validity, breach or interpretation of this Agreement, either party may commencemediation within fifteen days after the conclusion of such fifteen-day period by providing to theother party a written request for non-binding mediation, setting forth the subject of the disputeand the relief requested (a “Mediation Notice”). The parties will cooperate with JudicialArbitration and Mediation Services (“JAMS”) and with one another in selecting a mediatorfrom JAMS’ panel of neutrals, and in scheduling the mediation proceedings. The parties shallendeavor to conclude any mediation under this Section 3.5 within thirty days after delivery byeither party of Mediation Notice. The parties covenant that they will participate in the mediationin good faith and that they will share equally in its costs; provided that each party will beresponsible for its own attorney’s fees. Either party may seek equitable relief prior to themediation to preserve the status quo pending the completion of that process. Except for such anaction to obtain equitable relief, neither party may commence a civil action with respect to thematters submitted to mediation until after the completion of the initial mediation session, orthirty days after delivery of the Mediation Notice, whichever occurs first.     (c) Any disputes referred to the Executive Officers for resolution pursuant to this Section3.5 shall not be subject to any dispute resolution mechanism or procedure other than pursuant tothis Section 3.5.**ARTICLE IV****PRODUCT PROMOTION**     Section 4.1 **Product Promotion****.**     (a) Subject to applicable Legal Requirements, as well as the provisions of this Agreement,King shall, from and after the Promotion Commencement Date, at its sole expense, use commerciallyreasonable efforts to Promote the Product within the Territory in accordance with the Launch Planor Annual Plan (the “Promotional Effort”). For purposes of the preceding sentence, King’scommercially reasonable efforts shall mean, until [***], at least the same
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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degree of effort (including with respect to the reach and frequency of Details) that Kingwould use for the Promotion of any of King’s products that are promoted in the [***], are of asimilar market size and patent life, and represent a similar commercial opportunity; thereafter,King will apply the same standard, except that it may fulfill its obligations by Promoting theProduct in the [***]. All statements, core selling messages and materials to be utilized by Kingto Promote the Product shall be consistent in all material respects with the Annual Plan and theLaunch Plan. King will cause the King Sales Force and King employees and agents acting on King’sbehalf to comply with this Agreement and all applicable Legal Requirements in connection with thePromotion of the Product. It is understood, and King agrees, that it will be accountable for theacts or omissions of the King Sales Force and its employees and agents to the extent such acts oromissions fail to comply with King’s obligations under this Agreement.     (b) From and after the Promotion Commencement Date, King shall perform at least [***] PDEs percalendar year, with such amount prorated over the initial and final calendar years of the Term ifeither such year is a partial year. In fulfilling its obligations under this Section 4.1(b), Kingwill perform [***], as follows: King will perform no less than an average of [***], with suchreach and frequency as the JCC determines as part of the Annual Plan each year. The determinationof the [***] will be based on [***] used by King with respect to [***]; provided that the [***] byKing will be [***] will be deemed the [***] Notwithstanding the foregoing, the parties acknowledgeand agree that during the first month following the Commencement Date, King will be building itsPromotional Efforts.     (c) King shall commence (the date of such commencement, the “Promotion CommencementDate”) Promotion (including Details by the King Sales Force) of the Product in accordance withthis Agreement and the performance of the other obligations contained herein that are required tobe performed from and after the Promotion Commencement Date as soon as practicable following thedate hereof, but no later than September 5, 2006, or as soon thereafter as the Product (includingSamples) is available in commercial quantities reasonably adequate to support the commercial launchof the Product in the Territory. The parties agree to cooperate with each other in good faith infurtherance of the preceding sentence.     (d) Any Professional on the King Physician List who does not receive [***] Detail prior to theend of the Launch Period will be removed from the King Physician List at the end of the LaunchPeriod. From time to time, King may Promote the Product to Professionals who are not on the KingPhysician List or the Depomed Physician List. At such time as King conducts [***] Details to anysuch Professional during a six**-**month period, such Professional will automatically be added to theKing Physician List.     Section 4.2 **Representations to Customers****.**King will not make any false or misleadingrepresentations to Professionals, customers or others regarding Depomed or the Product and will notmake any representations, warranties or guarantees with respect to the specifications, features orcapabilities of the Product that are not consistent with the applicable then-current FDA approvedlabeling, package insert or other documentation accompanying or describing the Product, includingDepomed’s standard limited warranty and disclaimers. King agrees to undertake timely and completecorrective action for any deviations from this Section 4.2, subject to discussion and review byDepomed’s regulatory affairs and quality assurance department.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 4.3 **Staffing; Training****.**     (a) King agrees that from and after the Promotion Commencement Date, the King Sales Force willbe staffed with at least [***] full-time Sales Representatives (subject to vacancies consistentwith average vacancy rate experienced by King across its total sales force) who are activelypromoting the Product in accordance with the Launch Plan or Annual Plan (the “Minimum SalesForce Level”); provided that King may meet such requirement to actively promote the Product bypromoting the Product through P2 Details and P3 Details. Throughout the remainder of the Term,King shall use its commercially reasonable efforts to ensure that the number of SalesRepresentatives comprising the King Sales Force meets or exceeds the Minimum Sales Force Level,including by promptly filling all vacant positions in the King Sales Force resulting fromresignations or terminations.     (b) King shall be solely responsible for all costs and expenses of compensating its SalesRepresentatives. Consistent with applicable Legal Requirements, King shall pay incentivecompensation to its Sales Representatives with respect to the Product in accordance with King’sincentive compensation plan for King’s own products; it being understood that, (i) through [***],King shall determine the target incentive payment for the Product in a manner consistent with theway in which King determines the target incentive payment for pharmaceutical drug products that arepromoted in the [***], are of a similar market size and patent life, and represent a similarcommercial opportunity; and (ii) thereafter, King shall determine the target incentive payment forthe Product in a manner consistent with the way in which King determines the target incentivepayment for pharmaceutical drug products promoted by King that are of a similar market size andpatent life, and represent a similar commercial opportunity. King shall notify its SalesRepresentatives prior to the Promotion Commencement Date, or coinciding with the launch of theProduct and consistent with its procedures for King’s other products, of the total potentialincentive compensation for the Product. Promptly after the adoption by King of an incentivecompensation payment plan with respect to the Product pursuant to this Agreement and any materialamendments thereto, King shall provide to Depomed [***] for the Product pursuant to such plan.     (c) Depomed shall make available to King any training materials created by Depomed prior tothe Effective Date at Depomed’s out-of-pocket cost for such materials. In consultation withDepomed, King shall develop, [***], training materials for its Sales Representatives in other mediaor forms provided that such materials shall be subject to Depomed’s review as Promotional Materialsas provided in Section 4.4. King shall, at its own expense prior to the Promotion CommencementDate, train its Sales Representatives using such training materials, the other PromotionalMaterials and such programs as King shall deem appropriate that are in compliance with King’sobligations hereunder and all other Legal Requirements and that have been approved by the JCC.Such programs shall include training with respect to reporting Adverse Drug Experiences andtechnical complaints. After the initial training, King shall periodically provide additionaltraining to each of its Sales Representative, and shall update its training materials asappropriate in connection with such additional training, in accordance with this Section 4.3.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 4.4 **Promotional Materials; Educational Materials****.**     (a) Subject to Sections 4.4(b), 4.4(c) and 4.9, King shall, [***], create, develop, produce orotherwise obtain, and utilize sales, promotional, advertising, marketing, educational and trainingmaterials (“Promotional Materials”) which are necessary to support fully the PromotionalEffort for the Product. Such Promotional Materials may include, by way of example, detailing aids;leave items; journal advertising; educational programs; formulary binders; appropriate reprints andreprint carriers; product monographs; patient support kits; convention exhibit materials; directmail; market research survey and analysis; training materials; and scripts for telemarketing andteleconferences. All Promotional Materials used by the King Sales Force or bearing the KingTrademarks will be subject to the review and approval of the King CCC. All Promotional Materialsdeveloped by King hereunder shall prominently display such Depomed Trademark(s) as shall bespecified by Depomed to King following its review of the applicable prototype in accordance withSection 4.4(b).     (b) Prior to the use thereof, King shall provide to Depomed a prototype of any PromotionalMaterials created by King for review. Depomed shall notify King of any objections it has to suchprototype and the basis therefor as soon as reasonably practicable, but no later than ten businessdays following its receipt thereof (five business days during the Launch Period). King shallmodify such Promotional Materials to the extent necessary to resolve any objections made by Depomedto such Promotional Materials on the grounds that such Promotional Materials are inconsistent withany Legal Requirements or this Agreement and shall in good faith consider and address any ofDepomed’s other objections. The final version of the Promotional Materials approved by the KingCCC shall be provided to Depomed for its review and approval to confirm their consistency with theprototype approved by Depomed and the resolution of Depomed’s objections in accordance with thisSection 4.4(b), which review and approval shall occur, as soon as reasonably practicable, but nolater than ten business days (five business days during the Launch Period) following its receipt byDepomed. Upon approval, the Promotional Materials may be produced in quantity, and King shallprovide Depomed with the requisite number of copies of the final printed form in a timely manner soas to allow Depomed to satisfy its obligation to file such materials with the FDA prior to thefirst use of the Promotional Materials, and Depomed will make such filing with the FDA within fivebusiness days of its receipt of such copies.     (c) Notwithstanding the provisions of Section 4.4(a), Depomed shall maintain responsibilityfor the creation and development of Promotional Materials to be utilized in connection with thecommercial launch of the Product (the “Launch Promotional Materials”). Depomed shallprovide to King prototypes of all Launch Promotional Materials for the review and approval of theKing CCC. King shall notify Depomed of any objections it has to such prototype and the basistherefor within five business days following its receipt thereof. Depomed shall modify suchPromotional Materials to the extent necessary to resolve any objections made by King to suchPromotional Materials on the grounds that such Promotional Materials are inconsistent with anyLegal Requirements or this Agreement, and shall in good faith consider and endeavor to resolve andaddress any of King’s other objections. The final version of the Launch Promotional Materialsshall be provided to King for the review and approval of the King CCC to confirm their consistencywith the prototype approved by King and the resolution of King’s objections in accordance with thisSection 4.4(c), which review and
