to such Legal Requirements.
(C)
SAMPLING VOLUME WILL BE INCLUDED AS A PART OF EACH ANNUAL PLAN.
ARTICLE VII
COMPENSATION
SECTION 7.1
PROMOTION FEES.
(A)
IN CONSIDERATION FOR WATSON'S PERFORMANCE OF ITS OBLIGATIONS UNDER
THIS AGREEMENT, FOR EACH AGREEMENT QUARTER BEGINNING WITH THE AGREEMENT QUARTER
ENDING ON DECEMBER 31, 2007, DEPOMED SHALL PAY PROMOTION FEES (THE "PROMOTION
FEES") IN AN AMOUNT EQUAL TO [***] OF THE FIELD GROSS MARGIN FOR SUCH AGREEMENT
QUARTER. IN THE EVENT THAT PROMOTION FEES PAYABLE TO WATSON UNDER THIS AGREEMENT
FOR A PARTICULAR PERIOD IS A NEGATIVE NUMBER, WATSON WILL NOT BE REQUIRED TO
MAKE A PAYMENT TO DEPOMED EQUAL TO THE NEGATIVE PROMOTION FEES, AND DEPOMED
SHALL CREDIT AN AMOUNT EQUAL TO ANY NEGATIVE PROMOTION FEES AGAINST ANY FUTURE
PAYMENTS DUE TO WATSON UNDER THIS AGREEMENT.
(B)
DURING THE TERM, UPON THE LATER TO OCCUR OF (A) 30 DAYS FOLLOWING
THE END OF EACH AGREEMENT QUARTER, AND (B) 20 DAYS FOLLOWING DEPOMED'S RECEIPT
FROM WATSON OF THE PRESCRIBER DATA FOR SUCH AGREEMENT QUARTER AS CONTEMPLATED BY
SECTION 4.6(B), DEPOMED SHALL PROVIDE WATSON WITH A STATEMENT SETTING FORTH:
(I)
NET SALES DURING SUCH AGREEMENT QUARTER;
(II)
FIELD PRESCRIPTION UNITS DURING SUCH AGREEMENT QUARTER;
(III)
THE FIELD RATIO FOR SUCH AGREEMENT QUARTER;
(IV)
FIELD NET SALES DURING SUCH AGREEMENT QUARTER;
(V)
FIELD COGS DURING SUCH AGREEMENT QUARTER
(VI)
FIELD GROSS MARGIN FOR SUCH AGREEMENT QUARTER;
(VII)
A CALCULATION OF THE AMOUNT, IF ANY, PAYABLE BY DEPOMED TO WATSON
IN RESPECT OF SUCH AGREEMENT QUARTER PURSUANT TO SECTION 7.3.
NOTWITHSTANDING THE FOREGOING, WITHIN FIFTEEN (15) DAYS AFTER THE END OF EACH
AGREEMENT QUARTER, DEPOMED SHALL PROVIDE TO WATSON A NON-BINDING, GOOD FAITH
ESTIMATE OF THE CALCULATION OF THE AMOUNT PAYABLE TO WATSON FOR SUCH AGREEMENT
QUARTER TO ENABLE WATSON TO MEET ITS FINANCIAL REPORTING OBLIGATIONS. WHERE
APPLICABLE, THE FOREGOING CALCULATION SHALL BE BASED ON SUCH PRESCRIBER DATA (IF
ANY) FOR SUCH AGREEMENT QUARTER AS IS THEN READILY AVAILABLE TO DEPOMED.
(C)
EXCEPT AS EXPRESSLY SPECIFIED OTHERWISE, ANY AMOUNTS PAYABLE BY
ONE PARTY TO THE OTHER PARTY IN RESPECT OF ANY AGREEMENT QUARTER PURSUANT TO
THIS AGREEMENT SHALL BE PAID WITHIN FORTY-FIVE (45) DAYS AFTER THE END OF SUCH
AGREEMENT QUARTER.
(D)
AN EXAMPLE CALCULATION OF A PROMOTIONAL FEE IS ATTACHED AS
SCHEDULE 7.1.
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 RECORDS MAINTAINED IN ACCORDANCE WITH SUCH
PARTY'S ACCOUNTING PRACTICES IN SUFFICIENT DETAIL TO ENABLE A THIRD PARTY TO
ACCURATELY CALCULATE (I) IN THE CASE OF DEPOMED, THE ITEMS SET FORTH IN SECTION
7.1(B)(I)-(VII) AND SECTION 7.4, AND (II) IN THE CASE OF WATSON, P1 DETAILS, P2
DETAILS AND P3 DETAILS (IF APPLICABLE) COMPLETED BY THE WATSON SALES FORCE. UPON
THIRTY (30) DAYS PRIOR WRITTEN NOTICE, SUCH RECORDS SHALL BE MADE AVAILABLE BY
THE AUDITED PARTY FOR AUDIT BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM
DESIGNATED