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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approval shall occur, as soon as reasonably practicable, but no later than five business daysfollowing its receipt by Depomed. On or prior to the Promotion Commencement Date, Depomed shalldeliver to King all King-approved Launch Promotional Materials created by Depomed in its inventory,less a reasonable amount thereof necessary to support Promotion efforts undertaken by Depomed. TheLaunch Promotional Materials supplied to King under this Section 4.4(c) shall be delivered to asingle location specified by King in writing prior to such delivery. Depomed hereby grants to Kingthe non-exclusive right, during the Term, to use the Launch Promotional Materials supplied to Kingpursuant to this Section 4.4(c) in the performance of its obligations under this Agreement.     (d) Depomed shall own all copyrights to all Promotional Materials that are created during theTerm of this Agreement in connection with the Promotion of the Product. King shall usecommercially reasonable efforts consistent with accepted business practices to obtain suchassignments from the authors and creators of such materials as may be necessary to vest ownershipof the copyright in Depomed. Depomed shall, and does hereby, grant to King a royalty-free licenseto use and reproduce such materials solely in conjunction with its Promotion of the Productpursuant to this Agreement, which license shall not be assignable or transferable by King, exceptin accordance with the terms of Section 2.2.     (e) All written materials relating to Educational Programs that are funded usingAdvertising/Marketing/Educational Expenses shall identify both Depomed and King as sponsors of suchEducational Programs, unless otherwise agreed by the JCC.     Section 4.5 **Launch Plan; Annual Plan; Promotion Expenses****.**     (a) The JCC shall use all reasonable efforts to refine the Launch Plan prior to the PromotionCommencement Date in order to set forth in detail the parties’ responsibilities during the LaunchPeriod, incorporating the components of an Annual Plan set forth in Section 4.5(b) below.     (b) On or prior to September 1 of the preceding calendar year with respect to each calendaryear during the Term beginning with the 2007 calendar year, King shall develop an annualcommercialization plan (the “Annual Plan”) and submit the Annual Plan to the JCC for reviewand approval; provided that the Annual Plan for the 2007 calendar year will be developed on orprior to December 1, 2006. The Annual Plan shall set forth the manner in which the Product is tobe Promoted and commercialized during the period to which the Annual Plan relates and shallinclude, at a minimum:     (i) the anticipated number of quarterly and annual Details (including P1 Details, P2 Detailsand P3 Details) to be provided by the King Sales Force;     (ii) the King Physician List;     (iii) Product positioning, strategy and tactics with supporting advertising and promotionalactivity to be undertaken, including all material communications to Third Parties related tocommercial matters for the purpose of Promoting the Product;     (iv) any training and/or sampling programs to be conducted;
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     (v) medical education programs to be conducted;     (vi) planned public relations activities;     (vii) Product production forecasts;     (viii) Sample forecasts and delivery schedules;     (ix) pricing and contracting strategies;     (x) format and quantity of sales, marketing and educational materials;     (xi) managed health care strategies and tactics;     (xii) customer targets;     (xiii) Product manufacturing and distribution;     (xiv) post-marketing clinical studies that Depomed, in its sole discretion, decides toconduct; and     (xv) a detailed, itemized budget for all costs and expenses associated with the activities tobe undertaken pursuant to the Annual Plan (including all Advertising/Marketing/EducationalExpenses), and the allocation of such costs and expenses between the parties.     (c) The JCC shall use all reasonable efforts to approve the Annual Plan not later thanNovember 1 of each preceding calendar year; provided that the Annual Plan for the 2007 calendaryear will be approved no later than January 1, 2007. The Annual Plan for 2007 shall incorporatetasks, activities and responsibilities in addition to any tasks, activities and responsibilities inthe Launch Plan. The JCC shall endeavor to ensure the parties there are no tasks, activities orresponsibilities in the Launch Plan inconsistent with those set forth in the Annual Plan for 2007.     (d) Each party shall use its commercially reasonable efforts to perform all tasks,responsibilities and activities for which it is responsible under the Launch Plan and the AnnualPlan. Neither party shall have any obligation to incur Advertising/Marketing/Educational Expensesin excess of those set forth in the Annual Plan; provided, that King shall be responsible for anyand all costs and expenses associated with creating and approving any new Product packaging designproposed by King (and such costs and expenses shall be in addition to King’sAdvertising/Marketing/Educational Expenses). Furthermore, except to the extent the JCC hasapproved any payment in accordance with this Agreement, including approval as part of an AnnualPlan, or except for a party’s obligation to pay its portion of theAdvertising/Marketing/Educational Expenses described in Section 4.5(e) below, neither party shall(i) be obligated to incur any costs or expend any funds that have not been approved by such partyor (ii) have the authority to cause the other party to incur any costs or expend any funds thathave not been approved by such other party.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     (e) All Advertising/Marketing/Educational Expenses incurred by a party on and after theEffective Date (and such expenses incurred prior to the Effective Date as are specifically setforth in the Launch Plan attached hereto as Schedule 1.56) shall be allocated between theparties according to the following percentages: [***]% will be allocated to King and [***]% willbe allocated to Depomed; provided that the first $[***] of Advertising/Marketing/EducationalExpenses set forth in the Launch Plan is allocated to, and shall be paid by, Depomed and the next$[***] of Advertising/Marketing/Educational Expenses set forth in the Launch Plan is allocated to,and shall be paid by, King. Without the prior written consent of each party, the aggregateAdvertising/Marketing/Educational Expenses to be incurred by the parties each calendar year duringthe Term shall be as set forth on Schedule 4.5. With the prior written consent of eachparty, the JCC may increase or decrease the Advertising/Marketing/Educational Expenses above thoseamounts set forth on such schedule.     (f) Each party will bear its own operating expenses associated with the Product and Promotionthereof, including all personnel, general and administrative and overhead costs. King will bearall King Sales Force expenses, and Depomed will bear all Depomed Sales Force expenses. Depomedwill bear all costs associated with maintaining and continuing all Regulatory Approvals of theProduct in the Territory, including all costs associated with Adverse Drug Experience reporting andall clinical and regulatory requirements.     Section 4.6 **King Promotion Reports****.**Within thirty (30) days following the end of eachAgreement Quarter, King shall provide the JCC with a status report, which report will summarizeKing’s Promotional activities pursuant to this Agreement for such prior Agreement Quarter and on acalendar year-to-date basis, including, to the extent King customarily creates the followingreports for King’s other products which are promoted by or on behalf of King: (a) the number ofP1, P2 and P3 Details made and recorded by King’s standard record keeping procedures; (b) the namesand addresses of the Professionals called upon; (c) the percentage of Professionals Detailed whowere provided with Samples; (d) the average number of such Samples delivered on each Detail; (e) abreakdown of all information required to be contained in each report on an aggregate basis; (f) anyProfessionals added to the King Physician List during such quarter; and (g) such other informationas may be required in the then-current Annual Plan.     Section 4.7 **Medical Inquiries****.**The parties acknowledge that each may receive requestsfor medical information concerning the Product from members of the medical and paramedicalprofessions and consumers regarding the Product. If such requests come from a Professional on theKing Physician List or are otherwise received by King, the request will be handled by King’smedical department. The King medical department will submit all form letters to the Depomed’sdevelopment department for approval prior to use. King will comply with direction provided byDepomed as to the content of any such letters or communications. Depomed shall be responsible forresponding to such requests that do not come from Professionals on the King Physician List or arenot otherwise received by King, which responses shall be in compliance with all applicable LegalRequirements and the NDA. The parties shall use the same form of letter or communication for allsuch responses to Professionals and consumers. Each party shall promptly provide the other partywith (i) copies of all written materials and (ii) written summaries of all oral advice, provided bysuch party in response to such inquiries.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 4.8 **Trademarks****.**     (a) The “Depomed” trademark must appear on all Promotional Material that makes reference tothe Product. The “AcuForm” trademark must appear on all Promotional Materials that make referenceto the “AcuForm” drug delivery technology incorporated into the Product. Depomed hereby grants toKing a non-assignable, non-sublicensable, non-exclusive, royalty-free right and license to use theDepomed Trademarks in the Territory solely in connection with King’s Promotion of the Product inaccordance with this Agreement; provided King may assign and sublicense such right and license inaccordance with Section 2.2. Such license shall expire immediately upon the expiration ortermination of this Agreement. Subject to this Section 4.8 and to applicable Legal Requirements,King shall have the right to use the King Trademarks, and include the name “King” or any variationthereof on the Promotional Materials developed by King; provided, that such King Trademarksshall not appear in such Promotional Materials in greater prominence or in greater frequency thanthe Depomed Trademark(s). In addition, the JCC will discuss including the King Trademarks, inequal prominence to the Depomed Trademarks and in accordance with all Legal Requirements, on allpackaging for Samples distributed by the King Sales Force, with determination as to including suchmarks being based on the timing for implementing such change and the costs associated therewith,with all costs associated with creating and approving new packaging borne by King in accordancewith Section 4.5(d). King recognizes Depomed’s title to the Depomed Trademarks, and shall not atany time, during or after the Term, do or knowingly suffer to be done any act or thing which willin any way impair the rights of Depomed in or to the Depomed Trademarks. King acknowledges andagrees that it shall not acquire and shall not claim any title to the Depomed Trademarks adverse toDepomed by virtue of the rights granted under this Agreement or through King’s use of the DepomedTrademarks, it being the intention of the parties that all goodwill and improved reputationgenerated by King and use of the Depomed Trademarks shall inure to the benefit of Depomed.     (b) King hereby grants to Depomed a non-assignable, non-sublicensable (except to any ThirdParty acting as the Depomed Sales Force), non-exclusive, royalty-free right and license to use theKing Trademarks in the Territory solely in connection with Depomed’s Promotion of the Product.Such license shall expire immediately upon the expiration or termination of this Agreement.Subject to this Section 4.8 and to applicable Legal Requirements, Depomed shall have the right touse Depomed Trademarks, and include the name “Depomed,” “AcuForm,” or any variation thereof on thePromotional Materials developed by Depomed in accordance with this Agreement. Depomed recognizesKing’s title to the King Trademarks, 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 the rights of King in orto the King Trademarks. Depomed shall not be obligated to use the King Trademarks in the DepomedPromotional Materials. Depomed acknowledges and agrees that it shall not acquire and shall notclaim any title to the King Trademarks adverse to King by virtue of the rights granted under thisAgreement or through Depomed’s use of the King Trademarks, it being the intention of the partiesthat all goodwill and improved reputation generated by Depomed and use of the King Trademarks shallinure to the benefit of King.     (c) Each of King with respect to its use of the Depomed Trademarks and Depomed with respect toits use of the King Trademarks will maintain quality standards for all of its uses**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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of the trademarks of the other party in connection with the Promotion of the Product that aresubstantially equivalent to those standards used by the owner of such trademarks in connection withpharmaceutical products. Subject to the foregoing and to the other provisions of this Agreement,each party acknowledges and agrees that the owner or licensee of the trademark has the right, atany time, to modify or supplement such quality standards and that the licensee or sublicensee mustimplement such new standards or changes following receipt of notice of such additions or changes;provided that the licensor agrees to bear all reasonable costs associated with such modificationsand supplements. Compliance with this Section 4.8(c) shall be determined pursuant to thePromotional Material and Depomed Promotional Materials review and approval procedures set forth inSections 4.4(b) and 4.9(e), as applicable.     Section 4.9 **Promotion by Depomed****.**     (a) At Depomed’s option, it may, but is not obligated to, have the Depomed Sales Force Promotethe Product directly to Professionals who are (i) not on the King Physician List or (ii) are on theKing Physician List but did not receive at least [***] Details in the four most complete AgreementQuarters following the Promotion Commencement Date (or, if Depomed desires to commence Detailsprior to March 31, 2008, at least [***] Details during the two Agreement Quarters on which theBaseline Percentage is determined). If Depomed desires to use the Depomed Sales Force for thispurpose, it will inform King at least 90 days in advance of the commencement of Details by theDepomed Sales Force and provide King with the Depomed Physician List. During such 90-day period,King will be entitled to review the Depomed Physician List and confirm that such list does notcontain any Professionals that are not, as of the date of King’s receipt of the Depomed PhysicianList, eligible for inclusion on the Depomed Physician List. Following creation of the initialDepomed Physician List, from time to time but not more than two times per calendar year, Depomedmay add Professionals to the Depomed Physician List pursuant to the procedure set forth above, solong as Depomed has conducted at least [***] Details to such Professional during the six-monthperiod immediately prior to being added. Following the addition of such Professionals to theDepomed Physician List, the Baseline Percentage shall be adjusted to reflect prescriptions writtenby any such Professionals by adding to the then-current Baseline Percentage the quotient obtainedby dividing (x) [***] prior to Depomed’s commencement of providing Details to such Professionals,by (y) [***], based on Prescriber Data for such two complete Agreement Quarters.     (b) Depomed will 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 in developing the Annual Plan.Any Professional on the Depomed Physician List who does not receive at least [***] Details in eachfull calendar year following the commencement of Promotion of the Product by the Depomed SalesForce will be excluded from the Depomed Physician List in subsequent calendar years for purposes ofcalculating Depomed Net Sales, and for purposes of calculating the Baseline Percentage.     (c) During any period in which the Depomed Sales Force is making Details, efforts will be madeat the local level to coordinate the Details by the Depomed Sales Force with Details by the KingSales Force to ensure the most effective coverage of the target audiences and to minimizenon-productive efforts. Depomed will provide the JCC with such information related to Depomed’spromotion activities as is reasonably necessary to assist in such efforts.**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     (d) All Details made by the Depomed Sales Force will be reported to King. Such reports byDepomed will be made in the same manner as King’s Details under Section 4.6 (to the extent Depomedcustomarily creates such reports for Depomed’s other products which are promoted by or on behalf ofDepomed).     (e) Depomed may purchase from King, [***], copies of any Promotional Materials created by Kingfor use by the Depomed Sales Force. Upon Depomed’s request, King will provide to Depomedelectronic copies of Promotional Materials created by or for King, which Promotional Materials maybe modified for use by Depomed; provided that any modification must be approved in the same manneras approval of Depomed Promotional Materials (as defined below). King [***] for such PromotionalMaterials. Depomed may also create and develop its own Promotional Materials for use by theDepomed Sales Force (“Depomed Promotional Materials”). Prior to the use thereof, Depomedshall provide to the JCC a prototype of any Depomed Promotional Materials. The JCC may review suchprototype for consistency with Legal Requirements and the Product positioning and messagingreflected in the then-current Annual Plan. If the JCC notifies Depomed within 10 business daysafter receipt of a prototype that is objects to such prototype on the grounds that it isinconsistent with the Product positioning and messaging reflected in the then current Annual Plan,Depomed shall modify such Depomed Promotional Materials to the extent necessary to resolve anyobjections made by the JCC to such Depomed Promotional Materials on such grounds. In addition,Depomed shall in good faith consider any other objections the JCC may have to any DepomedPromotional Materials. The Depomed Promotional Materials will not contain any King Trademarkunless such materials are subject to the review and approval of the King CCC. King may purchasefrom Depomed, [***], copies of any Depomed Promotional Materials. Upon King’s request, Depomedwill provide to King electronic copies of Depomed Promotional Materials created by or for Depomed,which Depomed Promotional Materials may be modified for use by King; provided that any modificationmust be approved in the same manner as approval of Promotional Materials.     (f) Depomed may purchase from King, [***], copies of training materials developed by Kingrelated to the Product for use by Depomed in the training of the Depomed Sales Force. Depomedshall be responsible for training of the Depomed Sales Force, and may, at its own expense, developtraining materials for the Depomed Sales Force in other media or forms, provided that suchmaterials shall be subject to King’s review as Depomed Promotional Materials as provided in Section4.9(e). Depomed shall, at its own expense, train the Depomed Sales Force using such trainingmaterials, the other Promotional Materials and Depomed Training Materials and such programs asDepomed shall deem appropriate that are in compliance with Depomed’s obligations hereunder. Suchprograms shall include training with respect to reporting Adverse Drug Experiences and technicalcomplaints. After the initial training, Depomed shall periodically provide additional training toeach Sales Representative, and shall update its training materials as appropriate in connectionwith such additional training, in accordance with this Section 4.9(f).     (g) [***] Depomed’s costs or expenses related to any activities of the Depomed Sales Force,including costs for Depomed Promotional Materials, training or training materials or the purchasefrom King of Promotional Materials for the Depomed Sales Force, will be included inAdvertising/Marketing/Educational Expenses or be reimbursable by King.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     (h) It is understood, and Depomed agrees, that it will be accountable for the acts oromissions of its employees and agents to the extent such acts or omissions fail to comply withDepomed’s obligations under this Agreement.**ARTICLE V****CLINICAL AND REGULATORY AFFAIRS; DEVELOPMENT**     Section 5.1 **Regulatory Approvals****.**Depomed shall use commercially reasonable effortsto maintain and continue all Regulatory Approvals currently in effect for the Product. King agreesthat all Regulatory Approvals, applications therefor and any other submissions to a GovernmentalAuthority with respect to the Product shall be in the name of, and shall be owned by, Depomed orits designee.     Section 5.2 **Compliance with Regulatory Requirements****.**Unless otherwise required by lawor expressly required by this Agreement, Depomed will retain exclusive authority over andresponsibility for complying with all regulatory requirements and maintaining all contacts withGovernmental Authorities with respect to the Product, including maintaining and updating of theNDA, the development and submission of applications for new indications, the reporting of anyadverse drug reactions to the FDA, the compliance of Promotional Materials with FDA rules andregulations and the filing of Promotional Materials with the FDA.     Section 5.3 **Compliance****.**In performing its duties hereunder, each party shall, andshall cause the King Sales Force or Depomed Sales Force, as applicable, and its employees andagents to, comply with all Legal Requirements, including the FDA’s regulations and guidelinesconcerning the advertising of prescription drug products, DDMAC’s promotional guidelines, theDepartment of Health and Human Services Office of the Inspector General Compliance Program Guidancefor Pharmaceutical Manufacturers, the American Medical Association’s Guidelines on Gifts toPhysicians, the PhRMA Code on Interactions with Healthcare Providers, the Prescription DrugMarketing Act of 1987, as amended, and the rules and regulations promulgated thereunder, the ACCMEStandards for Commercial Support of Continuing Medical Education, equal employment,non-discrimination and federal and state anti-kickback Legal Requirements, Legal Requirements withrespect to submission of false claims to governmental or private health care payors, and allindustry and professional standards, which may be applicable to the activities (including thewarehousing, handling and distribution of Samples) to be performed by such party hereunder. Noneof King, Depomed, the King Sales Force, the Depomed Sales Force and either party’s employees andagents shall offer, pay, solicit or receive any remuneration to or from Professionals in order toinduce referrals of or purchase of the Product. The King Sales Force and the Depomed Sales Forceshall have no direct contact with, nor shall the King Sales Force or the Depomed Sales Force beinvolved with the delivery of Product to patients, other than delivery of Samples directly toProfessionals authorized to prescribe the Product. The King Sales Force and the Depomed SalesForce shall be trained in connection with compliance with Sec. 1128B(b) of the Social Security Actand the AMA Guidelines on Gifts to Physicians from Industry prior to engaging in Promotion of theProduct.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 5.4 **Communications with Regulatory Authorities****.**     (a) All communications with Government Authorities concerning the Product shall be the soleresponsibility of Depomed. Depomed shall within two business days provide King with copies of allsuch communications (including summaries of all relevant verbal communications) related toPromotional Materials and Serious Adverse Drug Experiences (except that routine communications asto such matters (e.g., FDA 2253 correspondence) may be forwarded to King within 5 business days).Depomed will consult with King concerning adverse drug reaction reporting to the FDA that Depomedreasonably considers to be significant to the Product, including regulatory responses to follow upinquiries regarding adverse drug reactions. Depomed will provide to King a copy of all draftresponses related to such matters as soon as practicable, and will endeavor to provide them atleast five business days in advance of their submission (to the extent allowable under LegalRequirements), and will consider in good faith any comments provided to Depomed by King.     (b) King shall not, without the consent of Depomed or unless so required by Legal Requirements(and then only pursuant to the terms of this Section 5.4, unless this Section 5.4 is inconsistentwith Legal Requirements), correspond or communicate with the FDA or with any other GovernmentalAuthority, whether within the Territory or otherwise, concerning the Product, or otherwise take anyaction concerning any Regulatory Approval under which the Product is sold or any application forRegulatory Approval of the Product; provided that during the Term, King shall have theright to communicate with the FDA or any other Governmental Authority regarding the Product if suchcommunication is necessary to comply with the terms of this Agreement or any Legal Requirement, orif King made a request of such agency to communicate with Depomed instead, and such GovernmentalAuthority denied such request (in any such case, King shall give Depomed notice as soon asreasonably practicable of such communication and, to the extent practicable, Depomed shall bepermitted to accompany King, take part in any such communications and receive copies of all suchcommunications). King shall, immediately upon receipt of any communication from the FDA or fromany other Governmental Authority relating to the Product, forward a copy of the same to Depomed andrespond to all inquiries by Depomed relating thereto. If King is required by law to communicatewith the FDA or with any other Governmental Authority relating to the Product, then King shall soadvise Depomed immediately (within one business day) and provide Depomed in advance with a copy ofany proposed written communication, or a written summary of any proposed oral communication withthe FDA or any other Governmental Authority. King shall comply with any and all reasonabledirection of Depomed concerning any meeting or written or oral communication with the FDA or anyother Governmental Authority relating to the Product unless otherwise required by LegalRequirements.     Section 5.5 **Product Complaints****.**King shall refer any oral or written ProductComplaints which it receives concerning the Product to Depomed within four calendar days of itsreceipt thereof; provided, that all complaints concerning suspected or actual Producttampering, contamination or mix-up shall be delivered within twenty-four hours of its receiptthereof. King shall not take any other action in respect of any such complaint without the consentof Depomed unless otherwise required by Legal Requirements. If requested by Depomed, King willcollaborate with Depomed to resolve any Product Complaints. All Product Complaints shall bedirected to the attention of Depomed’s Vice President, Regulatory Affairs, at
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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Depomed’s address set forth in Section 14.1. Depomed shall provide King with a summary of allProduct Complaints received by Depomed within ten business days of its receipt thereof.     Section 5.6 **Adverse Drug Experience Reports****.**     (a) Each party shall notify the other: (i) of all Serious Adverse Drug Experience Reportswithin forty-eight (48) hours of the time such Serious Adverse Drug Experience Report becomes knownto such party (including its employees); and (ii) of all Adverse Drug Experience Reports withinfive (5) calendar days of the time such Adverse Drug Experience Report becomes known to such party(including its employees).     (b) Except as may otherwise be required by Legal Requirements, (i) King shall not disclose anyinformation concerning Adverse Drug Experience Reports or Serious Adverse Drug Experience Reportsto any Person or Governmental Authority without the prior consent of Depomed; and (ii) Depomedshall have the sole discretion to determine whether any Product Complaint, Adverse Drug ExperienceReport or Serious Adverse Drug Experience Report must be reported to the FDA or any otherGovernmental Authority.     (c) All follow-up investigations concerning Adverse Drug Experience Reports and SeriousAdverse Drug Experience Reports shall be conducted by Depomed; provided that King shallhave the right to participate in such investigations upon its request. King shall provide allreasonable cooperation with any such follow-up investigation as may be requested by Depomed fromtime to time.     Section 5.7 **Recalls or Other Corrective Action****.**Depomed shall have soleresponsibility for and shall make all decisions with respect to any recall (including recall ofpackaging and promotion materials), market withdrawals or any other corrective action related tothe Product. Depomed shall promptly notify King of any such actions taken by Depomed, includingall actions that are reasonably likely to result in a material adverse effect on the marketabilityof the Product in the Territory. At Depomed’s request, King shall provide assistance to Depomed inconducting such recall, market withdrawal or other corrective action (including retrieving Samplesdistributed by the King Sales Force to Professionals). With respect to any recall, marketwithdrawal or corrective action initiated by Depomed as a result of Depomed becoming aware of anymanufacturing defect in Product (other than Product manufactured by King in accordance with Section6.6), Depomed shall reimburse King for its reasonable, documented, direct, out-of-pocket costsincurred in connection with participating in such recall, market withdrawal or other correctiveaction provided that King’s breach of its obligations hereunder is not a material cause of therecall, market withdrawal or other corrective action. Except as set forth above, Depomed shall beunder no liability whatsoever to compensate King or make any other payment to King for any decisionto recall, initiate a market withdrawal or take any other corrective action with respect to theProduct.     Section 5.8 **Assistance****.**Each party agrees to provide to the other all reasonableassistance and take all actions reasonably requested by the other party that are necessary toenable the other party to comply with any Legal Requirement applicable to the Product.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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**ARTICLE VI****MANUFACTURING AND SUPPLY; SALES; PRICING; 1000MG FORMULATION**     Section 6.1 **Obligations of Depomed****.**In accordance with the provisions of thisAgreement and all applicable Legal Requirements, Depomed shall, at its cost and expense, usereasonable best efforts to perform or cause to be performed all Product manufacture, labeling,packaging, warehousing, distribution and return, order entry, customer services and all otheractivities to supply and distribute the Product in the Territory in order to fill orders forProduct conforming to the then-current Volume Forecast in a timely and efficient manner. From andafter the completion of the sixth full calendar month following the Promotion Commencement Date,Depomed shall use commercially reasonable efforts to maintain at least one month’s safety stock ofProduct (“Safety Stock”) to address unanticipated changes in demand for the Product(calculated on the basis of the Volume Forecast contained in the then-current Annual Plan).     Section 6.2 **Manufacturing Activities****.**The Product, including all Samples, to bemanufactured by or for Depomed for sale in the Territory shall be manufactured to meet applicablespecifications for the Product in accordance with the NDA, cGMP and in compliance with all otherapplicable Legal Requirements.     Section 6.3 **Volume Forecasts****.**At least 30 days prior to the beginning of eachAgreement Quarter ending after the Promotion Commencement Date, King shall submit to the JCC awritten forecast by month of the number of Units of Product expected to be sold in the Territoryduring the twelve (12) month period beginning with such Agreement Quarter, which forecast shall beprepared by King in good faith. In order to assist King in developing such forecasts, Depomedshall give King trade wholesaler stocking levels information within ten days following thebeginning of each Agreement Quarter ending after the Promotion Commencement Date (or, if later,within two business days after such information becomes available to Depomed). The JCC shallreview and discuss such forecast and shall make such modifications thereto as may be necessary forsuch forecast to be unanimously approved by the JCC and to be consistent with the forecasting andpurchasing provisions of Depomed’s Third Party supply agreement relating to the Product (as somodified and approved for the applicable twelve (12) month period, the “Volume Forecast”).Depomed shall use reasonable best efforts to manufacture and distribute, or cause to bemanufactured and distributed, Product consistent with the Volume Forecast. The Volume Forecast forthe twelve month period beginning on August 1, 2006 is attached hereto as Schedule 6.3.     Section 6.4 **Sales; Pricing****.**     (a) Depomed or its Affiliates shall book all sales of the Product in the Territory and shallbe responsible for entering into any contracts and other arrangements with any Person regarding thesale of the Product, and for establishing and approving the form, content and terms and conditionsthereof, including any discount, allowance, rebate, chargeback or other term granted therein;provided, however, that (i) the pricing of the Product shall be consistent with thepricing established by the JCC in accordance with Section 3.3 hereof, (ii) the terms of suchcontract and other arrangement shall be consistent with the contracting guidelines established bythe JCC in accordance with Section 3.3(k) and reflected in the Annual Plan, and (iii) any
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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deductions from gross amounts invoiced pursuant to any such contract or arrangement shallcorrespond to one or more of the categories of deductions set forth in the definition of “NetSales” in Article I. The parties have reviewed the initial pricing and contracting guidelinesapplicable to the Product. The parties agree to discuss among the JCC and finalize the initialpricing and contracting guidelines within two weeks after the Effective Date.     (b) King will work on behalf of Depomed to provide necessary support for managed markets andtrade customer groups with respect to the Product to enable Depomed to enter into such contractsand other arrangements described above. For purposes of clarity, all such contracts andarrangements supported by King must be executed and administered by Depomed.     Section 6.5 **Samples****.**     (a) Depomed shall provide or cause to be provided to King, from time to time as contemplatedby the Annual Plan, with samples of the Product that are not for sale and with no fee associated(“Samples”) to be distributed by King solely in connection with the performance of Details.Depomed shall supply such Samples FOB Depomed’s or its designee’s warehouse, and the risk of lossand responsibility for handling and warehousing of the Samples shall pass to King upon delivery toa carrier designated by King. King shall be responsible for distributing the Samples to its SalesRepresentatives in a timely manner. Depomed shall invoice King for each shipment of Samples at itsStandard Cost payable within 30 days of the invoice date. King shall also be responsible forsecuring the return and appropriate disposal of and reconciling existing Sample inventories fromdiscontinued Sales Representatives.     (b) Samples supplied by Depomed to King shall be used by King solely in performing Details toProfessionals in accordance with this Agreement. Upon its receipt of Samples, King shall be solelyresponsible for accountability and compliance with the PDMA for the King Sales Force, and otherapplicable Legal Requirements relating to such Samples or the distribution of same by the KingSales Force, and shall be responsible for adherence by its Sales Representatives to such LegalRequirements.     (c) Sampling volume shall be consistent with King’s Promotional Effort and considered acomponent of the Advertising/Marketing/Educational Expenses. Sampling volume will be included as apart of each Annual Plan.     Section 6.6 **Inability to Supply****.**In the event that a Depomed Supply Failure occurs,notwithstanding its compliance with its obligations under Section 6.1, to fulfill all orders forthe Product generated by King activities in a timely and efficient manner, upon written notice toDepomed (a “King Manufacturing Notice”), King shall have, and hereby grants King,exercisable only in accordance with the provisions hereof, the right, but not the obligation, tomanufacture, or have manufactured, the Product on behalf of Depomed, at Depomed’s expense,including expenses related to the technical transfer of the Product, and Depomed will providereasonable assistance to King in connection therewith, including by transferring or licensing toKing all Technology necessary or useful to give King the capability of manufacturing the Product sothat King can undertake manufacture of the Product; provided, however, that Depomedshall not be required to reimburse King for more than [***] percent ([***]%) of Depomed’s standardcost for such Product. Any such Product manufactured by King will be
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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sold by Depomed in accordance with this Agreement. King’s right to use the Technology tomanufacture, or have manufactured, the Product under this Section 6.6 shall terminate upon thelater to occur of (a) the second (2nd) anniversary of the date upon which King deliveredthe King Manufacturing Notice to Depomed and (b) the six (6) month anniversary of the date uponwhich Depomed shall have delivered to King a certification of its CEO as to Depomed’s ability tofulfill all orders for the Product generated by King activities in a timely and efficient manner,but in any event on termination of this Agreement.     Section 6.7 **Manufacture by King**. Depomed agrees to consider in good faith anyproposal by King to manufacture the 500mg formulation of the Product at King’s Bristol facilitythat would result in a reduction in the supply price applicable to the Product relative toDepomed’s then current contract manufacturer, and would be suitable to Depomed’s operations,regulatory affairs, and quality assurance groups. Any fixed and determinable savings in Productmanufacturing cost to Depomed realized during the Term, and during the eight calendar quartersduring which a payment is being paid pursuant to Section 7.4, that results from any definitivelong-term supply arrangement between Depomed and King relating to the Product relative to Depomed’sthen current long-term supply arrangement [***]; provided that, in the event King continues tomanufacture the Product for Depomed, the parties will negotiate in good faith with respect toadjusting the pricing mechanism for the manufacture of such Product following the Term, and sucheight calendar quarter period, in order to compensate King for such savings and for any discountsKing provided to Depomed as a result of the relationship of the parties hereunder. Any manufactureby King of the Product would be subject to regulatory approval of a supplemental NDA providing forsuch manufacture.     Section 6.8 **1000mg Formulation**.     (a) The parties acknowledge that Depomed will use commercially reasonable efforts to submit asupplemental new drug application to the FDA and to obtain Regulatory Approval for a 1000mgformulation using metformin as the sole active pharmaceutical ingredient (the “1000mgFormulation”) to which Depomed has certain rights pursuant to the BLS Supply Agreements.     (b) The provisions of Section 6.1 through 6.6 will not apply to the 1000mg Formulation unlessand until Depomed obtains Regulatory Approval for the 1000mg Formulation, at which time suchprovisions will apply, except as follows: (i) Depomed shall have no obligation to continue tosupply and distribute the 1000mg Formulation if Depomed, in the exercise of its reasonable businessjudgment after consultation with the JCC, determines that marketing the 1000mg Formulation in theTerritory is not commercially feasible due to reasons related to intellectual property matters,safety, FDA, manufacturing or supply issues, or market conditions; and (ii) Depomed shall have noliability under this Agreement for any failure by BLS to timely deliver and supply the 1000mgFormulation under the BLS Supply Agreement in accordance with the terms thereof, and any suchfailure on the part of BLS shall not be a breach or default of this Agreement by Depomed (except tothe extent that any such failure by BLS arises directly from Depomed’s failure to comply with itsobligations, including paying amounts due, under such agreement).
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 6.9 **BLS Supply Agreements****.**The parties acknowledge that Depomed is subject tocertain obligations under the BLS Supply Agreements. Depomed shall not amend, terminate or causeto be terminated any BLS Supply Agreement (or any other agreement between Depomed and BLSconcerning rights to, or the supply or marketing of, the Product in the Territory) without theprior written consent of King, which consent shall not to be unreasonably withheld, delayed orconditioned; provided that Depomed shall have the right to amend any BLS Agreement without theconsent of King if such amendment does not materially and adversely affect (a) Depomed’s ability tomaintain Regulatory Approval for the 1000mg Formulation, (b) Depomed’s ability to purchase the1000mg Formulation in commercial quantities under the BLS Supply Agreements, or (c) King’s economicbenefits hereunder.**ARTICLE VII****COMPENSATION**     Section 7.1 **Promotion Fees****.**     (a) In consideration for King’s performance of its obligations under this Agreement, Depomedshall pay promotion fees (the “Promotion Fees”) to King as follows: following eachAgreement Quarter during the Term, Depomed shall pay to King 50% of the Gross Margin for suchAgreement Quarter.     (b) Within thirty (30) days following the end of each Agreement Quarter during the Term,Depomed shall provide King with a statement setting forth:          (i) the aggregate number of Units of Product sold to customers in the Territory during suchAgreement Quarter;          (ii) Net Sales during such Agreement Quarter;          (iii) Depomed Net Sales during such Agreement Quarter (if any);          (iv) COGS during such Agreement Quarter (based on Depomed’s Standard Cost);          (v) Advertising/Marketing/Educational Expense with respect to the costs of Samples (based onDepomed’s Standard Cost) during such Agreement Quarter;          (vi) Gross Margin for such Agreement Quarter; and          (vii) a calculation of the amount, if any, payable by Depomed to King in respect of suchAgreement Quarter pursuant to Section 7.3(a).     (c) Within 4 business days following the end of each Agreement Month (or if later, within twobusiness days after such information becomes available to Depomed) during the Term, Depomed shallprovide King with a statement setting forth the aggregate number of Units of Product sold tocustomers in the Territory during such Agreement Month.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     (d) Except as expressly specified otherwise, any amounts payable by one party to the otherparty in respect of any Agreement Quarter pursuant to this Agreement shall be paid withinforty-five (45) days after the end of such Agreement Quarter.     Section 7.2 **Maintenance of Records****.**     (a) Each party agrees to keep, for a period of at least three years after the date of entry(or such longer period as may be required by Legal Requirements) full and accurate recordsmaintained in accordance with such party’s accounting practices in sufficient detail to enable aThird Party to accurately calculate (i) in the case of Depomed, COGS, BLS Fees, Depomed’sAdvertising/Marketing/Educational Expenses, Net Sales and Depomed Net Sales reported, payments tobe made under this Agreement and Details completed by the Depomed Sales Force, and (ii) in the caseof King, King’s Advertising/Marketing/Educational Expenses and PDEs completed by the King SalesForce. Upon 30 days prior written notice, such records shall be made available by the auditedparty for audit by an independent certified public accounting firm designated by the other partyand reasonably acceptable to the party whose records are to be examined. The auditor will onlyexamine such books and records during business hours but not more than once each fiscal year whilethis Agreement remains in effect and for three years thereafter in order to verify expenses, NetSales, Depomed Net Sales, PDEs or Details completed, or payments due under this Agreement. Thefees and expenses of the auditor performing such verification examination shall be borne by theparty conducting the verification; provided, however, that if any verification reveals that theaudited party has reported incorrectly, and the amount of such discrepancy is at least five percentof the aggregate amount that should have been reported for the period examined, then the auditedparty shall pay the entire amount of the fees and expenses for such verification.     (b) Each party shall have the right, upon five business days’ prior written notice, to auditall applicable records of the other party (other than records described in Section 7.2(a)) for thepurpose of determining the audited party’s compliance with the obligations set forth in thisAgreement, including with respect to training programs and certifications and records reports forthe Samples. The audit will be conducted during normal business hours, at convenient times. Anysuch audit may be conducted no more than once each fiscal year. The fees and expenses of theauditing party shall be borne by such party. This right to audit shall extend throughout the termof this Agreement and for one year after expiration or termination of this Agreement.     (c) Whenever in 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 shall be determined inaccordance with generally accepted accounting principles as applied in the United States(“GAAP”), consistent with the terms of this Agreement. The term “out-of-pocket” costs orexpenses means cost or expenses paid to Third Parties and shall not include any fixed costs orexpenses, personnel costs or expenses, overhead costs or expenses, or other costs or expenses of asimilar nature.     (d) COGS and all Advertising/Marketing/Educational Expenses, including Samples, shall bedetermined in accordance with GAAP, except as follows: (i) COGS and Samples shall be calculated atDepomed’s Standard Cost for each Agreement Quarter and reconciled
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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periodically as set forth in Section 7.5(d); and (ii) COGS shall include costs incurred byDepomed associated with achieving manufacturing efficiencies and ensuring Product supply.     (e) Depomed shall calculate Standard Costs in good faith to approximate as closely asreasonably practicable such actual costs calculated in accordance with GAAP (*e.g.*, the unit cost offinished goods by bottle size or packaged samples) and shall provide the JCC with its methodologyfor calculating such costs. The JCC shall review Depomed’s methodology for calculating StandardCost at least annually during the Term to ensure that Depomed’s Standard Costs continue toapproximate as closely as reasonably practicable such actual costs calculated in accordance withGAAP, and Depomed shall revise such methodology following such review in accordance with therecommendations of the JCC.     Section 7.3 **Payments****.**Any payments required to be made by either party under thisAgreement shall be made in United States dollars via wire transfer of immediately available fundsto such bank account as the other party shall designate in writing prior to the date of suchpayment.     Section 7.4 **Tail Promotion Fees****.**Following the termination of this Agreement at theconclusion of the initial five year term or any additional term, for each of the eight fullcalendar quarters following such termination, Depomed shall pay to King an amount equal to, in eachof the first four such calendar quarters, [***]% of the Net Sales for each such quarter and, ineach of the fifth through eighth such calendar quarters, [***]% of such Net Sales for each suchquarter.     Section 7.5 **Expense Reimbursement****.**     (a) If Depomed pays Advertising/Marketing/Educational Expenses allocated to King under theLaunch Plan or the Annual Plan, Depomed shall notify King at least five business days in advance ofthe payment of such Advertising/Marketing/Educational Expenses, and, unless King objects in writingto Depomed before the end of such five business-day period, King shall reimburse Depomed for suchAdvertising/Marketing/Educational Expenses within thirty days’ after receipt of a detailed invoicetherefor. If King pays Advertising/Marketing/Educational Expenses allocated to Depomed under theLaunch Plan or the Annual Plan, King shall notify Depomed at least five business days in advance ofthe payment of such Advertising/Marketing/Educational Expenses, and, unless Depomed objects inwriting to King before the end of such five business-day period, Depomed shall reimburse King forsuch Advertising/Marketing/Educational Expenses within thirty days’ after receipt of a detailedinvoice therefor.     (b) Within 15 days following the end of each Agreement Quarter, each party shall provide tothe JCC a report setting forth in reasonable detail Advertising/Marketing/Educational Expensesincurred by such party in such Agreement Quarter in accordance with GAAP, including expensesincurred by a party but not reimbursed by the other party pursuant to Section 7.5(a) above orexpenses reimbursed by a party pursuant to such section. Within 10 days thereafter, the JCC shallproduce a report setting forth the calculation of Advertising/Marketing/Educational Expenses andits allocation between the parties in accordance with Section 4.5(e) above. The report shall alsoset forth the amount of any
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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payments that a party must make to the other party in order to achieve such allocation betweenthe parties. All such payments shall be made within 45 days following the end of the applicableAgreement Quarter.     (c) At the end of each Agreement Quarter, the parties will reconcile their respective paymentsand expenses hereunder, including Promotion Fee payments and expense reimbursements pursuant tothis Article VII, and, at the discretion of the party who has paid an amount greater than thatallocable to such party for the relevant Agreement Quarter, such over-paying party will bereimbursed by the other party within 45 days following the end of the applicable Agreement Quarter,based on the report of the JCC described in Section 7.5(b) above or, at its discretion, willreceive a credit against amounts payable by the over-paying party to the other party in thesubsequent Agreement Quarter(s), which credit amount will be carried forward until fully creditedor reimbursed. Reimbursement of expenses pursuant to this Section 7.5(c) shall be made based onAdvertising/Marketing/Educational Expenses recorded in accordance with GAAP.     (d) The statement submitted by Depomed pursuant to Section 7.1(b) for the final AgreementQuarter of each calendar year during the Term, and the final Agreement Quarter of the Term, shallbe accompanied by a report created by Depomed (a “Reconciliation Report”) that (i)reconciles Depomed’s Standard Cost for COGS and Samples during such calendar year (or partialcalendar year, as applicable) to Depomed’s actual COGS and Depomed’s actual out-of-pocket cost forSamples calculated in accordance with Section 7.2(d), (ii) sets forth any adjustment to GrossMargin for such calendar year (or partial calendar year, as applicable) on the basis of suchreconciliation, and (iii) sets forth any adjustment to Advertising/Marketing/Educational Expensesfor such calendar year (or partial calendar year, as applicable) based on reconciliation of actualcosts for Samples. The report shall also set forth the amount of any payments that a party mustmake to the other party in order to achieve the proper allocation of the adjusted Gross Marginbetween the parties, pursuant to Section 7.1(a), for such calendar year and the proper allocationof Advertising/Marketing/Educational Expenses between the parties, pursuant to Section 4.5(e), forsuch calendar year. All such payments shall be made within 45 days following the receipt of theReconciliation Report. Depomed may elect to submit Reconciliation Reports on a quarterly basis inaccordance with the provisions of this Section 7.5(d), in which event (i) such quarterlyReconciliation Reports will accompany the statement submitted by Depomed pursuant to Section7.1(b), and (ii) each reference in this Section 7.5(d) to a calendar year shall be deemed to bereference to an Agreement Quarter.     Section 7.6 **Depomed Percentage**. If, prior to or following the commencement of ProductPromotion by the Depomed Sales Force, Depomed reasonably determines that the Prescriber Data failsto, or is likely to fail to, reasonably accurately reflect the portion of Net Sales attributable toprescriptions written by Professionals on the Depomed Physician List (whether as a result ofProfessionals opting out of the American Medical Association’s Physician Masterfile database orotherwise), the parties shall negotiate in good faith with respect to implementing a revised mannerof measuring the portion of Net Sales attributable to prescriptions written by Professionals on theDepomed Physician List, and reflect any such modification in the definition of “Depomed Percentage”and the “Baseline Percentage.” The parties shall consider in their discussions any other customarymanner of determining similar
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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information as may arise in light of Professionals opting out of the American MedicalAssociation’s Physician Masterfile database.**ARTICLE VIII****TERM AND TERMINATION**     Section 8.1 **Term**. The term of this Agreement shall commence on the Effective Date andshall continue, unless terminated sooner in accordance with this Article VIII, until June 27, 2011(the “Term”). The Term of this Agreement shall be extended for subsequent one year periodsupon the mutual agreement of the parties, which agreement shall be set forth in writing (in whichevent a party that desires to so extend the Term of this Agreement shall notify the other party atleast 120 days prior to the termination of this Agreement).     Section 8.2 **Early Termination**.     (a) Depomed and King shall have the following rights with respect to the performance of PDEs:          (i) In the event King performs more than [***] PDEs each Agreement Quarter (the “PDEMinimum”) in any Agreement Quarter, such excess PDEs will be carried forward to the immediatelyfollowing Agreement Quarter. In the event that King does not perform the PDE Minimum in anyAgreement Quarter (the difference between such PDE Minimum and the number of PDEs actuallyconducted, the “PDE Shortfall”), King will have until the end of the Agreement Quarterimmediately following to cure its failure by providing a sufficient number of excess PDEs in theimmediately following Agreement Quarter.          (ii) If King does not perform, in the aggregate, two times the PDE Minimum in any twoconsecutive Agreement Quarters, Depomed may demand that King cure such default by (A) [***] and (B)[***], in each case, prior to the end of the next succeeding Agreement Quarter following noticefrom Depomed.          (iii) Upon the third failure by King to meet the PDE Minimum during any six consecutiveAgreement Quarters, Depomed shall have the right to [***] or demand that King shall cure suchdefault in the same manner outlined in clause (i) above for the first such default.     (b) If, as of the end of any period of the immediately previous four consecutive AgreementQuarters, Promotion Net Sales for such period are less than $[***], either party shall have theright to terminate this Agreement on 120 days’ prior written notice to the other party, whichnotice may not be given before the third anniversary of the Promotion Commencement Date.     (c) If a party desires to exercise its option to terminate this Agreement pursuant to thisSection 8.2 or demand any [***] or cure pursuant to Section 8.2(a), it must give written notice tothe other party within 60 days after receiving the report of the Agreement Quarter or AgreementMonth giving rise to the right to terminate this Agreement pursuant to Section 8.2.
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     Section 8.3 **Termination for Cause****.**Either party may terminate this Agreement,effective at any time after providing sixty days written notice and an opportunity to cure duringsuch sixty day period (ninety 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 material obligations contained in thisAgreement. If such cure is effected, such notice with respect to such termination shall be nulland void.     Section 8.4 **Termination for Bankruptcy or Force Majeure****.**To the extent permitted bylaw, each party will have the right to terminate this Agreement immediately upon notice to theother party, in the event of either of the following:     (a) The entry of an order for relief under the United States Bankruptcy Code (or anycorresponding remedy under successor laws) against the other party; the filing of a petition by oragainst the other party under any bankruptcy, insolvency or similar law (which petition is notdismissed within sixty days after filing), except Chapter 11 of the United States Bankruptcy Codeor any successor statute that permits a corporation to continue its operation while protecting itfrom creditors; the appointment of a receiver for the other party’s business or property; or theother party’s making of a general assignment for the benefit of its creditors; or     (b) Any Force Majeure Event affecting the other party beyond the other party’s control whichlasts for a period of at least six months and which is of sufficient intensity to interrupt orprevent the carrying out of such other party’s material obligations under this Agreement duringsuch period.Notwithstanding the occurrence of any of the event specified in subsection (a) of this Section 8.4,the parties acknowledge and agree that, to the extent Section 365(n) of the United StatesBankruptcy Code applies to this Agreement, the non-insolvent party may elect to retain and exercisethe rights granted to it hereunder with respect to the intellectual property owned or controlled bythe insolvent party.     Section 8.5 **Force Majeure****.**Any Force Majeure Event of the type described in Section16.7 affecting a party hereunder shall entitle the other party hereto, at any time after the expiryof the period of six months specified therein and upon sixty days written notice given after suchsix month period (such notice being, null and void if the Force Majeure Event is discontinuedduring such sixty-day period), in addition to the right to terminate this Agreement under Section8.4, the right to (i) extend this Agreement for a period equal to the duration of the Force MajeureEvent which occasioned the delay, interruption or prevention (subject to the maximum term of sixmonths) or (ii) continue the Agreement in full force and effect without modification. In nocircumstances will either party be liable to the other for its inability to perform under thisAgreement due to any such Force Majeure Event.     Section 8.6 **Recall****.**Either party shall have the right to terminate this Agreement inthe event of a large scale recall or withdrawal of the Product from the Territory resulting from asignificant safety risk inherent in the Product and not due to tampering, a remediablemanufacturing problem, or other defect that can be cured with respect to Products manufacturedafter such risk is discovered.     Section 8.7 **Effect of Termination****.**
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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     (a) No additional payment obligations arising under Article VII hereof shall accrue after thedate of expiration or termination of this Agreement except as set forth in Section 7.4; provided,however, that expiration or termination of this Agreement shall not relieve either party of anyobligations accruing prior to such expiration or termination. Certain provisions of this Agreementby their terms continue after the expiration or termination of this Agreement. In addition, anyother provisions required to interpret and enforce the parties’ rights and obligations under thisAgreement shall also survive, but only to the extent required for the full observation andperformance of this Agreement.     (b) Except as indicated in Sections 8.5, expiration or termination of this Agreement shall bewithout prejudice to (a) any remedies which any party may then or thereafter have hereunder or atlaw; and (b) a party’s right to receive any payment accrued under the Agreement prior to thetermination date but which became payable thereafter; and (c) either party’s right to obtainperformance of any obligations provided for in this Agreement which survive termination by theirterms or by a fair interpretation of this Agreement. Except as expressly set forth herein, therights to terminate as set forth herein shall be in addition to all other rights and remediesavailable under this Agreement, at law, or in equity or otherwise.     (c) Upon the expiration or termination of this Agreement pursuant to this Article VIII, eachparty shall promptly transfer and return to the other party all Proprietary Information of theother party (provided that each party may keep one copy of such Proprietary Information of forarchival purposes only). Upon the expiration or termination of this Agreement, King shall provideto Depomed, at King’s out-of-pocket cost therefor, all Promotional Materials in King’s possession(including electronic files of all Promotional Materials); provided, however, that King may destroyany printed copies of Promotional Materials bearing the King Trademarks and may remove the KingTrademarks from electronic files of Promotional Materials.**ARTICLE IX****REPRESENTATIONS AND WARRANTIES**     Section 9.1 **Representations and Warranties of Depomed****.**Depomed hereby represents andwarrants to King as of the date hereof as follows:     (a) Organization. Depomed (i) is a corporation duly organized, validly existing andin good standing under the laws of the state of California, and (ii) has all necessary corporatepower and corporate authority to own its properties and to conduct its business, as currentlyconducted.     (b) Authorization. The execution and delivery of this Agreement and the consummationof the transactions contemplated hereby are within the corporate power of Depomed, have been dulyauthorized by all necessary corporate proceedings of Depomed, and this Agreement has been dulyexecuted and delivered by Depomed.     (c) No Conflict. The execution and delivery of this Agreement and the consummation ofthe transactions contemplated hereby do not: (i) conflict with or result in a breach of anyprovision of Depomed’s organizational documents; (ii) result in a material breach
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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of any material agreement to which Depomed is party; (iii) result in a violation of any Orderto which Depomed is subject; (iv) require Depomed to obtain any material approval or consent fromany Governmental Authority or Third Party other than those consents and approvals which have beenobtained prior to the date hereof; or (v) violate any Legal Requirement applicable to Depomed inany material respect.     (d) Enforceability. This Agreement constitutes the valid and binding obligation ofDepomed, enforceable against Depomed in accordance with its terms, subject to bankruptcy,reorganization, insolvency and other similar laws affecting the enforcement of creditors’ rights ingeneral and to general principles 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 agent with respect tothis Agreement or the transactions contemplated hereby.     (f) Depomed Intellectual Property. To the knowledge of Depomed, the Promotion andsale of Product in the Territory in accordance with this Agreement will not infringe any patents,trademarks or other intellectual property rights of any Third Party; provided, that Depomed makesno representation as to the King Trademarks. Depomed has the right, power and authority to grantthe licenses granted by it hereunder, including the right, power and authority to license to King,pursuant to Section 6.6, all Technology necessary for the manufacture of the Product.     (g) Litigation. There is no litigation, arbitration proceeding, governmentalinvestigation, action or claims of any kind, pending or, to the knowledge of Depomed, threatened,by or against Depomed or any of its Affiliates relating to the Product or which would reasonably beexpected to materially affect Depomed’s ability to perform its obligations hereunder.     (h) Documentation. Depomed has made available to King copies of substantially allclinical data and reports, medical information, competitive information, marketing research andother documentation related to the Product in Depomed’s possession that have been requested by Kingin the course of King’s due diligence investigation of the Product.     (i) Supply. Depomed currently has access to sufficient supplies of Product to performthe manufacturing obligations required by it under this Agreement. All Product will bemanufactured with reasonable due care and in conformity with current generally accepted standardsand procedures for manufacturing the Product and cGMP.     (j) Generic Drug Act. Pursuant to the Generic Drug Enforcement Act of 1992, 21 U.S.C.§ 335a, as may be amended or supplemented (the “Generic Drug Act”),          (i) none of Depomed, its Affiliates, or any Person under its direction or control is currentlydebarred by the FDA under the Generic Drug Act;          (ii) none of Depomed, its Affiliates, or any Person under its direction or control iscurrently using or will use in any capacity in connection with the Product any Person that isdebarred by FDA under the Generic Drug Act; and
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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          (iii) there have been no convictions of Depomed, its Affiliates, or any Person under itsdirection or control for any of the types of crimes set forth in the Generic Drug Act within thefive years prior to the Effective Date.     (k) Legal Requirements. None of Depomed, its Affiliates, or Person under itsdirection or control is currently excluded from a federal or state health care program underSections 1128 or 1156 of the Social Security Act, 42 U.S.C. §§ 1320a-7, 1320c-5 as may be amendedor supplemented. None of Depomed, its Affiliates, or Person under its direction or control isotherwise currently excluded from contracting with the federal government. None of Depomed, itsAffiliates, or Person under its direction or control is otherwise currently excluded, suspended, ordebarred from any federal or state program. Depomed shall immediately notify King if, at any timeduring the Term, Depomed, its Affiliates, or any Person under its direction or control is convictedof an offense that would subject it or King to exclusion, suspension, or debarment from any federalor state program.     (l) NDA Acquisition. Depomed has not committed fraud in relation to the filing oracquisition of an NDA or used unfair methods of competition in connection with such filing oracquisition, including, in either case, in connection with any data supplied by Depomed to the FDA.The parties acknowledge that a breach of this representation is a material failure of a materialobligation and is not subject to cure.     (m) BLS Agreements. Depomed is not in material breach of the BLS Agreements and hasnot submitted to BLS any notice (written or oral) to the effect that BLS is in breach of the BLSAgreements. Depomed has not received from BLS any notice (written or oral) to the effect thatDepomed is in breach of the BLS Agreements. The BLS Agreements are legal, valid, binding,enforceable and in full force and effect in all material respects.     Section 9.2 **Representations and Warranties of King****.**King hereby represents andwarrants to Depomed as of the date hereof as follows:     (a) Organization. King (i) is a corporation duly organized, validly existing and ingood standing under the laws of the state of Tennessee, and (ii) has all necessary corporate powerand corporate authority to own its properties and to conduct its business, as currently conducted.     (b) Authorization. The execution and delivery of this Agreement and the consummationof the transactions contemplated hereby are within the corporate power of King, have been dulyauthorized by all necessary corporate proceedings of King, and this Agreement has been dulyexecuted and delivered by King.     (c) No Conflict. The execution and delivery of this Agreement and the consummation ofthe transactions contemplated hereby do not: (i) conflict with or result in a breach of anyprovision of King’s organizational documents; (ii) result in a material breach of any materialagreement to which King is party; (iii) result in a violation of any Order to which King issubject; (iv) require King to obtain any material approval or consent from any GovernmentalAuthority or Third Party other than those consents and approvals which have been
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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obtained prior to the date hereof; or (v) violate any Legal Requirement applicable to King inany material respect.     (d) Enforceability. This Agreement constitutes the valid and binding obligation ofKing, enforceable against King in accordance with its terms, subject to bankruptcy reorganization,insolvency and other similar laws affecting the enforcement of creditors’ rights in general and togeneral principles of equity (regardless of whether considered in a proceeding in equity or anaction at law).     (e) Broker. King has not employed any broker or finder with respect to this Agreementor the transactions contemplated hereby.     (f) King Trademarks. To the knowledge of King, the use of the King Trademarks toPromote and sell Product in the Territory in accordance with this Agreement will not infringe anytrademarks or other intellectual property rights of any Third Party.     (g) Litigation. There is no litigation, arbitration proceeding, governmentalinvestigation, action or claims of any kind, pending or, to the knowledge of King, threatened, byor against King or any of its Affiliates relating to the Product or which would reasonably beexpected to materially affect King’s ability to perform its obligations hereunder.     (h) Generic Drug Act. Pursuant to the Generic Drug Act,          (i) none of King, its Affiliates, or any Person under its direction or control is currentlydebarred by the FDA under the Generic Drug Act;          (ii) none of King, its Affiliates, or any Person under its direction or control is currentlyusing or will use in any capacity in connection with the Product any Person that is debarred by FDAunder the Generic Drug Act; and          (iii) there have been no convictions of King, its Affiliates, or any Person under itsdirection or control for any of the types of crimes set forth in the Generic Drug Act within thefive years prior to the Effective Date.     (i) Legal Requirements. None of King, its Affiliates, or Person under its directionor control is currently excluded from a federal or state health care program under Sections 1128 or1156 of the Social Security Act, 42 U.S.C. §§ 1320a-7, 1320c-5 as may be amended or supplemented.None of King, its Affiliates, or Person under its direction or control is otherwise currentlyexcluded from contracting with the federal government. None of King, its Affiliates, or Personunder its direction or control is otherwise currently excluded, suspended, or debarred from anyfederal or state program. King shall immediately notify Depomed if, at any time during the Term,King, its Affiliates, or any Person under its direction or control is convicted of an offense thatwould subject it or Depomed to exclusion, suspension, or debarment from any federal or stateprogram.     Section 9.3 **Depomed Disclaimer****.**EXCEPT AS EXPRESSLY PROVIDED HEREIN, DEPOMEDDISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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WITH REGARD TO THE PRODUCT, INCLUDING THE WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESSFOR A PARTICULAR PURPOSE.     Section 9.4 **King Disclaimer****.**EXCEPT AS EXPRESSLY PROVIDED HEREIN, KING DISCLAIMS ALLOTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY AND WARRANTY OFFITNESS FOR A PARTICULAR PURPOSE.**ARTICLE X****INTELLECTUAL PROPERTY MATTERS**     Section 10.1 **Third Party Competition****.**Expressly excluding Article XIII of thisAgreement, nothing in this Agreement shall limit or restrict Depomed’s ability to grantnon-exclusive patent licenses to patents and patent applications included within the Technology orotherwise covering the Product in connection with the settlement of any pending, threatened orcontemplated patent litigation with respect to extended release metformin products commercializedin the Territory prior to the Effective Date, including any such litigation against marketers ofmetformin products (each such license, an “AcuForm Patent License”). However, inrecognition of the parties’ agreement to co-exclusively Promote Products, in accordance with theterms and conditions of this Agreement, Depomed agrees that if Depomed or any Affiliate thereofgrants to any Affiliate or Third Party a license, covenant not to sue, right of reference, right ofsupply or other intellectual right (in any case, other than AcuForm Patent Licenses and covenantsnot to sue and other rights in connection with the grant of AcuForm Patent Licenses for extendedrelease metformin products commercialized in the Territory prior to the Effective Date) related tothe manufacture, use, offer for sale, sale, importation, marketing or promotion of any Product thatuses Depomed’s or its Affiliate’s proprietary drug delivery technology currently referred to as theAcuForm technology and described in U.S. Patent Nos. 6,340,475 and 6,635,280 or other drug deliverytechnology incorporated into any formulation of the Product, including any authorized genericversion of any Product covered by any NDA, then the parties shall negotiate in good faith financialadjustments to this Agreement adequate to compensate King for any lost market share attributable tosales of product by or on behalf of such Third Party or Affiliate, taking into account theconsideration received by Depomed or its Affiliates for the grant of such rights.     Section 10.2 **Infringement****.**     (a) If either party shall learn of a claim or assertion that the manufacture, use or sale ofthe Product in the Territory infringes or otherwise violates the intellectual property rights ofany Third Party or that any Third Party violates the intellectual property rights owned orControlled by (i) Depomed in the Product and the Depomed Trademarks in the Territory or (ii) Kingin the King Trademarks, then the party becoming so informed shall promptly, but in all eventswithin fifteen (15) business days thereof, notify the other party to this Agreement of the claim orassertion.     (b) If warranted in the opinion of Depomed, after consultation with the JCC, Depomed shalltake such legal action as is advisable in Depomed’s opinion to restrain
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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infringement of such Depomed patent rights or the Depomed Trademarks. King shall cooperatefully with, and as reasonably requested by, Depomed in Depomed’s attempt to restrain suchinfringement, and Depomed shall reimburse King for its out-of-pocket expenses incurred in providingsuch cooperation. King may be represented by counsel of its own selection at its own expense inany suit or proceeding brought to restrain such infringement, but Depomed shall have the right tocontrol the suit or proceeding.     (c) If warranted in the opinion of King, King shall take such legal action as is advisable inKing’s opinion to restrain such infringement of the King Trademarks. Depomed shall cooperate fullywith, and as requested by, King in King’s attempt to restrain such infringement, and King shallreimburse Depomed for its out-of-pocket expenses incurred in providing such cooperation. Depomedmay be represented by counsel of its own selection at its own expense in any suit or proceedingbrought to restrain such infringement, but King shall have the right to control the suit orproceeding.**ARTICLE XI****INDEMNIFICATION; LIMITS ON LIABILITY**     Section 11.1 **Indemnification****.**Each party will defend, at its own expense, indemnifyand hold harmless the other party and its Affiliates from and against any and all damages,liabilities, losses, costs, and expenses, including reasonable attorneys’ fees, arising out of anyThird Party claim, suit or proceeding brought against the other party or its Affiliates to theextent 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 made by such indemnifyingparty in this Agreement, unless waived in writing by the indemnified party; (ii) any breach of therepresentations or warranties made by such indemnifying party in this Agreement; or (iii) thenegligence or willful misconduct of the indemnifying party, except (under any of (i) or (ii)) tothe extent arising out of the breach, violation, failure, negligence or willful misconduct of theindemnified party. In addition, Depomed will defend, at its own expense, indemnify and holdharmless King and its Affiliates from and against any and all damages, liabilities, losses, costs,and expenses, including reasonable attorneys’ fees, arising out of any Third Party claim, suit orproceeding brought against King or its Affiliates to the extent such claim, suit, or proceeding isbased upon a claim arising out of or relating to (w) any actions of the Depomed Sales Force,including any false or misleading representations to Professionals, customers or others regardingKing or the Product; (x) any agreement between Depomed and BLS; or (y) any claim made by any Personthat the manufacture, use or sale of the Product infringes or misappropriates the patent,trademark, or other intellectual property rights of such Person, except with respect to any claimrelating to the King Trademarks; and (z) any product liability claim made by any Person withrespect to the Product, except to the extent liability is based on a breach by King of Section 4.2.Each party agrees that it shall promptly notify the other in writing of any such claim or actionand give the indemnifying party full information and assistance in connection therewith. Theindemnifying party shall have the sole right to control the defense and the sole right to settle orcompromise any such claim or action, except that the prior written consent of the other party shallbe required in connection with any settlement or compromise which could (i) place any obligation onor require any action of such other party; (ii) admit or imply any liability or wrongdoing of suchother party; or (iii) adversely affect the goodwill or public image of such
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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other party. Notwithstanding the foregoing, the indemnified party may participate thereinthrough counsel of its choice, but the cost of such counsel shall be borne solely by theindemnified party. The provisions of this Section 11.1 shall survive the termination of thisAgreement for three years (except as to claims as to which a party has notified the other inwriting prior to the third anniversary of the termination date of this Agreement, in which event,the indemnifying party’s obligations under this Section 11.1 shall survive with respect to any suchclaim until its resolution).     Section 11.2 **Consequential Damages****.**NEITHER KING NOR DEPOMED (WHICH FOR THE PURPOSESOF THIS SECTION 11.2 SHALL INCLUDE THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES ANDAGENTS) SHALL HAVE ANY LIABILITY TO THE OTHER FOR ANY PUNITIVE DAMAGES, SPECIAL, INCIDENTAL,CONSEQUENTIAL OR INDIRECT DAMAGES, RELATING TO OR ARISING FROM THIS AGREEMENT, EVEN IF SUCH DAMAGESMAY HAVE BEEN FORESEEABLE; PROVIDED THAT SUCH LIMITATION SHALL NOT APPLY IN THE CASE OFFRAUD OR WILLFUL MISCONDUCT.**ARTICLE XII****CONFIDENTIALITY AND PUBLICITY**     Section 12.1 **Proprietary Information****.**Pursuant to this Agreement, a party receivingProprietary Information from the other, directly or indirectly, will treat such ProprietaryInformation as confidential, will use such Proprietary Information only for the purposes of thisAgreement and will not disclose, and will take all reasonable precautions to prevent the disclosureof, such Proprietary Information to (a) any of its officers, directors, managers, equity holders,employees, agents, representatives, Affiliates or consultants who are not required to know suchProprietary Information or who are not bound by a like obligation of confidentiality or (b) toThird Parties.     Section 12.2 **Disclosures Required by Law****.**In the event the recipient party isrequired under applicable Legal Requirements to disclose Proprietary Information of the disclosingparty to any Governmental Authority to obtain any Regulatory Approval for the Product, is requiredto disclose Proprietary Information in connection with bona fide legal process (including inconnection with any bona fide dispute hereunder) or is required to disclose Proprietary Informationunder the rules of the securities exchange upon which its securities are traded, the recipientparty may do so only if it limits disclosure to that purpose after giving the disclosing partyprompt written notice of any instance of such a requirement in reasonable time for the disclosingparty to attempt to object to or to limit such disclosure. In the event of disclosures requiredunder applicable Legal Requirements, the recipient party shall cooperate with the disclosing partyas reasonably requested thereby.     Section 12.3 **Publicity****.**Neither party will originate any publicity, news release,public comment or other public announcement, whether to the press, to stockholders, or otherwise,relating to this Agreement, without the consent of the other party, except for such announcementwhich, in accordance with the advice of legal counsel to the party making such announcement, isrequired by law; provided, however, that each party shall be entitled to refer publicly to the
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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relationship of the parties reflected in this Agreement (i.e., Depomed as the developer of theProduct and King as the co-promoter of the Product in the Territory) in a manner that is consistentwith the joint press release issued by the parties and that is not damaging to the business orreputation of the other party. Except as otherwise permitted pursuant to the immediately precedingsentence, any party making any announcement which is required by law will, unless prohibited bylaw, give the other party an opportunity to review the form and content of such announcement andcomment before it is made. Either party shall have the right to make such filings withgovernmental agencies, including the United States Securities and Exchange Commission, as to thecontents and existence of this Agreement as it shall reasonably deem necessary or appropriate. Theparties have agreed upon the form and content of a joint press release to be issued by the partiespromptly following the execution of this Agreement. Once such press release or any other writtenstatement is approved for disclosure by both parties, either party may make subsequent publicdisclosure of the contents of such statement without the further approval of the other party. Theprovisions of this Article 12 shall survive termination of the agreement and shall remain in effectuntil a date three years after the Term of this Agreement.**ARTICLE XIII****COMBINATION PRODUCTS; RIGHT OF FIRST NEGOTIATION**     Section 13.1 **Combination Products****.**     (a) Depomed agrees to grant and hereby grants to King an exclusive option (exercisable atKing’s sole discretion by providing written notice of intent at any time, but in no event laterthan 180 days after the Effective Date) to obtain an exclusive license in the Territory to certainof Depomed’s proprietary drug delivery technology in combination with both metformin hydrochlorideand any other active pharmaceutical ingredients (a “Combination Product License”). If Kingnotifies Depomed in writing within 180 days after the Effective Date that King desires to exerciseits option to obtain a Combination Product License, King and Depomed shall promptly commencegood-faith negotiations regarding a definitive agreement providing for the Combination ProductLicense, for a period of 60 days or such longer period as may be mutually agreed upon by theparties in writing; and it is agreed that, as part of such good faith negotiations, the partieswill discuss, for inclusion in any definitive agreement, appropriate non-compete obligations foreach party with respect to any product containing metformin hydrochloride as an activepharmaceutical ingredient. If Depomed and King fail to enter into such a definitive agreementduring such period, then Depomed shall thereafter have the right to negotiate and enter into one ormore agreements with Third Parties related to Depomed’s proprietary drug delivery technology incombination with both metformin hydrochloride and other active pharmaceutical ingredients; providedthat, for a period of 6 months, any such agreement may not be on terms and conditions materiallymore favorable to the Third Party than the terms and conditions last offered by King prior to thetermination of discussions with Depomed.     (b) In the event the parties are not able to enter a definitive agreement with respect to aCombination Product License, pursuant to Section 13.1(a), then prior to the expiration ortermination of this Agreement, except pursuant to this Agreement, (i) neither party, nor any
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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Person controlled by a party, will be entitled to commercially launch in the Territory (eitherdirectly or indirectly through a marketing partner) a product containing metformin as an activepharmaceutical ingredient, and (ii) no Affiliate of Depomed will be entitled to commercially launchin the Territory (either directly or indirectly through a marketing partner) a product that (A)contains metformin as an active pharmaceutical ingredient and (B) uses Depomed’s or its Affiliate’sproprietary drug delivery technology currently referred to as the AcuForm technology and describedin U.S. Patent Nos. 6,340,475 and 6,635,280.     Section 13.2 **Right of First Negotiation****.**Depomed shall notify King in writing in theevent that Depomed desires to divest itself of its rights to the Product in the Territory (e.g., byasset sale or product license to a Third Party), or of its rights in the Territory to a productowned or controlled by Depomed containing metformin and another active pharmaceutical ingredient incombination with Depomed’s proprietary drug delivery technology incorporated within the Product(currently referred to as the AcuForm technology) (a “Combination Product”). If Kingnotifies Depomed in writing within 30 days after receipt of such notice (the “EvaluationPeriod”) that King is not interested in obtaining all of Depomed’s rights in and to the Productor the applicable Combination Product (such rights, “Metformin Product Rights”), or if Kingfails to notify Depomed of King’s interest in obtaining the Metformin Product Rights, in eithercase prior to the expiration of the Evaluation Period, then Depomed shall have no furtherobligation to King under this Agreement with respect to the applicable Metformin Product Rights.If King is interested in obtaining the Metformin Product Rights, it shall so notify Depomed inwriting prior to the expiration of the Evaluation Period, and upon Depomed’s receipt of such noticeKing and Depomed shall promptly commence good-faith negotiations, for a period of 30 days and suchlonger period as may be mutually agreed upon by the parties in writing in the event the partieshave made material progress in the negotiations (the “Negotiation Period”), regarding thecommercially reasonable terms of an agreement pursuant to which King shall obtain the MetforminProduct Rights. If Depomed and King fail to enter into an agreement for the Metformin ProductRights prior to the expiration of the Negotiation Period, then Depomed shall thereafter have theright to negotiate and enter into an agreement with a Third Party granting the Metformin ProductRights to a Third Party; provided that, for a period of 6 months, any such agreement may not be onterms and conditions materially more favorable to the Third Party than the terms and conditionslast offered by King prior to the termination of discussions with Depomed. The provisions of thisSection 13.2 shall not apply to, and Depomed shall have no obligation to King under this Section13.2 in respect of, any acquisition of Depomed by a Third Party, any merger or consolidation withor involving Depomed, any acquisition by a Third Party of any material portion of the stock ofDepomed, or any acquisition by a Third Party of a material portion of the assets of Depomed inaddition to the Product or any Combination Product; provided that such Third Party must remainbound by the terms and conditions of this Agreement, including this Section 13.2. **ARTICLE XIV****NOTICES**     Section 14.1 **Notices****.**All notices required or permitted hereunder shall be given inwriting and sent by facsimile transmission (with a copy sent by first-class mail), or mailed
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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postage prepaid by certified or registered mail (return receipt requested), or sent by anationally recognized express courier service, or hand-delivered at the following address:If to Depomed:Depomed, Inc.1360 O’Brien DriveMenlo Park, California 94025Attention: PresidentFax No.: (650) 462-9991With a copy to:Heller Ehrman LLP275 Middlefield RoadMenlo Park, CA 94025Attention: Julian SternFax No: (650) 324-0638If to King:King Pharmaceuticals, Inc.501 Fifth StreetBristol, Tennessee 37620Attn: Legal Affairs DepartmentFacsimile: (423) 990-2566All notices shall be deemed made upon receipt by the addressee as evidenced by the applicablewritten receipt.**ARTICLE XV****INSURANCE**     Section 15.1 **Insurance****.**     (a) During the Term and for a period of two (2) years after any expiration or termination ofthis Agreement, each party shall maintain (i) a commercial general liability insurance policy orpolicies with minimum limits of $[***] per occurrence and $[***] in the aggregate on an annualbasis and (ii) a product liability insurance policy or policies with minimum limits of $[***] peroccurrence and $[***] in the aggregate on an annual basis; provided that the minimum productliability policy limits set forth above shall be increased to at least $[***] per occurrence and$[***] in the aggregate on an annual basis no later than December 31, 2006. Furthermore, Depomedwill undertake to direct its insurance broker to conduct an analysis to determine the appropriatelevel of product liability insurance with respect to the Product to be maintained by Depomed, whichanalysis will be conducted prior to Depomed’s next insurance renewal, currently scheduled to occurin October 2006. Such analysis will include, among other considerations, product riskcharacteristics, product litigation history,
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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comparable company coverage and insurance availability. Depomed will share such analysis withKing     (b) Upon request, each party shall provide certificates of insurance to the other evidencingthe coverage specified herein. Neither party’s liability to the other is in any way limited to theextent of its insurance coverage.**ARTICLE XVI****MISCELLANEOUS**     Section 16.1 **Headings****.**The titles, headings or captions and paragraphs in thisAgreement are for convenience only and do not define, limit, extend, explain or describe the scopeor extent of this Agreement or any of its terms or conditions and therefore shall not be consideredin the interpretation, construction or application of this Agreement.     Section 16.2 **Severability****.**In the event that any of the provisions or a portion ofany provision of this Agreement is held to be invalid, illegal, or unenforceable by a court ofcompetent jurisdiction or a governmental authority, such provision or portion of provision will beconstrued and enforced as if it had been narrowly drawn so as not to be invalid, illegal, orunenforceable, and the validity, legality, and enforceability of the enforceable portion of anysuch provision and the remaining provisions will not be adversely affected thereby.     Section 16.3 **Entire Agreement****.**This Agreement, together with the schedules andexhibits hereto and the Confidentiality Agreement, all of which are incorporated by reference,contains all of the terms agreed to by the parties regarding the subject matter hereof andsupersedes any prior agreements, understandings, or arrangements between them, whether oral or inwriting.     Section 16.4 **Amendments****.**This Agreement may not be amended, modified, altered, orsupplemented except by means of a written agreement or other instrument executed by both of theparties hereto. No course of conduct or dealing between the parties will act as a modification orwaiver of any provisions 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 party whose signature appearsthereon, but all of which taken together will constitute but one and the same instrument.     Section 16.6 **Waiver****.**The failure of either party to enforce or to exercise, at anytime or for any period of time, any term of or any right arising pursuant to this Agreement doesnot constitute, and will not be construed as, a waiver of such term or right, and will in no wayaffect that party’s right later to enforce or exercise such term or right.     Section 16.7 **Force Majeure****.**     (a) In the event of any failure or delay in the performance by a party of any provision ofthis Agreement due to acts beyond the reasonable control of such party (such as, for example, fire,explosion, strike or other difficulty with workmen, shortage of transportation equipment,
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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accident, act of God, 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) (a “ForceMajeure Event”), then such party shall have such additional time to perform as shall bereasonably necessary under the circumstances. In the event of such failure or delay, the affectedparty will use its diligent efforts, consistent with sound business judgment and to the extentpermitted by law, to correct such failure or delay as expeditiously as possible. In the event thata party is unable to perform by a reason described in this Section 16.7, its obligation to performunder the affected provision of this Agreement shall be suspended during such time ofnonperformance.     (b) Neither party shall be liable hereunder to the other party nor shall be in breach forfailure to perform its obligations caused by a Force Majeure Event. In the case of any such event,the affected party shall promptly, but in no event later than 10 days of its occurrence, notify theother party stating the nature of the condition, its anticipated duration and any action beingtaken to avoid or minimize its effect. Furthermore, the affected party shall keep the other partyinformed of the efforts to resume performance. After sixty (60) days of such inability to perform,the parties agree to meet and in good faith discuss how to proceed. In the event that the affectedparty is prevented from performing its obligations pursuant to this Section 16.7 for a period ofsix (6) months, the other party shall have the right to terminate this Agreement pursuant to theprovisions of Sections 8.4(b).     Section 16.8 **Successors and Assigns****.**Subject to Section 16.9, this Agreement shall bebinding upon and shall inure to the benefit of the parties hereto and their respective successorsand assigns permitted under this Agreement.     Section 16.9 **Assignment****.**This Agreement and the rights granted herein shall not beassignable by either party hereto without the prior written consent of the other party. Anyattempted assignment without consent shall be void. Notwithstanding the foregoing, a party maytransfer, assign or delegate its rights and obligations under this Agreement without consent to (a)an Affiliate or (b) a successor to all or substantially all of its business or assets of theassigning party to which this Agreement relates, whether by sale, merger, consolidation,acquisition, transfer, operation of law or otherwise or (c) in the case of either party, to one ormore financial institutions providing financing to such party pursuant to the terms of a securityagreement relating to such financing. In connection with any assignment, or Subcontractingpursuant to which a Third Party Sales Representative is engaged to Promote the Product, of thisAgreement or any of the rights granted herein pursuant to this Section 16.9, the assignor, or partySubcontracting to another, shall ensure that the assignee, or Subcontractor, represents andwarrants the matters set forth in Sections 9.1(j) and (k) (in substantially the same form as setforth in Sections 9.1(j) and (k)), where Depomed (or one of its successors or assigns) is theassignor or Subcontracting party, or Sections 9.2(h) and (i) (in substantially the same form as setforth in Sections 9.2(h) and (i)), where King (or one of its successors or assigns) is the assignoror Subcontracting party. In connection with any Subcontracting pursuant to which a Third Partywill manufacture the Product, the party Subcontracting to another shall use its commerciallyreasonable efforts to cause the Subcontractor to represent and warrant the matters set forth inSections 9.1(j) and (k) (in substantially the same form as set forth in Sections 9.1(j) and (k)).Neither party shall knowingly engage any Third Party appearing on the FDA’s debarment list or thelist of excluded individuals/entities of the Office of Inspector General of the Department ofHealth and Human Services to perform, or assist such party in the performance of, its obligations
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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under this Agreement, and each party shall review each such list prior to engaging any suchThird Party.     Section 16.10 **Construction****.**The parties acknowledge and agree that: (a) each partyand its representatives have reviewed and negotiated the terms and provisions of this Agreement andhave contributed to its revision; and (b) the terms and provisions of this Agreement will beconstrued fairly as to each party hereto and not in favor of or against either party regardless ofwhich party was generally responsible for the preparation or drafting of this Agreement. Unlessthe context of this Agreement otherwise requires: (i) words of any gender include each othergender; (ii) words using the singular or plural number also include the plural or singular number,respectively; (iii) the terms “hereof,” “herein,” “hereby,” and derivative or similar words referto this entire Agreement; (iv) the terms “Article,” “Section,” “Exhibit,” “Schedule,” or “clause”refer to the specified Article, Section, Exhibit, Schedule, or clause of this Agreement; (v) “or”is disjunctive but not necessarily exclusive; and (vi) the term “including” or “includes” means“including without limitation” or “includes without limitation.” Whenever this Agreement refers toa number of days, such number shall refer to calendar days unless business days are specified.     Section 16.11 **Governing Law****.**This Agreement will be construed under and in accordancewith, and governed in all respects by, the laws of the State of New York, without regard to itsconflicts 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 in damages in anaction at law and that such a breach may cause the other party irreparable injury and damage. Byreason thereof, each party agrees that the other party is entitled to seek, in addition to anyother remedies it may have under this Agreement or otherwise, preliminary and permanent injunctiveand other equitable relief to prevent or curtail any breach of this Agreement by the other party;provided, however, that no specification in this Agreement of a specific legal or equitable remedywill be construed as a waiver or prohibition against the pursuing of other legal or equitableremedies in the event of such a breach. Each party agrees that the existence of any claim, demand,or cause of action of it against the other party, whether predicated upon this Agreement, orotherwise, will not constitute a defense to the enforcement by the other party, or its successorsor assigns, of the covenants contained in this Agreement.     Section 16.13 **Relationship Between Parties****.**The parties hereto are acting andperforming as independent contractors, and nothing in this Agreement creates the relationship ofpartnership, joint venture, sales agency, or principal and agent. Neither party is the agent ofthe other, and neither party may hold itself out as such to any other party. All financialobligations associated with each party’s business will be the sole responsibility of such party.[Signature page follows]
**Portions of this Exhibitwere omitted and have been filed separately with the Secretary of theCommission pursuant to the Company’sapplication requesting confidential treatment under Rule 24b-2 of theSecurities Exchange Act of 1934.**
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate on the dayand year first above written.      DEPOMED, INC.